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

Mealey's Franchise

June 14, 2021
Franchisees’ Claims Of Being Steered To Black Communities Dismissed

CHICAGO — A federal judge in Illinois on June 9 dismissed with prejudice based on the two-year statute of limitations putative class claims by two Black franchisees that they were steered by a fast food franchisor to Black communities where white franchisees refused to operate restaurants due to higher overhead costs and employee turnover and denied as moot a motion to strike class allegations.
June 11, 2021
2nd Circuit Affirms Arbitration Denial In Subway TCPA Class Complaint

NEW YORK — A consumer who filed a class complaint against Subway Franchisee Advertising Fund Trust Ltd. alleging that it sent her and a proposed class unwanted text messages in violation of the Telephone Consumer Protection Act (TCPA) was not bound by an arbitration agreement on Subway’s website due to the company’s failure to provide users with a reasonable conspicuous notice that they were agreeing to such terms, a Second Circuit U.S. Court of Appeals panel ruled June 8.
June 10, 2021
DOL: States Lack Standing To Challenge Joint Employer Rule

NEW YORK — The U.S. Department of Labor (DOL) is considering whether to rescind the joint employer rule issued in February 2020; however, even if the rule is not rescinded, the states and commonwealth that have sued challenging the changes lack standing as the injuries they allege they will suffer “result entirely from their own policy changes,” the DOL argues in its reply brief filed May 28 in the Second Circuit U.S. Court of Appeals.
June 10, 2021
Unions To 2nd Circuit: NLRB Erred In Not Reopening Joint Employer Dispute

WASHINGTON, D.C. — Two unions challenging the National Labor Relations Board’s (NLRB) refusal to reopen the record and reconsider an order directing approval of settlement agreements between a fast food franchisor and franchisees accused of retaliating against workers involved in an organizing campaign for higher pay and the impartiality of one of the NLRB members and the substance of the agreements filed an opening brief on June 4 in the District of Columbia Circuit U.S. Court of Appeals, arguing that they must be permitted to present new evidence and challenging the standard of review used by the NLRB.
June 08, 2021
Judge Won’t Dismiss Restaurant Worker’s Title VII Claims Against McDonald’s

ST. LOUIS — A former employee who filed claims of sex discrimination and hostile work environment under Title VII of the Civil Rights Act of 1964 against McDonald’s Corp. and McDonald’s USA LLC and a franchisee made sufficient allegations based on the joint employer theory to state a claim for relief against the franchisors, a Missouri federal judge ruled June 3, denying motions to dismiss filed by the McDonald’s defendants.
June 07, 2021
Franchise Owners Appeal Dismissal Of $41M Coronavirus Coverage Dispute

NEWARK, N.J. — Owners of more than 120 franchise locations under the brands Wendy's, T.G.I. Friday's, Marriott and Hilton filed a notice of appeal in a New Jersey federal court on June 4 indicating they are seeking the Third Circuit U.S. Court of Appeal’s review of the lower court’s dismissal of their breach of contract lawsuit alleging $40,798,390 in damages for their losses resulting from the coronavirus pandemic.
June 07, 2021
Plethora Of Bar, Restaurant Owners, Operators Sue Insurer For Coronavirus Losses

CHICAGO — Owners and operators of various bars, restaurants and taverns, including the Buffalo Wild Wings franchise, sued their property and casualty insurer in a federal court in Illinois on June 2 for its failure to provide coverage for their lost business income arising from the ongoing coronavirus pandemic and subsequent executive orders issued by Illinois Gov. J.B. Pritzker.
June 04, 2021
Preliminary Approval Of $1.2M Wage, Hour Class Action Settlement Denied A 3rd Time

