By Eric Ganci
I recently discussed the November 23, 2022 decision Pereda v. Atos Jui Jitsu, which right now is cited as 2022 WL 17174558. That blog focused on the principles of agency: actual agency and ostensible agency, and whether a franchisor can be liable for the negligence of a franchisee.
In part 2 of this discussion, I’ll roll through the facts and decisions of the actual case.
Plaintiff was a student of a franchisee Jui-Jitsu studio which franchised from a Franchisor. Plaintiff filed a lawsuit against both Franchisee and Franchisor, claiming negligence against both.
Franchisor filed a motion for summary judgment. The Trial Court agreed with Defendant and granted the MSJ, and this Court affirmed that ruling.
“The law is clear that a franchisee may be deemed to be an agent of the franchisor.” And this is through either agency principles: actual or ostensible (which I discussed in the last session).
The general law is this:[A] franchisor is liable for the conduct of the franchisee only if the franchisor actually exercises control—or is reasonably believed to exercise control—over the ‘means and manner’ of the franchisee’s operation that caused the plaintiff’s alleged injury.”
The Court gives examples of where a franchisor may or may not be liable for the franchisee:
To decide whether agency existed, it’s a time-stamp at the time of injury and not necessarily what Plaintiff understood later once learning more facts about the agency relationship:
The Court say here “[b]ecause ostensible agency focuses on what a reasonable person knowing what the plaintiff knew would have believed, we necessarily focus on what the plaintiff knew at the time of his injury.”
Here, the Court finds there was no ostensible agency relationship between the Franchisor and Franchisee.
Plaintiff argued the Franchisee website discussed the “safety of Brazilian jiu-jitsu”, “listed the [Franchisor] League as one of [the Franchisee’s] ‘affiliates’”…and set forth a link to a different website for the [Franchisee] League.” The Court says this is not enough to create agency.
Plaintiff also argued neither defendants nor the Franchisor affirmatively disclaimed the Franchisor’s control over the Franchisee by explicitly stating the Franchisee was independently owned and operated…and the Court disagreed in saying “the absence of such a disclaimer does not convert an unreasonable belief of ostensible agency into a reasonable one.”
All this was to argue for ostensible agency. Plaintiff in the MSJ conceded there was no actual agency.
So, here the Plaintiff loses against the Franchisor.
When Parties argue MSJs and file their motions and declarations, this case gives important law about what a Party may subjectively state in a declaration.
First, a Party’s belief is a question of law. Here, as directed to the Plaintiff the Court states “[t]he narrower question of whether a plaintiff’s belief is reasonable is a question of law.” The Court cites others case which says the same thing in different words: