DOMINO’S PIZZA, INC., et al. v. McDONALD

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470 OCTOBER TERM, 2005
Syllabus
DOMINO’S PIZZA, INC., et al. v. McDONALD
certiorari to the united states court of appeals for
the ninth circuit
No. 04–593. Argued December 6, 2005—Decided February 22, 2006
Respondent McDonald, a black man, is sole shareholder and president
of JWM Investments, Inc. (JWM). He sued petitioners (collectively
Domino’s) under 42 U. S. C. § 1981, alleging, inter alia, that JWM and
Domino’s had entered into several contracts, that Domino’s had broken
those contracts because of racial animus toward McDonald, and that
the breach had harmed McDonald personally by causing him to suffer
monetary damages and damages for emotional injuries. The District
Court granted Domino’s motion to dismiss on the ground that McDonald
could bring no § 1981 claim against Domino’s because McDonald was
party to no contract with Domino’s. Reversing, the Ninth Circuit ac
knowledged that an injury suffered only by the corporation would not
permit a shareholder to bring a § 1981 action, but concluded that when
there are injuries distinct from those of the corporation, a nonparty like
McDonald may nonetheless sue under § 1981.
Held: Consistent with this Court’s case law, and as required by the stat
ute’s plain text, a plaintiff cannot state a § 1981 claim unless he has (or
would have) rights under the existing (or proposed) contract that he
wishes “to make and enforce.” The statute, originally enacted as § 1 of
the Civil Rights Act of 1866, now protects the equal right of “[a]ll per
sons” to “make and enforce contracts” without respect to race, § 1981(a),
and defines “make and enforce contracts” to “includ[e] the making, per
formance, modification, and termination of contracts, and the enjoyment
of all benefits . . . of the contractual relationship,” § 1981(b). This can
not be read to give McDonald a cause of action because he “made and
enforced contracts” for JWM as its agent. The right to “make con
tracts” protected by the 1866 legislation was not the insignificant right
to act as an agent for someone else’s contracting, but was rather the
right, denied in some States to blacks, to give and receive contractual
rights on one’s own behalf. The statute’s text makes this common
meaning doubly clear by speaking of the right to “make and enforce”
contracts. When the 1866 Act was drafted, a mere agent, who had no
beneficial interest in a contract he made for his principal, could not gen
erally sue on that contract. Any § 1981 claim, therefore, must initially
identify an impaired “contractual relationship,” § 1981(b), under which
the plaintiff has rights. McDonald’s complaint identifies a contractual

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Syllabus
relationship between Domino’s and JWM, but it is fundamental corpora
tion and agency law that a corporation’s shareholder and contracting
officer has no rights and is exposed to no liability under the corporation’s
contracts. McDonald’s proposed new test for § 1981 standing—
whereby any person may sue if he is an “actual target” of discrimination
and loses some benefit that would otherwise have inured to him had a
contract not been impaired—ignores the explicit statutory requirement
that the plaintiff be the “perso[n]” whose “right . . . to make and enforce
contracts,” § 1981(a), was “impair[ed],” § 1981(c), on account of race.
Shaare Tefila Congregation v. Cobb, 481 U. S. 615, 618; Runyon v. Mc-
Crary, 427 U. S. 160, 168; and Goodman v. Lukens Steel Co., 482 U. S.
656, 669, distinguished. McDonald’s policy argument that many dis
criminatory acts will go unpunished unless his reading of § 1981 prevails
goes beyond any expression of congressional intent and would produce
satellite litigation of immense scope. Pp. 474–480.
107 Fed. Appx. 18, reversed.
Scalia, J., delivered the opinion of the Court, in which all other Mem
bers joined, except Alito, J., who took no part in the consideration or
decision of the case.
Maureen E. Mahoney argued the cause for petitioners.
With her on the briefs was J. Scott Ballenger.
Allen Lichtenstein argued the cause for respondent.
With him on the brief were David T. Goldberg, Eric Schnap
per, and Pamela S. Karlan.*
*Briefs of amici curiae urging reversal were filed for the State of Ala
bama et al. by Troy King, Attorney General of Alabama, and Kevin C.
Newsom, Solicitor General, by Roberto J. Sa´ nchez Ramos, Secretary of
Justice of Puerto Rico, and by the Attorneys General for their respective
States as follows: John W. Suthers of Colorado, Phill Kline of Kansas,
Michael A. Cox of Michigan, Brian Sandoval of Nevada, Jim Petro of
Ohio, Hardy Myers of Oregon, Paul G. Summers of Tennessee, Mark L.
Shurtleff of Utah, and Rob McKenna of Washington; for the Equal Em
ployment Advisory Council et al. by Ann Elizabeth Reesman, Stephen A.
Bokat, Robin S. Conrad, and Robert J. Costagliola; and for the Pacific
Legal Foundation by John H. Findley and Paul J. Beard II.
Briefs of amici curiae urging affirmance were filed for the State of New
York et al. by Eliot Spitzer, Attorney General of New York, Caitlin J.
Halligan, Solicitor General, Michelle Aronowitz, Deputy Solicitor Gen
eral, and Shaifali Puri and Benjamin N. Gutman, Assistant Solicitors

