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

Mealey's Franchise

March 17, 2021
Title III ADA Claim Moot After Plaintiff’s Death, New York Federal Judge Rules

BROOKLYN, N.Y. — Following the death of the plaintiff in a putative class action disability access suit that was filed shortly before his death, a New York federal judge on March 9 rejected requests to stay the case so that an estate representative could be substituted in or a new plaintiff found to appear as class representative, dismissing an alleged violation of Title III of the Americans with Disabilities Act (ADA) claim as moot and noting that “successful class certification motions in this Circuit in cases like this are few and far between.”
March 16, 2021
Federal Judge Allows Sex Trafficking Coverage Suit To Proceed But Stays Discovery

ATLANTA — A federal judge in Georgia on March 15 refused to dismiss an insurer’s lawsuit seeking to rescind a liability insurance policy and a declaration that it has no duty to defend or indemnity the owner, operator and franchisors of a Marietta, Ga., hotel against underlying sex trafficking claims but stayed discovery to see how prosecution of the underlying action proceeds.
March 16, 2021
EEOC Sues IHOP Franchisee For Manager’s Alleged Harassment Of Workers

BALTIMORE — The Equal Employment Opportunity Commission filed a complaint on March 15 in a Maryland federal court accusing the owners of 12 IHOP franchises of subjecting female employees, including teenagers, to sexual harassment by the general manager of its Frederick, Md., location.
March 12, 2021
Federal Judge: Childcare Franchise May Be Liable In Wrongful Death Suit

GALVESTON, Texas — A Texas federal judge on March 10 denied a motion for summary judgment in a wrongful death suit, finding that “a broad contractual right to control operative details” exposed a childcare center franchisor to vicarious liability for a franchisee’s alleged negligence.
March 11, 2021
Policy Requires Final Judgment Or Settlement Before Suit, Panel Affirms

ATLANTA — The 11th Circuit U.S. Court of Appeals on March 9 affirmed a lower court’s dismissal of an equipment rental company insured’s bad faith failure-to-settle lawsuit against its insurer, noting that the Georgia Supreme Court has interpreted nearly identical policy language as requiring a final underlying judgment or settlement before a party can bring a coverage suit.
March 11, 2021
Franchisor Awarded Fees, Damages, As Sanction In Trademark Dispute

MEMPHIS, Tenn. — A federal judge in Tennessee on March 10 found that the disgorged profits framework established in the Lanham Act can serve as the basis for an award of damages as a sanction for violation of an injunction, even without a first finding of liability under the statute.
March 11, 2021
Federal Judge Certifies In Part Wage And Hour Class Claims By Tool Maker Franchisee

SAN FRANCISCO — A California judge on Feb. 21 granted in part and denied in part a motion for class certification brought by a franchisee and distributor for a professional-grade mechanics tools manufacturer on wage and hour claims. The judge certified claims for employment misclassification and reimbursement and declined to certify claims regarding overtime, meal and rest breaks and wage deduction claims.
March 11, 2021
Pizza Delivery Drivers’ Class, Collective Wage Suit Settles For $3 Million

NEW BERN, N.C. — A North Carolina federal judge on March 3 granted a motion for final approval of a $3 million settlement fund plus attorney fees in a class and collective action suit by delivery drivers who allege that a Domino’s Pizza franchisee violated federal and state wage laws by not sufficiently reimbursing them for expenses.
March 10, 2021
Wisconsin Panel: No Employee Benefits Liability Coverage Owed For Franchise Owner

MILWAUKEE — A Wisconsin appeals panel on March 9 held that a commercial insurer does not owe employee benefits liability coverage for six underlying class action lawsuits brougt against its restaurant franchise operations owner insured, affirming a lower court’s grant of summary judgment in favor of the insurer.
March 09, 2021
Restaurant Chain Claims ‘Knock-Off’ Violated UCL, U.S. Trademark Law

SANTA ANA, Calif. — Boiling Crab Franchise Co. LLC sued Cajun Boiling Crab Inc. and related parties in a California federal court on March 4, alleging that its “knock-off” restaurants deliberately infringe federally registered trademarks and constitute violations of federal and California unfair competition laws.
March 09, 2021
6th Circuit Sets Oral Arguments In Countertop Franchise Dispute Over Forum Selection

CINCINNATI — Following the filing of briefs in a dispute between the seller and manufacturer of a line of countertops over whether the Michigan Franchise Investment Law (MFIL) prohibits the enforcement of forum-selection clauses, the Sixth Circuit U.S. Court of Appeals on Feb. 25 scheduled oral arguments for April 20.
March 04, 2021
Federal Judge Grants Franchisor Partial Dismissal In Dispute Over Territory

HARTFORD, Conn. — A Connecticut federal judge granted an urgent care facility franchisor partial judgment on the pleadings on Feb. 24 in a dispute over the purchase of certain franchises in the plaintiff’s territory, dismissing claims alleging violation of antitrust law and state franchise and business law and claims including tortious interference and abuse of process.
March 02, 2021
Franchise Groups To Amend Complaint Over California Independent Contractor Test

SAN DIEGO — Four franchising-related associations on Feb. 16 gave notice in a federal suit challenging the constitutionality of California’s “ABC Test” that they intend to file a first amended complaint in time to render the state’s pending motion to dismiss the original complaint moot, saying that the court should deny the motion to dismiss on those grounds. The state argues, among other things, that the ABC Test does not interfere with any congressional objective in the Federal Trade Commission’s Franchise Rule or the Lanham Act.
March 01, 2021
Stay, Interlocutory Appeal Denied Following Class Denial In Franchisee Dispute

