Gray v. McDonald's USA, LLC

• Decision Date: 30 May 2012
• Docket Number: No. 2:10–cv–2779–JPM–tmp.,2:10–cv–2779–JPM–tmp.
• Citation: 874 F.Supp.2d 743
• Parties: Jerelle GRAY, Jerome Gray and Garnetta Gray, Plaintiffs, v. McDONALD'S USA, LLC; Century Management, LLC d/b/a McDonald's, 3363 Austin Peay Highway, Memphis, Tennessee; Broadmoor Investments Corporation; Fred J. Tillman, individually and as managing member of Century Management, LLC; Chad Tillman; Tenth, Inc.; Jackson Martin, III; and John Does Numbers 1 and 2, unidentified managers of McDonald's, 3363 Austin Peay Highway, Memphis, Tennessee, Defendants.
• Court: U.S. District Court — Western District of Tennessee

874 F.Supp.2d 743

Jerelle GRAY, Jerome Gray and Garnetta Gray, Plaintiffs,

v.McDONALD'S USA, LLC; Century Management, LLC d/b/a McDonald's, 3363 Austin Peay Highway, Memphis, Tennessee; Broadmoor Investments Corporation; Fred J. Tillman, individually and as managing member of Century Management, LLC; Chad Tillman; Tenth, Inc.; Jackson Martin, III; and John Does Numbers 1 and 2, unidentified managers of McDonald's, 3363 Austin Peay Highway, Memphis, Tennessee, Defendants.

No. 2:10–cv–2779–JPM–tmp.

United States District Court,

W.D. Tennessee,

Western Division.

May 30, 2012.

Carl Rutherford Wilander, Bennie Lazzara, Jr., Wilkes & McHugh, PA, Tampa, FL, Christopher M. Glaros, Children's Defense Fund, Columbus, OH, Carey Lynn Acerra, D'Army Bailey, Wilkes & McHugh, P.A., Memphis, TN, David L. Eanes, Jr., Wilkes & McHugh, PA, Little Rock, AR, for Plaintiffs.

Kristy L. Gunn, Thomas L. Henderson, Ogletree Deakins Nash Smoak & Stewart, P.C., Memphis, TN, for Defendants.

ORDER GRANTING MCDONALD'S MOTION FOR SUMMARY JUDGMENT

JON PHIPPS McCALLA, Chief Judge.

Before the Court is Defendant McDonald's USA, LLC's (“Defendant” or “McDonald's”) Motion for Summary Judgment (Docket Entry (“D.E.”) 176), filed September 30, 2011. Plaintiffs Jerelle Gray, Jerome Gray, and Garnette Gray (“Plaintiffs”) responded in opposition on October 17, 2011. (D.E. 185, 186 & 187.) Defendant replied on November 10, 2011. (D.E. 200.) On January 23, 2012, Plaintiffs filed supplemental materials in opposition to the Defendant's motion. (D.E. 227.) The Court held a telephonic hearing on the Defendant's motion on January 24, 2012. (D.E. 229.) On May 5, 2012, Plaintiffs again filed supplemental materials in support of their motion (D.E. 271), to which Defendants responded on May 9, 2012 (D.E. 274). For the reasons discussed below, the Court GRANTS Defendant's motion and dismisses all claims against McDonald's.

I. Background

This case concerns the assault on Jerelle Gray (“Gray”) by his supervisor, Jackson Martin III (“Martin”), while Gray was working at the McDonald's restaurant at 3363 Austin Peay Highway in Memphis, Tennessee (the “Austin Peay restaurant”). Plaintiffs have filed suit against: (1) McDonald's, the franchisor of the Austin Peay restaurant; (2) Century Management, LLC (“Century”), the entity responsible for managing the Austin Peay restaurant; (4) Chad Tillman and Fred Tillman (the “Tillmans”) d/b/a Tenth Inc. (“Tenth”), both individually and as managing members of Century; and (5) Martin and three unidentified managers at the Austin Peay restaurant.

The facts surrounding Gray's assault are largely undisputed. On February 14, 2010, Gray was asked by Keun Anderson, a Second Assistant Manager at the Austin Peay restaurant, to work an overnight shift in exchange for $30.00 in cash and a free meal. (Pl.'s Resp. to Def.'s UMF (D.E. 187) ¶ 87–89.) At around 1:00 a.m., Anderson gave Gray $30.00 and left the restaurant, informing him that another manager would arrive shortly. ( Id. ¶ 90.)

Martin and two other unidentified managers arrived at around 5:30 a.m. to begin their shift. At that time, Gray attempted to leave. ( Id. ¶ 91.) Martin, however, did not allow Gray to leave, and apparently became angry when Gray attempted to take the free meal that he had been promised. ( Id. ¶ 92–93.) In fact, each time Gray grabbed a sandwich, Martin slapped the sandwich out of his hand. ( Id. ¶ 93.) Martin eventually became so angry that he physically assaulted Gray, causing him to momentarily lose consciousness. ( Id.) Plaintiffs allege that Martin's conduct was racially motivated. (See Pl.'s Fourth Am. Compl. ¶ 90.)

