Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D. Md.: Arbitration award dismissing franchisee’s claims confirmed, (Dec 11, 2013)

By John W. Arden, J.D., LL.M.

An arbitration decision, dismissing a franchisee’s breach of contract, fraudulent inducement, and negligent misrepresentation claims against franchisor Mail Boxes Etc., Inc. and enjoining the franchisee from violating the post-term non-competition provisions of the franchise agreements, was confirmed by the federal district court in Greenbelt, Maryland (Meena Enterprises, Inc. v. Mail Boxes Etc., Inc., December 9, 2013, Chasanow, D.).

Franchisee Meena Enterprises, Inc. and Sabapathy Sengottuvelu brought an action in Maryland state court, alleging that Mail Boxes Etc. had breached the parties’ franchise agreements, fraudulently induced the franchisee to enter the franchise agreements, and negligently misrepresented the franchise offering. The action was removed to the federal district court based on diversity of citizenship.

Mail Boxes Etc. moved to stay the proceedings and compel arbitration, based on an arbitration provision in the franchise agreement. The district court granted that motion (Business Franchise Guide ¶14,910).

At arbitration, Mail Boxes Etc. submitted a motion to dismiss Meena’s claims and a counterclaim seeking an injunction against the franchisee’s violations of the non-competition provisions of the franchise agreements. On June 28, 2013, the arbitrator dismissed Meena’s claims and, on August 26, 2013, granted an injunction. The injunction required Meena to cease and desist engaging in the business of offering postal, communication, and business services at any location within five miles of an existing Mail Boxes Etc. franchise, including its former franchise location.

The district court confirmed the arbitration award and injunction, finding that there was a valid contract requiring arbitration and that the claims were within the scope of that arbitration agreement. The franchisee did not oppose the motion for confirmation of the award, and the record did not reflect any ground for vacating it.

The case is Civil Action No. DKC 12-1360.

Attorneys: Harry M. Rifkin (Law Offices of Harry M. Rifkin LLC) for Meena Enterprises, Inc. Benjamin W. Hahn (Hahn Law LLC), Mark R. McDonald (Morrison and Foerster LLP), Mollie Lenore Finnan (Schnader Harrison Segal and Lewis LLP) for Mail Boxes Etc., Inc.

Companies: Meena Enterprises, Inc.; Mail Boxes Etc., Inc.

Cases: FranchisingDistribution MarylandNews