McKinney v. Sheriff of Whitley County Indiana The Office of the et al

Filing 85

OPINION AND ORDER DENYING 81 MOTION for Reconsideration re 77 Opinion and Order filed by Mark Hodges, Sheriff of Whitley County Indiana The Office of the. Signed by Judge William C Lee on 7/17/2018. (lns)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
TERRANCE S. McKINNEY,
Plaintiff,
v.
THE OFFICE OF THE SHERIFF OF
WHITLEY COUNTY, and SHERIFF
MARK HODGES, in his individual
capacity,
Defendants.

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CIVIL NO. 1:15cv79

OPINION AND ORDER
This matter is before the court on a motion to reconsider, filed by the defendants, Office
of the Sheriff of Whitley County (“Whitley County”) and Sheriff Mark Hodges in his individual
capacity (“Hodges”), on June 11, 2018. The Plaintiff, Terrance S. McKinney (“McKinney”)
responded to the motion on June 25, 2018. Defendants have declined to file a reply.
For the following reasons, the motion will be denied.
Discussion
On May 21, 2018, this court entered an Order granting in part and denying in part
McKinney’s second motion for leave to file second amended complaint. This Order permitted
McKinney to add Mark Hodges as a defendant and to pursue a Section 1981 claim against both
Hodges and Whitley County.
Defendants now request that the court reconsider the motion. As they argued in their
objection to the motion to amend, the Defendants again argue that the statute of limitations for
McKinney’s Section 1981 claim is two years, and that the two years have expired. Defendants

again rely on Campbell v. Forest Pres. Dist of Cook Cty, Ill., 752 F.3d 665, 671 (7th Cir. 2014
and Jett v. Dallas Indep. Sch. Dist, 491 U.S. 701, 733 (1989). Inexplicably, Defendants also
continue to argue that Section 1981 only applies to express written employment contracts.
McKinney has correctly noted that the motion to reconsider does not meet any category of
cases where such a motion would be appropriate. There is no manifest error of law or fact to
correct, nor is there newly discovered evidence to consider. However, in an attempt to insure
that everyone fully understands the basis of granting the motion to amend, the Court will
entertain the motion to reconsider.
McKinney has sued his employer, Whitley County, for alleged race discrimination. In his
second motion for leave to file second amended complaint, McKinney sought to add former
Sheriff Mark Hodges as a defendant, and to assert discrimination, retaliation and disparate
treatment claims pursuant to Section 1981, against both defendants. The May 21, 2018 Order
granted both of these requests.
The main issue raised by the motion to amend (and, now, the motion to reconsider) was
which statute of limitations applied to the Section 1981 claims. Generally, Section 1981 has a
two-year statute of limitations. Pursuant to 28 U.S.C. Section 1658, a four-year limitations period
applies to causes of action “arising under an Act of Congress enacted” after December 1, 1990.
A cause of action “arises under” such an enactment “if the plaintiff’s claim against the defendant
was made possible by a post-1990 enactment. Jones v. R.R. Donnelley & Sons Co., 541 U.S. 369,
382 (2004). For Section 1981, claims based on post-formation conduct, such as wrongful
termination, were made possible by the Civil Rights Act of 1991, and are subject to the four-year
limitations period. Dandy v. United Parcel Service, 388 F.3d 263, 269 (7th Cir. 2004). However,
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government employees sued in their individual capacities are state actors for purposes of Section
1981, and such claims must be brought under Section 1983. The crucial question, on which
there appears not to be a Seventh Circuit case precisely on point, is whether a claim brought
against a state actor under Section 1983, for a right secured by Section 1981, is governed by the
four-year limitations period.
In the motion to reconsider, Defendants claim that Campbell (and by extension, Jett) are
“precisely on point”. Defendants are wrong. The plaintiff in Campbell attempted to plead a
Section 1981 action against a state actor without also bringing a claim under Section 1983. Thus,
there was no need for the Campbell Court to consider whether the four-year limitations period of
28 U.S.C. Section 1658 applied, as the Section 1981 claim could not be brought against a state
actor without an accompanying Section 1983 claim. However, in dicta, the Seventh Circuit noted
that the “one might argue” that Section 1658's four-year statute of limitations “should apply
regardless”. Campbell at 668. However, as the plaintiff in Campbell had disavowed any reliance
on Section 1983, the Seventh Circuit declined to express an opinion on the issue of which statute
of limitations applied to a Section 1981 claim brought through a Section 1983 claim. As
McKinney notes, the conclusion of the Campbell opinion states:
Because 42 U.S. C. § 1981 does not create a private right of action against state
actors, Campbell’s § 1981 claim against the FPD fails to state a claim upon which
relief can be granted. Moreover, Campbell does not challenge the district court’s
decision to deny him leave to replead under 42 U.S.C. § 1983. Therefore the
district court’s order granting the FPD’s motion to dismiss is affirmed.

