RIPPLE, Circuit Judge.
In his amended complaint, Mr. Hussein alleged that he is an Egyptian-born, naturalized citizen and that his employer, Oshkosh Motor Truck Company (Oshkosh Truck), discriminated against him on the basis of his race. He sought relief under both Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. (Title VII), and section 1981 of the Civil Rights Act of 1866, 42 U.S.C. § 1981 (section 1981). Holding that section 1981 protects only American Negroes, the district court granted the defendant’s motion to dismiss that claim. R.30 at 1-2. After dismissing the section 1981 claim, the district court proceeded with a bench trial on the Title VII claim. The court made findings of fact and entered judgment in favor ox the defendant.
We hold that the district court erroneously dismissed the section 1981 claim because the protection of section [350]*3501981 is not limited to American Negroes. Nor do we believe that principles of collateral estoppel should bar further litigation of the section 1981 claim. The plaintiff was required to bring both the section 1981 count and the Title VII count in the same complaint. Had the district court not committed legal error in dismissing the section 1981 claim, Mr. Hussein would have been entitled to a jury’s resolution of those factual issues underlying his section 1981 claim and the district court would have been bound by those findings in deciding whether to grant the equitable relief requested in the Title VII count.
Accordingly, we reverse the district court’s dismissal of the section 1981 claim. The case is remanded to the district court for proceedings consistent with this opinion.
I
Facts
In his original complaint, filed on June 24, 1988, Mr. Hussein alleged that he is an Egyptian male and that Oshkosh Truck had discriminated against him on the basis of his national origin. Specifically, the complaint alleged that, on numerous occasions, Oshkosh Truck employees referred to him as a “sand nigger,” “camel jockey” and a “non-American.” R.l at 3. Mr. Hussein sought not only the equitable relief available under Title VII and section 1981 but also compensatory and punitive damages recoverable only under section 1981.1 He demanded a jury trial on “any and all issues herein triable by right of jury.” R.l at 5.
Holding that the complaint only alleged discrimination based on national origin, and that section 1981 does not provide a cause of action for national origin discrimination, the district court dismissed the section 1981 claim. R.25. The district court refused to consider Mr. Hussein’s arguments that the complaint fairly stated a cause of action for racial discrimination because, in the court’s view, section 1981 protects only American Negroes and Mr. Hussein had not alleged that he was an American Negro. Id. at 2. Two days later, during a final pre-trial conference, the district court granted Mr. Hussein’s request for leave to file an amended complaint. Although there is no transcript of the pre-trial conference, it appears that the court imposed no time limitation on the filing of the amended complaint.
In his amended complaint, filed on January 3, 1985, Mr. Hussein alleged that he is an Egyptian-born, naturalized citizen, “not a member of the white or caucasion [sic] race, but is rather a member of the Negro or Brown race,” and that Oshkosh Truck discriminated against him because of his race and national origin. R.28 at 2-3. Once again, he sought relief under both Title VII and section 1981. Stating that “it was not contemplated that plaintiff would transmute his national origin discrimination claim to a race discrimination claim, thereby affording him an opportunity to seek the forms of relief available under § 1981 but not § 2000(e),” R.30 at 1, the district court again dismissed the section 1981 claim. The district court noted that the plaintiff:
alleged that he was an Egyptian by birth. The § 1981 claim in the original complaint was dismissed because the Civil Rights Act of 1866 affords protection only to American Negroes. The amended complaint contains the allegation that plaintiff is a member of the Negro race. In view of the entire record and the proceedings to date, the amendment is frivolous. The amendment will not be allowed, and the § 1981 claim is dismissed.
Id. at 2. By dismissing the section 1981 count, the district court removed from the litigation the claim that entitled Mr. Hussein to a jury trial.
[351]*351Once again, before the trial began on the remaining Title VII claim, Mr. Hussein asked the district court to reconsider its decision to dismiss the section 1981 count. Referring to Mr. Hussein’s 1984 deposition testimony,2 the plaintiff’s counsel submitted that, regardless of the label used in the original complaint, from the very beginning of the lawsuit, Mr. Hussein had claimed that Oshkosh Truck had discriminated against him because of his race. Mr. Hussein argued that the amended complaint simply conformed the allegations to the evidence uncovered by discovery. In response to the request to reconsider, the court reiterated its position:
Well, I would like to state to start out with a trial judge does not have — is not in a position to write dissents to his own decisions. I suppose I could. If someone asked me whether 1981 should from a legislative point of view cover race, all races, Chinese, white, whatever you want to call it, Arabic or anything else, I might well vote as a legislator that it should. I think 1981 has been construed, and I so ruled, that it applies to protect the American Negro. It gives them certain rights.
