Torres v. Simpatico, Inc., No. 14-1567 (8th Cir. 2015)
Annotate this CaseStratus Franchising sells master franchises, which grant a master franchiser the exclusive right to sell Stratus unit franchises in a particular regional market. Each plaintiff (current or former unit franchisees of the commercial cleaning business) entered into a standard unit-franchise agreement that included a broad, standard-form arbitration provision. They filed a putative class-action suit against their respective master franchisers and other individuals and entities associated with the Stratus Group, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968. Applying Missouri contract law, the district court granted the Stratus Group’s motion to compel individual arbitration. The Eighth Circuit affirmed, rejecting an argument that the arbitration provision was unenforceable as unconscionable and that members of the Stratus Group who were not signatories to their respective Agreements could not invoke or enforce the arbitration provision.
Court Description: Civil case - Arbitration. Arbitration provision in plaintiffs' franchise agreements was enforceable and was not unconscionable because of the costs associated with individual arbitration proceedings; argument that the agreements were unconscionable because they waived punitive or exemplary damages and attorneys' fees went to the merits of the dispute and were for the arbitrator to resolve; agreements were broad enough to permit non-signatory parties, as third party beneficiaries of the agreement, to invoke and enforce the arbitration provision.
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