Labor & Employment Law Daily Wrap Up, DISCRIMINATION—RACE—5th Cir.: Fired Black city manager met requirements of Section 1983, not Section 1981, (Oct 8, 2025)

By Jason Albright, J.D.

After his departure, city council members allegedly disparaged him, and they ultimately voted to rescind his separation agreement.

A Black city manager for Hutto, Texas, who was allegedly disparaged by members of the city council—which later granted him a severance arrangement but then voted to rescind his separation agreement—met the requirements of Section 1983 but not Section 1981, the Fifth Circuit found. A resolution adopted by the city council rescinding the separation agreement constituted a municipal policy, adopted by a policymaker, that deprived him of his rights under the agreement. Under Section 1981, however, his headcount theory failed, and his cat’s paw claim was incompatible with Monell’s bar on respondeat superior. Remanding, the appeals court found that his claim for attorney fees remained (Jones v. City of Hutto, No. 24-50096 (5th Cir. Oct. 7, 2025)).

First Black city manager. The City of Hutto hired the plaintiff as its first Black city manager in 2016. He worked closely with the seven elected members of the city council. During the period at issue, the city, which is a neighbor of Austin, was impacted by that larger city’s growth.

Rift concerning “growth.” This caused a rift in local politics between the “pro-growth” and “anti-growth” factions. The “pro-growth” faction wanted to attract development and businesses, but the “anti-growth” faction was concerned that development would affect the city’s culture and infrastructure.

“Pro-growth.” The city manager aligned himself with the “pro-growth” contingent, and he led efforts that included improving the city’s water system, restructuring the police department, and bringing a $1.5 billion development project to the city, the largest in its history.

Two “anti-growth” councilmembers. In May 2019, two new “anti-growth” councilmembers won election after campaigns allegedly aimed at “get[ting] rid of the city manager and his staff.” One of the new councilmembers’ frustration with the city manager initially concerned a perceived lack of transparency and suspicion of improper dealing.

Report of race-based discrimination. Later, two investigations unearthed no impropriety by the city manager, but tensions mounted that took on an alleged racial character. The city manager, in turn, reported race-based discrimination by the two new members to the city council in August 2019.

Separation agreement. The situation did not resolve, according to the court, and the parties began to discuss parting ways. In November 2019, the city council entered into a separation agreement with the city manager by a five-vote majority (5-1), noting the separation was “without cause.” One of the two new members cast the lone “nay” vote, and the other was absent and did not vote. In accordance with the city manager’s employment agreement, the separation “without cause” provided him with 12 months of salary and health benefits: $412,000 in total. The separation agreement also contained a mutual non-disparagement clause and a mutual waiver of then-existing legal claims.

Alleged “campaign” by two new council members. The next day, the city released a statement announcing this news and praising the former city manager for his tenure as such. The two new “anti-growth” council members, however, voiced their dissenting opinions in a “press release” posted to the candidacy Facebook page of one of them. The city manager alleged this initiated a “campaign” by the two to have the city council retract the separation agreement. And that it ultimately did.

Resolution rescinding separation agreement. In December 2020, the city council unanimously voted to adopt a resolution that purportedly rescinded the separation agreement, pursuant to a legal opinion by the city attorney that it was defectively executed and accordingly void.

The city argued that it focused on the separation agreement’s validity because the city was experiencing a budget shortfall and an audit identified the agreement as a cost. After the city voted to rescind the agreement, the city attorney sent the resolution and a demand letter to the city manager demanding the return of the $412,000 received under his separation agreement.

Lawsuit. A week later, the city manager filed suit in federal district court. By trial, the claims had narrowed to a civil rights claim under 42 U.S.C. § 1981 and a state-law breach of contract claim. The parties both moved for summary judgment as to the separation agreement’s validity, and the court granted the city manager’s motion, declaring the contract valid and enforceable. The case then proceeded to trial, and at the close of evidence, the city moved for judgment as a matter of law under Rule 50(a), which the court denied.

