ORDER DENYING DEFENDANT’S PARTIAL MOTION TO DISMISS
Before this court is the motion of Defendant, Trammell Crow SE, Inc., for partial dismissal of Plaintiffs’, Carolyn Henry (“Henry”), Deborah Sargent (“Sargent”) and Cyn
Plaintiffs allege that Defendant discriminated against them in the enjoyment of the benefits, privileges and conditions of their employment with Defendant and thereby violated § 1981. Plaintiffs also allege that Defendant violated § 1981 by discriminating against Sargent in the termination of her employment with Defendant.
For the following reasons, this court denies Defendant’s partial motion to dismiss.
I. FACTS
A. PLAINTIFF HENRY
Plaintiff Henry, an African-American, was hired by Defendant on February 24, 1997 to serve as Assistant Controller for the General Accounting Department at Defendant’s Southeast Financial Services, Investor Services Division in Memphis, Tennessee. (Def.’s Ans. ¶ 9). In her capacity as assistant controller, Henry was responsible for overseeing accounts receivable, accounts payable and cash management functions. (Def.’s Ans. ¶ 9). Henry also supervised thirteen assistant accountants in Defendant’s General Accounting group. (Pis.’ Compl. ¶ 9). Of these thirteen assistant accountants, only two are African-American. (Pis.’ Compl. ¶ 9). At the time of her hiring, Plaintiffs allege that Phyllis Bottom, a human resource coordinator for Defendаnt, warned Henry that the white subordinates in her group would resent her supervisory position because she was African-American. (Pis.’ Compl. ¶ 10). Defendant denies that this incident ever took place. (Def.’s Ans. ¶ 10).
On July 7, 1997, Henry scheduled a meeting with all of the Assistant Accountants in the General Accounting group. (Def.’s Ans. ¶ 11). The purpose of the meeting was to discuss Henry’s concerns about homophobic comments, racially offensive remarks, gossiping and inappropriate games among her staff. (Pis.’ Compl. ¶ 11). The parties dispute what occurred at this meeting. Plaintiffs aver that Henry merely expressed her opinion that the alleged conduct was unprofessional and violative of company policy. (Pis.’ Compl. ¶ 11). On the other hand, Defendant contends that Henry issued an “official verbal warning” to the group about spreading rumors. (Def.’s Ans. ¶ 11).
On July 8, 1997, Vince Dunavant (“Duna-vant”), Senior Vice President of Operations for Defendant’s Memphis office and Tina Hopkins (“Hopkins”), Human Resources Coordinator for Defendant, met with Plaintiff Henry to discuss what had occurred at the July 7, 1997 meeting. (Def.’s Ans. ¶ 12). At that meeting, Dunavant reprimanded Henry for holding what he considered to be an inappropriate meeting and for disciplining an entire group of employees without determining individual culpability. (Def.’s Ans. ¶ 12). Dunavant also informed Henry that several of the employees who had attended the July 7, 1997 meeting were upset by the verbal warning given to the group. (Def.’s Ans. ¶ 12). All of the employees who сomplained about Henry’s conduct were white. (Pis.’ Compl. ¶ 13).
After expressing disapproval of Henry’s conduct, Dunavant initiated a discussion with Henry about a job transfer. (Pis.’ Compl. ¶ 12). The parties disagree over the proper characterization of this discussion. Plaintiffs allege that Dunavant told Henry she would be transferred out of her department immediately. (Pis.’ Compl. ¶ 12). Plaintiffs aver that Henry accepted this transfer only because she feared she would lose her job if she declined. (Pis.’ Compl. ¶ 12). Plaintiffs allege that the new assignment was inferior to the position Henry formerly held because she was given no staff or supervisory duties in
During the week of July 28, 1997, Duna-vant and Joe Brown, Defendant’s Vice President and Regional Controller, interviewed three members of Henry’s former staff. (Def.’s Ans. ¶ 15). The parties disagree as to the purpose of these interviews. Plaintiffs assert that the interviews were conducted to determine whether Henry should be manager of the general accounting department. (Pis.’ Compl. ¶ 15). Based upon allegations that white managers or supervisors are not subjected to similar treatment, Plaintiffs allege these interviews constituted discriminatory treatment of Plaintiff Henry. (Pis.’ Compl. ¶ 15). Defendant contends that the interviews were conducted as nothing more than an investigation of Henry’s complaint that her staff had been “out to get her.” (Def.’s Ans. ¶ 15).
