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California court holds franchisor liable for sexual harassment

Franchise law can be complex, and it is often unclear whether or to what degree a franchisor can be liable for the actions of a franchisee. This is because the franchisee for the most part operates independently of the franchising company. However, sometimes a franchisor can be held liable for a franchisee lawsuit. This was the case in a recent sexual harassment case in California against Domino's Pizza.

The case began with a 16-year-old female employee of Sui Juris, LLC, a Domino's Pizza franchisee. While working under the franchisee, she was under the supervision of a male assistant manager. The employee claims that the supervisor sexually harassed and assaulted her while at the workplace. This prompted her to file a complaint under the Fair Employment and Housing Act against the franchisee and franchisor.

The plaintiff alleges that the defendants, Sui Juris and Domino's Pizza Franchising, did not fulfill their due diligence to prevent discrimination, retaliation of exercise rights, and constructive wrongful termination. Additionally, the complaint alleges damages from emotional distress, as well as accuses the supervisor of assault and battery. The plaintiff contends that the franchisee and franchisor are both responsible for the supervisor's actions.

The franchisee answered the complaint and claimed in a deposition that he was instructed by a Domino's area leader to fire the plaintiff. He said he felt if he did not comply, his ability to maintain the franchise could have been in jeopardy. The franchisee filed for bankruptcy shortly after answering the complaint.

The appellate court in California found that although the contract between the franchisee and franchisor indicated an independent contractor relationship, the level of control the franchisor maintained determines the nature of the legal relationship. As a result, the court determined that Domino's Pizza exercised enough control over the franchisee to be held liable for the employee's allegations of sexual harassment. Even though the issues in this case are complex and open to a degree of interpretation, this case illustrates how a properly crafted legal argument can help to win employment lawsuits.

Source: BlueMauMau, "Dominos Liable in Franchisee Sexual Harassment Case," Janet Sparks, July 19, 2012

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