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Appellate Revives Franchisee’s Defamation Claims against Cold Stone, Attorney Robert Zarco

An appeals court has now cleared the way for former Cold Stone Creamery franchisee Cecil Rolle to move forward with his defamation lawsuit against the franchisor and its legal counsel, Robert Zarco. The three-judge panel ruled on Wednesday that the alleged damaging remarks Cold Stone and its attorney made about the Florida ice cream shop owner after he appeared on a national television franchise expose were not protected as the trial court determined.

In reading the appellate decision, Rolle said he is resolved and anxiously looking forward to resuming this fight and moving into the discovery phase where they are finally going to get some answers. "We realize there may be members of the Cold Stone legal team, other than Miami attorney Robert Zarco, who should be in this litigation. Ironically, my litigation with both Cold Stone and attorney Robert Zarco has First Amendment rights at its core, which has generated a lot of national attention in the legal community and among large media organizations," Rolle explained.

The CNBC documentary Behind the Counter: The Untold Story of Franchising premiered on December 15, 2010, highlighting the success of some franchise companies and the back operations, some negative, of others: Five Guys hamburger chain, Camp Bow Wow doggie day care, Cold Stone Creamery and Proctor & Gamble in its effort to possibly franchise its Tide-branded dry cleaners and Mr. Clean car washes.

While other top executives participated in the television presentation at the request of CNBC's award winning reporter Darren Rovell, Cold Stone president Dan Beem refused the invitation, later stating, "Rovell approached Kahala [Cold Stone parent company] with a clear agenda and bias." He said Kahala executives felt an on-camera interview came with inherent risk that CNBC could leave out full or partial answers or alter context to support a negative, one-sided piece."

After the original program was aired several times the following week, which included not only other interviews of various dissatisfied franchisees, but also one recorded earlier with Cecil Rolle voicing his grievances with Cold Stone's franchise operations, executives balked. That prompted Cold Stone executives to send an email bulletin throughout its system on December 23, 2010, stating they had hired attorney Robert Zarco of Zarco Einhorn Salkowski & Brito to head up the company's new strategy "to defend and protect" its brand against "inaccuracies" of the CNBC documentary. Zarco, well-known as a franchisee attorney, affirmed his new position with the franchisor. He stated in an email and interview, "I will now be the face of Cold Stone, the one to speak on behalf of the franchisees to protect the brand." Prior to the exposé being aired, Zarco had represented Cold Stone franchisees and formed the National Independent Association of Cold Stone Creamery Franchisees Inc. (NIACSF).

In a strongly worded letter (pdf) sent December 24 to David N. Sternlicht, CNBC's media counsel, Zarco admonished CNBC for acting "irresponsibly, wrongfully and with malicious intent, negligently, and with reckless disregard for the interests of the franchisor, the franchisor's employees, the franchisees' employees, and consumers."  He proclaimed that its report was based on numerous defamatory, false and misleading statements about Cold Stone Creamery's franchisor-franchisee relationship.

Robert Zarco did not stop there. He also individually attacked Cecil Rolle and his business practices and ethics. Zarco's letter expressed that Rolle's accusations on the air regarding Cold Stone taking "kickbacks" from vendors and charging franchisees hidden expenses were "highly inflammatory and intended to imply illegal activity" by the franchisor. Instead, the attorney pointed to the franchise agreement saying Cold Stone was entitled to collect reasonable financial incentives from vendors. He asserted that the fees the franchisor collected were not hidden, improper or illegal.

CNBC agreed to update the documentary, this time with Cold Stone president Dan Beem agreeing to appear in the interview with his newly appointed counsel, Robert Zarco, and their hand-picked franchisee, Rudy Puig, sitting between the two men. On cue, Puig exclaimed, "All my stores have been profitable." [Court records showed otherwise.]

Cecil Rolle today said Kahala-Cold Stone disapproved of him speaking out to the public and to the franchisees about the damage caused by Cold Stone's kickback scheme, which caused franchisees to fail and Cold Stone's U.S. store count to consistently decline. He said, "I suppose CNBC was the breaking point for them. They in turn hired Robert Zarco who was paid by Kahala-Cold Stone to supposedly represent the franchisees, but instead represented the interest of Kahala-Cold Stone Creamery and blamed his own clients for their financial difficulties during his CNBC interview."

