Petition for Writ of Certiorari — Wal-Mart Stores, Inc. v. Danco, Inc.

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FILED

') DO 484 sep- si

_—-. CARE Ob THE CLERK

IN THE

Supreme Court of the Gnited States

WAL-MART STORES, INC.,

Petitioner,

DANCO, INC. AND BENJAMIN GUILIANI,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the First Circuit

PETITION FOR A WRIT OF CERTIORARI

ROBERT K. RHOADS

RANAE BARTLETT

WAL-MART STORES, INC.

702 S.W. 8th Street

Bentonville, Arkansas 72716

(501) 273-4505

JEFFREY S. SUTTON

Counsel of Record

JONES, DAY, REAVIS

& POGUE

1900 Huntington Center

41 South High Street

Columbus, Ohio 43215

(624) 469-3855

MELANIE P. SARWAL

JONES, DAY, REAVIS

& POGUE

2727 North Harwood Street

Dallas, Texas 75201

(214) 220-3939

Counsel for Petitioner

OS UALS.

QUESTION PRESENTED

Does 42 U.S.C. § 1981 permit independent contractors, as

opposed to employees, to bring hostile work environment

claims?

PARTIES TO THE PROCEEDINGS

The parties to the proceedings are identified in the caption

of the case. In accordance with S. Ct. R. 29.6, petitioner Wal-

Mart Stores, Inc. states that CIFRA, S.A. de C.V. is a non-

wholly owned subsidiary. Petitioner has no parent companies.

TABLE OF CONTENTS

Page

SPU REET POUNDUEEE oes bk eee bee ie i

PARTIES TO THE PROCEEDINGS ............... ii

pe Vv

OPINIONS AND JUDGMENTS BELOW ........... l

JURISDICTIONAL STATEMENT ................. 2

so ns a bap 5 a6 0t.c'v wnwee es 2

eg ab cio Nbc vee e ace Se 3

REASONS FOR GRANTING THE WRIT ........... 7

I. The Court Of Appeals Misconstrued § 1981 And

Disregarded Several Established Principles Of

Statutory Construction In Doing So.............. 8

1. The Terms Of § 1981 Do Not Reach

Hostile Work Environment Claims By

Independent Contractors ................... 8

2. As A Matter Of History And Context, The

1991 Amendments Do Not Cover Hostile-

Work Environment Claims By Independent

TR ES a 9

3. The Extensive Legislative History To The

1991 Amendments Is Utterly Silent About

Extending Hostile-Work Claims To

Independent Contractors .................. 14

4. This Extension Of § 1981 Is Awkward In

Theory And Will Make Little If Any Sense

a ee 17

Il. The Decision Exacerbates A Lower Court Conflict

Over The Standing Of Corporations To Bring

§ 1981 Claims On Behalf Of Their Employees .....

III. The Lower Court’s Interpretation Of § 1981 And

Its Subsidiary Standing Decision Deserve Review

Now Rather Than Later ......................

CONCLUSION

TABLE OF AUTHORITIES

Page

Cases

62 Cases of Jam v. United States, 340 U.S. 593

WI svicscnisctksssansipssctnighenosssanachanethepemmstindubensieclateides 9

American Hospital Ass'n v. NLRB, 499 U.S. 606

[|__| |) EE SR SN GaP ay aD OPSP ROME FOREN Kavoen He OsnnonE 15

Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940) ......... ll

Blue Chip Stamps v. Manor Drug Stores,

RIES: Ta iri ea dildanniiniaiinn 22

Burlington Industries, Inc. v. Ellerth, 118 S. Ct. 2257

CONN hn iia 12, 17

Chapman vy. United States, 500 U.S. 453 (1991) ............ 17

Chisom v. Romer, 501 U.S. 380 (1991) ..........c cece 15

City of Boerne v. Flores, 521 U.S. 507 (1997) ..........06. 16

Clifton Terrace Associates, Ltd. v. United Technologies

Corp., 929 F.2d 714 (D.C. Cir. 1991) 0... eee 21

Clinton v. City of New York, 118 S. Ct. 2091

| SAPO byt enn DaW EF Ss AON SOM OPMOTE SED 17

Community for Creative Non-Violence v. Reid,

OOD UD. TOI ei i hd 13

Concrete Pipe and Products of Cal., Inc. v. Construction

Laborers Pension Trust for So. Cal., 508 U.S. 602

CROUB DY: Boa Cc Ree sehen 16

Des Vergnes v. Seekonk Water District, 601 F.2d 9

Cha Ce ai ha aaa cesenedbecctcees 20

Faragher v. City of Boca Raton, 118 S. Ct. 2275

HI csccevnsniccanstensinadaieospainaphbenianinantnaeehensai eens 17

Florida Prepaid Postsecondary Education Expense

Board v. College Savings Bank, 119 S. Ct. 2199

CRO si ARE EEE sities enasnssins 16

Georgia v. Rachel, 384 U.S. 780 (1966) Ree ee ae aes 15

TABLE OF AUTHORITIES (cont'd)

Gersman v. Group Health Ass'n, 725 F. Supp.

573 (D.D.C. 1989), aff'd on other grounds,

SOE FBG Te ey WI casa cancdscteiictsicntencens 21

Harris v. Forklift System, Inc., 510 U.S. 17

GRE ceenecreteltiatldidecvenencsdibeddascesscsersmsbenh 12, 13, 18

Hotel St. George Associates v. Morgenstern, 819

F. Supp. 310 (S.D.N.Y. 1993) ........ccccccccsccssscccessseces 21

Hudson Valley Freedom Theater, Inc. v. Heimbach,

GTi B26 FOB GROG BOD vadisctitccisccetihehci 20

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133

CDI siisntinicctadaiecthtitilaenisthenclethedaieeaadesaete 11

Jones v. Alfred H. Mayer Co., 392 U.S. 409 (1968) ...... 16

Kolstad v. American Dental Ass'n, 119 S. Ct.

rib Et ee en ee Te 17

Marshall v. Kleppe, 637 F.2d 1217 (9th Cir. 1980) ......... 20

McDonald v. Santa Fe Trail Transp. Co., 427 U.S.

BID CEDTD ..scociccicccisscTiadincebiassttlhcnlien teeta 11

McNary v. Haitian Refugee Center, Inc., 498 U.S. 479

COBO .. ...«ssevissnesnsisasitonisiniecinsiesiaiestasaan taco 17

Meritor Savings Bank v. Vinson, 477 U.S. 57

CRIED: ccececiarssevesssensscesuntsiessnasodananene te ty Oe

Miles v. Apex Marine Corp., 498 U.S. 19 (1990) ........... 10

Mobil Oil v. Higginbotham, 436 U.S. 618 (1978) ............ 9

Morissette v. United States, 342 U.S. 246 (1952) .......... 11

NLRB v. Catholic Bishop of Chicago, 440 U.S. 490

CRD TD) .. .ccrccncecsnsctuchshisanieeensndiaatneia anes nn, 16

NLRB v. Hearst Publications, Inc., 322 U.S. 111

CRG ancccsccsececienemsechnaaeteneniaieii a 13

NLRB v. United Insurance Co., 390 U.S. 254

| RE Se eR 13

Nationwide Mutual Insurance Co. v. Darden,

$03 U.S. SIG (ISRRP cd... a el 14, 19

Vii

TABLE OF AUTHORITIES (cont'd)

O'Hare Truck Service, Inc. v. City of Northlake,

PU es PEON <li a iccaiahn dap plebiscite scl 13

Organization of Minority Vendors, Inc. v. Illinois

Central Gulf R.R., 579 F. Supp. 574 (N_D. Til.

IE Necondelh bbictinctingkedenaihicuasietdbdddlpnebiisandailasasclestisEiin 20

Oscar Mayer & Co. v. Evans, 441 U.S. 750 (1979) ....... li

Patterson v. McLean Credit Union, 491 U.S. 164

OE Ce aa eee ee a Le passim

Rosales v. AT&T Information Sys., Inc., 702 F. Supp.

i WI hicciedacksptitniirtictntotceatingncccicincnss 20

Santa Fe Industries, Inc. v. Green, 430 U.S. 462

IRE Si AER RN 9

T & S Service Associates v. Crenson, 505 F. Supp.

938 (D. RI. 1981), vacated on other grounds,

a IT ns sta ecetennniiepebapearseness 20

Triad Associates Inc. v. Chicago Housing Authority,

tf & hk iy 6 Rn 20

United Brotherhood of Carpenters and Joiners

of America v. Anderson, 119 S. Ct. 1495

(1999), cert. dismissed, 119 S. Ct. 2418 (1999) ....... 16

United States v. Champlin Refining Co., 341

BR SRN in A A 11

Valley Forge Christian College v. Americans

United for Separation of Church and State,

gE EN 19

Village of Arlington Heights v. Metropolitan

Housing Development Corp., 429 U.S. 252

(i eal lana Se ea 18, 19

Warth v. Seldin, 422 U.S. 490 (1975) ooscccccssssssseseeoo-e 19

Wheeldin v. Wheeler, 373 U.S. 647 (1963) .........c.cc00000-0- 9

Yesteryears, Inc. v. Waidorf Restaurant, Inc., 730

* 8 § 3 8. xe eieeeE 20

vill

TABLE OF AUTHORITIES (cont'd)

Statutes

a adusnandasdebeomeanianainall 2

iscsi san series cal oidannndbicadoaiabadestats passim

sg sseskbisarcunaueeiminennes 10

Congressional History

ES: I RIAA Fe BRC 14

H.R. Rep. No. 102-40(1) (1991), reprinted in 1991

Rec oh SERN Rennie bert ciae ane 14, 15

H.R. Rep. No. 102-40(II) (1991), reprinted in 1991

a a ae 15

Miscellaneous

Lewis L. Maltby & David C. Yamada, Beyond “Economic

Realities”: The Case for Amending Federal

Employment Discrimination Laws to Include

Independent Contractors, 38 B. C. L. Rev. 239

INET’ ssccconluibinhediaintdiijatdLiale si lotianncnckipaaitioncatakioasces 22

United States Dep’t of Labor, Bureau of Labor Statistics,

Contingent and Alternative Employment Arrange-

PR NE UNIO, sina ciiscncsniccacdaanindnoceosonnssnce 22

PETITION FOR A WRIT OF CERTIORARI

Enacted as part of the Civil Rights Act of 1866, section

1981 of Title 42 has long barred racial discrimination in the

“mak[ing] and enforc[ing] [of] contracts.” Section 1981

undoubtedly permits race-discrimination claims brought by

independent contractors regarding the enforcement or

termination of a contract. And section 1981 undoubtedly

permits employees to bring hostile work environment claims,

see Meritor Savings Bank v. Vinson, 477 U.S. 57 (1986),

against their employers. But does the provision permit both:

May an independent contractor in other words, as opposed to

an employee, bring a hostile work environment claim?

As a matter of statutory interpretation, logic and cominon

sense, the answer is “no.” Because the subordinate relation-

ship that makes a hostile work environment claim cognizable is

missing in an independent contractor setting, and because the

only party who generally has an enforceable contract in that

setting—the corporation—lacks standing to bring such actions,

the statute does not permit them. Nor, in the initial 133 years

of the statute’s existence, did any court, whether trial or

appellate, state or federal, rule to the contrary. In recently

becoming the first court to reach a different result, the lower

court not only overlooked settled principles of statutory con-

struction, but also issued a ruling that is laden with opportunity

for broad misapplication and that exacerbates a conflict in the

lower courts regarding the standing of corporations to bring

such claims. For these reasons and those elaborated below, the

Court should grant the writ.

OPINIONS AND JUDGMENTS BELOW

The opinion of the United States Court of Appeals for the

First Circuit was issued on May 12, 1999, was corrected by an

errata sheet on June 11, 1999, and is reported at 178 F.3d 8

(1999). The opinion that appears at 1a of the appendix reflects

the corrected version. The order of the United States District

Court, District of Maine, denying Wal-Mart’s motion for

summary judgment on the section 1981 claims, is unreported

and appears at 18a of the appendix. And the order of the

United States District Court, District of Maine, denying Wal-

Mart’s post-trial motion for judgment as a matter of law, is

unreported and appears at 37a of the appendix.

JURISDICTIONAL STATEMENT

The opinion of the United States Court of Appeals for the

First Circuit was entered on May 12, 1999. (App. la).

Jurisdiction exists under 28 U.S.C. § 1254(}).

STATUTE INVOLVED

42 U.S.C. § 1981 provides:

(a) Statement of equal rights

All persons within the jurisdiction of the United States

shall have the same right in every State and Territory to

make and enforce contracts, to sue, be parties, give

evidence, and to the full and equal benefit of all laws and

proceedings for the security of persons and property as is

enjoyed by white citizens, and shall be subject to like

punishment, pains, penalties, taxes, licenses, and exactions

of every kind, and to no other.

(b) “Make and enforce contracts” defined

For purposes of this section, the term “make and enforce

contracts” includes the making, performance, modification,

and termination of contracts, and the enjoyment of all

benefits, privileges, terms, and conditions of the contractual

relationship.

eins on tan be an Keds PS

The rights protected by this section are protected against

impairment by nongovernmental discrimination and impair-

ment under color of State law.

STATEMENT

1. In 1988, Benjamin Guiliani, a Mexican-American, founded

Danco, which he later incorporated as Danco, Inc. The pur-

pose of the company was to maintain and clean the parking lots

of various retail enterprises.

2. On September 15, 1994, Danco entered into a contract with

Wal-Mart Stores, Inc. (“Wal-Mart”) to perform parking lot

maintenance for a Wal-Mart store located in Augusta, Maine.

The agreement required Danco to remove litter from the

parking lot three times a week and to remove sand from the lot

once a week. While performing the agreement, Danco alleged

that its employees were subjected to three racially-motivated

incidents.

a. In October 1994, an individual spray-painted the words

“White Supremacy” on the Wal-Mart parking lot. (App. 2a).

Guiliani claimed that he saw a Wal-Mart associate, Bob

Amadei, walking toward the store shortly before he first saw

the painted words, while his eight-year-old son claimed that he

saw Amadei at the same spot with a can of spray paint just a

few seconds before spotting the graffiti. Amadei denied having

anything to do with the graffiti. (/d.). Guiliani brought the

graffiti to the attention of the store manager, Curtis Scheffe,

who agreed to investigate the incident and to have the graffiti

removed. (/d.). While Scheffe testified that he ordered the

graffiti to be removed immediately, others testified that it

remained there for over a month. (/d.). Neither Scheffe nor

anyone else involved in the investigation ultimately determined

whether a Wal-Mart employee painted the offending words.

(App. 2a-3a).

b. On October 14, 1994, Guiliani claimed that an off-duty

employee, Scott Hamlin, told him: “I don’t like your kind.”

(App. 3a, 23a). When asked what he meant, Hamlin allegedly

said “Puerto Ricans.” Guiliani also testified that Hamlin

verbally threatened and pushed him. Guiliani cailed the

Augusta police department and reported the incident to Scheffe

who agreed to investigate the matter. (App. 3a). The

investigation failed to determine who was responsible for the

incident. (/d.).

c. In November 1994, Guiliani alleged that Hamlin, again

while off duty (App. 23a), yelled a racial slur at him from a

passing vehicle. (App. 3a). No other incidents of harassment

occurred.

3. In January 1995, Wal-Mart hired a new manager, James

Helterbrake, to run the Augusta store. Soon thereafter, he told

Danco that he was unhappy with its performance and on

January 30, 1995, gave notice that the company’s services

would be terminated. (App. 3a). Nonetheless, a few weeks

later, Wal-Mart and Danco entered into a new contract

requiring Danco to sweep sand twice a week from the parking

lot. (/d.).

4. In February 1995, after making several oral complaints, the

Maine Department of Environmental Protection sent a letter to

Wal-Mart informing it that the sand removal from the parking

lot was inadequate and inconsistent with the special site

approval permit for the parking lot. (App. 4a). As a result,

Wal-Mart terminated Danco’s contract at the end of March

1995. Jd. At the time of the termination, the Maine Depart-

ment of Environmental Protection was considering taking

action against Wal-Mart to enforce the permit conditions for

the parking lot and to prevent additional sand from washing

into a nearby brook. (App. 2a, 4a).

