[1] Mobil Oil Corp. v. Bransford, 648 So. 2d 119, 120 (Fla. 1995). Return to text.

[2] Id. at 122 (Shaw, J., dissenting). Return to text.

[3] Id. Return to text.

[4] Id. at 120. Return to text.

[5] Id. Return to text.

[6] Id. Return to text.

[7] Id. at 122 (Shaw, J., dissenting). Return to text.

[8] Id. at 121. Return to text.

[9] Id. Return to text.

[10] Compare Mobil Oil Corp. v. Bransford, 648 So. 2d 119 (Fla. 1995) with Holiday Inns, Inc. v. Shelburne, 576 So. 2d 322 (Fla. 4th DCA 1991) (finding that a jury could reasonably determine that Holiday Inns, Inc. established an apparent agency relationship with its franchisee because the franchisee displayed the Holiday Inns sign and logo on its premises). Return to text.

[11] Thomas M. Pitegoff, Franchise Relationship Laws: A Minefield for Franchisors, 45 BUS. LAW. 289, 291 (1989) (stating that U.S. Department of Commerce estimated, by 1986, that retail sales by franchise establishments had grown to represent 34% of all retail sales by). While state law dictates the precise definition of the term "franchise," most definitions have a combination of the following: (a) either a marketing plan or a community of interest element, (b) a trademark element, and (c) a fee element. Id at 292-93. Return to text.

[12] David A. Beyer, Franchise Vicarious Liability in Florida: A Survey and Recent Developments, FLA. B.J., Feb. 1995, at 18. Beyer states that from 1960 through 1993, there appears to have been 11 reported opinions dealing with vicarious liability in the franchise industry in Florida. Id. As of the date of Mr. Beyer's survey, there were already four opinions reported in Florida in 1994. Id. Return to text.

[13] See, e.g., Gizzi v. Texaco, Inc., 437 F.2d 308 (3d Cir.) (two-one decision), cert. denied, 404 U.S. 829 (1971); Mobil Oil, 648 So. 2d at 119. Return to text.

[14] See, e.g., Mobil Oil, 648 So. 2d 119. Return to text.

[15] Charles R. Britt, Note, Agency—Apparent Authority and Agency by Estoppel: Emerging Theories of Oil Company Liability for Torts of Service Station Operators, 50 N.C. L. REV. 647, 648 (1972). Return to text.

[16] W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS § 69, at 499 (5th ed. 1984). This Note addresses the rationale behind vicarious liability infra part IV. Return to text.

[17] E.g., Leach v. Brilad Oil Co., 753 F. Supp. 366, 368 (S.D. Ga. 1991). Additional factors courts may take into account in determining whether the requisite degree of control or the right to it exists include: the kind of occupation and the customs of the community as to whether the employer usually supervises the type of work involved; whether the one employed is engaged in a distinct business or occupation and the skill required of the employee; who supplies the place and instrumentalities of the work; the length of time the employment is to last; and the method of payment. KEETON ET AL., supra note 16, at 501.

While courts must balance all possible factors to determine whether a master-servant relationship exists, Prosser and Keeton state that a relatively accurate rule-of-thumb considers whether the community would regard the person employed as part of the employer's working staff. Id. at 501, 502. If the community would view the employee in this manner, it may be said that the employee is a "servant" of the employer and that the employer may be held vicariously liable for the employees' torts within the scope of employment. Id.

The idea that the master is capable of maintaining sufficient control over the servant's duties to eliminate the possibility that the servant will act negligently will not prove valid in many circumstances. Cf. id. at 500 (stating that the "control" a master has over a servant is more or less fictional). Further, the rule-of-thumb stated by Prosser and Keeton and many of the indicia that courts purport to examine suggest that the doctrine of respondeat superior stems from concepts of reliance or estoppel. Since the rationale behind the theories of reliance and estoppel, discussed infra part IV, remains valid despite the absence of the control element, the control requirement of the doctrine of respondeat superior seems to amount to a limitation imposed by courts to limit the scope of vicarious liability and not a rationally indispensable element. Cf. id. (explaining that English courts receded from the control re quirement as a requisite to vicarious liability soon after 1700 in order to deal with the complications of commerce and industry). Return to text.

