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

Mealey's Franchise

October 28, 2020
Split 9th Circuit Tosses Ruling Denying Franchisee’s Motion To Reopen Class Action

PASADENA, Calif. — A 2-1 Ninth Circuit U.S. Court of Appeals panel on Oct. 21 overturned a federal judge in California’s denial of a franchisee’s motion to reopen his class action suit against a franchisor over his alleged misclassification as an independent contractor rather than an employee, holding that the judge should reconsider the decision and apply the ruling in Henson v. Fidelity National Financial Inc. (Sergio Gonzalez, et al. v. Coverall North America Inc., No. 19-55511, 9th Cir., 2020 U.S. App. LEXIS 33216).
October 27, 2020
D.C. Circuit Sends Union Dispute Back To NLRB For Further Explanation

WASHINGTON, D.C. — The District of Columbia Circuit U.S. Court of Appeals on Oct. 23 declined to enforce a decision by the National Labor Relations Board in a union representation dispute with a Chicago-area hotel operator and remanded with instructions that the NLRB distinguish its precedents (Davidson Hotel Company, LLC v. National Labor Relations Board, No. 19-1235, D.C. Cir., 2020 U.S. App. LEXIS 33394).
October 27, 2020
Divided Panel Upholds Widow’s Award In Dispute Against Domino’s

DAYTONA BEACH, Fla. — The Fifth District Florida Court of Appeal on Oct. 23 summarily affirmed an $8.9 million award in favor of the widow of a man who died in an automobile accident caused by a Domino’s Pizza delivery driver; in a dissent, one judge indicated that he would instead reverse because Florida’s standard jury instruction on agency “does not adequately account for a franchise relationship” (Domino’s Pizza LLC v. Yvonne Wiederhold, No. 5D19-2343, Fla. App., 5th Dist., 2020 Fla. App. LEXIS 15080).
October 27, 2020
McDonald’s: Claims Of Bias Against Black Former Franchisees Are Without Merit

CHICAGO — Former black franchisees who have sued alleging that McDonald’s has “a decades-long history of racial discrimination” have made only vague claims of practices undermining franchisees that are “illogical” and also “untimely and inconsistent with the plain language of the contracts they signed,” McDonald’s USA LLC and McDonald’s Corp. (together, McDonald’s) argue in a motion to dismiss filed Oct. 23 in a federal court in Illinois (Christine Crawford, et al. v. McDonald’s USA, LLC, et al., No. 20-05132, N.D. Ill.).
October 26, 2020
In Applebee’s Wage Suit, New York Federal Judge Modifies Recommendations

BROOKLYN, N.Y. — In an Oct. 21 ruling, a federal judge in New York directed a federal magistrate judge in New York to revisit her 2017 report and recommendation (R&R) that a motion to certify two proposed subclasses in a dispute over alleged wage violations by an Applebee’s restaurant franchisor should be granted (Carlos Marin, et al. v. Apple-Metro, Inc., et al., No. 12-5274, Shaunta Dove, et al. v. Apple-Metro, Inc., et al., No. 13-1417, E.D. N.Y., 2020 U.S. Dist. LEXIS 195258).
October 22, 2020
Volkswagen Salespersons’ Class Suit Due To Drop In Sales Dismissed With Prejudice

SAN FRANCISCO — Three Volkswagen salespeople who brought class employment and unfair competition law (UCL) claims alleging that their business was harmed by the car maker’s emissions scandal failed to show that Volkswagen is their employer, a federal judge in California ruled Oct. 21, opining that evidence of training is insufficient to establish Volkswagen’s status as the employer and dismissing the claims with prejudice (In re: Volkswagen “Clean Diesel” Marking, Sales Practices, and Products Liability Litigation, No. 15-md-2672, MDL No. 2672, N.D. Calif., 2020 U.S. Dist. LEXIS 195614).
October 22, 2020
Judge Confirms Award To Eco-Auto Wash Franchisor Over Noncompete Clause

DETROIT — A Michigan federal judge on Oct. 19 confirmed in part an arbitration award in favor of the franchisor of an eco-friendly auto and truck wash that upheld a noncompete clause against a former franchisee, its principal and the principal’s family members (DetailXPerts Franchise Systems, LLC v. TKTM Enterprise, LLC, et al., No. 18-11823, DetailXPerts Franchise Systems, LLC v. Deck, Inc., et al., No. 19-10037, DetailXPerts Franchise Systems, LLC v. SRQ Detailers, et al., No. 19-12607, E.D. Mich., 2020 U.S. Dist. LEXIS 192673).
October 21, 2020
Hotel Chain Franchisors: Sex Trafficking Suits Were Properly Dismissed