I don’t ask people to agree. I think that’s the law. And if, Mr. Williamson, you’re offended that the characterization was that the amendment on the eve of the trial was frivolous, I am willing to withdraw that comment. But I think the decision has to stand. Whether or not that is the best law that should be devised is another question, for appellate courts or for the legislature. But I think that’s the law, and we will proceed with the Court trial here today.
******
I may be wrong in my decision. This Trial Court may be in error. I have to ask you to accept it, even though you don’t agree with it. But I have been through this many times, what 1981 applies to, and I think that’s the law. That’s the way it has been construed by the Courts in the history of this country. Whether it should be expanded, if I was in the Supreme Court I might say maybe we should change the law. I don’t think I have that discretion. So let’s go forward under the statute that you’re operating under.
Tr. at 9-10. The court proceeded with the bench trial on the Title VII claim and returned a verdict in favor of the defendant. R.42 at 1.
On appeal, Mr. Hussein argues that the district court erred when it dismissed his section 1981 claim. He also argues that this error deprived him of his right to have a jury resolve those factual issues that are common to both the Title VII and the section 1981 claims. On the other hand, Oshkosh Truck argues that the district court did not abuse its discretion by refusing to permit the plaintiff to amend his complaint on the eve of trial. The defendant also urges this court to apply the doctrines of res judicata and collateral estoppel to bar any further litigation of the section 1981 claim. Our task is to determine whether the district court erroneously dismissed the plaintiff’s section 1981 claim; and, if so, [352]*352whether that error requires us to remand some or all of this case to the district court for further proceedings.
II
Dismissal of the Section 1981 Count
A.
The district court refused to consider the plaintiff’s section 1981 claim because it believed that the prohibitions against racial discrimination contained in section 1981 only applied to American Negroes. However, neither the Supreme Court nor this circuit has expressed such a restrictive view of the statute. In McDonald v. Santa Fe Trail Transp. Co., 427 U.S. 273, 287, 96 S.Ct. 2574, 2582, 49 L.Ed.2d 493 (1976), noting that the statute expressly prohibited discrimination against “all persons,” the Supreme Court rejected the argument that the protection of section 1981 is limited only to those who allege that they have been discriminated against because they are American Negroes. “Rather, the Act was meant, by its broad terms, to proscribe discrimination in the making or enforcement of contracts against, or in favor of, any race.” Id. at 295, 96 S.Ct. at 2586.
Furthermore, while this court has acknowledged that allegations of discrimination based on national origin do not state a cause of action under section 1981, Anooya v. Hilton Hotels Corp., 733 F.2d 48, 50 (7th Cir.1984), we have also noted that a complaint articulating discrimination on the basis of national origin may constitute a complaint on the basis of race when it is clear that the plaintiff is alleging that he “ ‘belongs to a group that is distinct from “white citizens” as a matter of race or color.’ ” Doe v. St. Joseph’s Hosp., 788 F.2d 411, 418 (7th Cir.1986) (quoting Anooya, 733 F.2d at 50) (allegation that discrimination was based on fact that plaintiff was Korean sufficient to state a cause of action under section 1981). Here, the plaintiff’s amended complaint clearly advised the court and the defendant not only that the plaintiff is “an Egyptian born naturalized citizen” but also that he is “not a member of the white or caucasion [sic] race, but is rather a member of the Negro or Brown race.” R.28 at 2. The complaint further elaborated that, during his employment, the defendant had “received numerous ethnic slurs from co-employees and supervisory personnel,” id. at 3, and went on to specify those slurs, many of which were racially-motivated.3 The record clearly indicates that the district court applied an erroneous interpretation of section 1981 in this case.
B.
