UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________

No. 97-11310 __________________

LAMARILYN FADEYI,

Plaintiff-Appellant,

versus

PLANNED PARENTHOOD ASSOCIATION OF LUBBOCK, INC.,

Defendant-Appellee.

______________________________________________

Appeal from the United States District Court for the Western District of Texas ______________________________________________ November 11, 1998

Before SMITH, DUHÉ, and WIENER, Circuit Judges.

WIENER, Circuit Judge:

The sole issue in this appeal is whether a Texas employment-

at-will relationship is a contract for the purposes of

. The district court dismissed Plaintiff-Appellant LaMarilyn

Fadeyi’s § 1981 claims after concluding that her at-will employment

with Defendant-Appellee Planned Parenthood Association of Lubbock,

Inc. (“Planned Parenthood”) was not a “contract” under § 1981.

Satisfied that in Texas an at-will employment relationship is a

contract for purposes of § 1981, we reverse and remand. I.

FACTS AND PROCEEDINGS

Fadeyi is a black female who was employed by Planned

Parenthood for seven years. She alleges that Planned Parenthood

engaged in various acts of racial discrimination against her

during the course of her employment, ranging from discriminatory

scheduling and distribution of office resources to the executive

director’s giving her and another black employee an application

for membership in the Ku Klux Klan. Fadeyi filed complaints with

the Equal Employment Opportunity Commission and the Texas

Commission on Human Rights, but both dismissed her complaints for

lack of jurisdiction because Planned Parenthood had fewer than 15

employees at all relevant times. Planned Parenthood fired Fadeyi

two working days after receiving notification that the EEOC did

not have jurisdiction to entertain her complaints.

Fadeyi then brought suit in district court under § 1981,

alleging racial discrimination in her employment and termination.

Planned Parenthood filed a motion for summary judgment, arguing

that Fadeyi’s claim should fail because she could not show the

existence of a contract, an essential element in a § 1981 action.

The district court agreed and granted Planned Parenthood’s

motion. Fadeyi timely filed this appeal.

2 II.

ANALYSIS

A. Standard of Review

We review a district court’s grant of summary judgment de

novo.1

B. Applicable Law

Fadeyi contends that § 1981 supports her claim for racial

discrimination regardless of the fact that she was an at-will

employee. Section 1981 guarantees that “[a]ll persons within the

jurisdiction 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 . . . .”2 Because Title VII applies

only to employers with 15 or more employees,3 § 1981 provides the

only refuge under federal law from race-based employment

discrimination by those who hire fewer than 15 employees.4

In Patterson v. McLean Credit Union,5 the United States

Supreme Court concluded that § 1981 covered “only conduct at the

initial formation of the contract and conduct which impairs the

right to enforce contract obligations through legal process.”6

1 Exxon Corp. v. St. Paul Fire and Marine Ins. Co.,

(5th Cir. 1997). 2

(a). 3 See 42 U.S.C. § 2000e(b). 4 See H.R. Rep. No. 102-40(I), 102d Cong., 1st Sess., at 91 (1991), reprinted in 1991 U.S.C.C.A.N. 549, 629. 5

(1989). 6

.

3 Consequently, the Court held that § 1981 does not cover racial

harassment by an employer after the inception of the employment

relationship.7 In response to Patterson, Congress, through the

Civil Rights Act of 1991, amended § 1981 to add a broad

definition of the phrase “make and enforce contracts,” which

includes “the making, performance, modification, and termination

of contracts, and the enjoyment of all benefits, privileges,

terms, and conditions of the contractual relationship.”8 Relying

on this expansive language, Fadeyi argues that Congress intended

to reach the very conduct that plagued her at Planned Parenthood

during her employment and in her termination.

The district court, however, dismissed Fadeyi’s complaint,

concluding that, as an at-will employee, Fadeyi had no “contract”

of employment on which to base a claim under § 1981. Under well-

established Texas law, the employer may, absent a specific

agreement to the contrary, terminate an employee for good cause,

bad cause, or no cause at all.9 It does not necessarily follow,

however, that the employment-at-will relationship is not a

contractual one for the purposes of § 1981.

Case law addressing whether an at-will employee may bring an

action under § 1981 is surprisingly sparse. Despite the fact

that more than 40 states recognize the employment-at-will

7 Id. at 178. 8 See

(b). 9 See Federal Express Corp. v. Dutschmann,

(Tex. 1993) (per curiam).

4 relationship, no circuit court has squarely resolved this issue

in the wake of Patterson,10 and the federal district courts that

have done so have come to differing results.11 We conclude that

the better view is that, irrespective of being subject to at-will

termination, such an employee stands in a contractual

relationship with his employer and thus may maintain a cause of

action under § 1981.