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472 DOMINO’S PIZZA, INC. v. McDONALD
Opinion of the Court
Justice Scalia delivered the opinion of the Court.
We decide whether 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 con
tractual relationship, may bring suit under Rev. Stat. § 1977,
42 U. S. C. § 1981.
I
Respondent John McDonald, a black man, is the sole share
holder and president of JWM Investments, Inc. (JWM), a cor
poration organized under Nevada law. He sued petitioners
(collectively Domino’s) in the District Court for the District
of Nevada, claiming violations of § 1981. The allegations of
the complaint, which for present purposes we assume to be
true, were as follows.
JWM and Domino’s entered into several contracts under
which JWM was to construct four restaurants in the Las
Vegas area, which would be leased to Domino’s. After the
first restaurant was completed, Domino’s agent Debbie Pear
refused to execute the estoppel certificates for JWM re
quired by the contracts to facilitate JWM’s bank financing.
The relationship between the parties further deteriorated
when Pear persuaded the Las Vegas Valley Water District
to change its records to show Domino’s, rather than JWM,
as the owner of the land JWM had acquired for restaurant
construction. McDonald had to go to the Water District to
prove JWM’s ownership of the land. In the course of what
were apparently many and fruitless discussions between
General, by Kerry E. Drue, Acting Attorney General of the Virgin Islands,
and by the Attorneys General for their respective States as follows: Lisa
Madigan of Illinois, Thomas J. Miller of Iowa, Thomas F. Reilly of Massa
chusetts, Mike McGrath of Montana, William H. Sorrell of Vermont, and
Peggy A. Lautenschlager of Wisconsin; and for the Lawyers’ Committee
for Civil Rights Under Law et al. by Thomas S. Martin, Barbara R. Arn
wine, Sarah C. Crawford, Tricia G. Jefferson, Jennifer K. Brown, Theo
dore M. Shaw, Jacqueline A. Berrien, Norman J. Chachkin, and Robert
Stroup.

