Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—N.D. Cal.: Ace Hardware off the hook for franchisee’s ADA violations, (Jul 8, 2014)

By Greg Hammond, J.D.

Ace Hardware Corp. has defeated claims that the hardware store franchisor violated the Americans with Disabilities Act (ADA), the Unruh Act, and the California Disabled Persons Act. In granting Ace’s motion for summary judgment, the federal district court in San Francisco determined that Ace did not have specific control over the access-related aspects of the hardware franchisee’s facility in question (Lemmons v. Ace Hardware Corp., July 3, 2014, Tigar, J).

Background. Ace and Berkeley Hardware, Inc. entered into a franchising agreement that allowed Berkeley to operate its hardware store under the "Ace" name. The agreement also provided Ace with control over the physical aspects of the store as it related to the company’s trademark and trade dress, but did not provide Ace with the ability to control accessibility issues.

Portia Lemmons, who has cerebral palsy, uses a motorized wheelchair to get around and is capable of executing many daily tasks individually, including basic shopping. She alleged that she visited Berkeley Ace Hardware on multiple occasions and on each visit, she faced physical barriers that prevented her from shopping without assistance, causing her to suffer difficulty, discomfort, and embarrassment. Specifically, she alleged that she had difficulty with narrow aisles and merchandise blocking the way, and employees told her to wait by the registers instead of taking her downstairs with a service elevator. She filed suit against Berkeley, Ace, and the building’s owner. Ace filed a motion for summary judgment, arguing it was not an owner, lessee, or operator of the store under the ADA.

Discrimination. The ADA bans discrimination "by any person who owns, leases (or leases to), or operates a place of public accommodation." The term "operator," includes individuals or entities that have an active and significant degree of control over the access-related aspects of a facility. Lemmons argued that, under the franchising agreement, Ace required Berkeley to abide by all federal and state laws, including laws regarding disability access. However, the agreement only provided Ace with a right to terminate the franchising agreement if Berkeley failed to comply. According to the court, the contractual terms only provided an incentive for Berkeley to comply with federal and state laws; they did not grant Ace the "specific control" necessary under the ADA to impose liability. Consequently, the court found that Ace was not an "operator" under the ADA, and the company’s motion for summary judgment was granted.

The case number is 12-cv-03936-JST.

Attorneys: Paul Leslie Rein for Portia Lemmons. James S. Link (Baraban & Teske) for Ace Hardware Corp., Berkeley Hardware, Inc. and EQR-Acheson Commons Ltd. Partnership.

Companies: Ace Hardware Corp.; Berkeley Hardware, Inc.; EQR-Acheson Commons Ltd. Partnership

Cases: FranchisingDistribution CaliforniaNews