United States District Court, D. Connecticut
Simon MUJO and Indrit Muharremi, on behalf of themselves and all others similarly situated, Plaintiffs,
JANI-KING INTERNATIONAL INC., et al., Defendants.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Adelaide Pagano, Shannon Liss-Riordan, Pro Hac Vice, Lichten
& Liss-Riordan, P.C., Boston, MA, Richard Eugene Hayber,
Hayber, McKenna & Dinsmore, LLC, Lori Ann Knuth, The
Hayber Law Firm LLC, Hartford, CT, Michael T. Petela, Jr.,
Hayber, McKenna & Dinsmore, LLC, New Haven, CT, for
Van Oort, Kerry L. Bundy, Pro Hac Vice, Larry E. Latarte, Pro
Hac Vice, Rory Collins, Faegre Baker Daniels LLP,
Minneapolis, MN, Alison G. Fox, Faegre Baker Daniels LLP,
South Bend, IN, Peter Joseph Murphy, Shipman & Goodwin
LLP, Hartford, CT, for Defendants.
AND ORDER ON MOTION FOR SUMMARY JUDGMENT
A. BOLDEN, UNITED STATES DISTRICT JUDGE.
Mujo and Indrit Muharremi, on behalf of a class of over 100
Jani-King franchisees (collectively "Plaintiffs"),
allege that Jani-King International, Inc., Jani-King, Inc.,
and Jani-King of Hartford, Inc. (collectively
"Defendants" or "Jani-King") unlawfully
classified them as independent contractors and were unjustly
enriched in violation of Conn. Gen. Stat. § 31-73(b).
moves for summary judgment.
following reasons, Jani-King's motion for summary
judgment is GRANTED.
FACTUAL AND PROCEDURAL BACKGROUND
signed Jani-King franchise agreements to "operate a
Jani-King franchise cleaning and maintenance services
company" and to provide commercial cleaning services
using Jani-King's trademarks and system. Pls.' Local
Rule 56(a)(2) Statement of Material Facts in Opp. to
Jani-King Mot., ECF No. 155 ¶ 1 (Aug. 2, 2019)
("Pls.' SMF"); Ex. 2: Luli & Son
LLC Franchise Agreement, ECF No. 136-5 at
§ 4.1 (Apr. 23, 2014) ("Luli & Son Franchise
Agmt."); Ex. 1: Simon Mujo Franchise Agreement, ECF No.
136-4 at § 4.1 (July 11, 2007) ("Mujo Franchise
Agmt."). Plaintiffs' claims arise out of the
Jani-King franchise agreement and the ensuing business
relationship between the parties. The parties dispute whether
Jani-King's franchise agreements permit the Plaintiffs to
operate as independent contractors with their own commercial
cleaning businesses, or whether Plaintiffs are employees.
Pls.' SMF ¶ 1.
Franchise System and Model
sells commercial cleaning service-based franchises, and
requires franchisees to operate under its franchise system in
a particular geographic area. Pls.' SMF ¶¶ 54,
56. Jani-King provides janitorial services to commercial
entities. Id. ¶ 89. Jani-King's workers are
classified as independent contractor franchisees.
Id. ¶ 91 (citing Luli & Son Franchise Agmt.
at § 12.6).
owns all contracts with its cleaning customers and is solely
responsible for drafting all cleaning contracts. Id.
¶ 93; see also Mujo Franchise Agmt. at §
4.7.1 ("All monies received from clients are the
property of Franchisor."). Jani-King has the exclusive
right to "secure commercial cleaning and maintenance
contracts." Pls.' SMF ¶ 99 (citing Luli &
Son Franchise Agmt. at § 4.3.1); see also Ex.
24: Jani-King Uniform Offering Circular, ECF No. 156-5 at
JKCT00001104 (Apr. 30, 2007)
("UOC") ("All proposals for services made by
[franchisees] to either current or prospective clients must
be reviewed and approved by [Jani-King] staff. Any
solicitation for services made by [franchisee] must be
approved by [Jani-King]."). Additionally, franchisees
are limited to accepting or rejecting Jani-King's offered
business. Pls.'s SMF ¶ 100 (citing UOC at
JKCT00001110). Along with the customer, Jani-King sets the
terms of the cleaning services to be provided by franchisees,
so franchisees must accept the contract negotiated between
Jani-King and the customer. Id. ¶ 101.
franchisees pay an initial franchise fee down payment and
initial finder's fee down payment, they operate under
Jani-King's marketing system and use Jani-King's
intellectual property. Id. ¶¶ 55, 57.
