United States District Court, Southern District of New York
February 3, 2003
STEPHANIE JOWERS, PLAINTIFF,
DME INTERACTIVE HOLDINGS, INC. AND DARIEN DASH, DEFENDANTS.
The opinion of the court was delivered by: Laura Taylor Swain, United States District Judge
MEMORANDUM OPINION AND ORDER
Stephanie Jowers ("Jowers" or "Plaintiff") alleges that DME Interactive Holdings, Inc. ("DME"), and Darien Dash ("Dash" and collectively "Defendants") violated 42 U.S.C. § 1981 and state and local civil rights laws by failing to negotiate an employment contract with her and terminating her employment on the basis of her race. Defendants have moved pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss Plaintiff's complaint for failure to state a claim upon which relief may be granted. They contend that Plaintiff, a white woman, lacks standing to bring a race discrimination claim under 42 U.S.C. § 1981, lacks standing to bring the state and local law claims because she was an independent contractor and not an employee of DME, and, finally, that the civil rights counts in her complaint are inadequately pled as a matter of law. For the reasons set forth below, Defendants' motion is denied.
This court has jurisdiction of this matter pursuant to 42 U.S.C. § 1981, 28 U.S.C. § 1331, 28 U.S.C. § 1343(4), and supplemental jurisdiction of Plaintiff's state and local law claims pursuant to 28 U.S.C. § 1367(a). For the purposes of this motion to dismiss, the Court accepts the allegations of the complaint as true. See Cruz v. Beto, 405 U.S. 319, 322 (1972).
The following facts are alleged in the complaint. DME is an internet services provider led primarily by Dash, an African-American, who is the company's principal shareholder, Chairman and Chief Executive Officer. Under Dash's leadership, DME has focused on serving minority populations that have not been adequately represented and served in the internet community. In early 2000, Jowers was employed as the Deputy Director of a non-profit organization whose purpose was to use new technology and media to the benefit of racial minorities. Dash, who served on the Board of Trustees of the non-profit organization, became acquainted with Jowers during her tenure there. In March of 2000, Dash initiated discussions with Jowers about the possibility of her working in an executive capacity with "Places of Color," DME's internet venture. During these discussions, Jowers expressed her concern about being a non-minority in a high-profile minority enterprise, but Dash reassured her that her race was irrelevant and subsequently hired her.
Jowers began working at DME on March 20, 2000. Pending the negotiation of a written employment contract, she was given the title Senior Manager and was "characterized as a 1099 worker for payroll purposes." Plaintiff was responsible for the day to day management of DME's staff, which was comprised largely of racial minorities. The staff were openly hostile and antagonistic to plaintiff; "it soon became obvious that DME's staff resented and resisted supervision by plaintiff because of her race." At a staff meeting in April 2000, an employee expressed complaints about recent developments at the company and cast them in racial terms. The following day, Jowers' immediate superior informed her that her position would be restructured so that she would have less direct involvement with the staff. Plaintiff's superior quoted Thomas O'Rourke, DME's Chief Operating Officer as stating that DME "needed someone Black in a leadership role."
Jowers was then given the title of General Manager, with no change in day to day duties and responsibilities. On May 3, 2000, Jowers was told that she would no longer have the title of General Manager but that a new position would be created for her. On May 5, 2000, O'Rourke informed Plaintiff that, for economic reasons and despite her excellent job performance, no new position would be created for her, that DME would not enter into an employment contract with her, and that she was being terminated. Jowers then met with Dash, who told her that the decision to terminate her was not economic. Rather, he said that she was not a good fit. He alluded to staff complaints and said that he would pay Plaintiff's salary only to the right people. An African-American woman replaced Plaintiff at DME, receiving a salary almost 50 percent greater than Jowers had earned. Plaintiff alleges that her employment was terminated, and that she was denied the opportunity to enter into the contemplated written employment agreement with DME, on account of her race.
As noted above, in evaluating a motion to dismiss, the Court is obliged to take as true the facts as alleged in the complaint and draw all reasonable inferences in favor of the plaintiff. Grandon v. Merrill Lynch & Co., 147 F.3d 184, 188 (2d Cir. 1998). The action must not be dismissed unless "`it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); Sims v. Artuz, 230 F.3d 14, 20 (2d Cir. 2000).