5. a. In March 1997, two years after the termination, Guiliani

and Danco sued Wal-Mart, alleging a violation of § 1981 as

well as several State laws, including breach of contract, unjust

enrichment, negligence, intentional infliction of emotional

i distress and denial of public accommodations. (App. 4a).

Plaintiffs sought to present both a wrongful termination and a

hostile work environment claim to the jury under § 1981.

b. Prior to trial, Wal-Mart moved for summary judgment

arguing that the § 1981 claim should be dismissed as a matter

of law. (App. 37a). The district court denied the motion.

(App. 21a-24a). At the close of plaintiffs’ case, Wal-Mart

moved for a directed verdict, arguing among other things that

the § 1981 claim should be submitted to the jury only on

wrongful termination, not hostile work environment, because

an independent contractor cannot maintain a hostile work

environment claim under the statute. (App. 4a, 39a-40a).

Though noting that there were no reported cases recognizing

such a claim for independent contractors (App. 39a), the

district court denied Wal-Mart’s motion and submitted both

theories of recovery to the jury. (App. 39a-40a). In doing so,

the judge gave jury instructions that “would be standard for a

Title VII hostile work environment claim, but omitted any

references to ‘employee’ (because of Danco’s independent

contractor status).” (App. 5a).

6. The jury ruled in favor of Wal-Mart on the discriminatory

termination claim under § 1981. (App. Sa). But it found for

plaintiffs on the § 1981 hostile work environment theory,

awarding $650,000. The district court granted a remittitur

reducing the award to $300,000. (/d.).

7. The First Circuit (Torruella, Boudin, Stahl) affirmed. The

court acknowledged (App. 7a-8a) that the 1991 amendments

to § 1981 responded to Patterson v. McLean Credit Union,

491 US. 164 (1989), which denied a hostile work environment

claim brought by an employee, not an independent contractor.

And it acknowledged that the legislative history of the 1991

amendments referred only to extending the statute to claims by

employees, as opposed to independent contractors. (App. 8a-

9a). Still, the First Circuit agreed that independent contractors

could bring hostile work environment claims, and could do so

under § 1981. “One could say,” the court noted, “that avoiding

a hostile work environment claim is an implicit contractual

benefit or term that exists for employees but not independent

contractors.” (App. 8a). But it found that “[o]n the face of the

statute, nothing forbids such a ciaim.” (/d.). It did not find

relevant the omission of the term “independent contractor” in

the legislative record to the 1991 amendments, reasoning that

“most cases involve employees rather than independent

contractors.” (App. 8a-9a).

> «

In addressing the “considerable” “problems” of “liability run

amok if a company is made responsible not only to protect its

own employees against racial harassment in the workplace but

also to protect all of the contractors with whom the company

may deal” (App. 9a), the court said that only corporations, not

their employees, could bring such claims. “Nothing in section

1981,” the court noted, “provides a personal claim” by

employees of such contractors. (App. 9a-10a). But because

“[{a] corporation ordinarily carries out its activities through its

employees,” the court felt that “work-site racial discrimination

against Danco’s employees could amount to racial discrimina-

tion against Danco.” (App. 10a).

8. Wal-Mart petitioned for rehearing and hearing en banc. It

pointed out that the panel’s analysis demonstrated that neither

Guiliani nor Danco had Article III standing to assert the hostile

work environment claim—first because Guiliani, as the panel

correctly understood, was not the contracting party and there-

fore had no rights under § 1981, and second because Danco, as

the panel failed to recognize, could not bring a hostile work

environment claim in its capacity as a corporation. Nonethe-

less, on June 11, 1999, the First Circuit denied the petition.

(App. 45a).

REASONS FOR GRANTING THE WRIT

In the 133 years since § 1981 came into existence and in the

13 years since the Court first recognized hostile work

environment claims, see Meritor Savings Bank v. Vinson, 477

U.S. 57 (1986), no other court has issued a holding merging

these separable and separately-conceived concepts—hostile

work environment and independent contractor status. The

reason is straightforward: The qualities of control and

dependence that make a hostile work environment actionable

in the context of an employer-employee relationship do not

exist in the setting of an agreement between two independent

businesses. Whether in the context of Title VII, the Americans

with Disabilities Act, the Age Discrimination in Employment

Act, or even § 1981, hostile work environment claims have

long been grounded in the unique dynamics of an employee-

employer relationship and that relationship alone. While

§ 1981 claims may be brought for racially-motivated termina-

tions of contracts, Danco in this instance was no more entitled

to bring a hostile work environment claim against Wal-Mart

than Wal-Mart was entitled to do so against Danco.

The court of appeals’ sudden expansion of § 1981 liability

warrants review now rather than later. The analysis is wrong

and disregards several established principles of statutory

interpretation announced by this Court. The decision

exacerbates a burgeoning conflict in the lower courts regarding

the standing of corporations to bring discrimination claims on

behalf of their individual employees. And, left unreviewed, the

decision may present, as the court of appeals itself

acknowledged (App. 9a), the “considerable” “problem” of

“liability run amok if a company is made responsible not only

to protect its own employees against racial harassment in the

workplace but also to protect all of the contractors with whom

the company may deal.” Nor is the answer to this quandary to

ask “Congress to fix” these “problems.” (/d.). Contrary to the

court of appeals’ suggestion, it is first to ask this Court to “fix”

the lower-court’s flawed analysis, which is just what this

petition does.

I. THE COURT OF APPEALS MISCONSTRUED § 1981

AND DISREGARDED SEVERAL ESTABLISHED

PRINCIPLES OF STATUTORY CONSTRUCTION IN

DOING SO.

1. The Terms Of § 1981 Do Not Reach Hostile Work

Environment Claims By Independent Contractors.

The operative words of § 1981 from 1866 to the present

have been, and continue to be, utterly silent about the

application of the statute to hostile work environment claims

between independently contracting businesses. The right to be

free of racial discrimination in the context of “mak[ing] and

enforc[ing] contracts,” 42 U.S.C. § 1981(a), simply has never

covered such claims. Nor did the 1991 amendments to the

statute change this component of the legislative landscape. By

establishing that the statute protected “the enjoyment of all

benefits, privileges, terms, and conditions of the contractual

relationship,” 42 U.S.C. § 1981(b), the amendments in no way

make one “term[] of the contractual relationship” the right to

be free of a subordinate hostile work environment in a non-

subordinate, non-employee, independent-contractor setting.

On this basis alone, the sudden and expansive extension of the

statute to this new setting, displacing all manner of State

common law actions in the process, should have been rejected.

The Court has long been “‘reluctant to federalize’” matters

historically covered by State law unless Congress clearly directs

ace

it to do so. Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 479

(1977). See also Mobil Oil v. Higginbotham, 436 U.S. 618,

625 (1978) (noting that “[t]here is a basic difference between

filling a gap left by Congress’ silence and rewriting rules” and

that “to prescribe a different measure of damages .. . or a

different class of beneficiaries” would be inappropriate),

; Wheeldin v. Wheeler, 373 U.S. 647, 652 (1963); 62 Cases of

; Jam v. United States, 340 U.S. 593, 600 (1951) (refusing to

extend statute “beyond the point where Congress indicated it

would stop”).

Yet, in the face of this textual silence, the court of appeals

reasoned differently. Seizing on the fact that “nothing” in the

statute “forbids such a claim,” it jumped to the conclusion that

this previously-unknown theory of liability is a permissible one

and did so without considering any other canons of

construction. (8a). This reasoning, of course, simply embraces

an invariable attribute of silence—which always “forbids”

“nothing”—and in the end offers no more explanation for

expanding the reach of the statute than limiting it. At a

minimum, the language of the 1991 amendments to § 1981 is

ambiguous on the point, making it necessary to consider a host

of other informative, and ultimately dispositive, legislative clues

about the correct interpretation of the statute. The court of

appeals’ failure to do so by itself warrants review or a summary

reversal.

2. As A Matter Of History And Context, The 1991

Amendments Do Not Cover Hostile-Work

; Environment Claims By Independent Contractors.

ee eee eee —

The 1991 amendments to § 1981 were not enacted in a

vacuum. They arose as a specific response to Patterson v.

McLean Credit Union, 491 U.S. 164 (1989), borrowed

language from Title VII that had a well-understood application

to hostile work environment claims brought just by employees,

and were enacted against the backdrop of a well-understood

distinction between independent contractors and employees.

As a matter of history, context and terminology, then, the

amendments simply do not extend § 1981 to hostile-work

claims brought by independent contractors.

In particular, three principles “of existing law,” with which

courts “assume that Congress [was] aware . . . when it

pass[ed]” the 1991 amendments, limit the reach of § 1981.

Miles v. Apex Marine Corp., 498 U.S. 19, 32 (1990) (citation

omitted). First, the 1991 amendments, all agree, were

prompted by Patterson v. McLean Credit Union, 491 U.S.

164. In rejecting the argument that § 1981 reached hostile-

work environment claims brought by employees, Patterson

concluded that the terms “make and enforce” contracts covered

only the formation of an employment contract, not racial

harassment that occurred during the course of employment, a

subject already covered by Title VII’s prohibition against

discrimination with respect to “terms, conditions, or privileges”

of employment, 42 U.S.C. § 2000e-2(a)(1). Patterson, 491

U.S. at 178-80. Two years later, the national legislature

responded to Patterson by simply borrowing the operative

language from Title VII that proscribed a hostile work

environment in employment, and made these provisions

applicable to § 1981 claims. The 1991 amendment thus defined

“make and enforce contracts” to include “the enjoyment of all

benefits, privileges, terms, and conditions” of the contractual

relationship. 42 U.S.C. § 1981(b).

Where, as here, “Congress borrows terms” from another

body of law, the Court has repeatedly said that the legislature

presumably knows and adopts the cluster of ideas that were

attached to each borrowed word in the body of learning

from which it was taken and the meaning its use will convey

to the judicial mind unless otherwise instructed. In such

set a nactinn -

Gi «agit She ons dirt

case, absence of contrary direction may be taken as

satisfaction with widely accepted definitions, not as a

departure from them.

Morissette v. United States, 342 U.S. 246, 263 (1952). See

also Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 144-45

(1990) (when Congress borrows language from one statute and

incorporates it into a second statute, the language of the two

acts should be interpreted similarly); Oscar Mayer & Co. v.

Evans, 441 U.S. 750, 756 (1979). The Court has said the same

thing when it comes to the specific context of construing

§ 1981. See McDonald v. Santa Fe Trail Transp. Co., 427

U.S. 273, 287 (1976) (noting that “whatever ambiguity there

may be in the language of § 1981 is clarified by an examination

of the legislative history of § 1981’s language”) (citation

omitted). Congress identified a problem regarding the failure

of § 1981 to reach hostile-work environment claims brought by

employees, and incorporated language from Title VII that

specifically addressed this employee-centered problem. The

1991 amendments thus “cannot be divorced from the

circumstances existing at the time it was passed, and from the

evil which Congress sought to correct and prevent.” United

States v. Champlin Refining Co., 341 U.S. 290, 297 (1951).

See also Apex Hosiery Co. v. Leader, 310 U.S. 469, 489

(1940) (“courts should interpret [statute]’s meaning in light of

_. . the particular evils at which the legislation was aimed”).

Second, not only does the cause-and-effect relationship

between Patterson and the 1991 amendments inform the reach

of § 1981, so too does the very nature of a hostile work

environment claim as it was understood at the time of the 1991

amendments and indeed as it has been understood ever since.

Not until Meritor Savings Bank v. Vinson, 477 U.S. 57, 65-67

(1986), did the Court first recognize that gender (or racial)

harassment that had “the purpose or effect of unreasonably

interfering with an individual’s work performance or creating

an intimidating, hostile, or offensive working environment”

violated Title VII because it amounted to individual

discrimination in “terms, conditions, or privileges of employ-

ment.” See Patterson, 491 U.S. at 179-80. Anchored to Title

VII and its coverage of civil rights claims by “employees,” the

theory of hostile work environment was necessarily linked to

the subordinate employee-employer relationship. “For sexual

harassment to be actionable,” the Court indicated, “it must be

sufficiently severe or pervasive to alter the conditions of [the

victim's] employment and create an abusive working environ-

ment.” Meritor, 477 U.S. at 67 (quotation omitted) (emphasis

added) Indeed, one defense to a hostile-work complaint is the

existence of “a procedure specifically designed to resolve” such

claims, id. at 71, a defense that does not translate to non-

employees of a company. See Burlington Indus., Inc. v.

Ellerth, 118 S. Ct. 2257, 2270 (1998) (affirmative defense

considers among other things whether “the plaintiff employee

unreasonably failed to take advantage of any preventive or

corrective Opportunities provided by the employer’).

Since Meritor, the Court’s hostile-work cases continue to be

linked to the employee-employer relationship and continue to

emphasize the individual nature of these claims. “A discrimi-

natorily abusive work environment, even one that does not

seriously affect employees’ psychological well-being, can and

often will detract from employees’ job performance, discourage

employees from remaining on the job, or keep them from

advancing in their careers.” Harris v. Forklift Sys., Inc., 510

U.S. 17, 22 (1993). As Harris reiterates, the theory is one of

“workplace equality,” id, and is about whether the conduct

“unreasonably interferes with an employee’s work

performance,” id. at 23, and ultimately asks whether “members

of one sex [or race] are exposed to disadvantageous terms or

conditions of employment to which members of the other sex

~ ee ee

ee ee ee ee -

[or race] are not exposed,” id. at 25 (Ginsburg, J., concurring).

To our knowledge, whether one looks to case law prior to the

1991 amendments or even to case law after it, no court (other

than the one below) has ever extended the theory of a hostile

work environment to an independent contractor

Third, besides following immediately on the heels of

Patterson and besides embracing a theory of liability that has

historically been limited to employees, the 1991 amendments

emerged in the context of a legal distinction that has a well-

established pedigree. The “distinction between employees and

independent contractors,” the Court has said, “has deep roots

in our legal tradition and often serves as a line of demarcation

for differential treatment of individuals.” O'Hare Truck Serv.,

Inc. v. City of Northlake, 518 U.S. 712, 721-22 (1996)

(citations omitted). See also Community for Creative Non-

Violence v. Reid, 490 U.S. 730, 739-40 (1989) (noting Court’s

historical understanding of term “employee” as describing the

conventional master-servant relationship); NLRB v. United Ins.

Co., 390 U.S. 254, 256 (1968) (“Congress passed an amend-

ment . . . [t]he obvious purpose of [which] was to have the .

courts apply general agency principles in distinguishing

between employees and independent contractors”).

Nor has the distinction been lost on Congress itself. After

the NLRB embraced a definition of the term “employee” that

covered independent contractors, see NLRB v. Hearst

Publications, Inc., 322 U.S. 111 (1944), Congress quickly

responded with new legislation. “In the law,” the House

Committee said in clarifying the two relationships, “there

always has been a difference, and a big difference, between

‘employees’ and ‘independent contractors’. ‘Employees’ work

for wages or salaries under direct supervision. ‘Independent

contractors’ undertake to do a job for a price, decide how the

work will be done, usually hire others to do the work, and

depend for their income not upon wages, but upon the

difference between what they pay for goods, materials, and

labor and what they receive for the end result, that is, upon

profits. .. . Congress intended then, and it intends now, that the

[NLRB] give to words not far-fetched meanings but ordinary

meanings.” H.R. Rep. No. 80-245, at 18 (1947). Under these

circumstances and in light of these time-honored under-

Standings, it seems exceedingly doubtful that Congress would

suddenly abandon this tradition by merging the employee-

spawned doctrine of a hostile-work environment claim with the

distinct legal concept of independent-contractor status. See

Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322-25

(1992) (when Congress gives no specific guidance as to the

meaning of a term, courts presume that Congress intended to

incorporate traditional principles of agency law). The lower-

court’s contrary determination should be reviewed and

reversed.

