Appeal Court Reverses Decision, Sends Mail Boxes Etc. to Trial
LOS ANGELES (Blue MauMau) - "We reverse the judgment," was the decision handed down Friday in California’s Court of Appeal, in a lawsuit filed by three MBE franchisees against United Parcel Services and Mail Boxes Etc. in Superior Court. As in similar litigation, franchisees claimed that UPS withheld crucial information and made misrepresentations in persuading them to convert to its new concept, The UPS Store, following its acquisition of Mail Boxes Etc. in 2001.
The franchisees' appeal was filed in January 2007 after the California Superior Court Judge Wendell H. Mortimer, Jr., now retired, granted UPS and Mail Boxes Etc. summary judgment —a decision based on the merits of the case without a trial—as to all their allegations. But the Appellate Court not only determined that the franchisees were successful in showing that all allegations stated in their case were suited for trial, he also awarded them costs related to their appeal, including attorney fees. The judge addressed three of the causes of action in his decision, but stated in light of the court's finding it saw no need to deal with the remaining thirty causes of action.
The Appeal court ruling gave a factual history of the franchisees' lawsuit. All three are members of the Platinum Shield Association, one of three organizations litigating against UPS. Through their attorneys, Gordon & Rees, they claimed that after its conversion program UPS and Mail Boxes Etc. began to abandon and undermine the existing MBE franchisees in order to violate its obligations of its franchise agreements. They also allege that in acquiring MBE Inc. and its trademark, trade name, and related intellectual property, UPS conspired to destroy the MBE franchised business and distribution system, and established in its place "The UPS Store," a network of UPS-favored businesses. By permitting its affiliate UPS to enter into agreements with other competitive retail outlets, it also alleges that its MBE company implemented anti-competitive practices.
But the franchisees' complaint went beyond that. According to allegations, UPS and Mail Boxes Etc. had actually collaborated prior to acquiring the MBE franchise system with the intent of eliminating the MBE Center business model, coercively converting it into The UPS Store. MBE operators also accused the company of depriving franchisees of their contractual rights under their franchise agreements to sell or transfer their franchised businesses, and to renew automatically their MBE franchise agreements for successive 10-year periods.
Because of the timing of receiving the decision late Friday, attorneys for the franchisees, Miles Scully and Amy Darby of Gordon & Rees, and attorney for UPS/MBE, Jane Barrett, Morrison & Foerster, were not reached for comment. An update will be published after they are contacted.
But former MBE franchisee Howard Spanier, president of the Platinum Shield Association, had much to say about the decision. In a telephone interview he said, "The Court of Appeals gave us a total victory. The court reversed every single claim that UPS and Mail Boxes Etc. made, and awarded cost on appeal to the plaintiffs." He also feels it was a complete repudiation of UPS and MBE's position, and that it was the last major hurdle for them. Spanier, who had been a franchisee in Malibu for eighteen years and one of MBE's top-performers, was forced to give up his Mail Boxes Etc. identity in 2006. He said UPS blocked his renewal as an MBE franchisee, despite the fact that his agreement allowed it. Mail Boxes Etc. Inc. would only allow him to renew as a UPS Store. "I considered that option to be financial suicide since under the UPS Store business model profit is totally controlled by UPS," he said in a statement.
Spanier said UPS must now face a public trial, where UPS and MBE will be forced to explain their anti-franchisee actions in front of a jury. “We can’t wait to finally have our day in court,” he added.
The decision is the third time that the California Court of Appeals has reversed the lower court and upheld the case of the UPS and Mail Boxes Etc. franchisees. The previous decision by the Court of Appeals was to grant certification of a national class action against UPS on behalf of the UPS Store franchisees.
With regard to the class certification, Spanier reported, "Our attorneys will file a formal motion to certify the class within the next two weeks. The motion will be heard by Judge Highberger on July 8, 2008. The motion will be based on the recent California Court of Appeal decision."
| Attachment | Size |
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| appellate court decision 5.23.08.pdf | 62.91 KB |
| Class Action Certification.pdf | 265.28 KB |
The Man Who Beat 'Big Brown'
Platinum Shield Association Says: The Man Who Beat 'Big Brown' UPS
Little Rock's Weedman made UPS 'Bully' surrender in 2006; looks forward to coming trial
LITTLE ROCK, Ark., June 12 /PRNewswire/ -- Tom Weedman faced every former franchise owner's worst nightmare in March, 2006 when 'Big Brown' United Parcel Service NYSE: UPS sought a temporary restraining order (TRO) alleging violation of trademark rules after they forced him to go independent. Weedman challenged UPS' attempt to close his store and risked his financial future by telling a Federal District Court he was prepared to face UPS immediately in a trial 30 days after they had shut him down.
"In about 45 minutes, UPS' attorneys phoned the judge and said they were withdrawing their request for a TRO and would not go to trial," Weedman recalled. "That was easily the most frightening period in my life, but it gave me the personal satisfaction of not letting a huge corporation bully me into closing my store."
