attorney’s fee

Brenda Patterson, a black woman, began her employment with McLean Credit Union in May 1972 as a teller and file coordinator in North Carolina. She remained in that position until July 1982, when the credit union laid her off. After her termination, Patterson commenced an action in the United States District Court for the Middle District of North Carolina, alleging that McLean Credit Union had harassed her, failed to promote her to an intermediate accounting clerk position, and discharged her, all because of her race, in violation of 42 U.S.C. § 1981. She also asserted a state-law claim for intentional infliction of emotional distress under North Carolina tort law. The District Court ruled that a claim for racial harassment is not actionable under § 1981 and declined to submit that portion of the case to the jury. The jury received and deliberated upon Patterson's § 1981 claims alleging discrimination in her discharge and the failure to promote her, returning verdicts for the employer on both claims. The District Court directed a verdict for the employer on the state tort claim, concluding that the employer's conduct did not rise to the level of outrageousness required under North Carolina law. In the Court of Appeals for the Fourth Circuit, Patterson challenged the District Court's refusal to submit her § 1981 racial harassment claim to the jury. She also argued that the District Court had erred in instructing the jury that she must show she was better qualified than the white employee promoted in her place. The Court of Appeals affirmed the District Court's judgment in full, holding that racial harassment does not abridge the right to make and enforce contracts under § 1981, while upholding the jury instruction on the promotion claim. The Supreme Court granted certiorari to decide whether Patterson's racial harassment claim is actionable under § 1981 and whether the jury instruction on her promotion claim was erroneous. After oral argument on these issues, the Court requested the parties to brief and argue an additional question whether or not the interpretation of 42 U.S.C. § 1981 adopted by this Court in Runyon v. McCrary, 427 U.S. 160 (1976), should be reconsidered.

The Fairfax-Brewster School commenced operations in 1955 and opened a summer day camp in 1956. Bobbe's School opened in 1958 and grew from an initial enrollment of five students to 200 in 1972. Neither school has ever accepted a Negro child for any of its programs. In response to a mailed brochure addressed "resident" and an advertisement in the "Yellow Pages" of the telephone directory, Mr. and Mrs. Gonzales telephoned and then visited the Fairfax-Brewster School in May 1969. After the visit, they submitted an application for Colin's admission to the day camp. The school responded with a form letter stating that it was "unable to accommodate [Colin's] application." Fairfax-Brewster's Chairman of the Board explained that the reason for rejection was that the school was not integrated. Mr. Gonzales then telephoned Bobbe's School, from which the family had also received a brochure addressed to "resident." He was told that only members of the Caucasian race were accepted. In August 1972, Mrs. McCrary telephoned Bobbe's School in response to an advertisement in the telephone book. She inquired about nursery school facilities for her son, Michael, and asked if the school was integrated. The answer was no. The suits were consolidated for trial. The District Court found that the Fairfax-Brewster School had rejected Colin Gonzales' application on account of his race and that Bobbe's School had denied both children admission on racial grounds. The court held that 42 U.S.C. § 1981 makes illegal the schools' racially discriminatory admissions policies. It therefore enjoined the schools and the member schools of the Southern Independent School Association from discriminating against applicants on the basis of race. The court awarded compensatory relief to Mr. and Mrs. McCrary, Michael McCrary, and Colin Gonzales. Finally, the court assessed attorneys' fees of $1,000 against each school. The Court of Appeals for the Fourth Circuit, sitting en banc, affirmed the District Court's grant of equitable and compensatory relief and its ruling on the statute of limitations, but reversed the award of attorneys' fees. Factually, the court held that there was sufficient evidence to support the trial court's finding that the two schools had discriminated racially against the children. The court agreed that 42 U.S.C. § 1981 is a limitation upon private discrimination. We granted certiorari to consider whether § 1981 prevents private schools from discriminating racially among applicants and to address the attorneys' fees and statute of limitations issues.

Interactive Data Corporation hired John Foley in June 1976 as an assistant product manager at a starting salary of $18,500. As a condition of employment Foley signed a confidential and proprietary information agreement. The company's president told Foley that if he performed his job well he would have a long and rewarding employment with the firm. Over the next six years and nine months Foley received steady salary increases, promotions, bonuses, awards, and superior performance evaluations, rising to branch manager of the Los Angeles office with an annual salary of $56,164 plus a merit bonus. In January 1983 Foley learned that his new supervisor, Robert Kuhne, was under investigation by the FBI for embezzlement from his former employer, Bank of America. Foley reported the information to Vice President Richard Earnest because he was worried about working for Kuhne in a supervisory position. Earnest told Foley not to discuss rumors and to forget what he had heard. In early March 1983 Kuhne informed Foley that the company had decided to replace him for performance reasons and offered a transfer to another division. Foley was later told he could continue as branch manager if he agreed to a performance plan, but when Kuhne met with him the next day Kuhne instead gave Foley the choice of resigning or being fired. Foley was discharged on March 13, 1983. Foley filed suit against Interactive Data Corporation alleging three causes of action: tortious discharge in violation of public policy, breach of an implied-in-fact contract to terminate only for good cause, and tortious breach of the implied covenant of good faith and fair dealing. The superior court sustained the company's demurrer without leave to amend and dismissed the action. The Court of Appeal affirmed the judgment. The Supreme Court granted review.