Domino's Pizza, Inc. v. McDonald
The Court ruled that a corporation's sole shareholder and president could not sue Domino's under a Reconstruction-era civil rights law over a contract dispute, because the contracts at issue belonged to his corporation, not to him personally.
The decision reinforces that basic rules of corporate and agency law limit who can sue for racial discrimination connected to a contract, even when the person suing says he personally suffered because of the alleged discrimination.
“Section 1981 plaintiffs must identify injuries flowing from a racially motivated breach of their own contractual relationship, not of someone else’s.”
The Court's core holding on who may sue for a racially motivated breach of contract.
How it got here: A federal trial court dismissed McDonald's claim; the Ninth Circuit reversed; Domino's asked the Supreme Court to review that reversal.
The Case in Depth
What happened
John McDonald, a Black man, was the sole shareholder and president of a Nevada corporation, JWM Investments, that contracted with Domino's to build and lease restaurants. McDonald claimed Domino's broke the contracts because of racial animus toward him personally, causing him financial and emotional harm, and he sued Domino's under a federal civil rights law protecting the right to make and enforce contracts.
The question before the Court
Can a company's owner personally sue under a civil-rights contract law when it was his corporation, not him, that actually held the broken contract?
Why it matters
Business owners who operate through corporations cannot personally sue for discrimination connected to their company's contracts unless they themselves hold rights under that contract. The ruling channels such claims back to the corporation itself (or other laws, like Title VII), and limits the scope of a widely used civil rights statute in the business context.
What changes now
The Ninth Circuit's ruling in McDonald's favor is undone, and the case is resolved in Domino's favor without further proceedings on this claim. McDonald cannot pursue his personal claim under this statute, though the underlying contract dispute was already separately settled in JWM's bankruptcy proceeding. This is a final merits decision, not a temporary or procedural ruling.
What this does not decide
The Court did not decide whether JWM, the corporation, could itself have sued under this statute, since JWM had already settled its claims and released Domino's. It also left open whether a third-party beneficiary of a contract could ever sue under the law, since McDonald made no such claim.
How the Court got there
The legal reasoning, step by step
- The Court read the civil rights statute's text, which protects a person's right to 'make and enforce contracts' and defines that phrase to include the making, performance, modification, and termination of contracts and enjoyment of contractual benefits.
- The Court explained that historically, the right to 'make contracts' meant the right to personally give and receive contractual rights, not merely the lesser right to act as someone else's agent in forming a contract for another party.
- Applying ordinary corporate and agency law, the Court reasoned that a corporation's shareholder and officer has no personal rights and bears no personal liability under contracts made in the corporation's name — that separation is the whole point of incorporating.
- Because McDonald's complaint identified only a contractual relationship between Domino's and his corporation, and he held no personal rights under that contract, he could not meet the statute's requirement that the suing person's own contract rights were impaired because of race.
- The Court rejected McDonald's proposed 'actual target' theory, under which anyone harmed by discrimination connected to someone else's contract could sue, because that approach ignored the statute's explicit requirement that the plaintiff be the person whose own contract rights were impaired.
Doctrinal impact
Cases affected by this decision
Reaffirms Runyon v. McCrary (427 U. S. 160)
The Court relies on it as still-good law establishing that the statute also protects would-be contractors.
Distinguishes Patterson v. McLean Credit Union (491 U. S. 164)
The Court notes Congress revised this ruling's limit on post-formation conduct but kept its focus on contract obligations.
Distinguishes Shaare Tefila Congregation v. Cobb (481 U. S. 615)
The Court says this case never actually decided the contractual-privity question McDonald relies on.
Distinguishes Goodman v. Lukens Steel Co. (482 U. S. 656)
The Court says this case decided different issues and did not resolve the privity question.