JOHN L. SMITH:
Small-business operator's case a big question of civil rights
It's no secret. Small-business owners don't have much clout in the corporate universe.
In a system of supergiants, the sole proprietor is barely a speck of dust in the vastness of space.
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When John McDonald's one-man development company entered into a contract with Domino's Pizza Inc. to build four of its popular shops in Southern Nevada, by all appearances it was an example of a small business and a large corporation working together toward a mutual benefit.
The corporate giant would get pizza parlors built by a minority contractor. McDonald, who is black, would get a chance to do what he's done for many years: develop properties.
The first store was completed without a problem, but the second encountered problems with zoning.
Construction delays caused a rift between McDonald and Domino's, and the pizza king played hardball. It canceled his contract and attempted to shove him out of a deal in which he had everything invested. When Domino's corporate employee Deborah Pear Phillips told him, "I don't like dealing with you people anyway," McDonald knew he was up against more than corporate bullying.
His company went bankrupt. His personal finances were ruined.
It's hard to fathom how the fate of that small pizza joint could change the course of American civil rights and knock the corporate world for a loop, but the legal wrangling between John McDonald and Domino's Pizza promises to do just that.
On Dec. 5, McDonald's case is due to be heard by the U.S. Supreme Court. McDonald's argument will be presented by attorneys Matthew Callister and Allen Lichtenstein of the American Civil Liberties Union .
Corporations do battle every day in courts across the land. In theory, the corporate veil protects officers from personal financial ruin, but in reality, small-business owners are regularly crushed by such wars. So, when McDonald sued, it wasn't surprising that a local federal court granted Domino's motion to dismiss.
But the stakes rose after the 9th U.S. Circuit Court of Appeals reversed the dismissal on grounds that racism arguably played a role in the dissolution of the relationship. McDonald's attorneys argue that to deny him the right to defend himself in a case in which he was racially discriminated against violates the Constitution's most basic civil rights component.
Now the Supreme Court is weighing in.
If racism played a substantive role in the dissolution of the contractual relationship between McDonald and Domino's, then McDonald might personally be able to sue the corporation for damages he suffered individually separate from the flattening of his small development company.
It was a small business, but it's no small question.
Don't be surprised if civil rights authorities throughout the nation are talking about McDonald and Domino's before the case is through the system.
They'll argue that to deny McDonald his right to enforce a contract in accordance with the Civil Rights Act of 1866 through the use of a corporate cloak is tantamount to making it open season to racially discriminate and to deny true corporate status to minority-owned businesses.
"McDonald, individually, was the focus and target of discrimination and suffered unique separate and distinct financial damages, different in kind from those suffered by the corporation," Callister asserts.
Domino's counsel Maureen Mahoney argues that "doing business through the corporate form, and thereby insulating himself from any personal contractual relationships that could have supported a claim was entirely McDonald's choice. And there is no coherent distinction between large corporations and small ones in this context. If McDonald's claim is permitted, then every shareholder, employee, or bystander who can claim to have suffered 'individual' damages, including emotional distress, traceable to an allegedly discriminatory breach of contract between IBM and General Motors will have standing to sue."
No, McDonald argues, just the ones who were racially discriminated against.
The small business doesn't count for much in the corporate world, but John McDonald's case transcends that now.
He's lost everything.
Has he lost his civil rights, too?
John L. Smith's column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at Smith@reviewjournal.com or call 383-0295.