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

Mealey's Franchise

March 22, 2021
U.S. High Court Won’t Hear Franchisees’ Arbitration Delegation Appeal

WASHINGTON, D.C. — The U.S. Supreme Court on March 22 denied a petition for a writ of certiorari filed by two commercial cleaning business franchisees seeking resolution of a circuit split and a decision on whether a passing reference to a set of arbitration rules constitutes “clear and unmistakable” intent to delegate arbitrability issues to an arbitrator, rather than a court.
March 22, 2021
New York Justice: Motion To Vacate Injury Case Summary Judgment Lacks Merit

BRONX, N.Y. — A New York state court justice on Feb. 26 denied a motion to vacate a summary judgment upon default in favor of Dunkin' Donuts Franchising LLC, ruling that the action in a case alleging personal injuries from a fall in a driveway used by several businesses lacked merit against Dunkin'.
March 19, 2021
Federal Judge Dismisses Franchise Owners’ $41M Coronavirus Coverage Suit

NEWARK, N.J. — A federal judge in New Jersey on March 17 granted an insurer’s motion to dismiss a breach of contract lawsuit brought by the owners of more than 120 franchise locations under the brands Wendy's, T.G.I. Friday's, Marriott and Hilton, finding that the insureds’ “general statements that the COVID-19 virus was on surfaces and in the air at their properties is insufficient to show property loss or damage.”
March 18, 2021
New Jersey Federal Judge Enters Default Judgment Against Franchisee In Breach Case

NEWARK, N.J. — A New Jersey federal judge on March 10 granted a motion for default judgment against a franchisee and its two individual members that did not respond to a lodging franchisor’s lawsuit, ordering them to pay $151,846.25 on claims that they breached their franchise agreement and the members’ guaranty by selling a hotel to a third party without prior consent and failing to pay liquidated damages and recurring fees.
March 18, 2021
McDonald’s Seeks To Strike Class, Dismiss Race Bias Claims By Franchisees

CHICAGO — A fast food franchisor filed replies on March 8 in a federal court in Illinois supporting its motions to dismiss a racial discrimination action and to strike proposed class claims brought by two Black franchisees, arguing that the plaintiffs have failed to show intentional discrimination or that there was a nationwide conspiracy.
March 18, 2021
Federal Judge: Arby’s Failure To Provide Braille Gift Cards Not An ADA Violation

NEW YORK — A New York federal judge on March 8 dismissed with prejudice a blind man’s proposed class action alleging that the Arby’s fast food franchisor violated the Americans with Disabilities Act (ADA), as well as state and local laws, for failing to provide gift cards in Braille.
March 18, 2021
Class Claims Over 2020 Marriott Data Breach Dismissed With Prejudice

GREENBELT, Md. — Two customers of Marriott International Inc. failed to allege facts establishing that injuries they experienced were fairly traceable to the hotel chain’s 2020 data breach, a Maryland federal judge ruled March 3, granting Marriott’s motion to dismiss their negligence and unfair competition claims for lack of standing.
March 17, 2021
Domino’s Argues For Stay Pending Appeal Of Arbitration Denial In Putative Class Suit

SANTA ANA, Calif. — A pizza company argues in a March 15 brief that a case involving a putative class complaint over truck drivers’ cell phone expenses should be stayed pending appeal of the denial of its motion to compel arbitration because the appeal raises a “substantial issue . . . of first impression.”
March 17, 2021
Federal Judge Excludes Former Employee’s Expert Report In Suit Over No-Poach Clause

EAST ST. LOUIS, Ill. — On Feb. 24, the parties in a proposed class action over a sandwich chain franchisor’s contractual no-poach agreement filed a redacted version of an Illinois federal judge’s sealed decision to exclude a former employee’s expert report as methodologically flawed and admit two expert reports for the franchisor.
March 17, 2021
Title III ADA Claim Moot After Plaintiff’s Death, New York Federal Judge Rules

BROOKLYN, N.Y. — Following the death of the plaintiff in a putative class action disability access suit that was filed shortly before his death, a New York federal judge on March 9 rejected requests to stay the case so that an estate representative could be substituted in or a new plaintiff found to appear as class representative, dismissing an alleged violation of Title III of the Americans with Disabilities Act (ADA) claim as moot and noting that “successful class certification motions in this Circuit in cases like this are few and far between.”
March 16, 2021
Federal Judge Allows Sex Trafficking Coverage Suit To Proceed But Stays Discovery

ATLANTA — A federal judge in Georgia on March 15 refused to dismiss an insurer’s lawsuit seeking to rescind a liability insurance policy and a declaration that it has no duty to defend or indemnity the owner, operator and franchisors of a Marietta, Ga., hotel against underlying sex trafficking claims but stayed discovery to see how prosecution of the underlying action proceeds.
March 16, 2021
EEOC Sues IHOP Franchisee For Manager’s Alleged Harassment Of Workers

BALTIMORE — The Equal Employment Opportunity Commission filed a complaint on March 15 in a Maryland federal court accusing the owners of 12 IHOP franchises of subjecting female employees, including teenagers, to sexual harassment by the general manager of its Frederick, Md., location.
March 12, 2021
Federal Judge: Childcare Franchise May Be Liable In Wrongful Death Suit

