Labor & Employment Law Daily Wrap Up, DISCRIMINATION—RACE—S.D.N.Y.: Golden Corral awarded dismissal of former franchisee’s discrimination claim, (Jul 10, 2025)

By Seth Abrams, J.D., M.A.

The court found no evidence of discriminatory treatment of the franchisee by the franchisor.

The federal district court in White Plains, New York, granted defendant Golden Corral Franchising Systems, Inc.’s (“Golden Corral”) motion for summary judgment against plaintiff Cornucopia Queen Inc. (“Cornucopia”). Cornucopia brought an action under 42 U.S.C. § 1981 against Golden Corral asserting racial discrimination due to unequal treatment compared to other non-minority franchisees in terminating the franchise agreement. Other claims had earlier been dismissed by the court. The court found that there was neither evidence of intentional discrimination nor any evidence of different treatment of other franchises. The court also found that Golden Corral had valid business reasons for the termination of Cornucopia and that there was no evidence or coherent argument that these were pretextual of illegal discrimination. The court also dismissed a claim for punitive damages (Cornucopia Queen, Inc. v. Golden Corral Franchising Systems, Inc., No. 7:19-cv-02878-NSR-AEK (S.D.N.Y. July 7, 2025)).

Sherrance Henderson, a Black woman, entered a franchise agreement to open a Golden Corral restaurant in Poughkeepsie, NY. She eventually assigned her franchise rights to Cornucopia. Henderson asserted that she did not want to operate in Poughkeepsie, but instead in Newark, which had a majority minority local demographic and where she had more connections. Nevertheless, the franchise opened in January 2017. The franchise ran into operational issues and received over 100 customer complaints. A food safety audit found 16 “critical violations” and 28 total violations. An internal audit by Golden Corral showed that the franchise received only 257 out of 500 points. After several warning letters, in March 2017, Golden Corral terminated the franchise agreement without an opportunity to cure due to the “continued defaults under the franchise agreement.” The franchise was terminated 56 days after opening. Cornucopia contends that the franchise agreement was illegally terminated due to Henderson’s race and not for legitimate business reasons.

In March 2019, Henderson commenced the action. In January 2022, she filed a SAC, which named herself and Cornucopia as plaintiffs. After the court dismissed all claims except for the claim of racial discrimination under 42 U.S.C. § 1981 and a claim for punitive damages, Golden Corral eventually moved for summary judgment on the claim.

Discriminatory treatment. Cornucopia provided six bases for its claim of racial discrimination. The first involved the decision to not permit the franchise to be based in Newark, which was Cornucopia’s preferred locale. The court concluded that “it makes little sense” to refuse a location because of race but then contract with the same person in a different location. The second involved Cornucopia’s assertion that Henderson was Golden Corral’s only black female franchisee. The court noted that Section 1981 only applies to racial discrimination and the relevant inquiry is whether she or others were treated differently based on race. The court found no evidence that Black franchise owners were “treated differently from non-minority franchises.” Third, Cornucopia argued that it was not provided the proper training prior to opening while other franchisees were. The court ultimately concluded that whether the proper training was provided does not raise an inference of racial discrimination. The court noted that “the record is barren of any facts… that it was denied training on the basis of race.” Fourth, Cornucopia asserts that she was not helped despite her pleas to Golden Corral. This basis of discrimination also failed because there was no evidence that the alleged lack of support was due to her race. Fifth, Cornucopia claims that it was not permitted an opportunity to cure its deficiencies while other non-minority franchisees were permitted to do so. Cornucopia, however, did not present evidence that the non-minority franchisees were similarly situated. Sixth, Cornucopia claims that its franchise agreement “being terminated in 56 days is proof of racial discrimination.” This also is devoid of evidence that the termination of the franchise agreement in 56 days was because of race. There are several other possible reasons, including a breakdown in the relationship between the parties. Cornucopia failed to raise any inference of racial discrimination throughout its bases.

Legitimate, non-discriminatory reasons. Even assuming an inference of racial discrimination, Golden Corral produced legitimate, non-discriminatory reasons for the termination. It provided the court with evidence of the “large volume of customer complaints” and the audits that showed low scores for the franchisee. It also provided the court with evidence that “the relationship between Golden Corral broke down to the point where Golden Corral no longer had any faith in [Cornucopia] to properly and successfully operate the franchise such that Golden Corral’s brand image would not suffer if allowed to continue.” Cornucopia also fails to show that these legitimate, non-discriminatory reasons are mere pretext. It did not provide the court with any such evidence.

Punitive damages. With summary judgment granted on the Section 1981 claim, there were no remaining claims for which punitive damages were available. As a result, this claim was also dismissed at the summary judgment stage.

The Case is No. 7:19-cv-02878-NSR-AEK.

Judge: Román, N.

Attorneys: Angel Ariel Bermudez (Bermudez Law Firm, P.A) for Cornucopia Queen, Inc. Selina Miriam Ellis (Walsh Pizzi O’Reilly Falanga LLP) for Golden Corral Franchising Systems, Inc.

Companies: Cornucopia Queen, Inc.; Golden Corral Franchising Systems, Inc.

Cases: Discrimination RaceDiscrimination RemediesDamages NewYorkNews