Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D. Colo.: Franchisee’s claims against home care franchisor stayed pending mediation , (Dec 8, 2015)

By Michael Menzhuber, J.D., LL.M.

The federal district court in Denver has stayed a home health care franchisee’s fraud and breach of contract claims against its franchisor, pending mediation, as provided by the franchise agreement (Mull v. Griswold International, LLC, December 3, 2015, Daniel, W).

John M. Mull purchased a franchise from Griswold International, LLC (GHC) to deliver non-medical home care services to senior citizens and disabled individuals. He claimed to have purchased the franchise based on GHC’s representations that: (1) it had a viable system under which caregivers operated as independent contractors; and (2) under this system, clients and franchisees would not be responsible for taxes or compliance with wage and hour or other labor or employment laws.

GHC purportedly provided training to Mull pursuant to this independent contractor model despite having knowledge that Department of Labor regulations, which were already finalized, would mandate changes to GHC’s model. Mull also alleged that he was told that GHC would not be affected by any changes in the healthcare regulations.

The franchise agreement entered into by the parties contained a mediation section which required that: (1) all claims or disputes be submitted for mediation; and (2) Mull submit notice to GHC, specifying the precise nature and grounds of such claim or dispute, prior to commencing any legal action against GHC.

Mull filed a complaint against GHC alleging: (1) common law fraud; (2) fraud by omission; (3) fraudulent concealment; negligent misrepresentation; (4) breach of contract; (5) breach of the implied covenant of good faith and fair dealing; and (6) failing to perform the franchise agreement. GHC responded by filing a motion to dismiss for failure to engage in mandatory pre-litigation mediation, or, in the alternative, to stay the proceedings pending the outcome of mediation.

GHC and Mull agreed to stay the case in order to permit the parties to engage in mediation. The court agreed with the parties that staying the matter, pending the outcome of mediation, would be the most appropriate and efficient course of action.

The case is No. 15-cv-00737-WYD-KLM.

Attorneys: William Michael Garner (Garner & Ginsburg, PA) for John M. Mull. Deanna Rene Kunze (Nixon Peabody, LLP) for Griswold International, LLC.

Companies: Griswold International, LLC

News: FranchisingDistribution ColoradoNews