IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
___________________
No. 96-40051
MARTIN BELLOWS, Individually and
on Behalf of Phillips Industrial
Constructors, Inc.,
Plaintiff-Appellee,
versus
AMOCO OIL COMPANY; ET AL,
Defendants,
AMOCO OIL COMPANY, TEXAS
CITY REFINERY,
Defendant-Appellant.
________________________________________________
Appeal from the United States District Court for the
Southern District of Texas
________________________________________________
July 16, 1997
Before GARWOOD, WIENER and DEMOSS, Circuit Judges.
GARWOOD, Circuit Judge:
Plaintiffs Martin J. Bellow1 (Bellow) and Phillips Industrial
Constructors, Inc. (PICI), a Texas corporation, brought this
lawsuit against defendant Amoco Oil Company, Texas City refinery
(Amoco), alleging that Amoco discriminated against them on the
basis of their race by terminating, modifying, or changing their
right to contract in violation of 42 U.S.C. § 1981. A jury
1
Bellow’s name was misspelled (“Bellows”) in the original
pleadings and, consequently, in the caption of the case as well.
This caption misspelling was never corrected below.
returned a verdict in favor of Bellow, awarding him $50,000 in
“subjective damages” and $225,000 in punitive damages. We reverse.
Facts and Proceedings Below
Bellow, an African-American, began working in the construction
business in 1970, working primarily in Texas City, Texas, and the
surrounding Gulf Coast area specializing in civil construction and
equipment operations. In 1974, Bellow met Harold Phillips
(Phillips), a Caucasian, while they both worked for the same
construction company. They instantly became friends, and over the
next several years Bellow and Phillips continued to work together,
first at the M.W. Kellogg Company, then at Byrd Construction, and
later at Callie Construction.
In the summer of 1978, Phillips left Callie Construction and,
with his wife, formed his own construction firm, PICI, a
corporation organized under Texas law. During the first six months
of its operation, PICI had difficulty obtaining construction work.2
In early 1979, Phillips learned that Amoco was seeking qualified
minority-owned construction firms to perform maintenance and
construction work at its Texas City refinery. To take advantage of
this opportunity, Phillips approached Bellow in March 1979 and
offered him a 51% ownership interest in PICI. Bellow accepted the
offer and became the president of PICI, while Phillips became
PICI’s vice-president and general manager, owning 49% of the
2
During those six months, PICI managed to secure only two
small construction jobs valued at less than $20,000.
2
corporation’s stock.3 On March 3, 1979, Bellow and Phillips wrote
a letter to Amoco informing it of PICI’s new status as a minority-
owned construction firm. Soon thereafter, PICI began receiving
general maintenance and construction work from Amoco.
Beginning in 1979, and lasting throughout the 1980s, PICI’s
business relationship with Amoco flourished. During this time,
almost all of PICI’s business involved work from Amoco’s refinery.
PICI performed a variety of civil construction and related
maintenance work for Amoco, producing several millions of dollars
in annual gross revenues for PICI (the amended complaint alleges
that PICI’s gross receipts from the Amoco refinery totaled over 32
million dollars from January 1985 through June 1994). Bellow
worked primarily in the field as a superintendent overseeing the
work of PICI crews at the refinery, while Phillips was responsible
mainly for the day-to-day administrative duties at the office.
PICI’s decade of prosperity came to an end, however. Sometime
during the mid-1980s, Amoco began reevaluating its use of
contractors and suppliers at the Texas City refinery. At one
point, over 3,000 contractors and suppliers performed work for the
refinery. In an effort to improve its monitoring of contractors
and increase its efficiency, Amoco decided to reduce the number of
contractors through “contract consolidation.” Under this
consolidation process, Amoco decided to use a single, primary
3
Bellow acquired 5,100 shares of the stock and Phillips
retained 4,900 shares. Because Phillips had already invested
$9,000 in the corporation, Bellow agreed to work for six months
without pay in exchange for the 5,100 shares of stock.