Thus, it is clear that the Seventh Circuit in Campbell was not considering whether Section 1981
and Section 1983, together, require a four-year statute of limitations. Further, the dicta strongly

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suggests that if the plaintiff in Campbell had plead a Section 1983 action to go with his Section
1981 action, that the Seventh Circuit would have applied the four-year statute of limitations.
As this Court noted in its May 21, 2018 Order, the Eleventh Circuit has held that the fouryear period applies. Baker v. Birmingham Bd. of Educ., 531 F.3d 1336 (11th Cir. 2008).
Additionally, The Seventh Circuit has held, without any real discussion, that the four-year statute
of limitations applies in Section 1981 actions brought against state actors. In Hall v. Village of
Flossmoor, Ill., 520 Fed. Appx. 468, 473 (7th Cir. 2013), the Court held that the District Court
correctly ruled that Plaintiff’s Title VII and Section 1983 claims were untimely, “but was wrong
about the Section 1981 claim. The Section 1981 claim has a four year statute of limitations, so it
was timely.” In Moore v. City of Chicago, 126 Fed. Appx. 745, 747 (7th Cir. 2005), an action by
a Chicago police officer against the City of Chicago, the Seventh Circuit stated: “Moore also
argues that the district court improperly applied a two-year rather than a four-year statute of
limitations period. The City concedes that a four-year statute of limitations period is proper for
claims under Section 1981". Other district courts in this Circuit have also held that the four-year
limitations period of Section 1658 applies to Section 1981 claims against state actors, brought
through Section 1983, holding that the limitations period for Section 1981 is an exception to the
general two-year period for Section 1983. See e.g., Price v. Northern Illinois Univ., 2017 U.S.
Dist. LEXIS 205544, *6 (N.D. Ill. Dec. 14, 2017); Sams v. City of Chicago, 2014 WL 6685809,
*6 (N. D. Ill. Nov. 25, 2014).
Additionally, as McKinney notes in his response to the motion to reconsider, Nitch v.
Ester, No. 16-CV-06033, 2017 U.S. Dist. LEXIS 171338, 2017 WL 465088, ad *4 n. 5 (N.D. Ill.
Oct. 17, 2017), correctly analyzes the issue:
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[I]n Abrams, the Supreme Court also stated, albeit in dicta, that § 1658's four-year
statute of limitations "would seem to apply" to a § 1983 claim enforcing
substantive rights that were created after enactment of the general four-year statute
of limitations in § 1658. See Abrams, 544 U.S. at 124 n.5. And indeed, it appears
that the Court found no tension between its statements that the nature of the right
asserted has no bearing on the statute of limitations applicable to a claim asserting
the right and its statement that the date the right was created seemingly would,
because the Court considered the substantive argument advanced by the petitioner
city under both assumptions—that the borrowed state statute of limitations
applied and that § 1658 applied. See 544 U.S. at 124-125.
Although the Court did not tackle the question in Abrams, and the Seventh Circuit
similarly demurred in Campbell, both seem to be pointing down the trail blazed
by Donnelley. The entire premise underlying the "borrowing" of state law personal
injury statutes of limitation is that there was not a federal statute applicable to the
claim. See Wilson, 471 U.S. at 266-69. But the enactment of § 1658 invalidated
that premise. State law fills gaps in federal civil rights statutes only so far as it is
not inconsistent with federal law. Id. at 269; 42 U.S.C. § 1988. But with the
enactment of § 1658, there is no limitations period gap to fill with state law, and
applying shorter state law limitations periods than the four-year period now
provided in § 1658 is seemingly "inconsistent with" the federal limitations period.
And while the Donnelley Court concluded that "settled expectations provide a
valid reason to reject an interpretation of § 1658 under which any new amendment
to federal law would suffice to trigger the 4-year statute of limitations," 541 U.S.
at 381-82, such concerns do not apply in the context of claims newly created after
the enactment of § 1658. As to those claims, whether brought under § 1981 or §
1983, there is an available federal statute of limitations. The defendants have
advanced no rationale for continuing to apply state personal injury limitations
periods to claims asserted against state actors that would, if asserted against
private actors be subject to the federal four-year statute and none suggests itself to
the Court.
Id. at 17-18.
Thus, this Court reiterates the holding in its May 21, 2018 Order that McKinney, who is
bringing his Section 1981 claim through a Section 1983 claim, is entitled to the four-year statute
of limitations provided by Section 1658.
Next, Defendants request this Court to reconsider its ruling that McKinney need not have
an express written employment contract to be protected by Section 1981. Defendants also