[18] Britt, supra note 15, at 648. Return to text.

[19] The courts, of course, maintain much latitude in determining the requisite degree of control necessary in each case. Return to text.

[20] See, e.g., Leach, 753 F. Supp. at 368. Return to text.

[21] RESTATEMENT (SECOND) OF AGENCY § 8 cmt. a (1957). Return to text.

[22] Id. § 8. Return to text.

[23] Mobil Oil Corp. v. Bransford, 648 So. 2d 119 (Fla. 1995). Note that, although the franchisor need not actually exercise control over the franchisee to be held liable under apparent authority, the plaintiff must reasonably believe that the franchisor does exercise such control, or maintains the authority to do so, in order to establish the reliance requirement. Return to text.

[24] RESTATEMENT (SECOND) OF AGENCY, supra note 21, § 8 cmt. b. Return to text.

[25] 437 F.2d 308 (3d Cir. 1971). Return to text.

[26] Id. Return to text.

[27] Id. at 309. Return to text.

[28] Id. at 310. Return to text.

[29] Id. at 309. Return to text.

[30] Id. at 310. Other evidence mentioned by the court included proof that Texaco leased the property on which the filling station was located to its employee, that Texaco owned certain pieces of equipment used at the station and sold its products at the station, and that Texaco engaged in substantial national advertising not only to promote Texaco products, but also to convey the impression that Texaco dealers were skilled in automotive servicing. Id. at 309-10.

Here, as in many other cases involving apparent authority, the court failed to distinguish those factors relevant to the apparent authority analysis from those not relevant under this theory. Because apparent authority is based solely on concepts of reliance and estoppel, those facts of which third parties have no knowledge (such as who owns the land and equipment, the content of the franchise contract, etc.) should not be relevant in the apparent agency determination. See RESTATEMENT (SECOND) OF AGENCY, supra note 21, § 8 cmt. a (stating that apparent authority is entirely distinct from authority, either express or implied). The failure of courts to distinguish factual elements relied upon to establish apparent authority from those relevant only to actual authority leads to much of the confusion surrounding the basis for these two theories. Return to text.

[31] Gizzi, 437 F.2d at 310. Return to text.

[32] Robert W. Emerson, Franchisors' Liability when Franchisees Are Apparent Agents: An Empirical and Policy Analysis of "Common Knowledge" About Franchising, 20 HOFSTRA L. REV. 609, 621-22 (1992). Return to text.

[33] Gizzi, 437 F.2d at 310. Return to text.

[34] See, e.g., Sutton v. Chevron Oil Co., 514 P.2d 1301 (N.M. Ct. App.), rev'd, 515 P.2d 1283 (N.M. 1973). Return to text.

[35] Emerson, supra note 32, at 628. Return to text.

[36] Comment, "You Can Trust the Man Who Wears the Star"—Or Can You?: The Use of Apparent Authority To Establish a Principle's Tort Liability, 33 U. PITT. L. REV. 257, 267 (1971) (commenting that from the fact pattern in Gizzi, it is difficult to conceive of any situation where an inference of apparent authority would not be warranted). See Robert N. Davis, Jr., Comment, Service Station Torts: Time for the Oil Companies To Assume Their Share of the Responsi bility, 10 CAL. W. L. REV. 382, 390-91, 396 (1974). Return to text.

[37] See Smith v. Cities Serv. Oil Co., 346 F.2d 349, 352 (7th Cir. 1965) (stating that it is generally recognized that provisions in service station leasing agreements almost universally provide that the lessee may display the lessor's brand signs and honor the lessor's credit cards and that the lessor may make suggestions as to the operation of the station and may terminate the lease); Emerson, supra note 32, at 620-21 (stating that numerous examples exist of courts' finding or permitting a jury to find an agency relationship based on vicarious liability in the gasoline industry). Return to text.

