Easley v. General Motors Corporation Reply Brief of Plaintiff-Appellant

    UNITED STATES COURT OF APPEALS 
FOR THE SEVENTH CIRCUIT

89-3613

HAROLD EASLEY, 
Plaintiff-Appellant, 

vs.
GENERAL MOTORS CORPORATION, 

Defendant-Appellee.

On Appeal from the United States District Court 
for the Southern District of Indiana, Indianapolis Division

REPLY BRIEF OF PLAINTIFF-APPELLANT

JULIUS LeVONNE CHAMBERS 
RONALD L. ELLIS 
CORNELIA T.L. PILLARD 
NAACP Legal Defense and 

Educational Fund, Inc. 
99 Hudson Street 
Suite 1600
New York, New York 10013 
(212) 219-1900
Attorneys for Plaintiff- 

Appellant



TABLE OF CONTENTS

TABLE OF AUTHORITIES.......................................... ii
INTRODUCTION ................................................ 1
ARGUMENT .................................................... 2
I. GENERAL MOTORS OPPOSES MR. EASLEY'S CLAIMS OF

DISCRIMINATION IN CONTRACT FORMATION SOLELY BY 
MISCHARACTERIZING THEM ...........................  2

II. MR. EASLEY'S CLAIM OF DISCRIMINATION IN THE
FORMATION OF HIS EMPLOYMENT CONTRACT IS NOT 
TIME-BARRED .......................................  4

III. PATTERSON DID NOT REVERSE THE ESTABLISHED
APPLICABILITY OF SECTION 1981 TO CLAIMS OF 
DISCRIMINATORY DISCHARGE ......................... 10

CONCLUSION.................................................... 14

l



TABLE OF AUTHORITIES
CASES

Barnes v. A.H. Robins.
476 N.E.2d 84 (Ind. 1985)

Bazemore v. Friday.
478 U.S. 385 (1986)

Eli Lilly & Co. v. EPA.
615 F. Supp. 811 (S.D. Ind. 1985)

Hicks v. Brown Group. Inc. .
Civil Action Nos. 88-2769/2817
(8th Cir, April 16, 1990) . . . . . . .

Lavender v. V & B Transmissions and Automobile Repair.
1990 U.S. App. LEXIS 4975 (5th Cir. April 6, 1990)

Lvtle v. Household Manufacturing, Inc.. 
58 U.S.L.W. 4341 (Mar. 20, 1990)

Neuhauser v. A.H. Robins Co., Inc..
573 F. Supp. 8 (S.D.Ind. 1983)

Overby v. Chevron USA, Inc..
884 F.2d 470 (9th Cir. 1989)

Ovens v. Okure.
102 L. Ed. 2d 594 (1989)

Patterson v. McLean Credit Union.
105 L. Ed. 2d 132 (1989)

Ulloia v. Midland Industries. Inc., 
663 F. Supp. 491 (S.D. Ind. 1987)

Wilson v. Garcia.
85 L. Ed. 2d 254 (1985)

STATUTES
42 U.S.C. § 1981 
42 U.S.C. § 1988
Indiana Code § 34-1-2-2 (Burns 1973)

ii

10

9

11

13

11

6

13

5

passim 

7, 9

5

passim
5
5

7



INTRODUCTION
General Motors Corporation ("GMC") urges this Court to 

constrict the scope of 42 U.S.C. § 1981 further than did the 
Supreme Court in Patterson v. McLean Credit Union, 105 L. Ed. 2d 
132 (1989). Mr. Easley contends that GMC discriminated against 
him by purporting to accept him on a non-discriminatory, 
probationary basis into a plant where in fact discrimination was 
rampant, and he contends that it did so with the covert intent to 
fire him after a few days rather than hire him as a permanent 
employee. In GMC's view, section 1981 should not prohibit such 
conduct, but should be limited to discrimination that not only 
occurs at the contract-formation stage, but that is communicated 
to the employee at that time. GMC also contends that Patterson's 
holding with respect to racial harassment admittedly does not 
apply to discriminatory discharge, but that this Court 
nonetheless should extend it to bar all discharge claims under 
section 1981. GMC urges a bar on discharge claims so categorical 
that even if the employer included prompt, automatic discharge as 
a term of black employees' contracts when they were formed, that 
discrimination would not be prohibited by section 1981.

GMC bases its contention that Mr. Easley's claims are time- 
barred on its mischaracterization of the nature of the 
discrimination that he challenges. Although GMC's discrimination 
was covert when Mr. Easley was hired, the Company nonetheless 
asserts that the claims accrued at that time. A section 1981 
claim might accrue on the day the contract was made if the

1



employer frankly stated to the employee that it had different 
plans and expectations for him because of his race, but Mr. 
Easley cannot be penalized because GMC was not so forthright.
Mr. Easley's claims of discrimination in the formation of his 
employment contract did not accrue when he was hired as a 
probationary employee, because no concrete harm had taken place, 
and he had no reason yet to anticipate that it would.

ARGUMENT
I. GENERAL MOTORS OPPOSES MR. EASLEY'S CLAIMS OF

DISCRIMINATION IN CONTRACT FORMATION SOLELY 
BY MISCHARACTERIZING THEM

General Motors Corporation attempts to sidestep Mr. Easley's 
section 1981 claims of discrimination in the formation of his 
employment contract by contending that "[t]he terms of 
plaintiff's employment were precisely those contained in the 
collective bargaining agreement between GM and the UAW." Brief 
of General Motors Corporation Defendant-Appellee (Df. Br.), at 5. 
GMC correctly contends that Mr. Easley does not challenge any 
explicit terms in the collective bargaining agreement. Id. at 6. 
It falsely assumes, however, that merely because there was a 
written contract without expressed racially discriminatory terms, 
that contract is exclusive, and no other, discriminatory 
contractual terms existed. Plaintiff's contention, however, is 
that GMC imposed implicit discriminatory terms on him that were 
not equally imposed on white employees. See Brief of Plaintiff- 
Appellee (PI. Br.) at 13-23. For the reasons discussed in

2



plaintiff's initial brief, discriminatory terms need not be 
verbally expressed to in order to violate section 1981 as 
Patterson construes it. See PI. Br., at 18-19. Defendant does 
not even address the viability of such claims under section 
1981.1

GMC similarly misses the thrust of Mr. Easley's claim in 
characterizing it as an argument that "postformation harassment 
or discrimination can relate back and taint a contract made on 
racially neutral terms." Df. Br., at 7. Mr. Easley does not 
allege mere post-formation harassment, but claims that his 
contract was not "made on racially neutral terms." GMC's 
discriminatory intent was present from the outset, and specific 
facts —  such as the area hire obligation coupled with the prompt 
decision to fire him, and the immediate and pervasive 
discriminatory treatment to which he was subjected —  relate the 
challenged discrimination to the point of contract formation.
The Patterson case included no such allegations.' The Supreme 
Court explained that what distinguishes harassment from 
formation-stage discrimination actionable under section 1981 is 
whether the discrimination was intended at the time the contract 
was made. See Patterson. 105 L. Ed. 2d at 155 (stating that the 
determinative factor is whether "at the time of formation of the

Defendant also contends that "GM was constrained by 
federal labor law from making a contract individually tailored for 
the plaintiff." Df. Br., at 6. The fact that GMC's imposition on 
Mr. Easley of additional, discriminatory contract terms beyond the 
terms of the collective bargaining agreement may also violate 
federal labor law does not mitigate the section 1981 violation.

3



contract, [the defendant] in fact intentionally refused to enter 
into a contract with the employee on racially neutral terms"). 
Although implicit discriminatory contract terms present problems 
of detection and proof that are absent when contract terms are 
explicitly stated, Patterson does not alter the established rule 
that contract terms may be implicit. It is GMC's argument, not 
Mr. Easley's, that proves too much. If claims of discrimination 
in the making of contracts could not be based on the 
circumstances immediately surrounding the contract formation, 
employers could easily subvert section 1981 by forming contracts 
that are racially neutral on their face, but that come with 
unwritten, discriminatory strings attached.

