Neff v. American Dairy Queen Corp.

• Decision Date: 20 July 1995
• Docket Number: No. 94-50552,94-50552
• Citation: 58 F.3d 1063
• Parties: , 4 A.D. Cases 1170, 11 A.D.D. 92, 6 NDLR P 446 Margo NEFF, for herself and those similarly situated, Plaintiff-Appellant, v. AMERICAN DAIRY QUEEN CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1063

58 F.3d 1063

64 USLW 2066, 4 A.D. Cases 1170, 11

A.D.D. 92, 6 NDLR P 446

Margo NEFF, for herself and those similarly situated Plaintiff-Appellant, v. AMERICAN DAIRY QUEEN CORPORATION, Defendant-Appellee.

No. 94-50552.

United States Court of Appeals Fifth Circuit.

July 20, 1995.

Pamela Breed Bonavita, Advocacy Inc., James C. Harrington, Austin, TX, for appellant.

David W. Koch, Philip F. Zeidman, Brownstein, Zeidman & Lore, Washington, DC, Lewis G. Rudnick, John F. Verhey, Rudnick & Wolfe, Chicago, IL, Matthew R. Shay, The Intern. Franchise Ass'n, Washington, DC, amicus brief, Intern. Franchise Ass'n.

Joseph M. Harrison, IV, Haynes & Boone, San Antonio, TX, William L. Killion, Troy A. Bader, Mark C. Kruger, Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, MN, for appellee.

Dan Morales, Atty. Gen. for Texas, Austin, TX, Marie K. McElderry, Jessica Dunsay Silver, Dept. of Justice, Washington, DC, amicus brief, U.S.

Appeal from the United States District Court for the Western District of Texas.

Before REAVLEY, GARWOOD and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Margo Neff appeals from the district court's entry of summary judgment on her claims against American Dairy Queen Corporation ("ADQ") under the Americans with Disabilities Act, 42 U.S.C. Secs. 12101-12213 (West Supp.1995) ("ADA"). We affirm.

I

ADQ owns the federally registered "Dairy Queen" trade name and various trademarks and service marks used in connection with the operation of licensed Dairy Queen stores. ADQ, through franchise agreements with franchisees throughout the United States, licenses franchisees to establish and operate Dairy Queen retail stores. Among those franchisees is R & S Dairy Queens, Inc., a Texas corporation that owns two Dairy Queen stores in San Antonio, one located at 13122 Nacogdoches (the "Nacogdoches Store"), and the other located at 9726 Perrin Beitel (the "Perrin Beitel Store") (collectively, the "San Antonio Stores").

Margo Neff is disabled and requires a wheelchair to gain mobility. Neff filed suit under section 308 of the ADA, 42 U.S.C. Sec. 12188(a) (1988), alleging that ADQ had violated section 302 of the ADA, 42 U.S.C. Sec. 12182, by failing to make the San Antonio Stores accessible to her. ¹ In her complaint, Neff pointed to numerous barriers that she alleged made the San Antonio Stores inaccessible to the disabled. Neff sought an injunction requiring ADQ to modify "its" ² San Antonio Stores to eliminate the alleged barriers, a declaratory judgment concerning ADQ's violation of the ADA, and attorneys' fees. ³

ADQ moved for summary judgment on the grounds that it did not own, lease, or operate the San Antonio Stores and therefore was not responsible for removing the alleged barriers. Its summary judgment pleadings included an affidavit by ADQ's Vice President for Franchise Operations stating that ADQ neither owned nor operated the San Antonio Stores. ADQ also offered copies of the franchise agreements between ADQ and R & S Dairy Queens relating to the San Antonio Stores. According to ADQ, the agreements established as a matter of law that it did not "operate" the stores within the meaning of section 302.

In response, Neff contended that the terms of the franchise agreement between ADQ and R & S Dairy Queens regarding the Nacogdoches Store supported her claim that ADQ retained sufficient control over the operation of the San Antonio Stores to make it an "operator" of the stores for the purposes of section 302.

The district court granted summary judgment, see Neff v. American Dairy Queen, Inc., 879 F.Supp. 57 (W.D.Tex.1994), concluding that the Nacogdoches Store franchise agreement established no more than that ADQ held the power to veto modifications to the store's facilities, and that this amount of control was insufficient to bring ADQ within the scope of section 302. Neff appeals from the district court's entry of summary judgment, contending that the existence of genuine issues of material fact regarding whether ADQ "operates" the San Antonio Stores should have precluded summary judgment on her ADA claims. ⁴

II

We review a district court's grant of summary judgment de novo, applying the same standard as did the district court. McDaniel v. Anheuser-Busch, Inc., 987 F.2d 298, 301 (5th Cir.1993). We "review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.1986). Summary judgment is appropriate when the summary judgment record demonstrates "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986); Fraire v. City of Arlington, 957 F.2d 1268, 1273 (5th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 462, 121 L.Ed.2d 371 (1992). "If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank, 47 F.3d 1459, 1462 (5th Cir.1995), petition for cert. filed, 63 U.S.L.W. 3892 (U.S. June 12, 1995) (No. 94-2025).

