Domino’s Pizza, Inc. v. McDonald

546 U.S. 470 (2006) Supreme Court of the United States 2006-02-22

Review of dismissal for failure to state a claim; shareholder claims personal injuries from racial breach of corporation's contracts; Ninth Circuit reversed. (result: claimant-lost)

Facts

  1. 2 Plaintiff has rights in an existing or proposed contract not law
    Respondent John McDonald, a black man, is the sole shareholder and president of JWM Investments, Inc. (JWM), a corporation organized under Nevada law.
  2. 2 Plaintiff has rights in an existing or proposed contract not law
    JWM and Domino’s entered into several contracts under which JWM was to construct four restaurants in the Las Vegas aréa, which would be leased to Domino’s.
  3. 2 Plaintiff has rights in an existing or proposed contract not law
    The gravamen of McDonald’s complaint was that Domino’s had broken its contracts with JWM because of racial animus toward McDonald, and that the breach had harmed McDonald personally by causing him “to suffer monetary damages and damages for pain and suffering, emotional distress, and humiliation.” Id., at 16.
  4. 2 Plaintiff has rights in an existing or proposed contract not law
    Any claim brought under § 1981, therefore, must initially identify an impaired “contractual relationship,” § 1981(b), under which the plaintiff has rights.
  5. 2 Plaintiff has rights in an existing or proposed contract not law
    McDonald’s complaint does identify a contractual relationship, the one between Domino’s and JWM. But it is fundamental corporation and agency law — indeed, it can be said to be the whole purpose of corporation and agency law — that the shareholder and contracting officer of a corporation has no rights and is exposed to no liability under the corporation’s contracts. McDonald now makes light of the law of corporations and of agency — arguing, for instance, that because he “negotiated, signed, performed, and sought to enforce the contract,” Domino’s was wrong to “insist that [the contract] somehow was not his ‘own.’ ” Brief for Respondent 4. This novel approach to the law contradicts McDonald’s own experience. Domino’s filed a proof of claim against JWM during its corporate bankruptcy; it did not proceed against McDonald personally. The corporate form and the rules of agency protected his personal assets, even though he “negotiated, signed, performed, and sought to enforce” contracts for JWM. The corporate form and the rules of agency similarly deny him rights under those contracts.