Gonzalez v. The Home Insurance Company Reply Brief for Petitioner

    EDWARD F. GONZALEZ, ANA T.
GONZALEZ, AND A.T.G. AGENCY INC.

Plaintiffs-Appellants,
vs.

THE HOME INSURANCE COMPANY,
HOME INDEMNITY COMPANY,
HOME INSURANCE COMPANY OF INDIANA, 

AND CITY INSURANCE COMPANY

, Jr

" * 89-7856
UNITED STATES COURT OF APPEALS 

FOR THE SECOND CIRCUIT

DEFENDANTS-APPELLEES.
On Appeal from the United States District Court 

for the Southern District of New York

LOREN BAILY 
295 Madison Avenue 
New York, New York 10017 
(212) 986-7468
HARRY C. KAUFMAN 
274 White Plains Road 
Eastchester, New York 10707 
(914) 961-1755

JULIUS LeVONNE CHAMBERS 
CHARLES STEPHEN RALSTON 
RONALD L. ELLIS 
CORNELIA T.L. PILLARD 
99 Hudson Street 
16th Floor
New York, New York 10013 
(212) 219-1900

Attorneys for Plaintiffs-Appellants



TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................  ii
INTRODUCTION ..............................................  1
I. IN RESPONSE TO PATTERSON, PLAINTIFFS-APPELLANTS HAVE 

PROPERLY ADVANCED ADDITIONAL ARGUMENTS TO SHOW THAT
THEIR COMPLAINT STATES A SECTION 1981 CLAIM .........  1

II. THE COMPLAINT CLEARLY ALLEGES THAT PLAINTIFFS CONTRACTED
WITH TWO PAIRS OF DEFENDANTS AT TWO DIFFERENT TIMES, AND 
EACH CONTRACT WAS DISCRIMINATORY WHEN FORMED ........  3

III. PLAINTIFFS' STANDING IS NOT BASED ON THE RIGHTS OF THIRD
PARTIES ..............................................  7

IV. PATTERSON DOES NOT BAR SECTION 1981 CLAIMS OF
DISCRIMINATORY CONTRACT TERMINATION .................  9

CONCLUSION ................................................. 1 1  l

l



CASES

Albert v. Caravano. 851 F.2d 561 (2d Cir. 1988) ..........  2
Barkan v. Hilti 89-C-318-E (N.D.Okla. October 12, 1989) ... 9
Chevron Oil Co. v. Huson. 404 U.S. 97 (1971) .............  1, 2
Conley v. Gibson. 355 U.S. 41 (1957) ...................... 3
D. Federico Co. v. New Bedford Redevelopment Authority,

723 F. 2d 122 (1st Cir. 1983) ........................... 2
DeMatteis v. Eastman Kodak, 511 F.2d 306 (2d Cir. 1975)

modified on other grounds, 520 F.2d 409 (2d Cir. 1975) . 7, 8
Gersman v. Group Health Ass'n. 1989 U.S. Dist. LEXIS 13449

(D.D.C. Nov. 13, 1989) .................................  8
Johnson v. Mateer, 625 F.2d 240 (9th Cir. 1980) ..........  2
Lopez v. S.B. Thomas. Inc., 831 F.2d 1184 (2d Cir. 1987) .. 8
Lvtle v. Household Manufacturing, Inc.,

88-334, 106 L. Ed. 2d 587 (1989) ....................... 9
Mackey v. Nationwide Ins. Co.. 724 F.2d 419 (4th Cir. 1984) 8
Martin v. New York State Deo11 of Mental Hygiene,

588 F. 2d 371 (2d Cir. 1978) ............................  2
Patterson v. McLean Credit Union, 109 S. Ct. 2363, 105 L.

Ed. 2d 132 (1989) ....................................  Passim
Patterson v. McLean Credit Union. 50 F.E.P. Cases at 1173 . 3, 5
Phelps v. The Witchita Eagle-Beacon,. 886 F. 2d 1262

(10th Cir. 1989) .......................................  8
Sullivan v. Little Hunting Park, 396 U.S. 229 (1969) .....  7, 8
The Dartmouth Review v. Dartmouth College, 1989 U.S. App.

LEXIS (1st Cir. Nov. 9, 1989) .......................... 8



INTRODUCTION

Defendants-appellees' arguments dwell on issues irrelevant 
to plaintiffs-appellants' section 1981 claim, and seek to 
undermine plaintiffs' claims largely by mischaracterizing them.

I. IN RESPONSE TO PATTERSON. PLAINTIFFS-
APPELLANTS HAVE PROPERLY ADVANCED ADDITIONAL 
ARGUMENTS TO SHOW THAT THEIR COMPLAINT STATES 
A SECTION 1981 CLAIM

Defendants repeatedly point to a change in emphasis in 
plaintiffs' arguments since the Supreme Court decided Patterson 
v. McLean Credit Union, 109 S. Ct. 2363, 105 L. Ed. 2d 132 
(1989), as if it were impermissible for plaintiffs to argue that 
their Complaint, drafted prior to the Supreme Court's decision, 
states a section 1981 claim under standards announced in that 
case. See Appellees' Brief at 8, 23, 34 n. 9, 40. Defendants' 
implication that it is unfair or burdensome to litigate under new 
legal theories after there has already been extensive discovery 
and briefing prior to Patterson. see Appellees' Br. at 6, only 
adds support to plaintiffs' position that Patterson should not be 
applied retroactively to this case. See Appellant's Br. at 30- 

33 .
If Patterson is to be applied here, it is plaintiffs' 

prerogative to explain how the allegations of their Complaint are
adequate to withstand dismissal under the standards the Supreme

*
Court recently set out in Patterson. As the Supreme Court 
explained in Chevron Oil Co. v. Huson. "[w]e should not indulge 
in the fiction that the law now announced has always been the law

1



and, therefore, that those who did not avail themselves of it 
waived their rights." 404 U.S. 97, 107 (1971) quoting Griffin v.
Illinois. 351 U.S. 12, 26 (1956).

