The opinion of the court was delivered by: Karen E. Schreier Chief Judge
ORDER DENYING IN PART AND GRANTING IN PART DEFENDANTS' SUMMARY JUDGMENT MOTION
Plaintiff, Michelleé Mutua, an African-American female, filed an employment discrimination suit against her employer, Texas Roadhouse, the Sioux Fall store's managing partner, Murray Welder, and the Sioux Falls market partner, Thomas Scheel (defendants). Mutua alleges discrimination and retaliation claims under 42 U.S.C. § 1981, Title VII, and the South Dakota Human Rights Act, and a breach of contract claim under South Dakota state law. Mutua also seeks punitive damages. Defendants move for summary judgment on all claims. The motion is granted in part and denied in part.
In the light most favorable to Mutua, the nonmoving party, the facts are as follows:
Mutua is an African-American female who began working as a server and trainer at the Sioux Falls Texas Roadhouse in June of 2006, when the restaurant first opened. On June 8, 2008, Mutua was working as a server when the customers at one of her tables requested a different server because the guests did not want an African-American server. The manager on duty removed Mutua from the table and replaced her with a white server. Mutua spoke with Welder about the incident the next day and he promised to investigate the situation and discuss it with the corporate office.
On June 12, 2008, the same guests returned to the restaurant, no supervisor spoke with them about the June 8 incident, and a white server was assigned to wait on them. When the same customers again returned on June 15, 2008, numerous servers declined to serve their table because of the previous incident. The next day, Welder told Mutua that the corporate office indicated that guests can ask for a different server based on race. On June 19, 2009, Mutua followed Texas Roadhouse's policy and filed a report with Ethics Point, Texas Roadhouse's human resources department. Four days later, Welder apologized to Mutua for the incident and told her that he would never again take a server off his or her table if a similar incident occurred. Welder also told her that customers who discriminated on the basis of race were not needed. On June 25, 2008, Mutua received an email response from Ethics Point informing her that Scheel had been notified of her claim and that he would address the matter.
On July 19, 2008, the same guests returned again and a white server was assigned to their table. When Mutua asked the manager on duty (Emily Erickson) why the guests could return, Erickson told Mutua that the guests were welcome and that Mutua should speak with Welder. On July 21, 2008, Mutua spoke to Welder, who informed her that the corporate office told him that the restaurant was prohibited from asking any guests to leave based on their discriminatory remarks.
On September 3, 2008, Mutua filed a charge of discrimination with the South Dakota Department of Labor, Division of Human Rights, and the Equal Opportunity Employment Commission (EEOC) based on discrimination against her on the basis of race and color. On October 8, 2008, Mutua and her counsel and Texas Roadhouse through its representative, Dee Shaughnessy, the Director of Care and Concern, met with an investigator from the South Dakota Division of Human Rights. A negotiated settlement was reached subject to Shaughnessy having twenty-four hours to obtain authority for the monetary portion of the settlement. The next day, Shaughnessy requested an extension until October 22, 2008. On October 24, 2008, Shaughnessy made a different offer to settle that was now contingent upon Mutua's immediate resignation. Mutua rejected this offer on October 27, 2008.
While Mutua's charge was pending, management sent Mutua home on October 22, 2008, for being late to work. On October 24, 2008, management asked Mutua to leave her shift for having a bad attitude and told her to return for a meeting on October 25, 2008. When Mutua returned on October 25, 2008, Welder suspended her from work until she spoke with Scheel. Mutua met with Scheel on October 28, 2008, and he told her that she was being terminated due to customer complaints and having a bad attitude. On December 3, 2008, Mutua filed a second charge of discrimination contending that she was retaliated against and that she suffered an adverse employment action when she was fired.
On December 4, 2008, the South Dakota Division of Human Rights found probable cause to believe that Mutua had been discriminated against as alleged in her first complaint. On February 17, 2009, the Division of Human Rights determined that there was probable cause on the second complaint. The EEOC issued a Notice of Right to Sue for both discrimination complaints on May 29, 2009. Mutua filed this suit in June of 2009.
Federal Rule of Civil Procedure 56(c)(2) provides that summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Only disputes over facts that might affect the outcome of the case will preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is not appropriate if a dispute about a material fact is genuine, that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id.
The moving party bears the burden of bringing forward sufficient evidence to establish that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). On a summary judgment motion, the court views the facts "in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (internal citation omitted). Similarly, the nonmoving party receives "the benefit of all reasonable inferences to be drawn from the underlying facts" in the record. Vette Co. v. Aetna Cas. & Sur. Co., 612 F.2d 1076, 1077 (8th Cir. 1980) (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 158-59 (1970)).
Evidence based on inferences is acceptable in an employment discrimination case. Crawford v. Runyon, 37 F.3d 1338, 1341 (8th Cir. 1994). Because the court is especially deferential to plaintiffs who base their evidence on inferences, "summary judgment should seldom be used in employment-discrimination cases." Id.; see also Lynn v. Deaconess Med. Center-West Campus, 160 F.3d 484, 486-87 (8th Cir. 1998) (reasoning that the court should "keep in mind the caution that summary judgment should seldom be used in discrimination cases.").
