Metropolitan News-Enterprise


Friday, August 29, 2014


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S.C. Tosses Suit Against Chain Over Harassment Claim

Court Divides 4-3, Says Franchisor Had No Control Over Franchisee’s Personnel




A former employee of a Domino’s Pizza franchise cannot sue the chain for sexual harassment and retaliation, the state Supreme Court ruled yesterday.

In a 4-3 decision, the justices reversed Div. Six of this district’s Court of Appeal and reinstated a summary judgment in favor of Domino’s Pizza, LLC and related defendants.

The chain did not hire or control the personnel hired by its franchisee and was therefore not liable for their misconduct, Justice Marvin Baxter wrote for the court.

“Here, the franchisor prescribed standards and procedures involving pizza-making and delivery, general store operations, and brand image,” Baxter wrote. “These standards were vigorously enforced through representatives of the franchisor who inspected franchised stores.  However, there was considerable, essentially uncontradicted evidence that the franchisee made day-to-day decisions involving the hiring, supervision, and disciplining of his employees.  Plaintiff herself testified that after the franchisee hired her, she followed his policy, and reported the alleged sexual harassment to him.  The franchisee suspended the offender.  Nothing contractually required or allowed the franchisor to intrude on this process.”

Ventura Superior Court Judge Barbara Lane ruled that Taylor Patterson could only sue the franchisee that she worked for, which the judge said controlled her employment based on the terms of the franchise agreement.

Patterson, who was 16 years old at the time, alleged that Daniel Poff, owner of the now-bankrupt franchise, forced her out after she complained about the assault by her manager. She sued the franchisee, along with Domino’s, on claims of sexual harassment in violation of the Fair Employment and Housing Act, failure to prevent discrimination, retaliation for exercise of rights, infliction of emotional distress, assault, battery and constructive wrongful termination. 

Poff testified in his deposition that an “area leader” for Domino’s told him to fire the manager, and that experience told him that if he failed to comply he’d “be out of business very quickly.” He described the corporation as extremely overbearing; management was constantly inspecting the operation and he “was getting ticky-tacked to death,” he said.

Domino’s moved for summary judgment on the ground that it was not Patterson’s or the manager’s employer “and was not involved in the training, supervision, or hiring of any employees of” the franchisee, Sui Juris, LLC.

Patterson offered Poff’s deposition in opposition to the motion. In granting summary judgment, Lane reasoned that the franchise agreement made the franchisee solely responsible for “supervising and paying the persons who work in the store.”

The Court of Appeal however, noted that the franchise agreement and related documents give Domino’s “substantial control” over a franchisee’s employees. It cited requirements that personnel files be maintained in a certain manner, as well as grooming and dress standards.

Domino’s also maintains full or partial control over various aspects of the business, including the computer system, tax accounting, store hours, advertising, signage, e-mail capabilities, equipment, furniture, fixtures, décor, methods of payment, pricing, and insurance, the panel pointed out.  

But the broad approach taken by the Court of Appeal is inconsistent with the realities of modern franchising, Baxter suggested.

“…[F]ranchisees are owner-operators who hold a personal and financial stake in the business,” he wrote. “A major incentive is the franchisee’s right to hire the people who work for him, and to oversee their performance each day.  A franchisor enters this arena, and becomes potentially liable for actions of the franchisee’s employees, only if it has retained or assumed a general right of control over factors such as hiring, direction, supervision, discipline, discharge, and relevant day-to-day aspects of the workplace behavior of the franchisee’s employees. Any other guiding principle would disrupt the franchise relationship.”

Chief Justice Tani Cantil-Sakauye and Justices Carol Corrigan and Ming Chin joined in the opinion.

Justice Kathryn M. Werdegar, joined by Justice Goodwin H. Liu and assigned Court of Appeal Justice Victoria Chaney, dissented, arguing that “if Domino’s relationship with Poff gave it the power to force him to fire his employees, then those employees were subject not just to Poff’s control but also to Domino’s and thus were the employees of both.”

The case is Patterson v. Domino’s Pizza, LLC, 14 S.O.S. 3826.


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