3. The Extensive Legislative History To The 1991

Amendments Is Utterly Silent About Extending

Hostile-Work Claims To Independent Contractors.

Not surprisingly, in light of this background, the legislative

history to the 1991 amendments says nothing about extending

hostile work environment claims to independent contraciors.

One congressional report after another refers just to changing

the outcome of Patterson and to “restor[ing]” the prior

understanding that hostile work environment claims were

available to employees under § 1981. H.R. Rep. No. 102-40(1)

(1991), reprinted in 1991 U.S.C.C.A.N. 549, 630. Not once

does Congress signal a desire to extend hostile-work claims

beyond the employer-employee relationship. See, e.g., id. (“In

the context of employment discrimination, for example, this

would include, but not be limited to, claims of harassment... .

[The amendments] would restore protection under federal law

against harassment and other forms of intentional

discrimination in the terms and conditions of employment for

more than 11 million employees in firms that are not covered by

Title VII.”) (emphasis added); id. at 676 (“Reversal of

Patterson simply expands the scope of Section 1981 to Clearly

include all aspects of the employment relationship, a

particularly important goal because only Section 198] prohibits

racial discrimination by employers with less than 15

employees.”’) (last emphasis added); H.R. Rep. No. 102-40(II)

(1991), reprinted in 1991 U.S.C.C.A.N. 694, 730 (noting that

effects of Patterson extended from employment context to suits

for “alleged racial discrimination in insurance, auto repair, and

advertising contracts” but making no mention of independent

contractors); id. at 761 (“The bill . . . reverses Patterson by

amending section 1981 to cover all aspects of the employment

relationship”) (emphasis added); id. (amendments give “redress

to victims of on-the-job racial harassment”) (emphasis added).

Notably, the Court has looked to the legislative history of

§ 1981 in limiting its reach before. See Georgia v. Rachel, 384

U.S. 780, 791 (1966) (“The legislative history of the 1866 Act

clearly indicates that Congress intended to protect a limited

category of rights”).

It strains credulity to assume that the national legislature

would make such a consequential change in the law—extending

hostile-work claims to independent contractors—while saying

nary a word that it was doing so, to say nothing of engaging in

any deliberative debate over the subject. See Chisom v. Romer,

501 U.S. 380, 396 & n.23 (1991) (“we are convinced that if

Congress had such an intent, Congress would have made it

explicit in the statute, or at least some of the Members would

have identified or mentioned it at some point in the... .

legislative history”); American Hosp. Ass'n v. NLRB, 499 U.S.

606, 613-14 (1991) (“[i]f this amendment had been intended

[as] petitioner suggests, we would expect to find some

expression of that intent in the legislative history.”). Congress

deserves more credit than to have made such a significant

change in the law without even a discernible hint that it

considered the matter.

Nor in light of the constitutional source of this law—the

Thirteenth Amendment, see Jones v. Alfred H. Mayer Co., 392

U.S. 409, 413 (1968)—does it seem possible to sustain this

broad interpretation. The whole point of enforcement

legislation under the Thirteenth Amendment, as under the

Fourteenth Amendment, is to remedy prior constitutional

violations and to prevent future ones. See Florida Prepaid

Postsecondary Educ. Expense Bd. v. College Sav. Bank, 119

S. Ct. 2199, 2206 (1999): City of Boerne v. Flores, 521 U.S.

507, 519-22 (1997) (discussing the “remedial” nature of

Congress’s enforcement power under § 5 of the Fourteenth

Amendment). Yet there is no evidence today or in the past,

and certainly none in the congressional record, that the

paradoxical problem of independent contractors and

subordinate hostile-work environments is the kind of national

issue that would warrant enforcement legislation. As the Court

has required before, this “constitutional problem[]” should be

“avoid[ed]” in view of the “otherwise acceptable construction”

of the statute available. Concrete Pipe and Prods. of Cal., Inc.

v. Construction Laborers Pension Trust for So. Cal., 508 U.S.

602, 628-29 (1993) (citation and quotation omitted); see also

NLRB v. Catholic Bishop of Chicago, 440 U.S. 490, 507

(1979) (in the face of silence, “declin[ing] to construe the Act

in a manner that could in turn call upon the Court to resolve

difficult and sensitive [constitutional] questions”). Just last

Term, the Court granted a petition that would have addressed

the scope of Congress’s enforcement authority under the

Thirteenth Amendment. See United Brotherhood of

Carpenters and Joiners of Am. v. Anderson, i19 S. Ct. 1495

(1999) (granting petition for writ of certiorari and refor-

mulating question to address scope of constitutional authority

for § 1981), cert. dismissed, 119 S. Ct. 2418 (1999)

(dismissing writ pursuant to parties’ agreement under S. Ct. R.

46.1).

4. This Extension Of § 1981 Is Awkward In Theory

And Will Make Little If Any Sense In Application.

Lastly, this concept of liability makes little sense in theory

and will make even less sense in practice, and for this reason as

well it is “unlikely” that Congress meant to adopt it. McNary

v. Haitian Refugee Ctr., Inc., 498 U.S. 479, 496 (1991). See

also Clinton v. City of New York, 118 S. Ct. 2091, 2098 (1998)

(rejecting reading of statute “which would produce an absurd”

result) (quotation and citation omitted); Chapman v. United

States, 500 U.S. 453, 476 (1991) (same).

One of the principal defenses to a hostile work environment

claim is the existence of “preventive or corrective opportuni-

ties provided by the employer” and the failure of the employee

to “take advantage” of those company procedures. Ellerth,

118 S. Ct. at 2270. Yet how would this doctrine apply to

independent contractors? Would companies be expected to

extend their internal grievance procedures to employees of

other, independent businesses, including even competitors?

Would employees of one company be penalized for not

invoking the other company’s procedures? In the event this

defense is not available to defend claims by independent

contractors, how could it still be said that hostile-work claims

do not involve strict corporate liability? See Kolstad v.

American Dental Ass’n, 119 S. Ct. 2118 (1999); Ellerth, 118

S. Ct. 2257; Faragher v. City of Boca Raton, 118 S. Ct. 2275

(1998). And how at any rate would an independent business

Show that the “workplace” of another independent

business—where it may provide services for just 2-3 hours a

week-—is “permeated with discriminatory intimidation, ridicule,

and insult, that is sufficiently severe or pervasive to alter the

conditions of the victim’s employment and create an abusive

working environment”? Harris, 510 U.S. at 21 (quotations

and citations omitted). There are many questions here. And

the answers to all of them render implausible this new-found

theory of § 1981 liability.

But all of this is prelude to what seems to be the most

conspicuous oddity of expanding § 1981 to hostile-work claims

by independent contractors: It remains to be seen who if

anyone could properly benefit from this expansive

interpretation. Neither corporations nor individuals, it appears,

will benefit in any meaningful way from these claims.

Take the situation of corporations. Section 1981 by its

terms applies only to “contracts,” 42 U.S.C. § 1981(a), and the

contracting entities in these cases are invariably

corporations—as in fact was true with Danco here. Yet hostile

work environments injure individuals, not companies. See

Harris, 510 U.S. at 21 (the statute covers “an environment that

a reasonable person would find hostile or abusive”).

Independent contractors such as Danco simply are not the

types of entities that may suffer a hostile work environment,

eliminating any standing they could possibly have to bring such

eminently-personal claims. See Village of Arlington Heights

v. Metropolitan Housing Dev. Corp., 429 U.S. 252, 263

(1977) (“a corporation .. . has no racial identity and cannot be

the direct target of the alleged racial discrimination”). See also

Harris, 510 U.S. at 21-22 (“if the victim does not subjectively

perceive the environment to be abusive, the conduct has not

actually altered the conditions of the victim’s employment, and

there is no [hostile work ¢ »vironment]”) (emphasis added).

Nor may individuals customarily bring such claims. In most

instances, as here, the individual simply will not be a

contracting party, which as the lower court itself recognized,

deprives the person of any claim at all. But even in the rare

instance where that is not the case—because the individuai,

say, is a sole proprietorship and enters into a contract with the

offending company—the independent status of the individual

will generally preclude the kind of subordinate contro! that

makes such claims cognizable. Indeed, the only time that will

not be true is precisely when individual claimants need a § 198]

claim least. Independent contractors in name, it is well

established, may be treated as employees in fact when the

necessary qualities of control exist. See Darden, 503 U.S. at

323-24 (discussing common law factors to consider in treating

individual as an employee, including among other factors “the

hiring party’s right to control” the other). But in that instance,

Title VII would of course protect them. In the end, what a

hostile work claim requires (subordinate status and control) is

precisely what independent contractors lack, making the claims

mutually exclusive in theory and in coverage. Accordingly,

even perhaps the best reason for sustaining the decision

below—the commendable desire to further “society’s

consensus that discrimination based on the color of one’s skin

is a profound wrong of tragic dimension,” Patterson, 491 U.S.

at 188—does not support the court of appeals’ analysis. The

decision warrants further review, if not summary reversal.

Il. THE DECISION EXACERBATES A LOWER

COURT CONFLICT OVER THE STANDING OF

CORPORATIONS TO BRING § 1981 CLAIMS ON

BEHALF OF THEIR EMPLOYEES.

In Village of Arlington Heights v. Metropolitan Housing

Development Corp., the Supreme Court stated in dicta that “a

corporation .. . has no racial identity and cannot be the direct

target of the alleged racial discrimination.” 429 U.S. at 263.

Ever since, the lower courts have disagreed whether a cor-

poration can suffer “some threatened or actual” injury, Warth

v. Seldin, 422 U.S. 490, 499 (1975), as is necessary to meet the

“irreducible minimum” of Article III, Valley Forge Christian

College v. Americans United for Separation of Church and

State, 454 U.S. 464, 472 (1982), when its employees face

conduct prohibited by § 1981.

On one side of the ledger is the decision below. In the First

Circuit’s view (10a), a “corporation ordinarily carries out its

activities through its employees, and work-site racial

discrimination against Danco’s employees could amount to

racial discrimination against Danco causing damage to the

company.” That view is supported by other lower-court

decisions. In Hudson Valley Freedom Theater, Inc. v.

Heimbach, 671 F.2d 702 (2d Cir. 1982), for example, the

Second Circuit held that a corporation possesses a racial

identity and has standing to bring an action for racial

discrimination under §§ 1981 and 1983 where a functional

nexus exists between the purpose or activity of the corporation

and the identity of the members of that corporation. /d. at

705-06. Other decisions too recognize that a corporation can

embody a racial identity, suffer a § 1981 injury, and thus have

standing to pursue a § 1981 claim. See, e.g., Des Vergnes v.

Seekonk Water Dist., 601 F.2d 9, 13-14 (1st Cir. 1979);

Rosales v. AT&T Info. Sys., Inc., 702 F. Supp. 1489, 1494 (D.

Colo. 1988); 7 & S Serv. Assocs. v. Crenson, 505 F. Supp.

938, 943 (D.R.I.), vacated on other grounds, 666 F.2d 722

(1st Cir. 1981); Yesteryears, Inc. v. Waldorf Restaurant, Inc.,

730 F. Supp. 1341, 1351-53 (D. Md. 1989); see also Triad

Assocs. Inc. v. Chicago Housing Auth., 892 F.2d 583, 591 (7th

Cir. 1989) (discounting Supreme Court’s statement regarding

a corporation and racial identity and remanding case for

reconsideration of standing in light of post-Arlington Heights

decisions); Marshall v. Kleppe, 637 F.2d 1217, 1219-20 (9th

Cir. 1980) (minority-owned corporation had standing to bring

Fifth Amendment claim); Organization of Minority Vendors,

Inc. v. Hlinois Central Gulf R.R., 579 F. Supp. 574, 588-89

(N.D. Ill. 1983) (corporation identified as minority business

a s

enterprise under federal regulations had standing for § 1982

action).

On the other side of the ledger are several decisions in line

with Arlington Heights. They all hold that a corporation is

independent of its employees and members’ racial identities and

thus has no standing to bring § 1981 claims. See Clifton

Terrace Assocs., Ltd. y. United T. echnologies Corp., 929 F.2d

714, 721 (D.C. Cir. 1991) (owner of federally subsidized

low-income housing complex lacked standing to press § 1981

race discrimination claims on behalf of its minority residents as

there was insufficient identity of interest between company and

tenants and as the “direct victims,” tenants were “best situated

to assert the individual rights in question”); Hotel St. George

Assocs. v. Morgenstern, 819 F. Supp. 310, 318-19 (S.D.N_Y.

1993) (hotel association did not have standing to assert

discrimination claims under § 1981 as association had not been

discriminated against on basis of race); Gersman v. Group

Health Ass'n, 725 F. Supp. 573, 578 (D.D.C. 1989) (finding

no § 1981 standing because “corporations are legal entities

separate and distinct from the . . . racial identit[y] of the

individuals that comprise the corporation”), aff'd on other

grounds, 931 F.2d 1565 (D.C. Cir. 1991). This conflict, which

has divided the lower courts ever since Arlington Heights,

warrants resolution.

fil. THE LOWER COURT’S INTERPRETATION OF

§ 1981 AND ITS SUBSIDIARY STANDING

DECISION DESERVE REVIEW NOW RATHER

THAN LATER.

The court of appeals’ sudden expansion of § 1981 warrants

immediate review. Indeed, it is precisely the absence of a

single holding of this Court or of any other supporting this new

doctrine that makes review both appropriate and necessary.

Most business is conducted by contracts between independent

enterprises. And some 8.3 million workers, representing 6.7%

of the total work force, identify themselves as independent

contractors. Lewis L. Maltby & David C. Yamada, Beyond

“Economic Realities”: The Case for Amending Federal

Employment Discrimination Laws to Include independent

Contractors, 38 B. C. L. Rev. 239, 243 (1997) (citing U.S.

Dep’t of Labor, Bureau of Labor Statistics, Contingent and

Alternative Employment Arrangements, Report 900, at 1

(1995)). It thus is no exaggeration to portend the risk of the

development of “a judicial oak” in this area “which has grown

from little more than a legislative acorn.” Blue Chip Stamps v.

Manor Drug Stores, 421 U.S. 723, 737 (1975).

Consider the situation of Wal-Mart itself. The company

currently operates over 2900 stores and employs over 815,000

employees. Each year the company also hires thousands of

independent contractors to clean its parking lots, floors, and

windows, paint the outside of its stores, remodel the interior

and exterior of its stores, and perform a range of maintenance

duties on plumbing, air conditioning, heating, alarms, and cash

registers. Every time a vending machine is filled, trash is

hauled away, or an armored car picks up deposits, an

independent contractor is involved. The company also hires

legal counsel, accountants, court reporters, and couriers. Many

of the tasks performed by these independent contractors occur

after hours when Wal-Mart personnel are not even present, as

was true here, and much of the interaction between Wal-Mart

employees and its independent contractors occurs by phone or

mail. It is difficult to imagine how a responsible company can

be expected to apply this new doctrine in these diverse circum-

stances, keeping in mind that in this case itself liability was

established for alleged discrimination that occurred after hours

and by an off-duty employee in two of the three alleged

incidents.

No less important is the related question whether corpora-

tions have standing to bring discrimination claims on behalf of

their employees. As the ever-expanding conflict in the lower

courts illustrates, this issue arises with considerable frequency

and cries out for prompt resolution by the Court.

Each of the above explanations for granting the writ

assumes (perhaps unfairly) that the First Circuit erred. But

even for those inclined to believe that the court of appeals

accurately interpreted § 1981 and a company’s standing to

bring such claims, that is no reason for waiting longer to review

the issue. Quite the opposite is true. Initial agreement with the

First Circuit presents perhaps the strongest case for reviewing

the issue promptly. No other circuit has issued a holding

extending § 1981 to hostile-work claims filed by independent

contractors. And many lower courts have denied corporations

standing to vindicate discrimination claims of their employees.

Right or wrong, in other words, employers, employees, and

independent contractors alike deserve immediate review of the

lower-court’s decision.

CONCLUSION

The Court should grant the petition.

ROBERT K. RHOADS

RANAE BARTLETT

WAL-MART STORES, INC.

