You May Not Be Entitled To Use Your Own Name

By Sheila Fox Morrison and Kevin Guidry

Working with several artisan food and alcohol producers as clients, we frequently notice that using one’s own name (first, last, or both) as a brand name in association with one’s goods is very common in these industries. Recently, a decision was handed down by the Trademark Trial and Appeal Board (TTAB) that reminds us that, while using one’s own name in almost every context is a birthright, using it in connection with food and beverage items in the marketplace may land a company in hot water with trademark litigation issues. In sum, you may not be entitled to use your own name!

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Four Loko Liability Ruling Notable, but Not Game-Changing

By Ashley Vulin

A California court recently held that Four Loko is not protected from liability in a wrongful death lawsuit.  Fiorini v. City Brewing Co., LLC, 2014 WL 5743133 (Cal. Ct. App. Nov. 6, 2014).  In this case, the parents of a 23-year-old college student sued the beverage company after their son drank two cans of Four Loko and then ended up in a confrontation with police that led to his death.  The judge ruled that the defendant was not immune to liability under either dram shop laws or as a seller of a common consumer product.  This ruling has received a meaningful amount of coverage (see, e.g., these articles) and is certainly notable as a departure from past precedent in this area. However, contrary to the perceived panic in current publications, there are a number of specific reasons why this ruling shouldn’t open the floodgates to a wave of liability lawsuits against beverage manufacturers. 

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Berkeley's Measure D: What Distributors, Restaurants and Retailers need to know about the Berkeley "Sugar Tax"

By Jennifer Brockett and Loring Rose

According to its backers, the Berkeley “Sugar Tax” is the future of sugar in America.  Berkeley’s Measure “D,” which garnered an overwhelming 75% “yes” vote, imposes a general excise tax of $0.01 per ounce on the distribution of sugar-sweetened beverages and the sweeteners used to sweeten such drinks:  this amounts to a 12 cent tax on a standard 12 ounce can of soda.  The ordinance takes effect on January 1, 2015.

The stated purpose of the tax is to “diminish the human and economic costs of diseases associated with the consumption of sugary drinks by discouraging their distribution and consumption in Berkeley through a tax.”  The revenue generated by the tax goes to the Berkeley general fund.

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Five Tips To Launching A Franchise Program Successfully

CONGRATULATIONS!  You’ve spent years building your business, developing a loyal following, and honing your operations into a replicable format.  You own two, three or maybe ten different locations, all profitable, and understand your business inside and out.  You know the right demographics and cost to jumpstart new locations.  You’ve cultivated reliable supply relationships, built a loyal management team, and learned to delegate daily details.  Over the years, you’ve turned away numerous inquiries about franchising while you’ve built your reputation and financial base.  Now you’re ready to franchise and you’re determined to avoid common mistakes.

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Twelve Tips for Franchisors to Reduce Joint Employer Risks Under Today's Legal Standards

Franchise agreement recitals declaring your franchisee to be an independent contractor, not an employee, are not dispositive!
 
Until now, the spotlight has never shined so brightly on franchising and, specifically, on whether franchisors are responsible for their franchisees’ activities.  
 
On July 29, 2014, the NLRB’s General Counsel announced its plan to sue McDonald’s for numerous unfair labor practices at franchisee-owned restaurants, claiming McDonald’s is the joint employer of the franchisees’ workers.  Weeks later, on August 27, 2014, the Ninth Circuit issued twin decisions holding thousands of FedEx Ground drivers were actually FedEx employees, not independent contractors, as FedEx claimed.  While FedEx’s arrangement with its drivers is not a franchise, the rulings expose examples of vulnerable practices that are also found in certain franchise arrangements.  The very next day, the California Supreme Court ruled that franchisor Domino’s was not responsible for sexual harassment allegedly committed by a supervisor at a franchise store, finding that Domino’s did not automatically become a joint employer or responsible for its franchisee’s wrongdoing simply because it set brand standards for running franchise stores.  Rendered in the space of four short weeks, these rulings show just how unsettled and confusing vicarious liability law is for franchisors in today’s business market.
 
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The NLRB Decision - What Does It Mean?

Join Shelley Spandorf in this Google Hangout for a frank discussion of the NLRB general counsel's action and its implications, as well as best franchise practices that help avoid these legal pitfalls.