I. The Discrimination Claims
Mutua alleges racial discrimination under 42 U.S.C. § 1981, Title VII, and the South Dakota Human Rights Act, SDCL 20-13-10. Racial discrimination claims under Title VII and § 1981 are nearly identical and should be analyzed under a similar framework. Kim v. Nash Finch Co., 123 F.3d 1046, 1063 (8th Cir. 1997). Additionally, racial discrimination claims under Title VII and SDCL 20-13-10 are analyzed under the same framework. Ross v. Kan. City Power & Light Co., 293 F.3d 1041, 1050 n.1 (8th Cir. 2002) (holding that federal and state discrimination laws should be analyzed under the same framework); Huck v. McCain Foods, 479 N.W.2d 167, 179 (S.D. 1991) ("[W]e now expressly acknowledge . . . that SDCL 20-13-10 is comparable to the corresponding provision in Title VII"). This case initially presents an issue of first impression, namely whether at-will employees in South Dakota have a cause of action under § 1981.
A. At-Will Employees in South Dakota May Sue Under § 1981
The parties dispute whether § 1981 applies to Mutua because she was an at-will employee under South Dakota law. Section 1981 prohibits employers from racially discriminating against employees in the making and enforcing of contracts. 42 U.S.C. §§ 1981(a) and (b). While § 1981 prohibits discrimination, it "does not provide a general cause of action for race discrimination." Youngblood v. Hy-Vee Food Stores, Inc., 266 F.3d 851, 855 (8th Cir. 2001).
Section 1981 only protects against racially-charged discrimination that interferes with the making and enforcement of contracts. 42 U.S.C. § 1981(a). In 1989, the Supreme Court narrowly interpreted "make and enforce" to only prohibit discriminatory conduct in making a contract. Patterson v. McLean Credit Union, 491 U.S. 164, 176-77 (1989).
In 1991, Congress amended § 1981 in direct response to Patterson. Skinner v. Maritz, Inc., 253 F.3d 337, 339 (8th Cir. 2001) (discussing the Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071). "Make and enforce" now 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(b). "Thus, § 1981 provides protection for violations that occur from the inception until the conclusion of the contractual relationship." Turner v. Ark. Ins. Dep't, 297 F.3d 751, 755-56 (8th Cir. 2002) (citation omitted). Plaintiffs, however, "must initially identify an impaired 'contractual relationship.' " Domino's Pizza, Inc. v. McDonald, 546 U.S. 470, 477 (2006).
The Eighth Circuit has noted that "the legislative history of § 1981 underscores Congress's intent to include at-will employees." Skinner, 253 F.3d at 340 n.1 (citing the congressional record on § 1981); see also Turner,297 F.3d at 756 (reasoning that Patterson "leaves no doubt that the Court considered the employee's [at-will] relationship with her employer to be a contractual one for purposes of § 1981." (citing Fadeyi v. Planned Parenthood Ass'n. of Lubbock, Inc., 160 F.3d 1048, 1050 (5th Cir. 1998))). According to the Eighth Circuit, it is "clearly established" that an at-will employee can sue for employment discrimination under § 1981. Id. Skinner and Turner are in line with the other circuits that have addressed this issue.*fn1
The Eighth Circuit requires a district court to apply the forum state's contract law to determine if a § 1981 contractual relationship existed. See Skinner, 253 F.3d at 338-39 (applying Missouri law and finding that a contract existed for a § 1981 claim alleged by an at-will employee). "[F]or purposes of § 1981, an employment-at-will relationship is considered a contractual one even though an independent state law contract may not exist." Turner,297 F.3d at 756 (applying Arkansas law and finding a contractual relationship existed for an at-will employee under § 1981).
South Dakota requires four elements for a valid contract: (1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) sufficient cause or consideration. SDCL 53-1-2. Contracts can be express or implied. SDCL 53-1-3. "An implied contract is one, the existence and terms of which are manifested by conduct." Id. Mutua did not have an express, written contract with Texas Roadhouse, but she did have an implied contract. Both parties were capable of contracting, each party willingly gave consent to contract with the other party, and the object of the contract, employment, was lawful. For consideration, Mutua agreed to work for Texas Roadhouse. Texas Roadhouse agreed to pay Mutua her hourly wage.
Accordingly, even though Mutua was an at-will employee, she had a contract with Texas Roadhouse under § 1981. This holding is consistent with Congress's intent, Eighth Circuit precedent for claims that arose under Missouri and Arkansas law, and the other circuits that have addressed the issue. The court will now analyze Mutua's § 1981and SDCL 20-13-10 claims under the Title VII framework.
B. Mutua Has Alleged Sufficient Facts that a Jury Should Determine Whether a Hostile Work Environment Existed
Mutua claims discrimination under Title VII, § 1981, and SDCL 20-13-10 and all three statutes provide a cause of action for a hostile work environment claim. Edwards v. Jewish Hosp. of St. Louis, 855 F.2d 1345, 1349 (8th Cir. 1988) (reasoning that in enacting § 1981, "Congress took aim at discrimination in employment, from whatever source"); Huck v. McCain Foods, 479 N.W.2d 167, 170 (S.D. 1991) (finding that SDCL 20-13-10 gives rise to a hostile work environment claim); Moylan v. Maries Cnty., 7 ...