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Dispute Resolution Keyed to Carbonneau, 8th Ed.
Doctor’s Associates v. Casarotto
Citation:
517 U.S. 681 (1996)Facts
In April 1988, Doctor’s Associates, Inc. (DAI), the national franchisor of Subway sandwich shops, entered into a franchise agreement with Paul Casarotto that permitted him to open a Subway shop in Great Falls, Montana. The franchise agreement contained an arbitration clause on page nine stating that any controversy or claim arising out of the contract would be settled by arbitration. In October 1992, Casarotto sued DAI and its Montana development agent, Nick Lombardi, in Montana state court, alleging various state-law contract and tort claims relating to the franchise agreement. DAI demanded arbitration and moved to stay the lawsuit pending arbitration. The Montana trial court granted the stay, but the Montana Supreme Court reversed, holding that the arbitration clause was unenforceable under Montana Code Ann. § 27-5-114(4), which required notice of arbitration to be typed in underlined capital letters on the first page of the contract. The Montana court reasoned that this requirement did not undermine the goals of the FAA because it merely ensured that arbitration agreements were entered knowingly.
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