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

Mealey's Franchise

January 22, 2021
Franchise Broker Being Sued For Fraud Notifies Court Of Parallel Proceedings

MINNEAPOLIS — FranChoice Inc., a franchise broker, and its consultants being sued in approximately a dozen cases brought by franchisees who are accusing the broker of using fraudulent and unlawful sales tactics in connection with iLoveKickboxing.com (ILKB) franchises filed a letter on Dec. 28 in a Minnesota federal notifying the court that plaintiffs in three of the cases have filed parallel proceedings against ILKB in a federal court in New York.
January 22, 2021
Split Florida Appeals Panel: Franchisor Has No Liability For Shooting By Franchisee

WEST PALM BEACH, Fla. — A franchisor that has no “substantial control” over its franchisees pursuant to its franchise agreement has no legal duty to a franchisee’s employee who was shot by the franchise owner, a divided Florida appellate panel ruled Jan. 20.
January 21, 2021
Judge Won’t Rethink Economic Loss Rule Application In Sonic Data Breach Suit

CLEVELAND — An Ohio federal judge’s decision to permit financial institutions (FIs) to pursue negligence claims against Sonic Corp. over a 2017 data breach will stand, the judge ruled Jan. 19, denying the fast food chain’s motion for reconsideration and finding no merit to Sonic’s assertion that the economic loss doctrine should have been applied to bar the banks’ claim.
January 21, 2021
Labor Secretary, Groups Argue For Reversal Of Joint Employment Ruling

NEW YORK — The U.S. secretary of Labor and trade groups separately filed appellant briefs on Jan. 15 in the Second Circuit U.S. Court of Appeals seeking reversal of a trial court’s ruling for various states deeming the portions of the U.S. Department of Labor’s (DOL) final rule revising its regulations interpreting vertical joint employer liability as “arbitrary and capricious,” in conflict with the Fair Labor Standards Act (FLSA) and “flawed in just about every respect.”
January 14, 2021
Domino’s Appeals Arbitration Denial In Truck Drivers’ Expenses Class Lawsuit

SANTA ANA, Calif. — A pizza company with more than 17,000 franchised and company-owned stores in the United States and internationally filed a notice of appeal on Jan. 5 in a federal court in California after its motion to compel arbitration of a putative class complaint over truck drivers’ cell phone expenses failed.
January 14, 2021
California High Court Holds That Dynamex Applies Retroactively To Nonfinal Cases

SAN FRANCISCO — The California Supreme Court’s ruling in Dynamex Operations West, Inc. v. Superior Court concerning classifying workers as employees or independent contractors “applies retroactively to all nonfinal cases that predate the effective date” of that decision, a unanimous California Supreme Court ruled Jan. 14.
January 13, 2021
Federal Circuit Affirms Dismissal Of Chrysler Franchisees’ Suit Over Bankruptcy Deal

WASHINGTON, D.C. — The Federal Circuit U.S. Court of Appeals on Dec. 29 affirmed a lower court ruling that former Chrysler dealership franchisees failed to prove that their franchise agreements would have had a positive value but for the conditions the federal government imposed on a $4 billion bridge loan to the bankrupt automaker that required rejecting their franchise agreements.
January 12, 2021
Insurer Seeks Dismissal Of Franchise Owners’ $41M Coronavirus Coverage Lawsuit

NEWARK, N.J. — An insurer on Jan. 7 moved a New Jersey federal court to dismiss a breach of contract and reformation lawsuit brought by the owners of more than 120 franchise locations under the brands Wendy's, T.G.I. Friday's, Marriott and Hilton, contending that although the novel coronavirus pandemic and the subsequent “Stay-at Home” orders “have had an adverse economic impact” on the insureds’ business operations, “claims for such intangible economic damage simply are not within the scope of the property insurance policy.”
January 11, 2021
6th Circuit Upholds Liquidated Damages For Franchisor After Franchisee Defaulted

CINCINNATI — The Sixth Circuit U.S. Court of Appeals on Jan. 5 affirmed a trial court’s final judgment, including nearly $2.6 million in liquidated damages, for a franchisor after a couple who operated numerous franchised locations stopped paying royalties and other fees, opining that the franchise agreement permitted the franchisor to terminate the agreement and collect such damages.
January 08, 2021
Texas Federal Judge Dismisses Homeowner’s Claims Alleging Shopping Center Conspiracy