Despite the fact that the district court had an erroneous view of the scope of section 1981, Oshkosh Truck argues that we can affirm the court’s judgment. It characterizes the district court’s decision to dismiss the amended complaint as an exercise of the court’s discretion not to accept an amendment on the eve of trial. We do not believe that the holding of the district court can be fairly given this characterization. The record, when read in its entirety, cannot support the conclusion that the district court considered the amendment to be untimely. The complaint had originally been filed in 1983; the amendment was not made until 1985. However, only two months elapsed between the time that the district court dismissed the original complaint and the time Mr. Hussein filed his amended complaint.4 The district [353]*353court acknowledged that it had granted the plaintiff’s request for leave to amend, R.30 at 1; therefore, some type of amendment was anticipated.
However, Oshkosh Truck focuses on the court’s comment that, “[i]n view of the entire record and the proceedings to date, the amendment is frivolous.” Id. at 2. It is not at all clear that this remark was directed at the issue of the timeliness of the complaint. Indeed, it is equally likely that the district judge was expressing his view as to the legitimacy of the amendment in light of the plaintiff’s prior allegations of national origin rather than race discrimination. In any event, the district court explicitly withdrew the remark in ruling on the plaintiff’s motion to reconsider. Tr. at 9. Furthermore, nothing in the record suggests that, had the district court not held an erroneous view of section 1981, it still would have dismissed the 1981 claim. Indeed, the district court had several opportunities to state explicitly that it believed the amended complaint was not timely filed. In each instance, the court returned to its view of section 1981 as the basis for its decision to dismiss the complaint.
The district court dismissed the complaint because it erroneously believed that section 1981 only applies to American Negroes. Therefore, the district court erred when it dismissed the plaintiff’s section 1981 count.
Ill
Effect of the Erroneous Dismissal
Oshkosh Truck argues that, even if we hold that the district court erroneously dismissed the 1981 claim, we need not reverse and remand this case. Following the erroneous dismissal, the district court held a bench trial on the plaintiff’s remaining Title VII claim. The Title VII claim was based on the same factual allegations as the section 1981 count. The court made findings of fact and conclusions of law which led it to enter judgment in favor of the defendant. R.42. Therefore, the defendant urges that the doctrine of collateral estoppel5 bars relitigation of those issues already resolved in the bench trial on the Title VII count. Mr. Hussein, on the other hand, argues that the seventh amendment prohibits application of collateral estoppel in this case and that the district court’s erroneous decision to dismiss the section 1981 count deprived him of his right to have a jury resolve those issues common to both the section 1981 and the Title VII claims. Therefore, Mr. Hussein urges that this court not only reverse the district court’s decision to dismiss the section 1981 claim, but also to vacate the [354]*354judgment on the Title VII count and to remand the case for trial on both claims. In addressing these contentions,6 we must reconcile the values protected by Mr. Hussein’s seventh amendment right to a jury trial, and the values embodied in the doctrine of collateral estoppel.
A. Plaintiffs Right to a Jury Trial
The seventh amendment provides: “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved____” U.S. Const, amend. VII. The seventh amendment applies “to actions enforcing statutory rights, and requires a jury trial upon demand, if the statute creates legal rights and remedies, enforceable in an action for damages in the ordinary courts of law.” Curtis v. Loether, 415 U.S. 189, 194, 94 S.Ct. 1005, 1008, 39 L.Ed.2d 260 (1974). “An individual who establishes a cause of action under § 1981 is entitled to both equitable and legal relief, including compensatory and, under certain circumstances, punitive damages.” Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 460, 95 S.Ct. 1716, 1720, 44 L.Ed.2d 295 (1975). In his amended complaint, Mr. Hussein sought both compensatory and punitive damages on his section 1981 count. R.28 at 6. He, therefore, was entitled to have a jury resolve the factual issues underlying his section 1981 claim. See Lincoln v. Board of Regents, 697 F.2d 928, 934 (11th Cir.), cert. denied, 464 U.S. 826, 104 S.Ct. 97, 78 L.Ed.2d 102 (1983); accord Williams v. Owens-Illinois, Inc., 665 F.2d 918, 928 (9th Cir.), cert. denied, 459 U.S. 971, 103 S.Ct. 302, 74 L.Ed.2d 283 (1982); Bibbs v. Jim Lynch Cadillac, Inc., 653 F.2d 316, 318 (8th Cir.1981); Moore v. Sun Oil Co., 636 F.2d 154, 157 (6th Cir.1980).
