How the Supreme Court’s Ruling in Cummings v. Premier Distorts Contract Law to Gut Discrimination Law

by | May 4, 2022 | Civil Litigation, Employment Discrimination, Title IX

In 2016, one of the authors of this post wrote a piece entitled “The ‘Tough Noogies’ Doctrine: Rights But No Remedies.” The article highlighted examples of then-recent Supreme Court cases denying clearly wronged individuals a remedy based on spurious reasoning.

Last week’s Supreme Court decision in Cummings v. Premier Rehab Keller, P.L.L.C., 2022 WL 1243658 (Apr. 28, 2022) is a prime example of the “tough noogies” doctrine. In Cummings, the Court stripped any meaningful remedies from many victims of race, gender, disability, and other forms of unlawful discrimination. And it did so based on a relatively superficial analysis of contract law, used as a veneer to shelter wrongdoers and leave plaintiffs holding the bag.

At issue in Cummings were four laws banning discrimination by programs and institutions that receive federal funding: Title VI (prohibiting discrimination based on race, color, or national origin); Title IX (prohibiting sex discrimination in educational programs and activities); the Rehabilitation Act (prohibiting disability discrimination); and the anti-discrimination provisions of the Affordable Care Act (covering race, color, national origin, sex, age, and disability discrimination by health programs and activities). These laws are exercises of Congressional spending power, under which Congress may attach conditions to the receipt of federal funds (accordingly, we refer to them as the four Spending Clause anti-discrimination statutes).

It is well-established that an individual subject to discrimination by an entity receiving funding may sue the entity for damages under these laws. Otherwise, the anti-discrimination rules lack any real teeth. Federal agencies virtually never terminate funding based on violations of anti-discrimination conditions—the Department of Education has never done so for a violation of Title IX—and the administrative remedies the government does impose (usually through a resolution agreement with the recipient) often do nothing to compensate the victims.

The question considered by the Court was what kind of damages are available to victims, and more specifically whether they can recover damages for non-economic injuries such as emotional distress. This is a significant matter with serious consequences. Often, emotional distress damages are the primary or only form of relief for discrimination plaintiffs—such as students or patients who experience sexual harassment or assault, victims of racial discrimination, and individuals forced to endure other degrading treatment and practices. And the trauma can be severe and lasting. The Cummings plaintiff’s injuries were perhaps less extreme than these examples but nonetheless amounted to “humiliation, frustration, and emotional distress”—the type of dignitary and psychological harms that anti-discrimination laws are meant to protect against.[1]

To answer this question, the majority and dissent both followed established Supreme Court precedent that likens the federal funding relationship to a contract in which non-discrimination terms are a condition of performance.[2] Focusing on the defendant funding recipient’s contractual expectations, the Court considered whether the recipient would anticipate being liable for emotional distress damages for breaching the non-discrimination conditions attached to the funds. At the most general, 30,000-foot level, emotional distress damages are not available in run-of-the-mill breach of contract case. Historically, however, such damages have been available in particular contractual situations where a breach is likely to give rise to emotional distress (think, for example, of a contract for handling funeral services or one related to a promise of marriage). The plaintiff argued that a funding recipient’s bargain not to discriminate against program participants is most analogous to these types of contracts because the anti-discrimination laws upon which the federal grant is conditioned are designed to protect against the long-recognized dignitary and emotional harms that accompany discrimination.

The majority (per Justice Roberts) disagreed with the plaintiff. The Court found its decision dictated by Barnes v. Gorman, 536 U.S. 181 (2002), which held that punitive damages are not awardable under the four Spending Clause anti-discrimination statutes because they are generally not available as a contractual remedy. Justice Roberts claimed that Barnes was analogous because, he asserted, punitive damages can be a permitted contractual remedy where the breaching conduct would also qualify as a tort. He thus concluded that Barnes must have applied a rule recognizing only general, rather than specific, contractual damages. Deeming emotional distress damages—like his characterization of punitive damages—to be an anomalous contract remedy, he decreed Cummings to be on all fours with Barnes and rejected the availability of emotional distress damages in Spending Clause discrimination matters. Case closed.

But not so fast, said Justice Breyer in dissent. The majority’s analysis reflects an overly narrow and simplistic interpretation of contract and anti-discrimination law that unjustifiably deprives discrimination victims of recourse. First, it is a common and well-established principle of contract law that emotional distress damages are available when the breach is particularly likely to cause serious emotional disturbance. This precept is especially salient when the contract is entered for non-pecuniary purposes and the core harms resulting from a breach are non-pecuniary. Second, it is plainly foreseeable that unlawful discrimination (e.g., race discrimination, sexual harassment) will cause the victim to suffer significant emotional distress. Damages for emotional distress are a central component of civil rights and anti-discrimination regimes, long recognized as essential to compensate victims for their injuries—which are often about human dignity and not mere economics, i.e. harm to the psyche, not the pocketbook. See, e.g., Cummings, 2022 WL 1243658, at *13, 15 (Breyer, J., dissenting); Brown v. Bd. of Ed. of Topeka, Shawnee Cty., Kan., 347 U.S. 483, 494 & n.11 (1955). Accordingly, a federal funding recipient who agrees to be bound by non-discrimination laws as a condition of the grant can reasonably expect to be liable for emotional distress damages flowing from a violation of those terms. The law is sufficiently clear to provide notice, even assuming that remedies under the statute at issue are limited to those historically awarded for breach of contract.

