Hammond v. Kmart Corporation

United States Court of Appeals
For the First Circuit

No. 13-1469

CHENELL HAMMOND,

Plaintiff, Appellant,

v.

KMART CORPORATION and SEARS HOLDINGS CORPORATION,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Richard G. Stearns, U.S. District Judge]

Before

Lynch, Chief Judge,
Thompson and Kayatta, Circuit Judges.

Christopher J. Trombetta for appellant.
William F. Benson, with whom Christine M. Netski and Sugarman,
Rogers, Barshak & Cohen, P.C. were on brief, for appellees.

October 25, 2013
 LYNCH, Chief Judge. Chenell Hammond, a retail customer,

appeals from the dismissal of her action under 42 U.S.C. § 1981

against Kmart Corporation and Sears Holdings Corporation

(collectively, "Kmart"), where she successfully purchased goods

using the store's layaway process. The district court granted

Kmart's motion to dismiss because Hammond's pleadings were

insufficient to state a claim under § 1981. It dismissed the

federal claim, but dismissed without prejudice a pendent state law

claim. We affirm on the narrow facts of this case and the paucity

of the allegations.

I.

Hammond filed suit on January 14, 2013, bringing a

federal claim of racial discrimination under 42 U.S.C. § 1981 and

a pendent state law claim of negligent infliction of emotional

distress. We take all of Hammond's factual allegations as true,

drawing reasonable inferences in her favor, Lemelson v. U.S. Bank

Nat'l Ass'n, 721 F.3d 18, 21 (1st Cir. 2013), as did the district

court.

Hammond is an African-American woman. In her complaint,

she alleged that on November 21, 2012, a white Kmart sales clerk

said "insulting racial slurs and comments" to her while she was

placing items on hold in a layaway transaction.

More specifically, on that day Hammond was at Kmart with

her two children. In order to place several items on layaway, she

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needed to give the sales clerk her identification card, which

indicated that she lived in Roxbury, Massachusetts, a part of

Boston which has a high percentage of African-American residents.1

Upon receiving this identification card, the white sales

clerk asked if Hammond would be "jumping the counter" to get what

she needed because she is from Roxbury. The clerk also labeled the

identification card, which was not a driver's license, a "liquor

ID."

The clerk commented that she used to live in Dorchester,

which is adjacent to Roxbury, but had to move because of "porch

monkeys" in that area. She said that these "porch monkeys" had

fired gunshots through her window, causing her to dive under her

bed for protection.

The clerk next spoke to Hammond about a public housing

project in Weymouth, Massachusetts, assuming that Hammond was

familiar with it, although she was not. Specifically, the clerk

said that she lived in Weymouth and that the only "action" in her

neighborhood came from that project.

Hammond was "humiliated and deeply offended" by these

comments, which she believed reflected the sales clerk's belief

1
In a layaway transaction a retailer agrees to hold
merchandise, which a customer secures by making a deposit. The
customer can retain the merchandise once the price is paid in full.
See Black's Law Dictionary 968 (9th ed. 2009).

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that she was "poor, inferior and violent . . . because she is

African American." She alleged no other consequences.

The complaint did not allege that Kmart in any way failed

to go through with the layaway, refused to perform any transactions

with her, or otherwise refused to contract with her. Nor did it

allege that Hammond had complained to the store, and, if so, what

had happened in response.

Kmart moved to dismiss the § 1981 claim, stating that the

complaint's allegations regarding the sales clerk's racially

discriminatory remarks fail to state a claim under § 1981. It

argued that Hammond's failure to allege that Kmart interfered with

a contractual relationship or denied her any rights under the

layaway contract warranted dismissal of her § 1981 claim.

Hammond opposed this motion but did not seek to amend her

complaint. Rather, her opposing memorandum added that the Kmart

clerk's remarks "almost did cause the cessation of the [layaway]

transaction" because Hammond was so offended by them that she

"considered walking away from the [checkout] counter."

The district court, following Garrett v. Tandy Corp., 295

F.3d 94 (1st Cir. 2002), dismissed Hammond's § 1981 claim. It

reasoned that Hammond "fail[ed] to make any factual averments to

support a claim that the store clerk's comments, described as

'racially demeaning, insulting, rude, and discriminatory,'"

precluded her from making or enforcing her layaway contract with

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Kmart. It held that Hammond's additional assertion that she

"almost" did not complete the layaway payment was also inadequate

to state a claim.

Hammond appeals from the dismissal of her § 1981 claim.

II.

We review de novo an order of dismissal for failure to

state a claim. Lemelson, 721 F.3d at 21. Dismissal is appropriate

"if the complaint does not set forth 'factual allegations, either

direct or inferential, respecting each material element necessary

to sustain recovery under some actionable legal theory.'" Id.

