The 10th Circuit Court of Appeals recently ruled that a franchisor has no liability to franchisee employees in a case involving the alleged sexual harassment of a female worker.
A representative from Wyndham Hotels was present at the Days Inn in Tahlequah for a franchisor inspection on the day of the alleged incident. In the incident, the franchise owner placed his hand on the center of an employee’s back and “moved it down to grab her from behind” during a business meeting.
The incident happened in front of Wyndham representative John Castro and another Days Inn employee, court records show. When it was time for her to check in at the end of the day, the employee, Shelby Sullivan, went to Castro and asked him what she should do.
“He told her she shouldn’t have ‘acted so friendly’,” court records show.
When Sullivan returned to work the next day, franchise owner Rupam Gandhi “persisted in trying to touch and kiss her,” court records said, so Sullivan resigned. She and others have alleged six allegations of sexual harassment under Title VII and Oklahoma state law.
All of these claims were dismissed with prejudice by the court, with the exception of one which was appealed to the 10th Circuit Court, examining whether Wyndham breached any obligation to Sullivan to either provide him with a HR solution to the harassment, either letting him know that “Wyndham did not have the ability to stop the harassment or tell him who did it.”
With its headquarters in New Jersey, Wyndham operates a portfolio of more than 20 hotel brands with 8,900 hotels. As a franchisor, Wyndham provides franchisees with an “extensive support structure for our owners that builds on the experience, scale and distribution of the world’s largest hotel company,” according to the company’s website. . Wyndham provides “one-on-one” support to franchisees, including access to technology and marketing tools.
But the franchisor lacks the capacity “to exercise disciplinary control over Gandhi,” court records show.
Sullivan’s complaint asserted that Castro, with “a very superior knowledge of the franchisor-franchisee structure”, had a duty to explain to Sullivan that Wyndham had no control over Gandhi’s actions and that Castro was not the one. no one who could help him.
The court disagreed, finding nothing in Oklahoma law or legal precedent that imposes such an obligation on the franchisor.
“At this point, suffice it to say that no court in Oklahoma, nor any court to our knowledge, has ever ruled what Sullivan asks us to take into account: that the sale of franchise rights by a franchisor to a franchise owner, i.e. the franchisee, alone, places the franchisor has a duty to protect an employee of the franchisee by providing, when asked to do so, to the employee specific legal advice or correct factual information on how to resolve the franchisee’s alleged wrongdoing, ”the court said.
Nor did the court find anything in Oklahoma law that would allow Castro’s statement, “while certainly misguided,” to be considered a material misrepresentation of the facts on which Sullivan relied. supported to its detriment.
“Indeed, the complaint tells us that when another Days Inn employee approached Sullivan about Gandhi’s harassment, Sullivan told him to contact the police,” the court noted. Such an allegation illustrates Sullivan’s knowledge of the reprehensible nature of Gandhi’s alleged misconduct and a way to remedy it. “