Jones v. Culver Franchising System, Inc.

12 F. Supp. 3d 1079, 87 Fed. R. Serv. 3d 646, 2013 WL 6730763, 2013 U.S. Dist. LEXIS 179370
CourtDistrict Court, N.D. Illinois
DecidedDecember 20, 2013
DocketNo. 13 C 3269
StatusPublished
Cited by3 cases

This text of 12 F. Supp. 3d 1079 (Jones v. Culver Franchising System, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jones v. Culver Franchising System, Inc., 12 F. Supp. 3d 1079, 87 Fed. R. Serv. 3d 646, 2013 WL 6730763, 2013 U.S. Dist. LEXIS 179370 (N.D. Ill. 2013).

Opinion

MEMORANDUM OPINION AND ORDER

Thomas M. Durkin, United States District Judge

Plaintiffs Michael Jones and Michael Anthony Wilbern (together the “individual plaintiffs”) and their respective companies, MBAJ Group, LLC and Wilbern Enterprises, LLC (together the “corporate plaintiffs”), brought this lawsuit against [1081]*1081Defendant Culver Franchising System, Inc. (“Culver”), alleging discrimination on the basis of race in violation of 42 U.S.C. § 1981 and intentional infliction of emotional distress (“IIED”). Culver moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), and also moves pursuant to Rule 21 to sever the claims of Jones and MBAJ Group, LLC from the claims of Wilbern and Wilbern Enterprises, LLC. R. 20, 22. For the reasons explained below, Culver’s motion to dismiss is granted in part and denied in part, and its motion to sever is denied without prejudice.

Background

The following relevant and well-pleaded facts, drawn from plaintiffs’ complaint, are accepted as true, and are set forth in the light most favorable to them. Gomez v. Randle, 680 F.3d 859, 864 (7th Cir.2012). In evaluating Culver’s motion to dismiss, the court considers both “documents attached to the complaint” and “documents that are critical to the complaint and referred to in it.” Geinosky v. City of Chicago, 675 F.3d 743, 745 n. 1 (7th Cir.2012).

Jones, an African-American, is the creator and sole member of MBAJ Group, LLC. R. 1 ¶ 2. Wilbern, an African-American, is the creator and sole member of Wilbern Enterprises, LLC. Id. ¶ 4. In late 2001 or early 2002, Jones, through his LLC, applied to Culver for a franchise opportunity. Id. ¶¶ 24-25. Pursuant to Culver protocol, after providing a down payment on Culver’s franchise fee, Wil-bern and Jones attended Culver’s 16-week training program at Culver’s Wisconsin headquarters. Id. ¶ 25. After successfully completing this training program, Jones became eligible to open his first Culver franchise. Id. ¶¶ 25-26.

Culver suggested that Jones locate his franchise in the Indianapolis market, and pursuant to that suggestion, Jones opened his franchise in Noblesville, Indiana on January 28, 2003. Id. ¶¶ 27-28. Jones hired Wilbern to serve as his general manager. Id. ¶ 28. Three years later, on January 31, 2006, Jones opened a second Culver franchise in Indianapolis, Indiana. Id. ¶ 39.

In May 2004, Culver proposed that Wil-bern take a position as manager of a Cul-vers restaurant franchise in Lansing, Illinois. Id. ¶ 32. Wilbern accepted Culver’s proposal but only on the condition that he would soon be approved to own and operate his own Culver restaurant franchise in Chicago. Id. ¶¶ 32-33. Wilbern initially proposed two locations in Chicago that he believed to be promising: 95th Street and Stony Island, and 83rd Street and Stewart Avenue. Id. ¶ 34. Both sites would be in African-American communities and available at prices Wilbern considered fair. Id. Moreover, tax-increment financing (“TIF”) was potentially available for these sites. Id. Culver indicated to Wilbern that it would consider these two locations, but Culver never approved them. Id. Instead, Culver recommended to Wilbern another site in Franklin Park, Illinois for his first franchise. Id. ¶ 35. Wilbern, in turn, proposed a site at 119th Street and Marsh-field Avenue, another site that was in an African-American community and for which TIF funds were potentially available. Id. ¶ 36. Despite these site suggestions for franchise locations, Wilbern was never approved to open a Culver’s franchise in a predominantly African-American community in Chicago. Id. ¶ 37. In November 2005, Wilbern, through his LLC, opened a Culver’s franchised restaurant in Franklin Park, Illinois. Id. ¶38.

Plaintiffs initially found success with their franchises; indeed by 2006, “[they] were up and running as the only African-American franchisees in the Culver’s system.” Id. ¶¶ 30, 40, 43, 54. From 2006 to [1082]*10822013, both Wilbern and Jones approached Culver to open additional Culver restaurants. Wilbern suggested on numerous occasions that Culver consider restaurants at the three Chicago locations he had previously identified. Id. ¶ 46. Wilbern particularly pushed for the 95th and Stony Island location because he learned that $800,000 in TIF funds may have been available for that location. Id. ¶ 47. Cul-ver, according to Wilbern, refused to allow him to expand into any of the African-American community sites that he identified; nor did it suggest any alternative sites for expansion. Id. ¶ 48.

Beginning in 2006, both plaintiffs experienced a variety of setbacks with their franchises that ultimately led to their closure or sale in 2012 and 2013. Id. ¶¶ 44, 58, 62. For Wilbern, the downturn was a result from a combination of several factors: (1) the receipt of “an unusually large tax bill” in 2006 from the Village of Franklin Park; (2) above-average leasing costs for his restaurant franchise; and (3) the opening of another nearby restaurant in 2010, which took customers away from Wilbem’s Franklin Park Culver franchise. Id. ¶ 44. According to Wilbern, when he started to experience financial difficulties in 2006, he requested assistance from Culver in challenging the tax bill, renegotiating his lease, and refinancing with a bank, but Culver did not help him. Id. ¶¶ 45, 49. In March 2012, due to financial difficulties, Wilbern Enterprises, LLC filed for Chapter 11 bankruptcy. Id. ¶ 50. Despite the filing, Wilbern continued his efforts to secure refinancing so that he could emerge successfully from bankruptcy, but that effort failed, according to Wilbern, “due in substantial part to a lack of support from Culver[ ], which was content to let Wilbern fail.” Id. ¶¶ 50-51. In November 2012, Wilbern closed the Franklin Park franchise. Id. ¶ 52. After Wilbern closed his franchise, the restaurant was acquired and reopened by two white franchisees, Guy and Kathy Hollis. Id. ¶ 53.

Meanwhile, Jones was running his two Culver franchises in Indiana. Id. ¶ 54. In 2010, Jones received an inquiry from the Indianapolis Colts about a possible joint marketing opportunity, but Culver was not interested in pursuing it. Id. ¶ 55. Nor was Culver interested in Jones’s idea to pursue another Culver franchise in No-blesville or five Culver restaurants in Florida with Jones and his prospective partner, Dorian Boyland, an African-American. Id. ¶¶ 56-57. The downturn for Jones began in late 2011 and early 2012 when he learned that the State of Indiana was claiming that he had underpaid a sales tax bill to the State. Id. ¶ 58. From then on, Jones alleges, Culver failed to financially assist him. In February 2012, Culver pressed Jones to sell his franchises to a white franchisee named Jeff Meyer, but Jones resisted, believing that he could resolve the tax dispute with the State of Indiana. Id. ¶ 60.

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12 F. Supp. 3d 1079, 87 Fed. R. Serv. 3d 646, 2013 WL 6730763, 2013 U.S. Dist. LEXIS 179370, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jones-v-culver-franchising-system-inc-ilnd-2013.