Wise v. Kentucky Fried Chicken Corp.

• Decision Date: 01 February 1983
• Docket Number: Civ. No. 82-427-D.
• Citation: 555 F. Supp. 991
• Parties: Joseph D. WISE v. KENTUCKY FRIED CHICKEN CORP.
• Court: U.S. District Court — District of New Hampshire

555 F. Supp. 991

Joseph D. WISE v. KENTUCKY FRIED CHICKEN CORP.

Civ. No. 82-427-D.

United States District Court, D. New Hampshire.

February 1, 1983.

Stephen Ells, Hampton, N.H., Ralph A. Barbagallo, Jr., Lawrence, Mass., for plaintiff.

Gilbert Upton, Concord, N.H., for defendant.

ORDER

DEVINE, Chief Judge.

This is a diversity action removed to this court from the Superior Court of Rockingham County pursuant to 28 U.S.C. § 1441. Plaintiff is a New Hampshire resident; defendant is a Delaware corporation with a principal place of business in Louisville, Kentucky. The complaint states that plaintiff was an employee of defendant's franchisee, KFC Foods of Salem, New Hampshire, and that he was burned by hot cooking oil from an allegedly defective Collectramatic Pressure Fryer during the course of his employment. Plaintiff alleges that the manufacturer of the pressure fryer informed defendant franchisor, Kentucky Fried Chicken Corporation ("KFC"), of certain defects in the pressure fryer and had requested KFC to instruct its franchisees to take certain remedial measures to correct the defect. Plaintiff claims that his injuries were the result of KFC's alleged failure to warn, supervise, and/or train young employees of its franchisees, or to direct its franchisees to make the necessary modifications to the allegedly defective pressure fryer.

The case now comes before the Court on KFC's motion for summary judgment. The gist of the motion is that defendant's franchisee is an independent contractor, and that KFC was under no duty, and undertook no duty, to control the day-to-day activities or working conditions of franchisee's employees. KFC also argues that under its Approved Supplier System its franchisees were free to choose from several suppliers of pressure fryers, and that once a piece of equipment was purchased, KFC had no authority or responsibility to require franchisees to make changes to the equipment. Plaintiff argues that KFC, by contract, retained control over the type of equipment its franchisees could utilize, and in so doing acquired an independent tort duty to warn and/or train the franchisee's employees concerning known dangers or defects in such equipment.

Summary judgment is proper only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law". Rule 56(c), Fed.R.Civ.P.; Condon v. Local 2944, United Steelworkers of America, 683 F.2d 590, 594 (1st Cir.1982). A dispute of fact is material if it "affects the outcome of the litigation" and is genuine if manifested by "substantial" evidence "going beyond the allegations of the complaint". Pignons S.A. de Mecanique v. Polaroid Corporation, 657 F.2d 482, 486 (1st Cir.1981), quoting Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976). In filing its motion, KFC has "assumed the burden of demonstrating there was no genuine issue of material fact". White v. Hearst Corporation, 669 F.2d 14, 17 (1st Cir.1982), quoting Over the Road Drivers, Inc. v. Transport Insurance Company, 637 F.2d 816, 819, n. 4 (1st Cir.1980); see also Mack v. Cape Elizabeth School Board, 553 F.2d 720, 722 (1st Cir.1977).

In reviewing the summary judgment motion, the Court must view the evidence and draw all reasonable inferences in the manner most favorable to plaintiff. Pignons S.A. de Mecanique v. Polaroid Corporation, supra. The pertinent facts are basically undisputed at present. On July 24, 1973, KFC entered into a "Standard Franchise Agreement" with the predecessors to plaintiff's employer. In return for monthly royalty payments, KFC granted the franchisee an exclusive license to use KFC's "applicable Trademarks and System", including all service marks, trade names, trademarks, copyrights, and patents. Agreement ¶¶ II, III A. Specifically, the franchisee acquired a license and franchise in KFC's "systems for cooking, preparing, and merchandising certain food products and items, which systems include the use of trade secrets, specialized cooking equipment, stylized store premises, menus and food containers". Id., ¶ II (emphasis added).

