Franchisor May Be Liable for Harassment by Franchisee’s Employee

Topics: Court Decisions, Discrimination, Harassment & Retaliation

Exemplifying the principle that “bad facts made bad law,” a California court held this week that Domino’s Pizza may be liable for alleged sexual harassment by one of its franchisee’s employees.  The plaintiff in the case was a 16 year old employee who worked for a Domino’s franchise.  The plaintiff alleged that she was sexually assaulted and harassed by a restaurant manager employed by the franchise.  The plaintiff sued both the franchisee and Domino’s Pizza, as the franchisor.  The franchisee filed for bankruptcy, which left Domino’s as the only practical payor of any significant settlement or judgment in the case.  Domino’s moved for summary judgment, arguing that it could not be held liable for conduct by a franchise employee.  Domino’s presented evidence of its franchise agreement, which provided that franchisees were independent contractors and responsible for employment decisions and the like at their own franchise.  The trial court granted Domino’s motion, holding that Domino’s was not liable, as a matter of law, for conduct by a franchise employee because Domino’s was not the employer.  The plaintiff appealed.

The appellate court disagreed with the trial court and reversed the judgment in favor of Domino’s.  The appellate court held that the franchise agreement was not dispositive of the issue of whether Domino’s truly had an independent contractor relationship with its franchise.  The plaintiff had presented evidence suggesting that Domino’s exercised significant control over the local operations of the franchise, suggesting that the franchise may have been an agent of Domino’s as opposed to an independent contractor.  The plaintiff also presented evidence that a Domino’s area leader made recommendations for terminating certain franchise employees, including the supervisor accused of assault and harassment in this particular case.  Based on evidence suggesting a high level of control by Domino’s over franchise operations, the court held that there was a triable issue of fact as to whether Domino’s could be held liable for the conduct of the franchise employee.  As a result, the court held that the plaintiff’s claims could proceed against Domino’s. 

The case is Patterson v. Domino’s.