Menu
Blog Banner Image

The Franchise Memorandum

Court Dismisses Ostensible Agency Claim on Motion for Reconsideration
Posted in Employment

A federal court in California has granted a motion for reconsideration in light of recent Ninth Circuit precedent, reversing the district court’s prior decision and dismissing ostensible agency claims alleged against a franchisor. Cruz v. MM869, Inc., 2020 WL 509109 (E.D. Cal. Jan. 31, 2020). Cruz, an employee of the Merry Maids franchisee and representative of a class action group, alleged that the franchisor Merry Maids and its parent organization ServiceMaster were joint employers and were liable for the franchisee’s alleged violation of various wage and hour laws under California’s Labor Code. The court previously dismissed Cruz’s joint employer claims against ServiceMaster/Merry Maids, but left intact her claims under an ostensible agency theory of liability.

ServiceMaster/Merry Maids filed a motion for reconsideration shortly after the Ninth Circuit’s ruling in Salazar v. McDonald’s Corp., 944 F. 3d 1024 (9th Cir. 2019), which found that a franchisor could not be held liable for wage and hour violations under an ostensible agency theory pursuant to Wage Order 5- 2001. The court held that the ostensible agency theory was inconsistent with the plain terms of the Wage Order, and therefore was precluded as a matter of law. Because Cruz’s claims were under the purview of the Wage Order, the district court concluded that the new Ninth Circuit ruling required dismissal of Cruz’s remaining claims against ServiceMaster/Merry Maids. Lathrop GPM represented ServiceMaster and Merry Maids in this case.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

To subscribe to monthly emails for The Franchise Memorandum, please click here

Topics

Archives

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors