Case Updates

On December 14, 2015, the U.S. Supreme Court once again upheld the enforceability of class waivers in arbitration agreements. In DIRECTV, Inc. v. Imburgia, the Supreme Court reversed a California Court of Appeal's refusal to enforce an arbitration agreement waiving the right to bring class arbitration claims.  The arbitration agreement at issue included a class arbitration waiver specifying that the entire arbitration agreement was unenforceable if the "law of your state" made class arbitration waivers unenforceable. The agreement also declared that… Read more

A district court sitting in California was recently asked to address the enforceability of an out-of-state forum selection clause in a franchise agreement in light of the U.S. Supreme Court’s landmark decision in Atlantic Marine Constr. Co., Inc. v. United States Dist. Court for W. Dist. of Texas, 134 S. Ct. 568 (2013). As discussed below, the district court circumvented Atlantic Marine by finding that the California Franchise Relations Act (the “CFRA’), at Bus. & Prof. Code § 20040.5, renders the out-of-state forum selection… Read more

SUMMARY In America’s Servicing Co. v. Schwartz-Tallard (In re Schwartz-Tallard), ___ F.3d ___, 2015 WL 5946342 (9th Cir. Oct. 14, 2015), the U.S. Court of Appeals for the Ninth Circuit (the “Ninth Circuit”), en banc, held that section 362(k) of the Bankruptcy Code authorizes an award of attorneys’ fees reasonably incurred in a debtor’s prosecution of a suit for damages to provide redress for a violation of the automatic stay.  In so holding, the Ninth Circuit overruled its prior decision in Sternberg v.… Read more

The Associate General Counsel for the National Labor Relations Board (“NLRB”) recently issued an Advice Memorandum finding that a franchisor was not liable as a “joint employer” for the alleged unfair labor practices of one if its franchisees. While the memo does not set legal precedent, it does represent a deviation by the NLRB to its recent aggressive treatment of franchisor-franchisee relationships as reflected in the landmarkMcDonald’s, USA, LLC case and in the amicus brief submitted by the NLRB’s General Counsel in… Read more

On May 14, 2015, the California state Assembly passed AB 525, a bill that would amend the existing California Franchise Relations Act (Business and Professions Code §§ 20000 – 20010) (“CFRA”) by expanding the protections for existing franchisees. As currently written, AB 525 would amend the CFRA in the following ways: “Good Cause” Restricted to Substantial Compliance. Under the CFRA, a franchisor is permitted to terminate a franchise prior to the expiration of its term only for “good cause,” which… Read more

Contractual forum selection clauses have historically been favored in California so long as they are entered into “freely and voluntarily, and their enforcement would not be unreasonable.” (Smith, Valentino & Smith, Inc. v. Superior Court of Los Angeles County, 17 Cal. 3d 491, 495-96 (Cal. 1976); America Online, Inc. v. Superior Court, 90 Cal. App. 4th 1, 11 (Cal. App. 1st Dist. 2001); Verdugo v. Alliantgroup, L.P., 2015 Cal. App. LEXIS 466, *5-6 (Cal. App. 4th Dist. May 28, 2015)(To be reasonable,… Read more

Late last summer, the California Supreme Court refused to find Domino’s Pizza vicariously liable for the alleged wrongdoing of its franchisee’s employee. The closely divided 4-to-3 decision in Patterson v. Domino’s reflected the Court’s attempt to reconcile the franchise business model with the traditional legal doctrines of agency and vicarious liability. (Patterson v. Domino's Pizza, LLC, 60 Cal. 4th 474 (Cal. 2014).) Recognizing the universal benefit of systemwide consistency, the Court applied the “means and manner” control test to Domino’s franchise system… Read more

With the economic turmoil of the Great Recession seemingly in America’s rearview mirror, many lawmakers have turned their attention to raising the pay and improving the job conditions for the minimum wage employees in this country.  The impasse in Washington over President Barack Obama’s push to raise the federal minimum wage from $7.25 to $10.10 has left local municipalities to evaluate the needs of the minimum wage workers in their communities. This has resulted in significant increases to minimum wage… Read more

Dear constituency list members of the Insolvency Law Committee, the following is a case update analyzing a recent case of interest: SUMMARY In Shapiro v. Henson (9th Cir. January 9, 2014), in a published decision, the United States Court of Appeals for the Ninth Circuit reversed the district court’s ruling affirming the bankruptcy court’s denial of a trustee’s motion for turnover pursuant to 11 U.S.C. § 542(a).  The Ninth Circuit held that a trustee may seek recovery from entities having “possession, custody,… Read more

The California Franchise Relations Act (“CFRA”) was enacted by the California legislature to govern the ongoing relationships between franchisors and franchisees in an effort to prevent unfair practices in the termination, renewal or transfer of a franchise.  (Bus. & Prof. Code Sec. 20000 et seq.)  Included in this bundle of CFRA protections is the rule precluding franchisors from unilaterally terminating franchise agreements prior to the expiration of their term, without good cause and providing the franchisee an opportunity to cure.… Read more