B. 42 U.S.C. §1981
The Civil Rights Act of 1866, codified as 42 U.S.C. § 1981, ensures that “all persons ... shall have the same right ... to make and enforce contracts ... as is enjoyed by white citizens.” While the Civil Rights Act of 1991 expanded the scope of § 1981 to protect “the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship,” the amendment retained § 1981's “focus upon contract obligations. In fact, it positively reinforced that element by including in the new § 1981(b) reference to a ‘contractual relationship.”’
To establish a claim under § 1981, plaintiffs must show (1) membership in a protected class, (2) discriminatory intent on the part of the defendant, (3) engagement in a protected activity, and (4) interference by the defendant with the protected activity.
Interestingly, it is the third prong of § 1981 that serves as the gatekeeper test for the statute. Courts look first to whether plaintiffs sought to engage in a protected activity before advancing on to whether there was intentional discrimination. In fact, the Supreme Court has held that “nothing in the text of § 1981 suggests that it was meant to provide an omnibus remedy for all racial injustice. If so, it would not have been limited to situations involving contracts. Trying to make it a cureall... goes beyond any expression of congressional intent.” In keeping with Supreme Court precedent to prevent § 1981 from morphing into an omnibus anti-discrimination statute, courts require shoppers alleging § 1981 claims to establish that they sought to create a contract. Section 1981 provides protection for “all phases and incidents of the contractual relationship.” In doing so, § 1981“protects the would-be contractor along with those who already have made contracts.” However, this protection requires the intent to form a specific contract in order to qualify as engagement in a protected activity, and § 1981 does not clarify how such intent in fact manifests.
The problem with Crystal Gregory and Michael Richmond's claims from Gregory v. Dillard's is that general browsing has never been found to qualify as engagement in a protected activity to satisfy the third prong of § 1981 analysis. As the Seventh Circuit noted in Morris v. Office Max, Inc., “[a] claim for interference with the right to make and enforce a contract must allege the actual loss of a contract interest, not merely the possible loss of future contract opportunities.” The First Circuit has also held that to satisfy the third prong of a § 1981 claim, “a retail customer must allege that he was actually denied the ability either to make, perform, enforce, modify, or terminate a contract, or to enjoy the fruits of a contractual relationship.” The First Circuit did note the difficulties in determining what pre-formation conduct would be protected, recognizing that “each time a customer takes an item off the shelf, a new contract looms, and each time the item is returned, the potential contract is extinguished.” In an effort to resolve difficulties in determining when a black shopper is engaged in a phase of the contractual relationship, courts require that the shopper “show an attempt to purchase, involving a specific intent to purchase an item, and a step toward completing that purchase.”
Once a specific sales contract has been shown, the inquiry moves on to the second and fourth prongs of § 1981 to determine whether the store had the intent to and did interfere with the sales contract on the basis of race. The second prong can be satisfied through either direct evidence, in the form of a racially-tinged statement or some other action, or through evidence of a pattern or practice of treating minority shoppers differently than white shoppers. While the second prong is expansive in what can be considered in order to show intent, the fourth prong has been substantially narrowed. While § 1981 states that it protects “all benefits, privileges, terms, and conditions of the contractual relationship,” courts--with the exception of the Sixth Circuit--have generally limited § 1981's applicability to instances where a contract was actually prevented, not merely offered on hostile terms.
There are thus two major approaches to intentional interference with the formation of a contract: the general approach and the Sixth Circuit's approach. The general approach looks to what prevented contract formation. The First Circuit Court of Appeals has held that § 1981 prohibits “imped[ing] a customer's ability to enter into, or enjoy the benefits of the contractual relationship.” In order to state a claim, the store's discrimination must have actually prevented contract formation or denied a black shopper the benefits of a specific contract. Offending the shopper to the point where she leaves the store of her own volition is generally not covered. A store employee must refuse service to a black shopper, or somehow prevent the shopper from obtaining service in order to qualify as having interfered with his ability to make a contract. In certain cases, the Eighth Circuit has recognized that discriminatory conduct can reach a level of offensiveness where it amounts to constructive denial of service. However, for actions to qualify as constructive denial of service, they must be extremely offensive and inappropriate. In Green v. Dillard's, a Dillard's employee personally refused to serve a black couple, interfered with another sales associate's efforts to serve them, and referred to the couple by an ethnic slur. Beyond situations that extreme, however, a black shopper facing overt racial hostility from store employees generally does not have relief under § 1981 if she leaves the store of her own volition.
The Sixth Circuit uses a broader interpretation of interference with a contract than the general approach in that it does not require actual denial of service. In Christian v. Wal-Mart Stores, Inc., the Sixth Circuit Court of Appeals held that providing services “in a markedly hostile manner and in a manner which a reasonable person would find objectively discriminatory” on the basis of race violates § 1981. While the shoppers in Christian were actually evicted from the store and thus would also be able to meet the general test, the Sixth Circuit's language about providing services in a hostile manner would allow relief for shoppers like those in Garrett and Youngblood who were only treated poorly and not denied the ability to contract.