Defendants also assert that plaintiffs "go beyond the 
pleadings" in their description of the facts. Appellees' Br. 
at 2. In the context of a motion to dismiss, and of de novo 
review of the grant of such a motion, a court may appropriately 
rely on allegations in a plaintiff's affidavit to supplement
facts formally pleaded in the complaint. See Eh_Federico Co.— v.s.
New Bedford Redevelopment Authority, 723 F.2d 122, 126 (1st Cir. 
1983) (holding that there is no need formally to amend the 
Complaint where there is no prejudice to the opposing party); 
Johnson v. Mateer. 625 F.2d 240, 242 (9th Cir. 1980) (remanding 
to allow plaintiff to amend under Rule 15(b) where factual 
allegations were submitted in an affidavit to the district 
court). Because defendants in this case have had adequate notice 
of the affidavit allegations, and those allegations are 
consistent with the Complaint, the Court of Appeals should not 
affirm the dismissal merely because a formal amendment was not 

made.1

1 Even cases defendants cited in their brief in support of 
their argument that plaintiffs' Complaint is inadequate authorized 
plaintiffs to replead on remand. See, e.g., Albert v.— Caravano, 
851 F. 2d 561, 563 (2d Cir. 1988) (affirming dismissal of claims 
without prejudice to plaintiff's right to amend complaint) ; Martin 
v. New York State Pep't of Mental Hygiene, 588 F.2d 371, 372 (2d 
Cir. 1978) (same).

2



II. THE COMPLAINT CLEARLY ALLEGES THAT PLAINTIFFS 
CONTRACTED WITH TWO PAIRS OF DEFENDANTS AT 
TWO DIFFERENT TIMES, AND EACH CONTRACT WAS 
DISCRIMINATORY WHEN FORMED

Defendants argue that the October 21, 1983 addendum to the 
Agency Agreement "cannot realistically be considered as the 
'making' of a new contract," Appellees' Br. at 18, because it was 
merely a "formal" or "technical" amendment, adding Home of 
Indiana and City Insurance as "nominal parties." Id. at 18, 19, 
22. See id. at 4. They appear to be contending that the second 
two defendants were parties to the agency agreement from the 
start, and that the addendum merely reconciled the written record 
with the practical reality of the parties' contractual 
relationship. Id. at 20, 21.

Defendants' assertions that a contractual relationship 
between plaintiffs and all four defendants existed prior to 
October 21, 1983 is entirely unsupported by the allegations of 
the Complaint, and it is those allegations and the reasonable 
inferences to be drawn therefrom which are alone relevant here. 
Conlev v. Gibson. 355 U.S. 41 (1957). There are no allegations 
that the second two defendants had any relationship with 
plaintiffs prior to October 1983. Defendants' position that a 
contract was formed with the second two defendants by practice 
alone without a formal writing contradicts plaintiffs' 
allegation, acknowledged by the district's court, that plaintiffs 
entered into an agency agreement with the first two defendants on 
December 28, 1982, and that the agreement was only later amended 
to include the second two defendants. Complaint at paras. 14-15

3



(A4); 50 F.E.P. Cases at 1173 and n. 1. In the current 
procedural posture on appeal from the dismissal of the Complaint 
for failure to state a claim, defendants' contention must fail.2

Defendants mischaracterize plaintiffs' claims when they 
assert that "Gonzalez has not alleged and cannot show that the 
addendum was offered or formed in a racially discriminatory 
manner." Appellees' Br. at 18. Defendants acknowledge, as they 
must for purposes of this appeal, plaintiffs' allegations that 
additional "conditions and restrictions" were placed on ATG 
between December 1982 and October 1983. Id- at 20; see Complaint 
paras. 21, 40, 41—N, 41—0, 41—P, 41—Q, 41—T (A5, A8, A10). They 
view these restrictions as immaterial to the contract with the 
second two defendants on the ground that the addendum merely 
adopted the "standard Agency Agreement and contained no other 
'terms' or 'provisions.'" Appellees' Br. at 18-19. The 
additional conditions and restrictions, including the 
requirements that plaintiffs produce an established quota of 
premiums in a set period of time and that they solicit only 
certain types of business, see Appellants' Br. at 5, were, 
however, undeniably incorporated into the agreement with the 
second two defendants. Indeed, it was precisely because the 
plaintiffs ostensibly failed to fulfill these additional

2 Even if evidence of record were relevant at this stage, 
the contract between plaintiffs and the second two defendants 
explicitly states that it was "effective October 21, 1983." 
Appellees' Br. at 19, n. 4. The parole evidence rule thus 
precludes consideration of evidence directly to the contrary.

4



conditions that The Home of Indiana and City Insurance cancelled 
their agency agreement with plaintiffs. See Complaint at para.
39; Appellees' Br. at 5.

With respect to the terms of the initial Agency Agreement 
between plaintiffs and the first two defendants, defendants have 
staked out the extreme position that if, at the time the contract 
was formed, defendants intended to discriminate but did not so 
state in the written Agency Agreement, the discrimination is not 
actionable under section 1981. See Appellees' Br. at 23-25.
Thus, for example, if the intent of defendants Home Insurance and 
Home Indemnity in December 1982 when they signed the Agency 
Agreement was to require their Hispanic agents to bring in more 
business and provide more documentation, to work under more 
difficult conditions than white agents, or to behave in a more 
deferential manner, defendants take the position that such 
discrimination is beyond the scope of section 1981. When there 
was discrimination from the outset in contract formation, 
however, it violates section 1981 as construed in Patterson 
regardless of whether the discriminatory terms were memorialized 

in writing.3

3 Defendants are wrong when they describe the 
discrimination as starting only 9 months after the formation of 
the initial agency agreement. See Appellees' Br. at 14-15. Even 
the district court characterized the Complaint as having alleged 
that the discrimination began "almost immediately." 50 F.E.P.Cases 
at 1173. Defendants also incorrectly assert that plaintiffs, in 
their argument in support of amendment of the Complaint, have 
identified no. new allegations that would support a section 1981 
claim. Examples of such allegations are set forth in Appellants' 
Br. at 16-17.

5



III. PLAINTIFFS' STANDING IS NOT BASED ON THE 
RIGHTS OF THIRD PARTIES

The insurance companies argue that plaintiffs have no 
•standing to challenge defendants' discriminatory refusal to enter 
into insurance contracts made by plaintiffs as agents on the 
ground that the discrimination is directed only at third parties. 
Appellees' Br. at 26-34. Contrary to defendants' assertions, 
however, plaintiffs have alleged that when defendants 
discriminatorily rejected insurance contracts with plaintiffs' 
clients, they violated plaintiffs' own rights under section 1981 
in two respects. Plaintiffs claim violations of their rights (1) 
to "make" insurance contracts between ATG's clients and the 
defendant insurance companies, and (2) to enter into individual 
unilateral contracts with the insurance companies for commissions 
on each insurance policy the company issued to an ATG client. 
Neither claim asserts or depends on the rights of third parties.

ATG made contracts and had a right under section 1981 not to 
be discriminated against in so doing.4 This was plaintiffs'

4 The existence of this right depends on statutory 
construction of section 1981, and not on appellants' status under 
insurance law or agency principles; the right exists irrespective 
of whether defendants are correct that an insurance agent would not 
be a party to the individual insurance contracts the agent 
arranged. See Appellees' Br. at 28-29.