Joinder of legal and equitable claims did not alter Mr. Hussein’s right to a jury trial. The Supreme Court has noted that, when a legal claim is joined with an equitable claim, “the right to jury trial on the legal claim, including all issues common to both claims, remains intact.” Curtis, 415 U.S. at 196 n. 11, 94 S.Ct. at 1009 n. 11. Therefore, it is clear that, had the district court not erroneously dismissed the section 1981 claim, Mr. Hussein would have had a right to have a jury resolve those factual issues underlying the 1981 count. Furthermore, had the section 1981 claim not been dismissed, the district court could not have considered the equitable count first. Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959). In Beacon Theatres, the Court concluded that the seventh amendment would, under normal circumstances, prohibit a district court from exercising its discretion to resolve equitable claims before legal claims joined in the same suit. Id. at 510, 79 S.Ct. at 956. “Beacon Theatres requires that any legal issues for which a trial by jury is timely and properly demanded be submitted to a jury.” Dairy Queen, Inc. v. Wood, 369 U.S. 469, 473, 82 S.Ct. 894, 897, 8 L.Ed.2d 44 (1962). “ ‘[0]nly under the most imperative circumstances, circumstances which in view of the flexible procedures of the Federal Rules we cannot now [355]*355anticipate, can the right to a jury trial of legal issues be lost through prior determination of equitable claims.’ ” Id. at 472-73, 82 S.Ct. at 896-97 (quoting Beacon Theatres, 359 U.S. at 510-11, 79 S.Ct. at 956-57).
Therefore, had it not committed legal error and dismissed the section 1981 claim, the district court would have been obliged to submit the legal claim under section 1981 to a jury. Moreover, in deciding whether to grant equitable relief under Title VII, the district court would have been prohibited from reconsidering any issues necessarily and actually decided by the jury. See Hunter v. Allis-Chalmers Corp., 797 F.2d 1417, 1421 (7th Cir.1986); Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 585 F.2d 821, 844 (7th Cir.1978), cert. denied, 440 U.S. 930, 99 S.Ct. 1267, 59 L.Ed.2d 486 (1979); see also Lincoln, 697 F.2d at 934; Heyman v. Kline, 456 F.2d 123, 131 (2d Cir.), cert. denied, 409 U.S. 847, 93 S.Ct. 53, 34 L.Ed.2d 88 (1972).
B. Collateral Estoppel
Collateral estoppel is a “judicially developed doctrine,” United States v. Mendoza, 464 U.S. 154, 158, 104 S.Ct. 568, 571, 78 L.Ed.2d 379 (1984), which, when properly applied, can “relieve parties of the cost and vexation of multiple law suits, conserve judicial resources, and by preventing inconsistent decisions, encourage reliance on adjudication.” Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 415, 66 L.Ed.2d 308 (1980). Oshkosh Truck argues that, despite the prohibitions of the seventh amendment and the concerns noted in Beacon Theatres, the Supreme Court’s holding in Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979), requires us to apply collateral estoppel in this case.
The issue in Parklane Hosiery was “whether a party who has had issues of fact adjudicated adversely to it in an equitable action may be collaterally estopped from relitigating the same issues before a jury in a subsequent legal action brought against it by a new party.” Id. at 324, 99 S.Ct. at 648. The Supreme Court stated that it had already held in Katchen v. Tandy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966), that “an equitable determination can have collateral estoppel effect in a subsequent legal action and this estoppel does not violate the Seventh Amendment.” Id. 439 U.S. at 335, 99 S.Ct. at 653. The Court found this principle implicit in the Beacon Theatres holding:
It is thus clear that the Court in the Beacon Theatres case thought that if an issue common to both legal and equitable claims was first determined by a judge, relitigation of the issue before a jury might be foreclosed by res judicata or collateral estoppel. To avoid this result, the Court held that when legal and equitable claims are joined in the same action, the trial judge has only limited discretion in determining the sequence of trial and “that discretion ... must, wherever possible, be exercised to preserve jury trial.”
Id. at 334, 99 S.Ct. at 653 (quoting Beacon Theatres, 359 U.S. at 510, 79 S.Ct. at 956).
