A federal court in South Dakota denied Denny’s Corporation and Denny’s Inc.’s motion to dismiss a Section 1981 claim after rejecting their argument that the plaintiffs, Damon Whitfield and Hector Madera, had named the wrong Denny’s entities and that a separate entity, DFO, LLC, was the franchisor of the Denny’s® franchise system. Whitfield v. Denny’s Corp., 2026 WL 1361492 (D.S.D. May 15, 2026).
The plaintiffs, both African American truck drivers, alleged that a server at the Denny’s® restaurant in Sioux Falls, South Dakota refused to take their order, twice referred to them as “you people,” took away their menus and an orange juice, and caused police to be called to remove them from the restaurant.
In denying the Denny’s entities’ motion to dismiss, the court held that the claims against the Denny’s entities could not be dismissed at the pleading stage by relying on corporate-structure arguments. Although Denny’s Corporation and Denny’s Inc. argued that DFO, LLC was the actual franchisor, that Denny’s Corporation was only a parent company, and that Denny’s Inc. was only a managing member, the court found that the Form 10-K cited by the Denny’s entities did not identify the franchisor of Denny’s franchise system. The court accepted as true, for the purposes of the motion to dismiss, the plaintiffs’ allegation that Denny’s Corporation and/or Denny’s Inc. were the franchisor. The court also accepted the plaintiffs’ alternative allegation that the server and manager were employed by Denny’s Corporation and/or the franchisee, reasoning that the plaintiffs could plead alternative employment relationships before discovery. The court did dismiss a related claim brought under Title II of the Civil Rights Act, 42 U.S.C. § 2000a(a), for lack of jurisdiction because the plaintiffs did not allege that they filed the required notice with the state authority as is required before a plaintiff may seek relief in federal court.