3
contractor to perform most of the construction and related
maintenance work that its own personnel could not handle.4 In
1989, Amoco began informing its construction contractors, including
PICI, that it would begin using Brown & Root Industrial Services
(BRIS) as its primary outside maintenance contractor.5 Under its
new contract consolidation policy, construction jobs would first be
assigned to Amoco personnel. If Amoco personnel were unavailable,
the job would be assigned to BRIS. If BRIS did not have the
personnel available or lacked the expertise for a particular job,
Amoco’s Contracts group would either bid the job to outside
contractors6 or hire a contractor under a cost-plus contract.7
4
According to Richard Evans, vice-president of refining and
engineering at Amoco, Amoco’s competitors at the time had already
moved in the direction of using a single contractor.
5
It was undisputed that none of the individual defendants in
this case had a hand in Amoco’s contract consolidation decision or
the decision to hire BRIS as the new primary contractor. Also,
Bellow conceded at trial that Amoco’s decision to utilize BRIS as
the primary outside general maintenance contractor was not
motivated by racial animus.
6
At Amoco, two groups worked directly with outside contractors
such as PICI. The Contracts Administration group (Contracts group)
in the purchasing department was responsible for awarding contracts
to outside contractors, including the selection of contractors,
providing the terms of the contract, and authorizing payment to
contractors. The other group was the Plant Support and Contracting
group (PS&C group) in the maintenance department. The PS&C group
was responsible for monitoring all construction and maintenance
contractors while they performed their work, and for scheduling and
initiating to the Contracts group all requests for construction and
maintenance services.
7
There were three methods by which Amoco retained services of
a construction and maintenance contractor like PICI. The first
method was by a “cost-plus” contract. Cost-plus contracts were
generally awarded for a particular, specific job or assignment
without bidding. The second method was by competitive bidding.
However, to avoid overlap of charges for services rendered on cost-
4
Beginning in 1990, PICI and other general maintenance
contractors experienced a dramatic decline in their general
maintenance work.8 Because Amoco personnel and BRIS consumed the
bulk of Amoco’s maintenance jobs, little work was left over for
PICI and other maintenance contractors. In 1991, PICI’s work load
decreased even further when Amoco decided not to renew PICI’s
service agreements——the primary source of PICI’s work.9 From 1991
to 1994, PICI performed whatever cost-plus work it could obtain.
PICI was invited to bid on several jobs when it did not have any
cost-plus contract work in the refinery; however, PICI was rarely
a successful bidder, as its bids were usually too high. PICI’s
annual gross revenues from Amoco work dropped from approximately
$3.5 million in 1990 to $209,537 in 1994 and $0 for the first half
of 1995.10
plus jobs, companies currently performing cost-plus contract work
were not allowed to bid on jobs. Because PICI preferred to do
cost-plus work, they seldom performed bid work. The third method
for retaining a contractor was with a year-to-year labor contract.
PICI had several service agreements with Amoco, including a general
maintenance contract, a refinery labor crew contract, a
contaminated soil agreement, and an outside lot mowing contract.
8
Of these contractors, only PICI was a minority-owned firm.
9
See note 7, supra. The PICI service agreements that were
canceled included a general maintenance contract, a refinery labor
agreement, a contaminated soil agreement, and an outside lot mowing
contract. Bellow conceded at trial that Amoco’s decisions not to
renew PICI’s contracts in 1991 were made for reasons unrelated to
Bellow’s race. According to Bellow, “my complaint is not that they
canceled our contract. My complaint is the way they treated us
when we did work in [the refinery].”
10
PICI completed its final cost-plus contracts sometime in
April 1994, and neither Bellow nor PICI performed any work for
Amoco after April 1994.
