Hammond v. Kmart Corporation, 733 F.3d 360

Hammond, an African-American woman, sues Kmart under 42 U.S.C. § 1981 for racial discrimination and separately for negligent infliction of emotional distress (state claim).
District court dismissed the § 1981 claim for failure to allege interference with a contractual relationship, dismissing the federal claim without prejudice on the state claim.
Hammond alleged that on November 21, 2012 a white Kmart clerk made insulting racial remarks while Hammond placed items on layaway.
Allegations described remarks about Roxbury and Weymouth, including racial slurs and stereotypes, but did not allege denial of layaway or termination of the contract, or any contract terms altered by the conduct.
Hammond did not amend after dismissal; the district court treated the complaint as stated and Hammond added in opposition that she completed the layaway.
The court reviews de novo and evaluates whether the complaint plausibly pleads a § 1981 claim by showing interference with a contractual relationship based on race.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the complaint state a § 1981 claim requiring interference with a contract?	Hammond argues remarks interfered with her layaway contract due to racial animus.	Kmart contends the allegations fail to show interference with any contractual right or relationship.	No; allegations do not show impairment of a contractual relationship.
Is there a sufficient nexus between discrimination and a contractual right under § 1981?	Hammond claims discriminatory remarks prevented completion or enforcement of layaway.	Garrett requires actual loss or interference with contract rights; mere offensive remarks are insufficient.	No; the discriminatory remarks do not plausibly impair Hammond's contract rights.
Can later assertion that layaway was completed salvage a § 1981 claim?	Completion of layaway suggests a loss of contract interest could be inferred.	Garrett requires actual loss of contract interest, not speculative or post hoc assertions.	No; completion of layaway does not establish the required contract interference.

Domino's Pizza, Inc. v. McDonald, 546 U.S. 470 (U.S. 2006) (limits § 1981 as a broad remedy; not all racial injustice is a contract claim)
Rivers v. Roadway Express, Inc., 511 U.S. 298 (U.S. 1994) (contract-related discrimination limits under § 1981)
Runyon v. McCrary, 427 U.S. 160 (U.S. 1976) (statutory scope and discrimination in contracts)
Garrett v. Radio Shack, 295 F.3d 94 (1st Cir. 2002) (discrimination must impair make/enforce contract interests; post-purchase conduct insufficient)
Danco, Inc. v. Wal-Mart Stores, Inc., 178 F.3d 8 (1st Cir. 1999) (contractual rights and § 1981 framework in retail context)
Benjamin v. Aroostook Med. Ctr., Inc., 57 F.3d 101 (1st Cir. 1995) (earlier § 1981 pleading standards in the First Circuit)
Sawyer v. Southwest Airlines Co., 243 F. Supp. 2d 1257 (D. Kan. 2003) (district court rare theory on enjoyment of contract terms under § 1981)
Lopez v. Target Corp., 676 F.3d 1230 (11th Cir. 2012) (retail discrimination must thwart contract rights)
Arguello v. Conoco, Inc., 330 F.3d 355 (5th Cir. 2003) (recognizes § 1981 claims when customer attempts to contract are thwarted)
Bagley v. Ameritech Corp., 220 F.3d 518 (7th Cir. 2000) (circuit split on broader § 1981 interpretations)
Green v. Dillard's, Inc., 483 F.3d 533 (8th Cir. 2007) (illustrates more expansive § 1981 claim when conduct is hostile and discriminatory)