Papa John's International, Inc. v. McCoy
244 S.W.3d 44 (2008)
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Rule of Law:
An employer is not vicariously liable for an employee's intentional tort when the act occurs within an independent course of conduct not intended to serve any purpose of the employer. A franchisor is vicariously liable for the tortious conduct of its franchisee only if the franchisor has control or a right of control over the daily operation of the specific aspect of the franchisee's business that is alleged to have caused the harm.
Facts:
- Gary McCoy ordered two pizzas from a Papa John's store for delivery.
- McCoy arranged for the delivery driver, Wendell Burke, to stop at his business to receive payment.
- After McCoy paid him, Burke remained in McCoy's office for a significant period.
- Burke's account was that McCoy held him against his will, showed him a rifle, and was drinking.
- McCoy's account was that Burke lingered, so McCoy put on a hunting video for him to watch.
- After Burke returned to the Papa John's store, an employee called the police on Burke's behalf.
- Based on Burke's statement, police obtained a warrant and arrested McCoy for unlawful imprisonment.
- The Papa John's store was owned and operated by RWT, Inc., a franchisee of Papa John's International, Inc.
Procedural Posture:
- Following his arrest and the dismissal of criminal charges, Gary McCoy filed a civil suit against Papa John's International, Inc. and Wendell Burke in circuit court.
- After discovering the store was a franchise, McCoy filed a separate suit against the franchisee, RWT, Inc., which was then consolidated with the first case.
- The circuit court (trial court) granted summary judgment in favor of RWT and Papa John's on all of McCoy's claims.
- McCoy appealed the summary judgment to the Kentucky Court of Appeals.
- The Court of Appeals affirmed in part and reversed in part, finding that genuine issues of material fact precluded summary judgment and allowing the malicious prosecution claims against both RWT and Papa John's to proceed.
- RWT and Papa John's (as appellants) were granted discretionary review by the Supreme Court of Kentucky to review the decision of the Court of Appeals.
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Issue:
Does vicarious liability extend to a franchisee for an employee's intentional tort motivated by purely personal reasons, or to a franchisor that lacks control over the specific instrumentality of the harm?
Opinions:
Majority - Justice Minton
No, vicarious liability does not extend in either circumstance. An employer is not liable for an employee’s intentional tort when the employee acts from purely personal motives that are in no way connected with the employer's interests. Here, Burke's alleged false statement to police served no purpose of his employer, RWT; it was motivated by personal reasons such as explaining his delay. Furthermore, a franchisor is only vicariously liable if it controls the specific aspect of the franchisee's business that caused the harm. Papa John's International controlled branding and food quality, but it had no control over RWT's employee's conduct in making a statement to the police. Therefore, neither RWT nor Papa John's International can be held vicariously liable for Burke's actions.
Dissenting - Chief Justice Lambert
Yes, vicarious liability should extend to the franchisor, Papa John's International, under a theory of ostensible agency. The majority creates a new, unsupported rule to insulate franchisors. The proper analysis is whether the third party, McCoy, reasonably believed he was dealing with the principal (Papa John's) based on the principal's manifestations. Papa John's, through its national advertising, branding, logos, and uniforms, holds itself out as a single enterprise, causing customers like McCoy to justifiably rely on its reputation for quality and safety. McCoy specifically chose Papa John's, not an unknown local company, and he had no way of knowing he was dealing with a franchisee. This creates a question of fact for the jury as to whether an apparent agency relationship existed.
Concurring-in-part-and-dissenting-in-part - Justice Scott
Yes, vicarious liability could extend to the franchisee, RWT, and the issue should be decided by a jury. While agreeing that Papa John's is not liable, the majority goes too far in insulating RWT. There is a genuine issue of material fact as to whether Burke was acting within the scope of his employment. RWT management was not a mere bystander; they encouraged Burke to report the incident, called the police for him, and provided a statement. By entangling itself in the dispute, RWT made the reporting an employment-related matter, bringing Burke's actions potentially within the scope of his employment. Therefore, summary judgment for RWT was improper.
Analysis:
This case establishes a significant new precedent in Kentucky for franchisor liability, adopting a narrow 'instrumentality' or 'specific control' test. This moves away from broader theories like ostensible agency, making it substantially more difficult for plaintiffs to hold national franchisors liable for torts committed by their local franchisees' employees. The decision insulates franchisors so long as they do not exercise control over the specific daily operation that caused the harm, such as employee hiring, supervision, or security protocols. The case also reaffirms Kentucky's adherence to a motive-based test for 'scope of employment' in intentional tort cases, shielding employers from liability when an employee acts for purely personal reasons.