Plaintiffs deny that they acquire rights to operate the
franchise and allege that "[a]t all times, Jani-King
controls the operation." Id. at ¶ 55.
Plaintiffs note that among other indices of control, their
franchise agreements state that:
Franchisor has developed and used, and continues to develop,
use and control in connection with its System, certain
confidential information, programs, devices, methods,
techniques and processes which are not generally known to the
public pertaining to franchising, promotion, marketing,
operation and management of a business, ... which includes
but is not limited to information regarding the operational,
sales, promotional methods and techniques, and marketing
methods and techniques of Franchisor and the Jani-King
Id. (citing Mujo Franchise Agmt. at § 4.1.2;
Luli & Son Franchise Agmt. at § 4.1.3). Plaintiffs
also allege that some franchisees pay the entirety of the
initial fee upfront, while others pay it over time, with the
fee being deducted from their pay. Id. ¶ 96.
to the franchise agreement, Jani-King has the "exclusive
right to perform all billing and accounting functions for the
services." Luli & Son Franchise Agmt. at § 4.8.
The franchisee must pay 3% of gross revenue as an accounting
fee to Jani-King. Id. Plaintiffs allege they must
agree to these support services even if they would rather
forgo them. Pls.' SMF ¶ 58.
to the franchise agreement, franchisees pay various fees: a
10% royalty fee on monthly gross revenue, subject to certain
minimum accounts, id. ¶ 59 (citing Luli &
Son Franchise Agmt. at § 4.5.1); an advertising fee of
1.5% gross revenue for specified marketing programs intended
to "maximize general public recognition and acceptance
of the registered trademarks and enhance the collective
success of all [Jani-King] franchises," id.
¶ 61 (citing Luli & Son Franchise Agmt. at §
4.5.2(1)); and a finder's fee for additional cleaning
work—over and above the initial business
purchased—referred by Jani-King, id. ¶
62 (citing Luli & Son Franchise Agmt. at § 4.6).
Other fees include insurance fees (otherwise known as the
"business protection plan"), complaint fees,
miscellaneous fees, and charge-backs. Id. ¶ 97;
see also id. ¶ 98 (explaining that a
charge-back occurs when a customer fails to pay Jani-King for
work already performed by Plaintiffs; Jani-King deducts this
amount from Plaintiff's earnings); Luli & Son
Franchise Agmt. at § 4.8.1 ("Any money not
collected in an account for any reason will be charged back
to Franchisee."). These contractual fees are all
deducted monthly from the gross revenue generated by
franchisees. Id. ¶ 64. Plaintiffs deny that the
franchise agreement defined "compensation," but
Jani-King alleges that Plaintiffs "expressly agreed that
would exclude all fees set out in their respective
the franchise agreement, franchisees are responsible for
providing and maintaining worker's compensation and
liability insurance. Id. ¶ 66.
order to ensure continuous service and client communication,
Jani-King has required franchisees to notify the regional
office of vacations and contact information for the people
who will be responsible for servicing the accounts.
Id. ¶ 67. Subject to customer requirements,
franchisees set their own schedules. Id. ¶ 68.
Franchisees could exchange customer accounts with other
franchisees, subject to Jani-King approval, and franchisees
also could decline or stop servicing customer accounts, but
they risk not getting additional work to make up the
difference in revenue. Id. (citing UOC at
requires franchisees to "purchase certain professional
products and equipment ... under specifications in the
Franchise Agreement and operating manuals." UOC at
JKCT00001090; see generally id. at JKCT00001090-91
(describing restrictions on sources of products, supplies,
and equipment for the cleaning services). Jani-King also
determines the advertising and promotional materials used by
franchisees, Pls.' SMF ¶ 106 (citing UOC at
are responsible for inspecting their customer accounts,
Pls.' SMF ¶ 70, and Jani-King also conducts
"quality control inspections of accounts ... from time
to time in order to insure [sic] that the service is
performed in accordance with the cleaning schedule or
instructions associated with the contract between Franchisor
[Jani-King] and the customer and to the performance standards
of Jani-King," Luli & Son Franchise Agmt. at §
requires franchisees to "meet brand standards addressing
everything from cleaning results, to the appearance of people
cleaning (e.g., that cleaners should wear clean uniforms with
name tags ...), to how the service is associated with
Jani-King trade names and advertising." Pls.' SMF
¶ 71; see also id. ¶ 108 (cleaners must
wear Jani-King branded uniforms). Additionally, franchisees
are prohibited from bringing extra items or non-employees
(including children and animals) to the customer site.
