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Supreme Court Sides With Comcast in Race Discrimination Lawsuit

By Chris Bacon and Peter Goetschel

Byron Allen is a well-known and successful African-American entrepreneur who owns Entertainment Studios Network (ESN), a company which operates seven television networks, including networks such as Justice Central.TV, Pets.TV and Cars.TV. Allen began negotiations with Comcast—the nation's second largest cable company—with the hope that Comcast would carry his networks. Comcast ultimately declined, and in 2015, Allen filed a 20 billion dollar lawsuit against Comcast, in which he accused the cable company of refusing to carry his networks because of racial bias.

Comcast claimed that its decision not to carry ESN's networks was based on a lack of demand for the programming that was offered on these networks, bandwidth constraints, and Comcast's preferences for news and sports programming. Allen contended that Comcast's articulated reasons were pretextual and that the real reason for not carrying Allen's channels was race discrimination. In support of his claim that Comcast's decision was motivated by race in some way, Allen noted that Comcast paid civil rights groups to advocate to the Federal Communications Commission.

While most people are very familiar with Title VII of the Civil Rights Act of 1964, the law which prohibits discrimination in employment on the basis of race, color, religion or national origin, in recent years an increasing number of plaintiff's lawyers have also been bringing race discrimination claims under a section of the Civil Rights Act of 1866, a law that was enacted during the Reconstruction Era to advance the goals of the Thirteenth, Fourteenth and Fifteenth Amendments, now codified at 42 U.S.C. § 1981. These claims are known as Section 1981 claims.

Section 1981 claims have some distinct advantages over Title VII claims in that plaintiffs enjoy a much longer four-year statute of limitations and that they are not obligated to exhaust their administrative remedies by filing a charge of discrimination with the EEOC before going to court. Additionally, where Title VII is limited to discrimination in employment relations, Section 1981 applies more broadly to all cases involving the "making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship." In other words, you can sue parties that are not your employer if they are discriminating against you when it comes to making a contract. (That particular advantage is the reason why Allen chose to sue Comcast under Section 1981 rather than Title VII. Allen claimed that he was entitled to relief under Section 1981 because Comcast was unwilling to enter into a contract with an African-American owned company.)

The disadvantage that plaintiffs suing under Section 1981 cases face, however, is that their standard of causation for proving discrimination is much tougher. Section 1981 plaintiffs must show that "but for" their race, they would not have suffered an injury. Title VII claims call for a less strenuous "motivating factor" standard, ever since its amendment in the Civil Rights Act of 1991, and that standard only requires that plaintiffs show race was a motivating factor in the discriminatory decision, regardless of whether the same decision would have been made in the absence of race.

The differences between the two standards are significant, especially where multiple factors are at play in a defendant's decision making. Consider the following hypothetical situation: An employer terminates an employee because he submitted false time sheets. However, while the evidence of time theft is undisputed, there is also evidence that the employee's supervisor made frequent derogatory statements about the terminated employee's race, suggesting that racial animus could have played a role in the employer's decision to terminate. If the employee filed a lawsuit under Section 1981, he would have to prove that "but for" their race, they would not have been terminated. Under that standard, if the employer could show that it would have and, in fact, did terminate every employee who had submitted a false timesheet—including many employees of other races besides the plaintiff's—the supervisor's racial animus would be irrelevant.

On the other hand, if the same employee instead brought a claim under Title VII, the employee would only have to demonstrate that racism had been simply "a factor" in the decision to terminate, even if it was not a determinative factor in the decision. In short, a plaintiff in a Title VII case only needs to be able to demonstrate minimal causation. (Though employers in Title VII claims may still limit the remedies available to plaintiffs, if they are able to show that race was not a but for cause of the alleged discriminatory action.)

Arguing that a "but for" causation standard applied, Comcast filed a motion to dismiss ESN's Section 1981 claims, and the district court, after giving ESN two opportunities to amend its complaint to plead additional facts, agreed that ESN had failed to state a claim as a matter of law. ESN appealed the dismissal, and the Ninth Circuit reversed the district court's order based on the district court's use of the "but for" standard of causation. The Ninth Circuit held that plaintiffs are instead only required to allege facts showing that race plays "some role" in Section 1981 injuries. Allen v. Comcast went on to the Supreme Court after the Ninth Circuit's holding.

Essentially, what the Ninth Circuit had done was to apply a causation standard more akin to Title VII's "motivating factor" test rather than the "but for" standard used in common law tort cases and that is generally considered the default standard for statutory claims (unless the statute specifically sets forth a different standard of causation, as Congress did when it amended Title VII in 1991).

Supreme Court Decision

It is quite unusual for the current Supreme Court to issue unanimous decisions in civil rights cases, and one might have expected some of the liberal justices to side with ESN and the Ninth Circuit in this case. Here, however, a unanimous court agreed that a "but for" standard is the appropriate standard of causation in Section 1981 cases and that a district court should apply that standard at every stage of the case, be it in a motion to dismiss, a motion for summary judgment, or at trial. Comcast v. National Association African American-Owned Media, (March 23, 2020).

In making this decision, the court noted that nothing in Section 1981's text or legislative history indicated that courts should create an exception to the default causation principles. It also observed that Congress had an opportunity to add a different causation standard in 1991, when it made other amendments to § 1981, but that it had failed to do so.

While the decision was unanimous, Justice Ginsburg did write a separate concurring opinion in which she clarified that Section 1981 injuries are not limited to the ultimate decision of whether or not to enter a contract. She made the point that Section 1981 claims may also be brought on a broader basis, including for discrimination in any pre-formation opportunities to present or receive contract offers or to negotiate the terms of a contract. For example, a requirement that white applicants for a position provide one reference while African-American applicants provide five could also support a Section 1981 claim.

Because the Supreme Court rejected the application of the minimal "motivating factor" standard in Section 1981, the media industry —which relies on contractual relationships more than most industries— should look at this decision as a positive maintenance of the status quo, and in the absence of new statutory amendments by Congress, companies should expect that Section 1981 claims will continue to adhere to the "but for" standard of causation.

Chris Bacon is counsel and Peter Goetschel an associate at Vinson & Elkins in Houston.

 
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