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BRIDGEPORT, Conn. – After a judge refused to dismiss a lawsuit brought by the independent franchisee association of Edible Arrangements, franchisor attorneys unsuccessfully decided to try one more shot. The franchising company again asked the court to dismiss the case because they felt the association did not have authority to represent franchisees on their claims. The franchisor said that the complaint was a blatant attempt to circumvent the individual arbitration clauses in each shop owner’s franchise agreement.
Once again, the judge declined Edible Arrangement’s request.
Attorney Justin Klein of Marks & Klein isn’t amused with the franchisor’s latest tactics. “These are retreads of the arguments that they have already made and have been rejected by the judge.” Klein said they look forward to proceeding to the merits of the case and ultimately a ruling from the judge on the merits of the case.
Specifically, the EA Independent Franchisee Association claims that the franchisor breached its contract and its duty of good faith and fair dealing, and violated the Connecticut Unfair Trade Practices Act.
Senior District Judge Warren W. Eginton stated he was not persuaded by the franchisor’s argument for two reasons. First, the franchisee association is seeking only declaratory relief, not individualized relief in the form of damages. Second, since the case is in its early stages and the association claims it can prove its allegations by using only experts and documents from the franchisor, it should be given the opportunity to do so.
The judge said Edible Arrangements argues in its recent motion for reconsideration (pdf) that the court overlooked important facts; namely, the franchisor has extensive authority over the association’s members. They urged the court to dismiss the case immediately so that members of the EA Independent Association will have to arbitrate individually as they agreed to in mandatory arbitration clauses.
Judge Eginton states that the Edible Arrangement defendants rely primarily on federal district court decision involving motions to compel arbitration, not motions to dismiss for lack of standing. He rejected the cited decisions they proposed in their argument and chose his own (see Penn. Psychiatric Soc’y v Green Spring Health Serv.), where the association survived on the same arguments of his case. There the Third Circuit observed that dismissal was premature when the association represents that it will be able to prove its claims. “Dismissal is appropriate when it becomes clear that an association will fail to satisfy its burden,” the judge wrote.
Judge Eginton again declined to dismiss the EA Independent Franchisee Association’s case before it has the opportunity to prove its claim. He adds, “However, the Court’s decision does not preclude defendants from seeking to compel individual arbitration.”
|EdibleArrangementsOrder Motion for Reconsideration.pdf||35.45 KB|