Today, Weedman and his 130 fellow members of the Platinum Shield Association (PSA) look forward to a trial in their now five-year-plus legal battle with UPS, following a California appellate court's decision last month. That unanimous decision overturned a lower court's granting of motions for summary judgment to UPS in the long-standing confrontation between the Atlanta-based shipping giant and franchisees like Weedman who were part of the Mail Boxes Etc. (MBE) system UPS acquired in 2001.
Weedman said his initial relationship with MBE was excellent, and from the time he purchased his first store in 1993 until the UPS acquisition of MBE in 2001, he found the business demanding, but rewarding. "You spend six days with the store open and all of the customer needs, and then the seventh day you try to catch up," he noted. "But I saw a real future in the MBE system and opened my second store in Jacksonville in 1995; when that store's franchise agreement with UPS expired in 2006, we were pressured to convert to a UPS Store. We rejected that, and were hit immediately with the TRO."
A native Arkansan, Weedman graduated from the University of Arkansas, Little Rock, in 1970 with a degree in mathematics; while living in the Chicago area and working for Baxter International, he earned an MBA from the Illinois Institute of Technology in 1988. He has taught business courses at the University of Arkansas since returning to Little Rock in 1992.
"This whole situation with UPS has been tough on me, my wife, Candice, and everyone in the Platinum Shield organization," Weedman added. "There are more than 130 others in the group, and we are located literally from coast to coast," he said, "and the TRO attempt was not just in Arkansas; there were a dozen more across the country."
Weedman said there are many issues that he hopes the trial will bring out, including UPS' lack of support for MBE franchisees who did not convert to UPS. "We paid a fee, a royalty really, each month to UPS, and part of that goes to our Area Franchisee, who in theory is our representative to UPS," he explained. "The last time he visited either of my stores was in 2003."
The lawsuit in which Weedman is a plaintiff alleges among other charges UPS' intentional destruction of the Mail Boxes Etc. franchise brand and system, violation of the MBE franchise agreements, fraud and anti-competitive actions by UPS in its creation of the UPS Store franchise system. At present there are numerous lawsuits filed against UPS by various store owner groups and individuals across the country, based on the forced conversion of the successful MBE business model to the failed UPS Store model.
Last month's California appellate court reversal of the lower court was the third time that a California appeals court had overturned a lower court and upheld the case of the UPS/MBE franchisees. The previous decision by the Court of Appeals was to grant certification of a national class action against UPS on behalf of the UPS Store franchisees.
Registration Suspended?
Why???
Corporation UNITED PLATINUM SHIELD TRADE ASSOCIATION Number: C2645075
Date Filed: 3/29/2004
Status: suspended Jurisdiction: California Address 23852 PACIFIC COAST HWY MALIBU, CA 90265 Agent for Service of Process MILES SCULLY 101 W BROADWAY STE 1600 SAN DIEGO, CA 92101Paul, You are right
I checked and attorney fees were not awarded. It states, "The judgment is reversed. Costs on appeal are awarded to plaintiffs Gil I. McDougal, Inc., Sanford Industries, Inc., and Martin Senoff, Inc."
Thanks.
Janet
--
Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise industry. She is now a freelance investigative reporter for franchising and a columnist for a leading franchise journal.
UPS Must Face Trial in Fight
UPS Must Face Trial in Fight With Its 'Mom & Pop' Franchisees
10:00 AM EDT May 26, 2008
LOS ANGELES, May 26 /PRNewswire/ -- A decision by the California Appellate Court here Friday (May 23) reversed the 2007 decision by a Los Angeles Superior Court that had granted motions by United Parcel Service (NYSE: UPS) and Mail Boxes Etc., Inc. (MBE) for summary judgments against its franchisees.
"The Court of Appeals gave us a total victory. The court reversed every single claim that UPS/MBE made, and awarded costs on appeal to the plaintiffs. This is a complete repudiation of UPS' and MBE's position and was the last major hurdle for us," stated Howard Spanier. "Now UPS must face a public trial, where UPS and MBE will be forced to explain their anti-franchisee actions in front of a jury. We can't wait to finally have our day in court," he added.
Spanier is the owner of Malibu Business & Shipping Center, which had previously been a Mail Boxes Etc. "The reason I am no longer a Mail Boxes Etc. is that UPS blocked my renewal as an MBE despite my franchise agreement allowing me to do so. They would only allow me to renew as a UPS Store. I considered that option to be financial suicide, since under the UPS Store business model profit is totally controlled by UPS."
Spanier is also President of the Platinum Shield Association (PSA), one of three franchisee associations litigating against UPS. PSA has been involved in the lawsuit with UPS since 2003.
Other former MBE franchisees were also forced to go independent. Glenn Sturgis of Montpelier, Vermont is one of them. He is a PSA member and is now the owner of Capitol Copy in Montpelier, after being blocked by UPS from renewing as an MBE. "The latest bullying tactic by UPS against its 'Mom & Pop' franchisees is, after blocking their renewal as an MBE, to close their UPS retail shipping account. Clearly, UPS wants to further disrupt the relationship franchisees have with their customers and thus cut off a source of revenue." Sturgis continued, "First UPS destroyed our franchise brand and now UPS has tried to drive us out of business. We are committed to our cause and look forward to having our day in court and demonstrating the unlawful acts of UPS. This cynical, indifferent bully corporation will be brought to justice."