5
At around the same time that Amoco implemented its new
contract consolidation policy, Bellow started to notice that Amoco
was treating him in a manner which he believed to be
discriminatory. Specifically, Bellow believed that Jerry Jordan
(Jordan), an Amoco employee who worked as a supervisor both with
the Contracts group and the PS&C group, was on a mission to “run
him out of the refinery” solely because Bellow was African-
American.11 The specific incidents of racial discrimination
attributed to Jordan include the following: (1) in 1989, Jordan
told Phillips that he believed Bellow made too much money as a
field superintendent; (2) in 1989, Bellow learned from Phillips,
who in turn had been so informed by Albert De Los Santos (De Los
Santos), another Amoco contractor, that Jordan had told De Los
Santos “Albert, whenever you drive a white Cadillac or a Lincoln
[like Bellow’s wife], I’ll stop doing business with you because you
done made too much money”; (3) in 1990, when Bellow complained to
Jordan about racist comments made by Sherman McNown (McNown), an
Amoco Turnaround Superintendent, Jordan told Bellow that he could
not do anything because he (Jordan) was prejudiced against African-
Americans;12 (4) between 1991 and 1994, when Jordan was supervisor
of the PS&C group, Emmanuel Moore (Moore), a contracts specialist
with the Amoco purchasing department, received complaints from
11
Jordan worked as a contract specialist with the Contracts
group from 1987 to 1990. From October 1990 to September 1991, he
was the supervisor of the Contracts group. In September 1991, he
became the supervisor of the PS&C group.
12
Apparently, McNown and another Amoco employee, Dewey Bailey,
called Bellow a “nigger” on one occasion.
6
Amoco job representatives that Jordan was treating PICI differently
because of Bellow’s race; (5) in 1993, Jordan told Melvin Hagler
(Hagler), an Amoco job representative, at a job representatives
meeting to make sure PICI workers left the refinery as soon as they
finished their jobs; (6) in 1993 or 1994, Hagler told Bellow that
Jordan did not like him and that “Jerry is going to get you”; (7)
in 1994, Hagler told Bellow that he overheard Jordan telling
another job representative, Howard Luster (Luster), that he
(Jordan) would “run [Bellow’s] nigger ass off”; and (8) on March
17, 1994, Jordan canceled a job that had been assigned to PICI
earlier that morning.13
On September 7, 1994, Bellow filed this lawsuit, “individually
and on behalf of” PICI, in the district court below asserting
claims against Amoco and Jordan under 42 U.S.C. §§ 1981 and
1985(3),14 as well as under Texas law for tortious interference with
13
According to Jordan, he canceled the job after he had
determined that an Amoco crew would soon complete another job and
would be available to take the job assigned to PICI. A few days
after Jordan canceled PICI’s job, Bellow filed with the Equal
Employment Opportunity Commission (EEOC) a charge of discrimination
against Amoco. The EEOC dismissed the complaint after it learned
that Bellow was not an employee of Amoco.
14
Section 1981 provides in relevant part:
Ҥ 1981. Equal rights under the law
(a) Statement of equal rights
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,
7
the right to contract and intentional infliction of emotional
distress. On January 11, 1995, an amended complaint was filed
adding PICI as a separate plaintiff, so that the plaintiffs became
Bellow and PICI,15 and adding Sherman McNown, Dewey Bailey, and
Larry Blow16 as defendants. Under their section 1981 claims,
licenses, and exactions of every kind, and to no other.
(b) ‘Make and enforce contracts’ defined
For purposes of this section, the term ‘make and
enforce contracts’ includes the making, performance,
modification, and termination of contracts, and the
enjoyment of all benefits, privileges, terms, and
conditions of the contractual relationship.” 42 U.S.C.
§ 1981.
Section 1985(3) provides in relevant part:
Ҥ 1985. Conspiracy to interfere with civil rights
...
(3) Depriving persons of rights or privileges
If two or more persons in any State or Territory
conspire, or go in disguise on the highway or on the
premises of another, for the purpose of depriving, either
directly or indirectly, any person or class of persons of
the equal protection of the laws, or of equal privileges
and immunities under the laws . . . in any case of
conspiracy set forth in this section, if one or more
persons engaged therein do, or cause to be done, any act
in furtherance of the object of such conspiracy, whereby
another is injured in his person or property, or deprived
of having and exercising any right or privilege of a
citizen of the United States, the party so injured or
deprived may have an action for the recovery of damages,
occasioned by such injury or deprivation, against any one
or more of the conspirators.” 42 U.S.C. § 1985(3).
