Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-02857/USCOURTS-cand-3_07-cv-02857-4/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Personal Injury

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DONALD WALKER, an individual,

Plaintiff,

 v.

PACIFIC PRIDE SERVICES, INC., an

Oregon Corporation,

Defendant.

 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. 07-2857 SC

ORDER GRANTING

DEFENDANT'S MOTION

FOR SUMMARY JUDGMENT

I. INTRODUCTION

This matter comes before the Court on the Motion for Summary

Judgment ("Motion") by the defendant Pacific Pride Services, Inc.

("Defendant" or "Pacific Pride"). See Docket No. 52. The

plaintiff Donald Walker ("Plaintiff" or "Walker") filed an

Opposition and Pacific Pride submitted a Reply. See Docket Nos.

53, 55. 

For the reasons set forth below, the Court GRANTS Defendant's

Motion for Summary Judgment.

II. BACKGROUND

Pacific Pride is the franchisor of an automated fueling

transaction authorization, processing and financial settlement

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 1 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 2

system. Mot. at 4. SF Petroleum is a franchisee of Pacific Pride

and Plaintiff was a fuel deliveryman employed by SF Petroleum. 

Mot. at 6; Opp'n at 3. On July 21, 2005, Plaintiff was working at

SF Petroleum's fuel refilling site. Opp'n at 3. Plaintiff was

driving an SF Petroleum tanker truck and was unloading fuel from

the truck to one of the fuel tanks located on the site of SF

Petroleum. Halloran Decl., Ex. A at 62. In the process of

disengaging the hose that connected the fuel truck to the fuel

tank, roughly a pint of fuel spilled onto the ground. Id. at 63. 

While Plaintiff was kneeling down and cleaning up the spilled

fuel, he was struck by a dumpster that was being transported on a

forklift owned by SF Petroleum. Id. at 70; Mot. at 5. The driver

of the forklift, who was also an SF Petroleum employee, was cited

by the Occupational Safety and Health Administration ("OSHA") for

negligently driving the forklift while front-loaded. Opp'n at 3. 

As a result of the injuries suffered by Plaintiff, he is now a

quadriplegic. Id. 

On September 14, 2006, Plaintiff filed suit against Defendant

in the Superior Court of the State of California, County of San

Francisco, asserting causes of action for negligence and premises

liability. On June 6, 2007, Defendant removed the case to federal

court. See Notice of Removal, Docket No. 1. Plaintiff has

conceded that the premises liability cause of action should be

dismissed. See Opp'n at 2. Therefore, Plaintiff's second cause

of action for premises liability is DISMISSED.

Pacific Pride has moved for summary judgment of Plaintiff's

first cause of action for negligence based on the theory that SF

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 2 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 3

Petroleum, as a franchisee, was an independent contractor, rather

than an agent of Pacific Pride, and Pacific Pride therefore is not

liable to Walker for the injuries he sustained.

III. DISCUSSION

A. Legal Standard

Entry of summary judgment is proper "if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is

entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). 

"Summary judgment should be granted where the evidence is such

that it would require a directed verdict for the moving party.” 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). Thus,

"Rule 56(c) mandates the entry of summary judgment . . . against a

party who fails to make a showing sufficient to establish the

existence of an element essential to that party's case, and on

which that party will bear the burden of proof at trial." Celotex

Corp. v. Catrett, 477 U.S. 317, 322 (1986). In addition, entry of

summary judgment in a party's favor is appropriate when there are

no material issues of fact as to the essential elements of the

party's claim. Anderson, 477 U.S. at 247-49. "[I]n ruling on a

motion for summary judgment, the nonmoving party's evidence 'is to

be believed, and all justifiable inferences are to be drawn in

[that party's] favor.'" Hunt v. Cromartie, 526 U.S. 541, 551-52

(1999) (alterations in original) (citing Anderson, 477 U.S. at

255).

