Opinion
1:99cv102-T
April 6, 2000.
MEMORANDUM AND RECOMMENDATION
N THIS MATTER is before the court upon defendants' Motion for Summary Judgment. Having carefully considered that motion and reviewed the pleadings, the undersigned enters the following findings, conclusions, and recommendation.
FINDINGS AND CONCLUSIONS
I. Standard
On a motion for summary judgment, the moving party has the burden of production to show that there are no genuine issues for trial. Upon the moving party's meeting that burden, the nonmoving party has the burden of persuasion to establish that there is a genuine issue for trial.
When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. In the language of the Rule, the nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving [sic] party, there is no "genuine issue for trial."Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citations omitted; emphasis in the original) (quoting Fed.R.Civ.P. 56). There must be more than just a factual dispute; the fact in question must be material and readily identifiable by the substantive law. Anderson v. Liberty Lobby. Inc., 477 U.S. 242 (1986). By reviewing substantive law, the court may determine what matters constitute material facts. Id. "Only disputes over facts that might affect the outcome of the suit under governing law will properly preclude the entry of summary judgment." Id. at 248. A dispute about a material fact is "genuine" only if the evidence is such that "a reasonable jury could return a verdict for the nonmoving party." Id.
[T]he court is obliged to credit the factual asseverations contained in the material before it which favor the party resisting summary judgment and to draw inferences favorable to that party if the inferences are reasonable (however improbable they may seem).Cole v. Cole, 633 F.2d 1083, 1092 (4th Cir. 1980). Affidavits filed in support of defendants' Motion for Summary Judgment are to be used to determine whether issues of fact exist, not to decide the issues themselves. United States ex rel. Jones v. Rundle, 453 F.2d 147 (3d Cir. 1971). When resolution of issues of fact depends upon a determination of credibility, summary judgment is improper. Davis v. Zahradnick, 600 F.2d 458 (4th Cir. 1979).
II. Factual Background
In this action, brought pursuant to 42, United States Code, Sections 1981 and 2000a, plaintiffs claim that one or more employees of the Denny's restaurant in Spindale, North Carolina, refused to fill plaintiffs' breakfast orders. Plaintiffs are African-American and attribute such alleged refusal to their race. The plaintiffs, all of whom are members of the Wilkins family, decided to have breakfast on their way to a hospital to visit a sick relative.
It is plaintiffs' recollection that when they arrived at approximately 10 a.m., the restaurant was "not busy at all"; "[t]here may have been one or two people seated, but it was fairly empty." L. Wilkins Depo., at 16. Plaintiffs allege and testify that they walked in; they stood briefly at the sign directing them to wait to be seated by the hostess; and then the hostess approached them, seated them at a table in the nonsmoking section, provided them with menus, and took their drink orders. The family ordered orange juice and milk, and a server other than the server who ultimately took the family's food orders brought them their drinks. Plaintiffs observed that they were the only African-American customers in the restaurant.
Plaintiffs were waited on by Glenda Clontz, a waitress who was responsible for the section in which the plaintiffs were seated. It is plaintiffs' allegation that Ms. Clontz first took orders from individuals who had been seated at another table at about the same time as plaintiffs had been seated and then turned around to take plaintiffs' orders. Because plaintiffs were engaged in the usual conversations that ensue when families are reunited, evidence of record indicates that they were not ready to place their orders the first time the waitress arrived. When the waitress returned to take their orders, plaintiffs ordered standard items from the breakfast menu, including the "grand-slam" special, junior cakes with bacon for the child, and a country or chicken fried steak. Defendants admit, and it is not in dispute, that plaintiffs' order "was not a complicated one" and that the plaintiffs "should have received their food within ten minutes of placing their orders with the waitress." Plaintiffs' Exhibit 1.
The ensuing wait for their food is the basis of this civil action. Plaintiffs testify that the initial delay went unnoticed by them because the family was enjoying the occasion to visit with one of its members, Lexie Wilkins, whom they had not seen in several years. Eventually, however, the plaintiffs noticed that although the waitress who took their order was serving other people, she had not brought them their food. They also noticed that the people who had been seated at the table next to theirs, and who had placed their orders at about the same time as had the plaintiffs, had already finished their meals and left, and that another party had been seated at the same table. In addition, plaintiffs observed that three or four nearby tables, with customers who had arrived after plaintiffs, had also been served their food and were completing their meals. Plaintiffs testified that some of the patrons seated after plaintiffs, all of whom were white, had already completed their meals, paid their bills, and left the restaurant.
