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LOS ANGELES – The US Court of Appeals, 9th Circuit, handed down its decision last week affirming that approximately 200 UPS Store franchisees failed to prove their case against franchisor Mail Boxes Etc.”The high court stated that the franchise owners did not present the necessary evidence to show that they had relied on allegedly “untrue and/or misleading statements” when they converted from MBE to The UPS Store. There are some plaintiff franchisees who purchased a UPS Store franchise who were never MBE owners.
A three-judge panel confirmed the central district court’s decision granting franchisor Mail Boxes Etc. summary judgment in Samica Enterprises v Mail Boxes Etc. The franchisees sued the company in March 2006, alleging violations of the California Franchise Investment Law, and common law fraud and misrepresentations. They claimed that UPS, following its $190 million acquisition of MBE in 2001, coerced and induced MBE franchisees to re-brand to The UPS Store model through its Gold Shield program.
The seven-page unpublished decision states that the franchise owners brought an additional claim under California’s investment law. It pertains to Mail Boxes Etc.’s failure to register the amendment to the franchise agreement in connection with the franchisees’ conversion from the old franchise model to the new “The UPS Store” model. MBE argued before the district court that the registration claim was barred by a one-year statute of limitations. The appellate court states that the franchisees failed to address that statute in opposing MBE’s motion for summary judgment. They did not address that argument in their opening brief for the appeals court.
The decision also states that the district court did not abuse its discretion in refusing to “unseal the record.” That court found good cause to seal the record on the franchisees’ initial motion, the appeals court judges stated. They explained that the franchise owners failed to provide adequate justification for unsealing the record, and that it was not an abuse of discretion on the part of the district court.
L. Michael Hankes in Boston is lead counsel in the case representing the franchisees. He said they are filing a motion for reconsideration.
Blue MauMau requested an interview with Stuart Mathis, president of Mail Boxes Etc. His office informed us that he was unable to speak with reporters without going through the MBE communications department. An email to communications was not answered. Another telephone call to the legal department was not returned.
Blue MauMau has learned from a source that petition for rehearing will be filed by December 22.