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Appeals Court: Courts Decide Enforceability of Franchise Arbitration Provision
The enforceability of franchise arbitration agreements took center stage in the Ninth Circuit Court of Appeals en banc decision in Nagrampa v. Mailcoups, Inc., American Arbitration Ass'n. (2006) __ F.3d __, 2006 WL 3478345 ('Nagrampa II'.) In a 7-4 ruling reversing the decision of the three-judge panel upholding arbitration ('Nagrampa I,' 401 F.3d 1024), the Nagrampa II court struck down the arbitration clause under California principles of unconscionability. Along the way, the court made significant holdings and observations that should garner the attention of franchise practitioners on both sides of the aisle.
The facts and procedure of the case are common in franchise circles. Mailcoups sued its franchisee Connie Nagrampa in arbitration for breach of contract after she failed and terminated the agreement. Although initially filed in Los Angeles, the American Arbitration Association transferred venue to Boston in accordance with the forum selection clause in the agreement. Nagrampa objected to arbitration and brought an action against Mailcoups in California state court alleging fraud and statutory violations as well as attacking the arbitration provisions. Mailcoups removed the case to federal court and moved to compel arbitration and to stay or dismiss the case. Nagrampa opposed the motion to compel on state law grounds of unconscionability. The district court found that the arbitration agreement was valid and granted Mailcoups' motion to dismiss. Nagrampa appealed, and the three-judge panel of the court of appeals (Nagrampa I), 401 F.3d 1024, affirmed, holding that the unconscionability of an arbitration provision contained in the franchise agreement is a question for the arbitrator to decide. The underpinning of that conclusion was that where an adhesion contract contains an arbitration clause, the arbitrator must decide unconscionability because the issue of adhesion (and thus the procedural prong of unconscionability) pertains to the making of the agreement as a whole and not to the arbitration clause specifically.
The implications of Nagrampa I were highly significant to the franchise community. If the decision were upheld, the enforceability of franchise arbitration clauses would almost always begin with the arbitrator ' a benefit for the franchisor.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.