1st Circuit: Doughnut Chain Didn’t Breach Contract

On Dec. 6, 2010, the 1st Circuit ruled against a franchisee who claimed Dunkin’ Donuts breached its contract with him in Barkan v. Dunkin’ Donuts, Inc.

In late 2001, Irwin Barkan purchased five Dunkin’ Donuts franchises and obtained a Store Development Agreement (SDA) with the company, which gave him the right to develop more stores. Barkan took out several loans, guaranteed by Dunkin’ Donuts, through bank holding company CIT to finance the franchises.

Barkan’s stores struggled, and by the end of 2003, he fell behind on many payments, forcing Dunkin’ Donuts to step in with cure payments because it had guaranteed the loan.

Dunkin’ Donuts worked with Barkan to resolve his debt, entering into a settlement agreement to modify the SDA and asking CIT to issue a new note. CIT denied the request.

Barkan sued, claiming that because Dunkin’ Donuts failed to comply with CIT’s requests, he was unable to restructure and open additional stores under his SDA. The district court ruled in favor of Dunkin’ Donuts. The 1st Circuit affirmed, saying that Barkan failed to demonstrate either causation or damages as a result of the company’s actions, both of which are necessary to prove breach of contract.

6th Circuit:ADA Asperger’s Claim Rejected

The 6th Circuit ruled Dec. 8, 2010, in Jakubowski v. Christ Hospital, Inc., that a medical resident with Asperger’s syndrome was not covered by the Americans with Disabilities Act (ADA).

Martin Jakubowski was a resident in family medicine at Christ Hospital when he was diagnosed with Asperger’s, which hindered his ability to communicate. He requested that the hospital accommodate his disability by making other employees aware of his condition and its symptoms and triggers. The hospital denied the request, and offered instead to assist in placing Jakubowski in a pathology residency, which would require very little patient interaction.

Jakubowski filed suit, claiming violation of his ADA rights. At the district level, he cited several ways the hospital could accommodate his condition that neither party had previously considered. The hospital argued that his Asperger’s endangered patients. The district court granted summary judgment to the hospital, explaining that Jakubowski was not an “otherwise qualified individual” entitled to ADA protection.

The 6th Circuit affirmed, noting that Jakubowski’s proposal didn’t sufficiently address his obstacle and that the hospital engaged in the interactive process, as required, by discussing Jakubowski’s proposal and offering an alternative.

7th Circuit: Employee Who Failed Test Can’t Claim Discrimination

Rejecting the transfer request of an employee who fails a required test is not discriminatory, the 7th Circuit affirmed Nov. 19, 2010, in Montgomery v. American Airlines.

Anthony Montgomery sued his employer, American Airlines, for discrimination after he was denied permanent transfer to a mechanic’s position in 2006. At the end of a six-month probationary period, he failed the required qualification test and returned to his previous position.

Montgomery later complained of racial harassment and discrimination. American investigated but found no such discrimination. When Montgomery filed suit, the district court granted summary judgment to American.

Montgomery needed to establish that American had either participated in or neglected to correct harassment. Since he only alleged harassment from a co-worker and did not to complain to management, the 7th Circuit found that he satisfied neither requirement. Regarding the discrimination claim, which was predicated on three American Airlines mechanics who had not passed the required test, the court found that none were similarly situated to Montgomery and therefore, no discrimination had taken place.

DC Circuit: E-cigarettes Aren’t Medical Devices

Electronic cigarettes (e-cigarettes) are not medical devices subject to regulation under the Food, Drug, and Cosmetic Act (FDCA), the D.C. Circuit ruled on Dec. 7, 2010, in Sottera, Inc. v. FDA.

When the Food and Drug Administration (FDA) blocked the import of shipments of e-cigarettes by Sottera, Inc., doing business as “NJOY,” the company sought an injunction. At dispute was the FDA’s regulatory authority over e-cigarettes, which administer vaporized puffs of nicotine without producing flames or smoke. The FDA categorized e-cigarettes as “drug-device combinations,” but NJOY argued the Tobacco Act applies because e-cigarettes are marketed as products for “smoking pleasure”–not as therapeutic products or quit-smoking aids.

The district court agreed, granting a preliminary injunction against the FDA, which the D.C. Circuit upheld. The FDCA’s jurisdiction over tobacco products is limited to those marketed with claims of therapeutic effects.