However, where, as here, the Supreme Court itself "has given
retrospective application to a newly adopted principle, `no
sound reason exists for not doing so here.'" Welyczko v. U.S.
Air, Inc., 733 F.2d 239, 241 (2d Cir.), cert. denied,
469 U.S. 1036, 105 S.Ct. 512, 83 L.Ed.2d 402 (1984) (quoting Holzsager
v. Valley Hospital, 646 F.2d 792, 797 (2d Cir. 1981)); see also
Gonzalez v. Home Ins. Co., 909 F.2d 716 (2d Cir. 1990).
Moreover, plaintiffs have not submitted sufficient reasons
under the Chevron balancing test to avoid retroactive
With respect to the second Chevron factor, plaintiffs submit
that their case is one in which no worthwhile purpose will be
served by applying Patterson retroactively, since their claims
relating to unequal treatment in compensation, fringe benefits,
and perquisites are closely related to their claims relating to
promotion and inability to join the rotating staff. This
argument is hardly persuasive. Patterson intentionally limited
the scope of section 1981 in order to preserve the separate
statutory scheme for remedying workplace discrimination set
forth in Title VII, which requires filing and processing by the
EEOC and which provides for more limited remedies. Patterson,
109 S.Ct. at 2374-75; Brackshaw v. Miles, supra, 723 F. Supp. at
62. Because plaintiffs' claims alleging discriminatory
compensation and benefits is now only actionable under Title
VII, allowing plaintiffs to proceed with these claims under
section 1981 would clearly retard the purpose of the new rule.
Plaintiffs' claim of substantial hardship should
Patterson be applied must also be rejected. The fact that
plaintiffs commenced this class action in March 1988, fifteen
months prior to the Supreme Court's decision, has not resulted
in any discernable prejudice. Plaintiffs may still claim
discriminatory conditions and benefits under their Title VII
claim, while discovery on this issue may be submitted to prove
certain aspects of the § 1981 promotion claim. Morgan v. Kansas
City, supra, 720 F. Supp. at 760. Moreover, the fact that
significant time may have been wasted on discovery has been
expressly rejected by this circuit as a bar to retroactive
application of Patterson. See Gonzalez, supra. Finally,
plaintiffs' reliance on Gillespie v. First Interstate Bank of
Wisconsin, 717 F. Supp. 649 (E.D.Wis. 1989), one of the few
decisions that has refused to apply Patterson retroactively, is
misplaced. The hardship in Gillespie, where plaintiffs had
already been awarded section 1981 damages after a lengthy
trial, was far more substantial than the current situation. Cf.
Thomas v. Beech Aircraft, supra (prejudice found largely due to
long trial delay).
Racial Discrimination under § 1981
Plaintiffs have challenged both the Bank's "dual staff
system" as well as alleged discrimination within the local
staff. Plaintiff's theory is that, under the guise of its
rotating staff system, Mitsubishi in fact practices intentional
racial discrimination against persons of non-Oriental ancestry
and national origin with no justification based on business
necessity. Moreover, they contend that promotions among local
staff personnel are given predominantly to Oriental persons for
invidious discriminatory reasons. Defendant asserts that
plaintiffs' complaint is in fact based solely on the Japanese
citizenship or national origin of its rotating staff and that
plaintiffs have failed to show any intentional, racially based
discrimination as required under § 1981.
Although § 1981 does not itself use the word "race," the
Supreme Court has construed the statute as forbidding all
"racial" discrimination in the making of private as well as
public contracts. Runyon v. McCrary, 427 U.S. 160, 168, 96
S.Ct. 2586, 2593, 49 L.Ed.2d 415 (1976). The prohibition
against racially discriminatory employment practices and
policies includes discrimination on the grounds of ancestry or
ethnic characteristics and has been held to encompass alleged
discrimination against a white person in favor of another race.
McDonald v. Santa Fe Trail Transportation Co., 427 U.S. 273, 96
S.Ct. 2574, 49 L.Ed.2d 493 (1976).
It is clear that an individual or class cannot sustain an
action under section
1981 that claims discrimination solely on the basis of national
origin. Thus, the court in Chaiffetz v. Robertson Research
Holding, Ltd., 798 F.2d 731 (5th Cir. 1986), held that a white
employee of a British corporation could not sue for
discrimination based on the fact that he was an American.
Similarly, the court in Rios v. Marshall, 530 F. Supp. 351
(S.D.N.Y. 1981), dismissed a section 1981 claim brought by
black and Puerto Rican workers after determining that their
complaint that black Jamaicans had been preferred involved
discrimination based on citizenship, and not racial animus. See
also Budinsky v. Corning Glass Works, 425 F. Supp. 786 (W.D.Pa.
1977) (dismissing section 1981 claim alleging discrimination
based on Slavic national origin); Kurylas v. Dep't of
Agriculture, 373 F. Supp. 1072 (D.D.C. 1974) (action claiming
discrimination based on Polish American national origin
However, the Supreme Court recently established that so long
as a plaintiff can prove that he was subjected to intentional
discrimination based on his race, ethnic characteristics or
ancestry, "rather than solely on the place or nation of his
origin," he has an actionable claim under § 1981. Saint Francis
College v. AlKhazraji, 481 U.S. 604, 613, 107 S.Ct. 2022, 2028,
95 L.Ed.2d 582 (1987). Saint Francis therefore indicates that
section 1981 claims may be maintained even though national
origin and/or citizenship concerns may have provided part of
the motive for the discriminatory activity.
In the present case, plaintiffs claim that they have suffered
racial discrimination because of their status as non-Orientals
and not just because of their American citizenship. In this
situation, the Court is faced with the difficult task of
discerning whether the Bank's acknowledged preference for
Japanese executives, at least in the rotating staff, is based
solely on citizenship or is also driven by racial animus. A
number of courts have recognized that "the line between
discrimination on account of race and discrimination on account
of national origin may be so thin as to be indiscernible."
Enriquez v. Honeywell, Inc., 431 F. Supp. 901, 904 (W.D. Okla.
Courts have most often confronted this dilemma in situations
involving a class of hispanics, who, although technically
considered "caucasian," may be subject to "racial" prejudice as
an ethnically identifiable subgroup. Most courts have concluded
that section 1981 permits such claims and should not be limited
to a technical or restrictive definition of race. See, e.g.
Manzanares v. Safeway Stores, Inc., 593 F.2d 968, 971-72 (10th
Cir. 1979).*fn2 Thus, in Cubas v. Rapid Am. Corp., 420 F. Supp. 663
(E.D.Pa. 1976), the court addressed the issue of a
Cuban-born citizen claiming discrimination on the basis of
"National origin discrimination is actionable only
to the extent that it is motivated by or
indistinguishable from racial discrimination. . .
. Hispanic Americans claiming that they have been
discriminated against in violation of § 1981 are
entitled to introduce evidence to prove that the
alleged discrimination was racial in character. . .
. We cannot find, as a matter of law, that the
alleged discrimination against the plaintiff as a
Cuban American did not contain elements of racial
420 F. Supp. at 665-66; accord Enriquez v. Honeywell, supra;
Rodriguez v. Chandler, 641 F. Supp. 1292 (S.D.N.Y. 1986).