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Hill v. Amoco Oil Co – Other Consumer Issues

Hill v. Amoco Oil Co., 97 C 7501

This is a proposed class action alleging that Amoco stations required African-American but not Caucasian customers to prepay for gas. Mr. Hill videotaped a number of transactions at Amoco stations before filing the lawsuit. The complaint alleges violation of the Civil Rights Act, 42 U.S.C. 1981-1982. The court rejected various technical arguments raised by Amoco, which now has to defend and justify its practice.
Edelman, Combs & Latturner represent the plaintiff.


Plaintiff Daron Hill brought this class action against Amoco for race discrimination. After previous motions to dismiss, only Count I of plaintiff s complaint remains. Count I asserts violations of Section 1981, 42 U.S.C. 1981, and Section 1982, 42 U.S.C. 1982. Plaintiff, an African-American, alleges that when he purchased gas from Amoco gas stations, he was required to prepay for his gas, while Caucasian customers were not. He asserts that this discriminatory treatment was pursuant to Amoco’s discriminatory policy and practice. Defendant moves to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant asserts that plaintiff fails to state a claim because even if Amoco sold gas to blacks on terms and conditions different from those imposed on whites, this conduct is not actionable under Section 1981 or Section 1982. The court disagrees.


Hill claims that Amoco’s conduct violates Section 1981. Section 1981 provides that “all persons … shall have the same right … to make and enforce contracts … as is enjoyed by white citizens….” 42 U.S.C. 1981(a). To sustain a claim under Section 1981 the plaintiff (1) must be a member of a racial minority; (2) must show that the defendant had an intent to discriminate on the basis of race; and (3) must show that defendant’s discrimination concerned an activity enumerated in the statute, i.e., making and enforcing contracts. Morris v. Office Max, Inc., 89 F.3d 411, 413 (7th Cir.1996). The term “make and enforce contracts” includes “the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.” 42 U.S.C. 1981
(b); see Rivers v. Roadway Express, Inc., 511 U.S. 298 (1994) (Section 1981 covers “all phases and incidents of the contractual relationship ……”)

Relying on Morris, Amoco asserts that since Hill successfully purchased gas, there was no actual loss of a contractual interest and, therefore, he fails to state a claim. In Morris, two African-American patrons were shopping at Office Max. While they were at the store, an employee called the police because she believed the patrons were crime suspects. After one of the patrons made a purchase, the police arrived and questioned the two patrons. The plaintiffs sued under Section 1981 claiming that the defendant had interfered with their right to make and enforce a contract. The Seventh Circuit affirmed the grant of summary judgment because the plaintiffs could not show that they were deprived of any enumerated rights in Section 1981. “They were denied neither admittance or service, nor were they asked to leave the store.” Morris, 89 F.3d at 414 (citations omitted). The court also rejected the plaintiffs’ argument that defendant’s conduct interfered with their prospective contractual relations because the plaintiffs did not allege that they were actually about to enter into another contractual relationship. There must be an actual loss of a contractual interest Id at 414-15.
Morris is distinguishable from the case at bar because in Morris the plaintiffs were allowed to carry out their contract under the same terms and conditions as white patrons. This is not the case here. Hill alleges that he was subjected to different terms and conditions of the contract to purchase gas than white customers. Hill, unlike the white patrons, was required to prepay. Accordingly, he has adequately stated a claim under Section 1981.


Based on the same factual allegations, Hill asserts that Amoco violated Section 1982. Section 1982 provides:
All citizens of the United States shall have the same right. . . as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.
The purpose of the section is to “assure that a dollar in the hands of a Negro will purchase the same thing as a dollar in the hands of a white man.” Clark v. Universal Builders, Inc., 501 F.2d 324, 329 (7th Cir. 1973) (citing Jones v. Mayer Co., 392 U.S. 409, 443 (1968). “[T]he [Supreme] Court has broadly construed [Section 1982’s] language to protect not merely the enforceability of property interests acquired by black citizens but also their right to acquire and use property on an equal basis with white citizens.” City of Memphis v. N.T. Greene, 451 U.S. 100,120 (1981).

Despite the Supreme Court’s broad interpretation of Section 1982, Amoco seeks to give the statute a narrow reading. Amoco asserts that Section 1982 does not extend to the “terms and conditions of a personal property transaction. Amoco correctly asserts that Section 1982 does not include the “terms and conditions” language found in Section 1981. However, it does not necessarily follow that the differential terms and conditions of a property transaction are not covered by the Act. In Clark, the Seventh Circuit held that Section 1982 imposed liability when the plaintiff showed that members of one race were treated differently from members of another race in the terms and conditions imposed in connection with the purchase of real property. 501 F.2d at 330, 334 (citation omitted). See also Lewis v. Northern Trust Co., 91 C 2923, 1992 WL 211069, *4 (N.D. 111. Aug. 25, 1992). Thus, differential terms and conditions of a transaction are potentially actionable as an impairment of a property right. Clark, supra. This does not mean that the terms and conditions must be the same for all. “Reasonable differentials due to a myriad of permissible factors can be expected and are acceptable.” Id at 333.

Hill alleges that he was subjected to different terms and conditions than similarly situated Caucasians, because he was required to prepay for gas if he wanted to purchase gas at an Amoco station. Thus, he properly alleges impairment of his equal right to purchase personal property. See Clark; supra. Whether Amoco has a reasonable, non-discriminatory explanation for the alleged differential treatment remains to be seen and it is not an issue properly addressed here. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973) (once plaintiff establishes prima facie case of race discrimination, defendant must articulate some legitimate, nondiscriminatory reason for its conduct). Defendant’s motion to dismiss Count I is denied.


United States District Judge
DATED: July 20, 1999