judicial enforcement of private agreements

The Blaisdells executed a mortgage on their property in Minneapolis to the Home Building & Loan Association on August 1, 1928. The mortgage contained a valid power of sale by advertisement. After default, the mortgage was foreclosed and the property sold to the Association on May 2, 1932, for $3700.98. The period of redemption under the law then in effect was set to expire on May 2, 1933. On April 18, 1933, Minnesota enacted Chapter 339 of the Laws of 1933, known as the Mortgage Moratorium Law. The statute authorized district courts to extend the period of redemption from foreclosure sales for such additional time as the court deemed just and equitable, not beyond May 1, 1935, upon condition that the mortgagor pay a reasonable part of the income or rental value toward taxes, insurance, interest, and principal. The Blaisdells applied to the District Court of Hennepin County for an extension of the redemption period. The district court found that the reasonable rental value of the property was $40 per month and the present market value was $6000. It extended the redemption period to May 1, 1935, requiring the Blaisdells to pay $40 per month to the Association. The Supreme Court of Minnesota affirmed the order. The Home Building & Loan Association appealed to the United States Supreme Court, which reviewed the judgment sustaining the statute as applied to the preexisting mortgage.

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.

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.

On September 26, 1970, petitioners L. N. McDonald and Raymond L. Laird, both white, and Charles Jackson, a black employee of Santa Fe Trail Transportation Co., were jointly and severally charged with misappropriating sixty one-gallon cans of antifreeze from a shipment the company was carrying for a customer. Six days later Santa Fe fired McDonald and Laird while retaining Jackson. A grievance was promptly filed with International Brotherhood of Teamsters Local 988 under the collective-bargaining agreement between the union and the company, but the grievance proceedings secured no relief. In April 1971 McDonald and Laird filed charges with the Equal Employment Opportunity Commission alleging that Santa Fe had discriminated against them on the basis of race in their discharge and that Local 988 had discriminated against McDonald on the basis of race by failing to represent his interests properly in the grievance proceedings. The EEOC notified them in July 1971 of their right to initiate a civil action in district court within thirty days. McDonald and Laird then filed suit in the United States District Court for the Southern District of Texas joining claims under Title VII of the Civil Rights Act of 1964 with a claim under 42 U.S.C. § 1981. Respondents moved to dismiss the complaint. In June 1974 the District Court issued a final modified opinion and order dismissing the claims under both Title VII and § 1981. The Court of Appeals for the Fifth Circuit affirmed the dismissal per curiam. The Supreme Court granted certiorari.