Plaintiffs further testified that the waitress had not returned to their table since taking their orders, although she was observed to be circulating around the tables of the white customers, refilling their coffee cups and otherwise checking on their welfare. S. Wilkins Depo., at 26-27. After plaintiff Ava Wilkins eventually got the attention of Ms. Clontz by raising her hand and catching Ms. Clontz's eye, Ms. Clontz responded by saying, "I know, I know, I know, it's coming" and then walked away. S. Wilkins Depo., at 26. Plaintiffs waited another 15 minutes, without the return of the waitress. At that point, plaintiff Steve Wilkins said to his family, "That's it, I am going to find a manager." S. Wilkins Depo., at 27. He testified that he found the hostess and asked to see the manager because his family had still not been served their food. The hostess expressed surprise, saying, "Oh, my God, you still haven't eaten yet?" The hostess then pointed out the manager, later identified as Roger Flynn.
According to Steve Wilkins, he approached Mr. Flynn, who was laughing and joking with a white couple in the restaurant, and said, "Excuse me, sir, could I speak to you a minute?" Steve Wilkins further testified that Flynn turned to him; looked at him; said, "Yeah, it will be a minute"; and then turned back to continue his conversation and again was laughing and joking with the white couple with whom he was talking. Defendants dispute this version and argue that Flynn was helping other customers. It is Steve Wilkins's additional testimony that he stood there for another five or ten minutes, waiting for Mr. Flynn to finish his conversation and attend to Mr. Wilkins's complaint, and that he told Flynn the following:
Me and my family have been in your restaurant for an hour now, and we still have not been served. People have come into the restaurant at the same time we did, have eaten and gone. People that came in after us have eaten and gone, and we still haven't been served a drop of food yet to eat. I don't appreciate the way your staff has treated us since we've been in here. They've totally ignored us. I want to let you know how we were treated, and I want to pay for my juice, my drinks because that's all we got, and we are going to leave your restaurant.
According to Steve Wilkins, Flynn replied, "Hell, I'll pay for the drinks. I'll give you the juice." Steve Wilkins testified that he did not want anything from Flynn and would pay for the drinks himself and that he then turned to the hostess, paid for the orange juice and milk, and the plaintiffs left the restaurant. Plaintiffs allege that Flynn never apologized for the lack of service or offered to find out the source of the problem and remedy it.
Evidence submitted by defendants primarily adds to rather than varies from the facts presented by plaintiffs. Plaintiffs testified that they could see the cooks in the open-window kitchen and knew that Ricky Twitty, an African-American acquaintance of plaintiff Lexie Wilkins, was one of the cooks working that day. S. Wilkins Depo., at 32; L. Wilkins Depo, at 29, 30, 33. Plaintiffs did not approach Mr. Twitty at any time prior to leaving the restaurant to inquire about their food order, even though plaintiff Lexie Wilkins knew Mr. Twitty, believed Mr. Twitty was aware of the Wilkins's presence, and would have expected Mr. Twitty to "expedite" the Wilkins's food order. L. Wilkins Depo, at 29-30. In addition to the surprise of the hostess at the slow service when told by Steve Wilkins, defendants point out that the hostess apologized to Steve Wilkins, and directed him to the manager. S. Wilkins Dep., at 27; Complaint, at ¶ 35. Plaintiffs acknowledged that the hostess was "very nice" and courteous throughout their visit to the Spindale restaurant and "did her job." S. Wilkins Depo., at 44. Steve Wilkins, while offended that Mr. Flynn did not immediately address his problems, acknowledges that he did not know what the white customers and the manager were discussing. S. Wilkins Depo. at 29. After Steven and Lexie Wilkins left the Spindale restaurant, plaintiff Ava Wilkins was standing outside the restroom waiting on her son, plaintiff Steven Wilkins, II, and overheard the manager, Mr. Flynn, say to the server, Ms. Clontz, "These people said they didn't get served, where is their ticket or what happened." A. Wilkins Depo., at 10-12. Ms. Ava Wilkins did not hear Ms. Clontz's response. None of the plaintiffs have identified any injury, illness, or identifiable mental or emotional disorder arising out of the facts as alleged in the Complaint. In addition, none of the plaintiffs has been seen by a physician, psychiatrist, licensed counselor or therapist as a result of their visit to the Spindale restaurant.
III. Section 1981 Claim
A. Applicable Standard Under Section 1981
In pertinent part, Section 1981 provides that:
(a) All persons within the jurisdiction of the United States shall have the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens . .
