Mealey's Franchise
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April 19, 2019
Parties Dispute Dismissal Of Franchisee’s Contract Claims In 4th Circuit
RICHMOND, Va. — An appellant told the Fourth Circuit U.S. Court of Appeals recently that a release he executed with his former franchisor did not bar his breach of contract and civil conspiracy lawsuit because two of the underlying franchise agreements were terminated several months after the release was signed (Michael Musselwhite, et al. v. Mid-Atlantic Restaurant Corporation, et al., No. 18-2435, 4th Cir.).
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April 19, 2019
Judge Upholds Waiver In Denying Bid For Jury Trial In Franchise Contract Row
DETROIT — A federal judge in Michigan on April 2 struck down the jury trial demand by a plaintiff seeking damages and the rescission of an alleged fraudulently induced franchise contract, citing a jury waiver clause in the 2015 franchise agreement between the litigants (MTR Capital, LLC v. LaVida Massage Franchise Development, Inc., Peggy Davis, and Duane Goodwin, No. 17-13552, E.D. Mich., Southern Div.).
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April 19, 2019
Jani-King Has Right To Pursue Damages From Ex-Franchisee Who Filed For Bankruptcy
NEW ORLEANS — A bankruptcy judge in Louisiana ruled April 10 that a franchisee committed fraud and breached a franchise agreement and that the franchisor, an international cleaning and janitorial services corporation, has the right to pursue damages after the franchisee filed for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code, although the damages might not amount to much (In re: Terry David Gaddis, Jr. [Enmon Enterprises, LLC, d/b/a Jani King, Plaintiff, v. Terry David Gaddis, Jr.], Chapter 7, 17-11781 Adv. Proc. No. 17-1065, E.D. La. Bkcy., 2019 Bankr. LEXIS 1155).
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April 17, 2019
Judge Denies Dismissal Of Housekeeper’s Overtime Class Claim Against Franchisor
PHILADELPHIA — A Pennsylvania federal judge on April 5 denied Choice Hotels International’s motion to dismiss a collective and class action lawsuit brought by a former housekeeper who sued Choice and one of its franchisees as joint employers for denying her and other workers overtime wages (Gina DiFlavis v. Choice Hotels International, Inc. et al., No. 18-3914, E.D. Pa., 2019 U.S. Dist. LEXIS 58924).
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April 16, 2019
Panel Upholds Injunction Against Frozen-Drink Franchisee Due To Breach
AMARILLO, Texas — A Texas appeals panel on April 12 affirmed a temporary injunction in a dispute between a frozen-drink franchisor and one of its franchisees because there is evidence that the franchisee breached the franchise agreement (South Plains SNO Inc. v. Eskimo Hut Worldwide Ltd., No. 07-19-00003, Texas App., 7th Dist., 2019 Tex. App. LEXIS 3015).
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April 15, 2019
Federal Judge Dismisses Most Counterclaims Against Child Care Franchisor
BALTIMORE — In a dispute between a franchisor of a national educational child care system and a former franchisee and its principals, a Maryland federal judge on March 31 granted the franchisor’s motion to dismiss counterclaims except for the negligent misrepresentation counterclaim (Kiddie Academy Domestic Franchising LLC v. Wonder World Learning LLC, et al., No. 17-3420, D. Md., 2019 U.S. Dist. LEXIS 56126).
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April 11, 2019
Judge Orders Franchisee To Cease Operations, Orders Franchisor To Post Bond
DETROIT— A federal judge in Michigan on April 8 granted a franchisor’s motion for a temporary restraining order (TRO) after finding that it is highly likely that it will succeed on its claims that a franchisee violated the terms of a franchise agreement when opening a new insurance agency in the same location following the expiration of the agreement (L.A. Insurance Agency Franchising v. David T. Elia, et al., No. 18-13523, E.D. Mich., 2019 U.S. Dist. LEXIS 59969).
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April 11, 2019
Federal Judge Denies Restraining Order Against Former Subway Franchisee
BROOKLYN, N.Y. — A New York federal judge on April 9 declined to issue a temporary restraining order against a former franchisee from marketing or promoting his restaurant with any mark similar to the Subway trademarks and materials but referred the issue of a preliminary injunction to a magistrate judge (Doctor’s Associates LLC, et al. v. Abdul Hai, No. 19-1968, E.D. N.Y., 2019 U.S. Dist. LEXIS 60760).
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April 9, 2019
Motel 6, Washington Settle Lawsuit Arising Out Of Release Of Guest Information
SEATTLE — Motel 6 has agreed to pay $12 million to settle a lawsuit filed by the state of Washington that alleged the hotel chain released guest lists to the U.S. Immigration and Customs Enforcement (ICE) that led to the detention of at least six people, according to a consent decree released on April 3 by the Civil Rights Division of the Washington Attorney General’s Office (AGO) (Washington v. Motel 6 Operating LP, No. 18-2-00283-4, Wash. Super., King Co.).
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April 9, 2019
Franchisor’s Counterclaim In California Copyright Case Dismissed
SAN FRANCISCO — A franchisor saw its intentional interference with contractual relations counterclaim dismissed April 4 by a California federal judge who rejected the counterclaimant’s challenge to the naming of its franchisees as defendants in a copyright infringement lawsuit (Fotohaus LLC v. PFG Ventures L.P., No. 18-1827, N.D. Calif., 2019 U.S. Dist. LEXIS 58641).
