A federal judge ruled that Domino’s Pizza is not responsible for the actions of a telemarketing firm independently hired by a franchise restaurant.
The court granted its motion for summary judgment and denied class certification in a case alleging violations of the Telephone Consumer Protection Act (“TCPA”) and Washington state law.
Named plaintiff Carolyn Anderson filed the class action suit against Domino’s Pizza, a Domino’s franchisee, Four Our Families, Inc., and a telemarketing company, Call-Em-All LLC, alleging violations of the TCPA and a Washington law that regulates telephone calls made to consumers through an “automatic dialing and announcing device” (ADAD). The plaintiffs alleged they received numerous unsolicited automated calls offering pizza deals from “Domino’s Pizza.” According to the lawsuit, these calls were made without the prior consent of consumers, as required by the TCPA and state law.
According to the lawsuit, the franchisee hired the telemarketer to place the calls under the franchisee’s robocall telephone campaign. Domino’s Pizza, however, denied it was involved in or connected with Call-Em-All LLC, the telemarketer that generated the calls.
Plaintiff argued that since Domino’s Pizza held a national franchise convention where the telemarketer was allowed to advertise its services to franchisees, it should also be held liable for the federal and state violations. Plaintiff also claimed that liability should attach to the pizza giant because the telemarketers used the PULSE system—which Domino’s Pizza requires franchisees use to take orders—to make the automated calls. Plaintiff further alleged that the franchise agreement contains a provision that requires franchisees to “participate in all national and local and regional advertising and promotions as [the company] determine[s] to be appropriate. . .” and that Domino’s has an “extremely broad right to control advertising and marketing decisions, including robo-calling campaigns.”
To refute these claims, Domino’s Pizza presented evidence proving that the company does not engage in robocalls on a national basis and/or involve itself with the local marketing activities of a franchisee. This evidence, in conjunction with the fact that there was nothing to suggest or prove that Domino’s Pizza communicated with the franchisee or participated in the telemarketing campaign, led the court to grant its motion for summary judgment and deny class certification. The court noted the “fact that Domino’s compels franchisees to use the PULSE system, which is capable of producing lists for ADAD-calling, does not compel the conclusion that Domino’s was complicit in the allegedly illegal calling here.” Likewise, the “mere fact that Domino’s requires franchisees to participate in marketing campaigns does not somehow mean that any franchisee’s illegal use of an [automatic dialing and announcing device] is imputed to the franchisor.”
To read the court’s order, click here.
Why it matters: This decision illustrates that national franchisors may not necessarily be held responsible for telemarketing campaigns devised solely by their franchisees and the vendors they hire. The franchisor must have some knowledge, control, or input on the campaign for potential exposure to attach. The court’s decision is reasonable; otherwise, franchisors would become limitless insurers for the misconduct of their franchisees and other third parties.