A federal court in North Dakota recently denied a motion to dismiss vicarious liability claims against the corporate entities constituting the Subway franchise system. C.S. v. Subway Worldwide, Inc., 2025 WL 472475 (D.N.D. Feb. 12, 2025).
The plaintiff, C.S., began working for a Subway franchisee when she was 17 years old. C.S.’s supervisor repeatedly drugged and sexually abused C.S., crimes to which he pleaded guilty. C.S. then sued Subway and the owners of the franchised location at which she worked, alleging claims for negligence, assault and battery, sexual assault, false imprisonment, and a claim under the Trafficking Victims Protection Reauthorization Act (TVPRA). Subway moved to dismiss, arguing that the complaint failed to plead actual or ostensible agency and a joint employer relationship between Subway and the franchisee.
The court denied the motion to dismiss, concluding that C.S. adequately pled allegations of agency or a joint employer relationship. For example, C.S. pled that Subway and the franchisee acted as a single integrated enterprise, that Subway’s human resources department was involved with its franchisees’ employment practices, and that C.S. believed she was employed by Subway. Notably, the court found that the franchise agreement’s disclaimer of an agency relationship was not dispositive at the motion to dismiss stage. Regarding the TVPRA claim, the court held that Subway’s indirect liability is largely based on the ostensible agency theory that it “knew or should have known” about C.S.’s sexual abuse. Specifically, C.S. pleaded that she asked Subway to transfer locations to get away from her abuser and that Subway exercised significant control over the day-to-day operations of the restaurant. The court found these allegations sufficient to plausibly allege ostensible agency for a TVPRA claim.