The Franchise Memorandum

Meanwhile, the federal court in Connecticut has granted a motion for class certification, allowing the lead plaintiffs to pursue employee misclassification claims on behalf of all Connecticut franchisees of the Jani-King system. Mujo v. Jani-King Int’l, Inc., 2019 WL 145524 (D. Conn. Jan. 9, 2019). The plaintiffs alleged that franchisees had been misclassified as independent contractors under their franchise agreements with Jani-King and were actually employees of the franchisor, citing operational standards and their dependence on Jani-King for work assignments. They originally alleged that Jani-King had violated Connecticut’s Minimum Wage Act, but the court dismissed those claims, leaving only claims that Jani-King was unjustly enriched by franchise fees paid by class members.

In analyzing the motion for class certification, the court had little trouble finding that an ascertainable class of numerous members had claims based on common questions of fact and law, that the claims made by the lead plaintiffs were typical of the class, and that the plaintiffs’ counsel would adequately represent the class. In fact, Jani-King did not challenge many of these issues. Rather, Jani-King’s challenge rested primarily on Rule 26(b)’s predominance and superiority requirements. Specifically, Jani-King argued that class certification was inappropriate because each franchisee ran their business as they saw fit, subject only to limited standardization requirements necessary to protect the brand. Thus, Jani-King argued, issues common to each franchisee’s claim did not predominate. The court disagreed, finding that each class member had entered a similar franchise agreement and had worked in Connecticut, Connecticut law applied to each class member’s claim, and all of the evidence would focus on whether Jani-King improperly conditioned initial or continued employment on payment of fees. Therefore, common issues predominated over all of the class members’ claims.

Jani-King also argued that individual lawsuits would be superior to a class action, since each claim rested on facts and evidence unique to each franchisee. The court again disagreed, finding that a class action was superior because class members may fear retaliation if forced to litigate on their own, the cost of litigating individual claims may be prohibitive for class members with small damages claims, and a class action would eliminate the risk of inconsistent results.