Franchisor not vicariously liable for negligence of franchisee.

Byline: David Ziemer

A franchisor is not vicariously liable for the negligence of a franchisee, unless it has actual control over the activities which give rise to the negligence claim, the Wisconsin Court of Appeals held on Oct. 9.

Arby's, Inc., is a national franchisor of fastfood restaurants. Dennis Rasmussen, Inc. (DRI), is one of Arby's franchisees. Under the terms of the franchise agreement executed by Arby's and DRI, DRI must follow Arby's specifications for food service, cleanliness, signage, suppliers, building construction and remodeling, among other things.

In addition, the license agreement required DRI to comply at all times with all applicable laws, ordinances and regulations, and the manager of the restaurant must have completed an Arby's Restaurant Management Training Seminar.

DRI hired Cathy Propp as general manager for its restaurant in 1994. Although Propp managed another Arby's at that time, she had not completed Arby's management training program. In early 1999 she hired Harvey Pierce, a Dane County Jail inmate with Huber law work release privileges.

At the time she hired him, Propp believed that Pierce had been convicted of some form of battery, but in fact, his conviction was for second-degree sexual assault. During the five months that Pierce worked at the restaurant, he was frequently verbally abusive to other employees, and on numerous occasions acted in an offensive and hostile manner.

Despite several complaints from coworkers, Propp never disciplined Pierce. Nor did she take any action when another employee informed her that he had sold Pierce a weapon.

On June 11, 1999, Pierce was scheduled to work from 3:00 p.m. to 10:00 p.m. At 3:51 p.m. he punched out without permission. The shift manager called Propp to tell her that Pierce had left work.

Pierce then walked from Arby's to a WalMart parking lot approximately one-half mile away, where he shot Robin Kerl (his exgirlfriend), David Jones (Kerl's fiance), and then himself. Jones and Pierce died, but Kerl survived, although she sustained serious injuries and is permanently disabled.

Kerl and Jones brought suit against DRI and Arby's, alleging negligent supervision, negligent hiring, negligent retention, nuisance, and breach of third-party beneficiary contract, seeking both compensatory and punitive damages.

The plaintiffs alleged that Arby's was vicariously liable for DRI's negligent supervision and negligent hiring under theories of actual or constructive agency...