15
Although the amended complaint added PICI as a separate party
plaintiff, the caption of the case was never changed in the court
record to reflect this amendment.
16
Larry Blow (Blow) is a supervisor with the building and
maintenance department at Amoco. Bellow alleged that Blow, under
Jordan’s instructions, told Bellow that PICI did not have a
contract on a particular job when, in fact, it did have a contract.
8
plaintiffs Bellow and PICI alleged that Amoco modified, changed, or
terminated PICI’s contracts with Amoco and Bellow’s contract with
PICI. Bellow never contracted with Amoco personally, and he did
not bring a section 1981 claim against Amoco for interference with
his contractual rights with Amoco.
Thereafter, and before the case was submitted to the jury, the
court dismissed plaintiffs’ section 1985(3) claims, their section
1981 claims against the individual defendants, and their state law
claims against all defendants. The only claims submitted to the
jury were plaintiffs’ section 1981 claims against Amoco. The jury
found that Amoco did not discriminate against PICI on the basis of
its race by interfering with its right to contract with Amoco. The
jury did find, however, that Amoco discriminated against Bellow
because of his race “in terminating, modifying or changing Martin
Bellow’s right to contract with Phillips Industrial Constructors,
Inc.,” and awarded Bellow $50,000 in “subjective damages” and
$225,000 in punitive damages.17 Amoco timely filed its notice of
appeal to this Court.18
Discussion
I.
On appeal, Amoco contends that the district court erred in
17
Plaintiffs filed a motion for an award of attorneys’ fees.
The district court stayed consideration of the attorneys’ fees
application pending final resolution of the case on appeal.
18
Neither PICI nor Bellow has appealed the judgment in favor
of Amoco on PICI’s claims against it or the judgment in favor of
Amoco on all of Bellow’s other claims (his claims other than his
section 1981 claim against Amoco for interfering with his asserted
contract, or right to contract, with PICI) against Amoco.
9
denying Amoco’s motion for judgment as a matter of law because
Bellow never had a contract with PICI and, therefore, Amoco could
not have possibly interfered with Bellow’s right to contract with
PICI; even if Bellow did have a contract with PICI, there is no
evidence that Amoco terminated, modified, or changed that contract;
and the evidence is insufficient to support the jury’s conclusion
that Amoco intentionally discriminated against Bellow on the basis
of his race. Amoco also argues that the evidence does not
sufficiently support the $50,000 in “subjective damages” and
$225,000 in punitive damages.
We review de novo the denial of Amoco’s motion for judgment as
a matter of law, applying the same standards as those applied by
the trial court. Canutillo Independent School Dist. v. Leija, 101
F.3d 393, 396 (5th Cir. 1996). We review factual issues for the
presence of substantial evidence supporting the verdict and legal
issues de novo. Heller Financial, Inc. v. Grammco Computer Sales,
Inc., 71 F.3d 518, 523 (5th Cir. 1996). A motion for judgment as
a matter of law should be granted by the trial court if, after
considering all the evidence in the light and with all reasonable
inferences most favorable to the party opposed to the motion, the
facts and inferences point so strongly and overwhelmingly in favor
of one party that the court concludes that reasonable jurors could
not arrive at a contrary verdict.19 Boeing Co. v. Shipman, 411 F.2d
365, 374 (5th Cir. 1969), overruled on other grounds, Gautreaux v.
19
Amoco timely moved for judgment as a matter of law at the
close of the plaintiffs’ case-in-chief and at the close of all the
evidence.
10
Scurlock Marine, Inc., 107 F.3d 331 (5th Cir. 1997) (en banc).
II.
Section 1981 provides that “[a]ll 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.” 42 U.S.C. § 1981(a). The phrase “make
and enforce contracts” is defined to include “the making,
performance, modification, and termination of contracts, and the
enjoyment of all benefits, privileges, terms, and conditions of the
contractual relationship.”20 42 U.S.C. § 1981(b).