It is immaterial to the construction of section 1981 whether 
the statute by its plain language gives appellant more protection 
than "other employees or agents simply because of the fortuity that 
he arranges contracts." Appellees' Br. at 26. Appellants lack 
rights under Title VII because they are not employees, regardless 
of how anomalous that may seem. By the same token, persons such 
as insurance agents, realtors, or wholesale buyers whose work

6



right, independent of the rights of ATG's clients and of the 
defendant insurance companies to make contracts with one another 
free from discrimination. See Appellants' Br. at 18-22. To the 
extent that defendants contracted unequally with plaintiffs based 
on assumptions about the race of their clients, see Appellants'
Br. at 21, this, too, was discrimination directly against 
plaintiffs because the assumptions were based on plaintiffs' 
race, not the race of their clients.

ATG also entered into unilateral contracts with the 
insurance companies each time ATG brought in business which the 
companies accepted. See Appellants' Br. at 22-23. These 
contracts, which are distinct from both the Agency Agreement and 
the individual insurance policies, were contracts to which only 
plaintiffs and defendants were parties.. Thus> plaintiffs' right 
to enter such contracts on a nondiscriminatory basis is their 
own, and not the right of third parties.

Even if defendants' position that ATG does not have standing 
to assert the section 1981 rights of its clients were relevant, 
it is contrary to law. Plaintiffs do have standing to assert 
their clients' rights. See Sullivan v. Little Hunting Park, 396 
U.S. 229 (1969); DeMatteis v. Eastman Kodak, 511 F.2d 306, 312 
(2d Cir. 1975) modified on other grounds, 520 F.2d 409 (2d Cir.

involves the making of contracts —  whether on their own behalf or 
for an employer or principal —  are protected by the plain terms * 
of section 1981 where others might not be.

7



1975) .5
IV. PATTERSON DOES NOT BAR SECTION 1981 CLAIMS OF 

DISCRIMINATORY CONTRACT TERMINATION
Defendants concede that the question whether section 1981 

extends to contract termination was not presented in Patterson 
and that the Supreme Court accordingly did not decide it. 
Appellees' Br. at 35, 37-38. Under the circumstances, this 
Circuit should either follow its own established precedent that
section 1981 covers contract termination, see Lopez v._S.B.
Thomas. Inc.. 831 F.2d 1184, 1187-88 (2d Cir. 1987), or refrain 
from deciding this appeal pending decision in Lytle. Defendants

5 Cases cited by defendants do not sustain the opposite 
contention. Judge Haynesworth's view in Mackey v. Nationwide Ins. 
Co.. 724 F.2d 419 (4th Cir. 1984), is founded on a misapprehension 
of Sullivan. 396 U.S. 229. In his view, the white plaintiff in 
Sullivan who challenged the defendant's refusal to assign a 
property interest to a Black family had standing to sue only 
because the Black purchasers would not themselves be in a position 
to vindicate their own rights. Mackey, 724 F.2d at 422. In fact, 
however, the Black purchasers were co-plaintiffs in Sullivan. 396 
U.S. at 235. This and other Circuits have not read Sullivan as 
barring white plaintiffs from challenging race discrimination where 
Blacks also harmed by the discrimination themselves might be able 
to sue.

Defendants' reliance on The Dartmouth Review v. Dartmouth 
College. 1989 U.S. App. LEXIS 16928, *11 n. 3 (1st Cir., Nov. 9, 
1989), is similarly misplaced. The First Circuit in that case 
cited DeMatteis with approval, and dismissed the claims of the 
white plaintiffs precisely because the plaintiffs had not asserted 
that they or anyone else were harmed by race discrimination against 
others (or against themselves), but had claimed that they were 
persecuted because of their own racist views. Gersman v . Group 
Health Ass'n. 1989 U.S. Dist. LEXIS 13449 (D.D.C. Nov. 13, 1989), 
merely holds that emotional distress is an insufficient basis for
standing under section 1981. And the Tenth Circuit in Phelps_v̂ _
The Witchita Eagle-Beacon, 886 F.2d 1262, 1267 (10th Cir. 1989), 
expressly reiected the lower court's holding that the plaintiff in 
that case lacked standing, affirming only on the separate ground 
that defamation is not actionable under section 1981.

8



are wrong that the contract-termination issue is not before the 
Court in Lvtle. The first question presented in the respondent's 
brief addresses whether section 1981 covers discriminatory 
termination. Brief for Respondent, Lvtle v. Household 
Manufacturing. Inc.. 88-334 (filed October 19, 1989), and the 
petitioner also discusses the issue in his reply brief. Reply 
Brief for Petitioner, at 17-23 (filed November 29, 1989).
(Relevant pages of each brief attached as addendum hereto).6

6 Regarding the merits of the termination claim, although 
defendants characterize as "legally unsound" plaintiffs' contention 
that termination of their at-will contract can equallybe described 
as refusal to re-contract, at least one federal district court has 
adopted that view. See Barkan v. Hilti. Civil Action No. 89-C- 
318-E (N.D.Okla. October 12, 1989)(attached hereto).

9



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

original Brief of Plaintiffs-Appellants, the decision below 
should be reversed and the case should be remanded to the 
district court.

Respectfully submitted,

295 Madison Avenue/ f  
New York, New York 10017 
(212) 986-7468

HARRY C. KAUFMAN
274 White Plains Road 
Eastchester, New York 10707 
(914) 961-1755

CORNELIA T.L. PILLARD 
99 Hudson Street 
16th Floor
New York, New York 10013 
(212) 219-1900

Attorneys for Plaintiff-Appellant

Dated: New York, New York
December 22, 1989

10



CERTIFICATE OF SERVICE

This will certify that I have this date served the
following counsel for Defendants-Appellees with true and correct
copies of the foregoing Reply Brief of Plaintiff-Appellants by
placing said copies in the U.S. Mail at New York, New York
postage thereon fully prepaid addressed as follows:

Lawrence 0. Kamin 
Willkie, Farr & Gallagher 
One Citicorp Center 
153 East 53rd Street 
New York, New York 10022
Mitchel H. Ochs 
Willkie, Farr & Gallagher 
One Citicorp Center 
153 East 53rd Street 
New York, New York 10022

Executed this 
York.



In The

Satprrmr (£nurt uf th? llnilrii S’talrs
October T erm, 1989

No. 88-334

J ohn S. Lytle,
Petitioner,

v.

Schwitzer U.S. Inc .,
A Subsidiary of Schwitzer Inc .,

Respondent.

