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Madhat Zubi v. AT&T Corp.

Date: July 18, 2000
Location: Court of Appeals, Third Circuit


MADHAT ZUBI
Appellant

v.

AT&T CORP.

On Appeal From the United States District Court
For the District of New Jersey
(D.C. Civil Action No. 98-cv-03424)
District Judge: Honorable Katharine S. Hayden

Argued November 17, 1999

BEFORE: ALITO and STAPLETON, Circuit Judges,
and FEIKENS,* District Judge

(Opinion Filed: July 18, 2000)

ALITO, Circuit Judge, dissenting:

I disagree with the majority's interpretation of 28 U.S.C. S 1658 and with the result that it reaches in the case before us. The majority does not heed the established meaning of the terms employed in S 1658. Instead, the majority relies on a snippet of legislative history and its own opinion regarding the rule that "seems . . . to promise the least uncertainty of application." Maj. Op. at p. 10. This is not the method that we are supposed to use in interpreting statutes, and it is doubtful that the majority's interpretation will provide the certainty of application that the majority seeks. Accordingly, I respectfully dissent.

I.

Before December 1, 1990, claims under 42 U.S.C.S 1981 were subject to the most analogous state statute of limitations. See Wilson v. Garcia, 471 U.S. 261, 279 (1985). On December 1, 1990, however, the Judicial Improvement Act of 1990, Pub. L. No. 101-650, 104 Stat. 5114, became law. Section 313(a) of this Act, which is codified at 28 U.S.C. S 1658, created a new, four-year statute of limitations for "an action arising under an Act of Congress enacted after the date of enactment of this section [December 1, 1990]." Our task here is to construe this language.

As the Supreme Court and our Court have repeated many times, in interpreting a statute, "[w]e begin by looking to the language of the Act. . . . When we find the terms of a statute unambiguous, judicial inquiry is complete, except in rare and exceptional circumstances." Rubin v. United States, 449 U.S. 424, 429-30 (1981) (internal quotations omitted). See also, e.g., Estate of Cowart v. Niklos Drilling Co., 505 U.S. 469, 475 (1992); Demarest v. Manspeaker, 498 U.S. 184, 190 (1991); Bread Political Action Committee v. FEC, 455 U.S. 577, 580 (1982); In re Unisys Sav. Plan Litig., 74 F.3d 420, 444 (3d Cir. 1996) ("As with any inquiry of statutory construction, we start with the text of the statute," and thus "where Congress' will has been expressed in reasonably plain terms, that language must ordinarily be regarded as conclusive.")

If a statute uses legal terms of art, we must "presume Congress intended to adopt the term's ordinary legal meaning." Omnipoint Corp. v. Zoning Hearing Bd., 181 F.3d 403, 407 (3d Cir. 1999) (citing McDermitt Intern., Inc. v. Wilander, 498 U.S. 337, 342 (1991)). See also Morissette v. United States, 342 U.S. 246, 263 (1952); Felix Frankfurter, Some Reflections on the Reading of Statutes, 47 Colum. L. Rev. 527, 537 (1947) ("[I]f a word is obviously transported from another legal source, whether the common law or other legislation, it brings its soil with it.").

In order to understand S 1658, we must interpret three terms-"action," "Act of Congress," and "arising under"- each of which has a commonly understood legal meaning. The term "action" refers to a civil lawsuit. See Fed. R. Civ.Proc. 3; Black's Law Dictionary 28-29 (7th ed. 1999).
The term "Act of Congress" means a law enacted in one of the ways prescribed by Article I, S 7 of the Constitution. Acts of Congress are published in the United States Statutes at Large, which constitute "legal evidence" of what the law provides. 1 U.S.C. S 112.

The phrase "arising under" is of course familiar in the field of federal jurisdiction. Article III, S 2 of the Constitution provides that "[t]he judicial Power shall extend to all Cases, in Law and Equity, arising under the Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority." In Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738 (1824), the Supreme Court, speaking through Chief Justice Marshall, interpreted this provision broadly, stating that a claim falls within the federal judicial power if federal law "forms an ingredient of the original cause." Id. at 823. See also Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 27-28 (1982); Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 491-92 (1983); Gully v. First National Bank in Meridian, 299 U.S. 109, 112 (1936).
Congress employed the phrase "arising under" in 1875 when it enacted the predecessor of current 28 U.S.C.S 1331,8 which gives the district courts subject matter jurisdiction over causes of action "arising under the Constitution, laws, or treaties of the United States." The Supreme Court has "long construed the statutory grant of federal question jurisdiction as conferring a more limited power" than Article III, S 2. Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 807 (1986). With respect to the statutory provision, the Court has observed:

