Paralyzed Subway Sandwich Franchisee Awarded $21.6 Million

An appellate court upheld an award to the 4-unit franchisee, based in part on his entrepreneurial contribution to the business.

Sukhsagar Pannu owns 2 Subway Sandwich franchises, and two 7-Eleven franchises in southern California. After getting into a 3-car accident, the Land Rover Discovery driven by Pannu rolled over, leaving him paralyzed from the waist down. Soon afterward, the 47 year-old Pannu was divorced from his wife, his son quit medical school to run the franchises, and the prognosis is that Pannu's medical condition will continue to deteriorate.

The central issue in the trial was related to liability, but an interesting aspect of the damages award related to the valuation of the loss due to Pannu's future inability to work at the franchised locations.

Los Angeles trial Judge Robert H. O'Brien presided over a bench trial and awarded Pannu $11,654,000 in economic damages and $10,000,000 in non-economic damages, 95 percent of liability being assessed to Land Rover and 5 percent being assessed to then-16 year-old Bret Lusis, who had been witnessed speeding at 75 mph, weaving in and out of traffic in a misting rain, before his Acura ran into the back of Pannu's Land Rover.

On appeal before a 3-judge panel, Land Rover argued that the trial court improperly awarded damages for the anticipated lost profits of Pannu's franchises. The proper valuation, argued Land Rover, was for the value of Pannu's service to those businesses.

The appellate court unanimously rejected Land Rover's argument:

In advancing this argument, Land Rover characterizes Pannu as essentially nothing more than the manager of the stores, akin to an employee who was readily replaced by family members and paid workers.

The court went on:

Pannu introduced compelling evidence of the devastating impact of his injury on his ability to work... The award of economic damages was based not on his stores' lost profits but on the unrebutted testimony of a vocational expert assessing Pannu's lost earning capacity as a "franchise owner/vice president." Contrary to Land Rover's grudging argument, there was ample evidence of Pannu's entrepreneurial skills, his work ethic and his consistent success in growing his businesses. In addition to simply managing the various stores...he participated in franchise and trade associations in an effort to expand his opportunities... He had the experience and the motivation to assess employee performance, to prevent malfeasance and to maximize growth. His injuries deprived him of far more than his ability to earn a manager's salary...

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Sukhsagar Pannu v. Land Rover North America Inc. et al, Ct. App. Calif., 2d App District, January 19, 2011

For Land Rover: Gibson Dunn & Crutcher (Theodore J. Boutrous Jr.) On the trial court case: Snell & Wilmer (Warren Platt)

For Pannu: Mardirossian & Associates (Garo Mardirossian) and Jacobs Jacobs Eisfelder (Stanley K. Jacobs)