Labor & Employment Law Daily Wrap Up, DISCRIMINATION—RACE—5th Cir.: ‘Faith-based’ auto repair company prevails against Jewish man it denied franchise, (Oct 1, 2026)

By Jason Albright, J.D.

“When the company refused to franchise to [the plaintiff], who is an ethnic and religious Jew, [he] sued for racial discrimination under 42 U.S.C. § 1981.”

Christian Brothers Automotive Corporation, a “faith-based auto-repair business that franchises only to Christians,” did not engage in unlawful race discrimination under 42 U.S.C. § 1981 when it refused to grant a franchise to a man who is an ethnic and religious Jew, the Fifth Circuit held. The plaintiff argued that discrimination against Jews is ipso facto race discrimination, but longstanding U.S. Supreme Court precedent holds that Section 1981 does not reach religious discrimination, the company’s more than 250 franchisees include at least two ethnic Jews who are professing Christians, and there was no evidence suggesting that the business’s franchise policy is a façade for ethnic discrimination against Jews, according to the Fifth Circuit. Judge Oldham concurred in the judgment (Domanic v. Christian Brothers Automotive Corp., No. 25-20486 (5th Cir. Sept. 30, 2026)).

To “glorify God…” Christian Brothers Automotive Corporation describes itself as a “faith-based franchisor of auto-repair stores.” Its “mission,” according to the court, is to “glorify God by providing ethical and excellent service to its customers,” and its “branding, website, mission statement, and, of course, its name” reflect that ethos.

“[S]piritually aligned.” It franchises only to professing Christians. In 40 years of business, according to the company, it has never offered a franchise to someone not “spiritually aligned with the company and prepared to share a personal Christian testimony.”

More than 250 franchisees. Each of the auto repair company’s more than 250 franchisees thus professes Christianity. It is undisputed, noted the court, that the group encompasses a variety of races and ethnicities, including at least two ethnic Jews.

Application. The plaintiff, who is both ethnically and religiously Jewish, applied to open a Christian Brothers franchise in the fall of 2020. During the application process, one of the company’s representatives asked him about his faith. He replied that he is Jewish, not Christian. He alleged that the representative told him religion would not be an issue, something Christian Brothers denies.

Rejected at third step. In November 2020, he made it to the third of eight steps in the application process, the step at which candidates share “more personal information.” At this point, the representative called him to tell him Christian Brothers was ending the process because he is Jewish.

Section 1981 lawsuit. In 2022, he sued Christian Brothers in federal district court, claiming race discrimination under 42 U.S.C. § 1981. He alleged that the company denied him a franchise because of his Jewish ethnicity, not his Jewish faith. And, in any event, he argued that there is no meaningful distinction between Jewish ethnicity and religion, regardless of what actually motivated the company’s refusal.

“Unaware” of ethnicity. Christian Brothers moved to dismiss, arguing that it ended the franchise process based solely on the applicant’s non-Christian faith, not his Jewish ethnicity, of which it said it was unaware. The district court denied the motion, finding the applicant adequately pleaded a claim of race—as opposed to religious—discrimination.

Decision below and appeal. The auto repair company later moved for summary judgment. Among other things, it said the applicant’s claim was “a religious discrimination claim masquerading as race discrimination.” It argued that he failed to make out a prima facie case of race discrimination, and that, in any event, its franchise policy provided a lawful, race-neutral, and non-pretextual reason for denying him a franchise.

Granting summary judgment for Christian Brothers, the district court, applying McDonnell Douglas, held that, though the applicant had established a prima facie case under Section 1981, the company showed that its religious franchise policy was a legitimate, race-neutral justification for its actions and that there was no evidence of pretext. The applicant appealed to the Fifth Circuit.

Race discrimination. Affirming, the appeals court found that the applicant made “no serious effort on appeal to show any error in the district court’s ruling.” The evidence proved without contradiction that Christian Brothers has a longstanding and consistent policy of franchising only to professing Christians. “And no evidence,” asserted the court, “suggested that this policy was a pretext for racial discrimination against persons of Jewish ancestry (or any other ancestry). To the contrary, the undisputed evidence showed that Christian Brothers has franchised to two ethnic Jews who are professing Christians.”

No distinction? The applicant argued that, as far as Section 1981 is concerned, there can be no distinction between discrimination based on Jewish ancestry and discrimination based on Jewish faith. Section 1981, he asserted, “protect[s] Jews... regardless of whether they are religious or ethnic Jews.”

Rejecting his argument, the Fifth Circuit said it would “vitiate the established principle that § 1981 does not touch religious discrimination.” Here, the court cited Runyon v. McCrary, 427 U.S. 160, 167 (1976) and Saint Francis Coll. v. Al-Khazraji, 481 U.S. 604, 613 (1987).

“If Christian Brothers’s policy were challenged under § 1981 by members of any other faith,” the Fifth Circuit concluded, “those claims would fail as a matter of law,” and the settled law of Section 1981, it said, barred the court from recognizing “an exception for one faith only—Judaism.”

Concurrence. Concurring, Judge Oldham agreed with the majority’s “bottom-line conclusion that Christian Brothers is entitled to summary judgment,” but he wrote separately to note his view that the court was required to reach the ministerial exception at the outset. Judge Oldham also noted his perplexity concerning “how or why McDonnell Douglas is relevant to disputes like this one.” In an appropriate case, he argued, an en banc Fifth Circuit should reconsider the court’s use of McDonnell Douglas at summary judgment generally and in Section 1981 cases specifically.

The case is No. 25-20486.

Judge: Duncan, S.

Attorneys: Eric L. Grogan (Grogan Law) for Evan Domanic. Jeffrey L. Oldham (Jackson Walker) for Christian Brothers Automotive Corp.

Companies: Christian Brothers Automotive Corp.

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