The most familiar definition of the statutory"arising under" limitation is Justice Holmes' statement,"A suit arises under the law that creates the cause of action." American Well Works Co. v. Layne & Bowler Co. , 241 U.S. 257, 260 (1916). However, it is well settled that Justice Holmes' test is more useful for describing the vast majority of cases that come within the district courts' original jurisdiction than it is for describing which cases are beyond district court jurisdiction. We have often held that a case "arose under" federal law where the vindication of a right under state law necessarily turned on some construction of federal law, see, e.g., Smith v. Kansas City Title & Trust Co., 255 U.S. 180 (1921); Hopkins v. Walker, 244 U.S. 486 (1917), and even the most ardent proponent of the Holmes test has admitted that it has been rejected as an exclusionary principle, see Flournoy v. Wiener, 321 U.S. 253, 270-272 (1944) (Frankfurter, J., dissenting). See also T.B. Harms Co. v. Eliscu, 339 F.2d 823, 827 (CA2 1964) (Friendly, J.). Leading commentators have suggested that for purposes of S 1331 an action "arises under" federal law "if in order for the plaintiff to secure the relief sought he will be obliged to establish both the correctness and the applicability to his case of a proposition of federal law." P. Bator, P. Mishkin, D. Shapiro & H. Wechsler, Hart & Wechsler's The Federal Courts and the Federal System 889 (2d ed. 1973) . . . ; cf. T.B. Harms Co., supra ("a case may `arise under' a law of the United States if the complaint discloses a need for determining the meaning or application of such a law"). Franchise Tax Bd., 463 U.S. at 8-9.

In interpreting the meaning of the phrase "arising under" in 28 U.S.C. S 1658, we must presume that Congress had in mind the well known interpretations of the same phrase in Article III, S 2 of the Constitution and/or the federal question statute.

II.

With these interpretations of the relevant statutory terms in mind, I turn to the particular claim at issue in this case. In September 1995, Madhat Zubi was terminated from his job at AT&T. On July 30, 1998, he commenced an action in federal court in New Jersey, claiming that he was discharged because of his race, in violation of 42 U.S.C. S 1981. Title 42 United States Code S1981, in its current form, provides as follows:
(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, to sue, be parties, give evidence, 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 to 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.

This provision is not itself an Act of Congress; rather, it is a codification of two prior Acts.9 Subsection (a) of S 1981 is a codification of Section 1977 of the Revised Statutes of 1874.10 Until 1989, it was unsettled whether the phrase "make and enforce contracts" in this provision reached the discriminatory termination of a contractual relationship, but in Patterson v. McLean Credit Union, 491 U.S. 164 (1989), the Supreme Court held that this language did not apply to conduct occurring after the formation of a contract. "[T]he Patterson opinionfinally decided what S 1981 had always meant." Rivers v. Roadway Express, 511 U.S. 288, 313 n.12 (1994).

In 1991, shortly after enacting 28 U.S.C. S 1658, Congress broadened the scope of this provision. Section 101 of the Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071, amended Section 1977 of the Revised Statutes and defined the phrase "make and enforce contracts" to include the "termination of contracts and the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship." This new provision is codified as 42 U.S.C. S 1981(b). Thus, as a result of the 1991 Act, a plaintiff may now sue under S 1981 for discriminatory termination of employment-and that is precisely what Zubi did here.

Zubi filed his complaint more than two years, but less than four years, after his claim accrued. If his complaint is governed by S 1658, it was filed within the statute of limitations. On the other hand, if it is not governed by S 1658, it is subject to the most analogous New Jersey statute of limitations, which the District Court found to be New Jersey's two-year statute for personal injury actions. See Genty v. Resolution Trust Corp., 937 F.2d 899, 919 (3d Cir. 1991)(two-year statute applies to S 1983 actions in New Jersey). In my view, Zubi's claim arose under the Civil Rights Act of 1991, as well as under Section 1977 of the Revised Statutes, and his complaint was thus filed in time.

It is beyond dispute that the Civil Rights Act of 1991 qualifies as an "Act of Congress" in the sense in which that term is invariably used. We would have to interpret the term "Act of Congress" in S 1658 in an entirely idiosyncratic way in order to reach a contrary conclusion. It is also clear that Zubi's claim of discriminatory termination arose under Section 101 of that Act under any of the accepted interpretations of the phrase "arising under." As noted, Section 101 of the Civil Rights Act of 1991 substantially expanded the scope of S 1981 by prospectively defining the phrase "make and enforce contracts" to include the termination of contracts. This new definition was indisputably an "ingredient" of Zubi's claim. American Well Works Co., 241 U.S. at 260. Indeed, it was an indispensable ingredient. For this same reason, in any realistic sense, Section 101 of the 1991 Act "create[d] the cause of action" for racially discriminatory termination of employment that Zubi asserted. American Well Works Co., 241 U.S. at 260. Furthermore, "in order for [Zubi] to secure the relief sought he will be obliged to establish both the correctness and the applicability to his case of [the proposition, established by the 1991 Act, that a plaintiff may sue under S 1981 for racially discriminatory termination of employment]." P. Bator, P. Mishkin, D. Shapiro & H. Wechsler, Hart & Wechsler's The Federal Courts and the Federal System 889 (2d ed. 1973). Consequently, I would hold that Zubi's claim is governed by the four-year statute of 28 U.S.C.S 1658 and was not properly dismissed.