To prevail under section 1981, the plaintiff must prove a
prima facie case of intentional discrimination. Wallace v. Texas
Tech Univ., 80 F.3d 1042, 1047 (5th Cir. 1996). The plaintiff may
establish a prima facie case by direct evidence or, more commonly,
by circumstantial evidence of discriminatory motive. Harrington v.
Harris, 108 F.3d 598, 606 (5th Cir. 1997); Wallace, 80 F.3d at
1047-48. To establish a section 1981 claim, the plaintiff must
show that (1) he or she is a member of a racial minority; (2) the
defendant had an intent to discriminate on the basis of race; and
(3) the discrimination concerned one or more of the activities
enumerated in the statute; in this case, the making and enforcing
20
In Patterson v. McLean Credit Union, 109 S.Ct. 2363 (1989),
the Supreme Court held that post-contract formation allegations of
racially discriminatory conduct were not actionable under section
1981, as section 1981 only governs racial discrimination in the
“making” of contracts and the right to “enforce” the contract. Id.
at 2372-74. Through the Civil Rights Act of 1991, enacted November
21, 1991, Congress expanded section 1981 to include post-contract
formation claims.
11
of a contract.21 See Green v. State Bar of Texas, 27 F.3d 1083,
1086 (5th Cir. 1994).
III.
As a threshold matter, we observe that this Court has not yet
decided whether a plaintiff has a cause of action under section
1981 against a third party for interference with the plaintiff’s
right to make and enforce contracts. Indeed, on at least one prior
occasion we have suggested that such a claim may not be covered by
section 1981. See Green, 27 F.3d at 1086-87 (explaining that the
plaintiff failed to state a claim under section 1981, as he did not
“complain that [defendant] refused to contract with him or that
[it] somehow impeded his right to enforce a contract in either the
courts or nonjudicial avenues,” but merely alleged “that the
defendant refused to honor a third-party contract he had with his
clients”). Thus, we express some doubt as to whether Bellow has,
in the first instance, presented a cognizable claim under section
1981.
Bellow contends that we held in Faraca v. Clements, 506 F.2d
956 (5th Cir. 1975), that third party interference claims are
actionable under section 1981. We do not read Faraca so broadly.
In Faraca, the plaintiffs successfully sued the director of the
Georgia Retardation Center under section 1981, alleging that the
director refused to hire Faraca, a Caucasian, because his wife was
African-American. On appeal, we affirmed the judgment, concluding
21
Of course, as an African-American, Bellow is a racial
minority covered by section 1981.
12
that the director could be held personally liable under section
1981 for interfering with the plaintiffs’ right to contract with
their prospective employer, the State of Georgia. The director in
Faraca was only nominally a third party. In substance, because he
was acting on behalf of the state when he decided not to hire
Faraca——thus making his hiring decision indistinguishable from that
of the state——the director and the state were essentially one and
the same. Cf. Al-Khazraji v. Saint Francis College, 784 F.2d 505,
518 (3d Cir. 1986) (holding that plaintiff could bring section 1981
claim against individual members of tenure committee for denying
plaintiff tenure if individuals were personally involved in the
discrimination and if they intentionally caused the college to
violate plaintiff’s right to contract), aff’d on other grounds, 107
S.Ct. 2022 (1987). Conversely, Amoco never had any such
relationship with PICI or Bellow. Amoco exercised no control and
had no authority over the contracting decisions of PICI or Bellow.
Unlike the situation in Faraca, where the third party and
prospective contracting party were the same party, Amoco is
separate and distinct from PICI, Bellow’s contracting party. Since
Faraca, this Court has not offered any opinion as to whether all
third party interference claims are actionable under section 1981,
and we decline to rule on this issue today.22
Instead, we leave for another day the resolution of that issue
22
At least one other circuit has also expressly declined to
rule on this issue. See Jordan v. Campbell-Taggart, Inc., 902 F.2d
28 (tab.), No. 87-3595, 1990 WL 51819, at *2-*3 (4th Cir. April 17,
1990).
