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Even if state law would not recognize any contract in an at-will employee’s relationship with his employer, such a worker may nonetheless sue for race discrimination under � 1981 because the relationship is “sufficiently contractual in nature” to meet the federal law’s standing requirements, U.S. District Judge Stewart Dalzell has ruled. “We would subvert Congress’s aims in enacting and amending Section 1981 if we insisted that the scope of employee’s civil rights depends on the vagaries of state employment law,” Dalzell, of the Eastern District of Pennsylvania, wrote in McClease v. R.R. Donnelley & Sons Inc. Since state law does not control the question, Dalzell said, the scope of � 1981 turns solely on whether federal law would hold that the relationship between an employer and an at-will employee is contractual. On that point, Dalzell found that Congress “casually but clearly assumed that all employment relations are contractual in nature.” Significantly, Dalzell also green-lighted Anthony McClease’s state law claim of intentional infliction of emotional distress, saying he should be given the opportunity to develop a record to show that the racial harassment and epithets he suffered amounted to “extreme and outrageous conduct.” According to court papers, McClease was hired as a temporary worker in a parcel distribution facility in Levittown, Pa., that was owned by Donnelley and operated by Genco Corp. The suit says Genco had contracted with Source One, a temporary employment agency, to provide workers for the facility. McClease was one of those workers. Within a week of his hiring, McClease claims, Genco hired a racist and put him in charge. The suit alleges that Mike Michniewski began to subject minority employees to an unceasing stream of racial epithets and openly expressed his desire to eliminate blacks from the facility. According to the complaint, Michniewski incessantly referred to black employees as “f—ing monkeys” and called them a “basketball team.” At one point, the suit says, Michniewski stated that he wanted to “get a bunch of Orientals. I know they stink, but they piss on themselves instead of going to the bathroom, just to get the job done.” After Asian workers were hired, Michniewski allegedly told McClease: “There are so many gooks in here we could make a war movie.” The suit alleges that another manager also made racist comments and colluded with Michniewski in eliminating black employees. McClease was ultimately fired from his post in April 2001. In a motion to dismiss, defense lawyers argued that McClease’s claim under � 1981 was fatally flawed since he was an at-will employee and therefore could not meet the law’s requirement of showing a contract. Dalzell found that � 1981 does not define the term “contract” and that state courts have adopted a variety of views on whether employment at will is contractual in nature. “While some state courts view employment at-will as a contractual relationship terminable by either party, other state courts draw an implicit distinction between contractual and at-will employment,” Dalzell wrote. Although the 3rd U.S. Circuit Court of Appeals has never addressed the issue, Dalzell found that five circuits have tackled the question and that all five — despite taking different routes — concluded that at-will employment constitutes a “contract” within the meaning of � 1981. Dalzell predicted that the 3rd Circuit would follow suit � 1981′s scope “should not be dependent on state law” and because Congress intended � 1981 to cover employment at will. “The legislative history of this statute points away from deference to state law,” Dalzell wrote. “Congress initially enacted Section 1981 to protect former slaves from discriminatory state laws, and Congress amended Section 1981 in 1991 with the awareness that the statute had emerged in the 1970s as an important source of civil rights protection in employment.” Having concluded that the federal courts need not defer to state law in defining the term “contract,” Dalzell turned to the purely legal question of whether, as a matter of statutory interpretation, employment at will is “sufficiently contractual to come within the scope of this statute.” Dalzell found that the best source for an answer to that question was Congress itself. “Rather than pick and choose among [treatises, Restatements of Law, and common law decisions], we turn to the legislative history of Section 1981 to determine what meanings Congress attached to the term ‘contract’ when it amended the statute in 1991,” Dalzell wrote. Dalzell concluded that Congress intended the term “contract” to encompass at-will employment. In a House committee report, Dalzell said, the lawmakers declared that � 1981 “would restore protection under federal law against harassment and other forms of intentional discrimination in the terms and conditions of employment for the more than 11 million employees in firms that are not covered by Title VII.” “This statement,” Dalzell said, “draws no distinction between workers who are employees at-will and those with employment contracts.” Dalzell also rejected a defense argument that McClease failed to allege a valid claim of intentional infliction of emotional distress since he didn’t allege any physical harm. The defense lawyers, Dalzell said, “seem to have overlooked Pennsylvania cases that have held that physical harm includes ‘ongoing mental … and emotional harm.’” McClease’s case met the test, Dalzell said, since he claims he has suffered “serious emotional harm, psychological distress and damage.” Likewise, Dalzell rejected the argument that racial harassment and epithets cannot constitute “extreme and outrageous conduct.” “We hesitate to predict that the Pennsylvania Supreme Court would hold that racial epithets and harassment can never be the basis of an IIED claim under Pennsylvania law. The Pennsylvania Supreme Court has never examined this question, and in fact only one published lower court decision has considered whether racial slurs constitute extreme and outrageous conduct,” Dalzell wrote. “Before we can determine whether the defendants’ alleged conduct is extreme and outrageous, McClease should have the chance to develop the factual record of his case,” Dalzell wrote.

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