II. • MR. EASLEY'S CLAIM OF DISCRIMINATION IN THE
FORMATION OF HIS EMPLOYMENT CONTRACT IS NOT 
TIME-BARRED

GMC contends that Mr. Easley's section 1981 claims of 
discrimination in the formation of his employment contract are 
time-barred because GMC hired him on February 9, 1987, and he did 
not file suit until February 20, 1989.2 Defendant correctly 
notes that the limitations period applicable here is the two- 
year period provided by the Indiana statute limiting personal 
injury claims.3 But defendant's statute of limitations defense

GMC does not contend, nor could it, that Mr. Easley's 
discriminatory discharge claim is time barred.

Because there is no statute of limitations provided by 
federal law that applies to section 1981 claims, the Indiana 
personal injury statute of limitations determines the timeliness 
of plaintiff's claims. See 42 U.S.C. § 1988; Owens v. Okure. 102

4



fails because it was not until February 20, 1987 that the 
limitations period began to run. Mr. Easley filed his suit on 
February 14, 1989. The suit was therefore timely under the 
applicable statute of limitations.

Mr. Easley has three overlapping but distinct claims of 
discrimination in the formation of his employment contract under 
section 1981, and each of these claims was timely when filed.
The first claim is that GMC hired Mr. Easley as a probationary 
employee on February 9, 1987 with the intent to discharge him 
before he completed the probationary term and became a full- 
fledged employee with enhanced job-related rights. See PI. Br., 
at 13-16. This claim is timely because (1) it did not accrue 
until the discharge contemplated by the contract took place on 
February 20, 1987, and (2) even if it had accrued on February 9, 
1987, when GMC hired Mr. Easley intending to fire him, the 
limitations period was tolled until February 20, 1987, because 
Mr. Easley 'could not have reasonably discovered that 
discriminatory intent until GMC had carried it out by firing him. 
Mr. Easley's second claim of discrimination in contract 
formation, based on his hire into a discriminatory work 
environment, was also timely under the discovery rule. His third 
claim, that the evaluative probationary period was part of the 
discriminatory hiring process for permanent employment, was 
timely because it was a continuing violation that was not

L. Ed. 2d 594 (1989); Wilson v. Garcia. 85 L. Ed. 2d 254 (1985).
The limitations period applicable to personal injury claims is two 
years. Indiana Code § 34-1-2-2 (Burns 1973).

5



complete until February 20, 1987.
Mr. Easley's first claim of hiring discrimination did not 

accrue until February 20, 1987, because it was then that the harm 
caused by this particular violation took place. "In Indiana a 
cause of action accrues at the time when both legal injury and 
damage have occurred, resulting in liability." Neuhauser v. A.H. 
Robins Co.. Inc.. 573 F. Supp. 8, 9 (S.D.Ind. 1983), citing 
Scates v. State. 178 Ind. App. 624, 383 N.E.2d 491 (1978);
Merritt v. Economy Department Store. 125 Ind. App. 560, 128 
N.E.2d 279 (1955).4 Two elements must be present before the 
limitations period begins to run: discrimination must have
occurred, and harm must have resulted from it. The violation of 
section 1981 consisted of hiring Mr. Easley as a probationary 
employee with the racially motivated intent to fire him before he 
had completed the probationary period. The harm was the racially 
motivated discharge. The limitations period on Mr. Easley's 
challenge to this implicit, discriminatory contract term thus did 
not begin to run until GMC had carried out its discriminatory 
intent by firing Mr. Easley on February 20, 1987.

The second reason that this discriminatory-hiring claim is

Neuhauser was a personal injury suit seeking to recover 
for a miscarriage caused by a malfunctioning intrauterine device 
(IUD), in which the court applied section 34-1-2-2, Indiana's 
personal injury limitations law. The limitations period was 
calculated not from the time the IUD was inserted, or even from 
when the plaintiff became pregnant and was informed by her doctor 
that the IUD would likely cause a miscarriage. Rather, the 
limitations period began to run when the miscarriage took place. 
Similarly, in this case, the period did not begin to run when Mr. 
Easley first began his discriminatory probationary term, but on 
February 20, 1987, when he was fired.

