FCS Advisors, LLC v. Missouri

929 F.3d 618 (2019) United States Court of Appeals for the Eighth Circuit 2019-07-09

civil; Section 1981 claim by a lender to a minority-owned prime contractor whose state contract was terminated; Rule 12(b)(6) dismissal affirmed by CA8 (result: claimant-lost)

Facts

  1. 2 Plaintiff has rights in an existing or proposed contract not pleaded
    Missouri hired EngagePoint, a minority-owned information-technology company, to redesign the software for its health-benefits programs.
  2. 2 Plaintiff has rights in an existing or proposed contract not pleaded
    Brevet alleges that Nelson's decision to terminate Missouri's contract with EngagePoint was motivated by racial animosity toward the company's managers.
  3. 2 Plaintiff has rights in an existing or proposed contract not pleaded
    The first is that Brevet has not "identif[ied] an impaired 'contractual relationship' under which [it ] ha[d] rights."
  4. 2 Plaintiff has rights in an existing or proposed contract not pleaded
    The software contract was between Missouri and EngagePoint, not Brevet, and section 1981 does not allow Brevet to sue on EngagePoint's behalf, even if it too had a contractual relationship with the company.
  5. 4 Judicial intentional-race-discrimination requirement not pleaded
    The second was that Nelson's alleged racial animus toward EngagePoint's "Asian-Indian American management" led to the company's termination, which violated federal anti-discrimination laws.
  6. 4 Judicial intentional-race-discrimination requirement not pleaded
    To the extent Brevet is relying on its own agreement with EngagePoint, its section 1981 claim fails for another reason. Brevet was not "the direct target of discrimination," nor did it experience discrimination based on its "relationship to, association with, or advocacy" for EngagePoint.
  7. 4 Judicial intentional-race-discrimination requirement not pleaded
    To be sure, the complaint alleges that "Nelson also discriminated against [Brevet] directly by making fraudulent and/or false or materially misleading representations to it because of its association and work with EngagePoint's Asian-Indian American management."
  8. 4 Judicial intentional-race-discrimination requirement not pleaded
    But this is a conclusory allegation based on a fraud theory that is itself inadequately pleaded.
  9. 4 Judicial intentional-race-discrimination requirement not pleaded
    The allegation is also implausible, particularly given that Brevet's complaint identifies independent non-discriminatory reasons for Nelson's actions.