It should be obvious to anyone reading these words that it is never a good idea to lie to a court of law. That's a pretty basic concept, right? Lying in court documents is called "perjury," and it's a crime in every State in the union. So it's always interesting to hear a story about someone who failed to grasp this fairly simple concept -- and how they got caught doing it. This time it was the Husains, longtime McDonald's franchisees, who lied to a court in Northern California in litigation against their franchisor.
The decision in Husain v. McDonald’s Corp. was handed down by the California Court of Appeals on March 28, 2013. The story goes something like this:
The Husains are longtime McDonald’s franchisees, having owned up to five different McDonald’s franchises located in northern California since the early 1980s. In June 2005, the Husains entered into an agreement with a third party to purchase an additional 7 restaurants. Of those, 3 of the franchise agreements were nearing the end of their 20-year franchise terms. As part of the purchase, the Husains asked McDonald's whether it would agree to provide them with new 20-year franchise agreements when the 3 expiring agreements came to the end of their respective terms.
McDonald's offered to extend the Husains' expiring terms by letter, which offer had to be countersigned and agreed to by the Husains to become effective. McDonald’s claimed the offer was never accepted and expired on its own terms, leaving the Husains without renewal franchise agreements for the 3 expiring restaurants. The Husains sued to enforce McDonald’s alleged promise to them. McDonald’s filed a cross-complaint to compel the Husains to relinquish the 3 restaurants to the company.
To "prove" that they had, indeed, accepted McDonald's offer to extend the expiring franchise terms, the Husains produced a certificate of mailing with a United States Postal Service postmark dated before the offer expired, alleging that the agreement had been properly accepted. McDonald’s countered by producing evidence that the post office that had supposedly provided the certificate of mailing was closed on the date bearing the postmark, and that the postmark stamp on the certificate was not in use until 2008.
Based on this evidence, McDonald’s claimed that the Husains had committed perjury and fabricated evidence, and sought terminating sanctions -- in other words, McDonald's asked the Court to sanction the Husains by not permitting them to continue litigating their case. The trial court denied the motion, finding that at most McDonald’s would be entitled only to dismissal of a cause of action the Husains had already dismissed, and that there was a factual dispute regarding the fabrication charges that could not be determined at the motion stage.