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Opinion of the Court
McDonald and Pear, McDonald “explained that he intended
to see [the contracts] through to completion,” even though
Pear made clear that unless he agreed to back out of the
contractual relationship, he would suffer serious conse
quences. App. to Pet. for Cert. 12–13. At one point Pear
said to McDonald, “ ‘I don’t like dealing with you people any
way,’ ” refusing to specify what she meant by “ ‘you people.’ ”
Id., at 13. Pear threatened to use Domino’s attorneys to
“bury” McDonald if he should sue. Ibid. The contracts be
tween Domino’s and JWM ultimately remained uncompleted.
At least in part because of the failed contracts, JWM filed
for Chapter 11 bankruptcy. The trustee for JWM’s bank
ruptcy estate initiated an adversary proceeding against
Domino’s for breach of contract. For whatever reason, the
trustee chose not to assert a § 1981 claim alleging Domino’s
interference with JWM’s right to make and enforce con
tracts. The breach-of-contract claim was settled for $45,000,
and JWM gave Domino’s a complete release. Consequently,
no further claims arising out of the same episode could be
pursued on JWM’s behalf.1 While the bankruptcy proceed
ings were still ongoing, McDonald filed the present § 1981
claim against Domino’s in his personal capacity.
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 McDon
ald personally by causing him “to suffer monetary damages
and damages for pain and suffering, emotional distress, and
humiliation.” Id., at 16. The complaint demanded that
Domino’s discharge its “obligations under the contracts
which McDonald would have received, but for the discrimi
1 Since JWM settled its claims and is not involved in this case, we have
no occasion to determine whether, as a corporation, it could have brought
suit under § 1981. We note, however, that the Courts of Appeals to have
considered the issue have concluded that corporations may raise § 1981
claims. See, e. g., Hudson Valley Freedom Theater, Inc. v. Heimbach, 671
F. 2d 702, 706 (CA2 1982).

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474 DOMINO’S PIZZA, INC. v. McDONALD
Opinion of the Court
natory practices, including, but not limited to front pay, back
pay and other lost benefits,” as well as “compensatory
damages for pecuniary losses, including pain and suffering,
emotional distress, mental anguish, and humiliation,” and
punitive damages. Id., at 17.
Domino’s filed a motion to dismiss the complaint for failure
to state a claim. It asserted that McDonald could bring no
§ 1981 claim against Domino’s because McDonald was party
to no contract with Domino’s. The District Court granted
the motion. It noted that Domino’s had “rel[ied] on the
basic proposition that a corporation is a separate legal entity
from its stockholders and officers,” id., at 6, and concluded
that a corporation may have “standing to assert a § 1981
claim” but that “a president or sole shareholder may not step
into the shoes of the corporation and assert that claim per
sonally,” id., at 7 (citing Guides, Ltd. v. Yarmouth Group
Property Management, Inc., 295 F. 3d 1065, 1072–1073
(CA10 2002)).
The Court of Appeals for the Ninth Circuit reversed. It
agreed that an “injury suffered only by the corporation”
would not permit a shareholder to bring a § 1981 action. 107
Fed. Appx. 18 (2004). But relying on its earlier decision in
Gomez v. Alexian Bros. Hospital of San Jose, 698 F. 2d 1019,
1021–1022 (1983), the Ninth Circuit concluded that when
there are “injuries distinct from that of the corporation,” a
nonparty like McDonald may nonetheless bring suit under
§ 1981. 107 Fed. Appx., at 18–19. The Court of Appeals ac
knowledged that this approach set it apart from other Cir
cuits. Ibid. We granted certiorari. 544 U. S. 998 (2005).
II
Among the many statutes that combat racial discrimina
tion, § 1981, originally § 1 of the Civil Rights Act of 1866, 14
Stat. 27, has a specific function: It protects the equal right
of “[a]ll persons within the jurisdiction of the United States”
to “make and enforce contracts” without respect to race. 42

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U. S. C. § 1981(a). The statute currently defines “make and
enforce contracts” to “includ[e] the making, performance,
modification, and termination of contracts, and the enjoy
ment of all benefits, privileges, terms, and conditions of the
contractual relationship.” § 1981(b).
McDonald argues that the statute must be read to give
him a cause of action because he “made and enforced con
tracts” for JWM. On his reading of the text, “[i]f Domino’s
refused to deal with the salesman for a pepperoni manufac
turer because the salesman was black, that would violate the
section 1981 right of the salesman to make a contract on
behalf of his principal.” Brief for Respondent 12. We
think not. The right to “make contracts” guaranteed by the
statute was not the insignificant right to act as an agent for
someone else’s contracting—any more than it was the insig
nificant right to act as amanuensis in writing out the agree
ment, and thus to “make” the contract in that sense.
Rather, it was the right—denied in some States to blacks, as
it was denied at common law to children—to give and receive
contractual rights on one’s own behalf. Common usage
alone is enough to establish this, but the text of the statute
makes this common meaning doubly clear by speaking of the
right to “make and enforce” contracts. When the Civil
Rights Act of 1866 was drafted, it was well known that “[i]n
general a mere agent, who has no beneficial interest in a
contract which he has made on behalf of his principal, cannot
support an action thereon.” 1 S. Livermore, A Treatise on
the Law of Principal and Agent 215 (1818).2
2 McDonald’s “pepperoni salesman” analogy is imprecise. It would bet
ter parallel the facts here if the analogy had been to a salesman unable to
collect on accounts receivable because he was black, rather than to one
who was unable to make the contract in the first place. The fundamental
point, however, is the same: An individual seeking to make or enforce a
contract under which he has rights will have a claim under 42 U. S. C.
§ 1981, while one seeking to make or enforce a contract under which some
one else has rights will not.

