Monday, October 3, 2011

Section 1981 Retaliation Claims Governed By Federal Catch-All 4-Year Statute of Limitations

Three Circuits, most recently the Ninth in Johnson v. Lucent Techs., Inc., No. 09-55203, 2011 U.S. App. LEXIS 16100 (9th Cir. Aug. 4, 2011), have held that retaliation claims under 42 U.S.C. § 1981 are subject to the 4-year statute of limitations set forth in 28 U.S.C. § 1658.  In Johnson, the Ninth Circuit recognized that retaliation claims were no longer viable under § 1981 after the Supreme Court’s 1989 decision in Patterson v. McLean Credit  Union, 491 U.S. 164 (1989) until they were resuscitated by the enactment of the Civil Rights Act of 1991. The Ninth Circuit held: “Because they arise under a post-December 1, 1990 act of Congress, section 1981 retaliation claims are governed” by section 1658.  Previously, the Eleventh and Seventh Circuits had so held.  See Baker v. Birmingham Bd. of Educ., 531 F.3d 1336 (11th Cir. 2008); Dandy v. United Parcel Serv., Inc., 388 F.3d 263 (7th Cir. 2004).  

To understand this issue, one needs to be familiar with some employment law history. Prior to the Supreme Court’s 1989 decision in Patterson, some courts had held that § 1981 encompassed retaliation claims. See, e.g. Sherpell v. Humnoke Sch. Dist. No. 5, 874 F.2d 530, 536 (8th Cir. 1989); Goff v. Continental Oil Co., 678 F.2d 593, 597-98 (5th Cir. 1982). Then, with Justice Kennedy writing for a five Justice majority, the Supreme Court issued its decision in Patterson  which held that § 1981 only covered claims regarding the “formation” of a contract.[1] In the wake of Patterson, most courts held that § 1981 did not cover retaliation claims. Williams v. First Union Nat’l Bank, 920 F.2d 232, 234 (4th Cir. 1990) (collecting cases); McCarthy v. Kemper Life Ins. Co., 924 F.2d 683, 688 (7th Cir. 1991); but see McKnight v. Gen. Motors Corp., 908 F.2d 104-112 (7th Cir. 1990) (Judge Posner, with Senior Circuit Judge Fairchild dissenting, suggests that maybe retaliation remained actionable under § 1981, provided that the retaliation had a racial motivation. In Dandy v. United Parcel Svcs., supra, the panel seemingly put this issue to rest, without any reference to Judge Posner’s opinion in McKnight). Indeed, the courts held that so called “post-formation” claims were no longer encompassed by § 1981. However, those “formation” claims that  Patterson recognized as cognizable under § 1981 continued to be filed, and the courts continued to be asked to determine the statute of limitations applicable to such claims. As the courts had done before Patterson, the post-Patterson courts held that, as § 1981 contains no statute of limitations, the federal district courts must determine the most appropriate state statute of limitations and apply that to a “formation” claim. See e.g. McKnight v. Gen. Motors Corp., 908 F.2d 104-112 (7th Cir. 1990). As a result, the statute of limitations on a “formation” claim varied from jurisdiction to jurisdiction. 

When Congress enacted the 1991 Civil Rights Act, it “overruled” the Supreme Court’s holding in Patterson, and rewrote § 1981 by adding § 1981a which defines the term “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.” Thereafter, the courts again began to hold that retaliation claims, in light of this amendment, were encompassed by the revised § 1981. The statute of limitations problem remained, however, and federal district courts continued to apply the most analogous state statue of limitations.  

On December 1, 1990, the Congress had enacted 28 U.S.C. § 1658, a catchall 4-year statute of limitations for actions “arising under an Act of Congress enacted after the date of the enactment of this section” where Congress had not included a statute of limitations. 28 U.S.C. § 1658(a). In 2004, the Supreme Court in Jones v. R.R. Donnelley’ & Sons Co., 541 U.S. 369 (2004), rev’g 305 F.3d 717 (7th Cir. 2002) was presented with the question of whether § 1981 hostile work environment, wrongful termination, and failure-to-transfer claims were governed by Congress’ 4-year catchall statute of limitations (28 U.S.C. § 1658), or by the most analogous state statute of limitations. The Court, in an opinion authored by Justice Stevens, held that § 1658 applies to any claim “arising under” an act of Congress which was enacted after December 1, 1990, and that “a cause of action ‘aris[es] under an Act of Congress enacted’ after December 1, 1990 – and therefore is governed by § 1658’s 4-year statute of limitations – if the plaintiff’s claim against the defendant was made possible by a post-1999 enactment.” Id. at 382. 

