Unpublished Disposition, 927 F.2d 612 (9th Cir. 1991)

No. 88-6451.

United States Court of Appeals, Ninth Circuit.

Appeal from the United States District Court for the Central District of California, No. CV-86-7562-FFF; Ferdinand F. Fernandez, District Judge, Presiding.

C.D. Cal.

REVERSED AS TO ROCK.

Before WALLACE, Chief Judge, POOLE, Circuit Judge, and BREWSTER,^*  District Judge.

MEMORANDUM

Vons, Ollis, and Rock appealed from a jury verdict and district court judgment imposing liability. The appeal has been dismissed as to Vons and Ollis pursuant to stipulation. What remains is the appeal of Rock. The district court had jurisdiction pursuant to 28 U.S.C. § 1343(a) (3) and 42 U.S.C. § 2000e-5(f) (3). We have jurisdiction over this timely appeal pursuant to 28 U.S.C. § 1291. We reverse.

The jury found Vons, Ollis, and Rock liable for racial harassment in the context of an employment relationship. See 42 U.S.C. § 1981. Additionally, the district court found Vons liable for a violation of Title VII of the Civil Rights Act of 1964. See 42 U.S.C. § 2000e. Finally, the district court held Vons, Rock, and Ollis liable for Young's costs and attorneys' fees. See 42 U.S.C. § 2000e-5(k). We consider this judgment only as it relates to Rock. The questions presented are solely legal, and thus subject to de novo review. See United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, 469 U.S. 824 (1984).

Section 1981 states in part that " [a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts." 42 U.S.C. § 1981. After trial but while this appeal was pending, the Supreme Court decided Patterson v. McLean Credit Union, 109 S. Ct. 2363 (1989) (Patterson) . The Court in Patterson construed section 1981 narrowly in accordance with its language, such that its protection " 'extends only to the formation of a contract, but not to problems that may arise later from the conditions of continuing employment.' Postformation conduct, such as breach of contract, or imposition of discriminatory conditions, does not implicate the right to make a contract and is thus not protected by the statute." Overby v. Chevron USA, Inc., 884 F.2d 470, 472 (9th Cir. 1989), quoting Patterson, 109 S. Ct. at 2372 (emphasis added in Overby) . Rock's harassment of Young occurred postformation. Thus, after Patterson, Rock is not liable under section 1981.

Young contends that Patterson ought not apply retroactively. But in Courtney v. Canyon Television & Appliance Rental, Inc., 899 F.2d 845, 849 (9th Cir. 1990), we held that Patterson should apply retroactively to "cases pending in this circuit at the time Patterson was decided." We will not, as Young urges, adopt an exception to Courtney here.

Young also contends that Rock waived his right to raise the issue on appeal by acceding to both pretrial orders and jury instructions consistent with the law before Patterson. We do not agree. The rules of waiver available in other contexts do not prohibit us from considering the effect of an intervening decision that interprets a substantive statute to preclude a cause of action. The issue was not waived.

Finally, Young contends that, regardless of our determination of the section 1981 issue, Rock remains liable for attorneys' fees pursuant to the district court's Title VII judgment. We see no way in which a party wholly absolved of substantive liability might be liable for Title VII attorneys' fees, and Young does not suggest one. Therefore, we also reverse the district court order inasmuch as it requires Rock to pay all or part of Young's attorneys' fees.

REVERSED AS TO ROCK.