Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—R.I. Super.: Franchise management company added as defendant in sexual harassment suit, (Sep 22, 2015)

By Greg Hammond, J.D.

A former employee of a donut shop franchise could add a management company as a defendant in a sexual harassment suit, the Superior Court in Providence, Rhode Island has decided. In granting leave to amend, the court concluded that the plaintiff made a mistake in misidentifying the proper party when she commenced her action, and the management company knew or should have known of the mistake (Korsak v. Honey Dew Associates, Inc., September 15, 2015, Taft-Carter, S.).

Melissa B. Korsak filed a sexual harassment suit against franchisor Honey Dew Associates, Inc. and subfranchisor Bowen Investment, Inc. She moved for leave to file a second amended complaint to add R.B. Donuts, Inc. as a defendant, arguing that R.B. manages, on a day-to-day basis, the franchises owned by Bowen. The defendants opposed the motion, arguing that the statute of limitations has run; Korsak did not meet the requirements to add R.B. as a defendant; and Korsak failed to demonstrate that R.B. knew or should have known that but for the purported mistake concerning its identity, it would have been named in Korsak’s complaint.

The court first noted that the applicable statute of limitations has run, and the only way for Korsak’s claim to be timely is for it to relate back to the filing of the original claim. Further, the only issue posed by the motion, according to the court, was whether R.B. knew or should have known that but for a mistake concerning the identity of the proper party, the suit would have been brought against it. Consequently, Korsak had to show she made a “mistake” as to the appropriate party and R.B. knew or should have known of that mistake.

Korsak mistakenly named Honey Dew and Bowen in the complaint, rather than the management company that operated Bowen, the court found. Specifically, the court noted that the license agreement and franchise agreement provided no indication that R.B. was the management company, and Korsak was not illogical in inferring that Bowen dealt directly with local franchises.

In addition, the court determined that R.B. knew or should have known that but for a mistake regarding the identity of the proper party, the action would have been brought against it. In particular, the court noted that R.B. is wholly owned by the co-owner of Bowen, whose sole purpose is to manage Bowen’s franchisees. It would therefore “defy all logic” to find that R.B. did not know that, but for the mistake, Korsak would have named R.B. in the original complaint.

The case number is PC 13-0105.

Attorneys: Chip Muller (Muller Law LLC) for Melissa B. Korsak. Michael D. Chittick, (Adler Pollock & Sheehan P.C.) for Honey Dew Associates, Inc. and Bowen Investment, Inc.

Companies: Honey Dew Associates, Inc.; Bowen Investment, Inc.

Cases: FranchisingDistribution RhodeIslandNews