In light of this history, the Ninth Circuit, with Judge Betty Fletcher writing for the panel in Johnson v. Lucent Technologies held that § 1658’s 4-year statute of limitations now applies to a § 1981 retaliation claim. 

In 2008, Judge Dubina writing for a panel of the Eleventh Circuit in Baker v. Birmingham Bd. of Educ., supra, held that plaintiff’s claims were made possible by the 1991 amendments to § 1981 and that, accordingly, those claims arise under a post-1991 enactment, bringing the 4-year catchall statute of limitations into play. Interestingly, in Baker, the court was confronted with a § 1983 claim (a 2-year Alabama limitations period would apply to a § 1983 claim) against a state actor, and one question before the court was whether the state statute applicable to § 1983 claims applied (Wilson v. Garcia 471 U.S. 261, 275-76 (1985) (Court held that the statute of limitations for a § 1983 claim is generally the applicable state-law statute of limitations for personal-injury torts)) or whether it should be the § 1981 statute of limitations. Section 1983 does not provide a cause of action against state actors, and claims against state actors of § 1981 violations must be brought pursuant to § 1983 (Jett v. Dallas Indep. Sch. Dist. 491 U.S. 701, 735 (1989) (holding that § 1983 “provides the exclusive federal damages remedy for the violation of the rights guaranteed by § 1981 when the claim is pressed against a state actor.”)), hence, the question as to whether the § 1983 or § 1981 statute of limitations applied. In light of the holding in Jones, the Eleventh Circuit concluded that plaintiff’s claim was made possible by the 1991 Civil Rights Act, a post-1990 enactment, and that, therefore, the four-year catchall statute of limitations applied. See also City of Rancho Palos Verdes, Cal. v. Abrams, 544 U.S. 113, 123 n.5 (2005) (Justice Scalia writing for the Court in a case brought under the Federal Telecommunications Act, states that while the statute of limitations for a § 1983 claim is generally the applicable state-law period for personal injury torts, here, since the claim rests upon violation of a post-1990 congressional enactment, § 1658 would seem to apply). Other courts have decided this issue differently, and held that the plaintiff’s cause of action arises under § 1983, not § 1981, since § 1983 is the exclusive remedy against state actors for violations of § 1981, and thus have applied the most analogous state personal injury statute of limitations. See AUI, LLC v. DeKalb Cnty., 2006 U.S. Dist. LEXIS 89828 (N.D. Ga. August 28, 2006); Marshall v. Daleville City Bd. Of Educ., 2006 U.S. Dist. LEXIS 50543 (M.D. Al. July 24, 2006). 

In 2004, in Dandy v. United Parcel Service, supra, the Seventh Circuit, Judge Williams writing for the panel, held that plaintiff’s claims, including (1) hostile work environment; (2) failure to promote; (3) disparate treatment in terms of compensation; and (4) retaliation were subject to § 1658’s catchall statute of limitations because they were made possible by the 1991 Civil Rights Act. Judge Williams wrote for the panel in that case. See also White v. BFI Waste Servs., 375 F.3d 288, 291-92 (4th Cir. 2004) (finding disparate treatment in compensation claims stated under §1981 are covered by § 1658).

To summarize the practice pointers: 

1.      A failure to hire claim under § 1981 is governed by the most analogous state statute of limitations.
2.      In a failure to promote claim where the promotion would create a new and distinct employment relationship, the most analogous state statute of limitations applies. Otherwise, the 4-year § 1658 statute of limitations applies.
3.      In § 1983 claims for violations of § 1981, there is a significant debate as to whether the most analogous state personal injury statute of limitations applies or the 4-year catchall.
4.      All circuits that have addressed the issue have held that retaliation claims under § 1981 are governed by the § 1658 4-year catchall.
5.      Compensation claims under § 1981 would appear to be governed by the 4-year catchall. In perusing such claims, take into account the Lilly Ledbetter Fair Pay Act provisions.
6.      Racial harassment and hostile work environment claims under § 1981 appear to be governed by the 4-year catchall statute of limitations.

[1] Subsequent to Patterson, some courts found, after a fact specific inquiry, that a promotion claim constituted a “formation” claim where the promotion would create “a qualitatively different relation between the employer and the employee, for example, a move from factory worker to foreman, foreman to foreman supervisor, or manager to officer, likely would create a new and distinct relation giving rise to a § 1981 action under Patterson.” Butts v. City of NY Dept. of Housing, 990 F.2d 1397, 1412 (2d Cir. 1993). However, some cases held that the denied promotion would not have satisfied the Patterson “new and distinct relationship” test. See e.g. Revis v. Slocomb Indus., Inc., 814 F. Supp. 1209 (D. Del. 1993); Johnson v. Indopco, Inc., 834 F. Supp. 1039 (N.D. Ill. 1993)

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