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CROCE v. V.I.P. REAL ESTATE

March 21, 1992

PHYLLIS CROCE, Plaintiff, against V.I.P. REAL ESTATE, INC., Defendant.


The opinion of the court was delivered by: ARTHUR D. SPATT

 SPATT, District Judge.

 This is a motion by the plaintiff to amend her complaint pursuant to Fed. R. Civ. P. 15(a). This action arises under Title VII of the Civil Rights Act of 1964 ("Title VII"), alleging discrimination on the basis of sex. In January, 1988, the plaintiff filed a charge of employment discrimination with the Equal Employment Opportunity Commission ("EEOC"). The EEOC determined that Croce failed to establish a violation of Title VII. Croce then commenced this Title VII action on June 27, 1989. No demand for a jury trial was made since at that time it was the view in this Circuit that Title VII did not encompass the right to a trial by jury. Compensatory damages were sought in the complaint, but that relief was not included in the pre-trial order filed on August 23, 1990. Title VII provided only for statutory damages at that time.

 The plaintiff now seeks to amend her complaint to include a demand for a jury trial and for compensatory damages under Title VII as amended by the Civil Rights Act of 1991 (Pub. L. No. 102-166) (the "Act"), which was enacted on November 21, 1991. The plaintiff contends that the Act, which amends Title VII to provide the right to a jury trial and compensatory damages, applies retroactively to cases which were pending at the time of the enactment of the Act.

 FACTUAL BACKGROUND

 The plaintiff began her employment as a real estate salesperson with the defendant in or about 1982. She eventually advanced to the positions of relocation director, sales manager and trainer. In October of 1984, the plaintiff was employed as Director of Recruitment and Training.

 In or about April of 1987, the plaintiff applied for the position of general manager, but was not promoted to that position. The plaintiff alleges that several months later, a less qualified and less experienced male was hired for that position. She also alleges that the defendant's president had remarked to certain other employees that he did not want any women as managers and that he preferred to hire men. The plaintiff concluded that the defendant refused to promote her on the basis of her gender, and as a result, she brought this action.

 AMENDMENT STANDARD

 Fed. R. Civ. P. 15(a) provides that "leave [to amend a pleading] shall be freely given when justice so requires" ( Gumer v. Shearson, Hammill & Co., 516 F.2d 283, 287 [2d Cir. 1974]). Only "undue delay, bad faith, or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party . . . [or] futility of the amendment" will serve to prevent an amendment prior to trial ( Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 [1962]; accord Reiter's Beer Distributors, Inc. v. Christian Schmidt Brewing Co., 657 F. Supp. 136, 141 [E.D.N.Y. 1987]; Richardson Greenshields Sec., Inc. v. Mui-Hin Lau, 825 F.2d 647, 653 n. 6 [2d Cir. 1987]). The party opposing the motion for leave to amend has the burden of establishing that an amendment would be prejudicial (see Panzella v. Skou, 471 F. Supp. 303, 305 [S.D.N.Y. 1979]), and "unless a proposed amendment is clearly frivolous or legally insufficient on its face, the substantive merits of a claim or defense should not be considered on a motion to amend" ( Lerman v. Chuckleberry Pub., Inc., 544 F. Supp. 966, 968 [S.D.N.Y. 1982], rev'd on other grounds sub nom., 745 F.2d 123 [2d Cir. 1984], cert. denied, 471 U.S. 1054 [1985]).

 Here the issue is whether the proposed amendment is legally sufficient on its face.

 THE LAW

 a. Civil Rights Act of 1991

 Section 402 of the Act sets forth its purported effective date:

 "(a) In General. - Except as otherwise provided, this Act and the amendments made by this Act shall take effect upon enactment.

 (b) Certain Disparate Impact Cases. - Notwithstanding any other provision of this Act, nothing in this Act shall apply to any disparate impact case for which a complaint was filed before March 1, 1975, and for which an initial decision was rendered after October 30, 1983" (emphasis supplied).

 Although subsection (a) is clear on its face, there are two problems which come to mind upon reading this section as a whole. Subsection (a) plainly states that the Act is effective on the date of enactment, November 21, 1991. However, subsection (b) specifically provides that the Act shall not apply to certain disparate impact cases antedating the enactment date. This amendment was specifically drafted to avoid the impact of the Act on the litigants in Wards Cove Packing Co. v. Antonio, 490 U.S. 642, 104 L. Ed. 2d 733, 109 S. Ct. 2115 (1989) (see 137 Cong. Rec. S. 15954 [daily ed. Nov. 5, 1991] [Senator Murkowski's letter to Senate colleagues]). The intent was to assure the employer in Wards Cove that it would not be subject to the Act's standards governing disparate impact cases (see 137 Cong. Rec. S. 15483 [daily ed. Oct. 30, 1991] [statement of Senator Danforth]). The Wards Cove litigation lasted approximately twenty years.

 The plaintiff argues, and at least one court has pointed out, that if the Act were intended to apply prospectively only, as the defendant contends, subdivision (b) would be entirely divested of any meaning ( Stender v. Lucky Stores, Inc., 1992 WL 2904 *1 [N.D. Cal. Jan. 7, 1992]). This apparent contradiction is again seen in Section 109 of the Act which addresses the protection of extraterritorial employment. Section 109 states that "the Amendments made by this section shall not apply with respect to conduct occurring before the date of the enactment of this Act." It is reasonable to infer that the language of these sections demonstrates the intent of Congress to ensure that certain cases would be excluded from any possible retroactive effect of the Act.

 The second problem caused by the language contained in section 402 arises when attempting to determine the actual effective date of the Act, by means of its legislative history. One court, faced with the problem of divining congressional intent from the Act's legislative history commented that:

 Upon review of excerpts from the Act's legislative history, it is clear that the colloquy concerning retroactivity split along partisan lines (compare 137 Cong. Rec. S. 15485 daily ed. Oct. 30, 1991, Senator Kennedy's comments ["It will be up to the courts to determine the extent to which the bill will apply to cases and claims that are pending on the date of enactment. Ordinarily, courts in such cases apply newly enacted procedures and remedies to pending cases"] with Senator Danforth's comments 137 Cong. Rec. S. 15,483, daily ed. Oct. 30, 1991, ["Our intention in drafting the effective date provision was to adhere to the principle followed by the vast majority of Supreme Court cases and exemplified by Bowen and Justice Scalia's concurrence in Bonjorno" to apply new law prospectively]).

 b. The EEOC Policy Guidance Directive

 The EEOC's policy guidance on retroactivity of the Act appeared in the Daily Labor Report on January 2, 1992. That document was issued to provide guidance as to whether the compensatory and punitive damages provisions of the Act apply to conduct occurring and charges pending prior to the "effective date" of the Act. The defendant argues that this guideline is entitled to deference but cites no authority for this proposition.

 The plaintiff, on the other hand, argues that the guideline is entitled to no deference since the EEOC is not empowered to promulgate rules or regulations pursuant to Title VII (see General Elec. v. Gilbert, 429 U.S. 125, 140-43, 97 S. Ct. 401, 410-11, 50 L. Ed. 2d 343 ["courts properly may accord less weight to such guidelines than to administrative regulations."] see e.g., EEOC v. Arabian American Oil, 113 L. Ed. 2d 274, 111 S. Ct. 1227, 1235 [1991] [the Court declines to "defer" to the EEOC construction of Title VII]).

 The EEOC concluded that the provisions of the Act are not retroactive, but are to be considered in all cases involving intentional discriminatory conduct occurring on or after ...


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