Mealey's Franchise : Mealey's : Legal News & Analysis

Mealey's Franchise

May 24, 2021
Franchisee’s Motion For Judgment On Architecture Firm’s Counterclaim Denied

RALEIGH, N.C. — A federal judge in North Carolina on May 12 denied a hotel franchisee’s motion for judgment on an architecture firm’s counterclaim for breach of an agreement to pay for design services, finding that emails between the parties from 2008 cannot be considered because they are not integral to or relied on by the firm in its counterclaim.
May 24, 2021
Federal Magistrate Judge Denies Former Franchisee’s Nonparty Discovery Requests

PHOENIX — In a trademark infringement action, a federal magistrate judge in Arizona on May 13 sustained a bathroom remodeling franchisor’s objections to a former franchisee’s discovery requests for the profit and loss statements of a nonparty franchisee, the franchisor’s financial statements and documents related to agreements between the franchisor and the nonparty franchisee.
May 24, 2021
Franchisor Awarded $97,000 By Florida Judge For Unapproved Shutdown Of 2 Franchises

FORT LAUDERDALE, Fla. — Following a bench trial, a Florida federal judge awarded a mobile dental equipment repair franchisor nearly $97,000 in damages on May 14 due to a franchisee shutting down two Virginia franchises without consent. The judge refused to reduce the amount to present value, holding that the franchisee produced no evidence regarding the proper calculation method.
May 21, 2021
Illinois High Court: Defense Owed For Claims Insured Disclosed Fingerprint Data

SPRINGFIELD, Ill. — The Illinois Supreme Court on May 20 affirmed a lower court’s ruling that an insurer has a duty to defend against class action claims that its insured violated the Biometric Information Privacy Act by disclosing fingerprint data to a third party without consent, further affirming that the policy’s violation of statutes exclusion does not bar coverage.
May 21, 2021
2nd Circuit: Summary Judgment Against Franchisee Stands In TCPA Case

NEW YORK — A former Wyndham Hotel Group franchisee “cannot now complain about receiving advertisements of the very type it expressly agreed to receive” through its franchise agreements with Wyndham, the Second Circuit U.S. Court of Appeals ruled May 13 on class allegations that Lands’ End violated the Telephone Consumer Protection Act (TCPA) by sending unsolicited fax advertisements, affirming a federal judge’s grant of summary judgment that dismissed the case.
May 21, 2021
Federal Judge Refuses To Dismiss Gym Franchisee’s Tortious Interference Claim

CONCORD, N.H. — A fitness center franchisee stated a plausible claim for tortious interference, a New Hampshire federal judge concluded May 14 in denying Planet Fitness’ motion for judgment on the pleadings to dismiss the counterclaim in a breach of contract suit over the development of franchise locations in Mexico.
May 20, 2021
Federal Judge Refuses To Dismiss 5 Sex Trafficking Suits Against 5 Florida Hotels

FORT MYERS, Fla. — A Florida federal judge on May 10 refused to dismiss the fifth of five lawsuits filed against the franchisors, franchisees and operators of five hotels brought by a woman alleging that she was a victim of sex trafficking at the hotels over a three-year period. He rejected the defendants’ arguments that the allegations were impermissibly vague and failed to state a claim.
May 14, 2021
Judge: Franchisee Group Lacks Associational Standing To Sue Franchisor Over Fees

FORTH WORTH, Texas — An association that represents trampoline park franchises failed to demonstrate associational standing to pursue claims for relief against a franchisor that it alleges made unilateral changes to the franchise agreements that affect profitability, a Texas federal judge ruled May 6, granting a motion to dismiss the case.
May 14, 2021
Judge Orders Marriott To Produce Discovery In Suit, Imposes Sanctions For Delay

SAN DIEGO — A federal magistrate judge in California on May 12 granted in part a motion to compel discovery brought by the plaintiffs in a putative class action accusing a hotel franchise of violating California’s unfair competition law (UCL) and other state statutes, writing that the bulk of the franchise’s objections to discovery were unfounded and ordering sanctions against it for raising objections to discovery that the court previously said were unmeritorious.
May 13, 2021
Federal Judge Issues Limited Injunction Against Tax Preparer’s Ex-Franchisee

NEWARK, N.J. — A New Jersey federal judge issued a temporary injunction on May 6 to enforce tax preparation franchisor Jackson Hewitt’s post-termination noncompete and nonsolicitation restrictions against a former franchisee but limited the injunction to 18 months instead of the requested two years.
May 13, 2021
California Seeks To Dismiss Franchise Groups’ Suit Over Independent Contractor Test

SAN DIEGO — The state of California on April 30 moved to dismiss an amended complaint filed by four franchising-related associations challenging the constitutionality of the state’s “ABC Test” to determine whether a worker is an employee or independent contractor. The state argues to a federal court that the associations fail to allege a case or controversy and lack standing.
May 13, 2021
Pa. High Court: ‘No Poach’ Clause In Shipping Business Contract Unenforceable

PITTSBURGH — A no-hire provision ancillary to a services contract between a logistics provider and a shipping company is unenforceable because it unreasonably restrains trade, the Pennsylvania Supreme Court ruled April 29 in an issue it noted was one of first impression.
May 11, 2021
Federal Judge Won’t Follow DOL Opinion Letter On Approximating Delivery Costs