requires franchisees to agree not to hold themselves out as
an agent, servant, or employee of Jani-King, so that
franchisees may not, without prior written approval, obligate
Jani-King for any expenses, liabilities, or other
obligations. Id. ¶ 72 (citing Mujo Franchise
Agmt. at § 12.7; Luli & Son Franchise Agmt. at
may sell their businesses, subject to Jani-King's right
of first refusal and written consent. Pls.' SMF ¶
74. Franchisees are subject to non-compete and
non-solicitation provisions after leaving the Jani-King
franchise system for a period of two years (within the
originally-contracted territory) or one year (outside the
territory); during that period, franchisees may not engage in
an "independently established trade, occupation, or
business" in the commercial cleaning industry.
Id. ¶¶ 75, 117 (citing Luli & Son
Franchise Agmt. at § 5.2.3).
franchise agreements have ten or twenty year terms,
id. ¶ 76, and may be terminated upon the
occurrence of any of the sixteen conditions of default,
id. (citing Luli & Son Franchise Agmt. §
8.1). Plaintiffs allege that the "highly subjective
conditions in Section 8.1 effectively provide Jani-King with
the right to terminate franchisees at will, since it can
decide whether Franchisees have engaged in `conduct
which reflects unfavorably upon ... Jani-King[.]'"
Id. (citing Luli & Son Franchise Agmt. at §
8.1(g)(iii)). For many of the conditions for default and
termination, Jani-King may terminate the franchise agreement
upon thirty (30) days notice. Id. ¶ 114 (citing
Luli & Son Franchise Agmt. at § 8.1(g)(i)-(ix)).
provides mandatory initial training, as well as training
manuals. Id. ¶ 77. Plaintiffs allege the
cleaning methods in the training manuals are not simply
recommended techniques, because the franchise agreement may
be terminated if franchisees "fail to maintain the
standards that Franchisor requires in this Agreement or any
other standards in Jani-King manuals." Id.
(citing Luli & Son Franchise Agmt. at § 8.1(g)(ii)).
Additionally, Jani-King may suspend franchisees or require
additional training until they meet Jani-King's minimum
standards. Id. ¶ 81. Jani-King may also charge
more fees to these franchisees who fail to correct
deficiencies to the client or Jani-King's satisfaction.
Id. ¶ 83.
to the franchise agreement between the parties:
Franchisee understands and agrees that Franchisee is required
to maintain a good relationship with each customer serviced
by Franchisee, and that Franchisor may inspect any premises
serviced by Franchisee at any time to ensure that the quality
of service being rendered is in accordance with Jani-King
Id. ¶ 82 (quoting Luli & Son Franchise
Agmt. at § 4.19; Mujo Franchise Agmt. at § 4.17).
Jani-King alleges it may only terminate franchise agreements
"for cause and subject to both contractual notice and
any additional requirements imposed by the Connecticut
Franchise Act," Conn. Gen. Stat. § 42-133(f)(a),
Defendants' Local Rule 56(a)(1) Statement of Undisputed
Facts, ECF No. 136-2 ¶ 84 (June 10, 2019)
("Jani-King SMF"), Plaintiffs allege that the broad
and subjective conditions for default in Section 8.1, along
with the fact that "Jani-King does not continuously
guarantee any level of work or accounts,"
"effectively provide Jani-King with the right to
terminate franchisees at will," Pls.' SMF ¶ 84;
see also id. ¶ 86 (citing Luli & Son
Franchise Agmt. at § 6.1.2 ("Franchisor does not
guaranty that the Initial Business will reach or remain at
the level stated on the Franchise Summary throughout the term
of this Agreement.") (emphasis omitted)). Jani-King does
allow franchisees to pursue additional business, provided
that they submit all sales proposals for Jani-King's
prior approval. Id. ¶ 87; see also UOC
at JKCT00001104. In addition, although franchisees may sell
extra services to customers, franchisees must still receive
prior approval from Jani-King. Id. ¶¶ 88,
employs staff to monitor customer satisfaction and field
customer inquiries, including complaints. Additionally,
Jani-King's centralized computer system stores call logs,
which Plaintiffs allege demonstrate Jani-King's
"extensive involvement" with Plaintiffs and
Jani-King customers. Id. ¶ 105.
