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

Mealey's Franchise

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.
April 26, 2021
1st Circuit To Decide If Independent Contractor Test Conflicts With Franchise Law

BOSTON — In briefs filed April 19 and Feb. 16, respectively, convenience store chain 7-Eleven and franchisees, who filed a proposed class action alleging they were misclassified as contractors rather than employees, ask the First Circuit U.S. Court of Appeals to determine whether Massachusetts’ three-prong test for independent contractor status conflicts with federal franchising regulations.
April 25, 2021
Tim Hortons Group Appeals Dismissal To 11th Circuit, But Jurisdiction Questioned

MIAMI — A trial court erred in dismissing predatory business scheme claims against a Tim Hortons franchisor because the complaint properly states a plausible claim for relief, an association of the restaurant’s franchisees argues to the 11th Circuit U.S. Court of Appeals in its April 16 appellant brief, which followed court-requested briefs on whether the court has diversity jurisdiction over the appeal.
April 23, 2021
New Jersey Appellate Court: Association Lacks Standing To Challenge Tesla Sales

TRENTON, N.J. — A trade association that represents New Jersey’s franchised automobile dealerships lacked standing to challenge state agencies’ discretionary enforcement actions allowing Tesla to sell its vehicles directly to consumers in the state, the New Jersey appellate court concluded April 20.
April 23, 2021
Judge Denies Attorney Fees, Ruling Franchisee Is Not Prevailing Party In Suit

SEATTLE — A direct marketing services franchisee did not prevail in a suit in which claims against him were voluntarily dismissed and his counterclaims were abandoned or dismissed on summary judgment, a Washington federal judge held April 12, denying a petition to make the franchisor who initially filed the suit pay $892,855.71 in attorney fees and costs under the franchise agreement.
April 23, 2021
11th Circuit Remands Franchisor’s Appeal For Citizenship Determination

ATLANTA — The 11th Circuit U.S. Court of Appeals on April 6 said it cannot determine whether it has jurisdiction over an urgent care facility franchisor’s dispute with a franchisee under complete diversity of citizenship, remanding the case to an Alabama federal court to determine the parties’ citizenship.
April 20, 2021
Class Suit Claims Shell Oil Charges Undisclosed Fee For Debit Card Purchases

WEST PALM BEACH, Fla. — Shell Oil Co. charges consumers paying with debit cards an undisclosed fee in violation of Florida’s consumer protection laws, a class alleges in a complaint filed April 16 in a federal court in Florida.
April 20, 2021
Lawn Mower Manufacturer Asks 8th Circuit To Vacate $6.5 Million Award To Dealer

ST. LOUIS — A lawn mower manufacturer seeks to vacate an award of more than $6.5 million in damages, attorney fees and costs to one of its dealers, arguing to the Eighth Circuit U.S. Court of Appeals in its April 9 appellant brief that the dealer’s expert provided no evidence of damages from the alleged breach of the parties’ contract or wrongful termination of the dealer.
April 19, 2021
Alabama Federal Judge: Hilton Owed No Duty To Guest Injured At Franchisee’s Hotel

MONTGOMERY, Ala. — A guest who alleged injuries from tripping over a cord did not prove that the parent company of a hotel franchisor exercised sufficient control over the franchisee to establish a duty of care to its guests, an Alabama federal judge ruled April 14, granting summary judgment in favor of the parent company on claims of negligence and recklessness and wantonness under Alabama law.
April 15, 2021
Volkswagen Salespersons Tell 9th Circuit Class Suit Was Wrongly Dismissed

SAN FRANCISCO — Three salespeople who allege that their business was harmed by Volkswagen’s emissions scandal tell the Ninth Circuit U.S. Court of Appeals in an April 9 appellant brief that a district court erred in concluding that the car maker was not their employer under California law and in granting a motion to dismiss their class employment and unfair competition law (UCL) claims.
April 14, 2021
10th Circuit: Franchisee Deprived Notice Of Entry Of Judgment

