Excessive Arbitration Fees Not Enough To Allow Franchisee To Avoid Arbitration
Last week, the California Northern District Court denied a franchisee’s request for a temporary restraining order – asking the court to enjoin the franchisor from arbitrating the parties’ dispute – because the franchisee’s anticipated injuries were limited to the substantial sums of money he would have to pay the American Arbitration Association, the arbitrator and others defending the arbitration. The court found that these expenses would not subject the franchisee to irreparable harm as is required for a TRO to issue.
California Federal District Court Decision Allows Plaintiff to Aggregate Competitive Effects of Separate Vertical Agreements to Show Antitrust Injury
In the antitrust context, a “rimless wheel” – or “hub-and-spoke” – conspiracy is not a general conspiracy but instead amounts to multiple conspiracies between the common defendant – e.g., a distributor – and each of the other defendants – e.g., multiple suppliers. This means that, absent allegations establishing a “rim” between the spokes, a hub-and-spoke conspiracy is not a single conspiracy, but rather consists of separate conspiracies for each spoke. Nevertheless, in a case of first impression, the United States District Court for the Northern District of California recently held that it is appropriate to aggregate the cumulative anti-competitive effects of multiple independent vertical agreements for the purpose of showing that a common distributor’s conduct was anti-competitive in violation of both Section 1 of the Sherman Act and California’s antitrust statute (the Cartwright Act).
Can Franchisors Recover Their Fees for Compelling Abritration?
California Courts Appear To Answer This Question In The Negative. Over the summer, the California Second District Court of Appeal (in Roberts v. Packard, Packard & Johnson) and the California First District Court of Appeal (in the unpublished opinion of Abbey v. Fortune Drive Assocs.) rejected requests for attorney’s fees – finding that attorney’s fee provisions only allow fee awards at the conclusion of the underlying dispute, not when a petition to compel arbitration is decided.