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42 USC Section 1981 limited to contracting parties
February 22, 2006 by Ross Runkel at LawMemo

Domino's Pizza v. McDonald (US Supreme Court 02/22/2006): The US Supreme Court holds (unanimously) that a plaintiff who lacks any rights under an existing contractual relationship with the defendant, and who has not been prevented from entering into such a contractual relationship, cannot bring suit under 42 USC Section 1981.

Domino's Pizza had several contracts with JWM Investments, a corporation. McDonald, an black man, was an officer and the sole shareholder the JWM corporation. McDonald personally was not a party to the contracts. McDonald sued Domino's claiming that Domino's terminated its contracts with JWM because of racial animus toward him. The suit was brought under 42 USC Section 1981 which provides that "All persons within the jurisdiction of the United States shall have the same right ... to make and enforce contracts ... as is enjoyed by white citizens." The trial court dismissed the suit, saying McDonald did not have standing because he was not a party to the contracts. The 9th Circuit reversed, saying "the same discriminatory conduct can result in both corporate and individual injuries." The US Supreme Court reversed the 9th Circuit decision.

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