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1.5 The Federal Civil Rights Acts: Sections 1981 and 1982

This treatise also briefly treats two other federal statutes with some importance to credit discrimination. These two statutes, 42 U.S.C. §§ 1981 and 1982, are referred to throughout this treatise as the federal Civil Rights Acts. These are recodifications of statutes enacted after the Civil War.

Section 1981, among other things, guarantees to all persons within the jurisdiction of the United States the same right as white citizens to make and enforce contracts. Section 1982 provides all citizens with the same right as is enjoyed by white citizens to purchase, lease, sell, hold, and convey real and personal property.

These statutes clearly apply to many aspects of credit transactions84 and also apply to many transactions beyond the scope of the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA).85 They are particularly useful in challenging discrimination in the leasing and sale of personal property.

The federal Civil Rights Acts generally apply only to racial discrimination, but the Supreme Court has expanded the scope of the Acts to include certain types of ethnic discrimination.86 In addition, section 1981 should reach discrimination against non-citizens.87 On the other hand, section 1982 does not provide rights to non-citizens.88

The federal Civil Rights Acts provide for actual and punitive damages, equitable relief and attorney fees. Like the FHA, and unlike the ECOA, there is no statutory cap on the size of punitive damages awards. Unlike both the FHA and the ECOA, the federal Civil Rights Acts only apply to cases of intentional discrimination and do not apply to cases of disparate impact—that is, the “effects test” is not available to prove violations of the federal Civil Rights Acts.89

The Civil Rights Act of 1991 amended section 1981 significantly. It added two new subsections, (b) and (c), and redesignated the prior text as subsection (a).90 Subsection (b) added a definition of the phrase “make and enforce contracts,” stating that it extends to both the “making, performance, modification, and termination of contracts” and the “enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.”91 This definition makes clear that section 1981 applies to discrimination in a contractual relationship that occurs after the formation of the contract. Subsection (c) added a provision making clear that section 1981 prohibits discrimination by both private and governmental entities.92

The limitations period for the federal Civil Rights Acts is somewhat complicated. The limitations period for a cause of action that could be brought under provisions of the Act that existed prior to the 1991 amendments is determined by state law, so the period may be longer or shorter than the FHA’s and the ECOA’s two-year limitations periods. To the extent, however, that a cause of action is made possible by the provisions added by the 1991 amendments, they are subject to the four-year “catch-all” federal statute of limitations found in 28 U.S.C. § 1658(a).93


  • 84 See, e.g., Jackson v. NovaStar Mortg., Inc., 2007 WL 4568976 (W.D. Tenn. Dec. 20, 2007) (motion to dismiss claim that defendants violated sections 1981 and 1982 by racial targeting and by offering credit on less favorable terms on the basis of race denied); Johnson v. Equicredit Corp., 2002 U.S. Dist. LEXIS 4817 (N.D. Ill. Mar. 22, 2002) (predatory lending/reverse redlining case brought pursuant to section 1981); Hargraves v. Capital City Mortg. Corp., 140 F. Supp. 2d 7 (D.D.C. 2000) (predatory lending/reverse redlining case brought under both sections 1981 and 1982), reconsideration granted in part, denied in part, 147 F. Supp. 2d 1 (D.D.C. 2001) (section 1981 claim dismissed for lack of standing, but not section 1982 claim); Doane v. Nat’l Westminster Bank, 938 F. Supp. 149 (E.D.N.Y. 1996) (mortgage redlining case brought under sections 1981 and 1982); Fairman v. Schaumberg Toyota, Inc., 1996 U.S. Dist. LEXIS 9669 (N.D. Ill. July 10, 1996) (section 1981 suit over allegedly predatory credit scheme targeting African Americans and Hispanics); Steptoe v. Sav. of Am., 800 F. Supp. 1542 (N.D. Ohio 1992) (mortgage redlining case brought under sections 1981 and 1982 and the Fair Housing Act); Evans v. First Fed. Sav. Bank of Ind., 669 F. Supp. 915 (N.D. Ind. 1987) (section 1982 can be used in mortgage lending discrimination case); Assocs. Home Equity Servs. v. Troup, 778 A.2d 529 (N.J. 2001) (predatory lending/reverse redlining case brought pursuant to section 1981).

  • 85 See, e.g., Campbell v. Forest Pres. Dist. of Cook Cty., Ill., 752 F.3d 665 (7th Cir. 2014).

  • 86 See § 3.6.1, infra.

  • 87 See § 3.6.2, infra.

  • 88 Davis v. Strata Corp., 242 F. Supp. 2d 643 (D.N.D. 2003) (credit discrimination case brought under section 1981; no liability without proof of intentional or purposeful discrimination).

  • 89 See § 4.3, infra (discussing the “effects” test).

  • 90 Pub. L. No. 102-166, 105 Stat. 1071 (1991).

  • 91 42 U.S.C. § 1981(b).

  • 92 42 U.S.C. § 1981(c).

  • 93 Jones v. Donnelley, 541 U.S. 369, 124 S. Ct. 1836, 158 L. Ed. 2d 645 (2004). See §, infra (more on the limitations period for federal Civil Rights Act cases). See also Johnson v. Lucent Techs. Inc., 653 F.3d 1000, 1005–1006 (9th Cir. 2011).