MELISSA B. KORSAK, Plaintiff,
HONEY DEW ASSOCIATES, INC., and BOWEN INVESTMENT, INC., Defendants.
Providence County Superior Court PC 13-0105
For Plaintiff: Chip Muller, Esq.; Nancy Sheinberg, Esq.
For Defendant: Michael D. Chittick, Esq.; Julie A. Sacks, Esq.
Before the Court for decision is Defendant Honey Dew Associates, Inc.'s (HDA) Motion to Dismiss for Lack of Personal Jurisdiction, pursuant to Super R. Civ. P. 12(b)(6) (Rule 12(b)(6)) and HDA and Bowen Investment, Inc.'s (BII) joint motion for summary judgment, pursuant to Super. R. Civ. P. 56 (Rule 56).
Facts and Travel
This litigation stems from allegations of workplace harassment and discrimination, alleged to have transpired by Melissa Korsak (Ms. Korsak), against HDA and BII. Ms. Korsak was employed at the Honey Dew Donut shop in North Providence, Rhode Island (Centerdale store) from July 1, 2007 until January 13, 2010. Am. Compl. ¶ 56. Plaintiff contends that John Frigault (Mr. Frigault), as agent of HDA and BII, mistreated, sexually harassed, and discriminated against her while she was employed at the Centerdale store. Id. at ¶ 64. Mr. Frigault is the President and owner of Applied Security Technologies (AST). Mr. Frigault provided various security services for the Centerdale store.
There are four entities involved in the lawsuit: HDA, BII, R.B Donuts, and Centerdale Donuts, Inc. (CDI). HDA and BII are the only named parties in the instant suit. Notably, HDA, BII, and R.B. Donuts are owned by either Richard Bowen, his brother Robert Bowen, or some combination of the two.
HDA is the sole and exclusive owner of the Honey Dew Donuts trademark as well as the associated proprietary marks, trade secrets, and methods of operation. Richard Bowen Aff. ¶ 1. HDA licenses the use of the Honey Dew name and on occasion enters into franchise agreements with local franchisees. Id. at ¶ 2. Here, HDA entered into a "license agreement with [BII.]" Id. at ¶ 3. The license agreement gave BII "the right to . . . grant franchisees approval to operate Honey Dew Donut shops in Rhode Island." Id. (citing License Agreement).
BII and R.B. Donuts
Pursuant to the License Agreement, BII is the subfranchisor for HDA in Rhode Island. Robert Bowen Dep. 8:14-15. As such, BII is entrusted with establishing and managing the Honey Dew franchises in Rhode Island. BII does not have employees. Id. at 10:23-11:1. Rather, BII owns a management company, R.B. Donuts,  "that manages the Honey Due [Sic] Donut shops . . . in Rhode Island for . . . BII." Richard Bowen Dep. at 8:8-11. BII's role in the management of each store depends upon whether the store is owned by BII or by an independent third party. If a store is owned by BII, i.e., a company store, then R.B. Donuts "manage[s] the franchise on a day-to-day basis[.]" Robert Bowen Dep. 8:21-24. However, if a store is independently owned, like the Centerdale store, R.B. Donuts merely provides logistical "support" and conducts biannual "full" inspections as well as monthly visitations. Id. at 9:21-10:6. Regardless of whether the store is company owned or independently operated, BII ensures that each franchise "maintain[s] Honey Dew's uniformity and high standards[.]" Richard Bowen Dep. 18:20-23.
Patricia Beale (Ms. Beale) is an employee of R.B. Donuts. Id. at 10:14-16. Ms. Beale is responsible for "help[ing] run the company stores" and conducting "shop visitations" in Rhode Island. Beale Dep. 13:1-5; 14:7-9, May 28, 2015. Such visitations are designed to "investigat[e] [BII's] franchisees' compliance with HDA standards[.]" Robert Bowen Dep. 19:10-13. In addition, "[Ms. Beale] attends weekly or bimonthly meetings at HDA, [where she] gets all the information" regarding HDA's standards." Robert Bowen Dep. 19:14-21.