On December 1, 1997, Henry was informed that she would receive a one thousand dollar salary increase but no year-end bonus pay. (Pis.’ Compl. ¶ 19). Other assistant controllers received higher salary increases and merit bonuses. (Pis.’ Compl. ¶ 19). Plaintiffs allege that this discrepancy in compensation occurred because Defendant discriminated against Henry by requiring her to satisfy a higher performance standard than her white eoworkers. 1 (Pis.’ Compl. ¶20). Defendant, on the other hand, contends that the other assistant controllers received higher salary increases and bonuses only because thеy received higher performance ratings than Henry. (Def.’s Ans. ¶ 19).
Henry filed a charge against Defendant with the Equal Employment Opportunity Commission (“EEOC”) on January 2, 1998. (Pis.’ Compl. ¶21). In her charge, Henry alleged that she had suffered retaliation and discrimination on the basis of her race and color. (Pis.’ Compl. ¶ 21). The complaint avers that Henry suffered excessive scrutiny and isolation from Defendant’s employees after she filed her EEOC charge. (Pis.’ Compl. ¶ 21). Defendant denies the truth of these allegаtions. (Def.’s Ans. ¶ 21).
B. PLAINTIFF SARGENT
Plaintiff Sargent, an African-American, was hired by Defendant on March 3, 1997 as one of two Associate Accountants in the Southeast Financial Services, Investor Services Division. (Def.’s Ans. ¶ 22). Plaintiffs allege that Defendant informed Plaintiff Sargent at the time of her hiring that she would receive two weeks of training on the various accounting systems used by Defendant. (Pis.’ Compl. ¶22). Plaintiffs further allege that Sargent only received two days of training while five of Defendant’s white employees receivеd two weeks of training as new hires. (Pis.’ Compl. ¶22). Defendant denies this allegation of discrimination. (Def.’s Ans. ¶ 22).
Plaintiffs allege that Plaintiff Sargent was the victim of several incidents of racial discrimination by Defendant. Sargent avers that she was discriminated against when her supervisor, Cindy Clayton (“Clayton”), reprimanded her for leaving work early, even though Sargent had tried to advise Clayton of her early leave on four occasions. (Pis.’ Compl. ¶ 24). Plaintiffs also allege that Defendant allowed a racially hostile work environment to exist as evidenced by racially offensive remarks made in the presence of Sargent’s co-workers. (Pis.’ Compl. ¶¶25, 36). Defendant denies all of these allegations and explains that what Plaintiffs perceive as racially offensive remarks were really negative comments about working with accountants. (Def.’s Ans. ¶ 25).
After Sargent declined the offer of a new position, Clayton inquired as to whether Sargent would resign. (Def.’s Ans. ¶ 29). Sargent then submitted a letter of resignation. (Pis.’ Comрl. ¶ 29). Sargent avers that her position was eliminated because of racial animus and in retaliation for her protests against unfair treatment. (Pis.’ Compl. ¶ 30). Defendant contends that Sargent’s position was eliminated because of a division reorganization. (Def.’s Ans. ¶ 28).
The parties are in dispute as to whether Sargent received severance pay after her resignation. Sargent avers that she did not receive the standard severance pay given when an emplоyee’s position is eliminated without cause. (Pis.’ Compl. ¶ 29). On the other hand, Defendant contends Sargent received severance and vacation pay after her resignation. (Def.’s Ans. ¶ 29).
C. PLAINTIFF CASH
Plaintiff Cash, an African-American, was hired by Defendant on March 27, 1997. (Pis.’ Compl. ¶ 32). Cash was hired as an Assistant Accountant in the General Accounting Department of Defendant’s Memphis office on a temporary basis. (Pis.’ Compl. ¶ 32). At the time of Cash’s hiring, Defendant allegedly had a policy of providing new emрloyees two weeks of training at the start of their employment. (Pis.’ Compl. ¶ 32). Cash alleges that Defendant discriminated against her by only providing her with two and one-half days of initial training. (Pis.’ Compl. ¶ 32). Defendant denies both the existence of any training policy or that it discriminated against Cash. (Def.’s Ans. ¶ 32).
