1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 BROADMOOR HOUSE, INC., et al., Case No. 25-cv-00992-CRB

9 Plaintiffs,

ORDER GRANTING MOTION TO

10 v.

DISMISS

11 REGIONAL CENTER OF THE EAST

BAY,

12 Defendant. 13 14 Plaintiffs Broadmoor House, Inc., Darrell Mellion, and Lesa Mellion sue Defendant 15 Regional Center of the East Bay alleging that RCEB breached a settlement agreement 16 arising out of a prior lawsuit and, separately, that RCEB racially discriminated against 17 them in connection with a contract in violation of 42 U.S.C. § 1981. RCEB moves to 18 dismiss the latter count on the grounds that Plaintiffs have failed to allege impairment of a 19 contractual right or intentional discrimination. The Court finds this matter suitable for 20 resolution without argument in accordance with Civil Local Rule 7-1(b) and GRANTS the 21 motion to dismiss. 22 Plaintiffs, who are vendors of RCEB, provide services to RCEB’s developmentally 23 disabled consumers. FAC (dkt. 6) ¶¶ 44, 46. They allege that they were treated adversely 24 on the basis of their race (and, in the case of Broadmoor House, the race of its owners). Id. 25 ¶ 45–49. This assertion is based on allegations that Black-owned vendors have more 26 empty beds than other racial groups, id. ¶¶ 18–20; that there is greater delay in processing 27 Black-owned vendors’ invoice payments, id. ¶¶ 22–27; and that RCEB pays its white 1 To state a claim upon which relief can be granted, a plaintiff must allege “enough 2 facts to state a claim that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 3 544, 570 (2007). “Dismissal can be based on the lack of a cognizable legal theory or the 4 absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pac. 5 Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). The Court “must take all of the factual 6 allegations in the complaint as true,” but it is “not bound to accept as true a legal 7 conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 8 The elements of a § 1981 claim are (1) that the plaintiff is a member of a racial 9 group, (2) that a contractual right with the defendant was impaired, (3) that the defendant 10 intentionally discriminated against the plaintiff based on his race, and (4) that the 11 plaintiff’s race was a but-for cause of the contractual impairment. Ray v. Am. Airlines, 12 755 F. Supp. 3d 1277, 1279 (C.D. Cal. 2024). RCEB challenges the second and third 13 requirements (and, by logical consequence, the fourth as well). MTD (dkt. 7) at 5. 14 RCEB is correct that Plaintiffs have failed to allege facts that would establish either 15 that their contractual rights with RCEB have been impaired or that RCEB intentionally 16 discriminated against them based on race. Plaintiffs apparently allege that they have 17 contracts with RCEB, see FAC ¶¶ 44, 46, but their complaint provides no details as to 18 those contracts. Thus, the Court cannot conclude that any alleged discrimination by RCEB 19 has “impair[ed] an existing contractual relationship” because it cannot determine what 20 rights Plaintiffs had under that relationship. See Domino’s Pizza, Inc. v. McDonald, 546 21 U.S. 470, 476 (2006). And though Plaintiffs assert that RCEB intentionally discriminated 22 based on their race, all of their factual allegations go to racial disparities, not intentional 23 discrimination. Disparate racial impact is not enough to state a § 1981 claim. Gen. Bldg. 24 Contractors Ass’n v. Pennsylvania, 458 U.S. 375, 389–91 (1982); see also Mobley v. 25 Workday, Inc., 740 F. Supp. 3d 796, 812 (N.D. Cal. 2024) (“Stating a claim for disparate 26 treatment requires pleading facts giving rise to an inference that the employer intended to 27 discriminate against the protected group.” (citation omitted) (emphasis in original)). Mere 1 For the foregoing reasons, the Court GRANTS RCEB’s motion to dismiss without 2 prejudice. Should Plaintiffs wish to pursue their § 1981 claim, they must allege facts that 3 would establish what contractual rights they have and how they were impaired, or that they 4 were prevented from entering into contracts in the first place. See Domino’s Pizza, 546 5 U.S. at 476. Plaintiffs must also allege facts that would establish intentional discrimination 6 on the part of RCEB, not merely disparate impact or knowledge thereof. See Mobley, 740 7 F. Supp. 3d at 812. Plaintiffs have 28 days from the issuance of this order to file an 8 amended complaint addressing these defects if they so wish. 9 IT IS SO ORDERED. 10 Dated: April 14, 2025

CHARLES R. BREYER

11 United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27