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

Mealey's Franchise

February 09, 2021
JPMDL Won’t Consolidate Dickey’s Barbecue Data Breach Lawsuits In California

WASHINGTON, D.C. — Noting that only six putative class actions have been filed over the recently announced data breach experienced by Dickey’s Barbecue Restaurants Inc., the U.S. Judicial Panel on Multidistrict Litigation (JPMDL) on Feb. 4 denied a motion by the plaintiffs in one of those cases to consolidate the suits in California federal court, holding that the parties and courts involved can instead engage in informal coordination efforts.
February 08, 2021
Sexual Misconduct Claims In Papa John’s Stock-Drop Suit Dismissed With Prejudice

NEW YORK — A federal judge in New York on Feb. 3 granted motions to dismiss filed by pizza delivery and carryout franchise Papa John’s International Inc. and its current and former CEOs on claims that they violated federal securities law by failing to disclose a toxic workplace environment created by a culture of sexual harassment and other inappropriate workplace conduct by its most senior executives, ruling that the lead plaintiff in the action failed to cure pleading deficiencies that led to a prior dismissal of its claims.
February 08, 2021
Arbitration Rules Reference Shows ‘Clear’ Intent, Master Franchisee Tells High Court

WASHINGTON, D.C. — A master franchisee of commercial cleaning businesses urged the U.S. Supreme Court on Feb. 4 to reject a petition for certiorari filed by two franchisees who argue that an appeals court in a proposed class action over employment classifications erred in holding that the mere reference to arbitration rules in an agreement constitutes “clear and unmistakable” intent to delegate arbitrability issues to an arbitrator instead of a court.
February 08, 2021
Federal Judge Upholds Claims Against In-Home Care Franchisees, Grants Injunction

LINCOLN, Neb. — A Nebraska federal judge refused on Feb. 4 to dismiss or stay an in-home care franchisor’s breach of contract claims against former franchisees in favor of a wrongful death action pending in an Alabama state court against the franchisees. In a separate ruling on Jan. 29, the judge agreed to impose a preliminary injunction against the former franchisees to keep them from violating the franchise agreements’ non-compete clauses.
February 05, 2021
New Jersey Judge Transfers Trampoline Park Franchise Agreement Suit To Texas Court

NEWARK, N.J. — A New Jersey federal judge on Jan. 31 transferred to Texas an action brought by an association representing trampoline park franchises alleging that a franchisor made unilateral changes to the franchise agreements, citing the doctrine of forum non conveniens and the franchise agreements’ forum-selection clauses.
February 05, 2021
Burger King Opposes Reconsideration In Franchise Closure Dispute

MIAMI — Burger King Corp., which was awarded summary judgment on Dec. 22 by a federal judge in Florida in its lawsuit accusing a franchisee of breaching its agreement by closing a restaurant without consent, filed a memorandum on Feb. 2 opposing the franchisee’s motion for reconsideration.
February 03, 2021
9th Circuit Vacates, Remands Franchise Wage Case After Dynamex Ruling

SAN FRANCISCO — A Ninth Circuit U.S. Court of Appeals panel on Feb. 2, in light of the California Supreme Court’s recent ruling that Dynamex Operations West, Inc. v. Superior Court applies retroactively in nonfinal cases, issued an amended opinion vacating a summary judgment ruling for the franchisor in a wage complaint by janitors alleging misclassification and remanded for the district court to consider whether the janitors are employees under the Dynamex standard in the first instance.
February 02, 2021
New Jersey Federal Judge: Gas Station Franchise Entitled To Fees, Costs

TRENTON, N.J. — A federal judge in New Jersey on Jan. 22 awarded a gas station franchise $100,276.93 in attorney fees and costs after it prevailed on allegations that a gas distributor violated the Petroleum Marketing Practices Act (PMPA).
February 01, 2021
9th Circuit Rejects Bid By Volkswagen Franchises To Press RICO Claims

