Following a three-day bench trial, the United States District Court for the Eastern District of Washington found in favor of CCLI member Forrest Hainline’s client, Pepperidge Farm, Incorporated, in an eight-year old case brought by two former Pepperidge Farm distributors who claimed that Pepperidge Farm was a franchisor under Washington’s Franchise Investment Protection Act (FIPA).
At trial, plaintiffs contended that Pepperidge Farm was an unregistered franchisor that deceptively sold plaintiffs franchises under FIPA. Under FIPA, a franchise is an agreement by which a person is granted the right to distribute goods under a marketing plan prescribed or suggested in substantial part by the franchisor, the operation of the business is a substantially associated with the franchisor’s name or trademark, and the person pays a franchise fee. In connection with their FIPA claims, Plaintiffs sought actual and exemplary damages and attorneys’ fees.
In its findings of fact and conclusions of law issued just one day after trial, the Court found for Pepperidge Farm on every element of the FIPA claim: plaintiffs’ distributorships were not franchises because plaintiffs did not operate under a marketing plan, their distributorships were not substantially associated with Pepperidge Farm’s name or trademark, and plaintiffs paid no franchise fee. The Court dismissed plaintiffs’ FIPA claims with prejudice, and ordered Pepperidge Farm to file a motion to recover its attorneys’ fees and costs under FIPA.
If plaintiffs had won, Pepperidge Farm would have been sued in thousands of cases across the nation under various state franchise protection laws.
CCLI member Forrest Hainline tried the case, and was assisted by Robert Bader.
