Unpublished Disposition, 874 F.2d 816 (9th Cir. 1988)

MEMORANDUM^* 

Plaintiff-appellant David Garza appeals from the district court's judgment entered in favor of the City of Inglewood (the "city"). Judgment was entered upon the court's order granting the city's motion to dismiss the amended complaint for failure to state a claim. Garza also appeals the court's order denying his motion for a temporary restraining order and application for a preliminary injunction. This court has jurisdiction pursuant to 28 U.S.C. § 1291.

* Garza is a male Hispanic police Lieutenant in the City of Inglewood. He filed a two-count complaint, with count one alleging employment discrimination under Title VII and 42 U.S.C. § 1981, and count two alleging a deprivation of his life, liberty and property without due process of law under 42 U.S.C. § 1983. Garza alleges that in June 1987, after earlier being passed over for promotion to Captain, he was not allowed to assume an acting Captain position although two openings were available. His EEOC charge alleged that he was not selected for a police Captain position on September 29, 1986, but the allegations in his complaint can only be interpreted as relating to the June 1987 denial of an acting Captain position.¹ 

Inglewood City counsel resolution 6295 allows the Chief of Police to fill vacancies in the department through temporary appointments. Garza calls these "permanent acting appointments." He argues that the use of these acting appointments has a discriminatory impact on Hispanic officers in the police force by circumventing the standard Civil Service promotional rules. Garza alleges that he is at the top of the Civil Service promotion list but has been passed over through the use of ad hoc permanent acting appointments.

II

We review a dismissal for failure to state a claim de novo. Conley v. Gibson, 355 U.S. 41 (1957); Western Reserve Oil and Gas v. New, 765 F.2d 1428, 1430 (9th Cir. 1985). We review for abuse of discretion the district court's dismissal without leave to amend. Klamath-Lake Pharm. Ass'n v. Klamath Med. Serv. Bureau, 701 F.2d 1276, 1292 (9th Cir.), cert. denied, 464 U.S. 822 (1983).

III

Garza filed a charge of discrimination with the EEOC based solely upon his national origin, while his amended complaint charges discrimination on the basis of color and race, but not national origin.

In Shah v. Mt. Zion Hospital & Medical Ctr., 642 F.2d 268 (9th Cir. 1981), the court held that the district court lacked subject matter jurisdiction over claims which the plaintiff failed first to raise before the EEOC. Specifically, the plaintiff's EEOC complaint in Shah alleged sex and national origin discrimination, but the plaintiff attempted to expand his Title VII action to include charges of race, color, and religious discrimination. Id. at 271. The court held that the district court properly dismissed these "three theories never investigated by the EEOC." Id. at 272. The Shah decision completely disposes of Garza's Title VII claims of color and race discrimination.

Nonetheless, we must inquire whether the district court abused its discretion in not allowing Garza an opportunity to amend his complaint to allege national origin discrimination under Title VII. From the record, it is clear that Garza filed a claim of national origin discrimination with the EEOC and that an amended complaint alleging this type of discrimination would be appropriate.

Motions to amend should be freely given but may be denied if the proposed amendment will not save plaintiff's suit. See Dan Caputo Co. v. Russian River County Sanitation Dist., 749 F.2d 571, 574 (9th Cir. 1984). But if from the underlying facts and circumstances plaintiff may be able to state a claim, leave to amend should be liberally granted. See McCartin v. Nortin, 674 F.2d 1317, 1321 (9th Cir. 1982). Ordinarily, leave to amend should be freely given in absence of prejudice to the opposing party. Keniston v. Roberts, 717 F.2d 1295, 1300 (9th Cir. 1983); Wyshak v. City Nat. Bank, 607 F.2d 824, 826 (9th Cir. 1979). Had the district court permitted Garza leave to file a second amended complaint alleging a Title VII violation premised on national origin discrimination, Garza could have overcome his defective allegation. Accordingly, we conclude that the district court abused its discretion in failing to permit him to file an amended complaint.

IV

As a threshold matter, it is clear that Garza's mishandling of his Title VII claim has no bearing whatsoever on his claims under sections 1981 and 1983. Title VII provides the exclusive judicial remedy for claims of discrimination in federal employment. Brown v. GSA, 425 U.S. 820 (1976). But in all other employment contexts, "Congress clearly has retained Sec. 1981 as a remedy against private employment discrimination separate from and independent of the more elaborate and time-consuming procedures of Title VII." Johnson v. Railway Express Agency, Inc., 421 U.S. 454 (1975). Similarly, "Title VII and section 1981 are overlapping but independent remedies for racial discrimination in employment" by cities. Lowe v. City of Monrovia, 775 F.2d 998, 1010 (9th Cir. 1985), amended, 784 F.2d 1407 (9th Cir. 1986).

