United States: Vicarious Liability: Can We Breathe a Sigh of Relief after Patterson? (No)

Last Updated: September 1 2014
Article by John R. Gotaskie, Jr.

It hasn't been a great summer for the issue of vicarious liability in franchising. In particular, the Office of General Counsel of the NLRB, in its McDonald's recommendation, has demonstrated that it is hostile to the franchising model of business. So many of us were rightly concerned about how the California Supreme Court would rule in  Patterson v. Domino's Pizza, LLC.  [PDF].

The facts of the case are terribly unfortunate. Taylor Patterson obtained a job at a local Domino's franchise in Southern California owned by a company called Sui Juris, LLC. Ms. Patterson alleged that a shift manager sexually harassed her whenever she and he shared the same shift. We can all agree that the alleged conduct was outrageous. Ms. Patterson claimed that the manager made lewd comments, and grabbed her breasts and buttocks. When the manager refused to stop, Ms. Patterson reported the conduct to the owner of Sui Juris and her father. She stayed away from work for one week. When she returned, she perceived that her hours had been cut in retaliation for reporting the harassment.

Patterson's father called a 1-800 customer complaint line set up by Domino's and reported what had happened to his daughter. In this manner, one of the key factual issues in the case developed. As a result of that call, the information was passed to a Domino's "area leader" for over 100 franchisees in Southern California. In discussing what had happened to Patterson with the franchise owner, the area leader allegedly told the owner, "You've got [to] get rid of this guy." Importantly, the franchise owner testified that he saw no specific implication in the remarks of his area leader nor did he ask what would happen if he didn't fire the manager. Ultimately, the manager stopped showing up for work, resolving the issue in the mind of the owner.

Nonetheless, the area leader's statement became a significant issue in the case after Ms. Patterson sued, naming not just the franchisee but the franchisor as well. Domino's sought summary judgment, stating that it was not an employer or principal of the manager, and that it could not be held vicariously liable as a result. The trial court agreed, but then the Court of Appeal reversed, holding that there was a triable issue of fact as to whether Domino's was an employer or principal for vicarious liability purposes. The Court of Appeal seemed to give particular weight to the "get rid of this guy" statements of the area leader, along with the franchisee's testimony that he followed her instructions.

The Supreme Court, after a careful and nuanced review of the franchising business model and vicarious liability law involving franchise systems, concluded that the trial court had been correct; Domino's was not the employer or principal of the manager who committed the harassment of Ms. Patterson. The Court focused on the means and manner test: an agency relationship exists only where the principal dictates, not just the desired result of the enterprise, but also the manner and means by which the result is achieved. The Court held that a comprehensive operating system alone does not constitute the amount of control necessary to support vicarious liability claims like those raised by Ms. Patterson.

With respect to personnel issues, the Court found that Domino's franchisees are owner-operators who hire and train the people who work for them, and who oversee the performance of those employees every day. In fact, in this Court's view, a franchisor only becomes potentially liable for the actions of the franchisee's employees if it retains or assumes a general right of control over factors such as hiring, direction, supervision, discipline, discharge and relevant day-to-day aspects of the franchisee workplace. Moreover, in reviewing the evidence, the Court found that Domino's had no contractual authority to manage the behavior of employees and, in fact, that it did not have any such actual authority either. Domino's was not involved in the application, review or hiring processes of its franchisees.  The franchisee was also solely responsible for training employees on how to treat each other at work and how to avoid sexual harassment.

So, a win for franchising? In the immediate term, yes. But I see significant potential long-term issues with the Supreme Court's opinion. First, the Court essentially authored a roadmap for lawyers looking for ways to sue franchise systems on grounds of vicarious liability. Franchisors should take a hard look at their systems, training programs and operating manuals–particularly if they are operating in California–to absolutely ensure that they do not control the manner and means where agency could be an issue.  Second, training of regional representatives, area leaders, and the like should emphasize that business areas left to the franchisee's control must be left to the franchisee's control. While the majority opinion accepted the testimony of the franchisee that he saw no implication in the "get rid of this guy" statement, the Court of Appeals and especially the dissenters on the Supreme Court seized on this comment. Unless it is truly a branding matter, it is best that the franchisor's representative stay out of the fray.

And that brings me to the third and most troubling issue. The dissenters, who would have found vicarious liability, pointed to the fact that the Domino's area leader once told the franchisee in this case to have a manager stop using Domino's-branded bags to deliver a competitor's food as further evidence of Domino's control over personnel decisions. Huh? That's right: what seems like a clear branding matter to a franchise professional is a personnel issue to three members of the California Supreme Court. Now, let me add that the Supreme Court decision was 4 to 3. One person changes sides, and this is a completely different (and very troubling decision).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

John R. Gotaskie, Jr.
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.