702 S.W. 8th Street

Bentonville, Arkansas 72716

(501) 273-4505

September 1999

Respectfully submitted,

JEFFREY S. SUTTON

Counsel of Record

JONES, DAY, REAVIS

& POGUE

1900 Huntington Center

41 South High Street

Columbus, OH 43215

(614) 469-3855

MELANIE P. SARWAL

JONES, DAY, REAVIS

& POGUE

2727 North Harwood Street

Dallas, Texas 75201

(214) 220-3939

Counsel for Petitioner

APPENDIX

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

DANCO, INC. and Benjamin Guiliani, Plaintiffs,

Appellees/Cross-A ppellants,

WAL-MART STORES, INC., Defendant,

Appellant/Cross-Annellee.

Nos. 98-2101, 98-2269.

Decided May 12, 1999,

As amended June 11, 1999.

Before TORRUELLA, Chief Judge, BOUDIN and STAHL,

Circuit Judges.

BOUDIN, Circuit Judge.

In the district court, Danco, Inc., and its owner Benjamin

Guiliani, brought suit against Wal-Mart, which is a major

discount retailer. On a claim for racial discrimination under 42

U.S.C. § 1981, the jury awarded the plaintiffs $650,000, based

on a hostile work environment theory; the judge reduced the

award to $300,000. Wal-Mart appeals from this judgment; the

plaintiffs cross-appeal from the district court’s dismissal prior

to the jury’s verdict of plaintiffs’ claim for punitive damages.

Benjamin Guiliani — a Mexican-American — started his

company, Danco, in 1988 to engage in the business of

maintaining parking lots (cleaning, striping, etc.). He

incorporated the company in 1994. He continued to be the sole

shareholder, but employed his son, Daniel, and a small number

of other employees from time to time. His principal contracts

during the time in question were with various Wal-Mart stores

On September 15, 1994, Guiliani signed a contract, on

behalf of Danco, agreeing to perform parking lot maintenance

for the Wal-Mart store in Augusta, Maine. The agreement

called for Danco to clear litter from the lot three times each

week, and to clear sand from the lot (using a vacuum-type

sweeper) once a week. The sweeping provision was included

in the contract because the Augusta Wal-Mart had a special site

approval permit, from the Maine Department of Environmental

Protection, requiring the lot to be swept of sand each week to

prevent the sand from being washed into a nearby brook.

According to Guiliani’s trial testimony, he felt unwelcome at

Wal-Mart soon after he signed the contract to maintain its lot.

Early in October 1994, there were two men in a truck in the

parking lot when he arrived to start working. They asked him

what he was doing in the lot, and if “Big Bob” knew he was

there. When the men told Big Bob (later identified as Bob

Amadei, the maintenance supervisor) that Guiliani was in the

lot, Big Bob told Guiliani to leave, saying that he did not know

of anyone who had been hired to work on the lot. At trial,

Amadei denied that he had ever had words with Guiliani.

Also early in October 1994, the words “White Supremacy”

were spray-painted on the Wal-Mart parking lot, near to the

spot where Guiliani and his son usually unloaded their

equipment. Guiliani testified that he saw Amadei walking

toward the store shortly before Guiliani drove over to the spot

where the words were painted. His son Daniel testified that he

had seen Amadei at the spot with a can of spray paint, leaning

over as if he were spraying the paint. Amadei denied that he

had anything to do with the graffiti.

Guiliani offered to cover over the spray paint in the parking

lot, but Curtis Scheffe, the manager of the Augusta store and

the person to whom Guiliani reported, said that he would take

care of it and would investigate to find out who had done it.

Although Scheffe testified at trial that he thought he had had an

employee cover the graffiti with paint shortly after the incident,

all other testimony indicated that the words remained on the lot

for over a month. Guiliani claimed that he told Scheffe that he

believed Amadei was the culprit, but Scheffe took no action

against Amadei. Scheffe said he did investigate and concluded

that no one was willing to say that they knew anything about

the incident, although two of Wal-Mart’s night shift workers

testified that he had not spoken personally to them about it.

A second incident occurred on October 14, 1994. Guiliani

testified that Hamlin, another night shift employee, said to him,

“I don’t like your kind.” When Guiliani asked what he meant,

Hamlin said “Puerto Ricans.” Guiliani said that he was

Mexican-American. Then, Guiliani said, Hamlin pushed him

and threatened to rip his head off. Guiliani returned to his

vehicle, where his younger son (Benjamin, Jr., age 8) was

waiting, and called the police a short time later. Hamlin

testified that he had made only a harmless jest not involving

race, that Guiliani started the quarrel, and that there was no

pushing.

The final incident took place in November 1994. Guilianj

testified that Hamlin yelled a racial slur at him from a passing

vehicle. His son Benjamin, Jr., also testified that he heard the

slur. Guiliani said that he was shaken by the incident, and again

called the police. Hamlin again denied the incident. Scheffe

testified that he again investigated, but did not discipline

Hamlin because he could prove neither Guiliani’s nor Hamlin’s

story.

In January 1995, Scheffe left the Augusta Wal-Mart, and

James Helterbrake replaced Scheffe as the manager. Guiliani

testified that when he told Helterbrake in February about the

earlier incidents, Helterbrake became angry about the police’s

having been called. Later in the month, Helterbrake gave

Danco notice that the company’s services were to be

terminated, assertedly because Helterbrake was unhappy with

Danco’s work. After further discussions, a new contract was

signed on February 21, 1995, calling for Danco to sweep twice

a week. However, Helterbrake remained unhappy with the

Sweeping and terminated that contract at the end of March.

At trial, Charles Kellogg of the Maine Department of

Environmental Protection testified that he had been displeased

about the amount of sand left on the lot. He said that he spoke

to Scheffe and Helterbrake a number of times about the sand

on the lot, as both confirmed. In February 1995, Kellogg sent

a letter to Wal-Mart stating that the sand removal had not been

adequate. Kellogg also testified that he had spoken to Guiliani

about the state of the lot, but Guiliani denied this. At the time

Guiliani was terminated, Kellogg said that he was considering

steps against Wal-Mart to enforce the permit condition.

In March 1997, approximately two years after the

termination of Danco’s contract, Guiliani and Danco sued Wal-

Mart. The complaint alleged a violation of civil rights under 42

U.S.C. § 1981, denial of public accommodations in violation of

5 Maine 1 R.S.A. § 4551 ef seq., breach of written contract,

breach of oral contract, unjust enrichment, negligence,

intentional infliction of emotional distress, negligent infliction

of emotional distress, and requests for compensatory and

punitive damages. Wal-Mart moved for summary judgment on

all counts. The district judge then dismissed three of the state

claims and set the others for trial.’

The case was tried to a jury in late April 1997. At the close

of the plaintiffs’ case, Wal-Mart moved for a directed verdict

on all remaining claims, but the district court granted the

motion only as to the request for punitive damages. As part of

its motion, Wal-Mart argued unsuccessfully that the civil rights

claim under section 1981 should be treated as comprising only

a wrongful termination and not a hostile work environment

theory. The court also refused to reconsider its pre-trial

' The claims dismissed on summary judgment were public accommo-

dations, negligence, and intentional infliction of emotional distress. The

dismissal has not been appealed. The claims set for trial were the section

1981 claim, the contract claims, and the claim for negligent infliction of

emotional distress.

decision not to allow Wal-Mart to impeach Guiliani’s

credibility based on an incident that occurred some 15 years

before.

Before instructing the jury, the judge told counsel that he

would tell the jury to treat the two plaintiffs as one person —

Benjamin Guiliani — for the purpose of their deliberations.

Neither side objected to this instruction which the judge then

gave. The judge’s instructions as to section 1981 included

separate instructions on the discriminatory termination theory

and the hostile work environment theory. For the hostile work

environment theory, the judge gave instructions that would be

standard for a Title VII hostile work environment claim, but

omitted any references to “employee” (because of Danco’s

independent contractor status). Throughout, the court rejected

Wal-Mart’s argument that independent contractors had no right

to make such claims based on a hostile work environment

theory.

By special verdict, the jury found for the plaintiffs on the

hostile work environment theory under section 1981, the claim

for negligent infliction of emotional distress, and one of several

contract theories.2 The jury found for Wal-Mart on the

discriminatory termination theory under section 1981 and on

the remaining contract theories. The jury awarded the plaintiffs

$650,000 on the hostile work environment claim and — despite

the liability finding — zero damages on the claim for negligent

infliction of emotional distress. The judge granted a remittitur

to which the plaintiffs assented, reducing the jury’s award of

$650,000 to $300,000. Cf Farber v. Massillon Bd. of Educ.,

917 F.2d 1391, 1396 (6th Cir. 1990), cert. denied, 498 U.S.

1082, 111 S. Ct. 952, 112 L. Ed.2d 1041 (1991).

? The contract theory accepted by the jury involved a contract to clean a

parking lot at a different Wal-Mart-owned store and resulted in an award

of $4,400. No appeal has been taken as to this award.

Wal-Mart now appeals on two different grounds from the

district court’s refusal to award Wal-Mart judgment as a matter

of law: first, that an independent contractor cannot bring suit

based on a hostile work environment under section 1981, and

second, that the evidence presented at trial was insufficient to

show a hostile work environment. Wal-Mart also says that the

district court erred in refusing to admit proffered evidence to

impeach Guiliani’s credibility. Plaintiffs cross-appeal

challenging the district court’s decision to withdraw their

punitive damages request from the jury.

We review de novo the district court’s denial of judgment as

a matter of law, viewing the evidence in the light most

favorable to the nonmovant. See Correa v. Hospital San

Francisco, 69 F.3d 1184, 1191 (1st Cir. 1995), cert. denied,

517 U.S. 1136, 116 S. Ct. 1423, 134 L. Ed.2d 547 (1996).

The most important issues raised by Wal-Mart’s motion involve

the construction of'42 U.S.C. § 1981, which inter alia gives all

persons equal rights to “make and enforce contracts” free from

racial discrimination. The initial question is whether this

provision gives an independent contractor a racial

discrimination claim based on the hostile work environment

theory that would be available to an employee under an

ordinary employment contract.

The Supreme Court first recognized the hostile work

environment theory under Title VII, 42 U.S.C. § 2000e-2,

which prohibits discrimination in employment on racial or

gender grounds (among others). In Meritor Savings Bank,

FSB v. Vinson, 477 U.S. 57, 65-67, 106 S. Ct. 2399, 91 L.

Ed.2d 49 (1986), the Court found that sexual misconduct that

had “the purpose or effect of unreasonably interfering with an

individual’s work performance or creating an intimidating,

hostile, or offensive working environment” violated Title VII

because, in the words of the statute, it amounted to sex-based

discrimination in “terms, conditions, or privileges of

employment.” Under Title VII, the same theory also applies to

ae POD PCN NE 8. A hy EES eS Nint erey RIA TA Newbies hy

racial harassment of employees that has the same effects.

Lattimore v. Polaroid Corp., 99 F.3d 456, 463 (1st Cir. 1996).

Title VII is unavailable to plaintiffs here because they were

never Wal-Mart employees. For this reason, the complaint

relied upon section 1981, which is part of the original Civil

Rights Act of 1866. Unlike 42 U.S.C. § 1983, which broadly

protects federal rights from impairment under color of state

law, section 1981 protects only certain specified rights,

including the right to make and enforce contracts, and it

protects them only against racial discrimination. But since

1968, section 1981 has been applied to private acts of

discrimination as well as official acts.*

In addition, the Supreme Court held in 1975 that the statute

covers employment contracts, thereby protecting against racial

discrimination in the employment relationship. Johnson v.

Railway Express Agency, Inc., 421 U.S. 454, 459-60, 95 S. Ct.

1716, 44 L. Ed.2d 295 (1975).

However, until 1991, section 1981 was read literally as

applying only to the making and enforcement of contracts, and

“enforcement” was read narrowly to include only enforcement

by legal process. Patterson v. McLean Credit Union, 491 U.S.

164, 177-78, 109 S. Ct. 2363, 105 L. Ed.2d 132 (1989).

Patterson held that no hostile work environment claim could be

brought under section 1981 because the environment might

discriminate in the carrying out of a contract — infringing its

* The Supreme Court ruled in Jones v. Alfred H. Mayer Co., 392 U.S. 409,

413, 88 S. Ct. 2186, 20 L. Ed.2d 1189 (1968), that 42 U.S.C. § 1982, a

directly analogous statute, prohibited acts of private discrimination, and

the courts have applied this ruling to section 1981. See, e.g., Waters v.

Wisconsin Steel Works of Int’l Harvester Co., 427 F.2d 476, 481 (7th

Cir.}, cert. denied, 400 U.S. 911, 91 S. Ct. 137, 27 L. Ed.2d 151 (1970);

Scott v. Young, 421 F.2d 143, 145 (4th Cir.), cert. denied, 398 U.S. 929,

90 S. Ct. 1820, 26 L. Ed.2d 91 (1970). The constitutional basis is the

Thirteenth Amendment. See Jones, 392 U.S. at 413, 88 S. Ct. 2186.

terms, conditions and privileges — but did not impede the

“making” or “enforcement” of contracts. 491 U.S. at 178, 109

S. Ct. 2363.

In 1991, Congress amended section 1981 specifically to

overtule the Patterson decision. See H.R.Rep. No. 102-40(D),

at 141 (1991), reprinted in 1991 U.S.C.C.A.N. 549, 670. New

language defines the phrase “make and enforce contracts” to

include “the making, performance, modification, and

termination of contracts, and the enjoyment of all benefits,

privileges, terms, and conditions of the contractual

relationship.” 42 U.S.C. § 1981(b). This language tracks

language of Title VII prohibiting discrimination with respect to

“compensation, terms, conditions, or privileges of

employment.” 42 U.S.C. § 2000e-2(a)(1). Thus, hostile work

environment claims may now be pursued by employees under

both Title VII and section 1981. See Jackson v. Motel 6

Multipurpose, Inc., 130 F.3d 999, 1008 n. 17 (11th Cir. 1997)

(collecting cases).

If an employee may sue under section 1981 on a hostile

work environment theory, can an independent contractor also

do so? On the face of the statute, nothing forbids such a claim.

Section 1981 does not limit itself, or even refer, to employment

contracts but embraces all contracts and therefore includes

contracts by which a corporate independent contractor like

Danco provides service to another corporation like Wal-Mart.

See T & S Serv. Assocs., Inc. v. Crenson, 666 F.2d 722, 725

(ist Cir. 1981). One could say that avoiding a hostile work

environment is an implicit contractual benefit or term that exists

for employees but not independent contractors, yet nothing in

the statute’s language supports such a limitation.

Wal-Mart makes two arguments against allowing a hostile

work environment claim by an independent contractor. The

first is that the 1991 amendment was intended to secure such

claims for employees, as the legislative history makes clear.

See H.R.Rep. No. 102-40(I), at 141, reprinted in 1991

U.S.C.C.A.N. 549, 670. But references to employees appear

because most cases involve employees rather than independent

contractors. There is nothing in the legislative history to

Suggest that Congress had any objection to providing similar

benefits to independent contractors, and the language it used

in its amendment applies as readily to the one as to the other.

In fact, H.R.Rep. No. 102-40(I), at 92, reprinted in 1991

4 U.S.C.C.A.N. 549, 630, states that “[t]he Committee intends

this provision to bar all race discrimination in contractual

relations.”

Alternatively, Wal-Mart paints a vivid picture of liability run

amok if a company is made responsible not only to protect its

own employees against racial harassment in the workplace but

also to protect all of the contractors with whom the company

may deal. These problems may be considerable, but it is fair to

point out that the hostile work environment theory is likely to

be useful only to those independent contractors who work on

site, and (as we shall see) the claims of such contractors are

more limited than Wal-Mart supposes. Beyond that, the

problems if any are for Congress to fix.

ree ee vee ee

Nevertheless, in the present case Danco has a potential claim

under section 1981, but Guiliani does not. The same statutory

. language that gives a claim to Danco, as an independent

: contractor with Wal-Mart, precludes such a claim by Guiliani

unless he also had a contract with Wal-Mart. It appears, not

: surprisingly, that the contract in question was between Wal-

Mart and Danco.* Nothing in section 1981 provides a personal

claim, so far as its language is concerned, to one who is merely

affiliated — as an owner or employee — with a contracting

* Although the complaint said that the Wal-Mart contract was with

“plaintiffs,” Wal-Mart’s statement of undisputed facts corrected this

assertion, citing to the contract itself, and plaintiffs’ counter-statement did

not disagree. An examination of the contract itself makes clear that the

two parties to the contract were Wal-Mart and Danco.

10a

party that is discriminated against by the company that made

the contract.

A corporation ordinarily carries out its activities through its

employees, and work-site racial discrimination against Danco’s

employees could amount to racial discrimination against Danco

causing damage to the company. But the employee cannot

collect damages on his own behalf. Cf Gersman v. Group

Health Ass'n, Inc., 931 F.2d 1565, 1573 (D.C. Cir. 1991),

vacated on other grounds, 502 U.S. 1068, 112 S. Ct. 960, 117

L. Ed.2d 127, but original opinion adopted on remand, 975

F.2d 886 (D.C. Cir. 1992), cert. denied, 511 U.S. 1068, 114

S.Ct. 1642, 128 L. Ed.2d 363 (1994); Perez v. Abbott Lab.,

1995 WL 86716, at *6 (N_D. Ill. Feb. 27, 1995). And the

suffering of Guiliani, however real, is not automatically damage

to Danco.

Thus, if the issue had been raised, Wal-Mart would likely

have been entitled to an instruction that Guiliani had no claim

of any kind under section 1981 because he had no contract.

Further, Guiliani offered evidence that he had suffered

emotional harm but there does not appear to be evidence that

Danco, as distinct from Guiliani, was measurably damaged by

the racial incidents. So Wal-Mart might also have been entitled

to a directed verdict on Danco’s hostile work environment

theory for lack of evidence of damages to Danco. However, so

far as we can tell, neither point was argued to the district court.

It is true that Wal-Mart argued in the district court that

neither Danco nor Guiliani had a claim under section 1981.

But the reasons given were quite different. It is well settled

that to preserve a claim for review on appeal, the party

claiming error must have supplied the right ground for the

request. The basis for this requirement is obvious: the judge

must largely rely upon the parties to research and raise issues,

and giving the judge the wrong reason for a request is usually

equivalent to giving the judge no reason at all. Havinga v.

Crowley Towing & Transp. Co., 24 F.3d 1480, 1483 n.5 (ist

ee eS er se

lla

Cir. 1994); Wells Real Estate, Inc. v. Greater Lowell Bd. of

Realtors, 850 F.2d 803, 810 (1st Cir.), cert. denied, 488 U.S.

955, 109 S. Ct. 392, 102 L. Ed.2d 381 (1988).

This brings us to the plain error doctrine. Hammond v. T.J.

Litle & Co., Inc., 82 F.3d 1166, 1172 (Ist Cir. 1996). The

requirements for plain error, set forth by the Supreme Court in

United States v. Olano, 507 U.S. 725, 732-35, 113 S. Ct.

1770, 123 L. Ed.2d 508 (1993), are that there be error, that it

be plain, that it affect substantial rights and that the error

threaten “miscarriage of justice.” Olano was a criminal case

but in this circuit, the same requirements are commonly

imposed in civil cases, and even more stringently. As we said

recently in Beatty v. Michael Bus. Machs. Corp., 172 F.3d 117,

121 (Ist Cir. 1999) (citations and internal quotation marks

omitted):

The plain error exception should be applied sparingly and

only in exceptional cases or under peculiar circumstances to

prevent a clear miscarriage of justice. The exception should

be confined to the exceptional case where the error has

seriously affected the fairness, integrity, or public reputation

of judicial proceedings.

In this case, letting any claim by Guiliani under section 1981

go to the jury was an error; it was arguably at least “plain”

error; and it affected substantial rights in the sense that no

damages to Danco were proved from the harassment. But

there are several reasons which, taken in combination, persuade

us that there is no miscarriage of justice or any other reason

sufficient to exercise our discretion to notice the error or errors

in the case before us. Olano, 507 US. at 736, 113 S. Ct. 1770;

Beatty, 172 F.3d 117, 121.

The first reason is that Wal-Mart, as well as the plaintiffs,

affirmatively consented to the district court’s instructions to

treat Guiliani and Danco interchangeably. The reasons may

have been tactical or may have resulted from a genuine

12a

misunderstanding of the law that governs whether and when a

small incorporated business can be treated interchangeably with

its owner and operator.° If the former, this would be a waiver

not subject to plain error; but even if the latter is true, it is at

least a consideration, in exercising our discretion, that the legal

issue was specifically discussed and counsel affirmatively

consented to treating the plaintiffs as one.

Second, it counts heavily against finding plain error that the

party on the other side would be unfairly prejudiced. Here, it

seems unlikely that Danco itself could have established

monetary damages of any size from the racial incidents; but it

is not impossible that some showing could have been attempted

if the plaintiffs had known that Guiliani’s right to recover for

the emotional effects on him was legally disputed on the basis

we are now considering. Whether and how much damage

Danco might have been proved is speculative, but that is

exactly why we cannot say for sure that there was no prejudice

from the failure to raise the objection in timely fashion.

Third, the jury would likely have awarded substantial

damages, and quite possibly the same $650,000, on the

negligent infliction claim if Guiliani’s section 1981 claim had

been stricken. As the case was tried, the same racial

harassment underlay both claims. Whatever the jury was told

in the instructions, the jury’s decision to award zero damages

for negligent infliction, after a finding that Wal-Mart was liable

on that claim, was probably due to the jury’s belief that the

award on the section 1981 claim already covered the same

* There is little indication from the facts in this record that Guiliani would

be subject to suit under a “piercing the veil” theory if Danco committed a

tort, Theberge v. Darbro, Inc., 684 A.2d 1298, 1300- 01 (Me. 1996);

Henn & Alexander, Laws of Corporations § 147, at 352-53 (3d ed.1983);

but there is even less basis in law for assuming that, if the corporation

were a sham, Guiliani could take advantage of a sham he had created to

assert Danco’s rights as a plaintiff, see LaBelle v. Crepeau, 593 A.2d 653,

655 (Me. 1991).

eedittnds Cities sttniee ev uibes

l3a

injury. In sum, we do not find that this error “calls into

question the fairness, integrity, or public reputation of judicial

proceedings.” Beatty, 172 F.3d 117, 121.

It remains to consider, on Wal-Mart’s appeal, its claim that

it was entitled to judgment as a matter of law under section

1981 because the evidence was not sufficient for a reasonable

jury to find that a hostile work environment existed. The

barrier to reversal on this ground is high, given the jury’s

superior ability to gauge the witnesses and draw inferences in

favor of one side or the other on this highly factual issue. See

Costos v. Coconut Island Corp., 137 F.3d 46, 48 (1st Cir.

1998). Viewing the evidence in the light most favorable to the

plaintiffs, this may have been a thin case but not so thin as to

preciude a reasonable jury from finding a hostile work

environment.

To make out a hostile work environment claim, the plaintiff

must show not only a contractual relationship but also two

further elements: (1) that the plaintiff was exposed to

comments, jokes, or acts of a racial nature by the defendant’s

employees; and (2) that the conduct had the purpose or effect

of interfering with the plaintiff's work performance or created

an intimidating, hostile or offensive working environment.

Harris v. Forklift Systems, Inc., 510 U.S. 17, 20-22, 114 S. Ct.

367, 126 L. Ed.2d 295 (1993). In addition, the defendant will

ordinarily only be liable for harassment by low-level employees

if management-level employees knew or should have known

about it. See Burrell v. Star Nursery, Inc., 170 F.3d 951, 1999

WL 160796 at *3 (9th Cir. Mar.25, 1999).

In this case, the plaintiffs alleged three race-related incidents.

While a plaintiff must show “more than a few isolated incidents

of racial enmity,” Snell v. Suffolk County, 782 F.2d 1094, 1103

(2d Cir. 1986), there is no “absolute numerical standard” by

which to determine whether harassment has created a hostile

environment, Vance v. Southern Bell Telephone & Telegraph

14a

Co., 863 F.2d 1503, 1511 (11th Cir. 1989). In the Supreme

Court’s words:

[W }hether an environment is “hostile” or “abusive” can be

determined only by looking at all the circumstances. These

may include the frequency of the discriminatory conduct; its

severity; whether it is physically threatening or humiliating,

or a mere offensive utterance; and whether it unreasonably

interferes with an employee’s work performance.

Harris, 510 U.S. at 23, 114 S. Ct. 367.

In this case, all of the incidents involved utterances but one

also involved a low level of physical violence (or so the jury

could have found) and one, it could be argued, effectively

lasted for months because Guiliani had to face the graffiti on

the parking lot every time he worked on the lot. Guiliani also

alleged that he altered his schedule so that he would work on

the Wal-Mart lot in daylight because of the harassment, an

action that suggests some amount of interference with his work

because of the harassment. Although much of the evidence

was contested, the jury is assumed to have believed the

plaintiffs’ version. See Correa, 69 F.3d at 1191.

Even on this premise, these allegations do seem rather tame

compared to many reported cases involving racially hostile

working environments. Cf West v. Philadelphia Elec. Co., 45

F.3d 744, 749-52 (3d Cir. 1995); Snell, 782 F.2d at 1098-

1100 (2d Cir. 1986). However, they are not so trivial that we

would countermand a jury’s decision that they constituted a

violation of section 1981. Of course, no evidence exists that

Danco itself suffered specific monetary damage; but (as

already noted), that may be because Wal-Mart’s legal attack on

the section 1981 claim was insufficiently precise to alert

plaintiffs to any need to make such a separate showing.

Wal-Mart’s final ground for appeal is that the district judge

should have allowed Guiliani to be impeached based on a 15-

year old incident. While Guiliani’s credibility was certainly

Pb At Mtr ls aba sed:

15a

important, the probative value of the incident was minimal, and

a danger of prejudice existed. Exclusion of the evidence was

not an abuse of the district court’s substantial discretion to

allow or exclude such impeaching evidence. See Freeman v.

Package Mach. Co., 865 F.2d 1331, 1340 (1st Cir. 1988).

Turning to the plaintiffs’ cross-appeal, their claim is that the

district court erred in deciding that the evidence did not permit

an award of punitive damages and in withdrawing that issue

from the jury. The standard for punitive damages in civil rights

cases, whether under Title VII or sections 1981-83, is drawn

from Smith v. Wade, 461 U.S. 30, 56, 103 S. Ct. 1625, 75 L.

Ed.2d 632 (1983), where the Court said that the plaintiff must

show that the defendant acted with “evil motive or intent” or

with “reckless or callous indifference” to the plaintiff s federally

protected rights.°

However, section 1983 cases like Smith v. Wade itself, often

involve only the wrongdoing individual, whereas cases like this

one and cases under Title VII often involve a company from

whom the plaintiff seeks compensation and punitive damages

for the acts of low-level employees. Company liability for

compensatory damages is fairly easy to establish although not

automatic, e.g., Faragher v. Boca Raton, 524 U.S. 775, 118 S.

Ct. 2275, 2292-93, 141 L. Ed.2d 662 (1998); but the rule for

punitive damages has been complicated because the precedents

often do not distinguish between the wrongdoing employee and

the employer against whom the punitive damage claim is

directed.

Such distinctions may not be pertinent where the

discriminatory conduct is a matter of company policy or is

* Smith was a section 1983 case, but the same standard has been applied

by this court and others under section 1981, e.g., Rowlett v. Anheuser-

Busch, 832 F.2d 194, 205 (1st Cir. 1987), and Congress in 1991 wrote

similar language into Title VII to govern punitive damages. 42 U.S.C. §

198 1a(b)(1).

l6a

engaged in by management officials whose own intent may

automatically be imputed to the company. Cf Dichner v.

Liberty Travel, 141 F.3d 24, 28-29 (1st Cir. 1998); Rowlett,

832 F.2d at 201-03. However, where, as here, we are

concerned only with isolated acts of harassment by ordinary

employees — Amadei had limited supervisory authority but not

over Guiliani — it follows that punitive damages should be

afforded only where the management itself “by evil motive or

intent” engaged in racial discrimination or behaved in a manner

that showed “reckless or callous indifference” to such

discrimination. Smith, 461 U.S. at 56, 103 S. Ct. 16235.

This view has been taken in well-reasoned decisions in the

Fourth and Tenth Circuits.’ More important, it accords with

the Supreme Court’s reminder in Smith that punitive damages

are to deter seriously wrongful conduct by the defendant and

not just to provide another layer of compensation. See

Hernandez-Tirado v. Artau, 874 F.2d 866, 869 (1st Cir. 1989)

(Breyer, J.). It is consistent with this view to require that

before a company is held liable for punitive damages for acts of

harassment by low-level employees, there be some culpability

beyond mere negligence at the management level.

In this instance, the district judge nghtly concluded that no

such malicious or evil intent or reckless indifference could be

attributed to Wal-Mart, whatever one might say about Amadei

and Hamlin. Even if Scheffe could be described as

management for this purpose—which we will assume arguendo

but do not decide-there is no indication that he was motivated

by racist attitudes or that he paid no attention to the complaints

” See Harris v. L & L Wings, Inc., 132 F.3d 978, 982-84 (4th Cir. 1997);

Fitzgerald v. Mountain States Tel. & Tel. Co., 68 F.3d 1257, 1262-64

(10th Cir. 1995). The Fifth Circuit originally adopted a more plaintiff-

friendly standard in Deffenbaugh-Williams v. Wal-Mart Stores, Inc., 156

F.3d 581 (Sth Cir. 1998). However, the opinion has been vacated and the

case set for rehearing. 169 F.3d 215 (5th Cir. 1999).

17a

of harassment by Guiliani. On the contrary, the record shows

that he investigated two of the three incidents but found no

definitive evidence as to what had happened; and on the

remaining incident Scheffe testified that he had undertaken an

investigation and explained why it bore no fruit, and there was

no conclusive proof to the contrary.

Certainly a jury might have found that Scheffe was careless.

He apparently did not question all of the 14 night shift workers

about the spray paint episode, and he failed to see that the

spray paint was promptly removed, even though he testified

that he thought he had given instructions that it be done and

that this had occurred. But Guiliani himself testified that

Scheffe was not racist, and Scheffe’s missteps hardly reveal the

evil intent or reckless disregard of civil rights necessary to

support punitive damages.

Affirmed.

18a

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

DANCO, INC. and

Benjamin Guiliani,

Plaintiffs

Vv.

)

) Civ. No. 97-0054-B

)

WAL-MART STORES, INC., )

Defendant )

ORDER AND MEMORANDUM OF DECISION

BRODY, District Judge

Plaintiffs, Danco, Inc. (“Danco”) and Benjamin Guiliani

bring this action against Defendant, Wal-Mart Stores, Inc.

(“Wal-Mart”), alleging violations of Plaintiffs’ civil rights under

42 U S.C. § 1981 (Count I), denial of Plaintiffs’ full and equal

enjoyment of the public facilities of Defendant (Count II),

breach of written and oral contracts (Counts III and IV), unjust

enrichment (Count V), negligence (Count V1), intentional and

negligent infliction of emotional distress (Counts VII and VIII),

and willful and wanton conduct in support of a punitive

damages claim (Count [X). Before the Court is Defendant’s

Motion for Summary Judgment on all counts of Plaintiffs’

Complaint. For the reasons set forth below, Defendant’s

Motion is GRANTED in part and DENIED in part.

BACKGROUND

For the purposes of summary judgment, the Court views the

facts in the light most favorable to the nonmoving party. See

McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (ist

Cir. 1995). Plaintiff Benjamin Guiliani, a Mexican-American of

Mexican-Hispanic descent, is the owner and sole shareholder

19a

of Plaintiff Danco, a commercial industrial maintenance

company incorporated in 1994.