$12.5 million verdict. The district court submitted the city manager’s Section 1981 and Texas breach of contract claims to a jury, which returned a verdict for the city manager on both claims, awarding him $8 million for the Section 1981 claim and $4.5 million for breach of contract, upon which the court entered final judgment.

$5 million remittitur. The city filed a renewed motion for judgment as a matter of law under Rule 50(b) and a motion for new trial or remittitur under Rule 59. The district court denied the renewed motion for judgment as a matter of law but suggested remittitur because a statute barred all breach of contract damages except for attorney fees, and the city manager did not segregate his attorney fees between the claims, risking double recovery.

Appeal and remaining fees issue. The court suggested that the city manager seek attorney fees by post-trial motion. He accepted the $5 million remittitur and filed a motion for attorney fees. The city, in turn, appealed the denial of judgment as a matter of law as to both the Section 1981 claim and the breach of contract claim.

Section 1983 claim. The Fifth Circuit first found that the city manager satisfied the requirements of Section 1983, even though under Section 1983, unconstitutional conduct must be “directly attributable to the municipality through some sort of official action or imprimatur” and “isolated unconstitutional actions by municipal employees will almost never trigger liability.” To prevail, a plaintiff must establish that “(1) an official policy (2) promulgated by the municipal policymaker (3) was the moving force behind the violation of a constitutional right.” The city manager satisfied all three requirements.

For the first prong, “written policy statements, ordinances, or regulations” suffice to establish a municipal policy for purposes of liability, and the resolution adopted by the city council rescinding the separation agreement was such a policy.

Next, a “policymaker” is the person or entity that “possesses final authority to establish municipal policy with respect to the action ordered.” Looking to the relevant municipal charters, the appeals court noted that Hutto’s Charter provides “all powers of the City... shall be vested in an elected council,... the ‘City Council,’ which shall enact local legislation, adopt budgets, determine policies and appoint the City Manager” and “vest[s] all authority... of [City Manager] suspension or removal in the City Council.” The city council was thus the policymaker.

Finally, the appeals court noted that, regarding Section 1983, it has treated “moving force” as a “direct causal link between the municipal policy and the constitutional deprivation.” Here, there was no question as to the link between the city council’s resolution—rescinding the separation agreement—and the deprivation of rights, the impairment of contract rights: the resolution was the very instrument that purported to void the city manager’s rights under the separation agreement.

Section 1981 claim. The city manager’s Section 1981 claim, however, failed. The claim, the court found, resolved on whether the contractual impairment, if any, was racially motivated, and to prevail on his Section 1981 claim, he had to “ultimately prove that, but for race, [he] would not have suffered the loss of a legally protected right.” He argued that discriminatory intent could be demonstrated by either (1) a headcount analysis or (2) a “cat’s paw” analysis, but these arguments both failed.

Headcount. Under a headcount analysis, he had to present sufficient evidence demonstrating race was a but-for reason of a “majority” (four of the six) of the councilmembers’ votes to rescind the separation agreement, but even assuming that the two new “anti-growth” members bore such animus, concluded the court, he could not establish animus chargeable to any of the remaining four.

Cat’s paw. Because the city manager’s cat’s paw claim was based in agency principles, the Fifth Circuit found, it was incompatible with Monell’s bar on respondeat superior and unavailable to him.

Attorney fees. Finally—agreeing with the district court that, as a matter of law, the separation agreement was valid regarding the separation payment, that the city breached the agreement when it attempted to rescind, and that the city manager prevailed on the breach of contract issue—the court found that his claim for attorney fees remained, notwithstanding his retention of the $412,000 severance payment throughout the proceedings. The Fifth Circuit accordingly remanded to the district court to consider only the attorney fees issue.

The case is No. 24-50096.

Judge: Richman, P.

Attorneys: Marcy Hogan Greer (Alexander Dubose & Jefferson) for Odis Jones. Ramon Gustave Viada, III (Viada & Strayer) for City of Hutto.

Companies: City of Hutto

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