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Bains LLC v. ARCO Prods. Co. - 405 F.3d 764 (9th Cir. 2005)

Rule:

When a corporation has acquired an imputed racial identity, it can be the direct target of discrimination and has standing to pursue a claim under 42 U.S.C.S. § 1981.

Facts:

In 1999 an Olympic Pipeline Company petroleum pipeline ruptured, interfering with the transportation of fuel from refineries in Northwest Washington to a distribution center in Seattle. It took two years to fix the pipeline. During that period ARCO hired a number of companies to truck fuel from its Blaine, Washington refinery to the distribution center.

Paul, Gary, and Deep Bains are American citizens who were born in the Punjab region of India. The Bains brothers bought a gas station and convenience store in Okanogan, Washington. They were the first Sikh family in the area. They did business under the name "Flying B," signifying that the Bains brothers were flying high in the American business world. Flying B soon owned five gas stations and employed 30 people. The brothers bought a tanker truck for about $100,000 and got the necessary permits to haul gasoline to their stations. That investment put the Bains brothers in an excellent position to make some money when the Olympic pipeline ruptured and ARCO needed help. In March 2000 they signed a contract with ARCO to haul fuel. By then Flying B was doing business as a corporation, the stock of which was owned solely by the three Bains brothers.

Flying B sued ARCO alleging that the latter terminated Flying B’s contract and subjected Flying B's employees to abuse based on racial discrimination in violation of 42 U.S.C.S. § 1981. ARCO appealed the judgment in favor of Flying B entered on a jury verdict in the United States District Court for the Western District of Washington. ARCO argued that Flying B had no racial identity, the verdict was inconsistent, the termination of the contract was not shown to be racially motivated, and the punitive damage award was excessive.

Issue:

Did Flying B acquire an imputed racial identity to support its claims under 42 U.S.C.S. § 1981?

Answer:

Yes

Conclusion:

The appellate court first held that Flying B, despite its corporate status, undoubtedly acquired an imputed racial identity to support its claims under 42 U.S.C.S. § 1981. Further, the nominal damages for racial discrimination did not establish an absence of economic harm to Flying B since the jury could have found that Flying B only failed to prove specific quantifiable damages from the harm. Moreover, despite notice of racial abuse by a company employee, ARCO took no action and thus supported the discrimination. However, the substantial disparity between the compensatory and punitive damages indicated that the punitive damages violated constitutional due process and thus were excessive.

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