Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—W.D. Okla.: Franchisees’ fraud claims against individual defendants barred, (Jan 29, 2016)

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

Fraud claims made against individual defendants by franchisees of a frozen yogurt chain franchisor were dismissed by the federal district court in Oklahoma City. The court determined that the franchisees’ claims were either insufficient to state a claim against the individual defendants or barred by their franchise agreements’ integration clause (Yummy Yogurt Indy, LLC v. Orange Leaf Licensing LLC, January 28, 2016, Cauthron, R.).

The franchisees filed a complaint against the franchisor, Orange Leaf Holdings, LLC, and four individuals, alleging common law fraud, statutory fraud, and breach of contract. In response, Orange Leaf filed a motion to strike and the individual defendants filed a motion to dismiss.

In support of their motion to dismiss, the individual defendants argued that the franchisees’ fraud claims were barred by the integration clause in the franchise agreements signed by the parties. The court agreed. It determined that, because the integration clause established itself as controlling the scope of the parties’ agreement, any prior oral representations could not overcome the written agreement.

The court also found that any of the franchisees’ claims based on future events should be dismissed. To the extent such claims would exist, they would also be barred by the integration clause, as they would be oral promises which would allegedly attempt to overcome the terms of the parties’ written agreement.

Finally, the court determined that the allegations in the amended complaint of misappropriation of the advertising fund, breach of fiduciary duty, and interference with attempts to mitigate were insufficient to state claims against the individual defendants. For the same reason, it also dismissed the franchisees’ claim for breach of contract against the individual defendants.

The case is No: CIV-15-272-C.

Attorneys: Jason A. Sansone (Sansone Howell PLLC) and P. Adam Davis (Davis & Sarbinoff LLP) for Yummy Yogurt Indy, LLC; Yummy Yogurt Mudga, LLC; and Aditi 3 Yummy Yogurt, LLC. Adam J. Strange (Resolution Legal Group) for Orange Leaf Licensing, LLC; Orange Leaf Holdings, LLC; and OT Holdings, LLC.

Companies: Yummy Yogurt Indy, LLC; Yummy Yogurt Mudga, LLC; Aditi 3 Yummy Yogurt, LLC; Orange Leaf Licensing, LLC; Orange Leaf Holdings, LLC; OT Holdings, LLC.

Cases: FranchisingDistribution OklahomaNews