In Patterson, the United States Supreme Court implicitly

conceded that an at-will employee may maintain a cause of action

under § 1981. Although, as discussed above, the Patterson Court

declined to recognize work place racial harassment as actionable

10 See Gonzales v. Ingersoll Milling Machine Co.,

(7th Cir. 1998) (noting, but finding no need to hold, that under Illinois law an employee at-will has no contractual rights to support a claim under § 1981); but see Adams v. McDougal,

(5th Cir. 1983) (holding that under Louisiana law the indefinite term of employment of an appointed deputy sheriff was “sufficiently contractual to bring [the deputy] under the protective umbrella of § 1981"). 11 We recognize that federal case law interpreting at-will employment relationships in other states is not binding on the court. We find the decisions informative, however, as the overwhelming majority of states recognize the traditional common law doctrine of employment at-will. Compare Lane v. Ogden Entertainment, Inc.,

(M.D. Ala. 1998) (holding that an at-will employee may bring a cause of action under § 1981); Larmore v. RCP/JAS, Inc.,

, *2 (E.D. Pa. 1998) (same); Baker v. American Juice, Inc.,

(N.D. Ill. 1994) (same); Harris v. New York Times,

(S.D.N.Y. 1993)(same); with Hawkins v. Pepsico, Inc.,

(M.D.N.C. 1998) (holding that no contract exists in an at-will employment relationship to support a cause of action under § 1981); Moorer v. Grumman Aerospace Corp.,

(E.D.N.Y. 1997) (same), aff’d,

(2d Cir. 1998); Spriggs v. Diamond Auto Glass,

, *1 (D. Md. 1997) (same); Askew v. May Merchandising Corp.,

, *6 (S.D.N.Y. 1991) (same).

5 under § 1981,12 it acknowledged that Patterson, an at-will

employee, might have a cause of action based on the claims that

her employer failed to promote her based on her race.13 The

Court stated that “the question whether a promotion claim is

actionable under § 1981 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. If so, then the

employer’s refusal to enter the new contract is actionable under

§ 1981.”14 This language leaves no doubt that the Court

considered the employee’s relationship with her employer to be a

contractual one: Obviously, there can be no “new contract” unless

there is first an old contract.15

Justice Stevens, writing separately in Patterson, explained

his understanding of the nature of the at-will employment

relationship in the context of § 1981:

An at-will employee, such as petitioner, is not merely performing an existing contract; she is constantly remaking that contract. . . . . [W]hether employed at will or for a fixed term, employees typically strive to achieve a more rewarding relationship with their employers. By requiring black employees to work in a hostile environment, the employer has denied them the same opportunity for advancement that is available to white citizens. A deliberate policy of harassment of black employees who are competing with white citizens

12 See Patterson,

. 13

. 14

15 See Harris,

, at *4 (suggesting that this portion of Patterson demonstrates that “the Court regarded Patterson’s relationship with her employer . . . as sufficiently contractual in nature to satisfy § 1981").

6 is, I submit, manifest discrimination in the making of contracts in the sense in which that concept was interpreted in Runyon v. McCrary. [

(1976)].16

This appears to be the approach embraced by Congress when it

overruled Patterson, a scant two years after that opinion was

rendered, by amending § 1981 in the Civil Rights Act of 1991.

The legislative history of the amendments to § 1981 reflects the

intent of Congress to protect minorities in their employment

relationships. For example, the report of the House Judiciary

Committee stated that the 1991 amendments were “designed to

restore and strengthen civil rights laws that ban discrimination

in employment. . . . By restoring the broad scope of Section

1981, Congress will ensure that all Americans may not be

harassed, fired or otherwise discriminated against in contracts

because of their race.”17 To hold that at-will employees have no

right of action under § 1981 would effectively eviscerate the

very protection that Congress expressly intended to install for

minority employees, especially those who, by virtue of working

for small businesses, are not protected by Title VII.

Texas law firmly supports the contractual nature of an at-

will employment relationship as well. The Texas Supreme Court

has recognized that an at-will employment relationship is a

contract, notwithstanding that either party may terminate it at

16

(Stevens, J., concurring in part and dissenting in part). 17 H.R. Rep. No. 102-40(II), 102d Cong., 1st Sess., at 2 (1991), reprinted in 1991 U.S.C.C.A.N. 694, 694.

7 will. In Sterner v. Marathon Oil Co.,18 the Texas Supreme Court

held that an at-will employee could maintain a cause of action

for tortious interference with contract against a third party who

interfered with the employment relationship.19 As the court

explained,

A promise may be a valid and subsisting contract even though it is voidable. . . . A similar situation exists with regard to contracts terminable at will. Until terminated, the contract is valid and subsisting, and third persons are not free to tortiously interfere with it.20

In other words, an employment-at-will relationship is a

contractual one, even though either party can terminate it

without cause at any time.21

We have also recognized, in applying the Texas Whistleblower

Act, that an at-will employee in Texas has a contract with her

employer.22 The Texas Whistleblower Act applies to “public

employees,” and at the time that Knowlton v. Greenwood Indep.