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Opinion of the Court
Any claim brought under § 1981, therefore, must initially
identify an impaired “contractual relationship,” § 1981(b),
under which the plaintiff has rights.3 Such a contractual re
lationship 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 pre
vented individuals who “sought to enter into contractual re
lationships” 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 contrac
tual relationship, as well as when racial discrimination im
pairs an existing contractual relationship, so long as the
plaintiff has or would have rights under the existing or pro
posed contractual relationship.
Absent the requirement that the plaintiff himself must
have rights under the contractual relationship, § 1981 would
become a strange remedial provision designed to fight racial
animus in all of its noxious forms, but only if the animus and
the hurt it produced were somehow connected to somebody’s
contract. We have never read the statute in this un
bounded—or rather, peculiarly bounded—way. See, e. g.,
Patterson v. McLean Credit Union, 491 U. S. 164, 176 (1989);
Burnett v. Grattan, 468 U. S. 42, 44, n. 2 (1984); General
3 We say “under which the plaintiff has rights” rather than “to which
the plaintiff is a party” because we do not mean to exclude the possibility
that a third-party intended beneficiary of a contract may have rights under
§ 1981. See, e. g., 2 Restatement (Second) of Contracts § 304, p. 448 (1979)
(“A promise in a contract creates a duty in the promisor to any intended
beneficiary to perform the promise, and the intended beneficiary may en
force the duty”). Neither do we mean to affirm that possibility. See,
e. g., Blessing v. Freestone, 520 U. S. 329, 349 (1997) (Scalia, J., concur
ring) (“Until relatively recent times, the third-party beneficiary was gen
erally regarded as a stranger to the contract, and could not sue upon it”).
The issue is not before us here, McDonald having made no such claim.

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Opinion of the Court
Building Contractors Assn., Inc. v. Pennsylvania, 458 U. S.
375, 396 (1982).
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 estab
lished 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 postfor
mation 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 posi
tively reinforced that element by including in the new
§ 1981(b) reference to a “contractual relationship.”
McDonald’s complaint does identify a contractual relation
ship, the one between Domino’s and JWM. But it is funda
mental 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 corpora
tion’s contracts. McDonald now makes light of the law of
corporations and of agency—arguing, for instance, that be
cause he “negotiated, signed, performed, and sought to en
force the contract,” Domino’s was wrong to “insist that [the
contract] somehow was not his ‘own.’ ” Brief for Respond
ent 4. This novel approach to the law contradicts McDon
ald’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.

