Inc. v. Kirksey

          RULING ON PETITION TO COMPEL ARBITRATION (DOC. NO. 1)

          Janet C. Hall United States District Judge

         The plaintiff, Doctor's Associates, Inc. (“DAI”), filed a Petition to Compel Arbitration. See generally Petition to Compel Arbitration (“DAI's Petition”) (Doc. No. 1). DAI is the franchisor of Subway sandwich shops in the United States. Id. at ¶ 2. The pro se defendant, Karlton F. Kirksey (“Kirksey”), is a Subway franchisee. Memorandum in Opposition to Petition to Compel Arbitration (“Kirksey's Opp'n”) (Doc. No. 16) at 1; Amended Complaint for Damages and Declaratory Relief, Kirksey's Opp'n (“Kirksey's Am. Compl.”) (Doc. No. 16) at ¶ 2.^[1] On May 31, 2018, Kirksey filed suit against DAI in Louisiana state court, which DAI later removed to the United States District Court for the Eastern District of Louisiana (the “Louisiana Lawsuit”). DAI's Petition at ¶¶ 15, 17; Kirksey's Am. Compl. at ¶¶ 12, 14. Pursuant to section 4 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 4, DAI moves to compel arbitration of the claims raised by Kirksey in the Louisiana Lawsuit. DAI's Petition at ¶ 20.

         For the reasons stated below, DAI's Petition to Compel Arbitration is granted so that the arbitrator may decide, in the first instance, whether the claims raised in the Louisiana Lawsuit are arbitrable.

         I. FACTUAL BACKGROUND

         DAI, a Florida corporation with its principal place of business in Connecticut, is the franchisor of Subway sandwich shops. See DAI's Petition at ¶ 2; Kirksey's Am. Compl. at ¶ 38. Kirksey is a resident of Louisiana. DAI's Petition at ¶ 3; Kirksey's Am. Compl. at ¶ 38.

         On or about February 5, 2004, DAI and Kirksey entered into a written contract, Franchise Agreement #33426 (the “Franchise Agreement”), allowing Kirksey to operate a Subway restaurant in Louisiana. DAI's Petition at ¶ 6; Kirksey's Am. Compl. at ¶ 2; Exhibit A, DAI's Petition (“Franchise Agreement”) (Doc. No. 1). Paragraph 10 of the Franchise Agreement is an arbitration clause, which provides in relevant part:

a. Any dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration. The arbitration shall be administered by an arbitration agency, such as the American Arbitration Association (“AAA”) or the American Dispute Resolution Center, in accordance with its administrative rules including, as applicable, the Commercial Rules of the AAA and under the Expedited Procedures of such rules or under the Optional Rules For Emergency Measures of Protection of the AAA . . . . The parties agree that Bridgeport, Connecticut shall be the site for all hearings held under this Paragraph 10 . . . .

. . .

c. You may only seek damages or any remedy under law or equity for any arbitrable claim against us or our successors or assigns. You agree that our Affiliates, shareholders, directors, officers, employees, agents and representatives, and their affiliates shall not be liable nor named as a party in any arbitration or litigation proceeding commenced by you where the claim arises out of or relates to this Agreement. You further agree that the foregoing parties are intended beneficiaries of the arbitration clause; and that all claims against them that arise out of or relate to this Agreement must be resolved with us through arbitration.

. . .

e. Any disputes concerning the enforceability or scope of the arbitration clause shall be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. § et. seq. (“FAA”), and the parties agree that the FAA preempts any state law restrictions (including the site of the arbitration) on the enforcement of the arbitration clause in this Agreement. If, prior to an Arbitrator's final decision, either we or you commence an action in any court of a claim that arises out of or relates to this Agreement (except for the purpose of enforcing the arbitration clause or as otherwise permitted by this Agreement), that party will be responsible for the other parties' expenses of enforcing the arbitration clause, including court costs, arbitration filing fees and other costs and attorney's fees.

Franchise Agreement at ¶ 10.

         On September 28, 2016, DAI notified Kirksey that he was in default of the Franchise Agreement. DAI's Petition at ¶ 10; Kirksey's Am. Compl. at ¶ 5. On January 6, 2017, DAI initiated arbitration proceedings against Kirksey, which resulted in Kirksey and DAI entering into an Interim Order. DAI's Petition at ¶¶ 10, 11; Kirksey's Am. Compl. at ¶¶ 6, 7. On August 7, 2017, Kirksey and DAI again engaged in arbitration and entered into a Second Interim Order. DAI's Petition at ¶ 12; Kirksey's Am. Compl. at ¶¶ 8, 9. In substance, both Interim Orders provided that DAI would not seek to terminate Kirksey's Franchise Agreement if Kirksey satisfied certain conditions. DAI's Petition at ¶ 12; Kirksey's Am. Compl. at ¶¶ 7, 10.

         On March 21, 2018, DAI notified Kirksey that he was in breach of the Second Interim Order and that DAI would initiate arbitration proceedings against Kirksey to terminate Kirksey as a Subway franchisee. DAI's Petition at ¶ 13; Kirksey's Am. Compl. at ¶ 11. The arbitration hearing was scheduled for June 1, 2018, in ...