* The city's first argument in support of the district court's dismissal of Garza's section 1981 and 1983 claims is that they are barred by res judicata.²  On January 11, 1988, the plaintiff entered into a stipulation with defense counsel to dismiss as defendants the Inglewood Police Department and Police Chief Raymond L. Johnson. Plaintiff then filed an amended complaint on February 10, 1988, naming the city as the only defendant. Essentially, the city argues that the amended complaint is barred because the city can only be liable through the actions of its agents, and the amended complaint centers on the same conduct of the police chief as did the original complaint. The city's res judicata argument assumes that there is no legal difference between this case, and a case where Garza sued only the department and the police chief in an original action which was dismissed with prejudice upon stipulation.

Res judicata, or claim preclusion, bars litigation of claims and issues that were raised or which could have been raised in a prior action between the same parties or their privies, where the prior action resulted in final judgment on the merits by a court of competent jurisdiction. Board of Trustees of Carpenters Pension v. Reyes, 688 F.2d 671, 673 (9th Cir. 1982), cert. denied, 462 U.S. 1120 (1983). This means that a different legal theory of recovery is barred if it centers on the same "transactional nucleus of facts" at the heart of the prior suit between the same parties or their privies. Sewer Alert Committee v. Pierce County, 791 F.2d 796, 799 (9th Cir. 1986).

The primary error in the city's assertion of res judicata is that Garza's amended complaint was not a subsequent action for purposes of res judicata. On January 11, 1988, the court accepted the parties' stipulation for dismissal of the department and the police chief with prejudice, and for granting the city's motion to strike without prejudice to plaintiff's filing an amended complaint by February 10, 1988, against the city. The amended complaint is not a subsequent action, nor is the January 11, 1988, dismissal of the original complaint a "prior action" under res judicata doctrine.

The city's argument is wholly untenable. It is clear that an amended complaint is not a separate and subsequent action to an original complaint. Indeed, an amended complaint adding new claims, and under certain circumstances, new parties, relates back to the date of the original pleading. See Fed. R. Civ. P. 15(c). Similarly, an amended complaint does not constitute a first dismissal for purposes of the "two dismissal" rule of Fed. R. Civ. P. 41(a) (1) (i). See Gianis & Co. v. Ostrau, 43 F.R.D. 405, 406 (S.D.N.Y. 1967).

An alternative construction poses the significant risk that plaintiffs would be greatly discouraged from entering into these types of voluntary dismissals. Obviously it makes the district judge's job much easier when the parties are able to narrow the number of defendants in the case. But if a plaintiff risks being estopped from proceeding with its case-in-chief as a result of such a dismissal, then such stipulations for dismissal will become anathema.

B

Section 1981 protects against both public and private discrimination in the making of contracts. Runyon v. McCrary, 427 U.S. 160, 170 (1975); Jones v. Alfred H. Mayer Co., 392 U.S. 409 (1948). Mexican-Americans are protected under section 1981. Gonzalez v. Stanford Applied Engineering, Inc., 597 F.2d 1298 (9th Cir. 1979). " [P]rejudice towards those of Mexican descent having a skin color not characteristically Caucasian must be said to be racial prejudice under Sec. 1981." Id. at 1300. Garza alleges that he is Hispanic and that the police department's promotional policies produce two different rates of promotion, "one for White employees and [another] for minorities."

A plaintiff suing under section 1981 must establish intentional discrimination; disparate impact is insufficient. Lowe, 775 F.2d at 1010 n. 10. Garza's appellate brief emphasizes his Title VII claim and exclusively discusses a discriminatory impact theory of recovery. Appellant's Br. at 5-14. Nonetheless, Garza does argue that he has adequately alleged an inference of discriminatory treatment. Id. at 10.

The standards governing whether a plaintiff has established a Title VII claim of disparate treatment also govern a section 1981 claim of race discrimination. Lowe, 775 F.2d at 1010. The governing standard for establishing an inference of intentional discrimination under Title VII is the test set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973); see also Yee v. Dept. of Environ. Serv., Multnomah County, 826 F.2d 877, 880-81 (9th Cir. 1987); Lowe, 775 F.2d at 1005. This requires (1) that the plaintiff belongs to a protected class, (2) the plaintiff applied and was qualified for a job for which the employer was seeking applicants, (3) that despite being qualified the plaintiff was rejected, and (4) that after the plaintiff's rejection the position remained open and other applicants were sought.