On Writ of Certiorari to the United States Court of Appeals 
for the Fourth Circuit

BRIEF FOR RESPONDENT



QUESTIONS PRESENTED

1. Whether Petitioner is precluded from maintaining a 
cause of action for discriminatory termination and re­
taliation under this Court’s holding in Patterson v. Mc­
Lean Credit Union that 42 U.S.C. § 1981 does not en­
compass conduct after the formation of an employment 
contract?
2. WTas the Court of Appeals correct in applying collat­
eral estoppel to Petitioner’s § 1981 claims after a full 
and fair hearing was held on his Title VII claims, the 
elements of which are identical to those under § 1981?
3. Does the Seventh Amendment require that Petitioner 
receive a new jury trial on his § 1981 claims when he 
failed to establish a prima facie case of discrimination 
during the trial of his Title VII claims?

(i)



nied, 320 U.S. 214 (1943U Similarly, when a directed 
verdict is appropriate, the erroneous denial of a jury trial 
constitutes harmless error. Laskaias i\ Tnomburfj, 73o 
F.2d 260 C 3d C i r . cert, denied, 469 U.S. 886 11984 >. 
Here, the district court dismissed Lytle’s Title VII dis­
charge claim at the conclusion of Lytle’s evidence, ruling, 
as a "matter of law. that Lytle had not established the ele­
ments of a prima facie case. The court made a similar 
ruling regarding the retaliation claim at the conclusion 
of all the evidence. Thus, Petitioner’s evidence would not 
have withstood a motion for a directed verdict and, as a 
consequence, any error regarding denial of a jury trial 
would ha've to be deemed harmless error.

ARGUMENT

I. THE FOURTH CIRCUIT’S JUDGMENT SHOULD BE 
AFFIRMED ON THE BASTS OF THIS COURT’S DE­
CISION IN PATTERSON v. McLEAN CREDIT 
UNION

Petitioner contends that the Fourth Circuit’s decision 
improperly deprived him of his Seventh Amendment right 
to a jury trial on his 5 1981 claims for discriminatory 
discharge and retaliation. However, the Court’s recent
decision in Patterson v. McLean Credit Union, -----  U.S.
___ , 105 L. Ed. 2d 132 (1989). makes clear that § 1981
does not provide a cause of action for discriminatory dis­
charge, or for retaliation in response to protected activi­
ties. Accordingly, this Court should affirm the Fourth 
Circuit’s judgment on the basis of Patterson or, alterna­
tively. dismiss the writ of certiorari as improvidently 
granted. See Picc'rillo v. New York, 400 U.S. 548, 548- 
59 '1971) i writ dismissed as improvidently granted be­
cause intervening court decision meant that constitutional 
question on which Court granted certiorari was no longer 
necessary to resolution of the case).

Initially, it is well settled that Schwitzer, as the pre­
vailing party below, may defend the appellate court’s

11



12

judgment on any ground raised in the courts below, 
whether or not that ground was relied upon, rejected or 
even considered by the lower courts. E.g., Washington v. 
Yakima Indian Nation, 439 U.S. 463, 476 n. 20 (1979) ; 
United States v. New York Telephone Co., 434 U.S. 159, 
166 n. 8 (1977) (“prevailing party may defend a judg­
ment on any ground which the law and the record per­
mit. . . .” ). Indeed, a respondent or appellee before this 
Court may even defend a judgment on grounds not previ­
ously urged in the lower courts,9 and this is especially 
appropriate where, as here, an intervening decision by 
this Court has changed controlling law. See Sure-Tan, 
Inc. v. NLRB, 467 U.S. 883, 896 n. 7 (1984) (permitting 
a petitioner, who is normally limited to issues presented 
in the petition for certiorari, to raise issue for first time 
before this Court because bf intervening change in con­
trolling law). Finally, it is particularly appropriate for 
the Court to consider alternative statutory grounds for 
affirmance where, as here, the Petitioner has posed a con­
stitutional challenge to the decision below. See Jean 'v. 
Nelson, 472 U.S. 846. 854 (1985), quoting Spector Motor 
Co. v. McLaughlin, 323 U.S. 101, 105 (1944) (federal 
courts must consider statutory grounds for judgment be­
fore reaching any constitutional questions because “ [i]f 
there is one doctrine more deeply rooted than any other 
. . ., it is that we ought not to pass on questions of con- 
stitutionalitv . . . unless such adjudication is unavoid­
able” ).

In short, both this Court’s precedents and the posture 
of this case suggest very strongly that the Court should 
dispose of the instant case on the Patterson issues rather

9 Schu-eiker v. Hogan. 457 U.S. 569, 585 & n. 24 >1982), quoting 
Blum v. Ba-con. 457 U.S. 132. 137 n. 5 (1982) (“Although appellees 
did not advance this argument in the District Court, they are not 
precluded from asserting it as a basis on which to affirm the court’s 
judgment . . . [because it': ‘is well accepted that . . .  an appellee 
may rely upon any matter appearing in the record in support of 
the judgment.’ ”).



13

than the Seventh Amendment issues raised by Petitioner. 
Here, Schwitzer has asserted from the outset that Peti­
tioner could not maintain causes of action for termina­
tion and retaliation under § 1981 i’J.A. 44, 51-56). Pat­
terson provides significant new guidance on that question, 
and it presents purely legal, non-constitutional issues that 
can be decided on the instant record with no prejudice to 
the parties. Accordingly, we turn now to a discussion 
of how Patterson impacts this case and requires affirm­
ance of the Fourth Circuit’s judgment.10

The relevant portion of § 19S1 under scrutiny in Pat­
terson provides that “ [a] 11 persons within the jurisdic­
tion of the United States shall have the same right in 
every State and Territory to make and enforce contracts 
. . . as is enjoyed by white citizens. . . .” 42 U.S.C. § 1981. 
The Patterson Court emphasized that, contrary to the 
trend in lower court cases, § 1981 “cannot be construed 
as a general proscription of racial discrimination in all 
aspects of contract relations.” Patterson, 105 L. Ed. 2d at 
150. Rather, the Court held that the right “to make” 
contracts “extends only to the formation of a contract,” 
that is, “the refusal to enter into a contract with some­
one, as well as the offer to make a contract only on dis­
criminatory terms.” Id. Thus, the Court refused to ex-

10 The Patterson decision applies retroactively. See, e g., Morgan
v. Kansas City Area Transportation Authority, ------  F. Sapp. ------
(W.D. Mo. 1989) [1989 Westlaw 101802]; Leong v. Hilton Hotels,
Inc., ------  F. Supp. ------ . 50 FEP Cases 733 (D. Hawaii 1989).
The majority of courts faced with this issue have implicitly found 
that the decision should be applied retroactively. See, e.g., Overby 
v. Chevron U.S.A., Inc., 384 F.2d 470 (9th Cir. 1989) ; Brooms v. 
Regal Tube Co., 381 F.2d 412 (7th Cir. 1989). But see Gillespie 
v. First Interstate Bank of Wisconsin Southeast, 717 F. Supp. 649 
(E.D. Wise. 1989). Retroactive application of judicial decisions is 
the rule, not the exception. United States v. Givens, 767 F.2d 574, 
578 (9th Cir.), cert, denied. 474 U.3. 953 (1985). In addition, 
“ [t]he usual rule is that federal cases should be decided in accord­
ance with the law at the time of decision.” Goodman v. Lakens 
Steel Co., 482 U.S. 656, 662 (1987).

