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Awuah v. Coverall: What, If Anything, Does the Dicta Mean for State Regulators?

By Jeffery S. Haff

The Awuah v. Coverall North America, Inc. case primarily involves the issue of whether “franchisees” in the Coverall system were, in reality, “employees” under Massachusetts law. In a recent opinion, the First Circuit addressed the issue of an arbitration clause in the parties' franchise agreements and whether it was unenforceable. See Awuah v. Coverall North America, Inc., __ F.3d __, 2012 WL 6699813 (1st Cir. Dec. 27, 2012). The franchisees/employees argued, among other things, that the clause was unenforceable because it was not displayed in a conspicuous manner. The court rejected this argument, stating:

Even if the district court had identified a principle of state law that imposed a special notice requirement before parties such as these could enter into an arbitration agreement, as it did not, such a principle would be preempted by the FAA. Id. at *7 (emphasis added).

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