Franchisor Not Liable for Franchisees’ “Robo-Calls”

A federal district court in Washington held that Domino’s Pizza, Inc. could not be held liable for its franchisees’ violations of Washington’s prohibition against automatic dialing and announcing devices. The relevant provisions of the Washington Automatic Dialing and Answering Devices Act (“WADAD”) prohibit the use of an automatic dialing and announcing device (“ADAD”) for purposes of “commercial solicitation,” defined as the “unsolicited initiation of a telephone conversation” for the purpose of encouraging sales. The plaintiffs contended that (i) because Domino’s introduced its franchisees to an automated calling service, (ii) because the Domino’s software platform was used to make the automated calls at issue, and (iii) because Domino’s benefitted from the calls, Domino’s could be held liable under the WADAD.

The court held that while the Domino’s software calling system was capable of producing automated customer lists for ADAD-calling, that fact alone did not mean that Domino’s was liable for its franchisees’ use of the system to make unsolicited calls advertising local pizza sales. Even though Domino’s received some benefit from the calls and directed the marketing campaign, the court reasoned, it was not complicit in its franchisees’ use of the system because it did not direct the unsolicited calls.

Anderson v. Domino’s Pizza, Inc., D. Wa. No. 11-cv-902 RBL, May 15, 2012.

Missouri Franchise Law Does Not Apply to Liquor Supplier-Wholesaler Relationship

A federal appellate court declined to apply Missouri franchise law to an oral business relationship between a supplier and a liquor wholesaler. Shelton Brothers, Inc., a beer supplier based in Massachusetts, entered into an oral agreement with MoBev, a Missouri liquor wholesaler, giving MoBev the option to buy and sell Shelton’s beer. MoBev sued when Shelton declined to continue the relationship, but the Eighth Circuit Court of Appeals held that MoBev was not a franchisee of Shelton under Missouri law. Specifically, MoBev could not establish that Shelton had granted them an exclusive license to use its trademark, and that Shelton and MoBev did not have a “community of interest in the marketing of goods or services.”

Mo. Beverage Corp., Inc. v. Shelton Bros., Inc., 8th Cir. No. 11-2456, Feb. 28, 2012.