contract

Issues

JWM Investments, Inc., a company wholly owned by Respondent John McDonald, entered into a contract with Petitioner Domino’s Pizza under which it the parties agreed that JVM would build and lease to Domino’s four restaurant buildings.  After the relationship began to sour, McDonald, an African-American, demanded that Domino's perform their end of the bargain. Another petitioner Deborah Pear Phillips, employee of Domino's, refused to sign contractually required "estoppel certificates," and the general counsel for Domino's said that it would perform the contracts only if McDonald would agree to amend them, which he refused to do. McDonald claimed that Petitioners' decision to breach the contracts was motivated by racial discrimination and sued under 42 U.S.C § 1981, which protects the right to make and enforce contracts. Petitioners argue that McDonald does not have standing to sue because he was not personally a party to the contract. The Supreme Court will thus decide whether 42 U.S.C. § 1981 creates a cause of action in one who is not a party to a contract, but who sustained personal injuries as a result of a breach of that contract, where the breach was motivated by racial discrimination against him.

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In 2002, Arnold Preston, a lawyer, and Judge Alex Ferrer entered into a contract where Preston agreed to act as Ferrer's personal manager in exchange for a portion of the earnings from a potential television deal. The contract contained a clause which required that any disputes over the validity of the contract be arbitrated. Several years later, Preston filed an action with the American Arbitration Association against Ferrer, seeking earnings which he claims are owed under that contract. Ferrer claims that the entire contract is invalid under the California Talent Agencies Act, and also contends that under that act, the parties must exhaust their administrative remedies by submitting the dispute to the California Labor Commissionerbefore an arbitrator or court can hear the case. The California Court of Appeals agreed with Ferrer. Preston challenges this holding, claiming that that the Federal Arbitration Act and the Supreme Court's decision in Buckeye Check Cashing v. Cardegna, 546 U.S. 440 (2006), which held that when there is an arbitration agreement disputes over the validity of a contract must first be submitted to an arbitrator, require this dispute to be first submitted to arbitration. Arbitration agreements are found in many contracts, and this decision could have a significant impact on the enforceability of such clauses and on the States' ability to regulate certain industries and agreements.

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Texas filed a complaint against New Mexico and Colorado, pursuant to the Supreme Court’s original jurisdiction under Article III, Section 2, Clause 2 of the United States Constitution and Title 28, Section 1251(a) of the United States Code, alleging that New Mexico violated the terms of the Rio Grande Compact to which all three states are party. The United States subsequently moved to intervene in the proceedings citing both claims under the Rio Grande Compact and federal reclamation law. In the Special Master’s First Interim Report, he suggested that the Court deny New Mexico’s motion to dismiss Texas’s claim, but grant its motion to dismiss the United States’ Complaint in Intervention to the extent that it states a claim under the Rio Grande Compact. The United States argues that the Court must allow it to assert all of its claims against New Mexico because it has a federal interest in the matter. New Mexico and Colorado assert that allowing the United States to proceed with its claims risks re-litigating claims that are already pending at the state level, which they believe is the proper forum for the adjudication of water rights. The Supreme Court’s decision in this case will affect the scope with which the United States can proceed as a party in this action.

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This case asks the Supreme Court to resolve a dispute between Texas, New Mexico, and Colorado regarding apportionment of the Rio Grande’s waters without the consent of the United States. Petitioner Texas and Respondents New Mexico and Colorado do not take any exceptions to the Special Master’s Third Interim Report, which purports to resolve the dispute by imposing a water monitoring system through a consent decree. The United States argues that the proposed consent decree cannot be implemented without its consent, that the proposed decree should be rejected because it unlawfully imposes obligations on the United States, and because the consent decree would run counter to the Rio Grande Compact. The outcome of this case could have an impact on water management in the Southwestern United States and may also impact the relationship between states and the federal government.

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