Martin Gross v. R.T. Reynolds, 487 F. App'x 711

Private Harrisburg University, a private, publicly funded institution, is subject to regulation; Gross and White, African-American subcontractors, bid to perform painting for Reynolds’ University project; Reynolds and its officers allegedly solicited Gross, with a subcontract agreement on May 7, 2007 overseen by Graystone Bank financing, including a mortgage on Gross’s home; alleged discriminatory conduct included delays, removal of work from Gross, and a demand to remove White; White and Gross complained to Reynolds/University in 2008; by April 2009 Gross completed obligations but was unpaid, and the District Court dismissed federal claims and declined supplemental jurisdiction over state-law claims; the court later remanded for potential leave-to-amend considerations

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Gross states a plausible §1981 claim against Reynolds and its employees	Gross alleges race-based discriminatory conduct by Reynolds and employees	Reynolds and employees allegedly engaged in non-discriminatory contract management	Claims dismissed for lack of plausible racial discrimination
Whether Gross states §1981 claims against the University and Darr	University and Darr interfered with contract due to minority status	No facts showing blocked or impaired contract rights by University/Darr	Claims dismissed; no state-action or interference shown
Whether Gross states a §1983 claim against all defendants	Defendants acted under color of state law through public funding/regs	Private entities not state actors; lack of state-actor nexus	Dismissed; no state-actor liability established
Whether the district court should have granted leave to amend	Amendment could cure pleading defects	Amendment would be futile or inequitable in parts; statute-of-limitations possible for Graystone	Remanded to determine whether leave to amend should be granted or amendment would be futile or inequitable

Brown v. Philip Morris, Inc., 250 F.3d 789 (3d Cir. 2001) (elements of §1981 claim; need for plausible discrimination)
Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470 (Supreme Court 2006) (definition of rights under §1981 and damages considerations)
Leshko v. Servis, 423 F.3d 337 (3d Cir. 2005) (state-actor requirement under §1983)
Rendell-Baker v. Kohn, 457 U.S. 830 (1982) (private school funding does not make discharge acts state action)
Blum v. Yaretsky, 457 U.S. 991 (1982) (private facility operating with state subsidy not per se state action)
Phillips v. Cnty. of Allegheny, 515 F.3d 224 (3d Cir. 2008) (leave-to-amend rule; futility/inequitable considerations apply)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requiring plausible claims)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard; not mere conclusory statements)