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April 5, 2019
Claims Trimmed In Franchisor’s Trade Secrets, Contract Lawsuit
HILLSBOROUGH, N.C. — A North Carolina judge on April 2 ruled that a franchisor partly failed to allege elements of its claim for trade secret misappropriation under North Carolina law against a franchisee and others with the required particularity and partially dismissed the claim (Window Gang Ventures Corp. v. Gabriel Salinas, et al., No. 18 CVS 107, N.C. Super., 2019 NCBC LEXIS 24).
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April 4, 2019
6th Circuit Panel Upholds Preliminary Injunction Issuance In Trade Secrets Suit
CINCINNATI — A Sixth Circuit U.S. Court of Appeals panel on April 1 held that a federal judge did not err in preliminarily enjoining franchisees from operating or taking part in any business that competes with or is similar to an ice cream parlor franchise with which the franchisees had franchise agreements based on the franchisor’s claim for trade secret misappropriation because the franchisor demonstrated a strong likelihood of success on the merits of its trade secret misappropriation and breach of contract claims (Handel’s Enterprises Inc. v. Kenneth S. Schulenburg, et al., No. 18-3596, 6th Cir.).
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April 4, 2019
California Federal Judge Remands Wage Class Suit Against Motel 6, Franchisor
SAN DIEGO — A California federal judge on April 2 agreed to remand a wage-and-hour class complaint against a motel franchisor and others, rejecting the defendants’ claim that the amount in controversy exceeds $65 million and instead holding that the defendants failed to show that the amount is above the Class Action Fairness Act’s (CAFA) $5 million threshold (Christina Cummings, et al. v. G6 Hospitality LLC, et al., No. 19-122, S.D. Calif., 2019 U.S. Dist. LEXIS 56719).
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April 2, 2019
Judge Denies Sheraton’s Summary Judgment Motion As Premature In Franchise Dispute
NEW YORK — A New York federal judge on March 5 denied without prejudice The Sheraton LLC’s motion for summary judgment as premature in its lawsuit seeking liquidated damages for a franchisee’s alleged breach of a franchise agreement and a personal guarantee, allowing the franchisor to renew its motion once discovery is completed (The Sheraton, LLC v. Fortuna Fifth Avenue, LLC, et al., No. 17-4637, S.D. N.Y., 2019 U.S. Dist. LEXIS 51988).
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April 2, 2019
Hardee’s Franchisee’s Hepatitis A Class Settlement Granted Final Approval
CHARLOTTE, N.C. — A North Carolina federal judge on April 2 granted final approval to a settlement by a Hardee’s franchisee with locations in North Carolina and South Carolina to end class claims by customers who were possibly exposed to hepatitis A at one of its locations (Iafreedre McClain, et al. v. Morning Star, LLC, No. 18-419, E.P., et al. v. CKE Restaurants Holdings, Inc., et al., No. 18-483, W.D. N.C., 2018 U.S. Dist. LEXIS 209543).
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April 2, 2019
U.S. Department Of Labor Announces Proposed Revisions To Joint-Employer Regulation
WASHINGTON, D.C. — The U.S. Department of Labor (DOL) on April 1 announced a proposed rule clarifying joint-employment arrangements in a move that the secretary of Labor says will “reduce uncertainty over joint employer status and clarify for workers who is responsible for their employment protections.”
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April 2, 2019
Preliminary Injunction Issued To H&R Block For Franchise Agreement Violations
JEFFERSON CITY, Mo. — A preliminary injunction was awarded to H&R Block Tax Services LLC on March 28 by a Missouri federal judge against another tax company and its principal for breaching their franchise license agreement by operating a competing business (H&R Block Tax Services LLC v. Kim Santiago, et al., No. 19-00154, W.D. Mo., 2019 U.S. Dist. LEXIS 53217).
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April 2, 2019
New Hampshire High Court: Kia Motors Properly Terminated Franchise Agreement
CONCORD, N.H. — The New Hampshire Supreme Court on March 29 affirmed a lower court’s ruling that Kia Motors America Inc. properly terminated its franchise agreement with a franchisee pursuant to New Hampshire Revised Statutes Annotated 357-C:7, concluding that the franchisee’s interpretation of the statute would “undermine” its purpose and “lead to absurd results” (TS&A Motors, LLC v. Kia Motors America, Inc., No. 2017-0714, N.H. Sup., 2019 N.H. LEXIS 56).
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April 2, 2019
Franchisors Awarded Summary Judgment In Woman’s Sexual Discrimination Suit
PITTSBURGH — A federal judge in Pennsylvania on March 29 awarded summary judgment to franchisors of a Midas automobile repair location in a woman’s lawsuit accusing them of violating the Pennsylvania Human Relations Act (PHRA), holding that they could not be liable as a joint employer because the franchise agreement does not demonstrate that the defendants had control over the location’s day-to-day operations (Hannah Harris v. Midas, et al., No. 17-95, W.D. Pa., 2019 U.S. Dist. LEXIS 53863).
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March 27, 2019
Magistrate Recommends Granting Preliminary Injunction In Franchise Dispute
FORT LAUDERDALE, Fla. — A magistrate judge on March 22 recommended that a Florida federal court grant a tax service franchisor’s motion for a preliminary injunction in its lawsuit alleging that a franchisee improperly used franchise marks to lure customers but processed tax returns through a different tax preparation business that was operating at the same location as the franchise (JTH Tax, Inc., et al. v. Jesus Abikarram, et al., No. 19-60328, S. D. Fla., 2019 U.S. Dist. LEXIS 49440).