6



timely is that until GMC cut short his probationary period on 
February 20, 1987, Mr. Easley reasonably was not aware that the 
Company had intended to deny him the opportunity to become a 
permanent employee. Under Indiana's "discovery rule," a personal 
injury cause of action is deemed not to accrue until the 
plaintiff knows or has reason to know of the injury and its 
cause. See Barnes v. A.H. Robins. 476 N.E.2d 84 (Ind. 1985); 
Ullom v. Midland Industries. Inc.. 663 F. Supp. 491, 492 (S.D. 
Ind. 1987). Mr. Easley does not claim that GMC explicitly told 
him on February 9, 1987 that it would hire him only on the 
condition that it could discharge him before his employment 
became permanent; his claim is rather that the GMC's intent to 
fire him was an implicit term of his employment contract. It was 
precisely because the term was not expressed to Mr. Easley that 
he could not reasonably be expected to have discerned it as soon 
as GMC imposed it on February 9, 1987. If GMC had told Mr.
Easley on February 9, "We'll let you work here as a probationary 
employee, but because you are black, we will fire you in a few 
days," he would have known then that his rights had been 
violated. Discriminatory contract terms are rarely so expressed, 
however, and section 1981 does not require a plaintiff to allege 
that they were. Because Mr. Easley did not become aware of GMC's 
intent not to hire him as a permanent employee until it fired 
him, the statute of limitations on his claim did not begin to run 
until then.

Mr. Easley's second claim of discrimination in contract

.....................................................................................  _ /  ■ ■ ■ ............. ............................

7



formation is that his employment contract with GMC incorporated 
the preexisting racially discriminatory working conditions at the 
Hydra-matic plant, and was therefore discriminatory when made.
See PI. Br., at 16-21. This, too, is a claim of implicit 
discriminatory terms of employment, present when the contract was 
formed but expressed to Mr. Easley primarily through the 
contract's performance. This claim is also timely under 
Indiana's discovery rule. Although GMC personnel treated him 
differently from his very first day at the plant, and continued 
to do so during the nine days that he worked on a probationary 
basis, it was not clear to Mr. Easley until after the fact that 
GMC had intended from the outset to employ him on discriminatory 
terms. The discrimination he suffered during his first few days 
at the plant, including selective enforcement of discipline, 
Complaint at ff 10, 13, 16-18 (A5-A6), racial slurs, id. at 5 28 
(A7), and work assignments violative of GMC policy, id. at 5 5  20- 
23 (A6-A7), might have been discrete instances of mistreatment.
It was only with the clarity of hindsight that Mr. Easley could 
see that he had been hired into a plant where discrimination was 
the norm, and that GMC intended when it hired Mr. Easley to 
subject him to it. Where, as here, some evidence of illegality 
is known to the plaintiff, but the reasons for it are not, the 
discovery rule applies and the statute of limitations does not 
begin to run until the plaintiff knows or has reason to know the 
cause of the harm. See Ullom. 663 F. Supp. at 492 (holding that 
claims of plaintiffs who suffered symptoms of formaldehyde

8



exposure six years prior to filing suit were not barred by the
two-year statute of limitations because their claims did not
accrue until they knew or should have discovered that the
formaldehyde had caused the symptoms).

Mr. Easley's third claim of discrimination in contract
formation challenges the discrimination that took place during
the probationary period as discrimination in the process of
forming —  or, in this case, refusing to form —  a contract for
permanent employment. See PI. Br., at 21-23. The hiring process
took place over several days, and was not complete until February
20, 1987, when GMC cut short the probationary period and rejected
Mr. Easley as a candidate for a permanent job. Under the
"continuing violations" doctrine in Indiana, this entire claim
was timely because it challenges a continuing course of conduct
which began on February 9, 1987, more than two years before
plaintiff filed suit, but ended on February 20, 1987, within the
two-year limitations period. In Indiana,

the statute of limitations does not always begin to run 
at the first moment when a wrongful invasion of a 
protected interest might give rise to a cause of action 
.... Where the wrong is continuing, the statute of 
limitations does not begin to run until the wrong is 
'over and done with.'