Mujo's Relationship with Jani-King
11, 2007, Mr. Mujo entered into a franchise agreement with
Jani-King. See Mujo Franchise Agmt. Mr. Mujo claims
he "was only a worker" for Jani-King and was not a
franchise owner. Ex. 31: Deposition of Simon Mujo, ECF No.
156-12 at 26:7-13 (July 27, 2018) ("Mujo Depo.");
see also Pls. SMF ¶ 2 (admitting that Plaintiff
Mujo "performed the manual labor of cleaning the offices
per Jani[-]King's specifications" beginning in
2007). Mr. Mujo admits that his Franchise Agreement obligated
him to "act at all times as an independent
contractor," but he alleges that notwithstanding this
language, he was a Jani-King employee. Pls. SMF ¶ 3
(citing Mujo Franchise Agmt. at § 12.7, but noting
generally the numerous controls exercised by Jani-King).
Mujo paid $44,175 as an initial franchise fee down payment
and initial finder's fee down payment in exchange for his
use of the Jani-King "System, Property Marks, and
Confidential Information." Id. ¶ 4 (citing
Mujo Franchise Agreement at 1, § 4.3). Mr. Mujo had no
prior sales experience. Id. ¶ 5. Mr. Mujo
understood that "Jani-King was obligated to offer [him]
at least $15,000 in monthly revenue during the first 480 days
of [his] agreement period," Mujo Depo. at 105:2-9, and
that Jani-King would keep a certain percentage of revenue
equal to its fees, Pls. SMF ¶ 6. Mr. Mujo received
Monthly Franchise Reports, which disclosed both customer
revenue and Jani-King fees and deductions. Id.
¶ 7. According to Mr. Mujo, "[o]nly Jani-King
representatives communicated with the customer accounts such
that [he] did not have any contact with customers at
all." Id. ¶ 8 (citing Mujo Depo. at
143:1-24). Mr. Mujo claims that he did not receive training
to clean specialized accounts, like hospitals and
restaurants, id. ¶ 9 (citing Mujo Depo.
1211:18-123:33), and he asserts the "Jani-King
representatives were unknowledgeable and unable to answer
questions about what kind of cleaning tools he should use for
new customer accounts," id. ¶ 10.
to Jani-King policies and his franchise agreement, Mr.
Mujo's cleaning work had to be performed "in
accordance with the cleaning schedule or instructions
associated with the contract between [Jani-King] and the
client to [Jani-King's] performance standards."
Id. ¶ 11 (citing Mujo Franchise Agmt. §
4.17). Mr. Mujo claims that he only declined customer
accounts offered by Jani-King when Jani-King instructed him
to do so. Id. ¶¶ 12-13 (citing Mujo Depo.
at 109:4-110:9). Mr. Mujo could and did hire employees, but
he only hired one part-time employee, his cousin, and Mr.
Mujo disputes that he supervised his cousin because his
cousin also had to "follow current established Jani-King
polices, practices, and procedures." Id. ¶
14 (citing Mujo Franchise Agmt. At § 4.2.2).
Mujo provided his own equipment and transportation for
cleaning jobs, and he sometimes purchased supplies at
Wal-Mart or Lowe's, which lowered his costs. Id.
¶ 15 (noting that Mr. Mujo also purchased supplies where
Jani-King told him to go). Although Mr. Mujo allegedly did
not know his franchise agreement allowed him to solicit
potential clients, id. ¶ 18, he notes that
"[a]ll contracts under which terms services are provided
by any Jani-King franchisee are the sole property of
Jani-King," Mujo Franchise Agmt. § 4.19.2. Mr. Mujo
admits he "did not believe he could improve the speed or
efficiency of cleaning work, ... that a customer account
would take just as long to clean the first time as it would
the twenty-fifth time." Pls.'s SMF ¶ 19.
Mujo "never communicated" with customers directly,
but admits that customers made complaints to Jani-King.
Id. ¶ 21 (citing Mujo Depo. at 143:16-24). One
customer complained to Jani-King that Mr. Mujo had
inappropriately touched an employee, and requested that a new
franchisee clean their office. Ex. 6 March 15, 2011 Incident
Report, ECF No. 136-8 at 2 (July 19, 2017). Mr. Mujo denies
the incident occurred, but admits the complaint was made.