The Honey Dew Donut shop in Centerdale is independently owned by CDI. CDI is co-owned by Charles Tsoumakas (Mr. Tsoumakas). CDI obtained the right to operate a Honey Dew Donut franchise by entering into a Franchise Agreement with BII. As part of the Franchise Agreement, CDI pays royalty fees of seven percent of their gross sales to BII. See Franchise Agreement 4; Richard Bowen Aff. ¶ 11. The Franchise Agreement describes the relationship between HDA, BII, and CDI as that of independent contractors, and expressly denies any agency relationship. Franchise Agreement 19. Furthermore, the Agreement characterizes HDA's role in the Franchise Agreement as that of a third party beneficiary. Notably, however, HDA and BII reserve the right to inspect and test the premises.  Id.
Parties' Relationship with Mr. Frigault
Mr. Frigault's relationship with HDA, BII, R.B. Donuts, and CDI is both complex and multifaceted. HDA previously retained Mr. Frigault to perform "secret shopper" operations at all of its stores, and it recommended Mr. Frigault's services to all of the Rhode Island franchises. Richard Bowen Dep. 28:2-17; 33:8-18. Similarly, R.B. Donuts, on behalf of BII, hired Mr. Frigault to perform "secret shopper" operations at all of its stores, including the Centerdale store. Robert Bowen 16:3-4; 58:6-13; 65:10-17; 108:23-25. Furthermore, he was given the authority to conduct "mini visitations" and "tape reviews" at all of BII's company stores. Id. at 98:16-25; 104:12-22; 105:18-22; Beale Dep. 36:3-37:15; 38:18-23. Finally, CDI hired Mr. Frigault to perform "tape reviews, " Rhode Island Commission for Human Rights (RICHR) Hr'g Tr. 21:4-7; 24:11-17; 44:1-13, Mar. 16, 2012, and "mini reviews, " id. at 44:18-24; 58:2-4, of the Centerdale store.
Defendant HDA argues that the case should be dismissed because the minimum contacts necessary to establish personal jurisdiction are lacking. In support, Defendant argues that Plaintiff cannot establish general personal jurisdiction because HDA is a Massachusetts corporation with a principal place of business at 2 Taunton Street in Plainville, Massachusetts. Furthermore, as to specific personal jurisdiction, HDA attacks the credibility of the Plaintiff's assertion that Mr. Frigault was an agent of HDA and that HDA exerted control over the day-today business and employment matters at CDI's Centerdale store. Thereby, HDA argues that its contacts with the forum are insufficient to establish specific personal jurisdiction.
In response, Plaintiff argues that the exercise of specific personal jurisdiction over HDA is appropriate because HDA, through BII and R.B. Donuts, had an agency relationship with Mr. Frigault. In addition, Plaintiff contends that the Court can exercise general personal jurisdiction over the Defendant because 1) HDA has a direct franchise relationship with the two stores in Cumberland and Lincoln; 2) HDA licenses the right to franchise additional Honey Dew Donuts stores in Rhode Island to BII; and 3) HDA buys advertising in Rhode Island with the proceeds of royalties collected from Rhode Island franchises.
Defendants HDA and BII have brought a joint motion for summary judgment. Defendants contend that this Court should grant summary judgment in their favor because: 1) the RICRA only reaches "intentional discrimination, " and thus all of Plaintiff's claims that are premised on the Defendants' vicarious liability for Mr. Frigault's alleged acts must be dismissed; 2) Plaintiff cannot demonstrate the Defendants' are vicariously liable under RICRA for the alleged actions of Mr. Frigault because no agency relationship existed between him and the Defendants; 3) when Plaintiff signed the Workers' Compensation Release, she signed a binding release and waiver of claims that precludes her from bringing the present action; and 4) Plaintiff cannot establish a prima facie case of quid pro quo harassment, hostile work environment sexual harassment, or sex discrimination.
In response, Plaintiff contends that Mr. Frigault was the apparent agent of HDA and BII when he sexually harassed her. Moreover, Plaintiff argues that despite the fact that Honey Dew Donuts cuts its business into multiple corporate entities, there is only one Honey Dew Donuts. As such, the Plaintiff contends that during the time when she was allegedly sexually harassed, she believed that Mr. Frigault was either an agent or employee of Honey Dew Donuts. Furthermore, Plaintiff posits that she can establish a prima facie case as to each of her causes of action.
