September 17, 2025|Franchise Frontlines
September 17, 2025 | U.S. District Court for the Central District of California | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Consuelo Marshall granted in part and denied in part Epson America, Inc.’s motion to dismiss discrimination and retaliation claims brought by a temporary worker assigned to Epson through a staffing agency. According to the opinion, the plaintiff alleged that a supervisor at Epson’s warehouse retaliated against him after he reported discrimination, threatened to replace the staffing agency if the plaintiff remained on-site, and thereby caused the staffing agency to terminate his assignment the next day. Epson argued it was not the plaintiff’s employer and that the claims should be dismissed on that basis. The Court dismissed the Title VII claim for failure to exhaust administrative remedies but held that the plaintiff plausibly alleged a contractual relationship under 42 U.S.C. § 1981 and that Epson could be treated as a joint employer at the pleading stage. The Court therefore allowed the § 1981 discrimination and retaliation claims to proceed, along with related state-law claims.
Relevant Background
The Court explained that the plaintiff was assigned by Volt Staffing Agency to work at an Epson warehouse in early 2023. According to the allegations in the First Amended Complaint, the plaintiff reported race-based harassment by an Epson supervisor named Roger. The opinion states that Roger was placed on leave following the report but returned to the facility on March 1, 2023, at which point he allegedly observed the plaintiff working and immediately contacted Volt. The plaintiff alleged Roger threatened to replace Volt with a different staffing agency if Volt did not remove him from the assignment. The following day, Volt ended the plaintiff’s placement.
The plaintiff filed a pro se federal action against Epson asserting claims under Title VII, § 1981, the California Fair Employment and Housing Act, and intentional infliction of emotional distress. The plaintiff characterized the claims as arising under “vicarious liability,” asserting that Epson exercised sufficient control over his working conditions to be treated as his employer. Epson moved to dismiss, arguing among other things that the plaintiff failed to exhaust Title VII administrative procedures, that no contractual relationship existed for purposes of § 1981, and that the allegations described actions by Volt rather than Epson. Epson also requested judicial notice of related state court filings.
Judge Marshall granted judicial notice of the existence of the prior filings but not for the truth of the asserted conclusions. The Court sustained objections to a supplemental declaration submitted by the plaintiff because extrinsic evidence cannot be used to oppose a Rule 12(b)(6) motion. The Court then turned to whether any of the plaintiff’s claims were plausibly alleged.
Decision
The Court dismissed the Title VII claim without prejudice because the plaintiff had not alleged timely exhaustion of administrative remedies. The opinion stated that, although Title VII’s administrative requirements are non-jurisdictional, a timely charge with the EEOC is a mandatory procedural step if properly raised. The Court found no allegation establishing that a charge was filed and therefore dismissed the claim to allow the plaintiff to initiate administrative procedures if permitted by the agency.
The Court then evaluated the § 1981 discrimination and retaliation claims. The Court noted that, although the First Amended Complaint alleged that Volt Staffing Agency hired and paid the plaintiff, that fact did not foreclose the possibility that Epson was also a joint employer. Relying on Ninth Circuit authority, including EEOC v. Global Horizons, Inc., the Court observed that a worker may have more than one employer and that the inquiry turns on the “extent of control” a putative employer exercises over the individual’s work. The Court found that the plaintiff’s allegations—that an Epson supervisor directed day-to-day activities at the warehouse, threatened to remove the plaintiff from the worksite, and allegedly induced Volt to terminate the plaintiff’s assignment—were sufficient to plead joint employer status at the motion-to-dismiss stage.
The Court also found the plaintiff plausibly alleged the existence of a contractual relationship with Epson for § 1981 purposes. According to the allegations the Court was required to accept as true, Epson allegedly exercised direct influence over the plaintiff’s ability to continue working at the site, and the plaintiff’s assignment was allegedly ended as a result of Epson’s actions. Because § 1981 protects the right to make and enforce contracts, the Court concluded these allegations were adequate to plead contractual interference.
With respect to causation, Epson argued the plaintiff could not plausibly plead “but-for” race-based motive under Comcast Corp. v. National Association of African American-Owned Media because the plaintiff acknowledged that Epson had worked with him previously. The Court rejected this argument, finding that the allegations—particularly that the plaintiff’s report of discrimination preceded the supervisor’s alleged threat to remove him, and that the termination occurred one day after the supervisor’s return—were sufficient at the pleading stage to allege that race was a but-for cause of the termination of his work opportunities.
Because the § 1981 claims survived, the Court held that supplemental jurisdiction existed over the related FEHA and emotional-distress claims and denied Epson’s request for dismissal under Rule 12(b)(1).
Looking Forward
This decision illustrates how courts in the Ninth Circuit evaluate joint employer theories in multi-entity work settings, including temporary staffing relationships. Although the franchisor–franchisee relationship presents distinct legal considerations, plaintiffs frequently attempt to adapt joint employer theories to franchisors, particularly when field representatives, supervisors, or brand personnel interact with franchisee employees on site. Under different circumstances and with a more developed evidentiary record, courts may reach different conclusions, but this opinion underscores that allegations involving control over work assignments, discipline, or termination may be sufficient to withstand early dismissal.
The opinion also highlights the significance of § 1981 claims in multi-entity employment disputes. Unlike Title VII, § 1981 does not require exhaustion of administrative procedures and can be invoked even where the plaintiff alleges interference with contractual relations rather than a formal employment relationship. For franchisors, this reinforces the value of maintaining clear operational boundaries, ensuring that franchisees independently manage their employees, and documenting the limits of any guidance provided by the brand. The Court’s reliance on the “extent of control” test, as articulated in Global Horizons, parallels the type of analysis franchisors may face when plaintiffs claim brand-level supervision influenced hiring or disciplinary decisions.
Finally, the case underscores the importance for employers to monitor workplace conduct that may be attributed to supervisory personnel, even in staffing or distributed-work environments. Early allegations involving threats to remove workers or to influence staffing decisions may increase litigation risk if not documented and addressed appropriately. Franchisors may wish to consider how training, communication protocols, and brand evaluation practices can reinforce that franchisees, rather than franchisors, control employment decisions within their businesses.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
