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“‘Undercover Boss’ Episode Isn’t Enough to Prove Vicarious Liability, Says a Maryland Federal Court”

Franchise Law Insider By Andrew P. Beilfuss

Plaintiffs routinely sue franchisors for the alleged misconduct of their franchisees. In fact, it’s become an exceedingly common practice. To use a simple example, if a person slips and falls in the parking lot of a franchised Joe’s Burger Shack location, they’ll inevitably sue Joe’s Burger Shack Franchising, Inc. as well, even if Franchising didn’t cause the plaintiff’s fall and couldn’t have done anything to prevent it from happening.

That’s essentially what Carla Funderburk attempted to do in her recently dismissed lawsuit against Choice Hotels International, Inc. Funderburk v. Choice Hotels International, Inc., No. RWT 13-cv-1078, 2014 WL 5781831 (D. Md. Nov. 5, 2014). She claimed that while staying at a franchised Clarion Inn Hotel in Pocatello, Idaho, the housekeeping staff entered her room when she was away and took pictures of her property. Apparently, this included a document that she claimed was protected by copyright. The housekeeper infringed the copyright, according to Funderburk, by showing a picture of the document to other members of the housekeeping staff. So she sued Choice Hotels, the franchisor, in a Maryland federal court. Funderburk alleged that Choice should be held responsible for the housekeeper’s alleged copyright infringement.

Choice Hotels filed a motion to dismiss the lawsuit, arguing that Funderburk had “failed to allege, through agency law, how Choice Hotels (the franchisor) could be held liable for the actions of TQ Pocatello, LLC and TQ Properties, LLC (the franchisee), which owns the Clarion Inn Hotel….” Undeterred, the plaintiff – who was self-represented – attempted to establish Choice Hotels’ liability through an episode of the reality-TV show “Undercover Boss.”

Funderburk offers as evidence screen shots of an “Undercover Boss” episode, a reality television show that aired two years before her stay at the Clarion Inn Hotel. In this episode of “Undercover Boss,” Choice Hotel’s [sic] Chief Executive Officer Stephen P. Joyce referred to a few franchisee employees (not at the Pocatello, Idaho location) as “employees” and offered them positions with Choice Hotels. (Citations to the record omitted).

The court agreed with Choice Hotels that this “evidence” wasn’t enough to establish agency or vicarious liability, and so it dismissed the case. “Without evidence that Choice Hotels controlled the housekeeping staff who allegedly infringed Funderburk’s copyright,” the court said, and without any indication that Choice Hotels “owned the premises where the alleged wrongdoing occurred,” there was no basis to hold it liable for the acts of the franchisee’s housekeeping staff.

Although the court found no need to engage in a lengthy discussion of the law of franchisor vicarious liability, its reasoning is in line with recent franchisor vicarious-liability cases. Generally speaking, a franchisor can’t be held liable for the franchisee’s activities based solely on its status as a franchisor. There has to be more, such as evidence – or, at the pleading stage, plausible factual allegations – that the franchisor controlled the specific person or thing that caused the plaintiff’s injury.

In this case, for example, Funderburk’s complaint couldn’t survive dismissal because she didn’t – and couldn’t – allege any specific facts showing that Choice Hotels controlled the housekeepers’ activities. They were apparently employed and supervised by the franchisee, TQ Pocatello, LLC and TQ Properties, LLC, not Choice Hotels. Without that control, Funderburk’s case couldn’t proceed.

This case wasn’t a difficult one for the court to decide given Funderburk’s failure to show that Choice Hotels controlled (or could have prevented) the housekeepers’ activities. But it’s certainly typical of the types of claims that franchisors are now facing every day in courts across the country. And franchisors can expect to see plenty more of these cases in the future.

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