[38] Emerson, supra note 32, at 645. Return to text.

[39] Id. Return to text.

[40] Id. Return to text.

[41] Id. Such indicia could include circumstances similar to those in Gizzi v. Texaco, Inc., 437 F.2d 308 (3d Cir. 1971), where an advertising campaign was designed by the franchisor to encourage customers to utilize service facilities of franchise stations, in addition to purchasing the franchisor's products. See Chevron U.S.A., Inc. v, Lesch, 570 A.2d 840 (Md. 1990). In Chevron, the court distinguished the circumstances surrounding the advertising campaign in Gizzi from a pattern of facts involving a similar advertising campaign previously conducted, but nearly terminated, prior to the alleged tortious incident. The court found that the latter situation did not provide the additional basis for the reasonable reliance necessary to overcome the common knowledge doctrine. Id. at 843. Return to text.

[42] Emerson, supra note 32, at 648. Return to text.

[43] See Mobil Oil Corp. v. Bransford, 648 So. 2d 119, 121 (Fla. 1995) (finding that despite the filling station's display of Mobil's logo, colors, and trademark symbols, the plaintiff clearly failed to allege the minimum level of representation necessary to create an apparent agency relationship). Return to text.

[44] Id. Return to text.

[45] Id. at 122 (Shaw, J., dissenting). Return to text.

[46] Id. Return to text.

[47] Id. Return to text.

[48] Id. Return to text.

[49] Id. Return to text.

[50] Id. at 120. Return to text.

[51] Id. Return to text.

[52] Id. Return to text.

[53] Id. Return to text.

[54] Id. at 122 (Shaw, J., dissenting). Return to text.

[55] Petitioner's Brief at 3. Return to text.

[56] Id. at 4. Return to text.

[57] Id. Return to text.

[58] 433 So. 2d 491 (Fla. 1983). Return to text.

[59] Mobil Oil, 648 So. 2d at Return to text.

[60] Id. Return to text.

[61] Id. Return to text.

[62] Id. at 120. Return to text.

[63] Id. Return to text.

[64] Id. at 121. Return to text.

[65] Id.; Orlando Executive Park, Inc. v. Robbins, 433 So. 2d 491, 492 (Fla. 1983). Return to text.

[66] Orlando Executive Park, 433 So. 2d at 492. Return to text.

[67] Id. at 494. Return to text.

[68] Id. Return to text.

[69] Id. Return to text.

[70] Id. Return to text.

[71] Mobil Oil Corp. v. Bransford, 648 So. 2d 119, 121 (Fla. 1995). Return to text.

[72] 392 So. 2d 357 (Fla. 4th DCA 1981). Return to text.

[73] Compare Orlando Executive Park, 433 So. 2d at 494 with Sydenham, 392 So. 2d at 357. Return to text.

[74] Sydenham, 392 So. 2d at 357. Return to text.

[75] Mobil Oil, 648 So. 2d at 121. Return to text.

[76] Id. Return to text.

[77] Id. at 120. Return to text.

[78] Id. at 121. Return to text.

[79] See Beyer, supra note 12, at 66. Beyer comments that because of Mobil Oil, plaintiffs will have to try to establish the representation element by noting instances of actual control by the franchisor. However, if a plaintiff can show actual control, the claim should be based on actual, not apparent, agency. Id. Return to text.

[80] Id. Return to text.

[81] See supra part II. Return to text.

[82] See supra part III.B. Return to text.

[83] See Beyer, supra note 12, at 20. Return to text.

[84] See id. Return to text.

[85] However, this reasoning again confuses control by the franchisor with the apparent authority determination. Return to text.

[86] See Mobil Oil Corp. v. Bransford, 648 So. 2d 119, 121 (Fla. 1995). Return to text.

[87] Id. at 120-21. Return to text.