.3 .P II- j 1 mm*. T

■ -V .



14

tend this aspect of § 1981’s coverage to discriminatory 
conduct occurring after the formation of a contract:

[T]he right to make contracts does not extend, as a 
matter of either logic or semantics, to conduct by 
the employer after the contract relationship has been 
established, including breach of the terms of the con­
tract or imposition of discriminatory working condi­
tions. Such post-formation conduct does not involve 
the right to make a contract, but rather implicates 
the performance of established contract obligations 
and the conditions of continuing employment. . . .

105 L. Ed. 2d at 150-51. See also 105 L. Ed. 2d at 152, 
155. Consistent with this rationale, the Court held that 
Patterson’s claim of pervasive workplace racial harass­
ment involved only post-formation conduct which was not 
cognizable under § 1981.11

The Court gave a similarly restrictive reading to the 
second relevant aspect of § 1981. The Court held that 
the right “to enforce” contracts established in § 1981 
“embraces protection of a legal process, and of a right 
to access to legal process, that will address and resolve 
contract-law claims without regard to race.” 105 L. Ed. 2d 
at 151. While this protection may extend to private 
race-based efforts to impede access to contract relief.r- 11 12

11 The Court recognized that § 19S1 may cover port-formation 
conduct in those limited situations where the conduct denies an 
employee the right to “make” a new employment contract with the 
employer. For example, a race-based refusal to promote may or may 
not be actionable under § 1981. depending upon whether the nature 
of the change in position is such that it would involve entering into 
a new contract with the employer. 105 L. Ed. 2d at 156. “Only 
where the promotion rises to the level of an opportunity for a new 
and distinct relationship between the employee and the employer is 
such a claim actionable under § 1981.” Id.

12 The Court cited the example of a labor union which bears ex­
plicit responsibility for prosecuting employee contract grievances 
and which carries out that responsibility in a racially discrimina-



15

the right “does not . . . extend beyond conduct by an 
employer which impairs an employee’s ability to enforce 
through legal process his or her established contract 
rights.” Id.

Aside from the fact that these constructions comport 
with the “plain and common sense meaning” of § 1981’s 
statutory' language 1105 L. Ed. 2d at 156 n. 6), the 
Patterson Court also recognized that strong policy con­
siderations support such limited constructions. 105 L. 
Ed. 2d at 152-53. An employee who suffers post-forma­
tion discrimination may seek relief under the adminis­
trative procedures provided in Title VII. In that statute, 
Congress established an elaborate administrative pro­
cedure designed to assist in the investigation of discrim­
ination claims and to work towards the resolution of 
these claims through conciliation rather than litigation. 
See 42 U.S.C. > 2000e-5ibi. Only after these procedures 
have been exhausted may a plaintiff bring a Title VII . 
action- in court. See 42 U.S.C. § 2000e-51 f ) f 1 ). Thus, 
permitting an emplovee to pursue a parallel claim under 
§ 1981 without resort to the statutory prerequisites would 
“undermine the detailed and well-crafted procedures for 
conciliation and resolution of Title VII claims,” render­
ing such procedures “a dead letter.” Patterson, 105 
L. Ed. 2d at 153.

Applying the Patterson standards to the instant case, 
it is clear that the Petitioner has no viable claims under 
§ 1981. Petitioner does not contend that Respondent 
prevented him from entering into or enforcing a con­
tract because of his race. Instead, he contends that Re­
spondent discriminatorily discharged him and then re­
taliated against him for filing a charge with the EEOC. 
Petitioner’s right under § 1981 to make or enforce a con­
tract on a race-neutral basis is therefore not implicated.

tory manner. 105 L. Ed. 2d at 151, citing Goodman v. Lu.kens Steel 
Co., supra..



16

First, a discharge is, by definition, post-formation con­
duct which does not involve an employee s right to make 
or enforce a contract. Such conduct, therefore, falls out­
side the purview of § 1981. See Leong v. Hilton Hotels 
Corp supra; Copperidge v. Terminal Freight Handling
Co., -__ F. Supp. ------- 50 FEP Cases 812 (W.D. Tenn.
19891 ; Sofferin v. American Airlines, Inc., 717 F. Supp. 
587 (N.D. 111. 1989) ; Hall v. County of Cook, State of
Illinois,----- F. Supp.------- (N.D. 111. 1989) [1989 West-
law 99802] ; Greggs v. Hillman Distributing Co., -----
F. Supp. ----- . 50 FEP Cases 1173 (S.D.N.Y. 1989).
But see Padilla v. United Air Lines, 716 F. Supp. 485 
(D. Colo. 1989).13

Second, Petitioner’s discharge claim is, at bottom, noth­
ing more than an assertion that he was punished more 
severely for absenteeism than were similarly situated 
white employees. See Pet. Br. at 8-12. This is pre­
cisely the type of conduct the Patterson dissent argued 
should be covered by 5 1981. See 105 L. Ed. 2d at 170 
(stating that § 1981 was intended to prohibit the prac­
tice of handing out severe and unequal punishment for 
perceived transgressions” ). However, the Patterson ma­
jority clearly rejected the dissent’s position that such 
discriminatory rule application is sufficient to state a 
claim under § 1981. 105 L. Ed. 2d at 155. While rec­
ognizing that such post-formation discrimination might 
be evidence that any divergence in explicit contract 
terms is due to racial animus, the majority nevertheless 
emphasized that the “critical . . . question under § 1981 
remains whether the employer, at the time of the forma­
tion of the contract, in fact intentionally refused to

13 This district court decision upholding- discharge claims under 
§ 1981 demonstrates that the lower courts have not. in fact, had 
"little difficulty applying the straightforward principles that (the 
Court announced in Patterson}." Patterson. 105 L. Ed. 2d at 156 
n. 6. This provides an additional reason why the Court should take 
this opportunity to reiterate the reach of § 1981 and the Patterson 
decision.



