In a recent article published by the Franchise Law Journal[1], authors Mary-Christine Sungaila and Martin M. Ellison survey the current status of joint employer liability in the franchise context and the pervasive influence of Patterson v. Domino’s[2] in this area of the law. In the wake of the National Labor Relations Board’s (NLRB) majority decision in Browning-Ferris Industries[3], franchisors have been forced to grapple with defining what controls may not be considered those “customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademark and brand.” Controls outside those parameters may expose franchisors to liability for actions of their franchisees and franchisees’ employees.
Prior to the NLRB’s groundbreaking decision, courts across jurisdictions applied either the “means and manner” test or the “instrumentality” test to determine whether franchisors exercised sufficient control over their franchisees to be held vicariously liable as a joint employer. Under the “means and manner” test, the relevant inquiry is whether the franchisor exercised control, or had the right to exercise control, over the means and manner in which the franchisee conducted its day-to-day operations.[4] Contrastingly, under the “instrumentality” test the relevant inquiry is whether the franchisor controls the actual aspect of the franchisee’s business that caused an alleged harm.[5]
In 2014, the California Supreme Court directly addressed the issue of joint employer liability in the franchise context in Patterson v. Domino’s, and many other jurisdictions have adopted the new test endorsed by California’s highest court. In Patterson, Sui Juris, LLC owned and operated a Domino’s pizza franchise in California. The parties to the franchise agreement were Sui Juris and Domino’s Pizza Franchising, LLC.
The Plaintiff, Taylor Patterson, was an hourly employee who alleged the assistant store manager made lewd comments and gestures to her and inappropriately touched her. She reported this behavior to Sui Juris’s owner, and her father reported the behavior to the police and Domino’s corporate human resources department. Patterson believed that her hours were then reduced for reporting the assistant manager’s behavior. When the owner of Sui Juris informed a regional leader for Domino’s about the allegations the regional leader said, “You’ve got [to] get rid of this guy.” Patterson sued Sui Juris, the assistant manager, and Domino’s, alleging sexual harassment, failure to take reasonable steps to avoid harassment, and retaliation for reporting harassment. She alleged that she and the assistant manager were both employees of Domino’s, and that Sui Juris and Domino’s had an agency relationship such that Domino’s was responsible for Sui Juris’s conduct. Domino’s moved for summary judgment, arguing that it had neither an agency relationship with Sui Juris nor an employment relationship with the assistant manager.
The trial court granted summary judgment for Domino’s, finding that, because Domino’s did not control the day-to-day operations or employment practices of Sui Juris, no agency or employment relationship existed that could subject Domino’s to any liability for the assistant manager’s misconduct. The appellate court reversed the trial court’s decision. The appellate...
