Patterson v. Domino's Pizza: Franchisor May Be Liable in FEHA Action

Patterson v. Domino's Pizza (6/27/12) --- Cal.App.4th ---, considers whether a franshisor may be liable for a franchisee's alleged violations of the Fair Employment and Housing Act (FEHA).

Plaintiff Taylor Patterson was employed by defendant Sui Juris, LLC, a Domino's Pizza franchisee. Patterson filed suit against Sui Juris and the franshisor, Domino's, alleging that her supervisor sexually harassed her at work. The trial court (Ventura Superior Court, Judge Barbara A. Lane) granted Domino's motion for summary judgment, finding that (1) Domino's did not employ Patterson and had no role in the franchisee's employment decisions, and (2) even if Domino's could be held liable as an employer, Patterson still could not prevail on her claims against it.

The Court of Appeal reversed.

Whether a franchisor is vicariously liable for injuries to a franchisee's employee depends on the nature of the franchise relationship. "[A] franchisee may be deemed to be the agent of the franchisor." ... If the franchisor has substantial control over the local operations of the franchisee, it may potentially face liability for the actions of the franchisee's employees.

Slip op. at 3. Reviewing the franchise agreement and other controlling documents, the Court found that "provisions of the agreement substantially limit franchisee independence in areas that go beyond food preparation standards." Slip op. at 5. The Court then held that this evidence of control raised "reasonable inferences" supporting Patterson's claims that the franchisee was not merely an independent contractor, as Domino's argued. Slip op. at 6. And these reasonable inferences were sufficient to defeat summary judgment. Slip op. at 8.

The Court then turned to the trial court's holding that, even if Domino's is considered the employer, there are no triable issues of fact showing it had notice of, ratified, or condoned the alleged conduct. The Court held that this was irrelevant because the alleged harasser was Patterson's supervisor, and Patterson was a minor.

A single sexually offensive act by one employee against another usually is not sufficient to establish employer liability.  But "where the act is committed by a supervisor, the result may be different."  "'Because the employer cloaks the supervisor with authority, we ordinarily attribute the supervisor's conduct directly to the employer.'"  "'Thus, a sexual assault by a supervisor, even on a single occasion, may well be sufficiently severe so as to alter the conditions of employment and give rise to a hostile work environment claim.'" 

Slip op. at 9 (internal citations omitted).

The opinion is available here.