Arguello v. Conoco, Inc.

Denise Arguello and her father, Alberto Govea (plaintiffs) stopped at a store to buy gasoline and other products. When Arguello attempted to complete the purchase, the store’s clerk, Cindy Smith, refused to sell to Arguello. Smith insulted Arguello, repeatedly uttering profanity and racial epithets to her directly and over the store’s intercom. Smith also knocked a six-pack of beer off the counter toward Arguello and locked her out. The incident occurred at a store owned by Conoco, Inc. (defendant), and Smith was Conoco’s employee. Similar racially discriminatory incidents occurred involving other customers (plaintiffs) at independently owned stores that used Conoco branding under a marketing agreement. The marketing agreement allowed Conoco to set guidelines for the stores’ operations, such as requiring courteous treatment of customers and to de-brand stores for noncompliance. However, the agreement did not give Conoco a right to control the stores’ daily operations and expressly stated that it did not create an agency relationship between Conoco and the independently owned stores. Arguello, Govea, and the other customers sued Conoco for discrimination under state law and two federal civil-rights statutes, 42 U.S.C. §§ 1981 and 2000a. Under the federal statutes, Conoco could be liable for a third party’s discriminatory actions only if the third party was acting as Conoco’s agent at the time the discriminatory actions were taken. The district court found that none of the wrongdoers had been acting as Conoco’s agents and dismissed the federal claims. Arguello and the other customers appealed to the United States Court of Appeals for the Fifth Circuit.