Supreme Court Upholds “but-for" Standard in Contract Claims Alleging Racial Bias

The Supreme Court has clarified that plaintiffs must meet a “but for" standard when alleging racial bias under §1981 of the Civil Rights Act. The Supreme Court's decision could impact civil rights litigation involving contracts, employment agreements, and other allegations of racial bias, and resolves a split among circuit courts.

A $20 Billion Lawsuit

At stake is a potential $20 billion lawsuit brought by Allen Media Group against Comcast. According to the complaint, Comcast declined to enter into a contract with the Allen Media Group to carry its television content due to it being minority-owned. The U.S. district court judge dismissed the complaint, but the Ninth Circuit Court of Appeals reversed. Under the Ninth Circuit's decision, Allen Media Group needed only to plausibly allege that race played a role in denying the contract to satisfy the burden in the early stages of litigation. The Allen Media Group met this lower burden, the panel found.

Torts Typically Require “but-for" Causation

Justice Gorsuch, writing for a unanimous court, disagreed with the Ninth Circuit's standard and remanded, writing that there was no evidence that the text of §1981 allowed for an exception to the “but-for" causation typically required when alleging a tort. Neither the Supreme Court nor the Ninth Circuit weighed in on whether the Allen Media Group's pleadings met the “but for" standard. The case will go back to the Ninth Circuit so the appellate court can consider the case in light of the higher standard.

Justice Ginsberg wrote a concurring opinion to note that she has previously made her displeasure with a “but for" standard in discrimination cases known. However, Justice Ginsberg conceded it is now the established rule in U.S. courts. Justice Ginsberg also wrote to refute Comcast's argument (supported by the Trump Administration) that §1981 protects only outcomes, not processes. Justice Ginsberg wrote that “if race indeed accounts for Comcast's conduct, Comcast should not escape liability for injuries inflicted during the contract-formation process." The majority declined to weigh in on that argument at all, with Justice Gorsuch writing in a footnote that “addressing the issue is entirely unnecessary to our resolution of the case."

The litigation continues, but plaintiffs seeking to make it past the pleadings stage in a §1981 claim should be prepared to meet the higher “but-for" causality standard.

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