The Agreement further provides that the franchisee will "actively manage the day-to-day operations of the outlet", and "shall at all times remain an independent contractor". Id., ¶ IV H, I. Nevertheless, the franchisee is required to operate in accordance with KFC's "Confidential Operating Manual", in order to "protect KFC's reputation and good will and to maintain uniform standards of operation". Id., ¶ VI G. The Agreement grants KFC the right to inspect the premises to insure compliance with the operating manual. Id. The Agreement requires the franchisee to purchase only approved equipment, paper goods, and other products. These items may be purchased from approved sources of supply or from a previously unapproved source at franchisee's request if the equipment or product meets KFC's "current standards and specifications". Id., ¶ VI B. KFC reserves the right to review the quality of equipment supplied by an approved manufacturer or supplier, and to remove manufacturers and suppliers from the list of approved sources. Id., ¶ VI B. Franchisees must be informed if a supplier is removed. Id. Conversely, the Agreement provides that KFC shall "undertake further refinement of its products and efficiency of its equipment, and inform FRANCHISEE of proven methods of quality control". Id., ¶ VII C.

Apparently the Collectramatic pressure fryer in question was purchased from the approved supplier list. According to Winston Shelton, the inventor of the fryer and the President of Collectramatic, Inc., there have been approximately forty accidents since 1973 in Kentucky Fried Chicken stores involving Collectramatic pressure fryers similar to the fryer plaintiff was cleaning when he was injured. Affidavit, ¶ 3. Mr. Shelton's affidavit states that his company wrote KFC several times between 1973 and 1977 to inform KFC of corrective measures which could be utilized to avoid such accidents, and that since 1977 it has continued to warn KFC of the dangers associated with the use of the equipment. Affidavit, ¶¶ 4, 5.

Although the parties have not specifically addressed the issue, the threshold issue before the Court is what law applies in this action. A federal court sitting in diversity cases must follow the conflict of law rules of the state in which it sits. Klaxon Co. v. Stentor Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941). Roy v. Star Chopper, Inc., 584 F.2d 1124, 1128 (1st Cir.1978), cert. denied, 440 U.S. 916, 99 S.Ct. 1234, 59 L.Ed.2d 466 (1979); Dunlap v. Aulson Corporation, 90 F.R.D. 647, 649 (D.N.H.1981). New Hampshire follows the approach adopted by the Restatement (Second) of Conflicts of Laws §§ 6, 146, and looks to the law of the state with the most significant relationship to the cause of action. Clark v. Clark, 107 N.H. 351, 222 A.2d 205 (1966). Applying the choice-influencing considerations set forth in Clark v. Clark, supra, the Court concludes that the substantive law of New Hampshire applies to this action. Plaintiff was injured while working in New Hampshire for a franchisee whose franchise contract was performed in New Hampshire.¹ The Court is aware of the fact that the Franchise Agreement (¶ XIII D) provides that it is to be governed by the law of Kentucky. The choice of law of the parties to a contract would likely govern any contract action between the parties, see Consolidated Mutual Insurance Company v. Radio Foods Corporation, 108 N.H. 494, 496, 240 A.2d 47, 49 (1968), but would not a fortiori govern a tort action by a third party. New Hampshire has a strong governmental interest in applying its own laws to actions involving those who are injured while employed or residing within its borders. Maguire v. Exeter & Hampton Electric Company, 114 N.H. 589, 325 A.2d 778 (1974) (law of New Hampshire governs issue of damages in wrongful death action of Maine resident employed in New Hampshire); Stephan v. Sears Roebuck & Co., 110 N.H. 248, 251, 266 A.2d 855, 858 (1970) (law of New Hampshire governs products liability action involving injury occurring at plaintiff's summer home in New Hampshire); cf. LaBounty v. American Insurance Company, 122 N.H. ___, 451 A.2d 161 (1982) (law of Maine or Massachusetts governs suit by New Hampshire resident against co-employee where injury took place in Maine while employed by Massachusetts corporation).

With regard to the maintenance of orderliness and good relations among the various states, the Court's independent research, cited infra, does not reveal any differences between Kentucky law and New Hampshire law relative to the issues now before the Court which would implicate a public policy of the Commonwealth of Kentucky. The franchisee herein was required by contract to purchase the Workers' Compensation and employer liability insurance necessary to protect both its and KFC's liability "as required by local law". Agreement ¶¶ X A, B. Defendant having required the purchase of insurance with an eye toward exposure to liability under the laws of New Hampshire, both interstate order and predictability of results would favor the application of New Hampshire law. See Dunlap v. Aulson Corporation, supra at 650. All remaining choice-influencing considerations being equal, New Hampshire law applies.

The parties have not cited, and the Court has not found, any New Hampshire cases dealing with a franchisor's liability to third parties injured on the franchisee's premises. Furthermore, this case is markedly different from the majority of cases reported, see Annot: Vicarious Liability of Private Franchisor, 81 A.L.R.3d 764 (1977), in that plaintiff herein does not seek to impose vicarious liability on KFC for its franchisee's negligence;...