DENVER — In an April 13 ruling, the 10th Circuit U.S. Court of Appeals found that although a federal judge in Oklahoma did not abuse his discretion in granting a motion to enforce a settlement agreement between a franchisor and former franchisee accused of trademark infringement, he “went too far” in entering a $200,000 judgment.
April 14, 2021
OSHA Cites Tax Prep Franchisee For Failure To Provide COVID-19 Safeguards

BOSTON — The owner of a Liberty Tax Service location in Massachusetts must pay $136,532 in penalties for refusing to put in place various safeguards to protect employees and customers from coronavirus, including prohibiting employees and customers from wearing masks, the U.S. Department of Labor (DOL) announced April 13.
April 14, 2021
Judge: Spa Franchises’ Losses Do Not Implicate Communicable Disease Provision

WILMINGTON, N.C. — A federal judge in North Carolina on April 13 held that franchises of Hand and Stone Massage and Facial Spa fail to plausibly assert that their insurance policies’ Communicable Disease Provision was implicated by their claimed lost income arising from their business closures prompted by the coronavirus pandemic, finding that the insureds do not assert that COVID-19 was ever present at their insured premises.
April 14, 2021
Motel Denied Class Certification In Junk Fax Prevention Act Case Against Sprint

NEW HAVEN, Conn. — A Connecticut federal judge on March 31 denied class certification in a motel’s case claiming that Sprint Solutions Inc. sent five unsolicited fax ads over three years in violation of the Junk Fax Prevention Act, ruling that the motel cannot show that classwide issues predominate over individual issues of consent.
April 14, 2021
Split 8th Circuit Rules Litigation Strategy Not A Waiver Of Right To Arbitrate

ST. LOUIS — A split Eighth Circuit U.S. Court of Appeals panel on March 30 reversed a district court’s denial of a motion to compel arbitration, ruling in a 2-1 decision that a corporation’s litigation strategy did not waive its right to arbitrate with a former employee who alleged that a franchise violated the Fair Labor Standards Act (FLSA) by failing to pay overtime.
April 13, 2021
Dispute Over Business Coaching Franchise Royalties Allowed To Proceed By Federal Judge

CINCINNATI — An Ohio federal judge denied business coaching franchisees’ motion to dismiss for lack of personal jurisdiction, failure to state a claim and improper venue on March 31 in a franchisor’s suit accusing the defendants of failing to pay royalties due under the franchise agreement after they changed the name of their business without consent. The judge agreed to dismiss a fraud claim against the owner of the franchise.
April 13, 2021
90 Franchisees Ordered To Individually Arbitrate Discrimination, RICO Claims

ALLENTOWN, Pa. — A Pennsylvania federal judge on March 19 granted a hotel franchisor’s motion to compel arbitration, ruling that arbitration clauses in its franchise agreements with 90 franchisees are valid and enforceable, ordering individual arbitration on the franchisees’ allegations that the franchisor discriminated against Indian-American and South-Asian American franchisees and violated the Racketeer Influenced and Corrupt Organizations Act (RICO) with a $61.4 million kickback scheme.
April 13, 2021
Judge Denies Franchisor’s Bid To Compel Arbitration In Scope Of Agreement Dispute

DETROIT — A Michigan federal judge on March 31 denied a franchisor’s motion to compel arbitration, holding that its dispute with two franchisees over the operation of a virtual computer training platform did not implicate the parties’ franchise agreements. The dispute fell under the parties’ participation agreements (PAs), which do not contain an arbitration clause, the judge said.
April 13, 2021
Domino’s Delivery Drivers Seek Final Approval Of Class Settlement In Mileage Dispute

NEWARK, N.J. — Domino’s pizza restaurant franchise delivery drivers on April 1 filed an unopposed motion in a New Jersey federal court for final approval of a $1.48 million class action settlement. The deal would resolve claims that the franchise owners and operators short-changed their delivery drivers in reimbursing them for the miles they drove their vehicles for work.