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Dispute Resolution Keyed to Carbonneau, 8th Ed.
Southland Corp. v. Keating
Citation:
465 U.S. 1 (1984)Facts
Southland Corporation owned and franchised 7-Eleven convenience stores throughout the United States. Its standard franchise agreement provided franchisees with trademark licenses, store leases, inventory financing, and other business support in exchange for a percentage of gross profits. The agreement contained an arbitration clause requiring that any disputes arising from the agreement be settled through arbitration. Between 1975 and 1977, several California franchisees filed individual actions against Southland in California state court, alleging fraud, breach of contract, breach of fiduciary duty, and violations of the California Franchise Investment Law. Additionally, franchisee Keating filed a class action on behalf of approximately 800 California franchisees. Southland moved to compel arbitration of all claims pursuant to the arbitration clause in the franchise agreement. The California Supreme Court ultimately held that claims under the state’s Franchise Investment Law required judicial consideration and could not be arbitrated, interpreting the state law to invalidate arbitration agreements covering such claims.
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