(quoting United States ex rel. Hutcheson v. Blackstone Med., Inc.,

647 F.3d 377, 384 (1st Cir. 2011)). So, "[t]o survive a motion to

dismiss, a complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible on

its face." Id. (alteration in original) (quoting Ashcroft v.

Iqbal, 129 S. Ct. 1937, 1949 (2009)) (internal quotation marks

omitted).

III.

The text of 42 U.S.C. § 1981 provides: "All persons

within the jurisdiction of the United States shall have the same

right in every State and Territory to make and enforce

contracts . . . as is enjoyed by white citizens. . . ."

Interpretation of this language has been the subject of a number of

Supreme Court cases. See Domino's Pizza, Inc. v. McDonald, 546

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U.S. 470 (2006); Rivers v. Roadway Express, Inc., 511 U.S. 298

(1994); Runyon v. McCrary, 427 U.S. 160 (1976). This court also

has a series of § 1981 cases. See Garrett, 295 F.3d 94; Danco,

Inc. v. Wal-Mart Stores, Inc., 178 F.3d 8 (1st Cir. 1999); Benjamin

v. Aroostook Med. Ctr., Inc., 57 F.3d 101 (1st Cir. 1995).

To state a claim under § 1981, a plaintiff must show that

(1) she is a member of a racial minority; (2) the defendant

discriminated against her on the basis of her race; and (3) the

discrimination implicated one or more of the activities listed in

the statute, including the right to make and enforce contracts.

Garrett, 295 F.3d at 98.

It is undisputed that Hammond, an African American, is a

member of a racial minority. In addition, Kmart for present

purposes does not contest that a jury could find that the sales

clerk's remarks, as alleged in the complaint, were racially

discriminatory. The question is whether Hammond's complaint

sufficiently met the third requirement. Under Garrett, "to satisfy

the foundational pleading requirement for a [§ 1981] suit . . ., a

retail customer must allege that he was actually denied the ability

either to make, perform, enforce, modify, or terminate a contract,

or to enjoy the fruits of a contractual relationship, by reason of

a race-based animus." Id. at 100-01 (emphasis added).

The scope of § 1981's coverage has changed over time. In

1991 Congress amended § 1981 to overrule Patterson v. McLean Credit

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Union, 491 U.S. 164 (1989), which had narrowly interpreted the

statute's phrase "make and enforce contracts." H.R. Rep. No. 102-

40, pt. 2, at 694-95 (1991). Patterson had held that the statutory

phrase did not encompass on-the-job racial harassment experienced

by an African-American employee who claimed she was ultimately

fired because of her race. 491 U.S. at 171. The Court determined

that "conduct by the employer after the contract relation has been

established, including breach of the terms of the contract"

comprises the "performance" of a contract, not its making or

enforcement. Id. at 177.

The 1991 amendment sought to undo this holding by more

broadly defining the phrase "make and enforce contracts" to include

"the making, performance, modification, and termination of

contracts," as well as "the enjoyment of all benefits, privileges,

terms, and conditions of the contractual relationship." 42 U.S.C.

§ 1981(b). Even with this broader definition, however, Congress's

focus on "bar[ring] all racial discrimination in contracts" did not

change. H.R. Rep. No. 102-40, pt. 2, at 731 (emphasis added); see

also Rivers, 511 U.S. at 306 n.6; Garrett, 295 F.3d at 100.

As the Supreme Court more recently said in Domino's

Pizza: "[N]othing in the text of § 1981 suggests that it was meant

to provide an omnibus remedy for all racial injustice. If so, it

would not have been limited to situations involving contracts."

546 U.S. at 479. As a result, courts interpreting the 1991

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amendment, including this court in Garrett, have continued to

require a "sufficient nexus between the asserted discrimination and

some contractual right or relationship." Garrett, 295 F.3d at 98.

Our case law and Supreme Court precedent control the

outcome here. In Garrett, we affirmed a district court's dismissal

of a § 1981 claim by a retail customer of the defendant store for

failure to state a claim. 295 F.3d at 106. There, as in this

case, the plaintiff alleged that racial discrimination interfered

with his § 1981 right to make and enforce contracts in a retail

store, although he had completed his purchase.

Garrett, an African-American man, claimed he endured two

forms of racial discrimination related to his shopping at Radio

Shack. The first is that three white employees monitored his

movements throughout the store, and "at least one of them

accompanied him throughout his visit." Id. at 96.

Although Radio Shack did not carry a police scanner that

Garrett was looking for, he ended up buying a book, a phone, and

some batteries. Id. This court held that Garrett's allegations of

race-motivated surveillance did not state a § 1981 claim because

the monitoring by the three employees did not impair his ability to

make purchases. Id. at 101.

There was a second form of alleged discrimination.

