On December 18, 2020, I published a blog all about 42 U.S.C. § 1981 (“§ 1981” or “Section 1981”) claims. I’m sure you remember it. It was pretty great, if I do say so myself.
But just in case, very briefly, § 1981 prohibits race discrimination and retaliation in contracting, which includes employment contracts. Further Section 1981 applies to at-will employment. That is significant because it means that if employers or companies are not subject to Title VII of the Civil Rights Act of 1964 because they are either too small or do not have employees, an aggrieved person can bring a claim under § 1981. Section 1981 claims can even be brought against local governmental entities through another statue located at 42 U.S.C. § 1983.
All of the above was discussed in my December 2020 blog. So why the follow up? Well, the second half of my blog is no longer accurate in the Fifth Circuit. You see, in the second half of my blog, I stated that third-party interference in contracts based on race was also prohibited by § 1981 even in the Fifth Circuit. The rest of the blog then detailed though citation to Supreme Court and Fifth Circuit precedent the basis for my belief. The analysis was based on a brief I had filed that was currently pending at the Fifth Circuit.
Well, as the saying goes, “time makes fools of us all.” Since that blog, the Fifth Circuit has ruled. And . . . I was wrong. Currently, in the Fifth Circuit, § 1981 only covers third-party interference in very limited circumstances. Specifically, the Fifth Circuit put it this way:
Since we decided Faraca, however, we have clarified the reason for the Director’s liability. The Director “was only nominally a third party,” we have explained. Id. Because the Director was acting on behalf of the State of Georgia when he instructed a subordinate not to hire Dr. Faraca, the Director and the State “were essentially one and the same.” Accordingly, we do not read Faraca to recognize, as Dr. Perry contends, a true third-party-interference theory of § 1981 liability. Rather, we read Faraca to allow § 1981 liability where the “third party” and the contracting party are “essentially one and the same.” No evidence suggests that VHS and PICCS are “essentially one and the same.” follows that Dr. Perry cannot recover against VHS under § 1981 on the theory initially articulated in Faraca and clarified in Bellows.
Perry v. VHS San Antonio Partners, LLC, dba North Central Baptist Hospital, 990 F.3d 918, 932-33 (5th Cir. 2021). In other words, essentially, a third-party interference claim can only be brought under § 1981 if the third-party is an employee, agent, or officer of the party with a contractual relationship.
So how am I going to get out of this with my credibility intact and on a positive, hopeful note for a broad view of § 1981 even in the Fifth Circuit? Well, how about this!
The Fifth Circuit’s reading conflicts with established law in eight other courts of appeals. In fact, the Fifth Circuit is the only court of appeals to read § 1981 so narrowly. The eight other courts of appeals that have addressed this issue have all found that § 1981 prohibits third-party interference in contracts based on race. Another way to put it would be that if Dr. Perry in the case quoted above had filed his lawsuit in the First, Second, Fourth, Sixth, Seventh, Ninth, Tenth, or Eleventh Circuits, he would have had a cause of action.
Because of this clear circuit conflict, Professor Eric Schnapper from the University of Washington School of Law, and I have just filed a petition for certiorari with the United States Supreme Court asking them to resolve this conflict. The Case is Melvin G. Perry v. VHS San Antonio Partners, LLC, dba North Central Baptist Hospital, No. 21-172.
Stay tuned because maybe my December 2020 blog will actually turn out to be correct . . . even in the Fifth Circuit!