Further, wrote Justice Breyer, the majority opinion misinterpreted Barnes. That case does not stand for the proposition that only general, rather than specific, contractual remedies are available. Indeed, punitive damages are not recoverable under contract law at all—they are recoverable in tort, and occasionally the same conduct will give rise both to a contract claim and tort claim. Imposing a tort-based remedy for tortious conduct does not convert it into a contract remedy simply because the tort accompanies a breach of contract. By contrast, emotional distress damages are awarded in certain types of contract cases—in line with discrimination cases—to effect the central purposes of contract law: making non-breaching parties whole by restoring them to as good a position as they would have been in absent a breach. They are compensatory in nature.

Indeed, Barnes itself emphasizes that punitive damages are not recoverable under the four Acts because they are not compensatory, are not designed to make good for the wrong done, and thus fall outside the scope of a contract-based remedy. 536 U.S. at 189. Moreover, in contrast to actual damages calibrated to harm suffered, they are indeterminate and potentially limitless—bound only by Due Process principles.[3] In consequence, Barnes observed, imposing punitive damages on top of compensatory damages “could well be disastrous” to the funding recipient; and an institution would not lightly accept their availability as a condition of funding. Id. at 188. It is the unorthodox and disproportionate nature of punitive damages as a contractual remedy that makes them unforeseeable to the recipient and unfair to impose as a condition of the grant. Id.

In contrast, emotional distress damages, which simply compensate victims for the foreseeable results of discrimination, are neither unorthodox nor indeterminate and disproportional in magnitude. They can only be viewed as an exception to the contract law “rule” by looking (as the court does) only to the most common type of contract—involving a pure economic transaction—and ignoring the reason why emotional damages aren’t available in such cases: Because they don’t compensate the plaintiff for the (strictly economic) benefits that it bargained for. When the promise is not to discriminate, of course, the opposite is true. Contract law recognizes this, but funding recipients (we’re told) wouldn’t follow its doctrines closely enough. The Court takes the contract analogy only so far and abandons it when that rubric no longer suits its purposes. See Cummings, 2022 WL 1243658, at *7-8.

Boiled down, the gist of the Court’s reasoning is this: Because the average commercial contract (e.g., for the sale of widgets) does not implicate emotional distress, individuals protected by cornerstone federal civil rights laws—who are in no way akin to buyers or sellers of goods— cannot recover such damages either when their rights are violated. There is no good reason why this result should emanate from the Supreme Court’s loose analogy to the funding relationship as contractual. The recipient has still agreed to comply with federal anti-discrimination laws and should well know what that means in practice. In actuality, federal funding recipients have long been held liable for compensatory damages (including emotional distress) stemming from their discriminatory conduct, and it is the Court’s decision that upsets settled expectations.

In sum, the Court’s decision in Cummings not only misapplies and departs from the remedies framework established by centuries of contract law,[4] it also creates an untenable “anomaly” in which individuals discriminated against by their employers or by the government itself may recover their damages under federal anti-discrimination statutes, but students sexually harassed by their teachers—and other vulnerable people discriminated against by federally funded institutions—may not. Cummings, 2022 WL 1243658, at *15 (Breyer, J., dissenting). This will leave countless victims without a remedy for even the most severe and egregious civil rights abuses.[5]

Tough noogies.

[1] Plaintiff, who is deaf and legally blind, was denied an ASL interpreter for therapy sessions in a federally funded physical therapy program and instead told that she could communicate with the therapist using written notes, lip reading, or gesturing. At the Supreme Court, it was undisputed that this was disability discrimination that was degrading to the plaintiff and may have interfered with the efficacy of the treatment.

[2] In concurrence, Justice Kavanaugh, joined by Justice Gorsuch, questioned the contract law analogy and opined that it was incumbent on Congress to define the available remedies for violations of these laws.

[3] Set forth at the time of Barnes in BMW v. Gore, 517 U.S. 559 (1996), and later elucidated in cases like State Farm Mut. Auto. Ins. Co. v. Campbell, 53 8 U.S. 408 (2003).

[4] Whether contract law actually provides a suitable framework for decision (see Cummings, 2022 WL 1243658, at *14 (Breyer, J., dissenting); see also id. at *10 (Kavanaugh, J., concurring)) can be reserved for another discussion. We would certainly argue that a funding recipient seeking to discern its obligations and potential liabilities for agreeing to be bound by anti-discrimination statutes would look to anti-discrimination principles and not the general common law of contracts. Barnes, however, held otherwise.

[5] It remains to be seen whether Cummings will be applied to bar recovery in cases involving physical injury.