Corporations

Brief

Miller v. McDonald’s Corporation

Procedural History:

• Trial court granted summary judgment to defendant on the ground that it did not own or operate the restaurant.
• Appealed.
• Reversed.

Facts:

• 3K owned and operated a restaurant under a License Agreement with defendant that required it to operate in a manner consistent with the “McDonalds System”.
• Manuals supplied to the franchisee detailed information relating to operation of the restaurant.
• 3K had to follow the defendants specifications and blueprints for the equipment and layout of the restaurant.
• 3K was not allowed to make any changes to the basic design of the building without first getting the consent of the defendant.
• Defendant periodically sent field consultants to the restaurant to inspect the operations and make sure there was conformity.
• Failure to comply could result in a loss of the franchise.
• However, the agree provided that 3K was not an agent.
• Plaintiff went to the restaurant and bit into a Big Mac which contained a gem and thus caused injury.

Issue:

• Whether there is evidence that would permit a jury to find the defendant vicariously liable for those injuries because of its relationship with 3K?

Holding:

• Yes. Vicariously liable.

Reasoning:

• Plaintiff asserts two theories: Actual or apparent agency.
• Actual Authority analysis:
  • Court uses the right to control test.
  • Wood v. Shell Oil Co.
    • The court held not actual agency because it did not control how the dealer complied with the requirements.
• Billops v. Magness Const.
  • Court held that this was an example of actual agency because the franchisor retained a certain amount of control over the details of the franchisees performance.
• This court analogized this case to that of Billops.
• The court felt that a jury would find sufficient control over 3K’s daily operations that an actual agency relationship existed.
• The key reason being that the defendant would regularly send inspectors and by its retained power to cancel the agreement.
• Apparent Agency Analysis:
  • One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such. 2^nd Restatement 267.
  • Everything about the appearance and operation of the Tigard McDonalds identified it with defendant.
  • The possible existence of a sign identifying 3K as the operator does not alter the conclusion that there is an issue of apparent agency for the jury.
  • Plaintiff relied on the general reputation of McDonalds in patronizing the Tigard restaurant and in her expectation of the quality of the food and service that she would receive.