17

enter into a contract with the employee on racially neu­
tral terms. ’ Id. (emphasis in original).

Finally, Petitioner does not and cannot contend that 
his discharge was a race-based effort to obstruct his 
access to the courts or other dispute resolution processes, 
indeed, his discharge had nothing to do with any effort 
to enforce contract rights or claims.

In short, the Petitioner’s discharge claim in the instant 
case involves post-formation conduct unrelated to his right 
to make or enforce a contract, and hence it is not coe- 
nizable under § 1981.

Petitioner’s retaliation claim is even farther afield 
from § 1981 coverage. First, like Petitioner’s discharge 
claim, the retaliation claim involves only post-formation 
conduct and therefore is not actionable under § 1981. 
Overby v. Chevron U.S.A., Inc., supra; Williams v. Na­
tional Railroad-Passenger Carp.. 716 F. Supp. 49 iDDC
1989) ;•Danger-field v. Mission Press, ___  F Supp ___ '
50 FEP Cases 1171 (N.D. 111. 1989)

Second, the prohibition of retaliation against employees 
or filing discrimination charges is purely a creature of 

statute, having come into existence only by an express 
prohibition in Section 704(a) of Title VII, 42 U SC 
§ 2000e-3 (a) . Indeed, the prohibition specifically relates 
only to the exercise of rights conferred by Title VII. 
Not only did the right to be free from such retaliation 
not exist before the passage of Title VII, see Great Amer­
ican Savings & Loan Association v. Novotny 442 U S 
366. 377-78 (1979 ). but it would be inappropriate 'to 
inject rights created by one statute into another statute 
passed approximately 100 years earlier. See Warren v.
Halstead Industries, ----- - F. Supp. -----  .33 FEP Ca<;ps
1416 0I.D.N.C. 1983, (questioning whether a caule 
of action created by Title VII is actionable under § 1981). 
See also Saldivar v. Cadena, 622 F. Supp. 949 (WD



18

Wise. 1985) (retaliation for advocacy of equal protec­
tion does not support a § 1981 claim i .

Moreover, this conclusion is particularly appropriate 
given the Patterson Court’s admonition against stretch- 

s 1981 to protect conduct already covere 
V III ^Patterson, 105 L. Ed. 2d at 153 The Court s con-
cen t'w ith  frustrating Title V II’s c o n d it io n  goals, to - 
oussed above, “is particularly apt where the very con 
duct complained of centers around one of Title VII s con-
“ procedures, the filing of an EEOC complamt^
Overbv v Chevron U.S.A. Inc., 884 F—d »
FEP Cases at 1213. Since 5 704(a) of Title y n  Pro­
scribes Respondent’s alleged retaliatory- conduct, the Court 
fhouU “d'edine to twist the interpretation of another 
statute (§ 1981) to cover the same conduct. lOo L. Ed.
2d at 153.

Finally, and perhaps most importantly, retaliation for
filincr Title VII charges is not even a race-based issue, filing Title v u  cnai0« 8 eoveraee The anti-wViifh is the sine qua non of > lyo-i co%erag
retaliation provisions of Title VII are designed to pro- 
tect channels of information, not freedom from race- 
based conduct, and they are equally availab.e to em- 

,• -4? fVipiy rac° 5ex. national orurm.

of Title VII “extends protection to all who a - 
‘participate’ regardless of their race or sex. k Thu-. P 
quite simply, a claim of retaliation for filing Tire VI 
charges has nothing to do with an employee » >,19S1 ™  
to make and enforce contracts 
citizens Indeed, even before this Lomt.  
c ion manv lower courts had held that discrimination 
S o n  factors other than race, such as retaliation in
violation of S 704fat of Title VU does not violate^ 1981.
See eg., Hudson v. IBM. -----  F. -upp. •
J  i; d NY 1975'; Takcall v. T7 ERD. Inc.,
^ % 9 Supp _ , 2 3  FEP Cases 947 <M.D. Fla. 1979 - ;



o

Grant v. Bethlehem Steel Corp., -----  F. Supp. ----- , 22
FEP Cases 6S0 iS.D.N.Y. 1978); Barfield v. A.R.C. Se-
curity, Inc., -----  F. Supp. ----- , 10 FEP Cases 739
iN.D. Ga. 19751.14 The correctness of that conclusion 
has only been confirmed by Patterson’s mandate that 
< 1981 be interpreted in accordance with the plain and 
common sense meaning of its terms and that courts 
should avoid “twist [ing] the interpretation of [§ 1981] 
to cover the same conduct” covered by Title VII. 105 
L. Ed. 2d at 153.

In sum. while both of Petitioner's claims are cogniza­
ble under Title VII. and indeed have been given full 
consideration under that statute, neither is cognizable 
under § 1981. Accordingly, this Court should either af­
firm the Fourth Circuit’s judgment on the basis of 
Patterson or dismiss the writ of certiorari as improv- 
idently granted.

II THE SEVENTH AMENDMENT DOES NOT RE­
QUIRE RETRIAL OF ISSUES ALREADY DECIDED 
BY THE DISTRICT COURT

The preceding section demonstrates that the funda­
mental predicate of Petitioner’s Seventh Amendment ar­
gument no longer exists. Specifically, the collateral es­
toppel and jury trial issues arose in the Fourth Cir­
cuit only because the court assumed that the district 
court had erroneously dismissed Petitioner’s § 1981 
claims. If dismissal was proper—and the foregoing sec­
tion shows it was—then no new trial is necessary and, 
a fortiori, the question of whether collateral estoppel is 
applicable does not arise. As a consequence, the Court 
need not reach the collateral estoppel Seventh Amend-

14 Although there are cases to the contrary (e.g., Goff v. Conti­
nental Oil Co.. 678 F.2d 693 (5th Cir. 1982)), they are not in keeping 
with the .statutory intent of 5 1981 to prohibit employment deci­
sions based on race, rather than post-discharge actions allegedly 
based on participation in statutory proceedings under Title VII.

19



No. 88-334

In  The

Supreme Court of tf)t ^HnitEb states
October  Te r m , 1989

John S. Lytle 

v.
Petitioner,

Household Manufacturing, Inc., 
d/b/a Schwitzer Turbochargers,

Respondent.

REPLY BRIEF FOR PETITIONER

Julius LeVonne Chambers 
Charles Stephen Ralston 
Ronald L. E llis 
E ric Schnapper 
Judith Reed*

NAACP Legal Defense & 
Educational Fund, Inc.