In Parklane, the party against whom collateral estoppel was invoked had been a party in another action, an SEC suit brought in the district court in which a jury was not required. Judgment had already been issued in that proceeding and had been affirmed by the court of appeals. The Supreme Court held, inter alia, that this first judgment would have a preclusive effect on the later action, even though the second action could normally be tried to a jury. In discussing whether such an application of collateral estoppel would be fair to the party against whom it was invoked, the court wrote:
It is true, of course, that the petitioners in the present action would be entitled to a jury trial of the issues bearing on whether the proxy statement was materially false and misleading had the SEC action never been brought — a matter to be discussed in Part II of this opinion. But the presence or absence of a jury as factfinder is basically neutral, quite unlike, for example, the necessity of defending the first lawsuit in an inconvenient forum.
[356]*356439 U.S. at 332 n. 19, 99 S.Ct. at 652 n. 19. In short, Parklane established that “preclusion may not be defeated simply by showing that there was no right to trial by jury in the first action and that there is a constitutional right to trial by jury in the second action, no matter what anguish that may cause to those who believe in juries.” 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure: Jurisdiction § 4465 at 600 (1981).
We believe that the present case presents a substantially different situation than that before the Supreme Court in Parklane. Here, there is no earlier valid judgment. Mr. Hussein brought a single action in the district court. The facts underlying Mr. Hussein’s section 1981 claim also form the basis of his cause of action under Title VII. Under the Federal Rules of Civil Procedure, the plaintiff is allowed to join his legal claims under section 1981 and his equitable claims7 under Title VII in a single lawsuit. See Fed.R.Civ.P. 18. Moreover, under the “same transaction” test employed in this circuit to define the scope of res judicata, if Mr. Hussein had not brought both claims in the same suit, a subsequent lawsuit would have been barred. Car Carriers, Inc. v. Ford Motor Co., 789 F.2d 589, 593 (7th Cir.1986). Therefore, Mr. Hussein had no real choice but to bring both his section 1981 and his Title VII claims in one complaint. Except for the error of the district court, he would have been able to obtain a jury determination of the facts underlying his discrimination complaint.
Under these circumstances, the policy concerns which govern the application of the doctrine of collateral estoppel certainly do not require its application here. “Collateral estoppel, like the related doctrine of res judicata, has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or privy and of promoting judicial economy by preventing needless litigation.” Parklane Hosiery, 439 U.S. at 326, 99 S.Ct. at 649. It is hardly “needless litigation” to reverse a judgment on the ground that the plaintiff was denied his right to a jury trial through no fault of his own solely because of the error of the trial court. It is inappropriate to apply collateral estoppel to preclude review of an issue on which the appellant could not have previously sought review. See Restatement (Second) of Judgments § 28(1) (1982). Unlike the situations in Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981), and Reed v. Allen, 286 U.S. 191, 52 S.Ct. 532, 76 L.Ed.2d 1054 (1932), the judicial system is not being asked in this case to assume an additional burden because the litigant failed to exercise his right to appeal. Here, Mr. Hussein appealed the dismissal of his section 1981 claim as soon as he had the final judgment required by 28 U.S.C. § 1291.8 The burden on judicial administration is no more than in other situations in which legal error is committed and a retrial required. The only judgment whose integrity is attacked is the Title VII portion of the judgment under review, a judgment whose validity is “infect[edj” because it was “presented to the wrong trier of fact.” Bouchet v. National Urban League, Inc., 730 F.2d 799, 803 (D.C.Cir.1984) (Scalia, J.). We cannot sanction an application of collateral estoppel which would permit findings made by a court in an equitable proceeding to bar further litigation of a legal issue that had been properly joined with the equitable issue when those findings were made only because the [357]*357district court erroneously dismissed the plaintiff’s legal claim. To permit such an application would allow the district court to accomplish by error what Beacon Theatres otherwise prohibits it from doing.
C. Title VII Claim
For the reasons set forth in their separate opinions, Judge Posner and Judge Eschbaeh are of the view that the judgment with respect to the Title VII claim should not be vacated. Judge Ripple, for the reasons set forth in a separate statement, believes that this portion of the judgment should be vacated.
The district court’s dismissal of the section 1981 claim is reversed. The case is remanded to the district court for proceedings consistent with this opinion.
It is so ordered.