Hampton v. Dillard Department Stores, Inc.
2001 Colo. J. C.A.R. 2056, 2001 U.S. App. LEXIS 7429, 247 F.3d 1091 (2001)
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Rule of Law:
Under 42 U.S.C. § 1981, racial discrimination that interferes with the “enjoyment of all benefits, privileges, terms, and conditions of a contractual relationship” is actionable, even if the “contract” is an informal promotional offer tied to a purchase, provided there is intentional interference and a racial motivating factor.
Facts:
- On April 5, 1996, Paula Darlene Hampton and her niece, Demetria Cooper, both African Americans, were shopping in the Dillard's children's department in Overland Park, Kansas, with four children.
- Dillard's security officer, Tom Wilson, noticed the group shortly after they entered the store and observed them for over fifteen minutes, partly due to a stroller and a rolled-up dark cloth item held by Ms. Cooper.
- Ms. Hampton purchased an outfit for Ms. Cooper's one-year-old son from a salesclerk in the children's department.
- After the purchase, the sales associate gave Ms. Hampton and Ms. Cooper each a coupon redeemable for cologne samples at the fragrance counter.
- As Ms. Hampton and Ms. Cooper were at the fragrance counter, conversing with fragrance consultant Betty Chouteau to redeem their coupons, Mr. Wilson interrupted them.
- Mr. Wilson stated that "the ... black female had been observed placing something in her coat," asked to look inside Ms. Hampton's Dillard's bag, and emptied its contents on the counter, checking them against the receipt.
- Mr. Wilson determined the items corresponded to the receipt, and Ms. Hampton expressed her upset at being accused of shoplifting, to which Mr. Wilson responded by threatening to call the police if she did not calm down.
- The encounter with Mr. Wilson lasted approximately five minutes, after which Ms. Hampton proceeded to the customer service counter and had no more contact with him.
Procedural Posture:
- Paula Darlene Hampton and Demetria Cooper filed suit against Dillard Department Stores, Inc., alleging false imprisonment under Kansas law and a violation of 42 U.S.C. § 1981, based on their observation and detention by Mr. Wilson and the store's alleged disparate security practices.
- Following the close of discovery, Dillard's moved for summary judgment on both claims.
- The district court granted Dillard's summary judgment on the state tort claims and most of the § 1981 claims, allowing only Ms. Hampton's § 1981 claim regarding interference with her ability to redeem the perfume sample to proceed to trial.
- The district court subsequently dismissed Ms. Cooper's remaining § 1981 claim, rejecting her contention that she was a third-party beneficiary of Ms. Hampton's purchase, on the day before trial.
- The district court bifurcated the trial into two phases: in phase one, the jury was to determine if the fragrance sample was a benefit of Ms. Hampton's purchase and if Dillard's intentionally interfered with its redemption; in phase two, if the jury found for Ms. Hampton in phase one, it would determine if the interference was racially motivated.
- The jury found for Ms. Hampton on all issues presented in both phases and awarded her $56,000 in compensatory damages and $1.1 million in punitive damages.
- The district court entered judgment in accordance with the verdict and rejected Dillard's Motion for Judgment as a Matter of Law, or Alternatively for a New Trial or Remittitur.
- Dillard's (appellant) appealed the district court's denial of its motion for judgment as a matter of law and for a new trial, also challenging the awards of compensatory and punitive damages and attorney's fees.
- Ms. Cooper (appellant) appealed the district court's dismissal of her § 1981 claim and her state law claim.
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Issue:
Does a department store's racially motivated interference with a customer's attempt to redeem a promotional coupon, received as a benefit of purchase, constitute a violation of 42 U.S.C. § 1981?
Opinions:
Majority - Henry, Circuit Judge
Yes, a department store's racially motivated interference with a customer's attempt to redeem a promotional coupon, received as a benefit of purchase, does constitute a violation of 42 U.S.C. § 1981. The court affirmed the district court's denial of Dillard's motion for judgment as a matter of law, holding that the jury had a legally sufficient evidentiary basis for its findings. First, the court found the fragrance coupon constituted a benefit or privilege of Ms. Hampton's purchase, forming an option or unilateral contract accepted by her performance of completing the purchase and presenting the coupon, citing Restatement (Second) of Contracts § 45. Second, the court determined there was sufficient evidence for the jury to find intentional interference with the coupon's redemption, relying on testimony from the fragrance consultant, Ms. Chouteau, that Mr. Wilson interrupted an ongoing transaction, which the jury was entitled to credit over Mr. Wilson's denial of knowing about the coupon. Finally, the court concluded that the jury reasonably inferred racial discrimination, noting that while direct evidence was absent, substantial indirect evidence—including security officer testimony about racial tracking, "race codes," store incident reports differentiating shoppers by race, and Mr. Wilson's report reiterating Ms. Hampton's race multiple times—supported the finding that Dillard's stated reasons for the stop were pretextual, as permitted under the McDonnell Douglas framework. The court also affirmed the jury instructions, the $56,000 compensatory damages, and the $1.1 million punitive damages, finding the punitive award reasonable under the BMW v. Gore guideposts, given the reprehensibility of the conduct and the difficulty of quantifying emotional harm, especially when economic injury was nominal.
Dissenting - Anderson, Circuit Judge
No, a department store's interference with a customer's attempt to redeem a promotional coupon, even if received as a benefit of purchase, does not constitute a § 1981 violation if the interference was unintentional and not racially motivated. Judge Anderson dissented, arguing that Dillard's met its burden to overturn the jury verdict because there was no legally sufficient evidentiary basis to find a § 1981 violation. The dissent contended that there was no evidence Mr. Wilson intentionally interfered with Ms. Hampton's coupon redemption, as Mr. Wilson testified he did not even know they were redeeming coupons and had no desire to prevent it. Judge Anderson emphasized that Mr. Wilson stopped the group based on probable cause to suspect shoplifting, and any interference with the coupon was "purely fortuitous, incidental and completely collateral" to that primary intent. The dissent also found no legally sufficient evidence of racial motivation in Mr. Wilson's interaction with Ms. Hampton, arguing that the existence of probable cause was a wholly sufficient reason for the stop, and there was no evidence Mr. Wilson made racially derogatory remarks or treated this investigation differently based on race. According to the dissent, Ms. Hampton's alleged injuries stemmed from the wrongful accusation of shoplifting, for which § 1981 does not provide a remedy unless there is also interference with a contract benefit due to racial discrimination.
Analysis:
This case significantly broadens the application of 42 U.S.C. § 1981 beyond traditional employment contexts to retail transactions, establishing that even informal promotional offers (like coupons) tied to a purchase can form a contractual relationship protected by the statute. It reinforces that indirect evidence, such as discriminatory surveillance practices and security reports, can be sufficient to prove racial animus in contract interference claims, especially when a defendant's stated reasons for their actions are found to be pretextual. The ruling also affirms that substantial punitive damages are appropriate in civil rights cases, particularly where economic harm is nominal but emotional distress and systemic discriminatory conduct are evident, serving as a deterrent against racial discrimination in commercial establishments.