99 Hudson Street 16th Floor 
New York, New York 10013 
(212) 219-1900

Penda D. Hair 
1275 K Street, N.W.
Suite 301
Washington, D.C. 20005 
(202) 682-1300

Pamela S. Karlan 
University of Virginia 

School of Law 
Charlottesville, VA 22901 
(804) 924-7810

Attorneys for Petitioner
* Counsel of Record

PRESS OF BYRON S. ADAMS. WASHINGTON, D.C. (202) 347-8203



CONTENTS

I. The Seventh Amendment Compels Reversal of
the Court of Appeals’ Judgment ...................  1 II.

II. Patterson v. McLean Credit Union Does Not
Preclude Petitioner From Maintaining This 
Action . . ..........................................................  10



is of constitutional dimension, it is an issue the Court 

need not reach in order to resolve the jury trial question 

in our favor.

(1) Discriminatory Discharge. Respondent urges 

this Court to hold that all discriminatory discharges are 

not actionable under section 1981. If the application of 

section 1981 to claims of this sort necessarily gave rise to 

a simple rule, either including or excluding all cases that 

might be characterized as "discharges," this might be an 

issue that could appropriately be resolved at this 

juncture. But because of the widely differing events that 

may occur when an employee loses his or her job, the 15

15(...continued)
Tennessee Valiev Authority. 297 U.S. 288, 346-48 (1936)(Brandeis, J., 
dissenting). In the instant case the constitutional issue has already 
been resolved, and repeatedly so, in petitioner’s favor (P. Br. 34-41), 
and involves not a potential conflict with a co-equal branch of 
government, but this Court’s special responsibility to supervise 
compliance with the Seventh Amendment by the lower federal courts. 
On the other hand, the complex statutory questions raised by 
respondent regarding the meaning of Patterson are entirely novel, 
having their origins in a decision less than six months old.

17



application of Patterson and section 1981 to discharges, 

like their application to promotions, is complex and fact- 

specific.

The mere announcement that an employee is fired 

may by itself do no more than terminate a contractual 

relationship; if that were all that occurred when a 

particular employee was dismissed, such an event might 

arguably constitute pure post-formation conduct.16 * But 

what actually occurs in a discharge case may in fact be 

more complex. Having been formally dismissed, the

16 Several post-Patterson cases hold that all racially motivated 
discharges are actionable under section 1981. See, e.g., Birdwhistle 
v. Kansas Power and Light Co., 51 FEP Cases 138 (D. Kan. 1989); 
Booth v. Terminix International. 1989 U.S.Dist. LEXIS 10618 (D. Kan. 
1989). At least where the discharged worker was an "at will" 
employee, this conclusion seems consistent with Patterson, since at- 
will employment is commonly regarded as "hiring at will". Corbin on 
Contracts, § 70 (1952); Martin v. New York Life Ins. Co., 148 N.Y. 
117, 42 N.E. 416,417 (1895). An employer who fires an at-will 
employee is not terminating an existing contract, but refusing to 
make new additional unilateral contracts. Since, however, at least 
some discharges of at-will or other employees .are undeniably still 
actionable after Patterson, and the instant complaint thus cannot be 
dismissed at this juncture, it is not necessary to decide whether all
discharges are still actionable.

18



potential plaintiff, technically already an ex-employee, at 

times seeks to get back his or her job, or, perhaps, some 

other position at the firm.17 That a dismissed employee 

might immediately seek that old job, or some other 

position, is hardly surprising; "the victims of 

discrimination want jobs, not lawsuits." Ford Motor Co. 

v. EEOC. 458 U.S. 219, 231 (1982).18 Since the 

announcement of the dismissal, as respondent itself 

argues, ends the old contractual relationship, an ex­

employee’s renewed efforts to work at the firm constitute 

an attempt to make a new contract. If an employer 

spurns these overtures of a newly dismissed employee 

because he or she is black, that discriminatory act would

17 See, e.g., Jones v. Pepsi-Cola General Bottlers, 1989 
U.S.Dist. LEXIS 10307 (W.D.Mo. 1989)(discharge claim actionable 
under section 1981 because the employee, after being told he was 
fired, "requested a different job, offering to sweep floors if necessary, 
to stay employed. Defendant refused.").

18 Indeed, petitioner sought reinstatement herein. Joint 
Appendix (JA) 13, par 3.

19



quite literally be a "refusal to enter into a contract1

within the very terms of Patterson.19 That would 

obviously be so in the case of a dismissed worker who 

applied a year later for employment, as occurred in 

McDonnell Douglas v. Green, 411 U.S. 792 (1978). 

There is no principled basis for treating differently a 

dismissed employee who seeks reinstatement, or a new 

position, a day, an hour, or a minute after his or her 

dismissal. On four occasions prior to Patterson this 

Court held actionable under section 1981 the discharge of 

a former employee; in each case the employee, after

19 Padilla v. United Air Lines. 716 F. Supp. 485, 490 n. 4 (D. 
Colo. 1989)("Defendant’s refusal to reconsider plaintiff for rehire due 
to discriminatory practices is clearly prohibited by § 1981"); Jones 
v. Pepsi-Cola General Bottlers, 1989 U.S.Dist. LEXIS 10307 
(W.D.Mo. 1989)("in refusing on the basis of race to make a new 
contract [with the dismissed worker], defendant violated section 
1981").

20



having been told of the dismissal decision, had taken 

steps to induce the employer to restore him to his job.20

Section 1981 would also be applicable to the 

termination decision itself if the employer, for racial 

reasons, fired a black employee for misconduct for which 

white employees were or would have been disciplined in 

a less harsh manner. Such discriminatory disciplinary 

practices would violate the last clause of section 1981, a 

provision not at issue in Patterson, which requires that 

blacks "shall be subject to like punishment . . . and to no 

other" as whites. The equal punishment clause, on the 

other hand, would have no application to an employer 

who, with no pretense of disciplinary motive, selected 

employees for discharge on the basis of race.

20 McDonald v. Santa Fe Trail Transportation Co., 427 U.S. 
273, 275 (1976)(grievance); Delaware State College v. Ricks, 449 
U.S. 250, 252 (1980)(appeal of termination decision); St. Francis 
College v. Al-Khazraii. 481 U.S. 604, 606 (1987)(appeal of 
termination decision); Goodman v. Lukens Steel Co., 482 U.S. 656, 
664 (1987)(grievance).

