Richard A. Samp retired on December 31, 2019 after a three-decade career as Washington Legal Foundation’s Chief Counsel. He was counsel of record on WLF’s amicus brief in Comcast Corp. v. NAAAOM.

The U.S. Supreme Court this week unanimously slapped down the Ninth Circuit’s effort to loosen the burden-of-proof standard that plaintiffs’ lawyers must meet in certain discrimination cases. The Court held in Comcast Corp. v. NAAAOM that to prevail on a claim under the Civil Rights Act of 1866 alleging race-based refusal to enter into a contract, a plaintiff must demonstrate that racial discrimination was the but-for cause of the refusal. The Court noted that “but-for” has been the traditional causation standard for tort claims and that there is no evidence Congress intended a different standard for this civil rights statute.

The decision was consistent with those of every other appeals court to address the issue and was a victory for the Washington Legal Foundation, which filed an amicus curiae brief urging reversal of the Ninth Circuit’s decision. But Comcast and other businesses remain vulnerable to the massive costs of defending against this and similarly insubstantial tort claims. The Court remanded the case to the Ninth Circuit for reconsideration under the proper causation standard. If history is any guide, the Ninth Circuit may well conclude on remand that the plaintiffs’ complaint is adequate to survive a motion to dismiss even when considered under the but-for causation standard—thereby exposing Comcast to intrusive and costly discovery requests. It is time for the Ninth Circuit and other lower federal courts to take seriously their obligation to reduce unwarranted litigation costs. Courts must weed out insubstantial claims at the pleadings stage and dismissing complaints that fail to allege facts demonstrating the plaintiff’s right to recover.

A Cable-TV Contract Dispute

Comcast arises from a contract dispute between comedian-turned-Hollywood-mogul Byron Allen and Comcast Corp. Allen’s media empire includes ownership of ESN, which operates seven cable networks that are available in a limited number of U.S. media markets. Over the past decade, Comcast has declined ESN’s requests that Comcast carry the networks, citing low consumer demand for ESN’s programming. Other cable operators declined similar requests from ESN for similar reasons.

In response to the refusals to carry its programming, ESN sued Comcast as well as Charter Communications, Time Warner Cable, DirecTV, and AT&T. The suits alleged that the defendants violated the Civil Rights Act of 1866 (known as “Section 1981”), which prohibits racial discrimination in making and enforcing contracts. Several of the defendants settled the claims by agreeing to carry ESN programming, but Comcast chose to fight.

There is no direct evidence of racial discrimination here. But Allen alleges that Comcast offered carriage contracts to white-owned networks that had fewer viewers than ESN’s networks; he asserts that racial discrimination can be inferred from that allegedly disparate treatment. Comcast denies that it treated white-owned businesses more favorably and notes that its cable offerings include many minority-owned networks.

The Ninth Circuit’s Lenient Causation Standard

The Ninth Circuit held that Allen’s disparate-treatment allegations were sufficient to withstand Comcast’s motion to dismiss. It held that a plaintiff could establish a Section 1981 claim by alleging (and eventually proving at trial) that race was merely “a factor” in a contracting decision. The plaintiff need not demonstrate but-for causation—i.e., it need not show that the defendant would likely have entered into a contract had the plaintiff been white.  Based on its lenient “a factor” standard, the Ninth Circuit overturned the decision of the district court, which on three occasions had dismissed Allen’s complaint as inadequate to state a cause of action.

The Supreme Court Unanimously Reverses

In an opinion authored by Justice Neil Gorsuch and issued March 23, the Supreme Court unanimously rejected the Ninth Circuit’s lenient causation standard.  It noted the “usual rule” under the common law that tort plaintiffs must prove but-for causation, and held that causation standard applicable throughout a lawsuit—i.e., at the pleadings stage as well as at trial. The Court established a “default rule” that Congress intends to require but-for causation for every federal-law tort claim and found no evidence that Congress intended a different standard when it adopted Section 1981.

Congress has, in fact, expressly adopted a more lenient causation standard for employment discrimination claims filed under Title VII of the Civil Rights Act of 1964. But the Court noted that when Congress amended Title VII in 1991 to adopt its new causation standard, it did not apply the new standard to Section 1981—even though the 1991 statute made other changes to Section 1981.

The Court reversed and remanded the case to the Ninth Circuit. The appeals court will have the opportunity to decide whether Allen’s complaint adequately alleges but-for causation. Unless Allen can allege facts sufficient to show that Comcast likely would have offered to carry the ESN networks had Allen been white, his complaint will be subject to dismissal.

Potential for More Mischief

The facts alleged to date by Allen—principally, his claim that the ESN networks were at least as “worthy” of carriage contracts as some of the white-owned companies with which Comcast does business—are far short of what is required to show that racial discrimination was the but-for cause of the carriage-contract denial. While racial discrimination is a possible reason for Comcast’s decision, it is at least as plausible (based on the facts alleged) that Comcast declined to offer a contract because it genuinely believed that ESN viewer support was insufficient to justify carriage. The Supreme Court has repeatedly held (see, e.g., Ashcroft v. Iqbal) that when (as here) a complaint alleges facts that admit of an “obvious alternative explanation” for the defendant’s conduct, the complaint should be dismissed as implausible in the absence of factual allegations from which one can reasonably infer that the plaintiff’s explanation is more probable.

The problem for corporate defendants facing tort claims is that the Ninth Circuit and some other lower federal courts have displayed a marked unwillingness to adhere to Iqbal. They permit insubstantial claim to proceed past the pleadings even in the absence of factual allegations that render the plaintiff’s discrimination claims more probable than the defendant’s alternative, innocent explanation. Given the Ninth Circuit’s past conduct—including its creation of a new, more lenient causation standard in order to breathe life into Allen’s discrimination claims—there is every reason to fear that it will once again reverse the district court’s dismissal order.

Permitting insubstantial claims to proceed past the pleadings stage undermines the fairness of our judicial system. Once a plaintiff survives a motion to dismiss on the pleadings, the high cost of litigation (including the cost of responding to endless depositions and document requests) will virtually force the defendant to settle the lawsuit without regard to its merits.

That may be what Allen is counting on. But Congress adopted the civil rights laws to eliminate racial discrimination in the making and enforcement of contracts, not as a litigation tool that unhappy plaintiffs can use to browbeat others into making unwanted deals. The Supreme Court took a step in the right direction this week when it held that civil rights plaintiffs are not exempt from the but-for causation requirement applicable to all other tort claims. But it should be vigilant to ensure that lower courts do not water down the but-for causation requirement by authorizing discrimination lawsuits to proceed through discovery when unsupported by factual allegations rendering those claims plausible.