Garrett also alleged that shortly after he had completed his

purchase and had left Radio Shack, a store employee noticed a

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laptop was missing and called the police to say that he suspected

Garrett of the theft, giving them Garrett's home address which he

had secured from Garrett at the checkout counter. Id. at 96.

Although three or four white customers had been in Radio Shack at

about the same time as Garrett, only Garret was named as a suspect

to the police. As a result, an officer went to Garrett's home.

Garrett gave the officer permission to search his home and car; no

laptop was found. Id. at 96-97.

Despite the extent of this post-purchase intrusion, the

Garrett court held that the allegations did not state a § 1981

claim because Garrett had "fully consummated the contract while he

was in the store (i.e., he completed the purchase of a book, a

telephone, and some batteries) and thereafter retained the items

that he acquired." Id. at 101.

The Garrett holding reflects an important limit on § 1981

claims: the alleged discrimination must interfere in some way with

the "make and enforce" contractual interests described in the

statute. See id. at 102. The Supreme Court, since Garrett, has

reinforced this limit, saying that "[s]ection 1981 offers relief

when racial discrimination blocks the creation of a contractual

relationship, as well as when racial discrimination impairs an

existing contractual relationship." Domino's Pizza, 546 U.S. at

476.

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 Thus, to state a claim a plaintiff must "initially

identify an impaired 'contractual relationship,' § 1981(b), under

which the plaintiff has rights." Id. (emphasis added). Absent

this requirement, § 1981 would become a catch-all remedy to racial

discrimination, "produc[ing] satellite . . . litigation of immense

scope." Id. at 479. As the Eighth Circuit has stated, "[s]ection

1981 'does not provide a general cause of action for race

discrimination.'" Green v. Dillard's, Inc., 483 F.3d 533, 538 (8th

Cir. 2007) (quoting Youngblood v. Hy-Vee Food Stores, Inc., 266

F.3d 851, 855 (8th Cir. 2001)).

Here, Hammond's pleadings describe comments, alleged to

have been fueled by racial animus, that "humiliated and deeply

offended" her. They do not allege that Hammond was unable to

complete her layaway transaction; nor do they say that the Kmart

sales clerk refused to help Hammond, forced Hammond to use

something other than the normal layaway procedure, or otherwise

contracted with Hammond on different terms than other customers,

such as charging her a higher price. There is no claim that

Hammond did not receive the purchases she had placed on layaway.

Hammond's scant allegations provide no basis for

inferring those comments interfered with her ability to buy items

through layaway.2 See Withers v. Dick's Sporting Goods, Inc., 636

2
Nothing in the record suggests that there are other
material facts that Hammond failed to allege.

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F.3d 958, 965 (8th Cir. 2011) ("[M]ere offending conduct[] does not

demonstrate interference with a protected activity[,] and any

allegations of such [conduct] are insufficient to state a claim

under § 1981."). Just as the Garrett court dismissed a § 1981

claim because the plaintiff did not allege that the "challenged

surveillance . . . ha[d] some negative effect on [his] ability to

contract with the store," 295 F.3d at 101, Hammond's complaint also

lacks in this way.3

If anything, Garrett was a closer case than this. Unlike

Garrett's one-time successful purchase of goods at Radio Shack, in

layaway transactions customers typically make payments in

installments while an item is on hold. Despite the greater

opportunity for contractual interference given the structure of

Hammond's purchase, Hammond does not allege that this or any other

Kmart employee impeded her from making installment payments or from

taking home the items placed on layaway. She was not hindered from

making and completing a layaway purchase.

Importantly, Kmart's motion to dismiss put Hammond on

notice that her pleadings were insufficient, but Hammond did not

3
While Hammond does not state a federal claim, this is not
to say that she has no claim under state law. Hammond's claim of
negligent infliction of emotional distress, which the district
court dismissed without prejudice, can be pursued in state court.
See also Mass. Gen. Laws Ch. 272 § 98 (prohibiting the
"distinction, discrimination, or restriction on account of
race . . . relative to the admission of any person to, or his
treatment in any place of public accommodation").

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seek to amend the complaint. Her opposing brief added only the

additional allegation that she did, in fact, complete the layaway

purchase. However, a plaintiff "must allege the actual loss of a

contract interest," not a "theoretical loss." Garrett, 295 F.3d at

102; see also Morris v. Dillard Dept. Stores, Inc., 277 F.3d 743,

751 (5th Cir. 2001) ("[A] plaintiff must establish the loss of an

actual, not speculative . . . contract interest.").