Standard of Review
"It is well established that to withstand a defendant's Rule 12(b)(2) motion to dismiss a complaint for lack of in personam jurisdiction, a plaintiff must allege sufficient facts to make out a prima facie case of jurisdiction." Cerberus Partners, L.P. v. Gadsby & Hannah, LLP, 836 A.2d 1113, 1118 (R.I. 2003) (citing Ben's Marine Sales v. Sleek Craft Boats, 502 A.2d 808, 809 (R.I. 1985)). "To establish a prima facie showing of personal jurisdiction in Rhode Island, a plaintiff's allegations must satisfy the demands of Rhode Island's long-arm statute, [G.L. 1956] § 9-5-33" and comport with the requirements of constitutional due process. Cassidy v. Lonquist Mgmt. Co., LLC, 920 A.2d 228, 232 (R.I. 2007) (citing Rose v. Firstar Bank, 819 A.2d 1247, 1249 (R.I. 2003)).
Rhode Island's "long-arm" statute provides in pertinent part that "[e]very foreign corporation . . . that shall have the necessary minimum contacts with the state of Rhode Island, shall be subject to the jurisdiction of the state of Rhode Island . . . in every case not contrary to the provisions of the constitution or laws of the United States." Sec. 9-5-33(a). "This language has been interpreted to mean that Rhode Island courts may exercise jurisdiction over foreign defendants within the parameters set forth by the United States Constitution." McKenney v. Kenyon Piece Dye Works, Inc., 582 A.2d 107, 108 (R.I. 1990). As such, "the statutory inquiry necessarily merges with the constitutional inquiry, and the two inquiries essentially become one.'" Nucor Corp. v. Bell, 482 F.Supp.2d 714, 721 (D.S.C. 2007) (quoting ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 623 (4th Cir. 1997)).
"The Due Process clause of the United States Constitution limits the exercise of personal jurisdiction over nonresident defendants to those who 'have certain minimum contacts with [the forum] such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Rose, 819 A.2d at 1250 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 318 (1945)). "This inquiry regarding minimum contacts turns on whether the cause of action arises out of the defendant's contacts with the forum. If a defendant's conduct does provide the basis for the litigation, all that need be shown for jurisdiction to be proper is a 'relationship among the defendant, the forum, and the litigation.'" McKenney, 582 A.2d at 108 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404, 411 (1984)). In order "[t]o establish that the forum court possesses personal jurisdiction over a nonresident defendant a plaintiff must allege and prove the existence of either general or specific personal jurisdiction." Rose, 819 A.2d at 1250.
General Personal Jurisdiction
"When [a defendant's] contacts with a state are continuous, purposeful, and systematic, a nonresident defendant will subject itself to the general jurisdiction of that forum's courts with respect to all claims, regardless of whether they relate to or arise out of the nonresident's contacts with the forum. Thus, if a nonresident's contacts with a forum are sufficient for general personal jurisdiction to exist, then such a party may be sued in that forum for 'causes of action arising from dealings entirely distinct from those activities.'" Id. (Emphasis added). However, "if [a] plaintiff's injury does not arise out of an act done in the forum state, then other contacts between the corporation and the state must be fairly extensive before the burden of defending a suit there may be imposed upon it without offending traditional notions of fair play and substantial justice. " Oddi, 461 F.Supp. at 309 (citing Ratliff v. Cooper Laboratories, Inc., 444 F.2d 745, 748 (4th Cir.), cert. denied, 404 U.S. 948 (1971)); see Orazi v. Hilton Hotels Corp., 2010 WL 4751728, at *5 (E.D. Pa. Nov. 22, 2010) (citing Stinnett v. Atl. City Showboat, Inc., 2008 WL 1924125, at *2 (E.D. Pa. Apr. 28, 2008)) ("The standard for general jurisdiction is demanding: contacts must be 'continuous and systematic' and facts supporting them 'extensive and persuasive.'").
Specific Personal Jurisdiction
Since Int'l Shoe, "specific jurisdiction has become the centerpiece of modern jurisdiction theory, while general jurisdiction [has] play[ed] a reduced role." Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2854 (U.S. 2011) (citing Twitchell, The Myth of General Jurisdiction, 101 Harv. L. Rev. 610, 628 (1988)). "In the absence of sufficient minimum contacts to warrant general jurisdiction, a party can make a prima facie showing of specific personal jurisdiction over a defendant 'if the claim sufficiently relates to or arises from any of a defendant's purposeful contacts with the forum.'" Cassidy, 920 A.2d at 233 (quoting Rose, 819 A.2d at 1251) (emphasis added); see also Santos v. A.C. McLoon Oil Co., 2013 WL 861548, at *3 (R.I. Super., Feb. 22, 2013) (Gibney, P.J.) ("The reviewing court must consider two prongs to determine whether the plaintiff has demonstrated the existence of specific personal jurisdiction in a given case: the plaintiff's claims must 'relate' to the defendant's specific contacts with the forum, and the defendant must have 'purposefully' created those specific contacts between itself and the forum."). This is accomplished by demonstrating a "relationship among the defendant, the forum, and the litigation." Ben's Marine Sales, 502 A.2d at 812 (quoting Helicopteros Nacionales de Colombia, S.A., 466 U.S. at 414). "To exercise specific jurisdiction, the court must be satisfied that the defendant performed 'some act by which [it] purposefully avail[ed] itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.'" Cassidy, 920 A.2d at 233 (quoting Rose, 819 A.2d at 1251) (alteration in original).