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 3 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 4

B. Analysis

The primary issue before the Court is whether the franchise

relationship between Pacific Pride and SF Petroleum gave rise to

an agency relationship. "The general rule is where a franchise

agreement gives the franchisor the right of complete or

substantial control over the franchisee, an agency relationship

exists." Cislaw v. Southland, 4 Cal. App. 4th 1284, 1288 (Ct.

App. 1992). See also Kuchta v. Allied Builders Corp., 21 Cal.

App. 3d 541, 547 (Ct. App. 1971) (stating that the "law is clear

that a franchisee may be deemed to be the agent of the

franchisor"). 

"[T]he question of whether the franchisee is an independent

contractor or an agent is ordinarily one of fact, depending on

whether the franchisor exercises complete or substantial control

over the franchisee." Id. Nonetheless, "when the essential facts

are not in conflict . . . an agency determination [may] be made as

a matter of law." Wickham v. Southland Corp., 168 Cal. App. 3d

49, 55 (Ct. App. 1985). This principle is "fully applicable to

cases in which it is asserted that a franchise is the agent of the

franchisor." Id. 

"[T]he right to exercise complete control [demonstrates that]

a principal-agency relationship existed as a matter of law . . .

." Id. at 58. "[O]therwise[,] the right to control [is] an

important factor to be taken into consideration . . . ." Id.

Plaintiff does not assert that Pacific Pride had complete control

over SF Petroleum. Instead, Plaintiff argues that "Pacific Pride

had substantial control over its franchisee . . . ." Opp'n at 1. 

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 4 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 5

Thus, the right to control is an important factor that is to be

considered along with several other factors, including whether the

franchisor had the authority to exercise control over decisions

relating to employment, inventory, or day-to-day operations. See

Cislaw, 4 Cal. App. 4th at 1296; Kuchta, 21 Cal. App. 3d at 547.

In Kuchta, the court found that the "elements of control

[exercised by the franchisor over the franchisee] were sufficient

to support an implied finding of agency." 21 Cal. App. 3d at 547. 

Specifically, the court stated:

The franchise agreement itself gave [the

franchisor] the right to control the

location of the franchisee's place of

business . . ., to regulate the quality

of the goods used or sold, to control the

standards of construction . . ., and to

assign persons to see that the franchisee

performed according to the franchisor's

standards. Additionally, [the

franchisor] enjoyed the right of

inspection over the franchisee's [work].

Id.

In Cislaw, however, the court found that where the franchise

agreement withholds certain decisions and authority from the

franchisor, "the agreement could not, in and of itself, provide a

basis for finding the existence of an agency relationship." 

Cislaw, 4 Cal. App. 4th at 1296. In particular, the court

emphasized that the franchise agreement "withheld from the

franchisor control over decisions relating to the employment,

inventory and day-to-day operations of the [franchisee]." Id.

In the present case, Plaintiff argues that Pacific Pride

exercises or has the authority to exercise control over decisions

relating to numerous aspects of SF Petroleum's operations,

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 5 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 6

including employment, inventory and day-to-day operations.

Plaintiff argues that Pacific Pride exercises control over

decisions relating to employment because Pacific Pride requires SF

Petroleum employee to attend a mandatory orientation. Opp'n at 6. 

As stated in the Franchise Agreement, however, only the franchisee

or its designated manager is required to complete Orientation

Training. See Condon Decl., Ex. A at 16. In addition, the

president of SF Petroleum testified during his deposition that

Pacific Pride only provides training on "[h]ow to use the computer

system." Webb Decl., Ex. 7, Falche Dep. at 57.

This evidence indicates that Pacific Pride in fact exercises

very little control over the employees of SF Petroleum. This

level of control falls short of that required by other courts to

establish an agency relationship. See, e.g., Weiss v. Chevron,

204 Cal. App. 3d 1094, 1100 (Ct. App. 1988) (relying, in part, on

franchise agreement that stated that the franchisor could not

hire, fire or exercise any control over franchisee employees to

find no agency). Ultimately, Plaintiff has failed to submit

evidence that would create a triable issue of material fact

regarding Pacific Pride's control over the employees of SF

Petroleum.