[88] See Randall K. Hanson, The Franchising Dilemma: Franchisor Liability for Actions of a Local Franchisee, 19 N.C. CENT. L.J. 190, 193 (1991). Return to text.

[89] See id. Return to text.

[90] See Emerson, supra note 32, at 628. Return to text.

[91] Beyer, supra note 12, at 66. Return to text.

[92] Emerson, supra note 32, at 628-29. Emerson cites Buchanon v. Canada Dry Corp., 226 S.E.2d 613 (Ga. Ct. App. 1976) (reversing the lower court's grant of summary judgment in favor of the defendant franchisor despite the fact that no third-party reliance could have existed to support a finding of apparent agency in a case involving the franchisee's negligent operation of a truck), to illustrate how some courts have perverted the apparent authority doctrine to allow a plaintiff to recover from a franchisor where no actual agency existed. Return to text.

[93] See Beyer, supra note 12, at 66. Return to text.

[94] This school of thought is based on the law and economics theory. For an example of a law and economics analysis of tort liability, see Guido Calabresi, Some Thoughts on Risk Distribution and the Law of Torts, 70 YALE L.J. 499 (1961); WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF TORT LAW (1987); S. SHAVELL, ECONOMIC ANALYSIS OF ACCIDENT LAW (1987). Return to text.

[95] This school of thought is embodied in the RESTATEMENT (SECOND) OF AGENCY, supra note 21. For further analysis of the relationship between tort law and moral theory, see JEFFERY G. MURPHY & JULES L. COLEMAN, PHILOSOPHY OF LAW 54-84 (1987) and George P. Fletcher, Law and Morality: A Kantian Perspective, 87 COLUM. L. REV. 533 (1987). Return to text.

[96] For a theory based on the proposition that tort law is a mixture of economic efficiency and moral justice, see Jules L. Coleman, Tort Law and the Demands of Corrective Justice, 67 IND. L.J. 349 (1992). Return to text.

[97] Calabresi, supra note 94, at 500. For further commentary on the concept of strict liability in tort law, see LANDES & POSNER, supra note 94, at 54-84, and W. PAGE KEETON ET AL., supra note 16, § 98, at 692-94. Return to text.

[98] Calabresi, supra note 94, at 502. Return to text.

[99] Id. Return to text.

[100] Id. at 500-01. Return to text.

[101] The complications with applying this theory under certain industry conditions are discussed supra part IV.A.i. Return to text.

[102] Calabresi, supra note 94, at 513. Return to text.

[103] Id. at 503. Return to text.

[104] Id. Return to text.

[105] Id. Return to text.

[106] Id. at 505. Return to text.

[107] Alan O. Sykes, The Economics of Vicarious Liability, 93 YALE L.J. 1231, 1266 (1984) (citing Smith v. Cities Serv. Oil Co., 346 F.2d 349 (7th Cir. 1965)). Return to text.

[108] Smith, 346 F.2d at 349. In Smith, the service station operator poured gasoline into a hot carburetor and the gasoline ignited. Id. The operator then threw the gasoline onto the plaintiff, who sustained severe burns. Id. Return to text.

[109] Id. at 352. Return to text.

[110] Id. at 351-52. Return to text.

[111] Sykes, supra note 107, at 1267. Return to text.

[112] Id. Return to text.

[113] Id. Knowing that it might make the operator a servant, Cities Service did not pay him a straight salary. Return to text.

[114] See id. Return to text.

[115] Id. The details of the contracts between Cities Service and the station operator also indicated that Cities Service had renegotiated the operator's rent on numerous occasions. One agreement called for the operator to pay only $1 per month in rent, and another guaranteed the operator net earnings of $335 a month. Id. The Seventh Circuit attributed these modifications to the "impecunious nature of the operation, coupled with the defendant's desire that the station be operated as an outlet for its products." Id. (citing Smith, 346 F.2d at 349). Return to text.

[116] Id. The service station was marginally profitable for Cities Service to operate; the main benefit to Cities Service came from a percentage earned from the sale of products. Id. Return to text.