On or about September 15, 1994, Danco entered into a

written contract with the Augusta Wal-Mart store whereby

Danco was to provide parking lot cleaning and maintenance

services. In a letter dated January 30, 1995, Defendant

terminated this contract effective March 2, 1995. Subsequently,

however, after discussing the matter, the parties signed a new

contract for parking lot maintenance services dated February

21, 1995. Around the same time that Danco entered into its

initial contract with the Augusta Wal-Mart, in the fall of 1994,

Danco also entered into oral agreements with other Wal-Mart

stores in Scarborough, Windham, Auburn, Farmington,

Rockland, Waterville, and the Sam’s Club in Augusta! to

provide parking lot cleaning and maintenance services. On

March 15, 1995, Danco entered into a written contract for

parking lot services with the Augusta Sam’s Club.

In October 1994, Mr. Guiliani and his son Daniel observed

the words “White Supremacy” spray-painted on the parking lot

pavement of the Augusta Wal-Mart. Daniel claims to have

observed the Augusta Wal-Mart maintenance manager, Robert

Amadei, spray-painting the words on the pavement earlier in

the day. Mr. Guiliani immediately reported the incident to the

Augusta Wal-Mart store manager, Curtis Scheffe, and informed

Mr. Scheffe that he found the words to be highly offensive.

Mr. Guiliani offered to remove the words from the parking lot

immediately, but Mr. Scheffe assured Plaintiff that he would

take care of it. Mr. Scheffe conducted an investigation into

who may have spray-painted the words, but the words allegedly

remained on the pavement for over two months.

' Defendant Wal-Mart is registered and licensed to do business in the State

of Maine under the names Wal-Mart and Sam’s Club.

20a

On or about October 14, 1994, a few days after the

spray-painting incident, a Wal-Mart employee, Scott Hamlin,

racially harassed and physically assaulted Mr. Guiliani on the

premises of the Augusta Wal-Mart store. Plaintiff Guiliani

immediately called the police and reported the incident to Mr.

Scheffe. Mr. Scheffe, however, failed to take any disciplinary

action against Mr. Hamlin. On or about November 12, 1994,

Mr. Hamlin allegedly further subjected Mr. Guiliani to racial

harassment, by shouting out a racial slur as he was driving out

of the Augusta Wal-Mart and Mr. Guiliani and his son

Benjamin were driving in. Mr. Guiliani reported this second

incident to Mr. Scheffe. Again, Wal-Mart took no disciplinary

action.

In January 1995, James Helterbrake replaced Curtis Scheffe

as the Augusta Wal-Mart manager. Mr. Guiliani informed Mr.

Helterbrake of the “White Supremacy” incident and the

confrontations with Mr. Hamlin, and mentioned that he had

contacted the police in response to two of the incidents. Upon

learning of Mr. Guiliani’s contact with the police, Mr.

Helterbrake allegedly became angry and asked Mr. Guiliani

why he had called the police and why the words “White

Supremacy” bothered him. Following this conversation, Mr.

Helterbrake treated Mr. Guiliani in a hostile manner.

In late March 1995, while Mr. Guiliani and Daniel were

completing their cleaning of the Augusta Wal-Mart parking lot,

Mr. Guiliani observed a sanding contractor enter the parking

lot and begin to sand the ice. Mr. Guiliani also noticed Mr.

Helterbrake watching the sanding contractor from in front of

the store. The following day Mr. Helterbrake terminated

Danco’s contract, on the ground that Danco was

unsatisfactorily performing its cleaning duties. Mr. Helterbrake

told Mr Guiliani that Charles Kellogg from the Maine

Department of Environmental Protection (“DEP”) had

complained the previous night about the sand on the lot and

had threatened Wal-Mart with a $500,000 fine. Mr. Kellogg

2la

has testified that he never threatened the Augusta Wal-Mart

with a $500,000 fine. Mr. Helterbrake also told Mr. Guiliani

that he did not wish to see him around the Augusta Wal-Mart

store again. Soon after Mr. Helterbrake terminated Danco’s

contract with the Augusta Wal-Mart, other Wal-Mart stores

began terminating their contracts with Danco without proper

notice or cause.

SUMMARY JUDGMENT

Summary judgment is appropriate in the absence of a

genuine issue of any material fact and when the moving party

is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).

An issue is genuine for summary judgment purposes, if “the

evidence is such that a reasonable jury could return a verdict

for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986). A material fact is one that has “the

potential to affect the outcome of the suit under applicable

law.” Nereida-Gonzalez v. Tirado-Delgado, 990 F.2d 701, 703

(Ist Cir. 1993). Facts may be drawn from “the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits.” Fed. R. Civ. P. 56(c).

DISCUSSION

A. Count I — Section 1981

In Count I, Plaintiffs allege that Defendant violated

Plaintiffs’ civil rights pursuant to 42 U.S.C. § 1981.

Specifically, Plaintiffs allege that Defendant failed to prevent or

remedy a racially hostile work environment, and ultimately

terminated Danco’s written contract with the Augusta

Wal-Mart for racially discriminatory reasons. The Court is

persuaded that summary judgment on Count I of Plaintiffs’

Complaint is inappropriate at this stage of the proceedings.

Section 1981(a) provides that “{aJll persons within the

jurisdiction of the United States shall have the same right... to

make and enforce contracts... .” 42 USC. § 1981(a).

22a

Section 1981(b) defines the term “make and enforce contracts”

as including “the making, performance, modification, and

termination of contracts, and the enjoyment of all benefits,

privileges, terms and conditions of the contractual

relationship.” 42 U.S.C. § 1981(b). The First Circuit has held

that analysis of a section 1981 claim is “substantially identical” °

to analysis of a Title VII claim. See Villanueva v. Wellesley

College, 930 F.2d 124, 127 n.2 (1st Cir. 1991). In both types

of claims, “the ultimate issue is whether the defendant

intentionally discriminated against the plaintiff. . . .”

Ayala-Gerena v. Bristol Meyers-Squibb Co., 95 F.3d 86, 95

(1st Cir. 1996).

The Court first addresses Plaintiffs’ contention that

Defendant subjected Plaintiff Guiliani to a hostile working

environment. To prevail on a hostile work environment claim,

Plaintiffs must establish: (1) unwelcome comments, jokes, acts,

and other verbal or physical conduct of a racial nature in the

workplace; (2) that such conduct has the purpose or effect of

substantially interfering with an individual’s work performance

or creating an intimidating, hostile, or offensive work

environment; and (3) that the employer, or its agents or

supervisory employees, knew or should have known of the

conduct. Duplessis v. Training & Dev. Corp., 835 F. Supp.

671, 677 (D. Me. 1993) (setting forth standard for hostile work

environment claim under Title VII). Once Plaintiffs have

established these factors, Defendant “may rebut a prima facie

case by showing it took immediate and appropriate corrective

action.” Jd; see also DeGrace v. Rumsfeld, 614 F.2d 796, 805

(1st Cir. 1980) (“employer who has taken reasonable steps

under the circumstances to correct and/or prevent racial

harassment by its nonsupervisory personnel has not violated

Title VII’).

In determining whether harassment is sufficiently severe as

to constitute a hostile working environment, courts “look to

the gravity as well as the frequency of the offensive conduct.”

23a

DeNovellis v. Shalala, 124 F.3d 298, 311 (ist Cir. 1997)

(analyzing Title VII hostile work environment claim). A

court’s decision must be based on the totality of the

circumstances. Duplessis, 835 F. Supp. at 677.

The Court is satisfied that Plaintiffs have raised genuine

issues of fact with respect to each of the elements of their claim

alleging a hostile work environment. The spray-painted words

“White Supremacy,” as well as both of Mr. Hamlin’s alleged

confrontations with Mr. Guiliani constitute unwelcome

comments and/or actions of a racial nature in the workplace.

Although Mr. Hamlin may have been off-duty when he

confronted Mr. Guiliani, the altercations took place on

Wal-Mart’s premises, indeed in the very place where

Mr. Guiliani performed his duties. Plaintiffs allege that the

harassment caused Mr. Guiliani great mental anguish and

directly interfered with his work performance, by causing him

to perform his duties during the day rather than at night

because he feared for the safety of himself and his family. While

the incidents of harassment may not have been large in number,

the Court is persuaded that their potential severity is sufficient

to preclude summary judgment.

Plaintiffs have also presented evidence sufficient to create a

question of material fact on the issue of Defendant’s knowledge

of the discriminatory conduct. Mr. Guiliani allegedly reported

each of the three discriminatory incidents to the Augusta

Wal-Mart manager, Mr. Scheffe. Although Mr. Scheffe

conducted an investigation into the “White Supremacy”

incident and told Mr. Guiliani he would handle removal of the

words from the parking lot, Plaintiffs allege that the words

remained on the pavement for over two months. Defendant

further failed to take any disciplinary action against Mr. Hamlin

although Mr. Scheffe was aware that the confrontations

occurred. A reasonable jury could find that Defendant failed to

take reasonable steps to prevent or correct a hostile work

Sonne ee

24a

environment, even though Defendant had knowledge of this

offensive atmosphere.

Next, the Court turns to Plaintiffs’ argument that Defendant

unlawfully terminated Danco’s contract with the Augusta

Wal-Mart for racially discriminatory reasons. Contrary to

Plaintiffs’ contentions, the Court finds that Plaintiffs have not

presented direct evidence of discrimination. The First Circuit

has held that “[d]irect evidence is evidence which, in and of

itself, shows a discriminatory animus.” Ayala-Gerena, 95 F.3d

at 96 (quoting Jackson v. Harvard Univ., 900 F.2d 464, 467

(ist Cir. 1990)). “[A]t a minimum, direct evidence does not

include stray remarks in the workplace, particularly those made

by nondecision-makers or statements made by decisionmakers

unrelated to the decisional process itself.” /d. Even assuming,

as Plaintiffs allege, that the spray-painting was done by Mr.

Amadei and that Mr. Amadei reported to the store manager

about Danco’s performance, Plaintiffs have not demonstrated

that the spray-painting incident was sufficiently related to Mr.

Helterbrake’s decision to terminate Danco’s contract so as to

constitute direct evidence of discrimination.

In the absence of direct evidence of race discrimination,

courts will apply the burden-shifting analysis established in

McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-05

(1973). Plaintiffs bear the initial burden of establishing a prima

facie case of discrimination by proving that: (1) Plaintiffs were

members of a protected class, (2) Plaintiffs performed their jobs

satisfactorily; (3) Plaintiffs’ contract was terminated; and (4)

Plaintiffs’ position remained open and was eventually filled by

persons with Plaintiffs’ qualifications. Ayala-Gerena, 95 F.3d

at 95. This initial burden is not onerous. See Lipsett v.

University of Puerto Rico, 864 F.2d 881, 899 (1st Cir. 1988).

Once Plaintiffs have established a prima facie case of

discrimination “the burden of production shifts to the defendant

in order to show a legitimate nondiscriminatory reason” for its

action. Ayala-Gerena, 95 F.3d at 96. If Defendant proffers

25a

such a reason, the burden shifts back to Plaintiffs to establish

that Defendant’s reason is merely a pretext for intentional

discrimination. Jd. :

Defendant contends that Plaintiffs have failed to satisfy the

second prong of their prima facie case of discrimination, the

requirement that Danco perform its job satisfactorily.

Defendant alleges that Mr. Kellogg, a representative from the

Maine DEP, criticized Plaintiffs and Wal-Mart for not

performing parking lot maintenance as required by DEP

regulations, and that Mr. Helterbrake was dissatisfied with

Danco’s performance. Plaintiffs respond that Wal-Mart District

Manager, J.R. Lee, commented several times on the excellent

work Danco was performing at the various Wal-Mart stores

and that Mr. Kellogg never recommended that Mr. Helterbrake

terminate Danco’s services. The Court is satisfied that Plaintiffs

have presented sufficient facts to support their prima facie

claim of discrimination.

Turning to the second stage of the McDonnell Douglas

analysis, the Court finds that Defendant has proffered a

legitimate nondiscriminatory justification for the termination of

Danco’s contract, Danco’s poor performance of its duties. The

Court is persuaded, however, under the third and final stage of

the McDonnell Douglas analysis, that Plaintiffs have put forth

sufficient facts from which a reasonable factfinder could

conclude that Defendant’s justification was merely a pretext for

discrimination. Even though the termination of Danco’s

contract with the Augusta Wal-Mart occurred when Mr

Helterbrake was in charge of the store, rather than Mr. Scheffe,

the manager at the time the incidents of harassment occurred,

Mr. Guiliani told Mr. Helterbrake of the alleged harassment.

Indeed, in response to Mr. Guiliani’s disclosure Mr.

Helterbrake allegedly became angry, and thereafter treated Mr.

Guiliani with hostility. Mr. Guiliani further contends that when

Mr. Helterbrake terminated Danco’s contract, he told Mr.

Guiliani that Mr. Kellogg had threatened Wal-Mart with a

26a

$500,000 fine. Mr. Kellogg has testified that no such fine was

ever threatened. The Court is satisfied that genuine issues of

material fact exist with respect to the reason behind the

Augusta Wal-Mart’s termination of Danco’s contract.

Accordingly, the Court denies Defendant’s Motion for

Summary Judgment on Count I.

B. Count II — Public Accomodations Discrimination

Plaintiffs allege in Count II that Defendant discriminated

against and denied Mr. Guiliani the full and equal enjoyment of

the public facilities of Defendant in violation of the “unlawful

public accomodations” provision of the Maine Human Rights

Act, 5M. R.S.A. § 4551 ef seg. Section 4592 of the Maine

Human Rights Act provides:

It is unlawful public accomodations discrimination, in

violation of this Act:

1. Denial of public accommodations. For any public

accommodation or any person who is the owner, lessor,

lessee, proprietor, operator, manager, superintendent, agent

or employee of any place of public accommodation to

directly or indirectly refuse, discriminate against or in any

manner withhold from or deny the full and equal enjoyment

to any person, on account of race or color, sex, physical or

mental disability, religion, ancestry or national origin, any of

the accomodations, advantages, facilities, goods, services or

privileges of public accommodation, or in any manner

discriminate against any person in the price, terms, or

conditions upon which access to accommodation,

advantages, facilities, goods, services and privileges may

depend.

5 M.R.S.A. § 4592.

Plaintiffs allege that when Mr. Helterbrake terminated

Danco’s contract with the Augusta Wal-Mart and Mr. Guiliani

questioned him about it, Mr. Helterbrake angrily told Mr.

EES ae ee =. =«¢

27a

Guiliani that he did not want to see him around the Augusta

Wal-Mart again. Mr. Guiliani contends that he interpreted Mr.

Helterbrake’s statement to mean that Mr. Helterbrake did not

wish Mr. Guiliani to go back to the property for any reason.

Plaintiffs have not, however, presented any evidence that Mr.

Guiliani was denied access to Defendant’s premises, or denied

access to shopping at the Augusta Wal-Mart. The Court is

persuaded that Mr. Helterbrake’s statement alone does not

present a sufficient issue of material fact as to whether Mr.

Guiliani was denied the full and equal enjoyment of

Defendant’s facilities to survive summary judgment. The Court,

therefore, grants Defendant’s Motion for Summary Judgment

on Count II.

od Count II] — Breach of Written Contract

In Count III, Plaintiffs contend that Defendant breached

written contracts with Plaintiffs by failing to pay Plaintiffs for

their services provided pursuant to these contracts. Specifically,

Plaintiffs allege that Defendant breached two written contracts,

the February 21, 1995, contract between Danco and the

Augusta Wal-Mart, and the March 15, 1995, contract between

Danco and the Augusta Sam’s Club.

With respect to the contract between Danco and the

Augusta Wal-Mart, Plaintiffs allege by way of background that

pursuant to ¥ 3 of the September 15, 1994, contract between

the Augusta Wal-Mart and Danco, Danco dumped all

“sweeping debris” into Wal-Mart’s compactor. In February

1995, however, Mr. Amadei informed Mr. Guiliani that he

could no longer dump debris into the compactor because of the

weight of the sand. Mr. Guiliani contacted the person who had

prepared the contract between Danco and Defendant, Helen

Poulin of S.R. Weiner Associates, for guidance. After checking

with Mr. Helterbrake, Ms. Poulin told Mr. Guiliani that he

would have to haul the sand off site. In response to Mr.