Rolle files civil action for false, defamatory statements

Cecil Rolle filed the first amended complaint against Cold Stone, Zarco and his firm, NIACSF, and others also named in the lawsuit, Cecil Rolle v. Cold Stone Creamery Inc. et al, 3D13-1821, on January 17, 2012, listing three counts, all which the Florida's Third District Court of Appeal found valid causes of action. (Video of Third District Court of Appeals proceeding March 1, 2017 by drive.google.com attached below)

The trial count eventually dismissed the first amended complaint with prejudice. It found that all three counts "are subject to dismissal on the grounds that the statements allegedly made and conduct allegedly engaged by Cold Stone and Zarco defendants were made in the course of a judicial proceeding and, thus are absolutely privileged." The opinion states that because of the existence of the "absolute privilege," any attempt by Rolle to allege these claims in subsequent pleading would be pointless.

Florida's Third District Court announced in its opinion Wednesday, "We reverse the two orders of dismissal with prejudice because the trial court went outside the four corners of the complaint and its attachments in granting appellees' [Cold Stone, Zarco, NIACSF and others named] motion to dismiss." The appellate judges state that "specifically eight letters from Rolle's counsel to appellees show on their face that they were sent pursuant to section 770.01 [of Florida Statute]." And that the first paragraph of each letter further states that the purpose of the letter is to serve as notice that Rolle intended to file a civil action in Florida for "several false and defamatory statements."

The appellate judges emphasized "that of significance to the appeal, the letter Robert Zarco wrote to CNBC demanding that it discontinue rebroadcasting of the television program "contained a number of comments critical of Rolle's business practices and ethics that Rolle alleges are false and defamatory." The judges list those comments in their decision. They also state, "In addition to sending the letter to CNBC, Zarco also published a letter to Janet Sparks (Sparks), a [Colorado] freelance writer for BlueMauMau.org, an internet blog that publishes stories and news for franchisees. The opinion states,

On December 26, 2010, Sparks published an article titled, "CNBC Shelves Cold Stone Story after Zarco Attacks." Sparks quoted portions of the Letter in the article, and the letter was attached to the article via hyperlink as a PDF. The article reported that Zarco P.A. planned to file suit on behalf of NAB [National Advisory Board] and NIACCF, and that Cold Stone was planning "a potential legal campaign to clarify [its] position and correct the inaccuracies presented in the CNBC piece."

But the appellate court asserted that while Cold Stone and attorney Zarco may ultimately prevail on the absolute privilege defense, "at this stage of the proceeding, there is nothing in the four corners of the complaint or its exhibits that allege a fact or facts that support that defense." The judges further state, "Indeed, neither the complaint nor its exhibits allege that a judicial proceeding existed at the time the letter was sent to either CNBC or to the reporter, Janet Sparks."

Robert Zarco told Law360 on Thursday, "I'm not the least bit concerned about this ruling, which I view as a ruling on a technicality, and I believe that when the lower court reviews this case on the merits the result will again be in our favor." Daily Business Review also quoted Zarco saying, "Our firm and I have no concern whatsoever as to the merits of the case filed by Mr. Rolle. We have absolute confidence that we will prevail . . . It is just unfortunate that this is causing such a vast waste of time."

The Daily Business Review article also reported, "Meanwhile, Rolle was subject to a suit from Zarco Einhorn Salkowski & Brito over websites and online postings criticizing Zarco and law partner Alejandro Brito, including a lengthy post on RipoffReport.com. He came out on the losing end when Miami-Dade Circuit Judge Monica Gordo upheld a preliminary injunction ordering Rolle to remove "any and all false statements" on two websites that have since been disabled. 

Cecil Rolle told Blue MauMau yesterday that they consolidated the accusations they posted on their webpage into two separate sites. He explained that they had been removed from the internet by his webpage host even though no court order authorized it. Rolle said the only thing he was told by the judge was that he had to remove any false statements of fact and all non-authorized photos from the webpages. Rolle said, "Those websites will be relaunched as soon as March 13, 2017 and remain fully compliant with all court orders."

Cold Stone Creamery is represented in the litigation by Caryn L. Bellus and Bretton C. Albrecht of Kubicki Draper. NIACCF is represented by Robert M. Einhorn, Alejandro Brito, Christopher Wiesman and Alaina B. Siminovsky of Zarco Einhorn Salkowski & Brito.

Jonathan P. Stevens and Melanie C. Hapner represent Cecil Rolle.


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