[117] Id. This limited liability allowed the operator to run the station and distribute Cities Service products, while the operator earned income from performing automobile repairs on the premises. Id. Return to text.

[118] Id. Return to text.

[119] See id. at 1268. Return to text.

[120] See Calabresi, supra note 94, at 517, 527; Emerson, supra note 32, at 634-36. Return to text.

[121] Calabresi, supra note 94, at 517. Return to text.

[122] Id. Return to text.

[123] See Britt, supra note 15, at 652. Return to text.

[124] Id. Return to text.

[125] Id. Return to text.

[126] Calabresi, supra note 94, at 518. However, if loss spreading were the only goal of a system of liability, the most desirable system would consist of a government relief program that would spread the burden of mishaps among the population through taxes. Id. Return to text.

[127] Id. at 519. Return to text.

[128] Id. Return to text.

[129] Id. Return to text.

[130] Id. at 524. Since relatively few oil companies control most of our country's oil supply, the oil industry would probably fall into this category of business. Return to text.

[131] Id. Return to text.

[132] Id. Return to text.

[133] Id. at 525. The inability of businesses to exit an industry produces undesirable social and economic effects and may put pressure on firms to take their chances without adequately insuring against losses. Id. at 529. Return to text.

[134] Id. at 524. Return to text.

[135] Emerson, supra note 32, at 636. Return to text.

[136] Id. Return to text.

[137] These two public policy precepts undergird the actual agency principle of respondeat superior. Id. Return to text.

[138] While usually focused on tort claims, the loss prevention argument may serve equally well in a contract context by providing incentive for the franchisor to maintain a high degree of control over its franchisees' books in order to ensure that the franchisor receives the proper amount of royalties and other fees. Id. 636-37. Return to text.

[139] Id. Commentators have noted that if liability becomes too broad, the mere threat of litigation may deter parties from socially beneficial innovations. Id. at 637 n.100. For this reason, liability is normally imposed on a franchisor only for failure to exercise "reasonable care and control." Id. The fact that holding the defendant liable under vicarious liability creates a strong incentive to prevent harm is often considered a factor in determining whether to hold a defendant liable. KEETON ET AL., supra note 16, at 23. Return to text.

[140] Emerson, supra note 32, at 637. Return to text.

[141] See id. Return to text.

[142] Britt, supra note 15, at 652. Return to text.

[143] See Calabresi, supra note 94, at 527. Calabresi compares the deep pocket theory of vicarious liability to the tax code; if one favors a highly graduated system of taxes, one will also likely find the deep pocket theory of liability compelling. Id. Return to text.

[144] Hanson, supra note 88, at 192. Return to text.

[145] Id. Return to text.

[146] Id. Return to text.

[147] Calabresi, supra note 94, at 527. Return to text.

[148] Id. at 530. Return to text.

[149] Britt, supra note 15, at 652.

These concepts hold that, as between two innocent parties, the burden is placed on the one whose misleading manifestations have created reliance and change of position. Id. Over the last half century, courts have evidenced an increasing tendency to consider and entertain the contention that law is, or at least should be, primarily a question of which interest is to prevail even when no one is at "fault." KEETON ET AL., supra note 16, § 4 at 21-22. In fact, some critics of the law and economics approach to tort law have even argued that a system of law designed to promote efficiency is immoral. See Ronald M. Dworkin, Is Wealth a Value?, 9 J. LEGAL STUD. 191 (1981). Return to text.

[151] Id. Return to text.

[152] Emerson, supra note 32, at 630. Return to text.

[153] Id. Return to text.

[154] Id. Failure on the part of the franchisee to maintain the charade may well be a breach of contract in many cases. See id. at 630 n.71. Return to text.

[155] Id. at 631. Return to text.

[156] Id. at 630. Return to text.

[157] Mobil Oil Corp. v. Bransford, 648 So. 2d 119 (Fla. 1995). Return to text.

