Labor & Employment Law Daily Wrap Up, DISCRIMINATION—RELIGIOUS—S.D. Tex.: Judgment granted in favor of franchisor in suit alleging religious discrimination, (Oct 8, 2025)

By Donielle Tigay Stutland, J.D.

42 U.S.C. § 1981 only protects against discrimination based on race, not based on religion.

The federal district court in Houston, Texas granted summary judgment in favor of an auto repair business franchisor in a suit alleging racial discrimination over the denial of a Christian Brothers Auto franchise to an applicant who was Jewish. The court found that the franchisor offered a legitimate, nondiscriminatory reason for declining to contract with the applicant. The franchisor asserted that it declined to offer the applicant a franchise because of his religion, not his race. The court indicated that Section 1981 prohibits racial discrimination—not religious discrimination (Domanic v. Christian Brothers Automotive Corp., No. 4:22-cv-00386 (S.D. Tex. Sept. 26, 2025)).

Background. Evan Domanic applied to open a Christian Brothers Auto franchise in 2020. The company describes itself as a “Christian faith-based franchisor of auto repair stores.” Christian Brothers Auto imposes one non-negotiable requirement: It only grants franchises to Christians. It has granted over 250 franchise contracts to racially and ethnically diverse applicants—including some who are ethnically Jewish—but has never awarded a franchise to a non-Christian.

During the rigorous application process, the applicant was questioned as to whether he was a man of faith. He replied that he was Jewish and then asked if that would disqualify him. The applicant claims that a franchisor’s representative assured him that his faith would not be an issue. Despite advancing partially through the application process, the applicant was informed that application process would be ending. The parties dispute the reason for terminating the relationship. The applicant contends that the franchisor ended the process because he is ethnically Jewish. The franchisor counters that any reference to the applicant’s Jewish identity concerned his religion—not his ethnicity. The applicant brought suit against the franchisor alleging race-based discrimination. The franchisor moved for summary judgment.

Race-based discrimination. The court’s analysis focused on the franchisor’s argument that it declined to offer the applicant a franchise because of his religion, not his race. To establish a Section 1981 claim, a plaintiff must show that (1) he is a member of a racial minority; (2) the defendant intended to discriminate based on race; and (3) the discrimination concerned one or more of the statute’s protected activities—here, contract formation. When, as here, the plaintiff lacks “direct evidence of discriminatory intent,” courts apply “the McDonnell Douglas burden-shifting framework.” First, the plaintiff “must establish a prima facie case of discrimination.” “Second, the burden shifts to the defendant” to articulate “a legitimate, non-discriminatory reason for its conduct.” “If it does, third, the burden shifts back to the plaintiff” to show that the defendant’s stated reason is pretextual. At the summary-judgment stage, a plaintiff meets this burden by offering “sufficient evidence to create a genuine issue of material fact” as to whether the proffered reason was pretext for racial discrimination.

The court found that the applicant satisfied this burden. First, the parties do not dispute that the applicant is Jewish. Second, “discriminatory motive may be—and commonly is—demonstrated by circumstantial evidence.” Here, the applicant disclosed that he is Jewish early in the application process and was rejected just two weeks later. the evidence—viewed in the light most favorable to Domanic—supports a reasonable inference that he would have been seriously considered and likely selected but for being Jewish. That interest is concrete enough to make a prima facie showing sufficient to support a Section 1981 claim.

The court next moved to the second step in the McDonnell Douglas burden-shifting framework and considered the franchisor’s “alleged non-discriminatory reason for its conduct.” Here, the franchisor asserted that it declined to offer the applicant a franchise because of his religion, not his race. The franchisor argued that although it has granted franchise rights to racially and ethnically diverse individuals—including some who are ethnically Jewish—it has never offered a franchise to a non-Christian.

The court concluded that the franchisor articulated a legitimate, nondiscriminatory reason for declining to contract with the applicant: its longstanding policy of offering franchise opportunities only to Christians in alignment with its faith-based mission. The court noted that such a justification is permissible under Section 1981.

As the franchisor offered a legitimate, non-discriminatory reason for its conduct, the court moved to the third step of the McDonnell Douglas framework, which require the applicant to present “evidence sufficient to create a genuine issue of material fact” that this non-discriminatory reason is a pretext for racial discrimination. The court found the applicant did not meet this burden. The court disagreed with the applicant’s primary argument that discrimination based on his Jewish religion is indistinguishable from discrimination based on his Jewish ethnicity, and that Section 1981 prohibits both. The court highlighted that Section 1981 prohibits racial discrimination—not religious discrimination. As such, the court indicated that the applicant must show that the franchisor used religion as a proxy for race. The court found that the applicant did not offer evidence to show that the franchisor’s faith-based policy was a façade selectively enforced to exclude him because of his race. The court suggested that he could have identified a similarly-situated person of a different race who was treated more favorably. The applicant’s only evidence was one alleged statement by a company representative, who told him early in the process that religion would not disqualify an applicant. The court suggested that this shows that his Jewish ethnicity—not his religious beliefs—ended the franchise discussions. The court stressed that a single disputed remark by a non-decision maker does not create a genuine issue of material fact on pretext. The court also noted that the franchisor presented ample evidence that it applies its religious policy consistently.

The court concluded that the franchisor offered a credible and legally permissible explanation for its decision, and that the applicant did not show that this explanation was a pretext for racial discrimination. The court granted summary judgment.

The Case is No. 4:22-cv-00386.

Judge: Tipton, D.

Attorneys: Eric L. Grogan (Grogan Law) for Evan Domanic. Scott Arthur Agthe (Pierson Ferdinand) for Christian Brothers Automotive Corp.

Companies: Christian Brothers Automotive Corp.

Cases: ReligiousDiscrimination Discrimination RaceDiscrimination ContractClaims TexasNews