Appeal from the United States District Court for the Eastern District of Wisconsin, No. 83-C-810, John W. Reynolds, Chief Judge.
Before POSNER and RIPPLE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.
RIPPLE, Circuit Judge. In his amended complaint, Mr. Hussein alleged that he is an Egyptian-born, naturalized citizen and that his employer, Oshkosh Motor Truck Company (Oshkosh Truck), discriminated against him on the basis of his race. He sought relief under both Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000(e) et seq. (Title VII), and section 1981 of the Civil Rights Act of 1866, 42 U.S.C. § 1981 (section 1981). Holding that section 1981 protects only American Negroes, the district court granted the defendant's motion to dismiss that claim. R.30 at 1-2. After dismissing the section 1981 claim, the district court proceeded with a bench trial on the Title VII claim. The court made findings of fact and entered judgment in favor of the defendant.
We hold that the district court erroneously dismissed the section 1981 claim because the protection of section 1981 is not limited to American Negroes. Nor do we believe that principles of collateral estoppel should bar further litigation of the section 1981 claim. The plaintiff was required to bring both the section 1981 count and the Title VII count in the same complaint. Had the district court not committed legal error in dismissing the section 1981 claim, Mr. Hussein would have been entitled to a jury's resolution of those factual issues underlying his section 1981 claim and the district court would have been bound by those findings in deciding whether to grant the equitable relief requested in the Title VII count.
Accordingly, we reverse the district court's dismissal of the section 1981 claim. The case is remanded to the district court for proceedings consistent with this opinion.
In his original complaint, filed on June 24, 1983, Mr. Hussein alleged that he is an Egyptian male and that Oshkosh Truck had discriminated against him on the basis of his national origin. Specifically, the complaint alleged that, on numerous occasions, Oshkosh Truck employees referred to him as a "sand nigger," "camel jockey" and a "non-American." R.1 at 3. Mr. Hussein sought not only the equitable relief available under Title VII and section 1981 but also compensatory and punitive damages recoverable only under section 1981.*fn1 He demanded a jury trial on "any and all issues herein triable by right of jury." R.1 at 5.
Holding that the complaint only alleged discrimination based on national origin, and that section 1981 does not provide a cause of action for national origin discrimination, the district court dismissed the section 1981 claim. R.25 The district court refused to consider Mr. Hussein's arguments that the complaint fairly stated a cause of action for racial discrimination because, in the court's view, section 1981 protects only American Negroes and Mr. Hussein had not alleged that he was an American Negro. Id. at 2. Two days later, during a final pre-trial conference, the district court granted Mr. Hussein's request for leave to file an amended complaint. Although there is no transcript of the pre-trial conference, it appears that the court imposed no time limitation on the filing of the amended complaint.
In his amended complaint, filed on January 3, 1985, Mr. Hussein alleged that he is an Egyptian-born, naturalized citizen, "not a member of the white or caucasion [sic] race, but is rather a member of the Negro or Brown race," and that Oshkosh Truck discriminated against him because of his race and national origin. R.28 at 2-3. Once again, he sought relief under both Title VII and section 1981. Stating that "it was not contemplated that plaintiff would transmute his national origin discrimination claim to a race discrimination claim, thereby affording him an opportunity to seek the forms of relief available under § 1981 but not § 2000(e)," R.30 at 1, the district court again dismissed the section 1981 claim. The district court noted that the plaintiff:
alleged that he was an Egyptian by birth. The § 1981 claim in the original complaint was dismissed because the Civil Rights Act of 1866 affords protection only to American Negroes. The amended complaint contains the allegation that plaintiff is a member of the Negro race. In view of the entire record and the proceedings to date, the amendment is frivolous. The amendment will not be allowed, and the § 1981 claim is dismissed.
Id. at 2. By dismissing the section 1981 count, the district court removed from the litigation the claim that entitled Mr. Hussein to a jury trial.
Once again, before the trial began on the remaining Title VII claim, Mr. Hussein asked the district court to reconsider its decision to dismiss the section 1981 count. Referring to Mr. Hussein's 1984 deposition testimony,*fn2 the plaintiff's counsel submitted that, regardless of the label used in the original complaint, from the very beginning of the lawsuit, Mr. Hussein had claimed that Oshkosh Truck had discriminated against him because of his race. Mr. Hussein argued that the amended complaint simply conformed the allegations to the evidence uncovered by discovery. In response to the request to reconsider, the court reiterated its position:
Well, I would like to state to start out with a trial judge does not have -- is not in a position to write dissents to his own decisions. I suppose I could. If someone asked me whether 1981 should from a legislative point of view cover race, all races, Chinese, white, whatever you want to call it, Arabic or anything else, I might well vote as a legislator that it should. I think 1981 has been construed, and I so ruled, that it applies to protect the American Negro. It gives them certain rights.
I don't ask people to agree. I think that's the law. And if, Mr. Williamson, you're offended that the characterization was that the amendment on the eve of the trial was frivolous, I am willing to withdraw that comment. But I think the decision has to stand. Whether or not that is the best law that should be devised is another question, for appellate courts or for the legislature. But I think that's the law, and we will proceed with the Court trial here today.
I may be wrong in my decision. This Trial Court may be in error. I have to ask you to accept it, even though you don't agree with it. But I have been through this many times, what 1981 applies to, and I think that's the law. That's the way it has been construed by the Courts in the history of this country. Whether it should be expanded, if I was in the Supreme Court I might say maybe we should change the law. I don't think I have that discretion. So let's go forward under the statute that you're operating under.
Tr. at 9-10. The court proceeded with the bench trial on the Title VII claim and returned a verdict in favor of the defendant. R.42 at 1.
On appeal, Mr. Hussein argues that the district court erred when it dismissed his section 1981 claim. He also argues that this error deprived him of his right to have a jury resolve those factual issues that are common to both the Title VII and the section 1981 claims. On the other hand, Oshkosh Truck argues that the district court did not abuse its discretion by refusing to permit the plaintiff to amend his complaint on the eve of trial. The defendant also urges this court to apply the doctrines of res judicata and collateral estoppel to bar any further litigation of the section 1981 claim. Our task is to determine whether the district court erroneously ...