## Facts

- Multiple Hispanic and African-American consumers alleged racial discrimination at convenience stores associated with Conoco, Inc.
- At a Conoco-owned store in Fort Worth, Texas, a cashier refused to accept an out-of-state driver’s license for a credit-card purchase, then allegedly used profanity and racial slurs, knocked beer off the counter, and continued yelling over the intercom.
- The incident occurred during routine point-of-sale tasks (checking identification and completing purchases); Conoco’s district manager reviewed video, and the cashier admitted using profanity, racial slurs, and obscene gestures.
- Other plaintiffs alleged discriminatory treatment at Conoco-branded gas stations that were independently owned, including differential service and racial hostility.
- Plaintiffs sued under 42 U.S.C. § 1981 and Title II of the Civil Rights Act (42 U.S.C. § 2000a) and also asserted a Title II disparate-impact theory.
- The district court dismissed the Title II disparate-impact claim under Rule 12(b)(6) and granted summary judgment to Conoco on claims tied to independently owned branded stations and on certain claims tied to the company-owned store.

## Issues

1. Whether Conoco could be held vicariously liable for alleged discrimination by employees of independently owned but Conoco-branded stations under agency or master–servant principles.
2. Whether the cashier’s racially abusive conduct at a Conoco-owned store could fall within the scope of employment for respondeat superior liability under § 1981 and Title II.
3. Whether Title II permits disparate-impact liability and, if so, whether the complaint sufficiently alleged a policy or practice causing disparate impact.

## Decision

- Affirmed summary judgment for Conoco on claims arising from independently owned Conoco-branded stations because the agreements and evidence did not establish an agency or master–servant relationship.
- Reversed in part the summary judgment regarding the Conoco-owned store incident, holding that scope of employment presented a jury question where the conduct occurred during customer transactions the cashier was employed to perform.
- Affirmed dismissal of the Title II disparate-impact claim; even assuming disparate-impact liability could exist under Title II, the complaint did not allege a specific policy or practice producing disparate impact.

## Legal Principles

- Agency for vicarious liability turns on the alleged principal’s right to control day-to-day operations; branding, quality standards, and a contractual right to terminate for noncompliance do not, without operational control, establish a master–servant relationship.
- Contract language disclaiming an employer–employee or principal–agent relationship is significant evidence against agency when matched by a lack of control over hiring, supervision, and daily management.
- Scope of employment generally presents a fact question; wrongful or abusive conduct is not automatically outside scope if it occurs while the employee is performing authorized transactional duties, and the degree of deviation may be for the jury.
- Disparate-impact pleading requires identification of a concrete policy or practice and allegations connecting it to disproportionate adverse effects; alleging isolated discriminatory episodes sounds in disparate treatment, not disparate impact.

## Conclusion

The Fifth Circuit held that Conoco was not liable for alleged discrimination at independently owned branded stations absent evidence of operational control creating agency, but it allowed a jury to decide whether a Conoco-owned store cashier’s racially abusive conduct during a sales transaction occurred within the scope of employment for potential § 1981 and Title II liability, and it rejected a Title II disparate-impact claim for insufficient pleading.


Arguello v. Conoco, Inc., 207 F.3d 803 (5th Cir. 2000)