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.
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.
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.
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.
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.
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.
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.
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.”
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.
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.
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.
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.”
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.
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.
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.
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.
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.
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.
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.
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.