GALVESTON, Texas — A Texas federal judge on March 10 denied a motion for summary judgment in a wrongful death suit, finding that “a broad contractual right to control operative details” exposed a childcare center franchisor to vicarious liability for a franchisee’s alleged negligence.
March 11, 2021
Policy Requires Final Judgment Or Settlement Before Suit, Panel Affirms

ATLANTA — The 11th Circuit U.S. Court of Appeals on March 9 affirmed a lower court’s dismissal of an equipment rental company insured’s bad faith failure-to-settle lawsuit against its insurer, noting that the Georgia Supreme Court has interpreted nearly identical policy language as requiring a final underlying judgment or settlement before a party can bring a coverage suit.
March 11, 2021
Franchisor Awarded Fees, Damages, As Sanction In Trademark Dispute

MEMPHIS, Tenn. — A federal judge in Tennessee on March 10 found that the disgorged profits framework established in the Lanham Act can serve as the basis for an award of damages as a sanction for violation of an injunction, even without a first finding of liability under the statute.
March 11, 2021
Federal Judge Certifies In Part Wage And Hour Class Claims By Tool Maker Franchisee

SAN FRANCISCO — A California judge on Feb. 21 granted in part and denied in part a motion for class certification brought by a franchisee and distributor for a professional-grade mechanics tools manufacturer on wage and hour claims. The judge certified claims for employment misclassification and reimbursement and declined to certify claims regarding overtime, meal and rest breaks and wage deduction claims.
March 11, 2021
Pizza Delivery Drivers’ Class, Collective Wage Suit Settles For $3 Million

NEW BERN, N.C. — A North Carolina federal judge on March 3 granted a motion for final approval of a $3 million settlement fund plus attorney fees in a class and collective action suit by delivery drivers who allege that a Domino’s Pizza franchisee violated federal and state wage laws by not sufficiently reimbursing them for expenses.
March 10, 2021
Wisconsin Panel: No Employee Benefits Liability Coverage Owed For Franchise Owner

MILWAUKEE — A Wisconsin appeals panel on March 9 held that a commercial insurer does not owe employee benefits liability coverage for six underlying class action lawsuits brougt against its restaurant franchise operations owner insured, affirming a lower court’s grant of summary judgment in favor of the insurer.
March 09, 2021
Restaurant Chain Claims ‘Knock-Off’ Violated UCL, U.S. Trademark Law

SANTA ANA, Calif. — Boiling Crab Franchise Co. LLC sued Cajun Boiling Crab Inc. and related parties in a California federal court on March 4, alleging that its “knock-off” restaurants deliberately infringe federally registered trademarks and constitute violations of federal and California unfair competition laws.
March 09, 2021
6th Circuit Sets Oral Arguments In Countertop Franchise Dispute Over Forum Selection

CINCINNATI — Following the filing of briefs in a dispute between the seller and manufacturer of a line of countertops over whether the Michigan Franchise Investment Law (MFIL) prohibits the enforcement of forum-selection clauses, the Sixth Circuit U.S. Court of Appeals on Feb. 25 scheduled oral arguments for April 20.
March 04, 2021
Federal Judge Grants Franchisor Partial Dismissal In Dispute Over Territory

HARTFORD, Conn. — A Connecticut federal judge granted an urgent care facility franchisor partial judgment on the pleadings on Feb. 24 in a dispute over the purchase of certain franchises in the plaintiff’s territory, dismissing claims alleging violation of antitrust law and state franchise and business law and claims including tortious interference and abuse of process.
March 02, 2021
Franchise Groups To Amend Complaint Over California Independent Contractor Test

SAN DIEGO — Four franchising-related associations on Feb. 16 gave notice in a federal suit challenging the constitutionality of California’s “ABC Test” that they intend to file a first amended complaint in time to render the state’s pending motion to dismiss the original complaint moot, saying that the court should deny the motion to dismiss on those grounds. 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.
March 01, 2021
Stay, Interlocutory Appeal Denied Following Class Denial In Franchisee Dispute

LOS ANGELES — A federal judge in California on Feb. 23 issued a two-page order declining to stay a case by 7-Eleven franchisees seeking unpaid reimbursements or to certify its order denying class certification for interlocutory appeal, citing the reasons provided by the franchisor in its opposition.
February 23, 2021
Potential Coverage Exists For Challenge To McDonald’s Steps To Contain COVID-19

CHICAGO — A federal judge in Illinois on Feb. 22 denied a commercial general liability insurer’s motion to dismiss a breach of contract and declaratory relief lawsuit brought by McDonald’s Corp. and former and current franchise owners seeking coverage for an underlying class action injunction alleging that they are taking inadequate steps to contain COVID-19 in the workplace.
February 22, 2021
Sex Trafficking Suit Against Days Inn Franchisee Allowed To Proceed By Federal Judge

FORT MYERS, Fla. — A Florida federal judge on Feb. 16 refused to dismiss a woman’s suit against the franchisor, franchisee and operators of a Days Inn Hotel alleging that she was a victim of sex trafficking at the hotel over a three-year period. The judge denied three defendants’ motion to dismiss, rejecting multiple arguments, including that the plaintiff failed to state a claim against them.