DAYTON, Ohio — A federal judge in Ohio on May 7 declined to follow an August U.S. Department of Labor (DOL) opinion letter adopting the “approximation” standard commonly used in the pizza industry for reimbursing delivery drivers for expenses and instead ruled that the employers must pay drivers for their actual expenses or reimburse pursuant to the Internal Revenue Service’s mileage rate.
May 11, 2021
Federal Judge: Softball League Liable For $767,000 In Attorney Fees, Sanctions

CLEVELAND — In adopting in part and modifying in part a magistrate judge’s report and recommendation on May 7, an Ohio federal judge found a professional softball league liable to the franchise team it sued for breach of contract for more than $480,000 in attorney fees and costs. The judge also held the league and its attorneys jointly and severally liable for more than $287,000 in attorney fees and costs for discovery sanctions.
May 07, 2021
Burger King Cashier Fired Over Trachea Tube Awarded $2 Million By Florida Jury

ORLANDO, Fla. — A Florida federal jury awarded a former Burger King cashier more than $2 million in compensatory and punitive damages on May 4, finding that a franchisee of the fast food giant illegally fired her because she had breathing problems and was fitted with a visible trachea tube in her neck.
May 07, 2021
Federal Judge Denies Preliminary Injunction In Franchisees’ Fraud Case

SACRAMENTO, Calif. — Finding no showing of immediate, irreparable injury, a federal judge in California on May 4 denied a motion for a preliminary injunction brought by small businesses and franchisees against the seller of bone density improvement center franchises in their lawsuit alleging claims including fraud, negligent misrepresentation and violation of California’s unfair competition law (UCL).
May 06, 2021
Federal Judge Won’t Reconsider Excluding Expert Report In Suit Over No-Poach Clause

EAST ST. LOUIS, Ill. — An Illinois federal judge on May 3 refused to reconsider an order excluding a former employee’s expert report from a proposed class action over a sandwich chain franchisor’s contractual no-poach agreement, finding that the former employee’s motion did not demonstrate “a manifest error of law or fact” that would warrant reconsideration.
May 06, 2021
BMW Must Provide SEC Documents In Franchise Agreement Dispute

MIAMI — Although BMW of North America LLC (BMW NA) had a duty to supplement its discovery submissions to the plaintiff in a franchise agreement lawsuit to include pertinent documents subsequently filed with the U.S. Securities and Exchange Commission, a Florida federal magistrate judge on April 24 held that sanctions against the automaker were unwarranted, denying the plaintiff franchisee’s motion to that end.
May 05, 2021
With Trademark Claims Voluntarily Dismissed, Contract Claim Tossed

MINNEAPOLIS — In an April 26 order, a federal judge in Minnesota ruled that there is “no reason” to exercise supplemental jurisdiction over contract claims leveled by a franchisor in view of the franchisor’s voluntary dismissal of allegations of trademark infringement.
May 04, 2021
Wyndham Must Produce Corporate Documents In Sex Trafficking Suits

COLUMBUS, Ohio — Two sex trafficking survivors demonstrated that corporate records and other documents sought from Wyndham Hotels & Resorts Inc. and its subsidiaries related to the company’s general knowledge of sex trafficking occurring are relevant to their claims of liability under a federal sex trafficking law, an Ohio federal magistrate judge ruled April 30, granting the plaintiffs’ motion to compel.
May 03, 2021
New Jersey Judge Denies Tax Preparation Franchise Employees Class Action Status

NEWARK, N.J. — A New Jersey federal judge on April 27 refused to grant class certification in an action brought by 20 tax preparation franchise employees who allege their employer illegally deducted the value of prepaid gift cards from their earnings, which resulted in lower commission payments.
April 30, 2021
Judge Denies Reconsideration, Attorney Fees In Franchise Contract Deceptive Act Row

DETROIT — A Michigan federal judge on April 27 declined to revisit his judgment that a franchisor violated the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) but must return only a $39,000 franchise fee to the former franchisee, saying that neither party raised issues that warrant reconsidering the case and denying the franchisee’s request for $342,871 in attorney fees.
April 30, 2021
2nd Circuit Denies 6-Month Abeyance In Joint Employment Appeal; States File Brief

NEW YORK — A week after the Second Circuit U.S. Court of Appeals denied a motion for a six-month abeyance of appeal sought by the Biden administration’s Labor secretary in an appeal filed by the secretary under the Trump administration, the states and commonwealths that sued the prior secretary challenging the U.S. Department of Labor’s (DOL) final rule revising its regulations interpreting vertical joint employer liability filed an appellee brief on April 16 asking the court to affirm the District Court’s ruling vacating the rule.
April 29, 2021
11th Circuit Remands Case Against Franchisor For Jurisdiction Determination

ATLANTA — A Florida district court must determine whether it had subject matter jurisdiction “in the first instance” before an appeal proceeds on its dismissal of Tim Hortons franchisees’ predatory business scheme claims against a franchisor, the 11th Circuit U.S. Court of Appeals said April 27, remanding the case upon finding a dispute about whether diversity jurisdiction existed because the association failed to allege its place of incorporation to establish diversity of citizenship.
April 26, 2021
N.Y. Justice: Owners Fail To Allege Direct Physical Loss Or Damage To Hotels

SYRACUSE, N.Y. — A New York justice on April 13 granted an insurer’s motion to dismiss a breach of contract lawsuit seeking coverage for losses arising from the coronavirus pandemic, finding that the hotel owners fail to allege any direct physical loss or damage to their premises to trigger coverage under the business interruption, ingress/egress, civil and military authority and rental insurance policy provisions.