The instant motion concerns McDonald's liability as a franchisor of the Austin Peay restaurant. McDonald's is engaged in franchising restaurants throughout the United States. (Pl.'s Resp. to Def.'s UMF ¶ 1.) Defendants Fred J. Tillman and Chad Tillman, d/b/a Tenth Inc. (the “Franchisee”), operate the Austin Peay Restaurant as a McDonald's franchise. ( Id. 12–4.) Defendant Century is a management company formed by the Tillmans to manage the day-to-day operations of their McDonald's franchise restaurants, including the Austin Peay restaurant. ( Id. ¶ 38–39.) The Tillmans operate the restaurant pursuant to a Franchise Agreement (“the Franchise Agreement”) with McDonald's, which was entered into on October 19, 1992. The Franchise Agreement lays out the rights and responsibilities of each party. (Franchise Agreement (D.E. 187–1) at 10; Pl.'s Resp. to Def.'s UMF ¶ 4–5.) Although the factual record before the Court is lengthy, the Franchise Agreement, which incorporates the Operations and Training Manual, and the Operations and Training Manual are the governing documents defining each party's duties and responsibilities with respect to the operation of the Austin Peay restaurant.¹ Both documents are discussed in further detail below.

A. Franchise Agreement

The Franchise Agreement outlines the relationship between the parties by stating that

[t]he foundation of the McDonald's System and the essence of this Franchise is the adherence by Licensee to standards and policies of McDonald's providing for the uniform operation of all McDonald's restaurants within the McDonald's System including, but not limited to, serving only designated food and beverage products; the use of only prescribed equipment and building layout and designs; strict adherence to designated food and beverage specifications and to McDonald's prescribed standards of Quality, Service and Cleanliness in Licensee's restaurant operation. Compliance by Licensee with the foregoing standards and policies in conjunction with the McDonald's trademarks and service marks provides the basis for the valuable good will and wide family acceptance of the McDonald's System. Moreover, the establishment and maintenance of a close personal working relationship with McDonald's in the conduct of his McDonald's restaurant business, his accountability for performance of the obligations contained in this Franchise, and his adherence to the tenets of the McDonald's System constitute the essence of this Franchise.

(D.E. 187–1 ¶ 1(c).) The Franchise Agreement also obligates McDonald's to provide the franchisee with business manuals prepared by McDonald's, and incorporates those manuals into the agreement by reference. ( Id. ¶ 4.) According to the Franchise Agreement, the manuals “contain detailed information including: (a) required operations procedures; (b) methods of inventory control; (c) bookkeeping and accounting procedures; (d) business practices and policies and ... advertising, and personnel policies.” ( Id.)

The Franchise Agreement further obligates McDonald's to “make available to Licensee the services of Hamburger University, the international training center for the McDonald's system.” ( Id. ¶ 6.) In exchange, the agreement obligates the franchisee “to enroll himself and his managers, present and future, at Hamburger University or at such other training center as may be designated by McDonald's from time to time.” ( Id. ¶ 6.)

The agreement also obligates franchisees to comply with the McDonald's System. The agreement specifically obligates the franchisee to “[o]perate the Restaurant seven days per week throughout the year and at least during the hours from 7:00 a.m. to 11:00 p.m., or such other hours as may from time to time be prescribed by McDonald's ..., maintain sufficient supplies of food and paper products, and employ adequate personnel so as to operate the Restaurant at its maximum capacity and efficiency.” ( Id. ¶ 12(g).) Furthermore, the franchisee shall “[c]ause all employees of Licensee, while working in the Restaurant, to: (i) wear uniforms of such color, design and other specifications as McDonald's may designate from time to time, (ii) present a neat and clean appearance, and (iii) render competent and courteous service to Restaurant customers.” ( Id. ¶ 12(h).) In the event of a franchisee's material breach, the agreement grants McDonald's “an immediate right to enter and take possession of the Restaurant in order to maintain continuous operation of the Restaurant, to provide for orderly change of management and disposition of personal property, and to otherwise protect McDonald's interest.” ( Id. ¶ 20(a).)

Under the Franchise Agreement, the franchisee must pay McDonald's a service fee based on a percentage of the restaurant's gross sales. (Pl.'s Resp. to Def.'s IMF ¶ 17.) McDonald's does not directly share in the profits and losses of the Austin Peay restaurant. ( Id. ¶ 18.)

B. Operations and Training Manual

The Operation and Training Manual (the “Manual”) presents guidelines and procedures that McDonald's asks its operators to follow when operating a McDonald's restaurant. (Operations and Training Manual (D.E. 227–1).) The Manual covers a variety of subjects, including training, restaurant security, and human resources.

The Manual's training section provides steps a franchisee may take to establish an effective training program. ( Id. ¶ at 22–67.) The Manual states that “a good training program has two benefits: It demonstrates our commitment and allows us to retain valuable team members.” ( Id. at 24.) The Manual also states that, “[b]y following the training procedures described in this chapter and by using the proper tools, you can effectively execute your training program” ( id. at 24), and informs the operator that “[o]ther training tools are available that can help your restaurant improve QSC and the customer experience. Through an analysis of your restaurant's processes using specially designed tools, you can identify areas where additional crew and management training may be useful” ( id. at 24.). The Manual then advises franchisors as to how to construct an effective training program by following a series of steps, including “Determin[ing] number of crew members to be trained and number of crew trainers available,” “Ensur[ing] training materials are available,” ...