Ninth Circuit lets minority company sue for racial discrimination.

A minority-owned company has the same right as a person to bring a discrimination claim under [section] 1981, the Ninth Circuit has ruled.

"When a corporation has acquired a racial identity, either as a matter of law or by imputation, then it can be the direct target of discrimination and has standing to pursue a claim tinder [section] 1981 ," Judge Sidney Thomas wrote. (Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1059 (9th Cir. 2004).)

The plaintiff in the case, Thinket Ink Information Resources, Inc., is an information services contractor in northern California. All of its shareholders are African-American, and the company is certified by the Small Business Administration to receive federal contracts under the so-called [section] 8(a) development program for minority-owned businesses.

"This ruling is an important step toward providing more civil rights protection to individuals," said Edward Kramer of Cleveland, immediate past chair of ATLA's Civil Rights Section. The individual minority owners, who were the target of the discrimination, had no standing to sue because their company is a corporation. Many small companies incorporate, so discrimination against minority businesspeople would go unremedied if companies were barred from bringing civil rights claims, Kramer said.

He characterized the Ninth Circuit's ruling as a logical extension of past fair-housing cases in which courts have allowed real-estate development companies to bring claims on behalf of minority would-be residents facing discrimination in home buying.

The Thinket case stemmed from the company's providing information-systems support services to Sun Microsystems, Inc.; the two companies signed several long-term contracts, including a Master Services Agreement (MSA) that included an arbitration clause. When the companies' business relationship soured, Thinker sued Sun, alleging it had refused to do business solely because Thinket is owned by African-Americans.

The district court ruled that Thinket's claims arising from dealings after the MSA was signed were controlled by the arbitration agreement. The Ninth Circuit agreed.

The district court also ruled that the pre-MSA claims were time-barred under California's one-year statute of limitations for personal injury claims. The Ninth Circuit said this analysis was correct at the time of the lower court's ruling but that it should be reconsidered in light of the U.S. Supreme Court's decision in Jones v. R.R. Donnelley & Sons Co. (124S. Ct. 1836 (2004).) Jones held that the four-year federal statute of limitations, not state statutes, applied to [section] 1981 claims. The Ninth Circuit remanded Thinket's we-MSA claims to the district court.

The appeals court also noted that both the First and Second circuits have held that a company may have standing to sue for civil rights violations in some circumstances. (Des Vergnes v. Seekonk Water Dist., 601 F.2d 9 (1st Cir. 1979); Hudson Valley Freedom Theater, Inc. v. Heimbach, 671 F.2d 702 (2d Cir. 1982).)