13
because even assuming, arguendo, that Bellow’s claim falls within
the ambit of section 1981, Bellow nevertheless is not entitled to
any recovery because he has failed to satisfy the third element of
his section 1981 claim——that is, that the discrimination concerned
one or more of the activities enumerated in the statute.
Specifically, even assuming that the evidence justifies a finding
that Bellow had some unspecified character of implied contractual
relationship with PICI, there is clearly no evidence that Amoco
ever modified, changed, or terminated that relationship or Bellow’s
right to contract with PICI.
Although we assume, for purposes of this appeal, that Bellow
had some undefined character of implied contract with PICI, we note
that the record is conspicuously devoid of any evidence of any
express contract between Bellow and PICI.23 At trial, Bellow
produced no document and presented no testimony evidencing the
terms, provisions, or conditions of any contractual relationship
between him and PICI.
Bellow’s mere ownership interest in and position as president
of PICI does not, in and of itself, suffice to establish a
contractual relationship. Although Bellow, by virtue of his
position as president of PICI, assumed certain legal obligations to
his company under state law, see, e.g., Gearhart Industries, Inc.
v. Smith Intern., Inc., 741 F.2d 707, 719-21 (5th Cir. 1984), these
obligations arose from his fiduciary relationship with PICI, not
23
Bellow has never alleged that he personally had or sought to
have any contractual relationship with Amoco; he has alleged only
that he had a contract with PICI.
14
from any contractual relationship. See generally F.D.I.C. v.
Dawson, 4 F.3d 1303, 1307 (5th Cir. 1993) (distinguishing between
breach of fiduciary duty claim and breach of contract claim for
statute of limitations purposes), cert. denied, 114 S.Ct. 2673
(1994); accord Kansa Reinsurance Co., Ltd. v. Congressional
Mortgage Corp. of Texas, 20 F.3d 1362, 1374 (5th Cir. 1994).
Although we do not doubt that a president of a corporation can (and
perhaps usually does) have an employment contract with the
corporation, in this case, where the president also happens to be
the 51% owner of the company, and the company’s executive vice
president owns the other 49%, and where there is no evidence of any
express contract of any kind (written or oral) between the
corporation and the president, it may not simply be assumed that
such a contract existed. Bellow has cited no authority, nor has
our own research revealed any, suggesting that an individual’s
status as majority shareholder and president of a corporation,
without more, gives rise to a contractual relationship between the
individual and the corporation.
Bellow argues that he was paid on an hourly basis which,
according to him, conclusively proves that he had an employment
contract with PICI. The record flatly contradicts Bellow’s
assertion, as the evidence shows that he was not paid by the hour,
but rather was paid a fixed weekly salary. Bellow presented no
evidence indicating that he received an hourly wage, nor did he
establish what his hourly pay was or whether PICI docked his pay
for time missed. Indeed, the evidence shows that Bellow exercised
15
considerable discretion over his salary, as he and Phillips jointly
decided how much they were paid and how much of a bonus they would
receive in any given year. Although Bellow occasionally received
overtime pay for working after hours and on weekends, Bellow
presented no evidence at trial describing how much he was paid per
hour for overtime work (or how this was determined).
IV.
Even assuming, arguendo, that Bellow did in fact have a
contract with PICI which Amoco could have interfered with, Bellow
would still be unable to recover any damages because he has failed
to present any evidence that Amoco did in fact interfere with the
contract. There is no evidence that Bellow’s relationship with
PICI, contractual or otherwise, was in any way changed, modified,
altered, terminated, or otherwise affected by any of Amoco’s
actions. Nor is there any evidence that PICI ever failed or
refused to honor or comply with any request by Bellow to PICI for
it to enter into any contract with Bellow. Instead, what the
record does show is that Bellow remained at all times the 51% owner
and president of PICI before, during, and after the alleged
discriminatory conduct by Amoco.24 See, e.g., Police Ass’n of New
Orleans v. City of New Orleans, 100 F.3d 1159, 1170-71 (5th Cir.