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reiterate their argument that McKinney must plead a “custom or policy” of the Defendants that
violated his right to make contracts.
With respect to the asserted need to have an express written employment contract,
Defendants should read Walker v Abbott Laboratories, 340 F.3d 471, 478 (7th Cir. 2003):
There is no dispute, however, that even as amended § 1981's protections still
center on contractual rights and that proof of a contractual relationship is
necessary to establish a § 1981 claim. See Perry, 199 F.3d at 1132; Gonzalez,
133 F.3d at 1034. The parties here do not dispute that Walker was an at-will
employee and therefore that either party to the employment relationship could
terminate his employment at any time. As noted above, in Gonzalez, this Court
opined in dicta that an at-will employment relationship might not be sufficiently
contractual to support § 1981 claims for discriminatory termination. 133 F.3d at
1035. We explicitly stated in our opinion, however, that we “need not
determine” the issue because Gonzalez had provided no evidence of
discrimination, and so her claim failed on that basis. Id.; see also Staples v.
Pepsi-Cola Gen. Bottlers, Inc., 312 F.3d 294, 298 n. 3 (7th Cir.2002) (noting that
Gonzalez discussed the issue but ultimately left it “for another day”). Before
Gonzalez, this Court in McKnight v. GMC took the view that “[e]mployment
at-will is not a state of nature but a continuing contractual relation. A contract for
employment at will may end abruptly but it is a real and continuing contract
nonetheless.” 908 F.2d 104, 109 (7th Cir.1990). Gonzalez questioned the
continued validity of this position since in McKnight we had relied on the
now-overruled Patterson decision. See Gonzalez, 133 F.3d at 1035. Not
surprisingly, Walker urges us to disregard the Gonzalez dicta and revive
McKnight; whereas Abbott contends that we should follow Gonzalez.
We note that since our decision in Gonzalez, every circuit court to address the
issue, five in all, have held that at-will employees can state claims under § 1981.
See Skinner, 253 F.3d at 342; Lauture, 216 F.3d at 260; Perry, 199 F.3d at 1133;
Spriggs, 165 F.3d at 1018-19; Fadeyi, 160 F.3d at 1049-50. Much as we did in
McKnight, these courts have found that at-will employment, though capable of
being terminated by either party at any time, is nonetheless a contractual
relationship.
Our review of § 1981's statutory language reveals no intent by Congress to give
the word “contract” in § 1981 any specialized meaning; thus, we must assume that
the ordinary meaning was intended. See Lauture, 216 F.3d at 261; Spriggs, 165
F.3d at 1018. According to the Second Restatement of Contracts, a contract is “a
promise or a set of promises for the breach of which the law gives a remedy, or
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the performance of which the law in some way recognizes as a duty.”
restatement (Second) Of Contracts § 1 (1981). Several courts have recognized
that under this definition, at-will employment creates a contract because the
employer promises to pay the employee for certain work and the employee accepts
the offer by beginning work. See, e.g., Skinner, 253 F.3d at 340 (“[Employer]
offered, either implicitly or explicitly, to pay [plaintiff] for performance of
services. [Plaintiff] accepted that offer by performance.”); Lauture, 216 F.3d at
261 (“[Plaintiff's] promise to work for [employer], as consideration for
[employer's] promise to pay her, was a contract.”); Spriggs, 165 F.3d at 1018
(“[Plaintiff's] performance of the assigned job duties was consideration exchanged
for [employer's] promise to pay. The parties' actions thus created a contractual
relationship.”). There is no dispute that this is the situation here: Abbott
employed Walker on an at-will basis, offering, either implicitly or explicitly, to
pay him for the performance of specified work, and Walker accepted that offer by
either promising to or actually performing the work.
The lack of a fixed duration of employment does not make the relationship any
less contractual. As we noted in McKnight, at-will employees, though capable of
losing or quitting their employment at any time, are not totally without
enforceable contractual rights: “Wages, benefits, duties, working conditions, and
all (but one) of the other terms are specified and a breach of any of them will give
the employee a cause of action for breach of contract.” 908 F.2d at 109 (citation
omitted). As another court noted, in all at-will employment relationships,
employees maintain “the right to treat the employer's failure to pay for work done
by the employee prior to termination of the employment relationship as a breach
of contract.” Skinner, 253 F.3d at 341-42. Moreover, the Restatement
contemplates that at-will employment relationships are contractual even though
they lack a term of duration. See restatement (Second) Of Contracts § 33 cmt. d,
illus. 6 (1981); see also Spriggs, 165 F.3d at 1018.
Some courts have looked to the state-law definition of “contract” to cast further