SAN FRANCISCO — In a Jan. 26 holding, the Ninth Circuit U.S. Court of Appeals left intact a California federal judge’s determination that allegations that a German multinational engineering and technology company and its subsidiary violated the Racketeer Influenced and Corrupt Organizations (RICO) Act in connection with Volkswagen’s buyback program fail.
February 01, 2021
Burger King Tells 11th Circuit Franchisees’ Alleged No-Hire Conspiracy Not Possible

ATLANTA — Burger King’s corporate entities filed an appellee brief on Jan. 27, arguing to the 11th Circuit U.S. Court of Appeals 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. In their proposed class action, three employees say the alleged no-hire agreement led to depressed wages.
January 28, 2021
Texas Holiday Inn Operator Sued By EEOC For Pregnancy Discrimination

CORPUS CHRISTI, Texas — The Equal Employment Opportunity Commission filed a complaint on Jan. 25 in a federal court in Texas accusing Awon Phie LLC, doing business as Holiday Inn Express & Suites, of firing a temporary employee because she was pregnant.
January 28, 2021
Hand And Stone’s Reargument Request Denied In Sexual Assault Liability Suit

GEORGETOWN, Del. — A Delaware judge on Jan. 22 denied a motion for reargument filed by a spa franchisor, leaving untouched a denial of a motion to dismiss a lawsuit concerning liability for an alleged sexual assault by a franchisee’s former employee, but leaving open the possibility for additional motions following discovery.
January 27, 2021
Judge: Fact Issues Exist As To Whether Insurer Failed To Settle Franchise Dispute

NASHVILLE, Tenn. — A federal judge in Tennessee on Jan. 25 held that a material factual dispute precludes summary judgment as a matter of law in favor of a plaintiff on its claim that a professional liability insurer acted in bad faith for failing to settle within policy limits an underlying breach of contract and fraud lawsuit brought by the plaintiff against a franchisor insured.
January 25, 2021
U.S. High Court Denies Review Of Domino’s Franchisee Worker’s Arbitration Issue

WASHINGTON, D.C. — The U.S. Supreme Court on Jan. 25 denied a petition for writ of certiorari filed by a Domino’s franchisee employee, who argued 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.
January 25, 2021
New York Justice Refuses To Hold Domino’s Liable For Franchisees’ Wage Violations

NEW YORK — Following a bench trial, a New York justice on Jan. 5 rejected the state attorney general’s allegations that Domino’s Pizza misled franchisees about the capabilities of the chain’s store management software program, which resulted in franchisees violating state labor laws by miscalculating wages and underpaying certain categories of employees.
January 25, 2021
California Moves To Dismiss Franchise Groups’ Suit Over Independent Contractor Test

SAN DIEGO — The state of California on Jan. 14 moved to dismiss a suit filed by four franchising-related associations in a federal court challenging the constitutionality of the state’s “ABC Test,” used to determine whether a worker is an employee or independent contractor. 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.
January 25, 2021
Judge Refuses To Dismiss Vicarious Liability Claim Against Hand And Stone Franchise

GEORGETOWN, Del. — A Delaware judge on Jan. 7 denied Hand and Stone Franchise Corp.’s motion to dismiss a vicarious liability claim arising from an alleged sexual assault by its former employee, finding that the plaintiff has sufficiently pleaded averments to survive a dismissal motion.
January 25, 2021
Franchisor’s Motion For Contempt Over Signage, Franchisees’ Webpages Denied

MINNEAPOLIS — A federal judge in Minnesota on Jan. 4 denied without prejudice an acupuncture franchisor’s motion for a finding of contempt against franchisees in Colorado that have failed to cover exterior signage with the franchisor’s logo and remove from their webpages any reference to the franchisor, holding that franchisees are attempting in good faith to comply with the terms of an Oct. 28 preliminary injunction order.
January 24, 2021
New York Hotel Franchisee Alleges Lender Is Using Pandemic To Take Over Property

NEW YORK — A DoubleTree by Hilton hotel franchisee sued its commercial mortgage lender in a New York state court on Jan. 7, alleging that the lender is using the franchisee’s failure to meet its loan obligations due to the COVID-19 pandemic to take control of the hotel.
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.