The five-year-old lawsuit alleges among other charges UPS' intentional destruction of the Mail Boxes Etc. franchise brand and business system, violation of the MBE franchise agreements, fraud and anti-competitive actions by UPS in its creation of the UPS Store franchise system.
This decision is the third time that the California Court of Appeals has reversed the lower court and upheld the case of the UPS/MBE franchisees. The previous decision by the Court of Appeals was to grant certification of a national class action against UPS on behalf of the UPS Store franchisees.
For a copy of the full court decision, please click on the link http://appellatecases.courtinfo.ca.gov/search/case/disposition.cfm?dist=2&doc_ id=1134683 (Due to the length of the URL, please copy and paste the link into an Internet browser).
SOURCE Platinum Shield Association
Significance of SJ denial
There was no "repudiation" of UPS' position. Please let's actually read the ruling which Ms. Sparks has appended here in pdf format.
The non-moving party raised triable issues of fact. As such, Summary Judgment is not appropriate.
Where triable issues of fact are raised, the non-moving party is entitled to have those matters put before the trier of fact.
Any paralegal with 5 minutes experience can tell you that.
Not only did the appellate court not decide which side was telling the truth, it would have been improper as a matter of law for any court to have done so.
As to "costs" this is what is sometimes known as "taxing" and it really is a matter of a few pennies. Look at the court rules for California , and the statute will tell you what "costs" are. My state has a similar statute, and many people don't even bother filing to get "costs" since it is barely worth the time involved in preparing the paperwork and going to the courthouse.
The franchisees have made some serious allegations which if proven at trial will put UPS in the hot seat. And this matter moving forward will enable discovery which may further butress the franchisee claims. So, it is a win for the franchisees. But let's not mis-state the law for the sake of PR spin.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
HUH?
Gee Paul,
I am not sure you get this. It was summary judgement, the position of the two sides is pretty simple. UPS's position was that there was no material issues of fact, and that it was entitled to a decision as a basis of law. The appeals court disagreed. Sounds to me like that UPS postion was repudiated.
Did you go to law school, or just take the bar exam and hang a shingle out?
Once again, SJ is...
Oh, by "complete repudiation of UPS position" the PSA spokesman merely meant "the appellate court found triable issues of fact."
Yeah, right.
BMM readers can look at the statement themselves and decide what the PSA meant by "complete repudiation."
If anyone wants to know what summary judgment is (and more importantly in this context, is not) they can look at the Franchipedia entry "Summary Judgment" or if you want to see the California standard, I put the hyperlinks in previous postings.
Bottom line: a denial of summary judgment simply means that the case moves forward. It does not mean that the court believes the non-moving party, it means that the court is required to assume as true the statements of the non-moving party.
There is a difference, and snotty ad hominem attacks do not change that.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Read the statement
Paul, I love when someone makes a statement and sticks to it no matter what. Let's resolve this with a few simple questions:
1. What positions of UPS was Spanier referring to? Well, it certainly seems to make sense that since he was speaking about an appeals court decision, he would be referring to the positions that UPS took in front of the appeals court! (I doubt that his statment menat that the appeals court repudiated every single position that UPS had ever taken since it was incorporated!)
2. If one side states that they are entitled to summary judgement (and yes, you are not the only one in the world who knows what summary judgement is)and the court disagrees, is that positon repudiated? Gee, it sure sounds like it to me!
PS Do you actually get any business from posting your anme and phone number ad nauseum on here?
Paul Paul Paul.
psa spokesman meant that it was a "complete repudiation of UPS's postition, in the oral argument. That is true. and again Paul listen to the oral argument!!!
PSA Victory
There is no Canadian franchisee lawyer happier for the PSA than I am.
However, Paul is making a very good point.
To the casual observer, it sounded like the PSA was claiming a substantive victory and that the Court of Appeal had made factual findings. (Actually, I happen to think that it is a great legal victory for PSA)
Paul was quite right to point out that no facts have been established by this ruling. The casual reader might have assumed that Mr. Spanier was suggesting that. (Actually, Howard is far too sophisticated to have made that mistake.)
But, nonetheless Paul's point is useful to keep in mind.
Michael Webster PhD LLB
Franchise News
reply to MW
And I do not question his point in raising the issue. Maybe because I am familiar with the issue and have listened to the cd of the oral argument, I know what Howard was referring to. I agree it was a legal victory. It allows PSA to go to trial and have the case heard before a jury. At no time did any of the people in the lawsuit think that it was anything other than that, Howard included. But Paul minimizing PSA winning their appeal and implying that it is not significant is not true either. The reversal was a victory, and a big one. The issue is ALL the causes of action making it through the Summary Judgement. Tell me that was not a victory
Oral Argument
We would absolutely love to hear the oral argument.
