Mobil Oil Corp. v. Bransford

Apparent agency requires three elements: a representation by the purported principal, the third party's reliance on that representation, and a detrimental change in position based on that reliance. The decisive defect in Bransford's claim was the first element. He identified no affirmative representation that Mobil controlled the station's operations or employment decisions; he instead inferred control from the Mobil name, symbols, products, and routine franchise assistance.

The Court concluded that, in the modern franchising context, consumers understand that the use of a franchisor's logo and advertising does not necessarily show that the franchisor controls substantial aspects of the franchisee's business. Routine support provided under a franchise agreement likewise does not communicate that the franchisor directs the franchisee's daily operations or employees.

The contract expressly characterized Berman as an independent businessman and disclaimed Mobil's right to control or direct the conduct or management of Berman's business. Although a franchisor may become an actual or apparent principal through its contract, conduct, or representations, that requires substantial participation in directing or managing the franchisee beyond ordinary franchise-support activities. Nothing in the record showed that Mobil and Berman departed from their contractual arrangement, actually or apparently.

Mobil's ownership of the land did not alter the result. Ownership matters only insofar as it suggests actual or apparent control over the business. Here, Mobil had leased the property to Berman, who had actual and superseding control of the premises, and the record contained no additional facts suggesting that Mobil controlled the station as to Bransford.

The relevant fact in Orlando Executive Park was not the nature of the franchisor's business or the use of its marks. Rather, the franchisor directly operated several components of the complex. That substantial direct participation itself represented to the public that the franchisor controlled the business.

Because Orlando Executive Park could be read to distinguish oil-company cases or to treat trademark displays alone as sufficient proof of apparent agency, it had created unnecessary confusion. The Court clarified that the same requirement applies across franchising settings: there must be conduct or a representation communicating that the franchisor exercises substantial control.

Apparent agency is a theory of vicarious liability: it imputes an agent's actionable conduct to the principal. If the agent cannot be held liable on a particular claim, there is no actionable conduct to impute to the principal.

The district court's disposition of the security claim was unclear, and the Supreme Court did not decide precisely what the district court had held. It nevertheless instructed the lower courts that Mobil could not face vicarious liability for a claim that had been dismissed against Berman or the employee.