The city argues that Garza has failed to satisfy the McDonnell Douglas test because "there was no assertion by the plaintiff that he applied for an available position, that he was qualified for the position and despite that, was passed over for promotion in favor of a non-minority person." Appellee's Br. at 22. Garza alleges that the intent of using acting appointments "was to continue and preserve defendant's long-standing practice ... of limiting the employment opportunities of Plaintiff because of his race and color." Complaint p 16.

Garza's complaint fails to satisfy the second and fourth McDonnell Douglas requirements. The complaint does not allege that the city was seeking applicants for the two allegedly open captain positions, and it does not allege that the positions remained open following June 1987. Neither does the complaint allege that anyone has been selected for these two positions. The complaint merely alleges that the two Captain positions were "available."

In June, 1987, after Plaintiff was passed over for promotion to Police Captain, Plaintiff was not allowed to assume an Acting Captain position, even though two openings were available and Plaintiff was next on the promotion list.

Complaint p 18.

While the complaint itself fails to allege a prima facie case of intentional discrimination, certain exhibits to the complaint do supply the missing elements. For instance, exhibit E-1 states that Lt. Robert Westlake was appointed acting commander of the office of operations in June 1, 1987. Exhibit E-2 states that Lt. Les Friesen was appointed in charge of the office of special enforcement. Finally, exhibit F, Garza's EEOC charge of discrimination, states that " [i]n June 1987 two Police Lieutenants have been placed as 'Acting Captains' wereas [sic], I have not been selected being next on the promotion list."

The exhibits to the complaint make it clear that the police department was "seeking" applicants for acting captain positions within the meaning of the McDonnell Douglas test. Garza should be able to adequately allege the necessary elements of the McDonnell Douglas prima facie case in a second amended complaint. Under these circumstances, the district court abused its discretion in dismissing Garza's section 1981 claim with prejudice. See McCartin, 674 F.2d at 1321.

C

Garza alleges in Count II that the "denial of promotional opportunity for Plaintiff to Captain and/or Acting Captain" has resulted in a denial of his "rights, privileges and immunities" and a deprivation "of his life, liberty and property without due process of law." His brief argues that he was denied "fair and impartial treatment." This seems directed at an equal protection claim.

A plaintiff's ability to satisfy the McDonnell Douglas test is relevant to whether he has advanced a proper equal protection claim under section 1983. See Lowe, 775 F.2d at 1011. As with his section 1981 claim, Garza should have the opportunity to file an amended complaint to cure his pleading deficiencies. See subsection B, supra.³ 

V

Garza argues that the district court improperly denied his application for a preliminary injunction. The threshold question is whether Garza filed a proper notice of appeal of the district court's order denying his application for a preliminary injunction. Garza's notice states that he appeals "from the order of dismissal with prejudice entered in this action on the 30th day of March, 1988." The district court entered two orders on March 30, 1988: "Order denying application for temporary restraining order & preliminary injunction," and "Order granting motion to dismiss and judgment." While a fair reading of the notice of appeal may indicate that it only relates to the latter order of dismissal, this circuit provides a forgiving standard.

In Lynn v. Sheet Metal Workers' Intern. Ass'n, 804 F.2d 1472, 1481 (9th Cir. 1986), aff'd, 109 S. Ct. 639 (1989), the court stated that " [w]hile some circuits construe [Fed. R. Civ. P. ] 3(c) strictly ... this circuit has held that 'a mistake in designating the judgment appealed from should not bar appeal as long as the intent to appeal a specific judgment can be fairly inferred and the appellee is not prejudiced by the mistake.' " But it is clear that the Lynn court gave little weight to the "intent" element, because the test promulgated by the court is merely "whether the affected party had notice of the issue on appeal; and, second, whether the affected party had an opportunity to fully brief the issue." Id.

In Lynn, the district court had entered summary judgment in favor of two defendants, the local union and the international. The notice of appeal named both defendants, but it "cites only the judgment in favor of the International, and not the judgment in favor of the Local, as the subject of this appeal." Id. Nonetheless, the court found it sufficient that appellant served the local with a copy of its appellate brief which contained claims against the local, and that the local filed a joint response brief with the international.

The Lynn decision sets forth a test which minimizes the intent element. See United States v. One 1977 Mercedes Benz, 708 F.2d 444, 451 (9th Cir. 1983), cert. denied, 464 U.S. 1071 (1984). The Lynn decision obligates this court to assume jurisdiction over Garza's challenge to the denial of his application for a preliminary injunction.

Nonetheless, the district court did not err by denying a preliminary injunction. Garza's pleadings were defective and the thrust of his case is based upon discriminatory impact while sections 1981 and 1983 require something more. His Title VII claim was jurisdictionally defective because he did not bring his claims of race and color discrimination before the EEOC. Under these circumstances the order denying a preliminary injunction was not an abuse of discretion.

REVERSED and REMANDED.