Can you post it?
If you don't know how, send the cd to my and I will post it.
Look, I think that this is a huge victory for the PSA because I am very familiar with many of the issues raised and the availability of discovery on all these issues is monumental.
Paul was making a good point, and perhaps we should also tweak Janet Sparks too, that what Howard was quoted as saying needed to be amplified or put in context, recognizing that the no facts had been proved.
But it is very important that the UPS road show of the Gold Shield program raises triable issues - which is what is at stake.
Michael Webster PhD LLB
Franchise News
CD of oral Argument
Unfortunately it has a player that is on the disk that has to be installed in order to play it. We tried copying it to no avail. It won't let you copy the executeable file. Mine is on "loan" right now. Maybe Mr. McDonald the UPS lawyer that requested a copy will lend his to you???? LOL
Try this on...
Here is some of it
Kitching: I think we’ll hear from respondents first. This is a great big summary judgment and the court granted it, and as we read the record of summary judgment not as summary adjudication of issues so that means that if there’s one triable of issue of fact in this whole record that the whole thing uh, should be reversed, and we’ve actually probably found forty or more triable issues of fact, and, I’ll just very briefly go over some of them with you, mmm Cause of Action #3 Intentional Interference with prospective economic advantage, uh, lost customer, there’s evidence that, from, Sen, uh, plaintiffs Sanford, Senoff and McDougal that they lost customers. Sanford, Mr Sanford had a declaration citing three instances of regualar patronage of the store by three named people when those people discon…discontinued patronage at the store, after, looking at advertisements saying they could obtain the same services for new lower prices at the UPS stores. Mr Sanford produced a list of 472 lost customers, who discontinued their patronage as a result of the Gold Shield program. Mr Senoff produced a list of customers names etc , now I know that the defendants say, well there are other reasons that these customers didn’t come to these stores, but that’s not for a court to decide on a summary judgment those, it seems to me are triable issues of fact.
As to the 24th cause of action, breach of the franchise agreements, there is all kinds of evidence about this local creative marketing materials and what quality they were and how the quality according to the plaintiffs, changed and that they couldn’t any longer use these materials. That’s a triable issues of fact. I know defendants will say those were fine, but, plaintiffs are saying they’re not. There are triable issues of fact as to who controlled the N-M-F, and both sides have arguments as to who’s really controlling it…are they advising, are defendants in control of it, are they independent…those are triable issues of fact.
We have issues about competition in the territories of the remaining Mail Boxes Etc. franchises, and there’s evidence that we have these drop boxes and the alliances and the ASO’s , and…those are triable issues of fact, whether those, uh, devises were competing
With the Mail Boxes Etc people.
Ummmm, as to the tortuous interference with contractual relations, uhh, the plaintiff alleges, uhh, that basically their franchises were without a business and defendant argues some kind of privelege, but I don’t believe privelege was alleged in the answer to the complaint and also that would be a triable issue of fact whether that kind of conduct was privelege. Priveledge is a question for the triar of fact under G H Kosc vs Mayer 224 Cal App 3rd at .....
So it seems to me that, this is a very big case and the parties see things veryyy differently, as to what happened and the plaintiffs have all kinds of evidence, all kinds of declarations. I left out the declarations of the experts who said they put these people out of business. Those are triable issues of fact. So, that’s our tentative view and I’ll hear from counsel.
Another justice: If, If I might just add too, it was your burden in order to sustain a summary judgment, not only to negate these facts, but to establish that these facts under no circumstances could be established by the plaintiffs, and you failed to do that on this record.
Justice Keatchin: so (nervous laughter in background) as I told counsel before, you have an uphill burden
MoFo Atty: alright
Other justice interrupts: to say the least
MoFo Atty: (nervously laughing) I am a little bit daunted here , but..
(11:11:05)
Justice Keatchin interrupts: Well, it you know, there are just too many disputed facts here. These people say you put us out of business, you did all these things to us, who knows who’s right but a court can not tell this on a summary judgment.
MoFo: What I’d like to try and do if, I can attempt to persuade you back to my point of view is to focus on some of the issues where there may be disputes of fact. But, um, they don’t fall within the, uh, conduct governed by the contracts, so I’ll start, for example, um with
Justice Keachin interrupts: you realize there only needs to be one? Ha ha
Mofo: Well, I huh
Other Justice: When you say, that’s right, when you say on some of the issues, umm, umm, the brief - briefing was extensive in this case, and both sides set out in some detail each of the issues, and discussed each of the issues, but it seems to me, as Justice Keatching said, if there was only 1 issue, since this was not a summary adjudication,
MoFo: Well, uh, I, I understood the order to be a summary adjudication of each of the various judies and then ending in summary judgment because…
Justice: Well, that’s it, but that, once you end in summary judgment then that assumes? Everything.
Justice keatching: We looked at that because it was a little confusing what was going on but the court filed a summary judgment I believe. We can look at that again. But..
MoFo: So. Are are are
Justice keathin: It seems to be given what I told you though, it’s easy to find 10 or 15 triable issues in each of the causes of action.