18

(Tex. 1989). 19 See

. 20

21 The Texas Supreme Court’s opinion in Light v. Centel Cellular Co.,

(Tex. 1994), relied on by the district court, is not to the contrary. In that case, the court considered whether a covenant not to compete was “ancillary to or part of . . . an otherwise enforceable agreement” under a Texas statute allowing covenants not to compete in limited circumstances.

. The court simply concluded that an employment-at-will relationship was not an “otherwise enforceable agreement” that could support a covenant not to compete under the Texas statute.

22 See Knowlton v. Greenwood Indep. Sch. Dist.,

(5th Cir. 1992) (applying Acts 1983, 68th Leg., R.S., ch. 832, §§ 1-6 (codified as amended at TEX. GOV’T CODE § 554.01-.09 (West 1994))(formerly TEX. REV. CIV. STAT. ANN. art. 6252-16a).

8 Sch. Dist.23 was decided, defined “public employee” as “a person

who performs services for compensation under a written or oral

contract for a state or local government body.”24 In Knowlton,

we concluded that the Act applied to at-will employees of a

school district because those employees met the statutory

definition of “public employee.”25 That is, the employees were

persons “who perform[] services for compensation under a written

or oral contract . . . .”26 The El Paso court of appeals reached

the same conclusion in Permian Basin Community Centers for MHMR

v. Johns,27 explaining that “[t]he at-will employment

relationship is a contractual one, albeit one for an indefinite

period of time.”28

23

(5th Cir. 1992). 24 Acts 1983, 68th Leg., R.S., ch. 832, § 1 (emphasis added) (codified as amended at TEX. GOV’T CODE § 554.01(4)) (formerly TEX. REV. CIV. STAT. ANN. art. 6252-16a, § 1(3)). 25 See Knowlton,

. 26

(emphasis added) (citation omitted). 27

(Tex. App.—El Paso 1997, no writ). 28

In numerous other cases, the Texas courts have acknowledged the contractual nature of an at-will employment relationship. See, e.g., Montgomery County Hosp. Dist. v. Brown,

(Tex. 1998) (referring to the at-will employment relationship as an “employment contract”); Hathaway v. General Mills, Inc.,

(Tex. 1986) (discussing the requirements for proving a modification of an “at will employment contract”); see also Rodriguez v. Benson Properties, Inc.,

(W.D. Tex. 1989) (“Texas courts have recognized that an employer/employee relationship is contractual in nature.”) (citing Pioneer Cas. Co. v. Bush,

(Tex. Civ. App.—Tyler 1970, writ ref’d n.r.e.); Northwestern Nat’l Life Ins. Co. v. Black,

(Tex. Civ. App.—Texarkana 1964, writ ref’d n.r.e.)).

9 Both the Texas Supreme Court and the Texas Legislature have

emphasized the importance of public policy when considering the

breadth of the employment-at-will doctrine. In Sabine Pilot

Service, Inc. v. Hauck,29 the Texas Supreme Court created the

only non-statutory exception to the at-will employment

relationship when it held that an at-will employee cannot be

discharged for refusing to perform an illegal act ordered by his

employer.30 The Texas Legislature has likewise enacted several

statutory exceptions to the at-will doctrine to protect at-will

employees from discriminatory practices in the workplace —— most

notably, a prohibition against discharging an individual based on

race, color, disability, religion, sex, national origin, or

age.31 The conclusion is clear that even though an at-will

employee can be fired for good cause, bad cause, or no cause at

all, he or she cannot be fired for an illicit cause. Any seeming

inconsistency in the determination that one who can be fired

without cause neverthless cannot be fired for an unlawful cause

evaporates under the foregoing analysis.

None can contest that discriminating against an employee on

the basis of race is illegal and against public policy. In

amending § 1981, Congress was advancing such public policy

29

(Tex. 1985). 30

. 31 TEX. LAB. CODE ANN. § 21.051 (West 1996); see also Hicks v. Utility Fuels, Inc.,

, *3 n.1 (Tex. Civ. App.-Hous. 1998) (unpublished) (listing the statutory exceptions to the employment-at-will doctrine).

10 concerns by providing a vehicle for every employee to remedy

racial discrimination in the workplace. Congress could not have

meant to exclude at-will workers from the reach of § 1981, as to

do so would be to allow use of the ubiquitous at-will doctrine

“as leverage to incite violations of our state and federal

laws.”32

We therefore conclude that the district court erred in

granting summary judgment to Planned Parenthood solely on the

basis that Fadeyi had no contract on which her § 1981 claims

could rest. Accordingly, we reverse the judgment of the district

court and remand for further proceedings consistent with this

opinion.

REVERSED AND REMANDED.

32 Hauck,

(Kilgarlin, J., concurring).

11