In most circuits, § 1981 would not provide relief for shoppers like Crystal Gregory and Michael Richmond. The Eighth Circuit Court of Appeals, when it heard Gregory v. Dillard's found for Dillard's because Gregory did not show that the store had thwarted an attempt to contract and because Richmond had not pled sufficient facts to satisfy Rule 12(b)(6). In Gregory's case, the Eighth Circuit Court of Appeals found that the presence of security guards outside of her fitting room was merely evidence of watchfulness, which did not interfere with a contract sufficiently to cause a § 1981 violation. The fact that a clerk gave her a “snicker” and Gregory's belief that the store manager was not particularly helpful did not establish that Dillard's had prevented her from making a contract, especially since the sales clerk was waiting to ring up her items. The Eighth Circuit did not discuss whether Gregory had satisfied the third prong of § 1981 by engaging in a protected activity, but it appears from the record that she did. She had selected a pair of pants, tried them on, and approached a sales counter with the intent to make a purchase. It was only after she had made the trip to the counter that she abandoned her merchandise because of treatment that she felt was discriminatory. Gregory was in a situation where the attitude and behavior of Dillard's employees offended her to the point where she left the store without purchasing the goods she had selected and tried on. However, she did not have relief under the general § 1981 test because courts in the Eighth Circuit narrowly limit § 1981 to situations where stores actually refuse to contract with shoppers who are carrying specific goods to purchase.
The Sixth Circuit's test would offer Crystal Gregory a substantially higher chance of getting her case to trial. Gregory claimed that Dillard's employees summoned security to monitor her and were rude and unhelpful to her because of her race. While none of them directly blocked her efforts to make a contract, a jury could determine that the employees were offering her the ability to contract in a “markedly hostile” or discriminatory manner. While there is no guarantee that Gregory's treatment would in fact be found to be discriminatory, since the Sixth Circuit uses the “markedly hostile” test, at the very least Gregory should be able to survive a motion to dismiss for failure to plead all prongs of § 1981.
Michael Richmond's claim was dismissed pursuant to a Rule 12(b)(6) motion for failing to plead sufficient facts, but had he sufficiently pled his motion, he would have had difficulty recovering nonetheless. Richmond complained of two instances of discrimination. The first instance involved a store employee walking away from Richmond several times when he approached her for service. By selecting merchandise and carrying it to a store employee to purchase, Richmond satisfied the third prong of § 1981 analysis. He would have had trouble, however, meeting the second and fourth prongs. In Gregory, there was extensive testimony from store employees regarding a store practice of treating black shoppers differently than white shoppers, which could be used to establish intent for the second prong. Richmond's problem is that, had he been presenting his claim on the merits of his experience alone, he would have had no evidence that he was treated differently because of race beyond the fact that he was treated poorly and that he was black. For the fourth prong, Richmond was not fully denied the ability to make his purchases. As was the case in Bagley, while the employee that Richmond interacted with refused to personally serve him (or interact with him at all), a second employee did approach him and offer to provide service. Under the Seventh Circuit's standard, Richmond would not have a case because he voluntarily abandoned his purchase despite the presence of an employee who was willing to ring him out. The facts in his case are not egregious enough to meet the Green exception for constructive denial of a contract either. While an employee's walking away from Richmond is certainly frustrating, it does not rise to the level focused on by the Eighth Circuit Court of Appeals in Green, where the employee used a racial slur and actively discouraged other employees from offering assistance. Since the employee in Richmond's case neither used a racial slur nor discouraged other employees from offering assistance, the Green exception would likely not apply.
Richmond's second complaint is also unlikely to succeed. His experience at the jewelry counter involve an employee directing his attention to lower cost merchandise after he requested to see a more expensive piece. These facts on their own would not satisfy the second prong of § 1981, because the employee did not make any reference to Richmond's race, and could very well have been trying to turn Richmond's attention to cheaper merchandise because of a perceived lack of funds. Richmond can meet the second prong only through the extensive employee testimony presented elsewhere in the case. The facts in Richmond's case also present problems with the third prong of § 1981, in that Richmond had not actually selected merchandise to purchase or made a step towards making a purchase. Richmond was diverted to other goods as he sought to browse merchandise in the display case. Since merely viewing items does not create a contractual relationship under § 1981, arguably, Richmond had not progressed far enough into the exchange for a specific sales contract to exist. With regards to the fourth prong, the employee did not prevent Richmond from being able to begin a contractual relationship. While her actions were frustrating, she did not necessarily refuse to serve Richmond and was, in fact, actively trying to sell him goods. Since Richmond left of his own accord, while a store employee was trying to sell him merchandise, like Bagley, his § 1981 claim would not succeed.
However, like Gregory, under the Sixth Circuit's test, Richmond would also have a much better chance of recovery. Regarding both incidents, Richmond benefits from the Sixth Circuit's focus on whether a shopper had to endure hostile or discriminatory treatment en route to contract as opposed to whether the shopper actually tried to contract with the store despite hostile treatment. Having a store employee repeatedly walk away from a black shopper and having a store employee refuse to let a black shopper look at expensive merchandise both present a triable issue of fact for a jury, rather than the dismissal that Richmond would receive under the general § 1981 test. Again, this does not guarantee that Richmond's particular treatment would qualify as creating a “hostile” environment, but at least he should be able to survive a motion to dismiss for failing to meet the prongs of § 1981 analysis.
As exemplified through Crystal Gregory and Michael Richmond, black shoppers facing discrimination in retail stores might not be adequately protected under current federal law. Courts have focused § 1981 directly on the four corners of the contract, rather than on whether racial discrimination has altered any of the phases and incidents of the contractual relationship. Black shoppers may be offered contracts laden with terms and conditions of humiliation and degradation, but so long as the contracts remain offered, § 1981 is not triggered. As such, in relation to protecting against discrimination in retail stores, federal law provides minimal relief.