Plaintiff's Standing as a Non-Minority Under 42 U.S.C. § 1981
Defendants argue that Jowers lacks standing to bring a suit under Section 1981 because that statute does not protect white persons from race discrimination based on their "whiteness," a form of discrimination often referred to as "reverse discrimination."
Section 1981 provides that:
All persons within the jurisdiction of the United
States shall have the same right in every State and
Territory to make and enforce contracts, to sue, be
parties, give evidence, and to the full and equal
benefit of all laws and proceedings for the security
of persons and property as is enjoyed by white
citizens, and shall be subject to like punishment,
pains, penalties, taxes, licenses, and exactions of
every kind, and to no other.
42 U.S.C.A. § 1981 (West 1994). The elements required to state a claim under Section 1981 are frequently summarized as follows: i) that plaintiff is a member of a racial minority; ii) that defendant intentionally discriminated against plaintiff on the basis of plaintiff's race; and iii) that the discrimination concerned one or more activities enumerated in the statute. See Mian v. Donaldson, Lufkin & Jenrette Securities, 7 F.3d 1085
, 1087 (2d Cir. 1993), cert. denied, 516 U.S. 824 (1995). Absence of the first element, that plaintiff is a member of a racial minority, does not, however, preclude recovery under Section 1981. See, e.g., O'Connor v. 11 West 30th Street Rest. Corp., Nos. 94 Civ. 2951, 93 Civ. 8895, 1995 WL 354904, at *6 (S.D.N.Y. June 13, 1995) (finding that white plaintiff's allegations of race-based discrimination were sufficient to state a claim under § 1981). As the Supreme Court has held, racial minorities are not the only persons entitled to relief under Section 1981. To the contrary, the statute protects from racial discrimination "all persons within the jurisdiction of the United States," regardless of what a person's race may be. See McDonald v. Santa Fe Trail Transp. Co., 427 U.S. 273
, 287-96 (1976) (holding that Section 1981 "explicitly applies to `All persons' (emphasis added [by Supreme Court]), including white persons" and discussing legislative history that reveals the statute was not intended to be limited in scope to discrimination against nonwhites). See also St. Francis College v. Al-Khazraji, 481 U.S. 604
(1987) (statute encompasses even discrimination as between groups currently characterized as "Caucasian"); O'Connor, 1995 WL 354904, at *5 ("[a] white person, just as a nonwhite, may state a claim under § 1981").
Defendants observe, correctly, that some courts have held that Section 1981 applies to whites where a white person alleges to have been the victim of discrimination due to animosity directed towards a member of a minority race. Defendants also identify several circuit court cases in which Section 1981 protections have been extended to white plaintiffs who have suffered vicariously the defendants' discrimination against racial minorities. See, for example, DeMatteis v. Eastman Kodak Co., 511 F.2d 306, 311-12 (2d Cir. 1975) (plaintiff contended that he had been forced into premature retirement because he had sold his house in a neighborhood primarily inhabited by white employees to a black fellow employee).
Although there is some support in district court decisions from this Circuit for the proposition that valid Section 1981 claims by whites are limited to those in which they claim discrimination derived from animus against a minority group,*fn1 Defendants' position runs directly contrary to the Supreme Court's holding in McDonald, which has been neither overruled nor abrogated. In McDonald, two white petitioners who were former employees of respondent transportation company brought claims of racial discrimination under Section 1981 when they were terminated for misappropriating cargo from one of the company's shipments while their former colleague, a black man who was charged with the same offense, was retained. The district court had dismissed the complaint on the pleadings, No. 71-H-891, 1974 WL 10598 (S.D. Tex. June 13, 1974), and the Court of Appeals had affirmed, 513 F.2d 90 (5th Cir. 1975), on the grounds that the protections of Section 1981 did not extend to white persons. The McDonald Court reversed the Fifth Circuit, holding, in no uncertain terms, that the protections of Section 1981 extend to whites as well as minorities and finding also that Section 1981 "is applicable to racial discrimination in private employment against white persons." McDonald, 427 U.S. at 286-87.
Defendants' motion is therefore denied to the extent it seeks dismissal of Plaintiff's Section 1981 claim for lack of standing.
