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Louisiana Federal Court Dismisses Franchisee's Last-Minute Attempt to Avoid Arbitration
Posted in Arbitration

A Louisiana federal court dismissed a franchisee’s attempt to avoid arbitrating a dispute that was arbitrable by agreement between the parties in Kirksey v. Doctor’s Associates Inc., 2018 WL 66510121 (E.D. La. Dec. 19, 2018). Doctor’s Associates Inc., franchisor of the Subway brand, and Kirksey were parties to a franchise agreement containing an arbitration clause that required them to arbitrate their disputes in Connecticut. On the eve of an arbitration hearing between the parties in Connecticut, Kirksey filed suit against Subway in Louisiana state court seeking a restraining order enjoining the arbitration. Subway then filed a motion to compel arbitration in the U.S. District Court for the District of Connecticut, removed the Louisiana case to federal court, and sought a stay of the proceedings pending the Connecticut court’s ruling. The Connecticut court granted Subway’s motion to compel arbitration, holding that (1) there was no dispute that Kirksey and Subway agreed to arbitrate the issues involved, and (2) any issue related to the arbitrability of Kirksey’s claim was a question for the arbitrator. Kirksey then filed a motion in the Louisiana federal court to stay the Connecticut court’s decision. Subway opposed Kirksey’s motion and sought to dismiss the Louisiana federal court action by way of a motion for judgment on the pleadings.

In granting Subway’s motion, the Louisiana court agreed with the Connecticut court that all issues raised between Subway and Kirksey had to be submitted to arbitration. The Louisiana court also reasoned that under Fifth Circuit precedent, courts have discretion to dismiss cases in favor of arbitration when staying an action will serve no purpose. Because there was nothing left for the Louisiana court to decide, and staying the action would serve no purpose, the Louisiana court dismissed the case.

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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