(b) For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.42 U.S.C. § 1981 (a) (b). The legislative intent of Section 1981 is to remove the impediment of discrimination from a minority citizen's ability to participate fully and equally in the marketplace. Patterson v. McLean Credit Union, 491 U.S. 164, 190 (1989). Historically, Section 1981 has been used to defeat discrimination in the context of contracts of employment, Morris v. Office Max, Inc., 89 F.3d 411, 413 (7th Cir. 1996); but has increasingly been utilized to question conduct affecting the performance of executory service contracts. Especially noticeable have been a series of cases, such as this, against Denny's restaurants.
B. Shifting Burdens
Adapted from Title VII, a Section 1981 case may be established by a plaintiff through direct evidence of intentional discriminatory treatment or through the cumulative effect of indirect evidence of the merchant's motivation. Lovelace v. Sherwin-Williams Co., 681 F.2d 230, 240 (4th Cir. 1982). Alternatively, a plaintiff may attempt to establish a prima facie case of race discrimination through use of a "McDonnell-Douglas scheme." Id.
If a plaintiff can establish such a prima facie case, the burden shifts to the defendant to show some legitimate, nondiscriminatory reason for the allegedly discriminatory conduct. Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 252-53 (1981). Upon such a showing, the burden shifts back, and the plaintiff has the burden of proof to show by a preponderance of the evidence that the legitimate reasons offered by the defendant were false and that race was the real reason for the adverse action. St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 514-15 (1993).
In the instant matter, plaintiffs contends that they have established aprima facie case and that defendants have failed to come forward with a legitimate, nondiscriminatory reason for the delay, thereby negating plaintiffs' need to show pretext.
C. The Prima Fade Case
To make out a prima fade case under Section 1981, plaintiffs would have to present evidence upon which a jury could find intentional discrimination. Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 (5th Cir. 1996). A number of courts have taken differing approaches to the element of "intentional discrimination." One court, in this district, adopted the following as elements of a prima facie case in the context of restaurant service:
To establish a section 1981 claim,
the plaintiff must show that (1) he or she is a member of a racial minority; (2) the defendant had an intent to discriminate on the basis of race; and (3) the discrimination concerned one or more of the activities enumerated in the statute; in this case, the making and enforcing of a contract.
Such a generalized version is useful in cases like the one under consideration here, where the facts do not conform to any of the more common situations . . .Bobbitt v. Rage, Inc., 19 F. Supp.2d 512, 517 (W.D.N.C. 1998) (citations and footnotes omitted; citing Bellows v. Amoco Oil Co., 118 F.3d 268, 274 (5th Cir. 1997)). As to the straightforward element of intentional discrimination, this court finds such articulation of elements to be very appropriate in the context of a Section 1981 case where plaintiffs are presenting direct, rather than circumstantial, evidence of discrimination. Direct evidence of discrimination, such as in the companion issue in Bobbitt involving requiring racial minorities to prepay, is rare.
The Bobbitt court was faced with two distinct causes of action. In the "Cary" incident, plaintiffs were relying upon circumstantial evidence, while the "Hickory" plaintiffs relied upon very direct evidence of racial discrimination, i.e., being told that they must prepay for their food because they were African-American. The Bobbitt court never reached the second element of "intentional discrimination" because it first considered the third element and found it wanting.
In a post-Bobbitt decision, the district court in Charity v. Denny's. Inc., 1999 WL 544687 (E.D.La. 1999), following the reasoning of Bobbitt, made observations about the nature of the restaurant and patron relationship and the current subtleties of racial discrimination:
[I]t could reasonably be said that a customer who enters a restaurant or service is contracting for more than just food. § 42 U.S.C. 1981(b) encompasses "the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship." Dining in a restaurant includes being served in an atmosphere which a reasonable person would expect in the chosen place. Courts have recognized that the contract formed between a restaurant and a customer does include more than just the food ordered. See Perry, 924 at 552 (plaintiff stated a claim under § 1981, because he is considered not to have just contracted for food, but also use of the bathrooms); McCaleb v. Pizza Hut of America, Inc., 28 F. Supp.2d 1043, 1048 (N.D.Ill. 1998) (plaintiffs stated a claim under § 1981, because the contract included the full benefits of dining in a restaurant and the defendant failed to provide them with utensils with which to eat and also created a disturbing atmosphere when plaintiffs were eating).