MoFo: And and so is your suggestion that you would have to, if if you find one one breach of one contractual duty then the entire case goes back and you…..
Other Justice: CORRECT
Mofo: and and you don’t look at the other issues?
Other Justice: CORRECT
Justice Keathing: I think theoretically that’s true, but I am also telling you that I think if you look at each cause of action you can find 10 or 15 triable issues of fact. When these plaintiff’s are saying, I lost customers, when their expert comes in and said, they didn’t trade here because the advertising, because the whatever you look up on the computer, and they sent you to the wrong place and all that….those are clearly triable issues of fact
MoFo: Well, on..on..that issue they they would have to show that there was uh wrongful conduct, um and they um, that that caused the interference with the customer relationship, and at the trial court they didn’t identify any wrongful conduct….On appeal now they are saying that it’s uh uh 17500 false advertising claim.
Other justice: See but, but the burden is on you before the burden even shifts to them, to establish not only that there that all the conduct was lawful, but under no circumstances could they establish that there was wrongful conduct.
MoFo: Well they acknowledge that the Korea Supply, uh, case requires them, to uh, to uh, as part of their case in chief plead and prove the unlawful violation. They can’t do that here because, uh, the the only unlawful advertising claims in the case were under 17200
Justice Keatchin: Well, but they could always amend their complaint. I, I don’t think that kind of technical argument is going to make it.
I mean if they just didn’t allege it in their complaint, they can allege it in their complaint…..and I don’t know that they even have to allege it in their complaint
MoFo: Well, but I..
Justice Keatching: You have to show they have no cause of action under any possibility under, or no case under any possibility under that cause of action. So like Justice Alldridge says, it’s YOUR burden, NOT theirs.
MoFo: Well, but it’s also the the allegations of the complaint that determine what is material….
Justice Keatching: right..and…
Mofo: for summary judgment
Justice keating: right, and when you read the complaint you would say, well, that’s false advertising, that’s what they are alleging, and so again, I’m telling you that whether they put a number on it or not, they are alleging that.
Mofo: But, uh uh uh, in the circumstances of this case they did have a false advertising claim under 17200, they had 2 claims under 17200, and the court granted summary adjudication of THOSE claims, and they didn’t appeal from that…so in in the circumstances of of
Justice Keating: Ok Ok, I understand your argument, I just see this as a very technical argument.
Mofo: Umm, I..I.. I (nervous laugh), I…I…I would like to..uhh..I…I.. realize you’re...your’re suggesting to me that anything that you find as a…as a factual issue, issue, is going to send the whole, whole case back, but I would really like to go by and talk about the different issues, um, and why there aren’t material disputes of fact.
Justice Keathing: OK, tell me why there aren’t material issues—triable issues of fact as to whether they lost customers when they have experts saying they lost customers and they have the names of customers who say we didn’t go back there because we thought you were out of business, etc etc.
MoFo: Well, I think, part of what they have, they have customers lists, and the customer lists, that that these are people that don’t come anymore
Justice K: They have names of customers
MoFo: And and, but there’s no link of the causation there. You, you need to
Justice K: Well they have an expert who said the people don’t come because
MoFo: Umm, he the expert, umm Stott, said they MAY not come, umm because of that. Ummm, but that’s, that’s just speculation, they don’t have, they, they didn’t have any, uhh, customer come in with anything other than, umm, conclusory, and and, one of their folks, umm, Mr Hilumberg, whose from Mr. McDougal, he came in and, and, and said…, umm, umm talked about, umm, what happened to him, when he became a customer in two thousand and four, umm, so that’s well after the advertisements at issue. Umm, so what we,what we said in our brief is if there are reasonable conclusions that that’s that can be decided as a matter of law and this court did that recently in the uh, uh, in the March,,in the umm, O’Brian case. You can, you can determine whether someone’s conclusions are reasonable, as a matter of law, it doesn’t necessarily present a question of fact, and what what, when you’ve got the ads, and umm, you know the ads say We’re becoming the UPS Store, we know that that’s in fact, umm true that 90% of the the stores uh converted immediately, umm, the others were, uhh, were going to be required by uhh MBE to convert at the end of their agreements, and for these 3 franchisees their agreements ended within a year, ummm, the tagline, same great service, um, we, we argued that that’s, um, a statement of opinion, umm they say that no that that’s a promise of exact same services from all the stores, but the statement, the mere statement same great service is a statement of opinion about the service and that’s value and opinion, so…
Is that: Is that…
Pretty Good
Yeah, this is bad.
Judge: We have found 14-15 triable issues.
Attorney: Ah, but you haven't heard my compelling argument.
Judge: What part of "14-15 triable issues" was hard for you to understand?
Please post the rest of this - I cannot stand the unintentional humour.
Michael Webster PhD LLB
Franchise News
Precious Stuff...
Fantastic and extraordinary lawyering!
The Truth Shall Set You Free!
TIF
And They Pay Mo Fo kers for this?
Definitely third class representation, the only thing they didn't do is
threaten to hold their breath until they turned blue if the decision was not what they wanted.
