Arguello v. Conoco, Inc.
207 F.3d 803, 2000 U.S. App. LEXIS 6435, 2000 WL 305928 (2000)
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Rule of Law:
An employer may be held vicariously liable under 42 U.S.C. § 1981 for the intentional discriminatory acts of its non-supervisory employee in a public accommodation setting if the employee's acts were committed within the scope of their employment. The restrictive vicarious liability rules developed for workplace harassment do not apply in the public accommodation context.
Facts:
- In March 1995, Denise Arguello and Alberto Govea, who are Hispanic, stopped at a gas station owned and operated by Conoco, Inc. in Fort Worth, Texas.
- While Arguello attempted to pay for gasoline and other items with a credit card, the store cashier, Cindy Smith, refused to accept Arguello's out-of-state driver's license as identification.
- Smith began insulting Arguello using profanity and racial epithets, knocked a six-pack of beer off the counter toward her, and made obscene gestures.
- After Arguello retreated from the store, Smith used the store’s intercom system to continue yelling racial epithets at the family.
- Arguello and Govea immediately called a Conoco customer-service number to complain about Smith's conduct.
- A Conoco district manager investigated, and Smith admitted to using profanity, racial epithets, and obscene gestures, but she was only counseled and not suspended or terminated.
- Other plaintiffs experienced similar discriminatory treatment at Conoco-branded (independently owned) stores, including being told 'we don’t have to serve you people,' 'you Mexicans need to go back to Mexico,' and being required to prepay for gas while Caucasian customers were not.
Procedural Posture:
- A group of Hispanic and African-American consumers ('plaintiffs') filed suit against Conoco, Inc. in the United States District Court.
- The plaintiffs alleged violations of 42 U.S.C. § 1981 and § 2000a based on theories of disparate treatment and disparate impact, as well as state law claims.
- The district court dismissed the plaintiffs' disparate impact and state law claims pursuant to a Rule 12(b)(6) motion.
- Subsequently, the district court granted summary judgment to Conoco on all of the plaintiffs' remaining claims.
- The plaintiffs (appellants) appealed the dismissal and the grant of summary judgment to the U.S. Court of Appeals for the Fifth Circuit.
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Issue:
Does an employer face vicarious liability under 42 U.S.C. § 1981 for the intentional racial discrimination of its non-supervisory employee in a public accommodation setting, when the discriminatory acts occurred while the employee was performing her authorized job duties?
Opinions:
Majority - Stewart
Yes, an employer may be held vicariously liable for the discriminatory acts of its non-supervisory employee in a public accommodation context if the employee's actions were within the scope of her employment. The court reversed summary judgment for Conoco, finding a genuine issue of material fact as to whether the employee's conduct fell within the scope of her employment. The court rejected Conoco's argument that the restrictive vicarious liability standard from employment harassment cases like Faragher v. City of Boca Raton should apply. In a public accommodation context, a customer's primary interaction is with a non-supervisory employee, and applying the Faragher standard would create a near-impenetrable shield from liability. Instead, traditional agency principles of respondeat superior govern. Under that framework, Smith's actions occurred at her place of employment, during her work hours, and while she was performing authorized tasks such as processing a sale and using the store's intercom. The fact that her conduct was an intentional tort does not automatically place it outside the scope of employment, as her authorized position enabled her to commit the discriminatory acts. Therefore, a reasonable jury could find Conoco liable for Smith's actions.
Analysis:
This case significantly clarifies the scope of vicarious liability for discrimination in public accommodations under § 1981. By distinguishing the public accommodation context from the employment harassment context, the court lowered the bar for holding companies liable for the misconduct of their front-line, non-supervisory employees. The decision establishes that an employer cannot easily escape liability by arguing that an employee's intentional racist acts were a personal 'frolic and detour.' This precedent strengthens consumer protection against discrimination by holding businesses accountable for the actions of employees who interact with the public as part of their authorized duties, thereby affecting how companies train and supervise customer-facing staff.
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