Guiliani’s query as to what he should charge for such removal,

Ms. Poulin told him that the going rate was $58.00 per ton.

28a

As a result of this series of events, Plaintiffs contend that

when Danco and the Augusta Wal-Mart entered into a new

contract for parking lot maintenance on February 21, 1995, the

provision allowing for the dumping of debris into Wal-Mart’s

compactor was absent. Plaintiffs allege that the parties mutually

assented to Danco’s hauling away of the debris and the

subsequent reimbursement of Danco by Defendant. At a

minimum, Plaintiffs argue, the ultimate disposition of the debris

is an ambiguity in the contract. Defendant responds that since

the contract does not expressly provide for the removal of sand

off-site, Defendant’s refusal to pay for such services does not

constitute breach of contract.

Under Maine law:

the paramount principle in the construction of contracts is to

give effect to the intention of the parties as gathered from

the language of the agreement viewed in the light of all the

circumstances under which it was made... . Such intention

must be gathered from the written instrument, construed in

respect to the subject matter, the motive and purpose of

making the agreement, and the object to be accomplished.

Hodgkins v. New England Telephone Co., 82 F.3d 1226, 1230

(ist Cir. 1996) (quoting Baybutt Constr. Corp. v. Commercial

Union Ins. Co., 455 A.2d 914, 919 (Me. 1983)). “Whether

contract language is ambiguous is a question of law.” Town of

Lisbon v. Thayer Corp., 675 A.2d 514, 516 (Me. 1996). A

contract is ambiguous “when it is reasonably susceptible to

different interpretations.” Fitzgerald v. Gamester, 658 A.2d

1065, 1069 (Me. 1995). When contract language is

ambiguous, its interpretation is a question of fact, McCarthy v.

U.S.I. Corp. 678 A.2d 48, 51-52 (Me. 1996), and “extrinsic

evidence may be admitted and considered to show the intention

of the parties.” Fitzgerald, 658 A.2d at 1069 (citation

omitted).

“I eee

29a

Paragraph 1 of the February 21, 1995, contract provides for

“[t]he parking lot and roadways. . . [to] be cleaned and

sweep/vacuumed two times per week” by Danco. B. Guiliani

Dep. Ex. 6. The Court is persuaded that this language is

ambiguous as to the ultimate disposition of the sweeping

debris. Danco needed to deposit the debris it collected from

cleaning the parking lot somewhere, and Mr. Guiliani’s

conversation with Mr. Amadei foreclosed the option of the

Wal-Mart compactor. Furthermore, Ms. Poulin allegedly

checked with Mr. Helterbrake before telling Mr. Guiliani that

the sand would have to be hauled off site. The Court is

satisfied that an issue of material fact exists regarding the intent

of the parties, and that, therefore, summary judgment on

Plaintiffs’ claim that Defendant breached the February 21,

1995, contract is inappropriate. See Town of Lisbon, 675 A.2d

at 516 (when an issue of fact exists regarding the intent of the

parties, summary judgment is inappropriate).

Plaintiffs also contend that Defendant breached its March

15, 1995, contract with Danco for maintenance of the Augusta

Sam’s Club parking lot. Pursuant to this contract, Plaintiffs

allege, Danco performed services for Defendant until May 31,

1995, when Sam’s Club manager, Eddie Smith, terminated the

contract. Danco has billed the Augusta Sam’s Club for its

services during the months of April and May, 1995; however,

Defendant has refused to pay for these services. The

determination of whether there has been a breach of contract is

a question of fact. VanVoorhees v. Dodge, 679 A.2d 1077,

1080 (Me. 1996). The Court, therefore, denies Defendant’s

Motion for Summary Judgment on Count III.

D. Count IV — Breach of Oral Contracts

Count IV of Plaintiffs’ Complaint alleges that Defendant

breached various oral contracts it had with Danco by

terminating these contracts without cause or sufficient notice.

The parties do not dispute that during the fall of 1994, Danco

and Defendant entered into oral agreements to provide parking

30a

lot maintenance and cleaning services for Wal-Mart stores in

Scarborough, Windham, Auburn, Farmington, Rockland,

Waterville, and the Sam’s Club in Augusta, Maine.’ Plaintiffs

contend that J.R. Lee, the district manager for Wal-Mart, told

Mr. Guiliani that these oral contracts were Danco’s to keep as

long as Danco performed its job in a satisfactory manner, and

further expressly promised Danco the contracts for a significant

duration of time. In spite of these representations, soon after

Mr. Helterbrake terminated the Augusta Wal-Mart’s written

contract with Danco, the remaining Wal-Mart stores, with the

exception of the Auburn Wal-Mart,’ terminated their oral

contracts with Danco, for no reason and without notice.

Defendant responds that the oral contracts between Danco and

these other Wal-Mart stores were “terminable at will.”

“While the interpretation of unambiguous language in a

written contract falls within the province of the court, .. .

questions of fact concerning the terms of an oral agreement are

left to the trier of fact.” Moulton Cavity & Mold, Inc. v.

Lyn-Flex Indus., Inc., 396 A.2d 1024, 1029 (Me. 1979)

(citations omitted). The parties dispute whether the oral

agreements were intended to be contracts of a specific

duration, and whether Defendant was allowed to terminate

them without cause or notice. The Court, therefore, is satisfied

that Defendant’s Motion for Summary Judgment on Count IV

should be denied.

? The Court assumes, however, that Plaintiffs’ claim for breach of oral

contract does not apply to Danco’s oral contract to provide parking lot

maintenance to the Augusta Sam’s Club, since on or about March 15,

1995, Danco and Wal-Mart entered into a written contract for parking lot

maintenance services for this store.

> Plaintiffs acknowledge that Don Jenkins, manager of the Auburn

Wal-Mart, did provide Danco with notice and a reason for termination of

their contract, namely the Auburn Wal-Mart’s decision to utilize in-house

personnel to maintain the lot during the winter months.

3la

E. Count V — Unjust Enrichment

Plaintiffs allege in Count V that Defendant has_ been

“unjustly enriched” by services provided by Plaintiffs,

specifically Danco’s hauling away of the sweeping debris from

the Augusta Wal-Mart parking lot. “‘{U]njust enrichment

describes recovery for the value of the benefit retained when

there is no contractual relationship, but when, on the grounds

of fairness and justice, the law compels performance of a legal

and moral duty to pay.”’ Hodgkins, 82 F.3d at 1232 (quoting

A.F-A.B., Inc. v. Town of Old Orchard Beach, 639 A.2d 103,

105 n.3 (Me. 1994)). Plaintiffs contend that to the extent the

February 21, 1995, written contract between Danco and the

Augusta Wal-Mart is found not to cover Danco’s removal of

sand from the site, Plaintffs are nevertheless entitled to relief

under a theory of unjust enrichment.

In order to establish a claim for unjust enrichment a party

must prove: (1) a benefit conferred upon Defendant by

Plaintiffs; (2) an appreciation or knowledge by Defendant of

the benefit; and (3) the acceptance or retention by Defendant

of the benefit under such circumstances as to make it

inequitable for Defendant to retain the benefit without payment

of its value. Aladdin Elec. Assoc. v. Town of Old Orchard

Beach, 645 A.2d 1142, 1144 (Me. 1994). The Court is

persuaded that genuine issues of material fact exist with respect

to each of these elements.

First, Danco’s removal of sand from the site conferred a

benefit upon Defendant. Second, Plaintiffs have put forth

evidence suggesting that Defendant knew about this benefit.

Mr. Guiliani alleges that Ms. Poulin checked with Mr.

Helterbrake before telling Mr. Guiliani to haul the debris off

site, and one of Defendant’s employees, Mr. Amadei, was

responsible for telling Mr. Guiliani that disposal of sand in the

compactor would no longer be allowed. Finally, Danco has not

yet received payment for this service. A reasonable factfinder

could conclude that it was inequitable for Defendant to receive

32a

Danco’s services without paying for them. The Court denies

Defendant’s Motion for Summary Judgment on Count V.

F. Count VI — Negligence

Count VI of Plaintiffs’ Complaint alleges a cause of action

for negligence. Specifically, Plaintiffs allege that Defendant had

a duty to protect Plaintiffs from racial discrimination while

Plaintiffs performed their contractual obligations, and breached

this duty by failing to prevent or correct a racially hostile

atmosphere. Defendant contends that no such duty exists.

Alternatively, Defendant argues that even if such a duty did

exist, there is no evidence on the record to support Defendant’s

breach of that duty.

In order to prevail on a claim for negligence, Plaintiffs must

prove: (1) a duty owed Plaintiffs by Defendant, (2)

Defendant’s breach of that duty; and (3) injury to Plaintiffs

from the breach. Parker v. Harriman, 516 A.2d 549, 550 (Me.

1986). The existence of a duty is a question of law for decision

by the Court. Fish v. Paul, 574 A.2d 1365, 1366 (Me. 1990).

Plaintiffs argue that Defendant’s duty to protect Plaintiffs

from racial discrimination arises from the recognized common

law duty, under Maine law, on the part of a business owner to

exercise reasonable care to prevent injury to business invitees.

See Pelletier v. Fort Kent Golf Club, 662 A.2d 220, 221-22

(Me. 1995). While the Court agrees that common law imposes

a duty of reasonable care upon a business owner, the traditional

application of common law negligence in this area has been to

protect business invitees from physical injury. See /saacson v.

Husson College, 297 A.2d 98, 105 (Me. 1972) (““A possessor

of land is subject to liability for physical harm caused to his

invitees .. . .”’) (quoting Restatement (Second) of Torts § 343

(1965)). Plaintiffs have failed to present any legal support for

extending this common law duty to cases such as this one,

where a plaintiff's alleged injuries are purely psychological in

ew ae ee, oe ee ee

33a

nature.* The Court is persuaded that Mr. Guiliani’s emotional

injuries are more properly addressed by his claim for negligent

infliction of emotional distress. As a result, the Court grants

Defendant’s Motion for Summary Judgment on Count VI.

G. Count VII — Intentional Infliction of Emotional

Distress

In Count VII, Plaintiffs allege that Defendant intentionally

and recklessly inflicted emotional distress on Mr. Guiliani. To

prevail on this claim, Plaintiffs must prove that: (1) Defendant

intentionally or recklessly inflicted severe emotional distress or

was certain that such distress would result from its conduct: (2)

the conduct was so “extreme and outrageous” as to exceed “all

possible bounds of decency” and must be regarded as

“atrocious, and utterly intolerable in a civilized community;”

(3) the actions of Defendant caused Mr. Guiliani’s emotional

distress; and (4) the emotional distress suffered by Mr. Guiliani

was so “severe” that “no reasonable [person] could be expected

to endure it.” Henriksen v. Cameron, 622 A.2d 1135, 1139

(Me. 1993) (quoting Vicnire v. Ford Motor Credit Co., 401

A.2d 148, 154 (Me. 1979)). The Maine Supreme Judicial

Court has held in the context of an intentional infliction of

emotional distress claim that:

[i]t is for the Court to determine, in the first instance

whether the Defendant’s conduct may reasonably be

regarded as so extreme and outrageous to permit recovery,

or whether it is necessarily so. Where reasonable [people]

may differ, it is for the jury, subject to the control of the

Court, to determine whether, in a particular case, the

conduct has been sufficiently extreme and outrageous to

result in liability.

* While Mr. Guiliani alleges that he suffers severe headaches, he

acknowledges that these headaches were caused by his severe emotional

distress and anguish.

34a

Colford v. Chubb Life Ins, Co. of America, 687 A.2d 609, 616

(Me. 1996), cert. denied, — U.S. —, 117 S. Ct. 2433 (1997).

Viewing the facts in a light most favorable to Plaintiffs, the

Court is satisfied that Defendant’s conduct may not reasonably

be regarded as so atrocious or extreme as to permit recovery

on this theory. Defendant, itself, did not commit any of the

three allegedly discriminatory acts. Rather, Plaintiffs allege that

Defendant failed to prevent or correct a hostile work

environment. While such allegations, if proven, may constitute

sufficient evidence of intentional discrimination, the Court finds

that they do not rise to the level of intentional infliction of

emotional distress. The Court, therefore, grants Defendant’s

Motion for Summary Judgment on Count VII.

H. Count VIII — Negligent Infliction of Emotional

Distress

Count VIII of Plaintiffs’ Complaint seeks relief for negligent

infliction of emotional distress. In order to succeed on this

claim, Plaintiffs must establish: (1) that Defendant failed to

exercise reasonable care in keeping the workplace free from

harassment; (2) that Defendant’s failure caused Mr. Guiliani

severe emotional distress; (3) that Defendant’s failure would

have caused a reasonable person severe emotional distress; and

(4) that the harm was foreseeable. Duplessis, 835 F. Supp. at

683 (citing Salley v. Childs, 541 A.2d 1297 (Me. 1988)).

Defendant contends that the mental anguish allegedly

suffered by Mr. Guiliani does not rise to the level of severity

necessary for a successful negligent infliction of emotional

distress claim. Mr. Guiliani alleges that the various incidents of

discrimination caused him to experience emotional distress

resulting in severe headaches and significant sleeplessness and

nightmares. The Court is satisfied that a reasonable factfinder

could determine that this mental distress was more than the

“usual and insignificant emotional traumas of daily life in

modern society,” Dewilde v Guy Gannett Publ’g Co., 797 F.

35a

Supp. 55, 62 (D. Me. 1992), constituting instead trauma that

no reasonable person could expect to endure. Defendant’s

Motion for Summary Judgment on Count VIII is, thus, denied.

I. Count IX — Punitive Damages

In Count IX, Plaintiffs move for punitive damages. Punitive

damages are available under section 1981 when “the

defendant’s conduct is shown to be motivated by evil motive or

intent, or when it involves reckless or callous indifference to

the federally protected rights of others.” Rowlett v.

Anheuser-Busch, Inc., 832 F.2d 194, 205 (1st Cir. 1987)

(analyzing punitive damages award in section 1981 case)

(quoting Smith v. Wade, 461 U.S. 3 0, 56 (1983)). Under

Maine law, Plaintiffs are entitled to punitive damages on their

common law tort claims if they can establish by clear and

convincing evidence that Defendant acted with malice. Tuttle

v. Raymond, 494 A.2d 1353, 1363 (Me. 1985).

The Court is satisfied that Plaintiffs have generated sufficient

facts, if viewed in a light most favorable to Plaintiffs, from

which a reasonable jury could conclude that Defendant acted

with malice, or with reckless indifference to Plaintiffs’ federally

protected rights. In general, however, punitive damages are not

available in Maine for breach of contract. See Drinkwater v.

Patten Realty Corp. 563 A.2d 772, 776 (Me. 1989). Since the

Court has granted Defendant’s Motion for Summary Judgment

on Counts II, VI and VII, the Court narrows Plaintiffs’ basis

for recovery on the punitive damages count to those damages

arising from Counts I, V, and VIII.

36a

CONCLUSION

Defendant’s Motion for Summary Judgment is GRANTED

as to Counts II, VI and VII, and DENIED as to all other

counts.

SO ORDERED.

/s/ Morton A. Brody

MORTON A. BRODY

United States District Judge

Dated this 26th day of March, 1998.

37a

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

DANCO, INC. and )

Benjamin Guiliani, )

Plaintiffs, )

)

v. ) Civ. No. 97-54-B

)

WAL-MART STORES, INC., )

Defendant, )

ORDER AND MEMORANDUM OF DECISION

BRODY, District Judge

On April 29, 1998, the Court entered judgment on a jury

verdict awarding Plaintiffs, Danco, Inc. and Benjamin J.