AMARILLO, Texas — A Texas federal judge on Dec. 23 dismissed a homeowner’s claims that current and past owners of a neighboring shopping center, franchises leasing space in the center and the city of Amarillo engaged in a conspiracy to protect the shopping center and its tenants from nuisance complaints. The judge dismissed the federal claims with prejudice and the state law claims without prejudice.
January 07, 2021
Pennsylvania Judge Throws Out Junk Hauler Franchisee’s Suit For Lack Of Jurisdiction

PHILADELPHIA — A 1-800-GOT-JUNK franchisee failed to show that a federal Pennsylvania court had jurisdiction over its proposed class action claims for product defects against a truck body manufacturer because none of its allegations arose out of any contacts the defendant had with the state, a federal judge held Dec. 18 in dismissing the claims.
January 06, 2021
Papa John’s Franchisee, Drivers’ $250,000 Settlement Preliminarily Approved

PHILADELPHIA — A federal judge in Pennsylvania on Dec. 28 granted preliminary approval of a $250,000 class and collective action settlement reached between a Papa John’s franchisee and delivery drivers who brought a wage-and-hour class and collective lawsuit.
January 06, 2021
4th Circuit Orders Another Recalculation Of Damages Award To Tax Franchisee

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Jan. 4 vacated a ruling awarding a former franchisee of JTH Tax Inc., d/b/a Liberty Tax and SiempreTax+ LLC (collectively, Liberty Tax), $5,000 in nominal damages and an additional $49,465.94 in damages for unpaid rent, finding that the franchisee was not entitled to nominal damages and that the knowledge about the amount of unpaid rent did not constitute new evidence.
January 06, 2021
EEOC Sues Popeye’s Franchisee For Rescinding Job Offer, Refusing Accommodation

HAMMOND, Ind. — An Indiana fast food franchisee violated the Americans with Disabilities Act (ADA) when it rescinded a job offer to an individual with a cognitive disability and failed to provide the individual with the accommodation of having her job coach present during training, the Equal Employment Opportunity Commission alleges in a complaint filed Dec. 31 in a federal court in Indiana.
January 04, 2021
Maryland Federal Magistrate Dismisses Suit Against Marriott For Costa Rica Resort Fall

GREENBELT, Md. — A Maryland federal magistrate judge concluded on Dec. 28 that the burden and difficulty in applying the law of Costa Rica, where a plaintiff claims that she was injured in a poolside fall at a Marriott resort, make Costa Rica a more convenient forum for the dispute against the franchisor than Maryland.
December 31, 2020
Domino’s Opposes Franchisee Worker’s Bid For High Court Review Of Arbitration Issue

WASHINGTON, D.C. — Domino’s Pizza filed a response brief on Dec. 21 in the U.S. Supreme Court opposing a petition for writ of certiorari filed by a Domino’s franchisee employee, who argues that “clear and unmistakable evidence” must exist in an arbitration agreement for a court to find that the parties agreed that an arbitrator rather than the court will decide questions of arbitrability. A law professor and arbitration expert filed an amicus curiae brief on the same day in support of the employee.
December 31, 2020
Black Former Franchisees’ Amended Complaint Fails To Correct Defects, McDonald’s Says

CHICAGO — In a second motion to dismiss, McDonald’s USA LLC and McDonald’s Corp. (collectively, McDonald’s) argue in a Dec. 21 memorandum to a federal Illinois court that an amended complaint filed by Black former franchisees continues to assert largely untimely claims of racial discrimination that fail to meet federal pleading requirements.
December 31, 2020
Burger King Employees File Corrected Brief In Hiring Ban Appeal

ATLANTA — Employees alleging that an agreement between a fast food franchisor and its franchisees not to recruit or hire each other’s employees led to depressed wages filed a new appellant brief in the 11th Circuit U.S. Court of Appeals on Dec. 15 to correct two citation errors.
December 22, 2020
Tim Hortons Franchisees’ Group Lacks Standing To Assert Claims Over Supplier Scheme