FRESNO, Calif. — A former Five Guys employee’s third motion seeking preliminary approval of a proposed $1.2 million class action settlement of allegations that the franchise chain and a franchisee violated federal and California consumer reporting laws, California wage-and-hour laws and California’s unfair competition law (UCL) does not provide sufficient information to show that it “is likely to be approved as ‘fair, reasonable, and adequate’ upon certification of the class,” a California federal judge ruled in an order filed June 1 that denied the motion without prejudice.
June 03, 2021
Ford To 6th Circuit: Fairness Act Can’t Protect Foreign Dealer From Arbitration

CINCINNATI — Ford Motor Co. in a June 1 appellee brief to the Sixth Circuit U.S. Court of Appeals says a Kuwaiti car dealer’s argument that the Motor Vehicle Franchise Contract Arbitration Fairness Act (the Fairness Act) applies to foreign dealers and should have precluded a district court from ordering it to arbitrate a dispute with Ford is moot and contends that the Fairness Act applies only domestically.
June 02, 2021
Papa John’s Franchisees Seek To Settle Drivers’ Expenses Suit For $3.25 Million

DAYTON, Ohio — Pizza delivery drivers employed by Papa John’s franchisees who brought class and collective claims seeking reimbursement for actual expenses moved in a federal court in Ohio on May 27 for preliminary approval of a $3.25 million settlement.
June 02, 2021
Franchise Owner’s Motion For Attorney Fees In EEOC Suit Denied By Federal Judge

WEST PALM BEACH, Fla. — A Florida federal judge on May 18 denied a post-settlement motion for attorney fees filed by the owner of multiple franchises in a dispute with the Equal Employment Opportunity Commission over an arbitration agreement employees were required to sign.
June 01, 2021
Engineering Firm: Building Designer Has No Evidence To Support Negligence Claim

RALEIGH, N.C. — An engineering firm named as a third-party defendant in a property owner and hotel franchisee’s suit over a building designer’s allegedly faulty plans says in a motion for summary judgment filed May 13 in federal court in North Carolina that the designer has not proffered any evidence that the firm violated its standard of care.
May 28, 2021
Insurer: No Coverage Owed For BIPA Suits Brought Against McDonald’s Franchisees

CHICAGO — An insurer on May 19 filed suit in an Illinois court, seeking a declaration that is has no duty to defend or indemnify McDonald’s and its franchisees against two underlying lawsuits alleging violations of the Illinois Biometric Information Privacy Act (BIPA), arguing that the underlying claims do not assert “bodily injury” or “property damage” that was caused by an “occurrence” nor do they allege “personal and advertising injury” under the policy.
May 28, 2021
Federal Magistrate Judge: Drivers’ Expenses May Be ‘Reasonably Approximated’

CINCINNATI — Vehicle-related expenses incurred by delivery drivers working for Domino’s Pizza franchises may be “reasonably approximated” under the Fair Labor Standards Act (FLSA) as there is “no genuine ambiguity” in the anti-kickback regulation, a federal magistrate judge in Ohio stated in her May 26 report and recommendation.
May 28, 2021
Wendy’s Franchisee Agrees To Settle Nevada Upper-Tier Minimum Wage Class Claims

LAS VEGAS — A Wendy’s franchise in Nevada has agreed pay more than $858,000 to settle class claims that it failed to pay workers who declined health benefits upper-tier minimum wages pursuant to state law, according to an order granting preliminary class settlement approval issued May 27 by a federal judge in Nevada.
May 27, 2021
Insurer Says District Court’s Ruling On COVID-19 Losses Must Be Affirmed

ATLANTA — A district court correctly found that an insured restaurant chain’s claim for loss of business income caused by shutdown orders issued by state governors in the wake of the COVID-19 pandemic is not covered because the decision is clearly supported by the insurance policy’s language and because the policy’s contamination exclusion bars coverage, an insurer says in a May 26 appellee brief filed in the 11th Circuit U.S. Court of Appeals.
May 26, 2021
Judge Refuses To Vacate Dismissal Of Franchise Owners’ $41M Coronavirus Coverage Suit

