## Facts

- John Garrett, a Black customer, shopped at a Radio Shack in Brunswick, Maine, on December 21, 1998, seeking a police scanner.
- He alleged he was the only African-American in the store and was closely monitored by three white employees, including being accompanied during his visit.
- Garrett purchased a book, a telephone, and batteries, and asked whether the scanner was available elsewhere.
- The store manager, Steven Richard, asked for Garrett’s name and address, which Garrett provided.
- After Garrett left, Richard discovered a laptop (about $2,000) missing and reported to police that he suspected Garrett, giving officers Garrett’s address.
- Police searched Garrett’s home and car with his consent and found no laptop.
- Garrett called the store to complain, alleging Richard admitted accusing him but did not retract the accusation to police.
- Garrett later alleged he avoided returning or seeking relief for defective purchased items because he feared being accused of theft again.
- Garrett sued for racial discrimination under 42 U.S.C. § 1981 and for defamation under Maine law.

## Issues

1. Whether allegations of racially motivated surveillance during a completed retail purchase, and a claimed deterrent effect on future returns, state a claim for interference with the making or enforcement of a contract under 42 U.S.C. § 1981.
2. Whether a store manager’s report to police accusing a customer of theft states a defamation claim under Maine law, and whether any qualified privilege for reports to law enforcement warrants dismissal at the pleading stage.

## Decision

- The First Circuit affirmed dismissal of the § 1981 claim for failure to allege impairment of an identifiable contractual right.
- The First Circuit reversed dismissal of the defamation claim and remanded, holding the complaint plausibly alleged defamation and privilege could not be resolved on a motion to dismiss.

## Legal Principles

- A § 1981 plaintiff must plead discriminatory interference with an actual contractual relationship or a contractual right (including performance, modification, termination, or enjoyment of contract benefits), not merely unpleasant or unfair treatment during a transaction that is completed.
- Allegations that a plaintiff chose not to attempt contract enforcement (such as returning goods) are insufficient absent facts showing the merchant actually denied or obstructed contractual remedies.
- Under Maine law, falsely accusing someone of a crime (including theft) is defamatory per se and may be actionable without pleading special economic damages.
- Communications to law enforcement reporting suspected crimes may be protected by a qualified privilege, but the privilege can be defeated (e.g., by malice or lack of reasonable grounds) and generally presents fact questions not ordinarily decided on the pleadings.

## Conclusion

The court held that § 1981 does not reach alleged racially motivated retail monitoring where the customer completes the purchase and pleads only a subjective deterrent from pursuing returns, but it allowed the defamation claim to proceed because accusing the customer of theft to police plausibly alleged actionable defamation and any qualified privilege could not be decided at dismissal.


Garrett v. Tandy Corp., 295 F.3d 94 (1st Cir. 2002)