Eli Lilly & Co. v. EPA. 615 F. Supp. 811, 822 (S.D. Ind. 1985) 
(holding that plaintiff's claims that EPA illegally issued and 
maintained registration on another company's product based on the 
plaintiff company's data was not time-barred notwithstanding that 
the issuance was prior to the limitations period because the 
maintenance of the illegal registrations constituted a continuing

9



violation occurring partly within the period), citing. Cooper v. 
United States. 442 F.2d 908, 911 (7th Cir. 1971); Taylor v. 
Meirick, 712 F.2d 1112, 1118 (7th Cir 1983).5 Here, although Mr. 
Easley arguably could have sued as soon as he began his 
probationary work under the discriminatory terms GMC imposed, the 
section 1981 hiring-stage violation was not "over and done with" 
until GMC rejected him on February 20, 1987, and he timely filed 
suit within two years of that date.

III. PATTERSON DID NOT REVERSE THE ESTABLISHED
APPLICABILITY OF SECTION 1981 TO CLAIMS OF 
DISCRIMINATORY DISCHARGE

GMC concedes that "Patterson does not discuss the issue of 
discriminatory discharge," yet nonetheless asserts that "it is 
logical to conclude that discriminatory discharge is outside the 
ambit of Section 1981." Df. Br., at 10. Defendant neglects to 
point out, however, that the Supreme Court has unanimously 
recognized that Patterson did not foreclose discriminatory 
discharge claims. Lytle v. Household Manufacturing. Inc.. 58

Cf. Bazemore v. Friday. 478 U.S. 385, 386-87 (1986) 
(unanimously holding that a government program's discriminatory 
salary structure instituted before Title VII applied to public 
employees nonetheless violated the statute because "to the extent 
that an employer continued to engage in [a discriminatory] act or 
practice, he is liable under that statute."). Under the theory of 
Bazemore, a plaintiff may challenge the continuing application of 
discriminatory contract terms even if the contract is completely 
formed and its discriminatory terms known to the plaintiff prior 
to the limitations period. If the continuing violations theory did 
not apply to permit plaintiff to reach back and recover for the 
full violation, there is still no guestion that Mr. Easley has 
alleged that he suffered harm between February 14, 1987 and 
February 20, 1987, and that under Bazemore and Indiana's general 
accrual rule, his claim based on that harm is timely.

10



U.S.L.W. 4341, 4343 n. 3 (Mar. 20, 1990); id. at 4344 (opinion of
O'Connor, J., concurring) (commenting that "the question whether
petitioner has stated a valid claim under § 1981 remains open").
In the absence of a Supreme Court holding that discriminatory
discharge claims are no longer covered, GMC's "logic" does not
justify ignoring the long line of Supreme Court precedent
establishing freedom from discriminatory discharge as the most
important right that section 1981 confers.6 Patterson's own
emphasis on the weight of stare decisis requires as much. See
Patterson. 105 L. Ed. 2d at 147-50.

The Eighth Circuit in Hicks v. Brown Group. Inc.. Civil
Action Nos. 88-2769/2817, slip op. (8th Cir, April 16, 1990)
(included in Appendix to Reply Brief of Plaintiff-Appellant),
recently confirmed that Patterson does not authorize courts of
appeals to reverse the Supreme Court's established interpretation
of section 1981 as prohibiting racially motivated discharge:

We believe that if the Supreme Court intended to call 
into question or overrule this substantial body of 
employment discrimination precedent in Patterson. it 
would have said so. We do not believe that the Supreme 
Court would reject by implication such seminal section 
1981 cases without so much as even a word.

Slip op. at 14. The Hicks court accordingly held that
plaintiff's racially motivated discharge violated section 1981.

Although section 1981 prohibits discrimination in the 
making and enforcement of all kinds of contracts, and bans 
discrimination in other areas as well, the statute is most 
frequently used in the employment context to redress discriminatory 
discharge. See generally Eisenberg & Schwab, The Importance of 
Section 1981. 73 Cornell L. Rev. 596, 599-601 (1988), cited in
Hicks. slip op. at 15.