Plaintiff also argues that "Pacific Price had control over

what SF Petroleum can and cannot sell." Opp'n at 12. Statements

made during a deposition of Pacific Pride's President, David

Harris, and relied on by Plaintiff for this argument, however, do

not support this claim. Instead, Harris's deposition testimony

merely indicates that Pacific Pride requires its franchisees to

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 6 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 7

stock at least three types of fuel, including one grade of diesel,

one grade of gasoline, and at least one other grade of petroleum

product. See Webb. Decl., Ex. 3 at 25, 57. Requiring franchisees

to stock a minimum quantity and variety of a product is not the

same as exercising substantial control over the inventory. 

Other evidence submitted by Plaintiff supports this

proposition. During his deposition, Harris testified that

franchisees of Pacific Pride independently make decisions

regarding the stocking and selling of other types of inventory,

including lubricating oil. Id. at 92-93. Harris indicated that

neither Pacific Pride nor the franchise agreement has any say over

the decision to stock additional inventory and stated,

"[l]ubricating oil is not part of our franchise offering." Id. at

92-93. This evidence indicates that Pacific Pride does not have

substantial control over the inventory of SF Petroleum.

Evidence submitted by Plaintiff also indicates that Pacific

Pride does not exert much control over the quality of petroleum

products stocked by its franchisees. During Plaintiff's

deposition of SF Petroleum owner Falche, the following exchange

took place:

Question: Now, when it comes to top

quality fuel and lubricants, what, if

anything, does Pacific Pride do to make

sure that its franchisees, including

yourself, sell only the top quality fuel

and lubricants?

Answer: They don't do anything because

the government dictates what fuel can be

sold.

. . . 

Question: Okay. Other than telling you

that you have to follow the law, do they

[Pacific Pride] have any checks or

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 7 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 Cynthia Condon is the Vice President of Franchise

Administration for Pacific Pride Services.

8

investigations that you are aware of to

make sure that you are following the law

with respect to the sale of quality fuel

lubricants?

Answer: Not that I am aware of.

Opp'n, Webb Decl., Ex. 7, Falche Dep. at 82. This evidence

indicates that, contrary to Plaintiff's assertion, Pacific Pride's

control over SF Petroleum's inventory was not substantial. 

Finally, the evidence submitted by Plaintiff does not

demonstrate that Pacific Pride has the authority to control

decisions relating to the day-to-day operations of SF Petroleum. 

That Pacific Pride has the authority to reject a proposed site for

a franchisee and the authority to require that franchisees stay

open 24 hours per day does not give rise to triable issues of fact

regarding the nature of the franchise relationship.

Plaintiff argues that Pacific Pride's insistence that

franchisee sites be safe, clean and well-lighted demonstrates that

Pacific Pride has substantial control over the safety of its

franchisee sites. The franchise Operations Manual states, in

part: "Your Pacific Pride sites must be maintained to ensure that

the sites are safe, clean, and well lit." Condon Decl., Ex. B at

ch. 9, § 1.1

 While this evidence demonstrates that Pacific Pride

had some power to control the physical conditions of the site, a

"franchisor must be permitted to retain such control as is

necessary to protect and maintain its trademark, trade name and

goodwill, without the risk of creating an agency relationship with

its franchisees." Cislaw, 4 Cal. App. 4th at 1295. Furthermore,

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 8 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 9

the Operations Manual is clear, especially in regards to safety

guidelines for fuel spills, that the guidelines are suggestions,

not requirements. See Condon Decl., Ex. B at ch. 9, § 2 (stating

that Pacific Pride "suggest[s] the following guidelines concerning

spills and their prevention . . ."). 

