The case Comcast Corp. v. National Association of African American-Owned Media will be argued on November 13th, 2019. The issue the Supreme Court will be deciding whether 42 U.S.C. & 1981, which provides that all persons, regardless of race, have the same right to make and enforce contracts—requires a plaintiff to prove that race was a but-for cause of any refusal to make a contract, rather than an alternative lesser proof requirement, such as demonstrating that race was a motivating factor. The case has serious implications for Civil Rights law and Contract Law moving forward. This Teleforum will serve as a preview for the case prior to Oral Arguments.
Richard Samp, Chief Counsel, The Washington Legal Foundation
Operator: Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Civil Rights Practice Group, was recorded on Friday, October 18, 2019, during a live teleforum conference call held exclusively for Federalist Society members.
Wesley Hodges: Welcome to The Federalist Society's teleforum conference call. This afternoon's topic is a "Courthouse Steps Preview on Comcast Corporation v. The National Association of African American-Owned Media." My name is Wesley Hodges, and I am the Associate Director of Practice Groups at The Federalist Society.
As always, please note that all expressions of opinion are those of the expert on today's call.
Today we are very fortunate to have with us Mr. Richard Samp, who is Chief Counsel at The Washington Legal Foundation. Richard drafted one of the amicus briefs in support of Comcast in this case. After our speaker gives his opening remarks, we will have audience Q&A, so please keep in mind what questions you have for the case or for our speaker.
Thank you very much for sharing with us today. Richard, the floor is yours.
Richard Samp: Thank you very much, Wesley. The Comcast case raises an important issue regarding a plaintiff's burden of proving racial discrimination under federal civil rights laws. But the nature of the case has shifted dramatically from when the Supreme Court initially agreed to hear it last spring.
The Court agreed to review a Ninth Circuit decision that held, in conflict with other circuits, that a plaintiff suing under the Civil Rights Act of 1866 could establish liability simply by showing that race was a factor in the defendant's challenged decision. But at the merit stage, the counsel for the plaintiff essentially concedes error and does not attempt to defend the Ninth Circuit's rationale.
Instead, counsel argues that the case is really about what sort of factual allegations a plaintiff must include in his complaint in order to survive a motion to dismiss. In other words, he seeks to make this a Rule 8 case along the lines of the Supreme Court's Twombly and Iqbal decisions.
But even as framed in the narrow fashion now espoused by the plaintiff's counsel, the case is very significant from a tort reform standpoint. A constant refrain from the business community is that it is extremely difficult for businesses to win dismissal of even the most frivolous claims at the pleading stage.
And as I'll explain, the plaintiff here has not alleged any facts suggesting that it was discriminated against on the basis of race. Yet, if a case gets beyond the pleading stage, defendants are required to respond to very expensive discovery requests, often, essentially, forcing them to settle the claims without regard to their merit.
Now, let me begin by providing a little background on the Civil Rights Act of 1866. Congress adopted it in the aftermath of the Civil War to ensure that southern states extended basic rights to newly freed slaves. The Act is codified in several spots in the U.S. code including 42 U.S.C. § 1981, which states, in relevant part, and I'm quoting here, "All persons within the jurisdiction of the United States shall have the same right to make and enforce contracts as is enjoyed by white citizens."
From here on, I'll refer to the Civil Rights Act of 1866 as Section 1981. For more than a century, Section 1981 was understood to focus solely on state-sponsored racial discrimination. For example, it prohibited state courts from closing their doors to blacks who sought to enforce contractual rights. But in 1976, the Supreme Court ruled in Runyon v. McCrary that Section 1981 also applies to private racial discrimination. It prohibited anyone from refusing to enter into a contract on the basis of the race of the other party.
Runyon had an enormous impact on employment discrimination litigation. All subsequent lawsuits claiming race-based employment discrimination included a claim not only under Title VII of the Civil Rights Act of 1964 but also Section 1981. The two claims are often overlapping, but a Section 1981 claim offers certain advantages not available with a Title VII claim.
For example, Section 1981 includes none of Title VII's exhaustion of administrative remedies requirements and provides easier access to jury trials. And Section 1981 is broader than Title VII in that it covers all contracts, not simply employment contracts, which bring us to the facts of the Comcast case.
Comcast is a large cable television company. It offers cable services to viewers across the country. Subscribers are usually offered a choice of several hundred channels, that includes both over the air stations and cable networks. The principal plaintiff in this case, ESN, owns seven cable networks. Over the past decade, ESN has asked Comcast to carry its programming, but Comcast has repeatedly declined to do so citing low consumer demand for ESN's programming.
Other cable operators declined similar requests from ESN. Now, ESN is not a fly-by-night enterprise. It is owned by African-American comedian Byron Allen, and its cable networks are carried in some markets. Indeed, ESN recently purchased The Weather Channel, a popular cable network that is carried by virtually all cable companies.
In response to the refusal to carry its programming, ESN filed lawsuits against not only Comcast but also Charter Communications, Time Warner Cable, Direct TV, AT&T. The suits allege that the defendants violated Section 1981 because their refusals to contract with ESN was based on the race of ESN's ownership, and thus denied ESN the same right to enter into contracts, quoting now here the language of Section 1981, "as is enjoyed by white persons."
