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

Mealey's Franchise

October 25, 2021
9th Circuit: Massage Envy Settlement Vouchers Were Coupons Under CAFA

SAN FRANCISCO — A class settlement by a massage and skin care franchisor accused of violating its membership agreement by periodically increasing membership fees was a coupon settlement under the Class Action Fairness Act (CAFA), a Ninth Circuit U.S. Court of Appeals panel ruled Oct. 20, first vacating approval of the attorney fee award and remanding for reconsideration based on the value of the redeemed vouchers and then vacating approval of the settlement for failure to adequately investigate the warning signs of implicit collusion, a process necessary for pre-certification settlements pursuant to In re Bluetooth Headset Products Liability Litigation.
October 25, 2021
DOL Announces Mileage Reimbursement Recovery For Franchisee Drivers

COLUMBIA, S.C. — The U.S. Department of Labor (DOL) Wage and Hour division recovered $27,209 in denied mileage reimbursement for delivery drivers employed by a South Carolina Jimmy John’s franchisee, the DOL announced Oct. 20.
October 25, 2021
Judgment Denying COVID-19 Coverage Claim Will Not Be Amended, Federal Judge Rules

SEATTLE— A federal judge in Washington on Oct. 7 denied a hotel owner’s motion to amend the judge’s prior judgment dismissing its lawsuit challenging an insurer’s denial of coverage for COVID-19-related losses, finding that even if the hotel owner’s scientific evidence that the coronavirus was airborne was “newly discovered evidence,” the claim would fail because the hotel owner could not show that the coronavirus causes lasting damage to property.
October 23, 2021
In Dispute Between Former Partners, Panel Says Forum Clause Not Enforceable

CINCINNATI — A federal judge in Michigan erred in granting a countertop manufacturer dismissal of allegations that it breached its contract with a countertop fabricator in view of a forum selection clause in the parties’ franchise agreement, the Sixth Circuit U.S. Court of Appeals ruled Oct. 15.
October 21, 2021
7-Eleven Franchisees To Massachusetts High Court: No ABC Test Carve Out

BOSTON — Franchisees who have allegedly been misclassified as independent contractors rather than employees are not exempt under the three-prong “ABC test” as it “applies to all claims of misclassification,” 7-Eleven franchisees tell the Massachusetts Supreme Judicial Court in their Oct. 12 appellant brief addressing a certified question from the First Circuit U.S. Court of Appeals.
October 21, 2021
2nd Circuit Denies Franchisees’ Rehearing Request After Ruling On Fees

NEW YORK — The Second Circuit U.S. Court of Appeals on Oct. 14 denied a request for a panel rehearing or, in the alternative, for rehearing en banc brought by two cleaning company franchisees after a divided panel ruled that their franchisor’s compensation scheme, which included an initial franchise fee and ongoing payments from franchisees, did not violate Connecticut law even if the franchisees were found to be employees rather than independent contractors.
October 20, 2021
Employee In Dispute With Franchisee Asks High Court To Review Arbitration Waiver

WASHINGTON, D.C. — The U.S. Supreme Court should review a wage-and-hour dispute between an employee and a Taco Bell franchisee to resolve a circuit split concerning whether a party asserting arbitration waiver due to litigation conduct must show prejudice as “the continued existence of the arbitration-specific prejudice requirement has consequences beyond its effect on particular cases, undermining this Court’s authority and leaving lower courts confused about how to apply its precedents,” the employee argues in her Oct. 15 reply brief.
October 18, 2021
Default Judgment Entered For Insurer In Carbon Monoxide Coverage Suit

NASHVILLE, Tenn. — A Tennessee federal judge on Oct. 15 granted an insurer’s motion for default judgment in a carbon monoxide poisoning coverage dispute after determining that a default judgment is appropriate because the insured failed to make any appearances since the insurer filed its suit.
October 14, 2021
Class Suit Accusing Subway Of Tuna Misrepresentation Dismissed With Leave To Amend

OAKLAND, Calif. — A federal judge in California on Oct. 7 dismissed with leave to amend a putative class complaint accusing a sandwich franchisor of violating California’s unfair competition law (UCL) and other state laws by labeling its tuna salad, sandwiches and wraps as “100% tuna” while failing to prevent adulteration in its supply chain or honor its representation that it has “a global ban on the sale of tuna species that come from anything less than healthy stocks.”
October 12, 2021
Golden Corral Franchisor Appeals Dismissal Of Coronavirus Coverage Dispute

RALEIGH, N.C. — Golden Corral Corp. and Golden Corral Franchising Systems filed a notice in a North Carolina federal court on Oct. 6 indicating that they are appealing the court’s grant of an insurer’s motion for judgment on the pleadings and dismissal of their bad faith lawsuit seeking coverage for their financial losses arising from the suspension of their restaurant operations in response to the government orders prompted by the coronavirus pandemic.
October 04, 2021
EEOC Sues Colorado Dealership For Subjecting Workers To Hostile Environment

DENVER — A Golden, Colo., car dealership has violated federal law by subjecting both male and female employees to a sexually hostile work environment and Black and Hispanic employees to a racially hostile work environment, the Equal Employment Opportunity Commission alleges in a complaint filed Sept. 30 in a federal court in Colorado.
September 28, 2021
Cleaning Company Franchisees Request Rehearing After Ruling For Franchisor On Fees

NEW YORK — Two cleaning company franchisees moved for rehearing en banc on Sept. 24, less than a month after a divided Second Circuit U.S. Court of Appeals ruled that their franchisor’s compensation scheme, which included an initial franchise fee and ongoing payments from franchisees, did not violate Connecticut law even if the franchisees were found to be employees rather than independent contractors.
September 27, 2021
Radisson, Competitor Stipulate To Dismissal Of Claim Of Interference With Agreements