Come on, UPS, show some class!
By Whom??? All I see is a
By Whom???
All I see is a lot of stuttering and stammering from UPS' attorneys
Re: By Whom??? All I see is a
You are so predisposed to think that I am on the side of UPS when I only care about the facts and I am not on one side or the other.
I think that UPS really screwed up on its acquisition and conversion of MBE, but it does not mean that the various franchisee lawsuits will prevail in court.
The Truth Shall Set You Free!
TIF
What I see
The allegations of the zees in this specific case give them a decent shot if proven, but I am more interested in how the comments to this article epitomize the customary zee-side approach.
As Webster noted, the Sparks article gave a view based on one side. I don't fault Ms. Sparks for this, since she did attempt to get comment by the opposing side and when a response came in, she did a follow-up article. But...
The article was misleading, and I addressed the issue of summary judgment and "costs" as a factual matter. I also discussed the matter of dicta, and further noted that any court feedback (via decisions or in court) may give an indication of the strengths/weaknesses of the underlying case.
For some franchisees, any deviation from the rah-rah choir is intolerable.
Interestingly, the moderate voices are from registered commentators and the pot-shots are from those who don't even bother to register with a pseudonym, let alone their real name.
We also see once more the bias argument: those who agree with us are pure-of-heart but those who disagree with us are shills acting out of base pecuinary motives.
The idea that spokesmen/counsel for a particular side might have a reason to spin a story..why, zees would never do such a thing. The idea that some people might actually wish to see balanced and enlightening discussion of their professional interests...why, they must really have some ulterior motives.
(And once again, I note that my practice is within a small area--so unless you know whether the "6" subway is local or express, you are wasting your time calling me for representation. There are excellent national firms that do that, as we have discussed previously.)
IFA (and to a lesser extent, ABA) franchise conferences suffer from a lack of balance. BMM has the same problem, albeit from the opposite side of the debate.
The difference is that the legal and regulatory structure favors franchisors, whether you like it or not. So if anything, presentation of a franchisee-oriented viewpoint requires making a better argument.
Unfortunately, that is more effort than most franchisee-side advocates are willing to make.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Well, Not really. You wrote
Well, Not really.
You wrote that is was great lawyering.
I asked by whom?
Whom do you think did the great lawyering?
RE: Well, Not really. You wrote
I was being facetious for God's sake!
The Truth Shall Set You Free!
TIF
Re: Once again, SJ is...
Paul Says: "It does not mean that the court believes the non-moving party, it means that the court is required to assume as true the statements of the non-moving party."
This is basically what the court of appeal said. It was not for them to decide on the issues, but there ARE many triable issues of fact that need to be decided, and they, nor Judge Mortimer, have/had the right to decide those issues.
RE: Once again, SJ is...
But Paul I want Summary Judgement (SJ) to be different!
I want the oppressed victims of franchising to have their cake and eat it too. So when a "lesser party" e.g., a franchisee wins on SJ they should get an extraordinary judgement in their favor with treble damages X2 and if they lose on SJ say against a superior party e.g., a franchisor they should get a "do over" before going to trial.
In my Monty Python/Three Stooges Logic I think this structure is the only "Fair Dealing" way to handle these trial matters.
The Truth Shall Set You Free!
TIF
Cake Fallacy
TIF writes: "I want the oppressed victims of franchising to have their cake and eat it too."
Uh, this expression often misused. You cannot eat a cake without having it. The proper expression is "eat their cake and have it too." Now that would be a magical cake: once eaten, you still could retain it.
Now back to our regular scheduled programming.
Michael Webster PhD LLB
Franchise News
Affirming the cake consequent
This is a common Canadian misconception - that you actually have to "have" a cake prior to one eating it. Eating a cake does not necessarily arise out of "having" a cake. In America, it would be improper to automatically assume that cake eating implies actual legal possession. There are many instances, too numerous to enumerate here, of eating without proper passing of cake title. We call them cake drive-bys.
Foreclosed Cake
Thank-you Bubba, I see my error. No doubt this explains how a) one try to foreclose on a cake because you owned the income stream from the mortgage on the cake, but b) not be in a legal position to do so because you had no title to the cake.
Michael Webster PhD LLB
Franchise News
Virtuous do have cake
"Dost thou think, because thou art virtuous, there shall be no more cakes and ale?'
This is variously attributed to Shakespeare (Twelfth Night, act 2 scene 3) and to "Cousin Vinny" (Subway Sandwich/Lap Dance impressario).
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
RE: Cake Fallacy
Little too much Stooges logic and not enough Monty Python!
The Truth Shall Set You Free!
TIF
So, you are smarter than a fifth grader
Isn't you statement that "any paralegal with 5 minutes experience can tell you that", a bit of spin in itself? I have talked to a lot of paralegals and most of them can't tell you much, it is not their job.
I confess that in reading the decision assumed that costs would include
the costs of research, preparation for trial, appearance at hearings as well as the cost of originals and copies, service of notice etc. etc. and court costs. Apparently my understanding was a bit too broad.
