The Unity Care Group v. County of Santa Clara, California

Background

Unity Care is a nonprofit organization that provides services to youth transitioning out of foster care. It contracted with Santa Clara County from 2008 through 2019 to provide “wraparound services” for “African Ancestry” children and families in the County’s foster-care system. Unity Care alleged that the County underpaid it compared with “white-led” organizations and defunded and terminated its services without justification.

Unity Care asserted race-discrimination claims under 42 U.S.C. §§ 1981 and 1983. It also asserted claims under Article I of the California Constitution, California’s Unruh Civil Rights Act, California’s Unfair Competition Law, and several California contract-related theories.

Federal Claims

The County moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Rule 12(b)(6) tests whether a complaint alleges enough facts to state a legally plausible claim; Rule 12(b)(1) concerns subject-matter jurisdiction.

The court held that the § 1983 claim was untimely. Section 1983 claims generally use California’s two-year limitations period and usually accrue when the plaintiff knows or has reason to know of the injury. Unity Care alleged that the County’s discriminatory acts occurred from 2008 through 2019, while Unity Care filed suit on April 8, 2022. The court rejected Unity Care’s argument that the claim accrued when the County allegedly refused, on September 22, 2020, to implement procedures for reconciling and settling amounts owed under the parties’ contract. The court also rejected reliance on the continuing-violations doctrine.

The court held that the § 1981 claim was not time-barred. Section 1981 claims covered by the Civil Rights Act of 1991 are subject to a four-year limitations period, and Unity Care alleged that its contract was terminated in 2019 and that it was underpaid for its 2018–2019 contract.

Even so, the court held that neither the § 1981 nor the § 1983 allegations plausibly showed that the County discriminated pursuant to an official policy, custom, or practice. The complaint did not allege facts plausibly showing a County policy or practice of underpaying African American-led organizations. It also did not allege that the County’s omission of language from Unity Care’s contracts was part of a policy or practice, or that other groups typically received more favorable contracts.

State-Law Claims and Disposition

The court said the federal claims provided the basis for federal subject-matter jurisdiction. It declined to exercise supplemental jurisdiction—the court’s authority to hear related state-law claims—until Unity Care alleged a plausible federal claim.

The complaint was dismissed with leave to amend. Unity Care was permitted to file an amended complaint by January 17, 2023, but could not add new claims or defendants without the court’s prior approval. The court stated that failure to meet the deadline would result in dismissal under Federal Rule of Civil Procedure 41(b).