Torres v. Simpatico, Inc.
United States Court of Appeals for the Eighth Circuit
January 15, 2015, Submitted; March 25, 2015, Filed
[*967] WOLLMAN, Circuit Judge.
Jose Torres, Guadalupe Clemente, Luz Walker, Christina Beiter, and Antonio Carmona (the Appellants) appeal from the district court's order granting appellees' motion to compel individual arbitration. We affirm.
The Appellants are current or former unit franchisees of Stratus Franchising, LLC, a commercial cleaning business. Stratus Franchising sells master franchises, which grant a master franchiser the exclusive right to sell Stratus unit franchises in a particular regional market. Each Appellant entered into a standard unit-franchise agreement (Agreement) that included a broad, standard-form arbitration provision. The Appellants filed this putative class-action suit against their respective master franchisers and other [**5] individuals and entities associated with the Stratus franchise system (Stratus Group), alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968. Applying Missouri contract law, the district court granted the Stratus Group's motion to compel individual arbitration under the terms of the Agreement. In reaching that conclusion, the court rejected the Appellants' argument that the arbitration provision was unenforceable as unconscionable and that members of the Stratus Group who were not signatories to their respective Agreements could not invoke or enforce the arbitration provision.
[*968] ] We review de novo the district court's decision regarding the validity and scope of the arbitration clause, and we review for clear error any factual findings made in support of that decision. [**6] See Faber v. Menard, Inc., 367 F.3d 1048, 1051 (8th Cir. 2004).
] The "principal purpose" of the Federal Arbitration Act (FAA), 9 U.S.C. §§ 9-14, is to "ensur[e] that private arbitration agreements are enforced according to their terms." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S. Ct. 1740, 1748, 179 L. Ed. 2d 742 (2011) (quoting Volt Info. Scis. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468, 478, 109 S. Ct. 1248, 103 L. Ed. 2d 488 (1989)) (holding that FAA preempted California judicial rule that deemed unconscionable all class-arbitration waivers in consumer contracts because the rule was an obstacle to FAA's purposes). The FAA thus reflects "a liberal federal policy favoring arbitration," id. at 1745 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983)), and such agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract," 9 U.S.C. § 2.
] Because "arbitration is a matter of contract," whether an arbitration provision is valid is a matter of state contract law, and an arbitration provision may be "invalidated by 'generally applicable contract defenses, such as fraud, duress, or unconscionability,' but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." Concepcion, 131 S. Ct. at 1745-46 (quoting Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S. Ct. 1652, 134 L. Ed. 2d 902 (1996)). If a valid and enforceable arbitration agreement exists under state-law contract principles, any dispute that falls within the scope of that agreement must be submitted to arbitration. See Faber, 367 F.3d at 1052. We ask only [**7] whether the arbitration agreement is valid and whether the dispute falls within the terms of that agreement. Id.Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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781 F.3d 963 *; 2015 U.S. App. LEXIS 4830 **
Jose Torres; Guadalupe Clemente; Luz Walker; Christina Beiter; Antonio Carmona, individually and on behalf of all others similarly situated, Plaintiffs - Appellants v. Simpatico, Inc.; Stratus Franchising, LLC; Peter Frese, Jr., individually; Dennis Jarrett, individually; Carmen Garcia, individually; David Farrell, individually; Marisa Lather, individually; Alen Suljanovic, individually; Bob Stapleton, individually; PHSSCH SBS, LLC; Channen Smith, individually; Stratus Building Solutions of Arizona, Inc.; Lupita Gallego, individually; Ed Nunez, individually; Jason Dowling, individually; Gonzalo Moreno, individually; Mark Bashforth, doing business as Stratus Building Solutions of San Diego; Mark Bashforth, individually; Jayson Bashforth, doing business as Stratus Building Solutions of San Diego; Jayson Bashforth, individually; Marvin Ashton, individually; Colorado Cleaning Partners, Inc., doing business as Stratus Building Solutions of Southern Colorado; James Van ***, individually; Channen Smith, doing business as Stratus of Denver; Joshua Fletcher, individually; Mert Smith, individually; Kukamachu, Inc., doing business as Stratus of Honolulu; Aaron Kahaloa, individually; Iowa Building Solutions, LLC, doing business as Stratus of Iowa; Leonard Fazio, individually; Michael Fazio, individually; Amy Lundstrum, individually; Stratus Building Solutions of Kansas, LLC; Gator Greenwill, individually; Luis Morales; Napco Group, Inc., doing business as Stratus Building Solutions of Maryland; Mike Napolitano, individually; Anthony Napolitano, individually; Stratus Building Solutions of Nebraska; Chelley Baack, individually; Jim Morrison, individually; Shawn Vick, individually; Ariss Rogel, individually; Sunshine Investment Group, Inc., doing business as Stratus of Northern New Jersey; Don Gartner, individually; Stratus Building Solutions of Long Island, Inc.; Richard Baran, individually; MARRS, LLC, doing business as Stratus Building Solutions of Cincinnati; Mark Stocker, individually; Terry Behrle, individually; Tom Grassi, doing business as Stratus Building Solutions of Cleveland; Tom Grassi, individually; Tim Tilton, doing business as Stratus Building Solutions of Cleveland; Tim Tilton, individually; HolBon Holdings, LLC, doing business as Stratus Building Solutions of Philadelphia; Tom Weiss, individually; John Coleman, individually; Bonnie Coleman, individually; Ralph Sizemore, doing business as Stratus of Upstate Carolina; Ralph Sizemore, individually; DE Holdings, LLC, doing business as Stratus Building Solutions of Nashville; David Smith, individually; Ed Lease, individually; Mark Bashforth, doing business as Stratus Building Solutions of Houston; Jayson Bashforth, doing business as Stratus Building Solutions of Houston; Greg Fishman, doing business as Stratus of Austin; Greg Fishman, individually; Tom Baker, doing business as Stratus of Dallas; Dawn Caudill, doing business as Stratus of Dallas; Tom Baker, individually; Dawn Caudill, -individually; Stephen Sheriff, individually; TJM Associates, Inc., doing business as Stratus of Northern Texas; Jacquelyn Mosley, individually; Thomas Mosley, individually; Eleazar Quintana, individually; William Ragsdale, individually; Stratus Building Solutions of Northern Utah; Lori Sealy, individually; SYDDAR, inc., doing business as Stratus Building Solutions of Salt Lake; Shauna Sharpsteen, individually; Lucero Flores, individually; Emily Thomas, individually; Shea Sealy, individually, Defendants - Appellees
Prior History: [**1] Appeal from United States District Court for the Eastern District of Missouri - St. Louis.
Torres v. Simpatico, Inc., 995 F. Supp. 2d 1057, 2014 U.S. Dist. LEXIS 12857 (E.D. Mo., 2014)
arbitration, unconscionability, Franchising, arbitration provision, arbitration agreement, costs, Parties, terms, Non-Signatory, district court
Business & Corporate Compliance, Pretrial Matters, Alternative Dispute Resolution, Judicial Review, Civil Procedure, Appeals, Standards of Review, Clearly Erroneous Review, De Novo Review, Arbitration, Federal Arbitration Act, Arbitration Agreements, Scope, Arbitrability, Contracts Law, Defenses, Unconscionability, Contracts Law, Contract Conditions & Provisions, Arbitration Clauses, Beneficiaries, Types of Third Party Beneficiaries, Intended Beneficiaries