Broadmoor House, Inc. v. Regional Center of the East Bay
3:25-cv-00992
N.D. Cal.Apr 14, 2025Background
- Plaintiffs (Broadmoor House, Inc. and others) are vendors providing services to developmentally disabled individuals under contract with the Regional Center of the East Bay (RCEB).
- Plaintiffs allege RCEB breached a settlement from prior litigation and engaged in racial discrimination in violation of 42 U.S.C. § 1981.
- Discrimination claims are based on alleged adverse treatment of Black-owned vendors compared to others, including more empty beds, delayed payments, and lower average payments for Black consumers.
- RCEB moved to dismiss the § 1981 discrimination count for failure to adequately plead contractual impairment and intentional discrimination.
- The Court decided the motion on the papers without oral argument, pursuant to local rules.
- The claim was dismissed without prejudice, giving Plaintiffs 28 days to amend if desired.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs alleged impairment of contractual rights under § 1981 | Plaintiffs have contracts with RCEB and suffered racial disparities in business outcomes | Plaintiffs failed to specifically allege how any contract was impaired | No impairment alleged, claim dismissed |
| Whether Plaintiffs alleged intentional race-based discrimination | Alleged adverse outcomes for Black-owned vendors, implying discrimination | Only disparities alleged, not intentional discrimination as required | No facts alleging intent, claim dismissed |
| Sufficiency of factual pleading under federal pleading standards | Complaint's allegations of race-based disparities should suffice | Conclusory allegations and statistics are insufficient without contract and intent details | Insufficient facts, claim dismissed |
| Whether disparate impact is actionable under § 1981 | Disparities demonstrate actionable discrimination | § 1981 requires proof of intentional discrimination, not disparate impact | Disparate impact alone is not enough |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard for facial plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (distinguishing fact from conclusory legal allegations at pleading stage)
- Domino's Pizza, Inc. v. McDonald, 546 U.S. 470 (action under § 1981 requires impairment of a valid contract)
- Gen. Bldg. Contractors Ass’n v. Pennsylvania, 458 U.S. 375 (§ 1981 covers intentional discrimination, not disparate impact)