Recently, the United States Court of Appeals for the Seventh Circuit found sufficient evidence that a jury should determine whether Dunkin Donuts’ failure to allow a franchise owner to relocate or to renew his franchise agreement was based on race. In its decision, the court labeled a Palestinian-Arab a member of the Arab race to determine whether he was a victim of racial discrimination.

In 1979, a Palestinian-Arab of the Muslim faith and a U.S. citizen (the “franchisee”) opened his first Dunkin Donuts franchise in Illinois. In 1984, Dunkin Donuts began selling breakfast sandwiches containing pork (bacon, ham, and sausage), but the franchisee refused to sell sandwiches because many members of the Arab race are forbidden from handling pork. In 1995, the franchisee opened a second store and he continued to refuse to sell pork products. Dunkin Donuts never objected to the franchisee’s refusal to sell pork products. In fact, Dunkin Donuts provided signs indicating that “meat products not available” and “bacon, sausage or ham may not be available at all shops.”

After agreeing to a lease to relocate his third store, Dunkin Donuts informed the franchisee that his relocation would not be approved. In August 2002, the franchisee received a letter from Dunkin Donuts’ legal counsel notifying him that Dunkin Donuts would not (1) approve the relocation of the third store and (2) renew his franchise agreements because of his continuing failure to carry the full line of Dunkin Donuts breakfast products. The franchisee filed suit alleging that Dunkin Donuts’ refusal to allow him to relocate or to renew his franchises constituted racial discrimination. The district court granted summary judgment in favor of Dunkin Donuts and the franchisee appealed.

The appellate court found that the franchisee produced enough evidence for the franchisee to present the case to a jury, which could determine if: (1) the franchisee belonged to a protected class, (2) the franchisee met Dunkin Donuts’ legitimate expectations with regard to the franchise agreement, (3) the franchisee suffered an adverse action, and (4) similarly situated, non-protected individuals were treated more favorably. After considering the different treatment received by three other franchisees, the court found significant evidence that carrying the full line of breakfast sandwiches was not very important to Dunkin Donuts. The other franchisees did not carry the sandwiches and suffered no adverse consequences.

According to Frank Del Barto, this case reinforces the need for employers to either enforce existing contracts or amend them to reflect actual practice. More importantly, this case is a reminder to all employers that the inconsistent enforcement of contract provisions among similarly situated employees can easily lead to charges of discrimination based on race, religion, sex, age, or any other category protected by federal, state, or local law. Here, Dunkin Donuts failed to enforce the contract provision and treated one franchisee differently, resulting in a claim of racial discrimination.