A

Neff argues that summary judgment was inappropriate in this case because genuine issues of material fact exist regarding ADQ's control over the restaurants in question. This argument raises the question of whether the issue that Neff and ADQ dispute is one of fact or one of law. ⁵ The only issue in dispute between the parties is whether ADQ's contractual rights under the Nacogdoches Store franchise agreement demonstrate that ADQ "operates" the San Antonio Stores. Neff's only summary judgment evidence, and the only basis for her claim that ADQ "operates" the San Antonio Stores, is the Nacogdoches Store franchise agreement, and "[t]he interpretation of an unambiguous contract is a question of law" which we review de novo. Exxon Corp. v. Crosby-Mississippi Resources, Ltd., 40 F.3d 1474, 1481 (5th Cir.1995). Neff has not alleged that the Nacogdoches Store franchise agreement is ambiguous. Indeed, the parties do not dispute the meaning of the terms of the agreement at all; rather, they dispute whether the control provided for in the agreement makes ADQ an "operator" of the store for the purposes of section 302, again a question of law which we review de novo. See Matagorda County v. Russell Law, 19 F.3d 215, 217 (5th Cir.1994) ("We review the district court's legal decisions, including the proper interpretation of a statute, de novo."). Consequently, we hold that because the disputed issue in this case is purely legal, it was appropriately resolved through summary judgment. ⁶

B

Neff's appeal thus presents a narrowly defined issue of first impression: whether a franchisor with limited control over a franchisee's store "operates a place of public accommodation" within the meaning of section 302(a). ⁷ Section 302(a) provides in pertinent part that "[n]o individual shall be discriminated against on the basis of disability in the full and equal enjoyment of ... [the] facilities ... or accommodations of any place of public accommodation by any person who owns, leases (or leases to), ⁸ or operates a place of public accommodation." (emphasis added). Because the ADA does not define the term "operates," we "construe it in accord with its ordinary and natural meaning." Smith v. United States, --- U.S. ----, 113 S.Ct. 2050, 2054, 124 L.Ed.2d 138 (1993); see also Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 199 (1979) ("A fundamental canon of statutory construction is that, unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning."). To "operate," in the context of a business operation, means "to put or keep in operation," The Random House College Dictionary 931 (Rev. ed. 1980), "[t]o control or direct the functioning of," Webster's II: New Riverside University Dictionary 823 (1988), "[t]o conduct the affairs of; manage," The American Heritage Dictionary 1268 (3d ed. 1992).

Neff argues that the terms of the Nacogdoches Store Franchise Agreement demonstrate that ADQ exercises sufficient control over the San Antonio Stores to bring ADQ within the scope of section 302. We hold that the relevant inquiry in a case such as this one is whether ADQ specifically controls the modification of the franchises to improve their accessibility to the disabled. Cf. Carparts Distribution Center, Inc. v. Automotive Wholesalers' Ass'n, 37 F.3d 12, 16-18 (1st Cir.1994) (interpreting "employer" as used in Title I of ADA by looking to defendant's control over allegedly discriminatory denial of employee benefits). Although we have found no circuit court of appeals case law interpreting the scope of "operates" as used in Sec. 302 of the ADA, the existing district court authority is consistent with our approach. All three district courts that have addressed the question of ADQ's liability for allegedly discriminatory conditions at franchisee stores have concluded that ADQ does not "operate" the stores for the purposes of Sec. 302, and all three looked to ADQ's authority over structural modifications to the franchisee stores in reaching their conclusions. See Young v. American Dairy Queen Corp., 1994 WL 761233, * 2 (N.D.Tex.1994); Neff v. American Dairy Queen, Inc., 879 F.Supp. 57, 60 (W.D.Tex.1994); Alonzo v. Bayside Restaurant Co., C.A. No. C-94-103, slip op. at 4 (S.D.Tex.1994). ⁹

Neff and the United States point to numerous non-structural aspects of the San Antonio Stores' operations that they contend ADQ controls, such as accounting, personnel uniforms, use of trademarks, etc. While ADQ's control over these aspects may be relevant in other contexts, we hold that because it does not relate to the allegedly...