Proffering proof sufficient to predicate a finding of specific jurisdiction is a far less onerous burden for the plaintiff to carry than that of general jurisdiction. See Ben's Marine Sales, 502 A.2d at 812. Thus, even when a defendant's contacts with the forum are insufficient to support general jurisdiction, a court may exercise specific personal jurisdiction over the nonresident defendant if the claim sufficiently relates to or arises from any of a defendant's purposeful contacts with the forum. Rose, 819 A.2d at 1251.
"The relatedness [prong] is not met merely because a plaintiff's cause of action [arises] out of the general relationship between the parties; rather, the action must directly arise out of the specific contacts between the defendant and the forum state." Sawtelle v. Farrell, 70 F.3d 1381, 1389 (1st Cir. 1995) (alteration in original). Furthermore, "[t]he function of the purposeful availment requirement is to assure that personal jurisdiction is not premised solely upon a defendant's 'random, isolated, or fortuitous' contacts with the forum state." Id. at 1391 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984)). As such, the "'cornerstones upon which the concept of purposeful availment rest are voluntariness and foreseeability.'" Cerberus Partners, L.P., 836 A.2d at 1121 (quoting Sawtelle, 70 F.3d at 1391). Jurisdiction is proper when the contacts proximately result from actions that create a "substantial connection" with the forum state. McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223 (1957). "Thus where the defendant 'deliberately' . . . has created 'continuing obligations' between himself and residents of the forum, . . . he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by 'the benefits and protections' of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S.Ct. 2174 (1985).
Finally, "once a court determines that a nonresident defendant purposefully established minimum contacts with [Rhode Island, ] the court must consider whether the exercise of jurisdiction would offend fair play and substantial justice. This determination turns upon a number of factors, including the burden upon the defendant, the interests of the forum state, the plaintiff's interest in obtaining relief, the interstate judicial system's interest in efficiently resolving disputes, and finally the shared interest of the several states in furthering fundamental social policies." State of Md. Cent. Collection Unit v. Bd. of Regents for Educ. of Univ. of Rhode Island, 529 A.2d 144, 151 (R.I. 1987) (citing Burger King Corp., 471 U.S. at 476-77). "These considerations sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required." Burger King Corp., 471 U.S. at 477. "These factors do not even come into play, however, until it has been shown that a defendant has purposefully established minimum contacts with the forum state." Cerberus Partners, L.P., 836 A.2d at 1121.
When deciding a motion for summary judgment, the trial justice must keep in mind that it "'is a drastic remedy and should be cautiously applied.'" Steinberg v. State, 427 A.2d 338, 339– 40 (R.I. 1981) (quoting Ardente v. Horan, 117 R.I. 254, 366 A.2d 162, 164 (R.I. 1976)). "Thus, '[s]ummary judgment is appropriate when, viewing the facts and all reasonable inferences therefrom in the light most favorable to the nonmoving party, the [C]ourt determines that there are no issues of material fact in dispute, and the moving party is entitled to judgment as a matter of law.'" Quest Diagnostics, LLC v. Pinnacle Consortium of Higher Educ., 93 A.3d 949, 951 (R.I. 2014). However, only when the facts reliably and indisputably point to a single permissible inference can this process be treated as a matter of law. Steinberg, 427 A.2d at 340. The party who opposes the motion for summary judgment "carries the burden of proving by competent evidence the existence of a disputed material issue of fact and cannot rest on allegations or denials in the pleadings or on conclusions or legal opinions." Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d 1223, 1225 (R.I. 1996); see also McAdam v. Grzelczyk, 911 A.2d 255, 259 (R.I. 2006).