The Franchise Memorandum

In a highly anticipated case involving franchisor vicarious liability, the California Supreme Court ruled, in a 4-3 decision issued today, that Domino’s is not vicariously liable for the acts of a franchisee’s employees. Patterson v. Domino’s Pizza, LLC, Case No. S204543 (Cal. Aug. 28, 2014).

The case began when Patterson, a teenage worker at a Domino’s franchise, filed an action against both the franchisee (Sui Juris) and Domino’s alleging that the assistant manager of the restaurant sexually harassed and assaulted her. Patterson claimed that Sui Juris and ...

In Interstate Equipment Co. v. ESCO Corp., 2014 U.S. Dist. LEXIS 97263 (W.D.N.C. July 17, 2014), a court established a broad interpretation of a supplier's obligations under the North Carolina Farm Machinery Franchise Act to repurchase inventory from a dealer upon termination of the parties' relationship. In particular, the court held that: (1) the repurchase requirements applied even if the dealer originally purchased the inventory for resale at a location outside of North Carolina; (2) so long as title to inventory would be free and clear at the time it was transferred back to the ...

A federal court in California denied in part a motion to dismiss a car dealer's price discrimination claim against its distributor under the Robinson-Patman Act. Mathew Enterprise, Inc. v. Chrysler Group LLC, 2014 U.S. Dist. LEXIS 95522 (N.D. Cal. July 11, 2014), involved a franchised dealer, Mathew Enterprise, that purchased its vehicle inventory directly from Chrysler at a standard invoice price. Chrysler, however, also offered earned subsidies to its dealers through "volume growth" incentive programs based on the dealer's prior sales. Although incentive programs are not ...

A federal court in Ohio partially granted a manufacturer's motion to dismiss certain claims in a suit challenging the termination of a distribution agreement brought by one of its former dealers. Palmer-Donavin Manufacturing Co. v. Rheem Sales Co., 2014 U.S.  Dist. LEXIS 82993 (S.D. Ohio June 18, 2014). Palmer-Donavin had been a dealer of the manufacturer Rheem's heating, ventilation, and air conditioning equipment for more than forty years pursuant to a series of written distribution agreements, the last of which had expired in 2009. After 2009, they had continued their ...

A federal district court in North Carolina denied a bakery goods distributor's motion to enjoin his termination because disputed issues of fact precluded a finding that he was likely to succeed on the merits of his wrongful termination claim. In Martin v. Bimbo Foods Bakeries Distribution, Inc., 2014 U.S. Dist. LEXIS 73992 (E.D.N.C. May 30, 2014), the manufacturer, Bimbo, terminated the parties' distribution agreement after discovering that Martin had created and transmitted false invoices to receive credit for extra inventory and had committed other material violations ...

A federal court in Oklahoma recently granted in part and denied in part a motion to dismiss brought by an equipment distributor. Charles Mach. Works, Inc. v. Valley Ditch Witch, Inc., 2014 U.S. Dist. LEXIS 60522 (W.D. Okla. May 1, 2014). Oklahoma-based tractor parts and equipment manufacturer Charles Machine Works brought suit against one of its Texas distributors, Valley Ditch Witch, seeking a judgment declaring the validity of its nonrenewal of the parties' dealership agreement. Valley Ditch Witch moved to dismiss the suit on its merits and on procedural grounds, including lack ...

Despite being one of two manufacturers that control 99% of the market, E.I. DuPont de Nemours and Co. has persuaded the United States Court of Appeals for the Fourth Circuit to affirm dismissal of exclusive dealing claims against it. Kolon Indus. Inc. v. E.I. DuPont de Nemours Sr Co., 748 F.3d 160 (4th Cir. Apr. 3, 2014). Kolon, a would-be competitor, claimed DuPont's multi-year supply agreements with large customers comprised an unlawful attempt or successful creation of a monopoly in the market for para-aramid fiber, a synthetic product used in body armor, tires, and other goods ...

The United States Court of Appeals for the Eighth Circuit has concluded neither side could prevail on summary judgment motions in an antitrust action brought by a "small town, family-owned grocery store" against SuperValu Inc. and C&S Wholesale Grocers, Inc., two of the largest grocery wholesalers in the United States. In re: Wholesale Grocery Prods. Antitrust Litig., 652 F.3d 728 (8th Cir. May 21, 2014). This case arose out of negotiations by SuperValu and C&S to buy assets of a third grocery wholesaler, Fleming Companies, and to acquire certain territories from each other. D&G ...

In a case of first impression, the Massachusetts Supreme Judicial Court has clarified the duty that a motor vehicle manufacturer owes a dealer to assume defense of a claim. Ferreira v. Chrysler Grp. LLC, 2014 Mass. LEXIS 336 (Mass. June 11, 2014). Ferreira purchased a new Jeep Wrangler from Somerset Auto Group, which came with a limited warranty by Chrysler. After experiencing ongoing problems with the vehicle, Ferreira sent a letter to Somerset and Chrysler alleging that both were at fault for the problems with the vehicle. In response, Somerset demanded that Chrysler assume its ...

A federal district court in New York dismissed a value-added reseller's antitrust claims against its competitor based on its failure to properly define a relevant market. Techreserves Inc. v. Delta Controls, Inc., 2014 U.S. Dist. LEXIS 47080 (S.D.N.Y. Mar. 31, 2014). Techreserves operates as a reseller in the building management systems sales, installation, and maintenance markets, in which Delta is a manufacturer. Techreserves claimed that its competitors, including defendant IBC, and Delta excluded other value-added resellers from selling, installing, and servicing ...

The United States District Court for the Northern District of Illinois has paved the way for what will be a closely-watched antitrust trial in American Needle, Inc. v. New Orleans Saints, 2014 U.S. Dist. LEXIS 47527 (N.D. III. Apr. 4, 2014). As reported in Issue 131 of The GPMemorandum, the United States Supreme Court in 2010 allowed plaintiff American Needle, an apparel manufacturer, to allege that the National Football League and thirty of its teams conspired, in violation of Sherman Act Section 1, to award Reebok an exclusive apparel license to make hats for all NFL teams. In a ...

A federal court in Washington denied a product supplier's motion for partial summary judgment on numerous claims related to an oral contract. Mastaba v. Lamb Weston Sales, 2014 U.S. Dist. LEXIS 72865 (E.D. Wash. May 27, 2014). Mastaba, a seller of frozen potato products in the Philippines, brought an action against Lamb Weston, its sole supplier of potatoes, for breach of contract, promissory estoppel, quantum meruit, unjust enrichment, negligent representation, and fraud, all based on the supplier's alleged oral representations that it would enter into a written, five-year ...