1996) (explaining that “[i]n deciding whether a change of position
rises to the level of a new and distinct relation [under section
1981], the court must compare the employee’s current duties,
24
Indeed, the amended complaint alleges that Bellow is the
“President and Chief Executive Officer” of PICI.
16
salary, and benefits with those incident to the new position”);
Harris v. Associates Corp. of North America, 917 F.2d 195, 197-98
(5th Cir. 1990) (same); see generally Morris v. Office Max, Inc.,
89 F.3d 411, 414 (7th Cir. 1996) (stating that “[a] claim for
interference with the right to make and enforce a contract must
allege the actual loss of a contract interest”).
In support of his contention that Amoco interfered with his
asserted contract with PICI, Bellow directs this Court’s attention
to the July 1989 incident where Jordan expressed concerns about
Bellow’s excessive compensation to Phillips and suggested that
Bellow spend less time at the Amoco refinery. As the record shows,
although Phillips and Bellow discussed the possibility of having
Bellow spend more time in the office, they ultimately decided that
Bellow would remain in his capacity as field superintendent on
Amoco jobs. That Bellow continued to supervise workers in the
field, despite Jordan’s recommendation, demonstrates not only that
Bellow’s relationship with PICI remained unchanged, but also
indicates that Amoco could not, even had it wanted to, interfere
with Bellow’s relationship (or contract, if any) with PICI.
Certainly, there is no evidence showing otherwise.
Bellow also points to his decrease in income as evidence of
Amoco’s asserted contractual interference. While it may true that
Bellow’s income suffered after Amoco allegedly interfered with his
asserted contractual relationship with PICI, this loss of income
was not a result of any change in his relationship or status with
PICI——as he continued to be PICI’s 51% owner, president, and chief
17
executive officer——but rather was caused by the fact that PICI no
longer received the same high volume of work from Amoco. Bellow
performed less work and received a smaller income not because of
any decision by PICI to reduce his hours or to cut his salary, but
because PICI received less work from Amoco. As PICI had less work,
it necessarily follows that Bellow, PICI’s president and majority
owner, also would have less work and, hence, less income.25
Although Bellow may not have made as much money as he did when PICI
received large volumes of work from Amoco on a consistent basis,
there is no evidence that once Amoco’s asserted discriminatory
endeavor began and PICI’s annual revenues plummeted, that PICI
reduced Bellow’s weekly salary while requiring him to work the same
number of hours, that PICI stopped measuring his overtime pay based
on extra hours worked, or that PICI in any other way modified or
changed his compensation structure. And, as mentioned above,
Bellow at all times remained PICI’s 51% owner and president.
Stripped of its veneer, Bellow’s argument, in essence, is that
Amoco interfered with his right to contract with PICI by
interfering with PICI’s contracts or ability to contract with
Amoco. The obvious problem Bellow faces with this argument, of
course, is that the jury found that Amoco did not interfere with
PICI’s contracts, or ability to contract, with Amoco on the basis
25
Moreover, the district court specifically instructed the
jury, without objection by Bellow, that Bellow could not recover
any damages “for lost income, wages or other earnings” caused by
Amoco’s alleged discrimination.
18
of race.26
Moreover, because Bellow’s claim against Amoco is merely
derivative of PICI’s cause of action, Bellow has no individual
section 1981 claim against Amoco. In this regard, we find our
decision in Searcy v. Houston Lighting & Power Co., 907 F.2d 562
(5th Cir.), cert. denied, 111 S.Ct. 438 (1990), dispositive. In
Searcy, the president/sole shareholder of an energy resource firm
that produced and supplied natural gas sued various utility
companies for refusing to enter into long-term natural gas supply
contracts with the energy firm. The plaintiff and his company each
sued the utility companies under section 1981. We held that the
plaintiff could not bring his individual section 1981 claim because
the discrimination could only be asserted to invade the legal
rights of the corporation and not the rights of the plaintiff, the
company’s sole shareholder. Id. at 565.
