## Facts

- eTeam, Inc. maintained a corporate credit account used to pay business travel expenses for its employees and consultants.
- In October 2013, eTeam authorized its employee, Jackline Ongwenyi, to stay for five days at the Hilton Garden Inn, San Francisco Airport North (the Hotel), and to charge that stay to eTeam’s corporate account.
- After the authorized period ended, Ongwenyi remained at the Hotel for roughly 15 months (into January 2015), including after eTeam terminated her employment.
- The Hotel continued charging eTeam’s corporate account approximately every 7–10 days, resulting in about $82,883.68 in charges eTeam alleged were unauthorized.
- The Hotel was operated by a franchisee (identified in the record as BR Hotels Operating LLC / BRE Select Hotels Operating LLC) under a franchise agreement with a Hilton-affiliated brand entity for the Hilton Garden Inn system.
- The franchise agreement included a “no agency” clause stating the franchisee was an independent contractor and that neither party was the other’s legal representative or agent, and it stated the franchisee had exclusive day-to-day control over hotel operations.
- The agreement also incorporated brand standards and a detailed standards manual governing many aspects of hotel operation, and provided Hilton-related entities enforcement rights (including termination for noncompliance).
- Record evidence described the standards as highly detailed, including operational requirements for hotel management, training, housekeeping/food service details, and—most relevant to eTeam’s claims—procedures for reservations and payment processing, including credit-card authorization and billing practices.
- eTeam sued Hilton Worldwide, Inc. and Hilton Worldwide Holdings, Inc. (together, the Hilton entities), asserting claims tied to the continued charges and seeking to hold the Hilton entities responsible based on agency and related theories, even though the franchised property was not owned or directly operated by the Hilton entities.
- The Hilton entities moved for summary judgment, arguing that, as franchisors and brand owners, they lacked the operational control needed for vicarious liability and should be dismissed as a matter of law.

## Issues

1. Whether the Hilton entities were entitled to summary judgment because the franchised hotel operator was an independent contractor under a franchise agreement disclaiming any agency relationship.
2. Whether evidence of Hilton’s standards, oversight rights, and control over hotel procedures—particularly reservation and billing practices—created a genuine dispute of material fact on actual agency and/or apparent agency sufficient to keep the Hilton entities in the case.

## Decision

- The court denied the Hilton entities’ motion for summary judgment.
- The court held the “no agency” language in the franchise agreement was relevant but not conclusive under New Jersey law, which focuses on the right of control and the parties’ relationship in practice.
- The court found a reasonable jury could conclude, based on the franchise documents and standards manual, that Hilton retained significant control over operational details connected to the alleged wrongdoing (the continued authorization and charging process).
- The court also concluded the record permitted a jury finding of apparent agency based on the Hotel’s operation under the Hilton Garden Inn name and the way the brand and systems could lead a third party to believe it was dealing with Hilton.
- Because material factual disputes existed on control and agency-related questions, the Hilton entities were not entitled to judgment as a matter of law.

## Legal Principles

- Summary judgment is improper where the evidence, viewed in the nonmovant’s favor, shows a genuine dispute of material fact and a reasonable factfinder could return a verdict for the nonmoving party.
- Under New Jersey agency law, an agency relationship may be shown by the principal’s right to control the agent’s conduct; contractual labels such as “independent contractor” and “no agency” are not dispositive.
- In the franchise context, franchisor requirements limited to brand protection may be insufficient for vicarious liability, but detailed operational control—especially control tied to the conduct alleged to be wrongful—can support an agency theory.
- Apparent agency (or apparent authority) may arise when the purported principal’s manifestations lead a third party to reasonably believe the actor is authorized to act for the principal, and the third party reasonably relies on that belief.
- Whether a franchisor’s standards, centralized systems, branding, and operational requirements amount to actual or apparent agency is often fact-intensive and may be for the jury when the record supports competing inferences.

## Conclusion

The court refused to dismiss the Hilton entities at summary judgment because eTeam produced evidence from the franchise agreement and standards materials from which a jury could find that Hilton exercised enough control—particularly over reservation and payment procedures—and held the hotel out as part of the Hilton brand such that actual or apparent agency could support liability for the unauthorized charges.


eTeam, Inc. v. Hilton Worldwide Holdings, Inc., 2017 WL 2539395 (2017)