ATLANTA — Allegations of sex trafficking in several hotel chains were properly dismissed, the hotel chains franchisors argue to the 11th Circuit U.S. Court of Appeals in separate Oct. 16 appellee briefs, because the complaints were impermissible shotgun pleadings (Jane Doe #1, et al. v. Red Roof Inns, Inc., et al., Nos. 20-11764, 20-11769, 20-11770 & 20-11771, 11th Cir.).
October 15, 2020
Restaurant, Hospitality Franchise Owners File $41M Coronavirus Coverage Lawsuit

NEWARK, N.J. — The owners of more than 120 franchise locations under the brands Wendy's, T.G.I. Friday's, Marriott and Hilton on Oct. 12 sued their all-risk commercial business insurer in a federal court in New Jersey for breach of contract and reformation, alleging that physical loss and damage caused by the novel coronavirus “directly led” to their subsequent $40,798,390 in economic damages (Manhattan Partners LLC, et al. v. American Guaranty and Liability Insurance Company, No. 20-cv-14342, D. N.J.).
October 15, 2020
Black Workers Accuse McDonald’s Of History Of Racial Discrimination

ROCK ISLAND, Ill. — McDonald’s Corp. was hit with a complaint on Oct. 13 in an Illinois federal court by two former employees and a current employee accusing it of racial harassment and discrimination against Black employees and favoritism toward white employees (Selynda Middlebrook, et al. v. McDonald’s Corporation, et al., No. 20-4214, C.D. Ill.).
October 12, 2020
Judge Gives Preliminary Approval Of $10M Settlement In Wage Putative Class Action

SACRAMENTO, Calif. — A California federal judge on Oct. 7 granted preliminary approval of a $10 million settlement in a putative wage and hour class action against a staffing agency, one of its franchisees and a wine servicing company because an issue of commonality in the class had been resolved (Michael H. Stoddart, et al. v. Express Services, et al., No. 12-1054, E.D. Calif.).
October 07, 2020
Judge Declines To Dismiss Antitrust Suit Against Real Estate Franchisors

CHICAGO — An Illinois federal judge on Oct. 2 allowed an antitrust action against the National Association of Realtors (NAR) and seven real estate franchisors to proceed because homeowners sufficiently allege a conspiracy to artificially inflate commission offers to a successful buyer-broker for property listing on a multiple listing service (MLS) (Christopher Moehrl, et al. v. The National Association of Realtors, et al., No. 19-1610, N.D. Ill., 2020 U.S. Dist. LEXIS 182532).
October 05, 2020
In Mixed Ruling, Minnesota Federal Judge Partly Sides With Franchisee

MINNEAPOLIS — Allegations by a Denny's franchisee that its franchisor breached the Minnesota Franchise Act when it failed to renew a franchise agreement under "substantially similar" terms will proceed, according to a Sept. 30 opinion by a federal judge there (Rogers Family Foods LLC v. DFO LLC, No. 19-1476, D. Minn., 2020 U.S. Dist. LEXIS 180598).
October 05, 2020
Judge Declines Preliminary Injunction Barring Sale Of 11 Popeyes Franchises

NASHVILLE, Tenn. — A group of co-owners of 11 Popeyes Louisiana Kitchen Restaurants franchises failed to establish the need for a preliminary injunction enjoining another group of co-owners from selling the franchises, a Tennessee federal judge ruled Oct. 1, finding an unlikelihood of success on the merits of intentional misrepresentation and conversion claims (Rajendra Patel, et al. v. AR Group Tennessee, LLC, et al., No. 20-52, M.D. Tenn., 2020 U.S. Dist. LEXIS 182130).
October 02, 2020
Dismissal Of Securities Class Action Over CEO's Alleged Sexual Misconduct Stands

NEW YORK — A federal district court did not err in dismissing a pension plan's consolidated amended securities class action complaint against a tax preparation services provider and two of its former senior executives stemming from the company's former CEO's sexual and personal misconduct without leave to amend because the pension plan failed to plead any sufficient material misrepresentations in making its federal securities law claims, a Second Circuit U.S. Court of Appeals panel ruled Sept. 30 in a summary order (In re Liberty Tax Inc. Securities Litigation, No. 20-652, 2nd Cir.).
October 02, 2020
Outback Steakhouse's Franchisee Sues Insurer For Losses Arising Out Of Coronavirus

SAN FRANCISCO — The franchisee of Outback Steakhouse restaurants in Arizona, Colorado, Nevada, New Mexico and California and its parent and affiliated companies on Sept. 29 sued an insurer in a California federal court, alleging that an all-risk insurance policy unambiguously provides coverage for its "direct and/or imminent physical loss" and property damage related to the novel coronavirus (Out West Restaurant Group Inc., et al. v. Affiliated FM Insurance Company, No. 20-06786, N.D. Calif.).
October 01, 2020
Judge Confirms Award On Post-Termination Rights To Bath Remodeling Franchisees

WILMINGTON, Del. — A Delaware federal judge on Sept. 29 confirmed a final arbitration award to former franchisees on post-termination rights against the franchisor of residential bath remodeling services as a result of the franchisor's breaches of franchise agreements (Rome Enterprises, Inc., et al. v. ReBath, LLC, 19-MC-191, D. Del., 2020 U.S. Dist. LEXIS 179078).
September 30, 2020
Krispy Kreme Franchisee Is Owed Refund For Increase In Unemployment Taxes