Several of the defendants settled the claims by agreeing to carry ESN's programming, but Comcast and Charter chose to fight and their cases are now before the Supreme Court. The district court three times dismissed ESN's complaints under Rule 12(b)(6) for failure to state a claim against Comcast. The final time, it did so with prejudice.
The district court held that Section 1981 requires a plaintiff to show that the defendant's racial discrimination was the but-for cause of its decision not to enter into a contract with the plaintiff. In other words, the claim fails if the evidence shows that the defendant would've declined contract even if race had played no role in the decision-making.
The Court then concluded that ESN's second amended complaint, that was the third time that ESN filed a complaint, that second amended complaint failed to allege facts from which one could plausibly conclude that race was the but-for cause of Comcast's decision. ESN's principal allegation was that Comcast signed carriage contracts with white-owned networks that had less viewer support than ESN's networks.
But the Court held that the complaint did not allege facts to support its less-viewer support claim. The Ninth Circuit reversed the dismissal, as well as dismissal of the virtually identical claims against Charter Communications. The Appeals Court held in conflict with the decisions of several other circuits that a Section 1981 claim does not require a showing of but-for causation. Rather, the Ninth Circuit said, it is enough that the plaintiff show that race was a factor, even if not a determining factor in the defendant's final decision.
It went on to hold that ESN's complaints suffice to survive a motion to dismiss, pointing to ESN's allegation that its networks were better qualified, i.e. its allegations of greater demonstrated viewer interests than some of the white-owned networks that Comcast did agree to carry. Although, conceding that Comcast contested the greater viewer interest claim and that the complaint itself included no factual allegations to support this bare claim, the Ninth Circuit held that disputes of this nature were more appropriately addressed at trial or on a motion for summary judgment.
The Supreme Court granted Comcast's cert petition to resolve the circuit conflict on the but-for causation issue. It held in abeyance Charter Communication's virtually identical cert petition, and the case is scheduled for oral argument next month on November 13. But as I mentioned previously, ESN's counsel has abandoned any effort to support the Ninth Circuit's rationale. Counsel concedes that to prevail on a Section 1981 claim, a plaintiff must show but-for causation.
That concession was really hardly surprising. In several recent decisions, the Supreme Court has held that but-for causation is the default standard under federal civil rights statutes. And the Supreme Court will presume that but-for causation is required unless the statute expressly provides a different standard because Section 1981 says nothing about the proper causation standard. It simply states that all persons shall have the same right to make an enforced contract as is enjoyed by white citizens.
The obvious implication is that causation must be examined under the default but-for standard. So instead of defending the Ninth Circuit, ESN's counsel is focusing his argument on pleading standards. He argues that a plaintiff adequately alleges by plausibly alleging that race was a factor in the contract denial. And he argues that his greater viewer interest allegation is sufficient to meet Rule 8's lenient pleading standards.
So he urges the Court to rule that the district court erred when it dismissed the complaint under Rule 12. It's really unclear how the Supreme Court will respond to this turn of events, and indeed, at this point, it's unclear how Comcast is going to respond since it has not yet filed its final reply brief.
The Supreme Court might simply decide, based on ESN's concession, to vacate the decision below and remand the case for determination under a proper construction of Section 1981. But it's also possible that the Court may agree to address ESN's new argument and decide whether the complaint adequately alleges that racial discrimination was the but-for cause of Comcast's contract refusal. If that happens, the Court's decision will be an important follow-on to the Rule 8 decisions issued by the Court a decade ago in its Twombly and Iqbal cases.
Now, ESN relies principally on the Supreme Court's 2002 decision in a case called, I think it's pronounced Swierkiewicz v. Sorema. Swierkiewicz involved a former employee's claim that he was fired both because of his age and his ethnic origin. He was of Hungarian background. His complaint included virtually no factual allegations to support his claim that ethnic discrimination was the but-for cause of his dismissal.
But the Court, nonetheless, held that the complaint adequately stated claims under Title VII and the Age Discrimination and Employment Act. It held that under Rule 8's liberal pleadings standard, the complaint provided the defendant all the information it needed to understand and defend against the discrimination claims, and that really was all the Court said Rule 8 required.
But the Court's later Twombly and Iqbal decisions considerably tightened the Rule 8 pleading standards. The Court held in those cases that a complaint is insufficient to state a claim unless it includes factual allegations that render the claim plausible. Merely reciting by rote that the defendant violated some provision of the law at issue is insufficient. You can't just simply say, "I was discriminated against," without supporting it with some factual allegation.
Nonetheless, the Court also stated that Swierkiewicz was not being overruled and, indeed, was still good law. For the past decade, the obvious tension between Swierkiewicz and the Court's later Twombly and Iqbal decisions has led to confusion in the lower courts, particularly in discrimination cases. The Comcast case may provide the Court with an opportunity to resolve that tension.
