Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D. Haw.: Consumer’s personal injury claims against Burger King as franchisor can proceed, (Apr 15, 2014)

By Linda O’Brien, J.D., LL.M.

In a personal injury action by a consumer against a hamburger fast food franchisor and franchisee for personal injuries sustained as result of food tampering, issues of material fact existed as to whether the franchisor retained requisite control over the food purchased by the consumer, the federal district court in Honolulu has ruled. Thus, the franchisor’s motion for summary judgment was denied (Bartholomew v. Burger King Corporation, April 14, 2014, Seabright, J.).

In 2009, hamburger fast food chain Burger King entered into a franchise agreement with the U.S. Army and Air Force Exchange Service (AAFES) for a Burger King restaurant. Under the agreement, AAFES, as franchisee, was not an agent, partner, joint venture, or employee of Burger King and Burger King had no control over the terms or conditions of AAFES employees. AAFES was to run the restaurant as an independent operator. The agreement required that AAFES strictly adhere to Burger King brand standards and incorporated the Burger King Manual, which extensively detailed food assembly procedures, quality assurance standards, and crisis management procedures.

In 2010, Clark Bartholomew purchased a burger sandwich meal at the AAFES Burger King restaurant and sustained personal injuries from eating the sandwich, which had two imbedded metal objects. Bartholomew filed suit against AAFES and Burger King, alleging negligence, product liability, and deceptive practices. Burger King moved for summary judgment.

Negligence and product liability. The court found that the franchise agreement provisions created a genuine issue of fact as to whether the restaurant was under the exclusive control of AAFES for Burger King to be liable for negligence and strict product liability. Franchisor tort liability could arise from actual or apparent agency of the franchise. A franchisor may be liable where the franchisor has control or the right to control the instrumentality that alleged caused the harm. According to the court, Burger King had strict specifications regarding food preparation and the ingredient supply. The franchise agreement contained detailed food assembly instructions and required that only approved products, supplies, and equipment be used in the restaurants. The disclaimer of agency in the franchise agreement by itself did not defeat liability where the circumstances showed that the requisite control existed.

Apparent agency and deceptive practices. Questions of fact also precluded summary judgment on an apparent agency theory and deceptive practices claims. The “Burger King” signage, architecture and color scheme, and numerous materials bearing the Burger King logo might create a relationship of apparent agency. Moreover, it was unclear whether AAFES actually posted a sign notifying the public of its ownership and operation, the court concluded.

The case is No. 11-00613.

Attorneys: Paul H. Saccoccio (Saccoccio & Lopez) for Clark Bartholomew. Grant K. Kidani (Kidani Law Center) for Burger King Corp. Normand R. Lezy (Leong Kunihiro Lezy & Benton) for CTI Foods Holding Co., LLC.

Companies: Burger King Corporation, CTI Foods Holding Co., LLC

Cases: FranchisingDistribution HawaiiNews