MIAMI — A Florida federal judge on Dec. 21 determined that an association of Tim Hortons franchisees does not have associational standing to assert claims on behalf of its members because the association failed to allege any plausible threats of future harm related to the franchisor’s requirement to require franchisees to buy products from specific suppliers (Great White North Franchisee Association-USA Inc. v. Tim Hortons USA Inc., et al., No. 20-20878, S.D. Fla., 2020 U.S. Dist. LEXIS 239160).
December 22, 2020
$350,708 Attorney Fee Award To Franchisor Vacated By Missouri Appeals Court

SPRINGFIELD, Mo. — A Missouri appeals court on Dec. 16 reversed a $350,708 attorney fees award to an adult-themed novelty products retail franchisor and remanded to the trial court to amend its judgment in its action against a former franchisee whose husband launched a similar business at the same location (AEFC Inc. v. Tammy D. Vietti, et al., No. SD36137, Mo. App., Southern Dist., Div. 2, 2020 Mo. App. LEXIS 1622).
December 18, 2020
Franchisee’s Interlocutory Appeal Of Transfer Order Rejected By Federal Judge

HARTFORD, Conn. — An aircraft dealership failed to show that Connecticut has a strong public policy against allowing a franchisee to agree to litigate franchise agreement disputes outside the state, a Connecticut federal judge held Dec. 14 in refusing to certify for interlocutory appeal his decision to transfer the action to Florida (Columbia Aircraft Sales Inc. v. Piper Aircraft Inc., No. 20-701, D. Conn., 2020 U.S. Dist. LEXIS 234889).
December 18, 2020
Federal Judge Lets Guest’s Racial Bias Claims Proceed Against Hotel Franchise

RICHMOND, Va. — A Black hotel guest sufficiently alleged that a security guard discriminated and committed a hate crime against him under federal and state statutes when he repeatedly asked the guest in the hotel lobby if he “belonged there” and requested identification, a Virginia federal judge concluded Dec. 4 in refusing to dismiss the claims against Hilton hotel franchise owners and operators and security service provider (Albert Law v. Hilton Domestic Operating Co. Inc., et al., No. 20-145, E.D. Va., 2020 U.S. Dist. LEXIS 228423).
December 17, 2020
Kuwaiti Car Dealer, Ford Motor Co. Both To Appeal Dismissal Of Contract Row

CINCINNATI — Ford Motor Co. on Nov. 23 filed a notice of cross-appeal in a federal court in Michigan, indicating its intent to bring before the Sixth Circuit U.S. Court of Appeals for the second time a Kuwaiti car dealership’s breach of contract suit against it in which the parties have disputed whether the Motor Vehicle Franchise Contract Arbitration Fairness Act (Fairness Act) applies to foreign dealers and, as such, whether the claims should be arbitrated (Arabian Motors Group W.L.L. v. Ford Motor Company, No. 16-13655, E.D. Mich.).
December 17, 2020
Federal Judge Denies Urgent Care Franchisee’s Bid To Halt Franchise Sales

HARTFORD, Conn. — A Connecticut federal judge on Dec. 2 refused to reconsider her Nov. 25 refusal to grant a temporary restraining order (TRO) to a franchisee of Doctors Express Urgent Care facilities, in which she concluded that the franchisee failed to provide evidence of irreparable harm if the franchisor moved forward with the purchase of certain franchises in the franchisee’s territory (Danilo Purugganan v. AFC Franchising LLC, No. 20-360, D. Conn., 2020 U.S. Dist. LEXIS 221288 and 2020 U.S. Dist. LEXIS 225638).
December 17, 2020
New York Justice Stays Suit Over Failed Subway Shops Pending Arbitration

NEW YORK — A New York justice granted Subway franchise defendants’ motions to stay pending arbitration a fraud suit brought by a franchisee over seven failed sandwich shops, concluding on Dec. 2 that the agreements between the parties clearly stated that an arbitrator must decide issues of arbitrability (Charles Fritschler, et al. v. Draper Management LLC, et al., No. 652056/2019, N.Y. Sup., New York Co., 2020 N.Y. Misc. LEXIS 10324).