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Jani-King franchisees obtain Rule 23 class certification in misclassification unjust enrichment action

By Nicole D. Prysby, J.D.

Jani-King cleaning service franchisees convinced the federal district court in Connecticut to certify a proposed Rule 23 class in their lawsuit claiming Jani-King misclassified them as independent contractors, instead of employees, and was unjustly enriched by the fees the franchisees paid in order to be employed. Finding that the class was sufficiently definite and numerous, the court determined the issue is the same for all class members: whether the underlying franchise agreement was an employment agreement that conditioned initial or continued employment on payment of a down payment or any number of other fees. Common questions of law and fact predominated: All class members performed the same cleaning work, worked for the same company, had materially identical franchise agreements, paid the same up-front fees, and had to adhere to the same policies and procedures. Individual plaintiffs’ recovery would be sufficiently small that the cost of litigation would be prohibitive, reasoned the court, and some class members still work for the franchisor, raising the possibility of retaliation for the filing of individual claims (Mujo v. Jani-King International, Inc., January 9, 2019, Bolden, V.).

Allegations. The franchisees brought a class action against Jani-King International, Jani-King, and Jani-King of Hartford, under an agreement in which they paid a nonrefundable $15,000 deposit and performed cleaning services for Jani-King. The franchisees alleged that Jani-King controls the methods and procedures for servicing Jani-King customers, that all putative class members are entirely dependent on Jani-King for work assignments, and that Jani-King deducts monthly sums from the franchisees’ wages, such as royalty and advertising fees.

State wage claims. State law wage claims against Jani-King were dismissed in 2017, but the court allowed the franchisees’ unjust enrichment claim to go forward. The franchisees alleged that the franchise agreement actually was an employment agreement that conditioned initial or continued employment on paying a down payment and other fees. They moved to certify a Rule 23 class of all individuals who have performed cleaning work for Jani-King in Connecticut since December 5, 2010.

Rule 23(a) elements. The court first determined that Rule 23(a) requirements were met. The class was sufficiently definite, defined solely with objective criteria. Jani-King should have identifying information for all franchisees in Connecticut during the relevant period. The proposed class met numerosity requirements, as there are approximately 70 class members.

The commonality requirement is also met, because the issue is the same for all class members: whether the underlying franchise agreement was an employment agreement that conditioned initial or continued employment on payment of a down payment or any number of other fees. Typicality is met because the plaintiffs alleged that all class members signed franchise agreements, Jani-King misclassified class members as independent contractors, Jani-King subjected all class members to the same policies and procedures, and Jani-King required all class members to pay fees. Therefore, every class member would be pursuing the same legal argument that Jani-King franchisees were employees under Connecticut state law, and the fees necessary to secure or continue employment constituted unjust enrichment for Jani-King.

The class representatives had no conflict with other class members and counsel is qualified (having previously litigated misclassification claims for class actions involving Jani-King and other similar janitorial franchise cleaning companies).

Rule 23(b). The Rule 23(b) requirement was also met through the 23(b)(3) predominance and superiority tests. The plaintiffs argued that common questions of law and fact predominate because all class members performed the same cleaning work, all class members worked for the same company, all class members had materially identical franchise agreements, all class members paid the same up-front fees, and all class members had to adhere to the same policies and procedures.

Connecticut’s ABC test. In addition, the class members have common claims under Connecticut’s ABC balancing test to determine employee status. Therefore, the question of whether Jani-King misclassified its cleaners and required them to pay up-front fees for the right to work predominates in all class member claims.

Jani-King argued that there are not common issues regarding whether the Jani-King franchisees are Jani-King employees, because Jani-King controls only the quality of the work, not the day-to-day methods. Because franchisees may run their individual businesses as they see fit, there are no common issues for class-wide resolution; franchise standardization practices do not create the control necessary for a finding of an employer-employee relationship.

Liability subject to class-wide proof. The court sided with the franchisees, finding that the issue of liability was subject to class-wide proof. The evidence would focus on the single question of whether the underlying agreements conditioned initial or continued employment on payment of a down payment and additional fees. Therefore, common issues predominate.

Superiority. Rule 23(b)(3)’s superiority requirement is also met because the individual plaintiffs’ recovery would be sufficiently small that the cost of litigation would be prohibitive—and some class members still work for Jani-King, raising the possibility of retaliation for the filing of individual claims. Finally, a class would eliminate the risk that individual lawsuits would have different outcomes for common questions of law and fact that predominate among the class members.