* * *
This Court concludes that being admitted into a restaurant and ultimately being served does not preclude bringing a § 1981 claim. Indeed, in light of the clear illegality of outright refusal to serve, a restaurant which wishes to discourage minority customers must resort to more subtle efforts to dissuade . . . efforts such as slow service, discourteous treatment, harassing comments and gestures and outright racial insults. In determining the scope of civil rights protection, courts must be guided "by the holdings of the Supreme Court of the United States that the Civil Rights Act is to be afforded a liberal construction in order to carry out the purpose of Congress to eliminate the inconvenience, unfairness and humihation of racial discrimination." United States v. L.C. Vizena, 342 F. Supp. 553, 555 (W.D.La. 1972)Id., 1999 WL 544687, at 3-5.
In their brief, defendants describe another case wherein racial minorities alleged a Section 1981 claim based upon disparate treatment. In White v. Denny's. Inc., 918 F. Supp. 1418 (D. Colo. 1996), the district court found the elements of a prima facie case to consist of plaintiffs showing that (1) they are members of a protected class, (2) they attempted to contract for certain services, (3) they were denied the right to do so, and (4) those services remained available to others outside the protected class. Id., at 1423-24. Finding that the elements set forth in White are more appropriate to a proof scheme relying upon circumstantial evidence, the undersigned will consider each element of a prima fade case under White.
As to the first element, it is undisputed that plaintiffs, as African-Americans, are members of a protected class under Section 1981. Plaintiffs have satisfied the first element.
The second element requires an attempt to contract for services. As made clear in the statute, the right to "make and enforce contracts" includes the "performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship." 42 U.S.C. § 1981 (a) (b). In this case, plaintiffs have presented evidence of contract formation in the placement of breakfast orders, an implicit term of which was that the food would be served in a reasonable time. The placement of a food order at a restaurant is an attempt to "make and enforce a contract." See Bobbitt, supra.
The third element requires plaintiffs to present evidence that they were denied the right to contract for those services. Plaintiffs have presented evidence that clearly conforms to the statute, i.e., that their contract was not performed in a reasonable time and that they were not allowed "the enjoyment of all benefits" of that contract, which would have been to eat the breakfast they ordered. Unlike the plaintiffs inBobbitt, plaintiffs herein never received their food orders, despite calling that fact to the attention of their waitress, the store hostess, and the restaurant's general manager. Defendants also admit that the delay and ultimate failure to serve was beyond what was reasonable. Similarly, the Bobbitt court held that there may be some level of bad service that would suffice to satisfy the third prong of the section 1981 prima facie case notwithstanding the successful completion of a sales contract." Id. at 518. Here, there was not a successful completion of a sales contract at any time, much less within the reasonable time contemplated by the agreement. As did the plaintiffs in Bobbitt, plaintiffs herein have presented proof that they were never served meals within a time frame that well exceeded what an ordinary person would believe to be reasonable.
The court will now determine whether the fourth prong of the White prima facie case is satisfied. To satisfy that element, plaintiffs must present evidence that the restaurant services denied them remained available to others outside the protected class. In this case, the affidavits submitted by plaintiffs clearly show that other, non-minority patrons, seated at approximately the same time as plaintiffs, were served and left the restaurant well before plaintiffs finally gave up and left. More importantly, plaintiffs' undisputed evidence is that they were the only racial minorities dining in the restaurant. From this circumstantial evidence, a reasonable jury could "infer" intentional discrimination.
In Texas Dept. of Community Affairs v. Burdine, supra, the Supreme Court stated that the "burden of establishing a prima facie case of disparate treatment is not onerous." Id. at 253. "Direct evidence of [a defendant's discriminatory intent] is rare; therefore, plaintiffs must ordinarily prove their claims through circumstantial evidence."Harrington v. Harris, 118 F.3d 359, 367 (5th Cir.), cert. denied, 522 U.S. 1016 (1997). "Above all, courts will look at evidence of discrimination not in splendid isolation, but as part of an aggregate package of proof offered by the plaintiff." Mesnick v. General Electric Co., 950 F.2d 816, 824 (1st Cir. 1991).
Having considered each element under White and determined that plaintiffs has proffered sufficient evidence on each of the elements of a prima fade case, the court will next consider whether defendants have proffered a legitimate, nondiscriminatory reason.
D. Defendants' Legitimate, Nondiscriminatory Reasons
Defendants argue that the real reason for the problem was not discrimination, but that the (1) restaurant was short-staffed, (2) there was a new cook who pulled the wrong tickets, and (3) Ms. Clontz may have neglected to enter the Wilkins's order into the computer. They, however, have failed to satisfy their burden because they have produced no evidence that would support their speculation as to the reasons the questioned events occurred. Defendants argue that the delay between the event and when they became aware of a potential claim made that day's event fade quickly in the institutional memory of a busy restaurant.
