06-3087 - James Barfield, et al., Appellants v. Commerce Bank NA
U.S. Tenth Circuit Court of Appeals
(March 7, 2007)

Briefs

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Case Summary (prepared at Washburn Law)

Facts

17-year old African-American Chris Barfield (Appellant) asked for change for a $50 bill at a Commerce Bank (Respondent) branch in Wichita. The teller asked if he had an account at the bank; although Chris did not, his mother did, and he told the teller he was trying to get change at his mother's request while she ran the family store. The teller refused to make change. Chris's father, Appellant James Barfield, sent a Caucasian friend into the same bank the next day with another $50 bill to ask for change, which he was given, despite not having an account at the bank (nor was he asked if he did have an account). 20 minutes later, James Barfield was denied change for a $100 bill, the teller citing bank policy not to make change for non-account holders. The experiment was repeated at the same bank, by two Caucasian and African-American reporters for the Wichita Eagle, with the same result: the white reporter was given change, with no questioning as to account-holder status; the black reporter was denied change after being asked if he held an account with the bank. Chris and James Barfield filed suit.

Procedure

Timeline:

Issues

  1. Whether making change is a protected activity constituting a contract under 42 USC § 1981(1).
    1. Petitioner's Argument
      1. Making Change Does Constitute a Contract
        1. Under §1981, to establish a prima facie case of discrimination, a person must show:
          1. Plaintiff was member of a protected class (African Americans are)
          2. The defendant had the intent to discriminate on the basis of race (see facts above)
          3. That the discrimination interfered with a protected activity (in this case, the ability to make a contract)
        2. The necessary elements of a contract (offer, acceptance, consideration) are present when a bank makes change
          1. Offer = plaintiff offered to give bank a $50 bill if the bank would give plaintiff five $10 bills
            • There would have been acceptance but for the defendant's racial discrimination against plaintiff
          2. Consideration was present under two theories:
            • There were mutual promises between the parties
            • There would have been a benefit to the bank in the form of a continued circulation of currency and extending good will towards potential customers
              • Consideration is sufficient so long as any party would receive some benefit
        3. The District Court Erred in Granting Defendant's Motion to Dismiss
          1. Presumption is in favor of the plaintiff when reviewing a motion to dismiss for failure to state a claim, and all reasonable inferences drawn in favor of the plaintiff
          2. Dismissal only appropriate when there is no set of facts plaintiff could allege that would give rise to a claim, so dismissal inappropriate here
            • Plaintiff demonstrated that making change is a protected type of contract under §1981; therefore there is a well-pleaded complaint that should not have been dismissed
    2. Respondent's Argument
      1. Making Change Does Not Constitute a Contract
        1. The complaint as written fails to allege facts that constitute a denial of the ability to make a contract
          1. The complaint as written only alleges that the plaintiffs were denied the ability to make change
        2. A §1981 claim has to be based on interference with a right to contract, and must involve the actual loss of contract interest
          1. Plaintiff did not have an account with the bank, so making change cannot be considered a benefit of an existing contractual relationship
          2. Also, there are no makings of a future contractual relationship since making change is not a contract under §1981
        3. Making change is not a contract because there is no consideration
          1. There is no bargaining here, and no benefit conferred, so there can be no consideration - it was simply $50 given for $50 dollars, and neither party was better off than they were before
            • The 'benefits' plaintiffs list are illusory:
              • there is no increased circulation of currency
              • Case law holds that §1981 claims must state a loss of an actual contract interest, not merely possible future contract opportunities
      2. The District Court Was Correct in Dismissing the Claim
        1. Since the complaint as written fails to implicate a protected activity under §1981, the complaint fails to allege facts sufficient to state a claim, and the district court correctly granted the motion to dismiss
  2. Whether the district court erred in denying Petitioner's motion for leave to amend their complaint as 'untimely and futile.'
    1. Petitioner's Argument - Motion to Amend Should Have Been Granted
      1. Plaintiff's motion was timely
        1. Parties were still in negotiations when the court deadline passed, and information necessary to the revised complaint was not discovered until after the deadline
          1. Motion was filed within 30 days after negotiations broke down
        2. Plaintiffs informed defendant of intent to amend their complaint if negotiations broke down, so there was no surprise or prejudice
        3. A delay of 7 months was also caused by the assigned judge's death, and the case was transferred to a different judge
      2. Plaintiff's motion was not futile
        1. There were sufficient facts alleged with enough specificity to satisfy Fed. R. Civ. Pro. 8's requirements, so Plaintiffs should have been allowed to add the desired Title IV class action suit
    2. Respondent's Argument - Motion to Amend Was Properly Denied
      1. The motion was untimely
        1. The parties agreed that all motions would be filed by September 9th, 2005, but this motion to amend was filed after the deadline had passed (on November 5th, 2005)
        2. Motions should only be allowed after the deadline for good cause-and this is not good cause because the delay was based on facts the Barfields knew or should have known
      2. The motion was futile
        1. There is no claim under §1981, since making change does not constitute a contract or loss of a contractual interest when denied
        2. There is no claim under the Title IV class action claim
          1. The Barfields lack standing to sue under Title IV, since they are not the intended beneficiaries of a federally-funded program as is required for Title IV claims

Footnote

1. §1981 reads:

(a) Statement of equal rights

All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts…and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and no other.

(b) "Make and enforce contracts" defined

For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.

(c) Protection against impairment

The rights protected by this section are protected against impairment by nongovernmental discrimination and impairment under color of State law.