I now turn to the majority's interpretation of the statute.

The majority pays little attention to the language of S 1658. Instead, after noting that district courts have adopted a variety of interpretations of this provision, the majority quickly concludes that the statute is ambiguous. See Maj. Op. at p. 4-6. The majority then lists three "distinct approaches" contained in these district court decisions, Maj. Op. at p. 4-5, and selects from among them based on what it finds to be "the rationale behind S 1658," which it identifies, based on a snippet of legislative history, to be the avoidance of disruptions of " `the settled expectations of a great many parties.' " Maj. Op. at p. 7 (quoting H.R. Rep.

No. 101-734, S 111, at 24 (1990)), reprinted in 1990 U.S.C.C.A.N. at 6870. This analysis leads the majority to the conclusion that it is "only when Congress establishes a new cause of action without reference to preexisting law that S 1658 applies." Maj. Op. at p. 10. According to the majority, an Act of Congress that amends a prior Act (generally) does not qualify as an Act of Congress within the meaning of S 1658, see Maj. Op. at footnote 5, p. 6.11

This interpretation cannot be squared with the language of S 1658, which, as noted, states that a four-year statute of limitations applies to "an action arising under an Act of Congress enacted after [December 1, 1990]." Under the majority's reading, however, the four-year statute is restricted to actions arising under some Acts of Congress enacted after December 1, 1990 -- namely those Acts of Congress that "establish[ ] a new cause of action without reference to preexisting law." According to the majority, an Act of Congress that establishes a new cause of action but refers to "preexisting law" in doing so does not qualify as "an Act of Congress" within the meaning of S1658. This interpretation of the term "Act of Congress" is not consistent with any known usage of the term.

In defense of its interpretation, the majority cites the previously mentioned statement in the legislative history to the effect that Congress did not want to disturb"the settled expectations of a great many parties." This very general sentiment, however, does not support the interpretation of S 1658 that the majority adopts-as the current case illustrates. Before the enactment of the Civil Rights Act of 1991, no employer in New Jersey could have had a settled expectation that an action for discriminatory discharge brought under S1981 would be subject to the state's two year statute of limitations for personal injury actions, since prior to that time, S 1981 did not authorize such an action at all. It was not until the 1991 Act that such an action was possible, and by that point S 1658 had been enacted. In light of the clarity of the language of S 1658, when interpreted in accordance with standard canons of construction, it is not apparent that resort to the legislative history is appropriate. See Darby v. Cisneros , 509 U.S. 137, 147, (1993) ("Recourse to the legislative history. . . is unnecessary in light of the plain meaning of the statutory text."). But even if the legislative history is considered, the single, general statement cited by the majority cannot bear the weight of the majority's interpretation.

The principal basis for that interpretation, it appears, is the majority's belief that its interpretation "promise[s] the least uncertainty of application" and is "the closest thing to a bright line." Maj. Op. at p. 10. In interpreting a statute, however, we are not free to disregard Congress's approach in favor of one that seems better to us. "It is by now axiomatic that `the judiciary may not sit as a superlegislature to judge the wisdom or desirability of legislative policy determinations made in areas that neither affect fundamental rights nor proceed along suspect lines.' Absent ambiguity in the statute, we cannot allow policy to guide our analysis." Sea-Land Serv., Inc. v. Barry, 41 F.3d 903, 909 (3d Cir. 1994) (internal citations omitted) (quoting City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976)); see also, Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 748 (1975). In framing S 1658, Congress plainly passed up alternative, simpler approaches. To take just one example that is much simpler than either S 1658 itself or the majority's rule, Congress could have made the new,four-year statute applicable to any claim accruing after December 1, 1990. Such an approach definitely would have provided a very "bright line rule," but Congress obviously thought that interests other than clarity and ease of application also had to be served to at least some degree.

Finally, I note that the majority's interpretation may not provide the clarity and certainty of application that the majority seeks. Under the majority's approach, most Acts of Congress that amend prior Acts of Congress do not qualify as Acts of Congress under S 1658. In footnote 5, however, the majority says that not all enactments styled as amendments are real amendments, and thus some amendments may count as Acts of Congress under S 1658. See Maj. Op., footnote 5. The majority may regard this as "the closest thing to a bright line rule." I do not.

I would hold that Zubi's claim is governed by the four-year statute of S 1658, and I would therefore reverse and remand.

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