Although Cash is the only assistant accountant in the General Accounting Department with a bachelor’s degree, she is also the lowest paid assistant accountant in that department. (Pis.’ Compl. ¶ 33). Plаintiffs contend that the disparity between Cash’s educational background and her compensation is evidence of racial discrimination. (Pis.’ Compl. ¶ 33). Plaintiffs further allege that the two black accountants in Defendant’s General Accounting Department are the lowest paid accountants in the department, even though their responsibilities are identical to those of the other assistant accountants. (Pis.’ Compl. ¶ 33). Defendant denies Plaintiffs’ contentions that the black accountants are the lowest paid members of the General Accounting Department and that the responsibilities of all assistant accountants are identical. (Def.’s Ans. ¶ 33).
Plaintiffs assert that Cash has been isolated, shunned and threatened with termination since she complained to Defendant’s national human resource director about racial discrimination. (Pis.’ Compl. ¶ 34). Defendant denies these allegations. (Def.’s Ans. ¶ 34).
II. STANDARD
In considering a Rule 12(b)(6) motion to dismiss, the court is limited tо examining whether plaintiffs complaint sets forth allegations sufficient to make out the elements of a cause of action.
Windsor v. The Tennessean,
While “a complaint need not set down in detail all the particularities of a plaintiffs claim,” the complaint must give the defendant “fair notice of what the defendant’s claim is and the grounds upon which it rests.”
Gazette v. City of Pontiac,
III. ANALYSIS
Defendant contends that Plaintiffs’ claims under § 1981 do not state a cause of action and therefore cannot survive a 12(b)(6) motion to dismiss. Section 1981 states in relevant part.
(a) All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for thе security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.
(b) For purposes of this section, the term “make and enforce contracts” includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship.
42 U.S.C. § 1981(a) & (b) (1994).
These рrovisions provide “a federal remedy against discrimination in private employment on the basis of race.”
Johnson v. Railway Express Agency, Inc.,
Prior to the enactment of the Civil Rights Act of 1991, § 1981 was narrowly construed to only allow claims of discrimination in the formation of contracts or in the enforcement of contracts through the legal system.
See Patterson v. McLean Credit Union,
Congress overruled the Court’s narrow construction of § 1981 in
Patterson
by enacting the Civil Rights Act of 1991. This act added subsection (b) to § 1981, which defined the phrase “to make and enforce contracts” to include “the enjoyment of аll benefits, privileges, terms and conditions of the contractual relationship.” 42 U.S.C. § 1981 (1994). By inserting this language into the statute, Congress expanded the scope of § 1981 to include claims of discrimination in the terms and conditions of employment. Accordingly, plaintiffs can now bring claims of racial harassment or discriminatory discharge under § 1981.
See, e.g. Ferrill v. The Parker Group, Inc.,
However, a plaintiff bringing a § 1981 claim must still demonstrate that a contrаct exists before she can invoke the protections of § 1981. Thus, this court must address two questions to determine if Defendant’s motion for partial dismissal should be granted: 1) whether employment at will relationships are sufficiently contractual under Tennessee law to support a § 1981 claim, and, 2) whether Plaintiffs have sufficiently pled a contractual relationship with Defendant to sustain a § 1981 claim.
There is no consensus among federal courts as to whether an at will employee can bring a claim of discrimination under § 1981. Some courts have held that at will employees cannot establish the necessary contractual relationship to invoke the provisions of § 1981.
See, e.g. Simpson v. Vacco,
No. 96 CIV.3916 (JFK),
Defendаnt contends that this question has already been settled in this Circuit by
Wilmer v. Tennessee Eastman Co.,
Although this language, read in a vacuum, may suggest that Defendant’s argument has merit, the context of the statement and the rest of the opinion indicate that
Wilmer
should not be construed as prohibiting at will employees from ever recovеring on § 1981 claims where the emphasis is on race discrimination and not breach of contract. In
Wilmer,
the plaintiff claimed that the defendant had violated § 1981 by subjecting plaintiff to discriminatory treatment on the job and by firing him. In rejecting plaintiffs appeal of summary judgment entered against him on his § 1981 claims, the court’s holding did not rest upon a per se ban against § 1981 claims by at will employees. Rather, the court rejected plaintiffs argument that
Patterson
should not be applied retroactively to his lawsuit.
