Ex-Banfield vet bites Zarco with suit
Illustration by Jonathan Hankin
Zarco Law is one of the brashest in franchising, boasting an “aggressive litigation style” on its website, deployed in high-profile cases against franchisors.
Now one of the most salacious stories in franchising—involving alleged sexual assault of an ex-Banfield Pet Hospital franchisee and a purported strategy to embarrass the system’s prominent owners into a settlement—has turned the tables on Zarco.
Dr. Heather Fees is suing the law firm for legal malpractice and breach of fiduciary duty. “Defendants recommended and embarked on a litigation-by-embarrassment strategy that put their own interests ahead of the plaintiffs’ interest,” the lawsuit says—and racked up attorneys’ fees plus lost income topping $7 million, according to the plaintiff.
Fees is an Ohio-based veterinarian who owned three Banfield pet hospitals. In the lawsuit filed in February 2018, she claims Zarco Law pursued a case against the franchisor despite clauses in her franchise agreement that would expose her to paying their attorneys’ fees if they prevailed in any actions.
Moreover, the lawsuit claims, Zarco urged her in 2013 to press a sexual harassment line of attack against the franchisor, owned by the Mars family of Mars candy bar fame since 2007, even though the statute of limitations was past and she had waived her rights to make such claims.
“She got hosed for two reasons,” said Florida attorney John Faro about his client, Dr. Fees, first because “there was no effort made to streamline the case,” and Fees was charged $20,000 a month for Zarco’s services, then because the signed waivers came to light. “She was left bare. She had no support for her claims of sexual harassment.
“She ended up having to settle the case and she didn’t have any money, so she had to surrender her franchises at a $2.2 million discount” to offset the legal fees owed to Banfield, based in Vancouver, Washington.
“The day of reckoning will come, because the lapses and neglect are unreal,” Faro said about Zarco Law.
Robert Zarco, the flamboyant franchisee attorney who was featured in Franchise Times in 2008 showing off his 18,200-square-foot home off Biscayne Bay in Miami Beach, had a characteristically colorful reply to the lawsuit. “This is totally made up bullsh** and extortion,” he said to my voicemail. When I called him right back, he continued.
“This is completely a fabricated attempt to try to extort money from a lawyer that she knows is very wealthy and very successful, to get a few more dollars out.”
Zarco said his firm had successfully represented another Banfield franchisee, Dr. Barry Goldberg, who had a dispute with Charter, Banfield’s parent, over the amount they were willing to pay to buy back his franchises.
Goldberg referred Fees to the firm. “She has been at odds with the company for a number of years, as the result of an affair with one of the corporate executives, a major embarrassment to the company,” Zarco said. The Fees case was “originally believed to be a total longshot,” and was ultimately resolved “for millions of dollars,” in a confidential settlement in June of 2016. “She was very, very complimentary to us about the work and how we were able to resolve the case.
“There were all kinds of accusations from the other side as to her mental state of mind, there was all kinds of discovery…because Charter was challenging her mental capacity,” said Zarco.
I said, isn’t that what happens to countless women when they allege sexual harassment, as the MeToo movement is bringing to light—they’re called liars or golddiggers or worse? “This is not a MeToo case,” Zarco said adamantly.
Himanshu Patel, the Zarco Law attorney who handled the case, said during discovery, text messages came to light between Fees and a fellow Banfield franchisee, leading to the conclusion that an affair with a Banfield executive was consensual.
Patel said, “It’s an absolute fact that she received substantial money” in the settlement for her hospitals. “She got more than they were worth. It’s a factual point because in the contract she had, the buyback provisions said you get 40 percent of your gross revenues. We got her more than that,” although the exact figures were kept confidential in the agreement. Patel said the June 2016 settlement covered “everything,” including the sexual misconduct allegations.
‘Groping and grabbing’
The atmosphere at Charter at the time of the alleged misconduct, 2008, Faro said, was “a pu**y buffet, you can quote me on that. The executives got drunk and they were groping and grabbing and having sexual favors. In 2008 there was one of these parties that was so outrageous it was brought to the attention of the Mars family,” and an investigation was done and the company said it handled the matter, Faro said.
The claims are included in the malpractice case, Faro said, to show why Fees felt “intimidated” and believed Zarco’s line of attack was the only way to get her franchise licenses renewed. Banfield declined to comment for this article.
The malpractice lawsuit filed in February is the second time around; Fees’ first lawsuit against Zarco was dismissed in August of 2017, after sanctions against Faro for rule violations. Curt Carlson is the new lead attorney on the case, a Florida attorney with experience in Securities & Exchange Commission litigation.
I asked Zarco for his reaction to a purportedly experienced malpractice attorney taking the lead role. “I don’t give a damn, zero,” about who is pressing the case. “I don’t care if it’s the pope,” Zarco said, then amended his answer. “I don’t care if it’s a rabbi, because I’m Jewish.”
He says he will never settle, even though carriers of malpractice insurance often press that option. “It’s very simple that we are adamant of our defense because it’s completely frivolous, a shakedown,” Zarco said. “I will never pay extortionists.”
Beth Ewen is editor-in-chief of Franchise Times, and writes the Continental Franchise Review® column in each issue. Send interesting legal and public policy cases to firstname.lastname@example.org.