E. Pretext
Having tendered arguably legitimate, nondiscriminatory reasons for the delay, those reasons, if supported, would shift the burden back to plaintiffs to show by a preponderance of evidence that the given reasons are pretextual and that the real reason was intentional discrimination. Under the new "pretext plus" reasoning of Vaughn v. MetraHealth Companies, Inc., 145 F.3d 197 (4th Cir. 1998), the defendants' reasons must not merely be rebutted by plaintiffs' proffered evidence, but it must be shown that, under all of the circumstances, a rational juror could conclude that the defendants' actions were motivated by discriminatory intent. Plaintiffs have shown why each of the possible reasons defendants have argued is pretextual.
As to the first reason — wait staff shortage — the letter of Ms. Smith talks only of a shortage of wait staff between 11:05 a.m., when Sue Webb went home sick, and 11:16, when Jessica Smith, who was due in at 11:00, arrived late to work. Plaintiffs' evidence is that they arrived at the restaurant at about 10:00 a.m., at a time when it was not busy, and substantially before the transitory shortage of wait staff.
As to the second reason — "ticket problems" by "pulling wrong tickets and food sent out wrong" — plaintiffs have presented evidence that all of the white customers were receiving their food and completing their meals. This is a fact upon which a reasonable juror could base a finding of pretext as to this reason, inasmuch as all other customers seemed to be receiving the correct food.
As to the third reason, plaintiffs argue that Mr. Flynn surmised that Ms. Clontz forgot to enter the Wilkins's order into the computer or the cook failed to pull it off the printer. Plaintiffs present evidence that the waitress had three years' experience at the restaurant, the error had been brought to her attention, and she made no efforts to rectify the problem even 15 minutes after plaintiffs notified her of it.
Plaintiffs have also presented the affidavit of Ricky L. Twitty, who was employed as a cook on the day in question. His affidavit contradicts the defendants' assertion that the restaurant was short-staffed. Twitty Affidavit, ~ 5. Moreover, he was not aware of any problem that would have caused a delay in serving the Wilkins, such as a new cook mixing up the orders. Evidence of inconsistencies in a defendant's proffered nondiscriminatory reasons for disparate treatment may actually strengthen otherwise weak direct evidence of discrimination. Burns v. AAF-McQuay, Inc., 96 F.3d 728, 733 (4th Cir. 1996).
F. Conclusion
Having considered the evidence and arguments submitted, the undersigned concludes that plaintiffs' Section 1981 claim should withstand summary judgment. The post-1980 development of tort law is replete with "insurance crises, medical crises," and "hospital crises" that have led to reforms that have done away with valuable protections once afforded the public. The court is very concerned that mere rudeness and bad service might be improperly used to bring civil rights actions. With such hesitation, and because of evidence of the effective denial of service, the undersigned will recommend that defendants' Motion for Summary Judgment as to plaintiffs' Section 1981 claim be denied and that such claim be tried at the May 2000 term.
IV. Section 2000 Claim
Plaintiffs also seek injunctive relief under Title II (public accommodations) of the Civil Rights Act of 1964 — 42 U.S.C. § 2000a, et seq. Defendant DenAmerica Corporation, now known as Phoenix Restaurant Group, Inc., is the franchisee owner of the Spindale Denny's at issue herein. Defendant Denny's, Inc., was the original franchisor of the restaurant. Defendants Flagstar Enterprises, Inc., and Flagstar Systems, Inc., are affiliated companies, which plaintiffs concede should no longer be in this case because corporate structure would prevent the imputation of liability. To survive defendants' Motion for Summary Judgment on this claim, plaintiffs must show grounds for permanent injunctive relief. At best, plaintiffs have presented a forecast of evidence of an isolated incident of racial discrimination, which would not be the basis for prospective relief.
This claim has also been rendered moot by developments in the ownership of the franchise at issue. In 1998, DenAmerica sold the Denny's restaurant in Spindale to Olijuwon Enterprises, which is not a party to this action. Neither plaintiffs nor the public face any possibility of being discriminated against by DenAmerica at the Spindale restaurant.Hill v. Shell Oil Co., 78 F. Supp.2d 764, 779-80 (N.D. Ill. 1999) (claim for injunctive relief against owner of gas station became moot when he sold station). Plaintiffs have presented no evidence that they are threatened with discrimination at any other establishment operated by DenAmerica. Plaintiffs acknowledge that they have no grievance against any Denny's other than the Spindale restaurant. S. Wilkins Depo., at 46. The entire Wilkins family visited a Denny's in Landrum, South Carolina, only three or four days after their visit to the Spindale restaurant and received "excellent" service. S. Wilkins Depo., at 13, 14, 46. Based upon the foregoing, the undersigned will recommend that plaintiff's Section 2000a claim be dismissed.