21



The complaint in this case, filed almost five years 

before Patterson, understandably does not address 

specifically all of the additional subsidiary facts that may 

be relevant, or even critical, after Patterson. The 

complaint does allege that respondent, prior to dismissing 

petitioner for an alleged violation of company rules, had 

chosen not to discharge whites "who have committed 

more serious violations of the company’s rules" than had 

petitioner. JA 8, par. 15. This claim clearly falls within 

the equal punishment clause of section 1981. The 

complaint does not indicate, on the other hand, what 

petitioner may have said to company officials after the 

initial notice to petitioner that he had been dismissed; 

affidavits submitted by respondent indicate that there 

were at least two subsequent meetings between those 

officials and petitioner before petitioner finally left the

22



plant.21 Under the Federal Rules of Civil Procedure, 

petitioner was not required in his 1984 complaint "to set 

forth specific facts to support [his] allegations of 

discrimination," or to anticipate any additional 

requirements that might follow from this Court’s 1989 

decision in Patterson. Conlev v. Gibson, 355 U.S. 41, 47- 

48 (1957).

(2) Retaliation. Respondent urges this Court to 

hold that no form of retaliation is ever prohibited by 

section 1981, arguing that all retaliation constitutes post­

formation conduct. (P. Br. 17-19). The application of 

section 1981 to retaliation claims raises a large number 

of different legal issues, because of the wide variety of 

circumstances in which some form of race related

21 Petitioner testified that while he was operating his machine 
Larry Miller told him of the termination. Tr. 143. Subsequently 
petitioner apparently met both with A1 Duquenne, the production 
superintendent, and then with the Employee Relations Department. 
Affidavit of A1 Duquenne, p. 3.

23



C S : 0 I  SB.  S D3Q0C * 30Ud l I

C r

IN THE UNITED STATES DISTRICT COURT 
FOR THE NORTHERN DISTRICT OF OKLAHOMA •

F I L E D
OCT 12 1939 C $

RITA G. BARKAN, et al., 
Plaintiffs,

Jack C Silver, Gerk 
U.S. DISTRICT COURT

v s . No. 89-C-318-e y
HILTI, INC.,

Defendant

O R D E R

This case is before the Court on three matters. First, 
Defendant, Hilti, Inc., appeals from the Magistrate's order denying 
a discovery stay during the pendency of the motion to dismiss. 
Second, Hilti moves to dismiss Plaintiffs' complaint on the grounds 
that the recent decision of the Supreme Court in Patterson— v̂ _
McLean Credit Union, ______  U.S. ------ , 109 S.Ct. 2363 (1989)
eliminates Plaintiffs' claims for relief under 42 U.S.C. §1981. 
Third, Plaintiffs move to dismiss Hilti's counterclaims. These

matters will be addressed in turn.
■ The-'Magistrate ' s~ O-rder- Denying—a- Stay of Discovery—
Title 28 U.S.C. §636 (1982) of the Federal Magistrate's Act 

provides that the Court may designate a Magistrate to hear and 
determine certain pretrial matters and in particular certain 
discovery matters such as the one now before the Court. 
Reconsideration of a Magistrate's order is, however, specifically 
limited. 28 U.S.C. § 636 (b) (1) (A) reads, •'... A judge of the court 
may reconsider any pretrial matter under this subparagraph (A)



0 0 0  • 3 9 b d  I I t’S : C 1 66. S 0 3Q

(  (

where it has been shown that the Magistrate's order is clearly 
erroneous or contrary to law."

A stay of discovery is not ordinarily warranted even during 
the pendency of dispositive notions, and it is a natter of 
discretion whether to impose a stay. The Court finds in this case 
that Defendant has not met its burden to show that the Magistrate's 
decision to deny a stay was clearly erroneous or contrary to law. 

pefendant's Motion to Dismiss $1931 Claims 
The Court is satisfied that the Patterson decision does not 

eliminate Plaintiffs' claims under 42 U.S.C. §1981. The Supreme 
Court held in Patterson that an employee's claim for racial 
harassment is beyond the scope of §1981. The employee in Patterson 
had an additional claim, however, that her employer violated §1981 
in failing to promote her. With regard to this claim the Court 
stated:

the question whether a promotion claim is 
actionable under §19 81 depends upon whether the 
nature of the change in position was such that 
it involved the opportunity to enter into a new 
contract with the employer.

____  U.S. at ___ , 109 S.Ct. at 2377. This language is instructive
in understanding the extent to which Patterson circumscribes 
§1981's application in the workplace. In this case Plaintiffs were 
at-will employees of Hilti. An at-will employee's contract is 
entered anew each day between the employee and the employer, c . f., 
Hinson v. Cameron. 742 P.2d 549 (Okla. 1987). It can be said, 
therefore, that the employee's discharge is a refusal by the 
employer to enter an employment contract with the employee. If the

2



F£ : £ I 5 8 .  S. .3.3CL

employer's refusal is racially motivated, then it is actionable 
under §1981. .An action pursuant to §1981 in such circumstances is 
completely consistent with the supreme Court's analysis of §1981's 
scope in Patterson. If Hilti's discharge of these at-will 
employees was racially motivated they may maintain an action under 
§1981. Hilti's motion to dismiss is accordingly overruled.

Plaintiffs' Motion to Dismiss Counterclaims for Defamation 
And Tortious Interference with Business Relationships

, The- only-specific, -clearly - articulated statements Hilti
alleges to be defamatory are those made in the Plaintiffs'
Complaint. As such, they are privileged statements under
Okla.Stat.tit. 12 §1443.1 (West Supp. 1989) which . protects
statements and expressions of opinion made in connection with
judicial proceedings. They are not statements that can be made
the subject of a defamation claim. See. Joplin _v. .Southwestern
Bell Telephone Co.. 753 F.2d 803 (10th Cir. 1983); White_v^
Basnett. 700 P.2d 666 (Okla.App. 1985). Hilti has not articulated
any other statements allegedly made by any of the Plaintiffs
outside of this action. Hilti's counterclaim for defamation is

therefore overruled.

F O O ' 38Ud 1 I

Plaintiffs' allegations in connection with this action

likewise do not form the basis for an actionable tort for

intentional interference with business or contractual

relationships.
The Plaintiffs' motions to dismiss these counterclaims are 

sustained.

3



i
£ £ : £ !  6 8 ,  5 33Q

(

IT IS THEREFORE ORDERED that the motion of Defendant Hilti to 

dismiss is overruled;
IT IS FURTHER ORDERED that the Magistrate's discovery order

of June 27, 1989 is affirmed; and
IT IS FURTHER ORDERED that the motions of Plaintiffs to

dismiss Hilti's counterclaims are sustained.
ORDERED this Hz. day of October, 1989.

£ 0 0 ' 3E'bd i i

f

. j •• ■

JLiC etJe-ttm
JAMES tf. ELLISON 
UNITED STATES DISTRICT JUDGE

4