Employers are likely to face more racial retaliation claims under a Civil War-era federal law as the result of a U.S. Supreme Court decision last week, observers say.

The 7-2 ruling in CBOCS West Inc. vs. Hedrick G. Humphries says racial retaliation claims are allowed under Section 1981, a federal law based on the Civil Rights Act of 1866, even though retaliation is not explicitly stated in the statute, based on precedent already established by previous rulings.

Observers note that while the ruling breaks no new legal ground, it still could lead to more claims of race-based retaliation.

"It does put the stamp of the Supreme Court on it, which I think could encourage the filing of these types of lawsuits even further," said Diana L. Hoover, an attorney with Mayer Brown L.L.P. in Houston.

Meanwhile, the court issued a parallel decision the same day in Myrna Gomez-Perez vs. John E. Potter, Postmaster General, holding that federal workers can claim retaliation for complaints of age discrimination under the Age Discrimination in Employment Act (see story, page 24).

Although racial retaliation claims already are permitted under Title VII of the Civil Rights Act of 1964, plaintiffs likely would prefer suing under Section 1981 for several reasons, including a longer statute of limitations period and the absence of a cap on awards.

According to court papers, Mr. Humphries, who is black, was an associate manager at a Bradley, Ill., Cracker Barrel restaurant owned by Lebanon, Tenn.-based CBOCS. Mr. Humphries said after he protested the firing of a black food server, he was falsely accused of leaving a safe open and was immediately terminated from his job.

Mr. Humphries subsequently brought claims of discrimination and retaliation under both Title VII and Section 1981, but the 7th U.S. Circuit Court of Appeals in Chicago upheld a lower court's dismissal of the Title VII claims because Mr. Humphries failed to pay the filing fees on time. The appeals court, however, overturned the lower court's dismissal of the Section 1981 case and remanded it for trial on Mr. Humphries' retaliation claims.

The Supreme Court upheld the appeals court's decisions. The majority opinion said given prior court rulingsóa principle of law known as stare decisisóand 1991 amendments made to the Civil War-era law, Congress "intended to restore" retaliation as a valid claim under Section 1981.

The minority opinion criticized the majority for "retreating behind the figleaf of ersatz stare decisis."

However, the majority ruled, "Principles of stare decisis, after all, demand respect for precedent whether judicial methods of interpretation changes or stay the same."

Jonathan T. Hyman, an attorney with Kohrman Jackson & Krantz P.L.L. in Cleveland, said the decision is consistent with past court rulings on discrimination law. "I think it's a fair reading of the statute to say that discrimination encompasses retaliation," he said.

Observers say there likely will be more discrimination claims under Section 1981. The most significant reason may be the longer, four-year statute of limitations vs. 300 day-limit after the alleged discriminatory act to file a Title VII complaint with the Equal Employment Opportunity Commission.

Potential plaintiffs "have a longer time to think about it and, as a result, there's an increasing likelihood of more claims being filed," said Ron Chapman Jr., an attorney with Ogletree, Deakins, Nash, Smoak & Stewart P.C. in Dallas.

Employers may be faced with defending employment decisions made four years earlier "and who knows know if the supervisor and employees are still there," still alive or in the same state, said Mr. Chapman.

Furthermore, under Title VII, depending on the size of the company, plaintiffs can essentially recover only up to $300,000 in compensatory and punitive awards, but Section 1981 has no damage cap.

In addition, Section 1981 plaintiffs do not have to go through Title VII's required administrative remedies. Title VII specifies employers receive proper notice of the complaint and provides a procedure to resolve disputes out of court, said Karen R. Harned, executive director of the National Federation of Independent Business Legal Foundation in Washington, which filed an amicus brief in the case on behalf of CBOCS. Under Section 1981, "the first notice of any claim in many instances could be through court papers," she said.

Nadine C. Abrahams, an attorney with Jackson Lewis L.L.P. in Chicago, said retaliation claims accounted for 32% of all charges filed with the EEOC in 2007.

Cynthia H. Hyndman, an attorney with Robinson Curley & Clayton P.C. in Chicago, who represented Mr. Humphries, said the opinion "provides a lot of certainty to both workers and other contracting parties going forward, knowing they'll be protected if they try to assert their right to be free of discrimination" in these situations.

CBOCS West Inc. vs. Hedrick G. Humphries, U.S. Supreme Court, 06-1431, May 27, 2008.