V. Punitive Damages
Punitive damages under Section 1981 are allowed where a plaintiff can prove that the conduct of any of the defendants was prompted by evil motive or intent or involved reckless or callous indifference to the plaintiffs' federally protected rights. Kolstad v. American Dental Ass'n, 527 U.S. 526 (1999). Plaintiffs cannot meet this burden. Even if it could be shown that any employee of defendants acted with the requisite mental state to establish entitlement to punitive damages against those individuals, plaintiffs have made no showing that would justify imputing punitivedamage liability to the four corporate defendants in this case. In determining punitive damages liability
[t]he inquiry does not end with a showing of the requisite "malice or reckless indifference"on the part of certain individuals, however. The plaintiff must impute liability for punitive damages to [the defendants].Id. In Williams v. Cloverleaf Farms Dany, Inc., 78 F. Supp.2d 479 (D.Md. 1999), the Court of Appeals for the Fourth Circuit stated that the standard for assessing punitive damages under respondeat superior set forth in the Restatement 2d of Torts should be adopted by the Fourth Circuit:
Punitive damages can properly be awarded against a master or other principal because of an act by an agent if, but only if, (a) the principal or a managerial agent authorized the doing and manner of the act, or (b) the agent was unfit and the principal or managerial agent was reckless in employing or retaining him, or (c) the agent was employed in a managerial capacity and was acting in telescope of employment, or (d) the principal or managerial agent of the principal ratified or approved the act.Id., at 486 (quoting Restatement 2d of Torts § 909 (1979)). TheKolstad court stated that even the conduct of a managerial agent will not impute punitive damage liability to an employer where the conduct of the managerial agent is contrary to the employer's good-faith efforts to comply with the federal antidiscrimination laws. Id., at 2128-29. Denny's, Inc., Flagstar Systems, Inc., and Flagstar Enterprises, Inc., cannot be liable for punitive damages for the conduct of DenAmerica's employees, because none of those entities had any control over DenAmerica's employees in June of 1996, and DenAmerica's employees cannot be deemed agents of those defendants. Absent a showing that a member of management was something more than rude, DenAmerica should not be subjected to punitive damages for the actions of one low-level employee. There is nothing to show that the defendants had knowledge of any malice or reckless conduct perpetrated by Ms. Clontz or authorized, ratified, or approved her actions. For the reasons set out above, the undersigned will recommend dismissal of the claim for punitive damages.
VI. Dismissal of Defendants Not Subject to Liability
It appears that the Flagstar defendants have nothing to do with the Denny's restaurant business, but are merely affiliated companies. Defendant DenAmerica is currently a franchisee of DFO, Inc., which is wholly owned by defendant Denny's, Inc. Defendant Denny's, Inc., was, but is no longer, the franchisor of defendant DenAmerica. Based upon the corporate structure, the only proper defendant in this action is DenAmerica Corporation, and the undersigned will recommend dismissal of all other defendants.
RECOMMENDATION
IT IS, THEREFORE, RESPECTFULLY RECOMMENDED that defendants' Motion for Summary Judgment be ALLOWED in part and DENIED in part, as follows:
(1) all defendants, except DenAmerica Corporation, beDISMISSED;
(2) plaintiffs' Section 1981 case be ALLOWED to go forward to trial;
(3) plaintiffs' Section 2000a claim be DISMISSED with prejudice; and
(4) plaintiffs' claim for punitive damages be DISMISSED.
The parties are hereby advised that, pursuant to 28, United States Code, Section 636(b)(1)(C), written objections to the findings of fact, conclusions of law, and recommendation contained herein must be filed within ten (10) days of service of same. Failure to file objections to this Memorandum and Recommendation with the district court will preclude the parties from raising such objections on appeal. Thomas v. Arn, 474 U.S. 140 (1985), reh'g denied, 474 U.S. 1111 (1986); United States v. Schronce, 727 F.2d 91 (4th Cir.), cert. denied, 467 U.S. 1208 (1984).
This Memorandum and Recommendation is entered in response to defendants' Motion for Summary Judgment (#15).
This 6th day of April, 2000.