As far as repudiation, I do believe that the decision was a repudiation of the summary judgment by Mortimer where he determined that the case had no merits based on the request of UPS/MBE counsel. It obviously was not a total repudiation of their positions other than
summary judgment, it is clear that the jury is the only one that is going to make that decision.
Still, in any event, this was a major victory for the franchisees and opens the door for resolution by a jury of our peers, or a courthouse steps settlement if the defendant so chooses.
Congratulations, Gordon & Rees!
Shame on you, big brown!
Credibility, not intellect
I wasn't the one calling the media, and yes, a paralegal in any decent litigation firm can tell you the standard for summary judgment.
The problem anyone (zor, zee, or otherwise) has when they misstate and/or overstate the facts and the significance of those facts is that your credibility is damaged in the future--most importantly, with your journalist contact.
This is why if you are in litigation, you should have one person designated as media contact. That person should consult with public relations and litigation counsel prior to speaking with media, and should not venture information that has not been vetted, particularly where the non-vetted information relates to technical matters (such as what a court means by "costs", which as Mr. Webster pointed out can mean different things in different courts).
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Significance of SJ Reversal
I look upon this a bit differently from Paul.
In the broad landscape of things, UPS must have done its own calculation of how much it would have cost to outright own the MBE locations - fully staffed UPS stores taking drop-offs.
Somewhere in their files is this study. This study will flatly contradict the song and dance that they gave to the MBE franchisees.
With the wide open discovery that the plaintiffs now have, at one point UPS is going to wish that they were only dealing with Bill Lerach, who I am reliably informed is unavailable for several years.
Michael Webster PhD LLB
Person Bill Lerac Right click for SmartMenu shortcutsFranchise News
Scuzziness not disputed
MW: I'm not doubting that UPS knew what it was doing, and gave the MBE franchisees a song-and-dance. To what extent that is actionable under California law given the admissible evidence in this litigation, I don't know; but my guess is that UPS would be wise to consider settlement talks.
My beef was with the perennial mis-statement as to the significance of denial of a motion for summary judgment. I would be just as prickly about UPS making similar statements.
For some unknown reason, the trial judge failed to apply the proper standard for deciding such a motion, and the appellate court properly reversed after determining that triable issues of fact existed. The appellate court neither accepted nor "repudiated" anyone's version of the facts, it simply found that as a matter of law the case was not suitable for summary judgment.
Even in California, there are rules. The trial judge didn't follow them, and got smacked on his knuckles. Nothing more, nothing less.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
P.S.: Bill Lerach is famous in US legal and legislative history as being the only person to so annoy Congress that they passed a law to put Lerach out of business (the PSLRA). I hear that Lerach is now in consultation with Snowden and Bororian about setting up a new franchise--did you want a piece of the IPO?
Paul
Yes Paul you have ground it into the ground now. It was explained to you the context in which PSA spokeman made the comments. Repudiation of Mortimers assessment of lack of triable issues. In that context the statement makes perfect sense.
Lerach
I am reliably informed that when Bill gets out of his federal retirement home, he intends to push for a private cause of action for the FTC Rule.
Michael Webster PhD LLB
Franchise News
Two to Tango
Seems to this reader that both sides are guilty of PR spinning of the law. Just look at the historical releases from UPS and Quizno's and their spin on various court rulings.
At least in this case it was a non-attorney who made the spin statements. Paul, maybe those in your profession should start by setting the example. If you look at the Quizno franchisee attorney responses, his comments seem more grounded than his franchisor counterparts.
Toujours Tango
(Another Canadian joke could be inserted here)
Guest is correct.
This bit about denial of SJ and other interlocutory rulings is widely misunderstood by the public, and is often twisted in media reports.
What bothers me more is that the clients often believe this pseudo-legal crap, and that is the fault of both their attorneys and the client for not having a discussion with the attorney before giving media interviews.
I love Ms. Sparks dearly, but if parties speak with her during the proceedings, they should be doing so as part of a strategy developed in consultation with legal and public relations advisors. Moreover, they should be careful to be factually accurate since if they exaggerate or lie to the reporter, they will lose credibility.
That is not to say that mistakes/misstatements don't happen, but one of the purposes of developing a strategy is to make sure that everyone knows (a) what they are talking about and (b) why they are talking about it.
PSA is playing in the big leagues and shouldn't be shooting from the cuff, especially to an influential trade journalist.
As to the Quizno's in-house counsel (and the "out house" counsel, also): both of them have been criticized here on BMM for taking gratuitous swipes at Mr. Klein, and for misleading pr spin. You may remember that this criticism came from both zor-side and zee-side observers.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Re: Significance of SJ denial
The bottom line is that UPS officials will have to testify under oath and explain how they managed to ruin the lives and bankrupt hundreds of franchisees. Call it what you want with all of the legal mumbo-jumbo, but UPS is in a very bad position.