Plaintiff's Employment Status
Defendants seek dismissal of the second and third counts of Plaintiff's complaint (alleging, respectively, violations of New York Executive Law § 296 ("NYHRL"), on which Plaintiff's second count is based, and under New York City Code § 8-107), asserting that Plaintiff, as an independent contractor, lacks standing to sue under those statues because their protections are generally limited to employees. Plaintiff alleges that she was "characterized as a 1099 worker for payroll purposes" pending "the final negotiation of a written employment contract." Complaint at ¶ 15. While IRS forms in the 1099 series are generally used to document amounts paid to independent contractors, rather than employees, paragraph 15 of the complaint is hardly conclusive of Plaintiff's status as a worker. Indeed, for the purposes of the NYHRL, a decision on whether a worker is an employee or an independent contractor depends on the application of the common law of agency. Eisenberg v. Advance Relocation & Storage, Inc., 237 F.3d 111, 133 (2d Cir. 2000). In such an analysis, "special weight should ordinarily be placed on the extent to which the hiring party controls the `manner and means' by the which the worker completes her assigned task, rather than on how she is treated for tax purposes or whether she receives benefits." Id. at 119. Moreover, independent contractors fall within the protections of City Code section 8-107 as long as they are "natural persons" who "carry out work in furtherance of an employer's business enterprise." New York City Code § 8-102(5) (Westlaw 2003). See also O'Neill v. Atlantic Security Guards, 671 N.Y.S.2d 976 (N.Y.App.Div. 1998); Lavergne v. Burden, 665 N.Y.S.2d 272 (N.Y.App.Div. 1997). Additionally, in that Plaintiff alleges she was denied an employment contract on the basis of her race, it is clear that, at a minimum, she alleges failure to hire on account of race. Because it is far from "beyond doubt that plaintiff can prove no set of facts in support in support of [her] claim which would entitle [her] to relief," Defendant's motion is denied insofar as it seeks dismissal of Plaintiff's state and local law claims.
Sufficiency of the Complaint
The essential elements of a Section 1981 claim are that the actions complained of were racially motivated and purposefully discriminatory. See General Bldg. Contractors Ass'n v. Pennsylvania, 458 U.S. 375, 391 (1982). Citing a long line of Second Circuit authority Defendants argue that, in order to survive a motion to dismiss, "the events of the intentional and purposeful discrimination, as well as the racial animus constituting the motivating factor for the defendant's actions must be specifically pleaded in the complaint." Yusuf v. Vassar College, 827 F. Supp. 952, 955 (S.D.N.Y. 1993), aff'd in part and vacated in part, 35 F.3d 709 (2d Cir. 1994); see also Albert, 851 F.2d at 571-72 (2d Cir. 1988); Mian, 7 F.3d at 1088. While the instant motion was pending, the Supreme Court issued its decision in Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002). In Swierkiewicz, the Court rejected the Second Circuit's long-standing requirement that an employment discrimination plaintiff plead a prima facie case of discrimination in order to survive a motion to dismiss, holding that only the notice pleading requirements of Rule 8 of the Federal Rules of Civil Procedure need be satisfied. Id. at 513. Plaintiff's complaint, which sets forth dates and events relevant to her claims and alleges that her termination and the denial of a formal employment contract were racially motivated, is sufficient to meet the Swierkiewicz standard. See id. at 514.
Request for Sanctions Against Defendants for Filing a Frivolous Motion
Arguing that the principal grounds of Defendants' motion were so inconsistent with the Supreme Court's decision in McDonald v. Santa Fe Trail Transp. Co. as to be frivolous and asserting that the conflict had been brought to Defendants' attention before the motion was interposed, Plaintiff suggests that the Court sua sponte sanction Defendants, pursuant to Federal Rule of Civil Procedure 11(c)(1)(B). The Court declines to do so. As noted above, there are a number of lower court decisions that are facially consistent with Defendants' position. Sanctions are inappropriate under these circumstances.
For the reasons discussed herein, Defendants' motion to dismiss is denied and the Court declines to institute sanctions proceedings.
A pretrial conference will be held in this case on March 27, 2003 at 4:30 p.m.