Similarly, in this case the legal right that Bellow asserts
Amoco violated——that is, the right to contract free from racial
discrimination——is indistinguishable from PICI’s right to contract
under section 1981. The Amoco work that Bellow lost which
purportedly gave rise to Bellow’s section 1981 claim was the exact
same Amoco work that PICI lost. Indeed, Bellow has not alleged,
nor does the record reflect, any violation of his contract rights
or rights to contract that differs from the violations claimed by
PICI against Amoco. See, e.g., Gregory v. Mitchell, 634 F.2d 199,
202 (5th Cir. 1981) (holding that shareholders in bank could not
26
And, Bellow does not challenge this finding.
19
maintain section 1983 action in respect to treatment of bank as
only the bank suffered any cognizable injury); Schaffer v.
Universal Rundle Corp., 397 F.2d 893, 896 (5th Cir. 1968)
(explaining that a “stockholder’s rights are merely derivative and
can be asserted only through the corporation” and that this “rule
is applicable in cases where the individual is the sole
shareholder”). Thus, because Bellow suffered no violation of his
contract rights or rights to contract which differs from the
violations claimed by PICI, we conclude that Bellow has no
individual cause of action under section 1981 against Amoco.27 See
Flynn v. Merrick, 881 F.2d 446, 449-50 (7th Cir. 1989) (holding
that individual stockholders and debenture holders could not bring
suit under 42 U.S.C. § 1983 for damages suffered by the
corporation); Cates v. International Tel. & Tel. Corp., 756 F.2d
1161, 1181-83 (5th Cir. 1985) (holding that partner had no
individual cause of action for breach of contract, interference
with partnership business, loss of value of partnership interest,
loss of income, salary or bonus, and damage to reputation and
prospective business advantage suffered by partnership); Stevens v.
Lowder, 643 F.2d 1078, 1080 (5th Cir. 1981) (holding that bank’s
shareholders could not recover for fraud, breach of confidential
relationship, and conspiracy against purchasers of bank’s assets
27
Although Bellow claimed that he sustained emotional damages
that were different from PICI’s economic damages, his emotional
damages result from the same violation that gave rise to PICI’s
economic damages——Amoco’s alleged violation of PICI’s right to
contract. Bellow does not have an individual claim for an alleged
violation by Amoco of PICI’s section 1981 rights, whether or not
Bellow suffered emotional damage as a result thereof.
20
because diminution in value of bank’s stock was insufficient direct
harm to shareholders); Erlich v. Glasner, 418 F.2d 226, 228 (9th
Cir. 1969) (holding that stockholder, who was president and general
manager of corporation, could not maintain individual action under
section 1983).
Conclusion
We hold that Bellow is not entitled to recover any damages
under section 1981. Even if Bellow did have some undefined,
implied contractual relationship with PICI, nothing in the record
supports the jury’s conclusion that Amoco in any way altered,
modified, or terminated any of his rights thereunder or to contract
with PICI.28 For these reasons, the judgment below is REVERSED and
judgment is here RENDERED for Amoco.
REVERSED and RENDERED
28
Moreover, we question whether Bellow was entitled to an award
of “subjective” damages. In particular, we do not believe that
Bellow’s testimony that Amoco’s alleged discriminatory acts caused
him to feel “less than a man” and “ruined his reputation as a man,”
without more, sufficiently supports the award of emotional damages.
Nor is there any other evidence supporting such an award. See,
e.g., Patterson v. P.H.P. Healthcare Corp., 90 F.3d 927, 938-39
(5th Cir. 1996) (reversing $40,000 award for emotional distress
under section 1981 where only evidence of emotional distress was
plaintiff’s own testimony that he felt “frustrated” and “real bad”;
that his work environment was “unbearable” and was “tearing my
self-esteem down”; and that he felt “angry” and “paranoid” because
his supervisor referred to him as a “porch monkey” or “nigger”),
cert. denied, 117 S.Ct. 767 (1997). Bellow did not testify about
any physical harm or injuries, nor did he testify about any stress,
emotional pain, or other similar conditions.
However, we need not reach the merits of this issue. Nor do
we need to address Amoco’s contention that the evidence fails to
support the jury’s finding of intentional racial discrimination and
award of $225,000 in punitive damages.
21