light on whether at-will employees have sufficient contractual rights to maintain §
1981 claims. See, e.g., Skinner, 253 F.3d at 340 (finding that under Missouri law
the plaintiff's at-will employment “had all the essential elements of a valid
contract”); Fadeyi, 160 F.3d at 1050 (same under Texas law). Walker contends
that Illinois law recognizes at-will employment relationships as contractual, and
Abbott makes no argument to the contrary. From our review of the case law, it
does appear that Illinois courts generally treat at-will employment relationships as
contractual in nature. See, e.g., Fellhaver v. Geneva, 142 Ill.2d 495, 154 Ill.Dec.
649, 568 N.E.2d 870, 878 (Ill.1991) (recognizing employment at will as a contract
for employment with an indefinite duration); cf. Callis, Papa, Jackstadt, and
Halloran. P.C. v. Norfolk & W. Ry., 195 Ill.2d 356, 254 Ill.Dec. 707, 748 N.E.2d
153, 161 (Ill.2001) (“The relationship between the law firm and [employee] is a
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contractual, at-will relationship. Until such a relationship is terminated, the
at-will contract is of value to the law firm.”).
Finally, a finding that at-will employees cannot state a § 1981 claim would appear
to contravene Congress's intention in the Civil Rights Act of 1991 to “restor[e] the
broad scope of Section 1981[to] ensure that all Americans may not be harassed,
fired or otherwise discriminated against in contracts because of their race.” H.R.
Rep. No. 102-40(II), at 2 (1991). Congress's intent to secure protection of all
employees is further evident in its explicit disapproval of the way in which the
Supreme Court in Patterson limited § 1981's application. See S.Rep. No.
101-315, at 14 (1990) (finding “a compelling need for legislation to overrule the
Patterson decision and ensure that federal law prohibits all race discrimination in
contracts”). Given these inclusive intentions, we find it difficult to believe that
Congress would have sought to exclude from § 1981's protections the large
portion of the employees in this country who work under at-will employment
contracts. As other courts have noted, excluding at-will employees from § 1981
protection “would be to allow use of the ubiquitous at-will doctrine as leverage to
incite violations of our state and federal laws.” Fadeyi, 160 F.3d at 1052
(quotation omitted); see also Skinner, 253 F.3d at 340 n. 1; Lauture, 216 F.3d at
264.
* * *
For the reasons stated above, we hold that Walker's at-will employment
relationship with Abbott is sufficiently contractual in nature to maintain a § 1981
action for discrimination in promotion and pay.
Id.
Thus, Defendants are clearly and utterly wrong in their assertion that McKinney must
have had an express written contract to bring a Section 1981 action.
Defendants assert that Domino’s Pizza, Inc. v. McDonald, 506 U.S. 470, 474-75, 479-80
(2006), states that a “contract” is required to bring a Section 1981 action, and apparently glean
from this that such a contract must also be a written contract. The facts in Domino’s are not even
close to the facts in the present case. In Domino’s, the issue was whether a non-party to a
contract could bring a Section 1981 claim. In a decision delivered by Justice Antonin Scalia, the
Supreme Court ruled that Section 1981 only apples to those who have enforceable rights under
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the contract, i.e., actual parties to the contract and not their agents. Although the contracts at
issue in McDonald were written contracts, there is nothing in McDonald suggesting that an
employee at will may not bring a Section 1981 action.
Defendants also assert that McKinney must show that the alleged violation of his
contractual rights was caused by a custom or policy within the meaning of Monell and
subsequent cases. Again, Defendants (and their counsel) fail to understand settled civil rights
law. The law is clear that there are three ways to state a claim for municipal liability: (1) express
policy of the municipality; (2) widespread, well-settled practice that effectively constitutes a
municipal policy, or (3) acts by a person with final policymaking authority. Williams v. City of
Chicago, 2017 U.S. Dist. LEXIS 116730 *26; 2017 WL 3169065 (N.D. Ill. 2017)(citing
Latuszkin v. City of Chicago, 250 F.3d 502, 504 (7th Cir. 2011)(citing Monell, 436 U.S. at 690)).
In the present case, it is clear that McKinney relies on the third method. McKinney has
consistently alleged that Sheriff Mark Hodges was the individual with the final policymaking
authority who violated McKinney’s rights. Clearly, McKinney’s claims fit within Monell.
Accordingly, as there is no basis to reverse any of the holdings in the May 21, 2018 Order
granting in part the motion to amend, Defendants’ motion to reconsider will be denied.
Conclusion
On the basis of foregoing, Defendants’ motion to reconsider [DE 81] is hereby DENIED.

Entered: July 17, 2018.
s/ William C. Lee
William C. Lee, Judge
United States District Court
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