Supreme Court of the United States · 2006-02-22
Case and law context
Role: applied; posture: 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; claim:
Instances and excluded annotation blocks
| Case | Element | Holding and scope | Variant | Exact source quotations |
|---|---|---|---|---|
| /us/546/0470-01 — Supreme Court of the United States · 2006 | Formation performance termination or contractual benefits | not_reached Excluded from merits counts rule-announced / meritsThe Court explains the reach of existing and proposed contract rights and Congress’s displacement of Patterson. It makes no independent finding that racial discrimination impaired McDonald’s own rights. | contract-scope/formation-and-postformation | Any claim brought under § 1981, therefore, must initially identify an impaired “contractual relationship,” § 1981(b), under which the plaintiff has rights. Such a contractual relationship need not already exist, because § 1981 protects the would-be contractor along with those who already have made contracts. We made this clear in Runyon v. McCrary, 427 U. S. 160 (1976), which subjected defendants to liability under § 1981 when, for racially motivated reasons, they prevented individuals who “sought to enter into contractual relationships” from doing so, id., at 172 (emphasis added). We have never retreated from what should be obvious from reading the text of the statute: Section 1981 offers relief when racial discrimination blocks the creation of a contractual relationship, as well as when racial discrimination impairs an existing contractual relationship, so long as the plaintiff has or would have rights under the existing or proposed contractual relationship.Source: docroot/ir/caselaw/us_546.jsonl#/us/546/0470-01; Unicode character offsets [6665:7639] (end exclusive); SHA-256 08aa6e7552f7114976fd783e4331bf60b60b9557dab0d3e972d66f22ec4c52bc.Nor has Congress indicated that we should. We held in Patterson that the prior version of § 1981 did “not apply to conduct which occurs after the formation of a contract and which does not interfere with the right to enforce established contract obligations.” 491 U. S., at 171. In 1991, Congress amended the statute, see 105 Stat. 1071, adding § 1981(b), which defines “make and enforce” to bring postformation conduct, including discriminatory termination, within the scope of § 1981. See Jones v. R. R. Donnelley & Sons Co., 541 U. S. 369, 383 (2004). But while Congress revised Patterson’s, exclusion of postformation conduct, it let stand Patterson’s focus upon contract obligations. In fact, it positively reinforced that element by including in the new § 1981(b) reference to a “contractual relationship.”Source: docroot/ir/caselaw/us_546.jsonl#/us/546/0470-01; Unicode character offsets [8244:9056] (end exclusive); SHA-256 08aa6e7552f7114976fd783e4331bf60b60b9557dab0d3e972d66f22ec4c52bc. |
| /us/546/0470-01 — Supreme Court of the United States · 2006 | Plaintiff has rights in an existing or proposed contract | not Counted merits instance applied / merits basis: law; party: McDonald personally; theory: Direct contract discrimination; subject: party=McDonald personally; theory=Direct contract discrimination The legal defect is absence of McDonald’s own contractual rights, not failure to allege racial animus or personal injury. Corporation and agent remain distinct despite his negotiating and signing the contracts. | corporate-separateness/shareholder-agent-contract-rights | Respondent John McDonald, a black man, is the sole shareholder and president of JWM Investments, Inc. (JWM), a corporation organized under Nevada law.Source: docroot/ir/caselaw/us_546.jsonl#/us/546/0470-01; Unicode character offsets [307:457] (end exclusive); SHA-256 08aa6e7552f7114976fd783e4331bf60b60b9557dab0d3e972d66f22ec4c52bc.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.Source: docroot/ir/caselaw/us_546.jsonl#/us/546/0470-01; Unicode character offsets [683:838] (end exclusive); SHA-256 08aa6e7552f7114976fd783e4331bf60b60b9557dab0d3e972d66f22ec4c52bc.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.Source: docroot/ir/caselaw/us_546.jsonl#/us/546/0470-01; Unicode character offsets [2676:2986] (end exclusive); SHA-256 08aa6e7552f7114976fd783e4331bf60b60b9557dab0d3e972d66f22ec4c52bc.Any claim brought under § 1981, therefore, must initially identify an impaired “contractual relationship,” § 1981(b), under which the plaintiff has rights.Source: docroot/ir/caselaw/us_546.jsonl#/us/546/0470-01; Unicode character offsets [6665:6820] (end exclusive); SHA-256 08aa6e7552f7114976fd783e4331bf60b60b9557dab0d3e972d66f22ec4c52bc.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.Source: docroot/ir/caselaw/us_546.jsonl#/us/546/0470-01; Unicode character offsets [9057:10154] (end exclusive); SHA-256 08aa6e7552f7114976fd783e4331bf60b60b9557dab0d3e972d66f22ec4c52bc. |