NEWARK, N.J. — A federal judge in New Jersey on May 24 denied a motion to vacate filed by the owners of more than 120 franchise locations under the brands Wendy's, T.G.I. Friday's, Marriott and Hilton, refusing to disturb her dismissal of their breach of contract lawsuit alleging $40,798,390 in damages for their losses resulting from the coronavirus pandemic.
May 24, 2021
Franchisee’s Motion For Judgment On Architecture Firm’s Counterclaim Denied

RALEIGH, N.C. — A federal judge in North Carolina on May 12 denied a hotel franchisee’s motion for judgment on an architecture firm’s counterclaim for breach of an agreement to pay for design services, finding that emails between the parties from 2008 cannot be considered because they are not integral to or relied on by the firm in its counterclaim.
May 24, 2021
Federal Magistrate Judge Denies Former Franchisee’s Nonparty Discovery Requests

PHOENIX — In a trademark infringement action, a federal magistrate judge in Arizona on May 13 sustained a bathroom remodeling franchisor’s objections to a former franchisee’s discovery requests for the profit and loss statements of a nonparty franchisee, the franchisor’s financial statements and documents related to agreements between the franchisor and the nonparty franchisee.
May 24, 2021
Franchisor Awarded $97,000 By Florida Judge For Unapproved Shutdown Of 2 Franchises

FORT LAUDERDALE, Fla. — Following a bench trial, a Florida federal judge awarded a mobile dental equipment repair franchisor nearly $97,000 in damages on May 14 due to a franchisee shutting down two Virginia franchises without consent. The judge refused to reduce the amount to present value, holding that the franchisee produced no evidence regarding the proper calculation method.
May 21, 2021
Illinois High Court: Defense Owed For Claims Insured Disclosed Fingerprint Data

SPRINGFIELD, Ill. — The Illinois Supreme Court on May 20 affirmed a lower court’s ruling that an insurer has a duty to defend against class action claims that its insured violated the Biometric Information Privacy Act by disclosing fingerprint data to a third party without consent, further affirming that the policy’s violation of statutes exclusion does not bar coverage.
May 21, 2021
2nd Circuit: Summary Judgment Against Franchisee Stands In TCPA Case

NEW YORK — A former Wyndham Hotel Group franchisee “cannot now complain about receiving advertisements of the very type it expressly agreed to receive” through its franchise agreements with Wyndham, the Second Circuit U.S. Court of Appeals ruled May 13 on class allegations that Lands’ End violated the Telephone Consumer Protection Act (TCPA) by sending unsolicited fax advertisements, affirming a federal judge’s grant of summary judgment that dismissed the case.
May 21, 2021
Federal Judge Refuses To Dismiss Gym Franchisee’s Tortious Interference Claim

CONCORD, N.H. — A fitness center franchisee stated a plausible claim for tortious interference, a New Hampshire federal judge concluded May 14 in denying Planet Fitness’ motion for judgment on the pleadings to dismiss the counterclaim in a breach of contract suit over the development of franchise locations in Mexico.
May 20, 2021
Federal Judge Refuses To Dismiss 5 Sex Trafficking Suits Against 5 Florida Hotels

FORT MYERS, Fla. — A Florida federal judge on May 10 refused to dismiss the fifth of five lawsuits filed against the franchisors, franchisees and operators of five hotels brought by a woman alleging that she was a victim of sex trafficking at the hotels over a three-year period. He rejected the defendants’ arguments that the allegations were impermissibly vague and failed to state a claim.
May 14, 2021
Judge: Franchisee Group Lacks Associational Standing To Sue Franchisor Over Fees

FORTH WORTH, Texas — An association that represents trampoline park franchises failed to demonstrate associational standing to pursue claims for relief against a franchisor that it alleges made unilateral changes to the franchise agreements that affect profitability, a Texas federal judge ruled May 6, granting a motion to dismiss the case.