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Federal Court Holds Franchisors May Be Held Liable In Public Accommodations Cases Brought Under 42 U.S.C. §1981

Relman, Dane & Colfax is pleased to announce an important new court decision governing the liability of franchisors in public accommodations discrimination cases. On August 1, 2012, a federal court in Ohio determined that a franchisor may be held liable under a theory of apparent agency in public accommodations cases brought under the Civil Rights Act of 1861 (also known as "Section 1981").

The underlying litigation was brought by two African-American women who were denied access to a room at a Comfort Suites Hotel in Columbus, Ohio for which they had already paid. They were forced to leave the hotel allegedly because of a "no party" policy at the hotel, even though a group of white guests gathered across the hall from Plaintiffs' room was permitted to stay at the hotel.

Defendant Choice Hotels, Inc., the franchisor of the Comfort Suites brand name, moved for summary judgment on all counts, and included an argument that under federal and state public accommodations laws it could not be held liable as the franchisor because it allegedly did not operate the hotel or provide services to the public. Recognizing that the theory of apparent agency is available in a §1981 public accommodations case, the Court's opinion found that a franchisor may be held liable for a public accommodations violation regardless of whether it operates the franchise or provides services to the public. The Court therefore denied summary judgment to Choice Hotels on the case as a whole. The Court's opinion is an important addition to the handful of public accommodations cases resolving the issue of franchisor liability in a plaintiff's favor.