[158] Smith v. Cities Serv. Oil Co., 346 F.2d 349 (7th Cir. 1965). Return to text.

[159] See John D. Lackey, Liability of Oil Company for its Lessee's Torts, 1965 LAW F. 915, 920 (stating that oil companies should not be able to distribute their products through franchises without assuming responsibility for injuries resulting from the conduct of business). Return to text.

[160] Commentators often discuss theories of law and economics along with reliance principles as justifications for franchisor liability. See Emerson, supra note 32, at 609. Return to text.

[161] See supra part II. Return to text.

[162] See supra part IV. Return to text.

[163] See supra part II. Return to text.

[164] But see Calabresi, supra note 94, at 518 (stating that enterprise liability is the best system from the standpoint of resource allocation). Return to text.

[165] See id. at 502. Return to text.

[166] Emerson, supra note 32, at 635. Return to text.

[167] Id. at 634. Return to text.

[168] Although oil companies would prefer for consumers to believe that franchises are owned and operated by the oil company, these companies should not be permitted to benefit by allowing consumers to be influenced by faulty impressions created by franchisor-marketing efforts. Return to text.

[169] Although scholars have suggested this sort of legislative intervention into the franchising industry for many years, see Davis, supra note 36, at 401 and Emerson, supra note 32, at 666, the Legislature has refused to take action. Presumably, the oil industry exerts a very powerful influence over the Legislature to prevent such measures. Return to text.

[170] Davis, supra note 36, at 402. Return to text.

[171] Id. Return to text.

[172] While informing consumers of their risks may not change the habits of many consumers, allowing consumers to make informed decisions would arguably eliminate many ethical problems that arise under the present system. Return to text.

[173] Davis, supra note 36, at 404. Return to text.

[174] Id. at 405. Return to text.

[175] Id. at 404. Return to text.

[176] Id. Return to text.

[177] Id. at 405 (commenting that the oil companies, not the service station operators, should secure the necessary insurance because oil companies have the economic power to bargain effectively with insurance companies). Return to text.

[178] See supra notes 8-10 and accompanying text. Return to text.

[179] Such concerns exist anytime a tort defendant is perceived by the jury as wealthy or well-insured, such as in the case of physicians. See Neil Vidmar, Empirical Evidence on the Deep Pockets Hypothesis: Jury Awards for Pain and Suffering in Medical Malpractice Cases, 43 DUKE L.J. 217-18 (1993). However, courts do not seek to eliminate physician liability to guard against unjust awards. The reluctance of courts to take this approach in the area of medical malpractice is evidenced by the continuing public focus on the physicians' need for malpractice insurance and concern about tort liability. See, e.g., F. Patrick Hubbard, The Physicians' Point of View Concerning Medical Malpractice: A Sociological Perspective on the Symbolic Importance of "Tort Reform," 23 GA. L. REV. 295, 297 (1989) (stating that the paramount problem in physician tort liability is the rapid increase in the cost of insurance). Return to text.

[180] FLA. STAT. § 768.74 (1995) (granting Florida courts the authority to hear motions for remittitur and additur "to determine if such amount is excessive or inadequate in light of the facts and circumstances which were presented to the trier of fact"). Return to text.

[181] Judicial activism of this type results in the judiciary's performing legislative functions and formulating policy. See GEOFFERY R. STONE ET AL., CONSTITUTIONAL LAW 362-67 (2d ed. 1991) (explaining why separation of powers was to many framers the most fundamental element in the U.S. Constitution). Return to text.

[182] Emerson, supra note 32, at 648. Return to text.

[183] See id. at 641 (stating that in cases not involving gasoline stations, courts may be less likely to find that consumers have a common body of knowledge about franchising). Return to text.

[184] See supra part III.B. Return to text.

[185] See supra notes 80-90 and accompanying text. Return to text.

[186] See supra part V.A. Return to text.

[187] See supra part V.B. Return to text.

[188] See supra part V.C. Return to text.