Theme du jour
(The bilingual subject line is for Les, Michael, and the rest of the "loonies")
We see a theme again of franchisees not being concerned with (and even misstating) the laws which apply to them. Yahoo populism and deriding "legal mumbo-jumbo" plays well to the ranters, but does you no good in court.
Another theme repeated is derision for anyone not sufficiently riled up with righteous fury at the evil franchise cabal, coupled with a broadside of righteous fury.
When SJ is denied, it means that discovery will proceed. That includes, inter alia, depositions of various parties. Those examinations are for purposes of eliciting evidence relevant to the cause(s) of action. In this case, the issues relate to contractual and common law obligations within a commercial business relationship.
UPS may lose this case, but if it does so it will be because it violated judicially-congnizable standards as set forth in the written franchise agreement and related statute/caselaw.
We have discussed this before on BMM, and I cited to cases where courts held that you need to obey your contracts even if it does force you into bankruptcy. UPS may indeed have "ruined lives and bankrupted hundreds of franchisees." But you should remember that the court is not your Momma (even in California) and keep your eye on the ball, which is the cause(s) of action, the element(s) thereof, and the applicable legal standard(s).
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Paul
I am confused on the "discovery will Proceed" Before the Summary Judgement, discovery had been closed. I am confused with your time line. Depositions, on both sides, interagatories and responses had already been done. Am I not understanding something.
Paul
If legal standards had been used by Mortimer UPS would have not been awarded the summary judgement at all. My understanding, correct me if I am wrong, says that Judges can only make rulings on law not on issues of fact.
True
The published ruling did not set out a complete procedural history (and we don't have the appellate briefs) but simply noted that SJ had been granted on Nov 21, 2006. The ruling addressed the complaint (10th amended?!!) and nothing further.
It is true that a motion for summary judgment may be brought at any time, and from what you say this motion was brought at the conclusion of discovery. Normally if your claim is that the Complaint fails to state a cause of action as a matter of law, then this would be a motion brought at the outset precisely because you don't want to have your adversary fishing for dirt to make a case that the adversary couldn't make when the complaint was filed.
As to the fact/law distinction: While this can be a blurry line on occasion, you are correct. Moreover, the standard for summary judgment is that you assume that everything the non-moving party says is true.
Looking at the ruling, I am puzzled as to why the trial judge granted summary judgment in the first place.
I agree with you that it appears the trial judge was wrong, and the appellate court reversed the trial judge so they agree with you as well. I doubt that any of the attorneys involved will speculate on the record, but either the trial judge didn't have his morning coffee or there is something else going on; SJ should not have been granted.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
10th Amended
I saw that as well - am curious as to how they keep allowing these amended complaints to go through - I would assume that there were likely hearings (in which defendants vigorously opposed these amended complaints), but honestly, are they seriously now working on their 11th amended complaint? Strategery-wise - they may just be trying to frustrate defense counsel, but from an outside perspective, it could make one question competency.
Not sure what all the hoopla is about the SJ ruling. Defense did not establish that there were no triable issues of facts - this does not necessarily imply that plaintiffs actually have any triable issue of fact, it just means that defense did not prove that plaintiffs do not. Granted, given the assumption that there are high caliber attorneys on both sides here (proposed 11th amended complaint notwithstanding), the inability of the defense to satisfy their burden reasonably could possibly lead one to conclude that the plaintiffs' claims have merit; however, this ruling does not in fact address that issue and it would not necessarily be wise to assume that it does. So all this congratulatory backslapping seems a bit premature as nothing was actually decided besides the fact that everything is still going forward. While I can certainly agree that every victory against a zor that has ground their business opportunities and dreams to a halt may seem emotionally warranted, I would recommend keeping the champagne in check until something more substantive for the plaintiffs occur, if only to prevent a possible monumental emotional letdown.
Regardless, would love to be a fly on the wall as to the reasons behind these continuous complaint amendments.
Paul
Yes it was the 10th amended, although there is now an 11 amended that the court accepted but those changes have to do with the Class Action that will be certified here shortly which was mentioned in Janet's article.
Just for the record you touch in your comment the reason for the "repudition" comment. This is a lawsuit of small business owners. We are playing in the big leagues and the money that we spend on this lawsuit is taxing everyone. When a group of people have to go to the appellate structure, three times on a case and each time the trial judge is reversed, it makes you wonder what is going on. I should not have to wait 5 years to get my day in court, I should not have to go to appeal time and time again to undue a ruling that could have been made properly the first time. Thank God for retirement!!!!!!
Puzzlement
It is odd to have this many reversals. Heck, getting any reversal is statistically an uphill battle; trial judges have broad discretion.
Please be careful about posting while your case is in litigation, but afterwards it would be interesting to know the reasons why the trial judge is so out of synch with his appellate colleagues.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
posting
Understood Thanks
Am I wrong...
Or could the trial judge still not certify the class?
Re: Am I wrong...
Of course the judge could have certified it. BUT HE THREW THAT PART OF THE CASE OUT TOO!!
The appeals court had to reverse that ruling ALSO
question for legal eagles
I think the person was asking even though the class action went to appeal and the appellants won the appeal can it still go back to the tr