Guiliani (collectively, “Plaintiff’), $654,440 in compensatory

damages. The jury found that Defendant, Wal-Mart Stores,

Inc., violated Plaintiff's civil rights by subjecting him to a

hostile work environment in violation of 42 U.S.C. § 1981, and

breached a written contract between Plaintiff and the Augusta

Sam’s Club. Pursuant to Fed. R. Civ. P. 50(b) and 59(a),

Defendant moves the Court for Judgment as a Matter of Law

or, in the alternative, for a New Trial. A hearing on

Defendant’s Motion was held on June 29, 1998. For the

reasons set forth below, the Court rejects each of Defendant’s

arguments in support of its motion, except for Defendant’s

claim that the jury’s award of damages on Plaintiff ’s civil rights

claim is excessive. Upon consideration of the evidence

presented at trial and the arguments presented by the parties in

connection with this issue, the Court is persuaded that

remittitur is warranted.

38a

I. STANDARD OF REVIEW

On a Fed. R. Civ. P. 50(b) motion for judgment as a matter

of law, the Court “‘examine[s] the evidence and the inferences

reasonably to be drawn therefrom in the light most favorable to

the nonmovant.”” Colasanio v. Life Insurance Co. of North

America, 100 F.3d 203, 208 (Ist Cir. 1996) (quoting

Wagenmann v. Adams, 829 F. 2d 196, 200 (Ist Cir. 1987)).

The Court will override a jury verdict only if the evidence “‘is

so one-sided that the movant is plainly entitled to judgment, for

reasonable minds could not differ as to the outcome.’” /d.

(quoting Gibson v. City of Cranston, 37 F.3d 731, 735 (ist

Cir. 1994)).

Pursuant to Fed. R. Civ. P. 59(a), the Court may order a

new trial and set aside a verdict “when the verdict is against the

clear weight of the evidence, or is based upon evidence which

is false, or will result in a clear miscarriage of justice.’”” Ahern

v. Scholz, 85 F.3d 774, 780 (1st Cir. 1996) (citations omitted).

““[ T]he district court has broad legal authority to determine

whether or not a jury’s verdict is against the “clear weight of

the evidence.””” Jd. (quoting de Perez v. Hospital del

Maestro, 910 F.2d 1004, 1006 (1st Cir. 1990)). The district

court, however, “‘cannot displace a jury’s verdict merely

because he disagrees with it or would have found otherwise in

a bench trial.’” /d. (quoting Milone v. Moceri Family, Inc.,

847 F.2d 35, 37 (1st Cir. 1988)).

Il. DISCUSSION

Defendant asserts four arguments in favor of its Motion for

Judgment as a Matter of Law or, in the alternative, for a New

Trial. The Court addresses each in turn.

39a

A. An Independent Contractor May Not Bring a Hostile

Work Environment Claim Pursuant to 42 U.S.C.

§ 1981.

Defendant reiterates its argument, raised during the course

of trial, that Plaintiff, as an independent contractor, is precluded

from claiming that Defendant violated 42 U.S.C. § 198]

(“§ 1981”) by creating a hostile work environment. Defendant

contends that the hostile work environment theory was crafted

under Title VII as a method of proving racial discrimination,

and is limited in its application to the employer/employee

relationship.

The parties have not cited, and the Court’s research does not

disclose, any authority directly addressing this issue. In Wright

v. State Farm Mutual Automobile Insurance Co., 911 F. Supp.

1364, 1376 (D. Kan. 1995), aff'd, 94 F.3d 657 (10th Cir.

1996), the court reached the merits of an independent

contractor’s § 1981 claim for a hostile work environment. The

court, however, granted summary judgment in favor of the

defendant on the claim, without discussing whether such a

claim was allowable. Jd.

42 USC. § 1981 provides that “[a]ll persons . . . shall have

the same right . . . to make and enforce contracts . . . as is

enjoyed by white citizens... .” 42 U.S.C. § 1981(a). The

phrase “make and enforce contracts” is defined to include the

“making, performance, modification, and termination of

contracts, and the enjoyment of all benefits, privileges, terms,

and conditions of the contractual relationship.” 42 U.S.C.

§ 1981(b) (emphasis added). Unlike Title VII which on its face

concems discrimination in employment relationships, the plain

language of § 1981 indicates that the statute applies to “all

persons,” and courts have consistently applied § 1981 to

independent contractors. See e.g., Miller v. Advanced Studies,

Inc., 635 F. Supp. 1196, 1199 n.4 (plaintiff s claim under

§ 1981 is not affected by his status as an independent

contractor); Wright, 911 F. Supp. at 1376; see also Springer v.

40a

Seamen, 821 F.2d 871 (Ist Cir. 1987) (involving § 1981 suit

brought by black independent contract postal carrier against

Postal Service and other individuals). The Court remains

persuaded that Plaintiff may bring a hostile work environment

claim pursuant to § 1981, and denies Defendant’s motion as it

relates to this argument.

B. Plaintiff did not Adequately Plead a Hostile Work

Environment Claim

Defendant next argues that because Plaintiff failed to allege

that he was the victim of a hostile work environment in his

Complaint, he was not entitled to proceed upon this theory. As

with Defendant’s first argument, the Court discussed and

resolved this issue during the course of trial. The Court

remains satisfied that Plaintiff has met his burden of notice

pleading with respect to his civil rights claim. See DeNovellis

v. Shalala, 124 F.3d 298, 310 n.6 (1st Cir. 1997) (plaintiff need

not allege a hostile work environment in his complaint because

notice pleading only requires that a plaintiff “give the defendant

fair notice of what the plaintiff's claim is and the grounds upon

which it rests,” not the “precise legal theories upon which the

plaintiff bases his right to recovery”) (citations omitted). In his

Complaint, Plaintiff described Defendant’s conduct and alleged

a violation of Plaintiff's civil rights pursuant to § 1981.

Plaintiff then articulated a hostile work environment theory

before the Court in response to Defendant’s Motion for

Summary Judgment. See id. (hostile work environment

satisfactorily presented to court where plaintiff failed to allege

nostile work environment theory in complaint, but raised theory

in reply brief to defendant’s motion for summary judgment).

The Court finds that Defendant had sufficient notice of

Plaintiff s hostile work environment argument and, accordingly,

denies Defendant’s motion insofar as it alleges that Plaintiff

failed to adequately plead this claim.

4la

S. Evidence was Legally Insufficient to Support -the

Hostile Work Environment Verdict

Defendant’s third argument is that the evidence introduced

at trial was insufficient to support the jury’s verdict in favor of

Plaintiff on his hostile work environment claim. Whether

Defendant’s conduct was sufficiently pervasive to create a

hostile or offensive work environment depends on the “gravity

as well as the frequency of the offensive conduct.” DeNovellis,

124 F.3d at 311 (analyzing Title VII hostile work environment

claim). The Court is satisfied that based upon the evidence

introduced at trial, including evidence that the racial graffiti

allegedly remained on the parking lot for a period of several

months, the jury’s verdict was not against the weight of the

evidence, nor would a reasonable factfinder be compelled to

reach a different conclusion. Therefore, the Court denies

Defendant’s Motion for Judgment as a Matter of Law or, in the

alternative, for a New Trial as it relates to Defendant’s

argument that the evidence was insufficient to support the

jury’s verdict.

D. Jury’s Award of $650,000 is Inconsistent and

Excessive

Defendant’s fourth argument is that the jury’s award of

$650,000 to Plaintiff for violation of his civil rights is

inconsistent with the remainder of the verdict and excessive.

Defendant contends that the wording of Question #6 on the

Special Verdict Form, requesting the jury’s determination of

damages on two of Plaintiffs breach of contract claims, resulted

in an inconsistent verdict. Specifically, Defendant draws the

Court’s attention to the following language in Question #6:

Subtract from this amount any portion of the damages you

may have awarded in question #2 [civil rights damages] that

is attributable to the violation of Plaintiff s civil rights as it

relates to breach of contract. Do not subtract any daniages

42a

you may have awarded in question #2 for pain, suffering,

mental anguish, and other non-pecuniary damages, if any.

Because the jury awarded $4,440 in response to this question,

Defendant contends that the $4,440 award is inconsistent with

the $650,000 award on Plaintiff's hostile work environment

claim which also included non-pecuniary damages. The Court

is not persuaded by Defendant’s interpretation of the jury’s

answers, and further rejects Defendant’s argument that the

$650,000 award could not have included any damages for

emotional distress because the jury awarded no damages on

Plaintiff's claim for negligent infliction of emotional distress.

The Jury Instructions stated that any damages awarded for

negligent infliction of emotional distress were to be “separate

from and awarded in addition to, any award of mental anguish,

pain or suffering.” Jury Instructions at 16.

Moreover, Defendant failed to object to the wording of

Question #6. By failing to object before the jury was

dismissed, Defendant waived any claim of inconsistency unless

“the alleged error seriously affected the fairness or integrity of

the trial.” Moore v. Murphy, 47 F.3d 8, 11 (1st Cir. 1995)

(plain error doctrine reserved for use “in only the most

egregious circumstances”); see also Wilson v. Maritime

Overseas Corp., No. 97-1804, 1998 WL 374902, at *4 (lst

Cir. July 10, 1998) (“[i]t is an ironclad rule in this circuit that

failure to renew objections after the charge constitutes waiver

of any claim of error.”) (citations omitted). The Court is

satisfied that any error in the wording of Question #6 does not

rise to the level of plain error, and denies Defenuant’s motion

insofar as it alleges that the jury’s award of damages on

Plaintiff's civil nights claim is iriconsistent with the remainder of

the verdict.

Defendant also argues that it should be entitled to a new trial

because the jury’s award of damages on Plaintiff's hostile work

environment claim is excessive. While Defendant’s initial

Motion for Judgment as a Matter of Law and/or a New Tnial

43a

did not contain a motion for remittitur, on July 2, 1998,

Defendant filed a Supplementary Memorandum of Law in

Support of its Motion for New Trial or for Remittitur. Plaintiff

responded to this Supplementary Memorandum on or about

July 27, 1998.

Under the federal standard, “a damage determination will

withstand scrutiny unless it is ‘grossly excessive, inordinate,

shocking to the conscience of the court, or so high that it

would be a denial of justice to permit it to stand.’” Blinzler v.

Marriott Int’l, Inc., 81 F.3d 1148, 1161 (ist Cir. 1996)

(quoting Correa v. Hospital San Francisco, 69 F.3d 1184,

1197 (1st Cir. 1995)). The Court may grant a remittitur or a

new trial when the award exceeds “any rational appraisal or

estimate of the damages that could be based upon the evidence

before it.” | Eastern Mount. Platform Tennis, Inc. vy.

Sherwin-Williams Co., 40 F.3d 492, 502 (ist Cir. 1994)

(quoting Kolb v. Goldring, Inc., 694 F.2d 869, 872 (1st Cir.

1982)). In calculating a remittitur, the First Circuit applies the

“least intrusive” standard. Conjugal Partnership v. Conjugal

Partnership, 22 F.3d 391, 398 (1st Cir. 1994). “Under this

standard, the remittitur amount should reduce the verdict ‘only

to the maximum that would be upheld by the trial court as not

excessive.” Jd. (quoting Earl v. Bouchard Transp. Co., 917

F.2d 1320, 1328 (2d Cir. 1990)).

While the Court is extremely reluctant to disturb the jury’s

damages award, in light of all the evidence introduced at trial,

the Court concludes that the compensatory damages awarded

by the jury for violation of Plaintiff's civil rights are so

excessive as to warrant a remittitur. Although the evidence at

trial supported the jury’s finding that Plaintiff was treated

improperly and unlawfully, the Court is persuaded that the jury

could not reasonably have awarded Plaintiff more than

$300,000 on his hostile work environment claim given the

evidence of compensatory damages presented bv Plaintiff and

the fact that Plaintiff's punitive damages claim was dismissed

44a

during the course of trial. If Plaintiff accepts this reduced

award, leaving him a total damages award of $304,440, the

Court will deny Defendant’s motion for a new trial.’

II. CONCLUSION

Defendant’s Motion for Judgment as a Matter of Law or, in

the alternative, for a New Trial is DENIED, except as to

Defendant’s claim that the jury’s award of damages on

Plaintiff's civil rights claim is excessive. Plaintiff shall have 30

days from the date of this Opinion in which to decide whether

to accept remittitur to the amount stated above, or to proceed

to a new trial.

SO ORDERED.

/s/ Morton A. Brody

MORTON A. BRODY

United States District Judge

Dated this 5th day of August, 1998.

' The Court does not consider this case to be one in which the verdict is

the result of passion or prejudice so as to make remittitur improper. See

11 Charles Alan Wright, Arthur R. Miller, and Mary Kay Kane, Federal

Practice and Procedure § 2815, at 165 (2d ed. 1995).

4Sa

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

DANCO, INC. and BENJAMIN GUILIANI,

Plaintiffs, Appellees/Cross-Appellants,

WAL-MART STORES, INC.,

Defendant, Appellant/Cross-Appellee.

Nos. 98-2101, 98-2269.

ORDER OF THE EN BANC COURT

Before

TORRUELLA, Chief Judge, SELYA, BOUDIN, STAHL,

LYNCH and LIPEZ, Circuit Judges.

Entered June 11, 1999

The panel of judges that rendered the decision in this case

having voted to deny the petition for rehearing and the

Suggestion for rehearing en banc having been carefully

considered by the judges of the Court in regular, active service

and a majority of said judges not having voted to order that the

appeal be heard or reheard by the Court En Banc,

It is ordered that the petition for rehearing and the

suggestion for rehearing en banc, be denied.

By the Court:

PHOEBE MORSE, Clerk

By: /s/ Janice M. O’Neil

Chief Deputy Clerk

46a

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

DANCO, INC. and )

Benjamin Guiliani, )

Plaintiffs, }

)

v. ) Civil No. 97-0054-B

)

WAL-MART STORES, INC., )

Defendant, )

JUDGMENT

This matter having come before the Court, Honorable

Morton A. Brody presiding and a jury, and the issues having

been duly tried, and pursuant to the verdict of the jury,

IT IS ADJUDGED that JUDGMENT is entered for the

plaintiff in the amount of Six Hundred Fifty Four Thousand,

Four Hundred and Forty Dollars and no cents ($654,440.00) as

against the defendant.

Dated this 29th day of April, 1998.

WILLIAM S. BROWNELL, CLERK

By: /s/ Harriett D. Jefferson

Deputy Clerk

47a

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

DANCO, INC. and )

Benjamin Guiliani, )

Plaintiffs, )

)

v. ) Civil No. 97-0054-B

)

WAL-MART STORES, INC., )

Defendant, )

AMENDED JUDGMENT

This matter having come before the Court, Honorable

Morton A. Brody presiding and a jury, and the issues having

been duly tried, and pursuant to the verdict of the jury, and

pursuant to the Plaintiffs’ acceptance of a remittitur;

JUDGMENT is hereby entered for the plaintiffs, in the

amount of three hundred and four thousand, four hundred and

forty dollars ($304,440).

Dated this 8th day of September, 1998.

WILLIAM S. BROWNELL, CLERK

By: /s/ Harriett D. Jefferson

Deputy Clerk

48a

RELEVANT CONSTITUTIONAL

AND STATUTORY PROVISIONS

U.S. Const. amend. XIII

SECTION |. Neither slavery nor involuntary servitude, except

as punishment for crime whereof the party shall have been duly

convicted, shall exist within the United States, or any place

subject to their jurisdiction.

SECTION 2. Congress shall have power to enforce this

article by appropriate legislation.

42 U.S.C. § 1981. Equal rights under the law

(a) Statement of equal rights

All persons within the jurisdiction of the United States shall

have the same right in every State and Territory to make and

enforce contracts, to sue, be parties, give evidence, and to the

full and equal benefit of all laws and proceedings for the

security of persons and property as is enjoyed by white citizens,

and shall be subject to like punishment, pains, penalties, taxes,

licenses, and exactions of every kind, and to no other.

(b) “Make and enforce contracts” defined

For purposes of this section, the term “make and enforce

contracts” includes the making, performance, modification, and

termination of contracts, and the enjoyment of all benefits,

privileges, terms, and conditions of the contractual relationship.

The rights protected by this section are protected against

impairment by nongovernmental discrimination and impairment

under color of State law.

CoP WN EO ERD ELIOT INLD NL VOILA OE

2 eT ER

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.