Patterson
held that § 1981 only covered claims of discrimination in the formation and enforcement of contracts. Under
Patterson,
the plaintiff in
Wilmer
could not have recovered on his § 1981 claims for discriminatory treatment or discriminatory discharge. Accordingly, the plaintiff argued that
Patterson
should not be applied retroactively to his case under the rule of
Chevron Oil v. Huson,
From the
Wilmer
court’s analysis of plaintiffs § 1981 claims, it is clear that the court
On the contrary, the language referred to by Defendant expressly states that the court relied upon its analysis of plaintiffs breach of contract claim to conclude that Wilmer could not recover for discriminatory discharge in breach of contract. An examination of this analysis also reveals that the Wilmer court did not intend to issue a per se ban against § 1981 claims by аt will employees. In his breach of contract claim, the plaintiff in Wilmer alleged that the defendant’s employment manual and posted policy statements guaranteed that he could not be terminated because of his race. The court found that the language of the manual and the policy statements failed to manifest any contractual intent from the defendant. Wilmer at 1163-64. Based upon this determination, the court concluded that defendant could not have brеached a contract not to fire plaintiff because of his race where no such contract existed. Id. at 1164. Nothing in this analysis suggests that the Wilmer court adopted a per se ban against § 1981 claims by at will employees.
A careful reading of the language used by Defendant to support its motion for partial dismissal also indicates that Wilmer is factually distinguishable from the present case. The Wilmer court stated that “Wilmer could not in this action recover for a discriminatory discharge in breach of contract.” Wilmer at 1164 (emphasis added). In the case at hand, the Plaintiffs are not arguing that Defendant breached its employment contract with them by discriminating against them on the basis of their race. The Plaintiffs charge that Defendant violated their statutory rights under § 1981. There is a marked difference between a claim for breach of contract and a claim of a statutory violation. If the Plaintiffs were bringing a breach of contract action for discriminatory treatment and discriminatory discharge, their claim would be barred under the holding of Wilmer. However, the holding of Wilmer does not bar statutory claims brought under § 1981 by at will employees.
Furthermore, Tennessee law recognizes employment at will as a contractual relationship. Under Tennessee law, the employer-employee relationship is contractual in nature.
Hamby v. Genesco, Inc.,
Based on the foregoing, the court rejects Defendant’s contention that Plaintiffs’ § 1981 claims must be dismissed because at will employees cannot recover under § 1981.
B. SUFFICIENT PLEADING
Defendant contends that Plaintiffs have failed to allege an underlying contractual relationship between Plaintiffs and Defendant to support their § 1981 claims. Defendant’s contention assumes that an at will employment relationship is not contractual and therefore is insufficient to support § 1981
Plaintiffs allege that Henry was hired to serve as Assistant Controller for Defendant’s General Accounting Department. Plaintiffs also allege that Defendant promised Henry a raise in salary of one thousand dollars. These allegations are more than sufficient to сonstitute adequate pleading of an employment relationship between Plaintiff Henry and Defendant.
Plaintiffs have also adequately pled that an employment relationship exists between Plaintiff Sargent and Defendant. Plaintiffs allege that Sargent was hired as an Associate Accountant by Defendant on March 3, 1997. Plaintiffs also allege that Sargent was promised two weeks of training by Defendant. Plaintiffs allege that Sargent resigned after her position with Defendant was eliminаted.
Plaintiffs allege that Plaintiff Cash was hired as an Assistant Accountant on March 27, 1997. Plaintiffs also assert that Plaintiff was one of thirteen Assistant Accountants in Defendant’s General Accounting Department. These allegations are also sufficient to withstand Defendant’s motion for partial dismissal.
IV. ORDER
Based on the foregoing, Defendant’s Motion for Partial Dismissal of Plaintiffs’ claims under 42 U.S.C. § 1981 is DENIED.
Notes
. Plaintiffs allege that Henry did not receive the salary increase and bonus she should have received because of an error she had made. (Pis.' Compl. ¶ 19). Plaintiffs argue that the error had been corrected and that errors made by white employees did not result in a loss of bonus pay or lower salary increases. (Pis.’ Compl. It 20).
. Before
Chevron,
federal courts followed
Goodman v. Lukens Steel Co.,