11



Even were this Court deciding on a clean slate whether 
section 1981 applies to discharge claims, it should not extend 
the reasoning of Patterson to preclude such claims. As the 
opinion in Hicks makes clear, the language and logic of the 
statute and the Congressional intent behind it support 
application of section 1981 to discriminatory discharges. Hicks 
held that the right to make contracts encompasses freedom from 
discriminatory contract termination because "discriminatory 
discharge goes to the very existence and nature of the employment 
contract. A discriminatory discharge completely deprives the 
employee of his or her employment, the very essence of the right 
to make employment contracts." Slip op. at 17. The court's 
extensive review of the legislative history of section 1981 
supp'orts its conclusion that the right to make contracts refers 
as well to the right not to have one's contract "unmade" on 
discriminatory grounds. See slip op. at 23-37.7 The Eighth 
Circuit is the only appellate court to have analyzed in detail 
the status of discharge claims after Patterson, and its decision

Holding that discriminatory discharge violates section 
1981 does not, contrary to GMC's suggestion, Df. Br. at 10, require 
acceptance of Justice Stevens' view that a contract at will is 
constantly re-made. Justice Stevens presented this argument, and 
the majority rejected it, in the context of determining whether the 
imposition of new "conditions of continuing employment" necessarily 
violates section 1981. See, Patterson. 105 L. Ed. 2d at 156; id. 
at 179 (Stevens, J. , concurring in the judgment in part and 
dissenting in part). Neither the majority nor the dissent 
addressed discharges in relation to this concept.

12



in Hicks offers substantial guidance to this Court.8
The court in Hicks emphasized the logic of its holding in

terms particularly apposite to Mr. Easley's section 1981 claims:
We refuse to construe section 1981 as prohibiting an 
employer from refusing to hire someone on the basis of 
her race, but then permitting the discharge of that 
same employee because of her race a month or a year 
later. Such an absurd interpretation would allow 
discriminatory discharge to effectively annihilate the 
right to make contracts.

Slip op. at 17. Mr. Easley has alleged that GMC has done 
precisely what the Eighth Circuit's holding seeks to avoid: it
accepted Mr. Easley for a probationary period only to discharge 
him a few days later on racially discriminatory grounds. This is 
just the kind of "very specific (and unusual) fact situation[]" - 
- in which a discharge involves the formation of a contract —  
that the EEOC General Counsel identified as still actionable in 
the passage GMC quotes with approval. Df. Br., at 10. If 
section 1981 no longer prohibits this conduct, then the statute 
is truly a dead letter.

Compare Hicks with Lavender v. V & B Transmissions and 
Auto Repair. 1990 U.S. App. LEXIS 4975 (5th Cir. April 6, 1990) 
(included in Appendix to Reply Brief), and Overby v. Chevron USA, 
Inc. . 884 F. 2d 470 (9th Cir. 1989). The courts of appeals that 
have rejected section 1981 discharge claims on the basis of 
Patterson have each done so for the same reason the district court 
in this case dismissed Mr. Easley's discharge claim: Each has read 
Patterson broadly and categorically to hold that everything that 
happens after the contract-formation stage is not actionable under 
section 1981. As our initial brief explains, that reading of 
Patterson is untenable, PI. Br. at 25, is inconsistent with this 
Court's prior opinions, id. at 23 and n. 10, and is inconsistent 
with the Supreme Court's own holding with respect to promotions, 
id. at 29-30. Decisions of the Supreme Court should be read 
narrowly so as not to overrule prior precedent by implication.

13



CONCLUSION
For the foregoing reasons, and the reasons stated in the 

initial Brief of Plaintiff-Appellant, the decision below should 
be reversed and the case should be remanded to the district 
court.

Respectfully submitted,

CORNELIA T.L. PILLARD 
NAACP Legal Defense and 

Educational Fund, Inc.
99 Hudson Street 
16th Floor
New York, New York 10013 
(212) 219-1900
Attorneys for Plaintiff-Appellant

Dated: New York, New York
May 10, 1990

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CERTIFICATE OF SERVICE

I hereby certify that on this 10th day of May, 1990 I have
served counsel for defendant in this action with true and correct
copies of the forgoing Reply Brief of Plaintiff-Appellant and the
Appendix Accompanying Reply Brief by placing said copies in the
U.S. Mail at New York, New York postage thereon fully prepaid
addressed as follows:
Wendell R. Tucker
Gregory L. Padgett
300 North Meridian Street, #2700
Indianapolis, Indiana 46204

for Plaintiff-Appellant