Ninth Circuit Court Expands Potential Remedies for Race Discrimination

Volume 2, Issue 10
August 20, 2003

Joining the majority of other federal courts, the Ninth Circuit Court, in Manatt v. Bank of America, NA, --- F.3d ---, 2003 WL 21730587 (9th Cir. July 28, 2003), gave plaintiffs and their counsel a major victory by ruling for the first time that hostile work environment and retaliation claims based on race can be filed under 42 U.S.C. § 1981 ("Section 1981"), in addition to filing such race discrimination claims under Title VII of the Civil Rights Act of 1964. Section 1981 is a provision of the Civil Rights Act of 1866 that protects individuals from race discrimination by guaranteeing all persons the same right to make and enforce contracts.

The Ninth Circuit Court rejected the employer's argument that the plaintiff, a Chinese woman formerly employed in the trade finance department of the Bank of America's Portland office, could not maintain her Section 1981 claim because she alleged national origin - not racial - discrimination. The court held that the term "race" as used by Congress when formulating Section 1981 is broadly defined to cover discrimination against ethnic groups such as the Chinese.

The Manatt case is bad news for employers because Section 1981 claims can be filed regardless of whether the plaintiff timely filed a charge of discrimination with the EEOC or NERC. More importantly, there are no statutory caps on compensatory and punitive damages under Section 1981 as there are under Title VII claims. The impact of the expanded remedies is illustrated in an August 7, 2003 decision by the Ninth Circuit Court upholding an award of $2.6 million in punitive damages and $360,000 in compensatory damages against a corporate employer and its parent company to a former employee under 42 U.S.C. § 1981 for unlawful retaliation and breach of contract due to the former employee's Chinese ethnicity and nationality. The court found that a 7:1 ratio between punitive damages and compensatory damages was lawful and justified by the employers' highly reprehensible conduct.

Zhang v. American Gem Seafoods, Inc., --- F.3d ---, 2003 WL 21805076 (9th Cir. Aug. 7, 2003).

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.