NLRB Will Charge McDonald's as "Joint Employer" For Franchisee Labor Violations

In a move with far-reaching ramifications for all businesses that license their brands to independent contractors including franchisees, the National Labor Relations Board (“NLRB”) announced on July 29, 2014 that it has authorized the filing of administrative complaints against franchise giant, McDonald’s USA LLC, for unfair labor practices involving workers at franchisee-owned restaurants. The NLRB said that it had investigated 181 cases of unlawful labor practices at McDonald’s franchise restaurants since 2012, including reports that employees were fired for participating in worker protests, and found sufficient merit in at least 43 cases to name McDonald’s as the workers’ “joint employer” creating a legal basis for holding McDonald’s responsible with the franchise owners for the labor violations. McDonald’s has more than 14,000 U.S. restaurants of which approximately 90% are franchisee-owned.

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TTB Changes Course on Oregon's Wine Growler Law

 On April 25, 2014, the Alcohol & Tobacco Tax & Trade Bureau (TTB), the federal agency that regulates and taxes alcohol producers, suspended a March 2014 wine growler ruling that would have unnecessarily required wineries and retailers to register as federal taxpaid wine bottling houses before selling refillable wine containers.  For wineries and restaurants looking to sell customers to-go wine growlers, the ruling would have created new registration, recordkeeping and labelling requirements despite the fact that there are no similar federal requirements for beer growlers or for glasses or carafes of wine.

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New Suit Claims Wage Violations for Non-tipped "Side Work"

The restaurant industry just keeps getting hit with new and creative theories of liability under wage and hour law. Here, tipped employees in a tip-credit state claim they should not have to perform “side work” because it cuts into the time they could be spending on tip generating work. 

FDA Proposal Seeks to Prevent Food Terrorism

As FDA implements the various sections of the Food Safety Modernization Act (FSMA) through rulemaking, the agency continues to convey a pragmatic approach complicated by regulatory reality. With its latest proposal, FDA attempts to design a system for preventing acts of terrorism impacting food production. In FDA’s words, “food facilities would be required to identify and implement focused mitigation strategies to significantly minimize or prevent significant vulnerabilities identified at actionable process steps in a food operation.”

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California Appellate Court Holds That Federal Law Preempts Unfair Competition Law Claims Tied to Organic Label

By Chip English and Allison A. Davis

In a case of first impression in the state courts, a California appellate court delivered an early Christmas present Dec. 23 to beleaguered food and beverage companies facing an avalanche of lawsuits under California’s Unfair Competition Law (“UCL”). In Quesada v. Herb Thyme Farms, Inc., Case No. B239602 (2nd Appellate District, Dec. 23, 2013), the court found that the federal Organic Foods Production Act (“OFPA”) preempted state law claims related to organic certification where Herb Thyme labeled its products as USDA Organic, but sold products with organically grown herbs mixed with conventionally grown herbs. The putative class action, alleging that the UCL was violated under California’s separate, but federally certified, organic program, was dismissed because the label met USDA’s certification requirements.

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Oregon Court Limits Agri-tourism at Farm Stands

A land use decision by the Oregon Court of Appeals could impact farm marketing activities across the state, imposing new permitting requirements and forcing changes to business operations. 

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The Hidden Pitfalls of Joint Venture Partnerships

Restaurant joint ventures regularly grab headlines. In May, the San Antonio Express-News announced a deal between Steak 'n Shake and an unnamed professional athlete. A month earlier, Ollie & Jax Pub 'n Pizza was touted in the Orange County Register as putting roots down in the California community in a joint venture between the brand's owners and Main Street Concepts.

These strategic alliances form for many reasons, but all aim to combine complementary strengths. The brand owner seeks investors or experienced operators to replicate the restaurant concept in a new market; investors and operators want to hitch their money or sweat equity to the brand's star.

When joint venture, or JV, parties join together, they create a new legal entity, distinct and separate from the one through which the original restaurant operates.

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"Ladies' Night" Promotions Violate California Law

By Anna Buono

The hospitality industry is no stranger to the rules prohibiting discrimination in accommodations. The average restaurant or hotel operator is aware that the establishment cannot deny service to a patron on the basis of a protected status, such as race or gender. What appears to be less well known is that, at least in California, the same business establishments cannot discriminate by providing extra service to a protected status either. This fact is apparent by the continuing trend to hold “Ladies’ Night” events, or special discounts available only to women, for businesses from restaurants to car washes. These bonuses for female patrons may be useful in boosting business, but if the same businesses refuse service or the same discounts to a male patron, they may be in for a rude awakening when they receive a complaint for statutory penalties for violation of California’s Unruh Act and/or The Gender Tax Repeal Act.

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Food and the City: Making Density Palatable

Moderated by DWT partner Jim Greenfield, the third installment of DWT and Forterra's Creating a Great Global Region series was an interesting and engaging evening focused on how social equity, community building and conversation of farmland intersect around food. The event consisted of a panel discussion of prominent members of the local agriculture and hospitality industries, followed by a group workshop, and ended with a networking reception.

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