US Supreme Court Denies Coffee Beanery Petition

WASHINGTON DC – The United States Supreme Court dealt a hard blow to The Coffee Beanery this morning, denying the franchisor’s plea to review and overturn its high-profiled legal dispute with its Annapolis, Maryland franchisees.

The Coffee Beanery petition for a writ of certiorari challenged a Sixth Circuit Court decision that reversed the ruling of a district court and vacated an arbitration award in favor of franchisor Coffee Beanery. The arbitrator didn’t think it was important to adhere to a law that required the disclosure of felony convictions of the franchising firm's officers. The federal court stated that the arbitrator cannot ignore laws. 

The petition, filed by William L. Killion of Faegre & Benson, asked, “Is manifest disregard of the law a valid common-law or statutory ground for vacating an arbitration award under the Federal Arbitration Act?  Did the Sixth Circuit err in vacating the arbitration award in this case for manifest disregard of the law?”  Killion stated that after the Sixth Circuit incorrectly vacated the arbitration award on the issue, it compounded its error by remanding for litigation “in a court of law” instead of for further proceedings in arbitration.” 

But Harry Rifkin, Cahn & Rifkin, representing franchisees Deborah Williams and Richard Welshans, had a different view. He stated that nothing in the petition was a surprise, that the franchisor misrepresented what occurred and ignored many underlining facts. “This case is an illustration of the worst abuses of an arbitration clause and everything that is wrong with arbitration today,” Rifkin decried.   

Today, Rifkin said he and his clients were pleased that the Supreme Court agreed with them, that Coffee Beanery’s petition was without merit and has preserved the standard for review of arbitration awards that has been in place for over 50 years, since Wilko v. Swan.

The International Franchise Association filed a friend of the court brief with the US Supreme Court in support of franchisor Coffee Beanery’s petition and against the franchisees' position on the issue of “manifest disregard of the law” in arbitration rulings. The IFA urged the Supreme Court to take the case so it can resolve the conflict among the circuit courts that “adversely affects every company that favors arbitration and does business nationwide.”  Today, David French, IFA vice president of government relations, said the Association knew when they filed the amicus brief that it wasn’t a slam-dunk that the Supreme Court would take the case. “We are disappointed because it potentially leaves the circuit courts split in place on this issue,” he said.  Coffee Beanery contends that the Sixth Circuit’s decision constitutes a departure from other circuits’ decisions that have been confronted with the question of whether a finding of “manifest disregard” does not constitute a valid non-statutory ground for vacating  under the Federal Arbitration Act. 

Deborah Williams and Richard Welshans would only issue a statement saying, “We are relieved and think that justice will be served.”

Telephone calls to Killion, Coffee Beanery attorney Karl V. Fink, Pear, Sperling, Eggan & Daniels, and Deepak Gupta, Public Citizen, representing the franchisees in the Supreme Court, did not return phone calls prior to publishing.

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Related Reading:

• Franchisees File Opposition to Coffee Beanery US Supreme Court Petition
• Public Citizen to Represent Coffee Beanery Franchisees in Supreme Court
• IFA Files Amicus in Support of Coffee Beanery
• Coffee Beanery Petitions Supreme Court to Address Big Issues on Arbitration
• Sixth Circuit Denies Coffee Beanery's Motion to Stay Mandate
• Coffee Beanery Attempts to Stay Mandate Pending Supreme Court Petition
• Coffee Beanery Franchisees Win on Appeal; Arbitration Decision Vacated