Now, from my perspective, it would be quite unfortunate if the Court agrees to reach the Rule 8 issue and then rules that ESN's complaint adequately alleges a Section 1981 cause of action. The complaint includes no direct evidence of discrimination, no factual allegations that Comcast even considered the race of ESN's owner when it denied a carriage contract. Comcast has entered into contracts with many networks with a majority black ownership.
ESN's business strategy seems fairly obvious. It sued everybody, hoping that the bad publicity would browbeat some cable companies into acceding to its demands. And in some cases, that worked. But ESN filed suit without any plausible factual basis for alleging that it was a victim of racial discrimination.
If complaints of this one are sufficient to withstand a motion to dismiss, then every would-be contractee can force its way into contractual relationships by alleging racial discrimination, and then wearing down the defendant by imposing huge litigation costs and threatening public exposure of all of the defendant's files.
But, of course, every company's files are going to include statements that are highly embarrassing, even if they are irrelevant to the plaintiff's claims. So companies routinely settle cases to avoid opening up their files and avoiding that potential embarrassment. I guess with that, I will conclude my opening remarks, but there's obviously a lot of more factual detail to the case, and I am happy to answer any audience questions.
Wesley Hodges: Very good. Thank you so much, Richard. So while we wait for any questions from the audience, Richard, I do want to ask you, this case, we've been talking about the burden of proof on the plaintiff. When does the burden ever shift to the defendant? Is there other cases that involve this?
Richard Samp: Yes, there are. There are circumstances that the Court has said that by making some sort of prima facie case, the plaintiff can impose on the defendant a either some cases a burden of production and other cases a burden of proof to defend what it did. Frankly, so far, the parties really have not gotten into that issue. Although, very conceivably, the Court will be interested in those shifting burdens issues.
One of the burden-shifting standards is called a McDonnell Douglas standard, and the other one is called the Price Waterhouse standard. That applies in the rare cases where, unlike here, the plaintiff presents substantial evidence that race was indeed a motivating factor for its decision. But at this point, there really is no indication that the Court will even address these burden-shifting issues because they really haven't been raised by the parties.
Wesley Hodges: Very good. Thank you, Richard. I see no questions right away. Richard, is there any other part of this case or topic that you'd like to dive in to, maybe in more detail, before we wrap up?
Richard Samp: Well, I think one thing that's worth mentioning is that really, this isn't your normal lawsuit. This is one where a large corporation is making claims that are really quite far-fetched. The initial complaint that was filed by ESN alleged a grand conspiracy that included not only Comcast but virtually every large civil rights organization in the country.
Comcast has been certainly very conscious of trying to maintain a profile as somebody that is an equal opportunity employer and equal opportunity contractor. And so it has entered into various relationships with leading civil rights groups. And so ESN's response to that was to say well, the Court shouldn't pay any attention to that because, in fact, what was really going on here was a grand conspiracy against companies like mine that are totally black-owned, and they entered into these agreements in order to provide the cover to Comcast. And therefore, Al Sharpton and the NAACP and other groups really are part of the conspiracy, and they were named as defendants.
They are not now currently in the lawsuit and, in fact, the NAACP has shifted sides and filed an amicus brief in support of the plaintiff here. But I think the nature of the allegations that have been made here is some indication of perhaps the insubstantial nature of the racial discrimination claim.
Wesley Hodges: Looks like we do have one from the audience. Caller, you are up.
Mark (sp): Oh, hello. My name is Mark. I didn't catch exactly your beginning part, but are you one of the main advocates as far as the presentation at the Supreme Court or are you just providing commentary?
Richard Samp: I am mostly a kibitzer. I filed a friend of the court brief in support of Comcast. Comcast has very able representation. They are represented by Miguel Estrada with the law firm of Gibson, Dunn. And as I think you can expect, high quality arguments, actually, from both sides of the case. The attorney for the plaintiff in the case is a well-known law professor at the University of California, Berkeley.
So I would recommend getting there relatively early. Obviously, if you're a member of the Supreme Court bar, you have an easier time getting into the Court and usually, if you are there by no later than 8, you can get into the Court. Even if you don't get into the Court, you can listen to the arguments from the lawyer's lounge. But if you're just trying to get in not as a bar member, you really need to be there by about 7:15 or 7:30.
Wesley Hodges: So, Richard, seeing no more questions in queue. Any closing thoughts for us today?
Richard Samp: No. I said at the beginning, let me repeat that this case is still very much in the air as to whether it will really decide anything because it's possible the Court will simply say based on the concessions made by the plaintiff, we vacate the Ninth Circuit decision and remand to the Ninth Circuit for them to reconsider the case under the proper but-for standard. But if they end up addressing what is a proper pleading under Rule 8 that would be adequate to withstand a Rule 12, a motion to dismiss, it could become a very important case that would be an important follow-on to the decisions in Twombly and Iqbal.
Wesley Hodges: Fantastic. Well, on behalf of The Federalist Society, I would like to thank you for the benefit of your valuable time and expertise today. We welcome all listener feedback by email at email@example.com. Thank you everyone for joining us today. This call is now adjourned.
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