Pls. SMF ¶ 22. Another customer, a physician's
group, cancelled their Jani-King contract after complaining
that Mr. Mujo's franchise did not adequately clean their
premises, even after the group spoke to Mr. Mujo.
Id. ¶ 23. Mr. Mujo has no
memory of speaking to anyone at the physician's group
about the alleged problem, but admits the complaint was made.
Mujo provided cleaning services for Jani-King until early
2016. Id. ¶ 120. Throughout the term of his
franchise agreement, Mr. Mujo paid finder's fees for new
accounts, and paid the many other fees as well. Id.
Muharremi's Relationship with Jani-King
April 23, 2014, on behalf of his limited liability company,
Luli & Son, LLC, Mr. Muharremi entered into a franchise
agreement with Jani-King. Luli & Son Franchise Agmt. Mr.
Muharremi admits that his Franchise Agreement stated that
"Franchisee will be at all times an independent
contractor," but alleges that notwithstanding this
language, Mr. Muharremi was a Jani-King employee and was not
permitted to operate as an independent contractor. Pls. SMF
¶ 25 (citing Luli & Son Franchise Agmt. at §
12.6, and noting the many indices of control throughout the
Muharremi paid $16,250 as an initial franchise fee down
payment and initial finder's fee down payment in exchange
for his use of the Jani-King "System, Property Marks,
and Confidential Information." Id. ¶ 26
(citing Luli & Son Franchise Agreement at 1, §
4.3-4.3.1). Mr. Muharremi understood that he (through Luli
& Son LLC) was contracting to receive offers of initial
business that would generate $4,000 of gross revenue per
month, less specified fees, and acknowledges that "part
of what [he] purchased with [his] franchise was access to the
Jani-King system, for example, training programs that trained
[him] in how to clean accounts according to Jani-King
standards." Id. ¶¶ 27-28. Although
Mr. Muharremi performed his daily duties without supervision,
Jani-King personnel sometimes inspected his work for quality
control. Id. ¶ 29 (citing Luli & Son
Franchise Agmt. at § 4.19.3 and various depositions of
Jani-King personnel). Mr. Muharremi "held himself out as
an owner of a Jani-King franchise through the use of his
business card." Id. ¶ 30; see
also Ex. 19: Luli & Son LLC Business Card, ECF No.
136-22 (June 10, 2019) (noting that it was an authorized
franchisee of Jani-King, and including Jani-King's logo).
with Jani-King's constraints and customer schedules, Mr.
Muharremi decided when to perform his cleaning services and
provided his own equipment. Id. ¶ 31. Mr.
Muharremi decided "both whether to accept any customer
account referred by Jani-King, ... and whether to use his own
or employee labor to provide cleaning services."
Id. ¶ 32. In the span of four years, Mr.
Muharremi is aware of three or fewer quality-control
inspections by Jani-King, and none occurred while cleaning
services were being performed. Id. ¶ 33. Months
would pass where Mr. Muharremi had no contact with Jani-King.
Id. ¶ 34.
Muharremi recognized that he could "minimize expenses by
providing services to nearby customers." Id.
¶ 35. Before accepting a new account, Mr. Muharremi
collected information about the square footage, fixtures, and
any time constraints. Id. ¶ 36. He sometimes
sold additional services, like stripping floors and carpet
extractions, to existing customers. Id. ¶ 37.
He "individually assessed whether each customer space
required an initial deep cleaning, ... and always inspected
work performed by family members before leaving a job."
Id. ¶ 38.
Muharremi never tried to "grow" his business or
hire employees; never considered what factors made accounts
profitable; and never devised strategies to improve
efficiency, such as tracking hours spent on different
accounts. Id. ¶ 39. Mr.
Muharremi personally serviced the accounts "90 percent
of the time." Id. (citing Ex. 7: Deposition of
Indrit Muharremi, ECF No. 136-10 at 230:6-10 (Apr. 18, 2018)
("Muharremi Depo.")). Mr. Muharremi shopped for the
lowest price on cleaning supplies and equipment, but noted
that "there [are] better deals but not [for] Jani-King
approved supplies." Id. (citing Muharremi Depo.
Muharremi continues to perform cleaning services for
Jani-King under his franchise agreement. Id. ¶
118. As a result, he alleges he pays finder's fees
"as a condition of securing more cleaning work with
Jani-King" for new accounts, and continues to pay the