A great case came down earlier this year that I’ve been meaning to blog about. Employee rights attorneys’ like myself are hesitant to take cases against small employers. This is true even when the employer is a franchisee (e.g. your local McDonald’s). Generally, franchisor’s (e.g. McDonalds corporate) isn’t liable for franchisee’s labor practices. Attorney’s like myself fear that we might litigate a case for two years, win a trial, but be unable to recover the full judgment because the local franchise doesn’t have very much money.
A recent case changes this in certain situations. Patterson v. Domino’s Pizza, LLC held a franchisor can be held liable for alleged sexual harassment of an employee of the franchisee by a supervisor employed by the franchisee and for related claims.
The facts of the case are fairly common. Patterson was a teenage employee of Sui Juris, a Domino’s pizza franchisee. Renee Miranda was the assistant manager of that restaurant. Patterson claimed Miranda sexually harassed and assaulted her at work.
Patterson filed an action against Miranda, Sui Juris, and the franchisor Domino’s, alleging causes of action for sexual harassment in violation of Fair Employment and Housing Act (FEHA), failure to prevent discrimination, retaliation for exercise of rights, infliction of emotional distress, assault, battery and constructive wrongful termination. She claimed Sui Juris and Domino’s were Miranda’s employers and were vicariously liable for his actions under the legal doctrine of respondeat superior.
Daniel Poff, the Sui Juris owner, testified at his deposition that Claudia Lee, a Domino’s “area leader,” told him to fire Miranda. He said he had to comply with the instructions of the Domino’s area leaders because “[i]f you didn’t, you were out of business very quickly.” He said Lee also told him to fire another employee because of his performance in handling bags. Poff had no choice; he had to follow Lee’s instructions and fire that employee. His operation was monitored by the Domino’s inspectors, and their decisions determined whether he could maintain his franchise.
The trial court made a decision that Patterson didn’t like so she appealed it. The Court of Appeal held Dominos did not meet its burden of showing the undisputed facts establish that the franchisee was not an agent of the franchisor and therefore not vicariously liable for the alleged conduct. The Court held the terms of the franchisee agreement are not controlling and looked to the extent the franchisor exercised control over the franchisee’s operations. It stated that “[i]f the franchisor has substantial control over the local operations of the franchisee, it may potentially face liability for the actions of the franchisee’s employees.”
The Court of Appeal also held that the franchisor could be liable even if there was no showing the franchisor had notice of, ratified, or condoned the conduct of the assistant manager of the franchisee. The Court of Appeal held the trial court applied the wrong standard and explained that when the alleged harasser is a supervisor or a manager of the allegedly harassed employee, the employer(s) of the alleged harasser is/are strictly liable under the FEHA.
All in all, this case is good news for employees, and bad news for mega franchisors like Dominos.
Branigan Robertson is a California employment lawyer who exclusively represents employees in workplace disputes. He focuses his practice on sexual harassment, wage & hour, wrongful termination, and retaliation. Visit his website at BRobertsonLaw.com or call his office at 949.667.3025.