The suggestive rather than mandatory nature of these safety

guidelines is confirmed by the deposition testimony of SF

Petroleum president Falche. During his deposition, Falche stated

that he does not even know whether the Operations Manual addresses

fuel spills. Webb Decl., Ex. 7 at 58. This evidence demonstrates

that Pacific Pride did not, in fact, have the authority to

exercise substantial control over the safety of the day-to-day

operations of SF Petroleum. 

2. The Franchise Agreement

Where the franchise agreement gives "the franchisor control

beyond that necessary to protect and maintain its interest in its

trademark, trade name and goodwill," the agreement itself can

provide a basis for finding the existence of an agency

relationship. Cislaw, 4 Cal. App. at 1296. Where, however, the

franchise agreement withholds "from the franchisor control over

decisions relating to employment, inventory and day-to-day

operations," the agreement cannot, in and of itself, provide such

a basis. Id.

Pacific Pride argues that the language of the Franchise

Agreement specifically limits the nature of the franchise to one

of an independent contractor, rather than an agency. 

Specifically, Pacific Pride points to the following section in the

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 9 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 10

Agreement:

Franchisee is not an agent, legal

representative . . . or servant of

Pacific Pride for any purpose whatsoever.

Franchisee is an independent contractor

and is in no way authorized to make any

contract, agreement, warranty or

representation on behalf of Pacific

Pride, or create any obligation, express

or implied, on behalf of Pacific Pride.

Franchisee shall prominently display in

its place of business a certificate

stating that the business is

independently owned and operated by

Franchisee as a Franchisee of Pacific

Pride, and not as an agent thereof.

Franchise Agreement, Condon Decl., Attach. Ex. A § 26. 

Language limiting the franchise relationship to that of an

independent contractor is not always dispositive in a court's

analysis. As the court in Kuchta stated: "While [the franchisor]

argues that no agency relationship existed by virtue of the

franchise agreement, in that the agreement stated that no such

agency relationship was created, the declarations of the parties

in the agreement respecting the nature of the relationship are not

controlling." 21 Cal. App. 3d at 548.

In the present case, however, the Franchise Agreement

confirms the nature of the relationship. Plaintiff has not

presented evidence demonstrating that the true nature of the

franchise agreement was contrary to the language of the contract. 

Plaintiff has not shown that "Pacific Pride either exercises, or

has the undisputed right to exercise control over vital aspects of

SF Petroleum's franchise." Opp'n at 4. Therefore, because the

essential facts are not in conflict, the Court determines, as a

matter of law, that an agency relationship did not exist. 

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 10 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 11

Wickham, 168 Cal. App. 3d at 55. Because the franchise

relationship did not rise to a principal-agency relationship,

Pacific Pride is not liable for the injuries suffered by Walker

while employed at SF Petroleum.

3. Punitive Damages

Before the present action was removed to federal court,

Plaintiff filed a motion for leave to amend his complaint to

request punitive damages. Mot. at 13. Although the case was

removed before Plaintiff's motion was heard, Plaintiff has

apparently indicated that he still intends to seek punitive

damages even though his current Amended Complaint does not reflect

this. See id. Thus, Defendant addressed punitive damages in the

Motion and Plaintiff addressed them in his Opposition. See Mot.

and Opp'n. Plaintiff's failure to amend his Complaint to include

punitive damages is rendered moot by the fact that the Court finds

that, as a matter of law, there was no agency relationship between

SF Petroleum and Pacific Pride and Pacific Pride, therefore, is

not liable to Plaintiff for the injuries he suffered while working

for SF Petroleum.

///

///

///

///

///

///

///

///

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 11 of 12
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 12

IV. CONCLUSION

For the foregoing reasons, the Court DISMISSES Plaintiff's

Second Cause of Action for premises liability and GRANTS

Defendant's Motion for Summary Judgment.

IT IS SO ORDERED.

November, 26 2007

____________________________

UNITED STATES DISTRICT JUDGE

Case 3:07-cv-02857-SC Document 58 Filed 11/27/07 Page 12 of 12