AMARILLO, Texas — A Krispy Kreme franchisee is owed $286,889.56 by the Texas Workforce Commission (TWC) as a refund for an increase in unemployment taxes paid as the result of an improper transfer of a predecessor's unemployment compensation experience rating to the franchisee, a Texas appeals panel held Sept. 25 (Dulce Restaurants, LLC v. Texas Workforce Commission, No. 07-19-00213-CV, Texas App., 7th Dist., 2020 Tex. App. LEXIS 7781).
September 24, 2020
Smoothie King Franchisee Pays Back Wages After Denying Emergency Leave

MOBILE, Ala. — The operator of a Smoothie King franchise in Mobile paid $918 in back wages to seven employees denied emergency leave while being tested for COVID-19, caused by the novel coronavirus, or quarantining due to exposure at work, the U.S. Department of Labor (DOL) announced Sept. 21.
September 24, 2020
EEOC Sues Subway Franchisee For Committing Bias With Job Denial

INDIANAPOLIS — Ranrae Inc., a Subway franchisee in Indiana, violated the Americans with Disabilities Act (ADA) when it rejected a heard-of-hearing job applicant due to his hearing and speech impairments, the Equal Employment Opportunity Commission alleges in a Sept. 23 class complaint filed in a federal court in Indiana (Equal Employment Opportunity Commission v. Ranrae, Inc., No. 20-2450, S.D. Ind.).
September 23, 2020
Judge: Former Restoration Services Franchisee Breached Contract Post-Termination

NASHVILLE, Tenn. — In a dispute over the termination of a franchise agreement, a franchisor of cleaning and damage restoration services was granted summary judgment in part on Sept. 21 by a Tennessee federal judge on the franchisor's breach of contract and trademark infringement claims as well as a breach of contract counterclaim brought by a former franchisee (Servpro Industries, Inc. v. Tammy Woloski, et al., No. 17-1433, M.D. Tenn., 2020 U.S. Dist. LEXIS 171955).
September 22, 2020
Insurer: No Coverage Due For Suit Disputing McDonald's Collection Of Biometric Data

CHICAGO — A businessowners liability insurer filed suit in a federal court in Illinois on Sept. 21, seeking a declaration that it owes no coverage for an underlying class action alleging that a McDonald's franchise owner violated the Illinois Biometric Information Privacy Act (BIPA) when it scanned an employee's fingerprints but did not disclose the specific purpose for collecting, storing and using her biometric data (American Family Mutual Insurance Company v. McEssy Investment Company, et al., No. 20-05591, N.D. Ill., Eastern Div.).
September 20, 2020
Insurers Seek To Boot Claims In Franchiser's Insurance Bad Faith Suit

DENVER — Dismissal of an insured's lawsuit against its commercial property insurance provider and the provider's parent company seeking coverage for business income losses at its franchised hair salons in Colorado and Missouri stemming from state and local governmental orders in response to the novel coronavirus pandemic is warranted because the insured has failed to state any viable claim against the defendants under the plain language of the policy, the defendants argue in a Sept. 11 motion to dismiss filed in Colorado federal court (Holtzman Enterprises Inc. v. Continental Casualty Co., et al., No. 20-2152, D. Colo.).
September 18, 2020
NLRB Won't Reopen Record On McDonald's Joint Employment After Settlement Order

WASHINGTON, D.C. — A three-member panel of the National Labor Relations Board (NLRB) on Sept. 16 declined to reopen the record and reconsider a Dec. 12 order in which an NLRB panel ruled 2-1 to vacate an administrative law judge's (ALJ) order that denied approval of multiple settlement agreements involving McDonald's USA LLC, McDonald's Restaurants of Illinois Inc. and a large number of franchisees accused of retaliating against workers involved in an organizing campaign for higher pay based on a lack of finding that McDonald's USA was a joint employer and remanded the case to the ALJ with instructions to approve the agreements (McDonald's USA, LLC, et al. and Fast Food Workers Committee, et al., Nos. 02-CA-093893, 04-CA-125567, 13-CA-106490, 20-CA-132103, 25-CA-114819 and 31-CA-127447, NLRB).
September 18, 2020
2nd Circuit Upholds Denial Of Arbitration To Subway In TCPA Action

NEW YORK — The Second Circuit U.S. Court of Appeals on Sept. 15 affirmed a lower court's denial of a request made by the franchisor of Subway restaurants to arbitrate a putative class action concerning violations of the Telephone Consumer Protection Act (TCPA) because an agreement to arbitrate does not exist between the parties under New York law (Luis Arnaud v. Doctor's Associates, Inc., No. 19-3057, 2nd Cir., 2020 U.S. App. LEXIS 29504).