Finding no room under Garrett, Hammond points to Sawyer

v. Southwest Airlines Co., 243 F. Supp. 2d 1257 (D. Kan. 2003), a

district court decision from another jurisdiction addressing a

different problem. There the court held that a jury could find

that a flight attendant's racist joke over an aircraft intercom

deprived a minority customer of the "the enjoyment of all benefits,

privileges, terms, and conditions" of his contract with the

airline. 243 F. Supp. 2d at 1273 (quoting 42 U.S.C. § 1981(b))

(internal quotation marks omitted). The court reasoned that an

airline passenger reasonably expects that cordial service during a

flight is a benefit or term of the contract for transportation.

See id. at 1272-73 (comparing contract with airline to a contract

with a restaurant, where the experience purchased reasonably

includes service in addition to the food that is consumed).

Hammond suggests that the layaway transaction here is

more similar to the "continuing contractual relationship" of a

flight than to a discrete retail transaction. However, the object

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of the typical retail transaction, purchasing goods, is not

transformed merely because a customer is allowed to pay for those

goods over time in installments. Moreover, at oral argument

Hammond's counsel was unable to articulate any benefit, privilege

or term of her contractual relationship with Kmart that she was

denied akin to the in-flight service at issue in Sawyer.4

Hammond cannot point to any case where verbal comments

alone made out a § 1981 claim against a retail store.5 In short,

Hammond's sparse allegations are that the only harm she suffered

was from the sales clerk's utterances, without more. She needs

more, but there is no more here. There are no allegations that

could plausibly support a finding that this completed layaway

transaction involving solely a sale of goods was a violation of

§ 1981. These line-drawing tasks, which have fallen to the Courts

of Appeals, are needed to effectuate Congressional intent.

4
At oral argument Hammond's counsel suggested a comparative
theory, stating that Hammond was unable to make a contract "in the
same manner" as whites because she was subjected to racial slurs.
This legal theory presumes that white people are not also exposed
to insensitive remarks by this Kmart sales clerk, but Hammond has
made no allegations to support this assumption. More importantly,
this theory does not distinguish Garrett.
5
Hammond mischaracterizes the holding in Leach v. Heyman,
233 F. Supp. 2d 906 (N.D. Ohio 2002), claiming that the Leach court
held that a convenience-store clerk's utterance of a racial slur
violated § 1981. However, that court found only that the "racial
epithet" was evidence of racial bias sufficient to survive summary
judgment. 233 F. Supp. 2d at 910-11. Moreover, the conduct
alleged in that case went far beyond oral remarks; the sales clerk
was charged with assault for pushing and slapping the black
customer. Id. at 908-09.

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 In our view, Garrett is more generous in its criteria for

an adequate § 1981 claim than the rule adopted in some other

circuits.6 See Lopez v. Target Corp., 676 F.3d 1230, 1234-35 (11th

Cir. 2012) (ruling that a retail store must "thwart" a plaintiff's

right to contract under § 1981 and dismissing a claim under that

section where a white cashier twice refused to serve a Hispanic

customer because a different cashier agreed to serve him); Arguello

v. Conoco, Inc., 330 F.3d 355, 358 (5th Cir. 2003) (stating that

the circuit will recognize a § 1981 claim "where a customer has

engaged in an actual attempt to contract that was thwarted by the

merchant" (quoting Morris, 277 F.3d at 752 (emphasis added));

Bagley v. Ameritech Corp., 220 F.3d 518, 519-520, 521 (7th Cir.

2000) (dismissing a § 1981 claim because the retail store did not

refuse to contract with a black customer where a white sales

6
The Sixth Circuit arguably has a more expansive
interpretation of § 1981 in "commercial establishment" cases than
Garrett. See Christian v. Wal-Mart Stores, Inc., 252 F.3d 862, 872
(6th Cir. 2001). To establish a § 1981 claim in that circuit, a
plaintiff can show that he was "denied the right to enter into or
enjoy the benefits . . . of [a] contractual relationship . . . [by]
receiv[ing] services in a markedly hostile manner and in a manner
which a reasonable person would find objectively discriminatory."
Id.
Garrett commented on Christian's "broader construction" of
§ 1981 but did not adopt it. See Garrett, 295 F.3d at 102 n.5. As
we have noted, "[a]part from the 6th Circuit, it does not appear
that any other circuit court has embraced the Christian court's
expanded formulation." Odunkwe v. Bank of Am., 335 F. App'x 58, 61
(1st Cir. 2009) (per curiam).

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manager refused to serve him and gave him the finger but a

different sales associate offered him help).7

We are bound to apply Garrett, and Hammond's pleadings

fail to state a claim.

The judgment is affirmed.

7
Successful § 1981 plaintiffs in other circuits have alleged
far more than Hammond. See Green, 483 F.3d at 536, 539 (holding
that § 1981 claim survives summary judgment where white sales clerk
refused to serve two black customers, "discouraged her coworkers
from assisting them," "treated them at all times with pronounced
hostility," including calling them "f-cking n-ggers," and ignored
the customers' plea that she leave them alone).

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