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The California Court of Appeal upheld a forum selection clause naming Denver, Colorado as the site of an arbitration hearing for disputes arising from a franchise agreement.
In Baber v. Quizno’s, B186235, 2006 WL 3072394 (Cal. App. Oct. 31, 2006), Baber filed suit following termination of his franchise agreement with Quizno’s. Quizno’s responded by filing a petition to compel arbitration pursuant to the arbitration clause in the parties’ agreement. Thereafter, Baber argued that the franchise agreement was permeated by fraud, that the forum selection clause was unconscionable, and that a Colorado venue for arbitration was unfair. The trial court granted the petition to compel arbitration, but required that it be conducted in Los Angeles County, rather than the parties’ selected forum.
The Court affirmed in part and reversed in part, finding the forum selection clause to be an enforceable term in the parties’ agreement. Baber had initially argued that the forum selection clause was invalid under CAL. BUS. & PROF. CODE §20040.5, which required claims relating to franchise agreements to be heard within California. However, this statute had been preempted by the Federal Arbitration Act, 9 U.S.C. §2. Bradley v. Harris Research, Inc., 275 F.3d 884, 888-90 (9th Cir. 2001). Therefore, there was no reason not to allow the parties to arbitrate the dispute in their chosen forum of Colorado.
Next, the Court dismissed Baber’s claim that Quizno’s had waived its right to arbitrate when it petitioned the trial court to compel arbitration in Denver. Under this “flawed” argument, Baber contended that seeking “any kind of relief” from a court constituted a waiver of the right to arbitrate. Yet, the Court noted that Quizno’s was left with no choice but to ask the court to compel arbitration, after Baber had attempted to proceed through the courts. Accordingly, there was no merit to Baber’s claim that Quizno’s had waived the right to arbitrate.
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