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478 DOMINO’S PIZZA, INC. v. McDONALD
Opinion of the Court
As an alternative to ignoring corporation and agency law,
McDonald proposes a new test for § 1981 standing: Any per
son who is an “actual target” of discrimination, and who loses
some benefit that would otherwise have inured to him had a
contract not been impaired, may bring a suit. Under this
theory, an individual is the “actual target” if he was the rea
son a defendant chose to impair its contractual relationship
with a third party. McDonald’s formulation simply ignores
the explicit statutory requirement that the plaintiff be the
“perso[n]” whose “right . . . to make and enforce contracts,”
§ 1981(a), was “impair[ed],” § 1981(c), on account of race. It
is just the statutory construction we have always rejected.
McDonald points to several of our prior cases involving
plaintiffs whose status as contracting parties was unclear.
Because they nonetheless prevailed, McDonald reasons, con
tractual privity cannot be a sine qua non of a § 1981 claim.
In those cases, however, we did not discuss, much less decide,
the privity question. In Shaare Tefila Congregation v.
Cobb, 481 U. S. 615 (1987), we decided the narrow question
whether Jews are a separate and protected race under
§ 1982. Id., at 618. Similarly, in Runyon, supra, the argu
ments and the opinion addressed “only two basic questions:
whether § 1981 prohibits private, commercially operated,
nonsectarian schools from denying admission to prospective
students because they are Negroes, and, if so, whether that
federal law is constitutional as so applied.” Id., at 168 (foot
note omitted). And in Goodman v. Lukens Steel Co., 482
U. S. 656 (1987), we decided only the two contested issues:
that § 1981 was subject to the state personal injury limita
tions period, id., at 660–664, and that it violates Title VII of
the Civil Rights Act of 1964 and § 1981 for a union to decline
to press black employees’ grievances under the governing
collective-bargaining agreement, id., at 669. “The Court
often grants certiorari to decide particular legal issues while
assuming without deciding the validity of antecedent prop
ositions, and such assumptions—even on jurisdictional is

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sues—are not binding in future cases that directly raise the
questions.” United States v. Verdugo-Urquidez, 494 U. S.
259, 272 (1990) (citations omitted).
McDonald resorts finally to policy arguments. Unless his
reading of the statute prevails, he warns, many discrimina
tory acts will go unpunished. Corporations, for instance,
may choose not to bring suit for the racially motivated con
tract breach. It is not likely to be a common occurrence that
the victim of a contract breach will forgo a potent available
remedy. Injured parties “usually will be the best propo
nents of their own rights,” Singleton v. Wulff, 428 U. S. 106,
114 (1976) (plurality opinion). And if and when “the holders
of those rights . . . do not wish to assert them,” id., at 113–
114, third parties are not normally entitled to step into their
shoes. Moreover, § 1981 is only one of a multitude of civil
rights statutes. Many of McDonald’s hypothetical examples
of unpunished discrimination would in fact be reachable
under Title VII—or even under general criminal law. See,
e. g., Brief for Respondent 27 (concerning a scenario in which
“Domino’s officials had beaten up McDonald in an attempt to
intimidate him”). The most important response, however,
is that nothing in the text of § 1981 suggests that it was
meant to provide an omnibus remedy for all racial injustice.
If so, it would not have been limited to situations involving
contracts. Trying to make it a cure-all not only goes beyond
any expression of congressional intent but would produce
satellite § 1981 litigation of immense scope. McDonald’s the
ory would permit class actions by all the minority employees
of the nonbreaching party to a broken contract (or, for that
matter, minority employees of any company failing to receive
a contract award), alleging that the reason for the breach (or
for the refusal to contract) was racial animus against them.
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

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Opinion of the Court
make and enforce.” Section 1981 plaintiffs must identify in
juries flowing from a racially motivated breach of their own
contractual relationship, not of someone else’s. Because the
District Court correctly recognized and applied these princi
ples, the Ninth Circuit erred in reversing its judgment.4
* * *
The judgment of the Ninth Circuit is accordingly
Reversed.
Justice Alito took no part in the consideration or deci
sion of this case.
4 McDonald also argues in his merits brief (for the first time) that we
should affirm the Ninth Circuit’s judgment because Domino’s interfered
with McDonald’s own contracts with JWM. Counsel for McDonald as
serted at oral argument that this contention is not a new argument (see
this Court’s Rule 15.2), but is a “sort of formulatio[n] of the same argu
ment” that he had properly raised. Tr. of Oral Arg. 28. As such, it fails
for the same reasons that the argument fails in its original incarnation.
McDonald acknowledges that JWM did not breach any contractual obliga
tion to him, see Brief for Respondent 44, and so any injury he may have
received still derived from impairment of the contractual relationship be
tween JWM and Domino’s, under which McDonald has no rights.