SPOKANE, Wash. — Following a stipulated motion to dismiss, a federal judge in Washington on Sept. 2 dismissed a lawsuit brought by Radisson Hotels International Inc., a hotel franchisor, alleging that one of its business competitors intentionally interfered with the franchise agreements of nine franchisees to acquire those franchisees and force the franchisor out of the subject territory.
September 27, 2021
Federal Judge Dismisses Golden Corral Franchisor’s Coronavirus Coverage Dispute

RALEIGH, N.C. — A federal judge in North Carolina on Sept. 8 granted an insurer’s motion for judgment on the pleadings and dismissed Golden Corral Corp. and Golden Corral Franchising Systems’ bad faith lawsuit seeking coverage for their financial losses arising from the suspension of their restaurant operations in response to the government orders prompted by the coronavirus pandemic, finding that the insureds have not plausibly alleged tangible, physical harm to their covered property or a tangible loss of their covered property.
September 27, 2021
DOL Announces Final Rule Allowing Penalties Where Employers Take Tips

WASHINGTON, D.C. — The U.S. Department of Labor announced a final rule on Sept. 23 that it says will restore the ability to levy civil money penalties up to $1,100 against employers who take workers’ tips and withdraw the civil money penalties’ provisions in the 2020 tip final rule that would have allowed the DOL to assess these penalties where such violations were found to be repeated or willful.
September 24, 2021
Black McDonald’s Franchisees Argue Against Dismissal Of Bias, Fraud Claims

CHICAGO — Two Black fast food franchisees who filed a second amended complaint alleging discrimination filed an opposition on Sept. 15 to the franchisor’s motions to dismiss and strike class allegations, arguing that they have addressed the issues raised in the previous dismissal by the federal judge in Illinois and added a claim for fraudulent concealment.
September 23, 2021
9th Circuit Reinstates Grubhub Driver’s Wage Claims For ‘ABC’ Test Consideration

SEATTLE — A district court must reconsider a food delivery driver’s wage claims under California’s “ABC” test, which distinguishes between employees and independent contractors in wage order cases as California’s Proposition 22 did not “abate” the application of the test to those claims, a Ninth Circuit U.S. Court of Appeals panel ruled Sept. 20.
September 23, 2021
Pizza Franchisees: Husband Is Not Employer, Emails Not Discoverable In Wage Suit

DAYTON, Ohio — A pizza shop franchisee and her limited liability companies named as defendants in a putative class complaint by a pizza delivery driver alleging improper reimbursement for vehicle expenses filed an opposition on Sept. 21 to the driver’s motion to compel discovery responses, arguing that the franchisee’s husband who was also named as a defendant is not an employer and so his emails are not discoverable.
September 21, 2021
7-Eleven Seeks Final Judgment In Its Favor After Franchisees Deemed Not Employees

LOS ANGELES — A convenience store franchisor on Sept. 16 filed a proposed final judgment in a federal court in California in favor of itself one week after the judge issued findings of fact and conclusions of law determining that 7-Eleven franchisees are independent contractors and not employees.
September 20, 2021
DOL Extends Effective Date For Rescission Of Joint Employer Status Rule

WASHINGTON, D.C. — The U.S. Department of Labor (DOL) on Sept. 20 announced an extension of the effective date of the rescission a joint employer status rule that took effect under President Donald J. Trump’s administration in March 2020.
September 15, 2021
Human Resources Expert Qualified To Opine On Staffing Standards, Judge Says

OXFORD, Miss. — A Mississippi federal judge on Sept. 13 rejected an employer’s attempt to narrowly define the expertise required in a wrongful death case, denying its motion to exclude filed in a case in which it is alleged that the company’s negligent hiring led to an employee’s death.
September 15, 2021
8th Circuit: Arbitration Waived In Anti-Competitive Realty Commission Class Suit

ST. LOUIS — One of the real estate broker franchisors accused in a putative class complaint of conspiring with other franchisors and the National Association of Realtors (NAR) to require home sellers to pay inflated broker commissions in violation of the Sherman Act waived its right to arbitrate after actively litigating the case for a year, the Eighth Circuit U.S. Court of Appeals ruled Sept. 10.
September 14, 2021
EEOC Hits Subway Franchise With Bias Suit; Judge Discourages Dismissal Motion

PHOENIX — The Equal Employment Opportunity Commission filed a disability bias complaint against a Subway franchise on Sept. 10, and a federal judge in Arizona the same day filed an order discouraging the parties from filing motions to dismiss or for judgment on the pleadings if any defects in the complaint could “be cured by a permissible amendment.”
September 13, 2021
Split 2nd Circuit Upholds Ruling For Cleaning Franchisor On Collection Of Fees

NEW YORK — A divided Second Circuit U.S. Court of Appeals panel on Sept. 9 ruled that a cleaning company franchisor’s compensation scheme, which included an initial franchise fee and ongoing payments from franchisees, did not violate Connecticut law even if the franchisees were found to be employees rather than independent contractors as the case law is clear that such fees are permitted and the franchisees received something of value, franchise rights, in exchange for the fees.
September 08, 2021
Sonic Denied Summary Judgment Over Data Breach Negligence Class Claim

CLEVELAND — An Ohio federal judge on Sept. 7 denied Sonic Corp.’s motion for summary judgment over a negligence claim brought against it by a class of financial institutions (FIs) related to the fast food chain’s 2017 data breach, with the judge finding that questions of material fact existed and holding that the key matter of proximate cause should be decided by a jury.