LOS ANGELES — A federal judge in California on Feb. 23 issued a two-page order declining to stay a case by 7-Eleven franchisees seeking unpaid reimbursements or to certify its order denying class certification for interlocutory appeal, citing the reasons provided by the franchisor in its opposition.
February 23, 2021
Potential Coverage Exists For Challenge To McDonald’s Steps To Contain COVID-19

CHICAGO — A federal judge in Illinois on Feb. 22 denied a commercial general liability insurer’s motion to dismiss a breach of contract and declaratory relief lawsuit brought by McDonald’s Corp. and former and current franchise owners seeking coverage for an underlying class action injunction alleging that they are taking inadequate steps to contain COVID-19 in the workplace.
February 22, 2021
Sex Trafficking Suit Against Days Inn Franchisee Allowed To Proceed By Federal Judge

FORT MYERS, Fla. — A Florida federal judge on Feb. 16 refused to dismiss a woman’s suit against the franchisor, franchisee and operators of a Days Inn Hotel alleging that she was a victim of sex trafficking at the hotel over a three-year period. The judge denied three defendants’ motion to dismiss, rejecting multiple arguments, including that the plaintiff failed to state a claim against them.
February 19, 2021
S.C. Ben & Jerry’s Franchisee Fined By DOL For Wage, Child Labor Violations

MYRTLE BEACH, S.C. — A Ben & Jerry’s franchisee will pay $21,360 to end claims of wage and child labor violations, the U.S. Department of Labor (DOL) announced Feb. 18.
February 19, 2021
Black Franchisee Files Civil Rights Claims Against McDonald’s

YOUNGSTOWN, Ohio — McDonald’s discriminated by redlining a Black franchisee and retaliated when he protested, a franchisee alleges in a Feb. 16 civil rights complaint filed in a federal court in Ohio.
February 19, 2021
McDonald’s Franchisee Cited By Calif. Labor Commissioner For Workplace Retaliation

LOS ANGELES — A Los Angeles McDonald’s franchisee has been cited $125,913 for committing labor violations and retaliation after it fired four workers for reporting unsafe conditions during the novel coronavirus pandemic, the California Labor commissioner announced Feb. 17.
February 19, 2021
Credit Unions Oppose Sonic’s Subpoena For Documents From Arby’s Data Breach Suit

CLEVELAND — The lead financial institution (FI) plaintiffs in a consolidated class action over a 2017 data breach experienced by Sonic Corp. filed a motion in Ohio federal court on Feb. 10, seeking to quash Sonic’s subpoena for documents in a data breach suit against fellow fast food chain Arby’s Restaurant Group Inc., characterizing the subpoena as an attempt “to circumvent the legal process for obtaining class member discovery” and arguing that the documents sought are irrelevant and privileged.
February 18, 2021
Franchisor To 9th Circuit: Wrong Standard Used In Franchisee Status Ruling

SAN FRANCISCO — A cleaning company franchisor that operates a “three-tier” franchising model and was sued by the third tier for unpaid wages filed a petition on Feb. 16 in the Ninth Circuit U.S. Court of Appeals seeking a panel rehearing and rehearing en banc after the appellate court issued an amended opinion on Feb. 2 vacating a summary judgment ruling for the franchisor and remanded for the district court to consider whether the janitors are employees under the Dynamex Operations West, Inc. v. Superior Court standard in the first instance, arguing that the wrong standard was applied.
February 18, 2021
Proposed Class Action Against Red Robin Over Beer Pours Remanded To Nevada Court

LAS VEGAS — A Nevada federal judge on Feb. 12 agreed to remand a proposed class action against the Red Robin restaurant franchise for shorting customers by serving them 14 ounces of Stella Artois beer in a 16-ounce glass, noting that the corporation’s sales figures did not reach the jurisdictional amount-in-controversy threshold required by the Class Action Fairness Act (CAFA).
February 18, 2021
Business Groups’ Amicus Briefs Back Burger King In No-Hire Conspiracy Appeal

ATLANTA — The International Franchise Association and Florida Chamber of Commerce filed separate amicus curiae briefs on Feb. 3 in the 11th Circuit U.S. Court of Appeals supporting arguments by Burger King’s corporate entities that a lower court correctly held that the fast food giant and its franchisees were incapable of conspiring to ensure that the franchisees did not recruit or hire each other’s employees.
February 18, 2021
Federal Judge Upholds Chargeback Claim In Suit Over GM Franchise Termination

CAMDEN, N.J. — A New Jersey federal judge on Feb. 8 allowed a Chevrolet dealer franchisee’s claim that General Motors LLC imposed more than $670,000 in unlawful chargebacks against it to proceed to a nonjury trial but entered judgment on all other claims in the dealer’s suit alleging that GM illegally terminated their franchise agreement over disputed warranty reimbursement claims.
February 18, 2021
Kentucky Appeals Court Affirms Dismissal Of Fraud Suit For Lack Of Standing

FRANKFORT, Ky. — The Kentucky Court of Appeals on Feb. 5 affirmed the dismissal of a woman’s fraudulent misrepresentation claims against a commercial cleaning system franchisor and others for lack of standing. It concluded that the woman’s limited liability company, which entered the franchise agreement, should have been the party to file suit.