Court interpretations recorded from this case
interpretation
Any claim brought under § 1981, therefore, must initially identify an impaired “contractual relationship,” § 1981(b), under which the plaintiff has rights. Such a contractual relationship need not already exist, because § 1981 protects the would-be contractor along with those who already have made contracts. We made this clear in Runyon v. McCrary, 427 U. S. 160 (1976), which subjected defendants to liability under § 1981 when, for racially motivated reasons, they prevented individuals who “sought to enter into contractual relationships” from doing so, id., at 172 (emphasis added). We have never retreated from what should be obvious from reading the text of the statute: Section 1981 offers relief when racial discrimination blocks the creation of a contractual relationship, as well as when racial discrimination impairs an existing contractual relationship, so long as the plaintiff has or would have rights under the existing or proposed contractual relationship.
/us/546/0470-01 — Supreme Court of the United States · 2006
Any claim brought under § 1981, therefore, must initially identify an impaired “contractual relationship,” § 1981(b), under which the plaintiff has rights. Such a contractual relationship need not already exist, because § 1981 protects the would-be contractor along with those who already have made contracts. We made this clear in Runyon v. McCrary, 427 U. S. 160 (1976), which subjected defendants to liability under § 1981 when, for racially motivated reasons, they prevented individuals who “sought to enter into contractual relationships” from doing so, id., at 172 (emphasis added). We have never retreated from what should be obvious from reading the text of the statute: Section 1981 offers relief when racial discrimination blocks the creation of a contractual relationship, as well as when racial discrimination impairs an existing contractual relationship, so long as the plaintiff has or would have rights under the existing or proposed contractual relationship.Source:
docroot/ir/caselaw/us_546.jsonl#/us/546/0470-01; Unicode character offsets [6665:7639] (end exclusive); SHA-256 08aa6e7552f7114976fd783e4331bf60b60b9557dab0d3e972d66f22ec4c52bc.Domino’s Pizza requires plaintiff’s own actual or proposed rights, not merely injury through a shareholder’s or agent’s relationship with a contracting corporation. The requirement applies to the direct contract-discrimination claim; CBOCS separately protects advocacy for another person’s contract rights.
interpretation
Consistent with our prior case law, and as required by the plain text of the statute, we hold that a plaintiff cannot state a claim under §1981 unless he has (or would have) rights under the existing (or proposed) contract that he wishes “to make and enforce.” Section 1981 plaintiffs must identify injuries flowing from a racially motivated breach of their own contractual relationship, not of someone else’s.
/us/546/0470-01 — Supreme Court of the United States · 2006
Consistent with our prior case law, and as required by the plain text of the statute, we hold that a plaintiff cannot state a claim under §1981 unless he has (or would have) rights under the existing (or proposed) contract that he wishes “to make and enforce.” Section 1981 plaintiffs must identify injuries flowing from a racially motivated breach of their own contractual relationship, not of someone else’s.Source:
docroot/ir/caselaw/us_546.jsonl#/us/546/0470-01; Unicode character offsets [14181:14591] (end exclusive); SHA-256 08aa6e7552f7114976fd783e4331bf60b60b9557dab0d3e972d66f22ec4c52bc.Section 1981 is not an omnibus remedy for all offensive conduct. The 1991 definition displaced Patterson’s restricted postformation coverage; do not revive that superseded limitation. Contract rights can be impaired without a separately proven state-law breach-of-contract tort.