California Supreme Court Holds a Franchisor Not Liable for the Actions of Employees of the Franchisee

In Patterson v. Domino’s Pizza, LLC, an employee of a Domino’s franchise sued the franchisee and Domino’s Pizza, LLC, the franchisor, for sexual harassment and assault by a manager. The plaintiff alleged that the owner of the franchise testified that he was told by a Domino’s Pizza “Area Leader” to fire the manager. In addition, the franchisor had control over and imposed uniform marketing and operation plans. As such, the employee argued that Domino’s had vicarious liability for the manager’s conduct. Domino’s filed a motion for summary judgment asking the court to find that the employee had an Independent Contractor Agreement and there was no agency or employment relationship between the franchisor and the employee. In opposition, the plaintiff alleged that Domino’s had substantial control over the franchisee. The trial court granted the motion for summary judgment. The appellate court reversed and the California Supreme Court reversed the appellate court’s decision.

The California Supreme Court noted that the imposition and enforcement of a uniform marketing and operational plan cannot automatically saddle the franchisor with the responsibility for employees of the franchisee. The Court further noted that to be liable, a franchisor must have retained or assumed a general right of control over factors such as the following: hiring; direction; supervision; discipline; discharge and relevant day-to-day aspects of the workplace behavior of the franchisee’s employees.

Shannon B. Jones, Partner, sbj@sbj-law.com