Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—N.D.Cal.: Metal convenience store franchisee denied temporary restraining order absent showing of irreparable harm, (Nov 12, 2013)

By Linda O’Brien, J.D., LL.M.

A metal convenience store franchisee was denied a temporary restraining order prohibiting arbitration of an assets purchase dispute with his franchisor, absent a demonstration of irreparable harm, the federal district court in Oakland has decided. (Moody v. Metal Supermarket Franchising America, Inc., November 8, 2013, Hamilton, P.).

In 2003, Terrance Moody (Moody) and Metal Supermarkets Franchising America (Metal Supermarkets), a supplier of small quantity metals, entered into a metal convenience store franchising agreement for a term of ten years. Under the agreement, Metal Supermarkets had the option to purchase the assets of Moody’s franchise at the end of the ten-year term. Metal Supermarkets indicated its intent to exercise the purchase option. However, the parties disagreed as to the proper formula to calculate the purchase price. Moody filed suit, seeking a declaration of the purchase price of the franchise’s assets. Metal Supermarkets subsequently filed a demand for arbitration with the American Arbitration Association (AAA) in Washington, D.C. Moody responded by filing a motion for a temporary restraining order to prohibit Metal Supermarkets from proceeding with the arbitration.

Moody argued that the franchise agreement provided for disputes to be resolved in court and that any arbitration provision in the agreement was unconscionable and unenforceable.

In denying the plaintiff’s request for a temporary restraining order, the court held that Moody failed to adequately demonstrate any irreparable harm that would result from the failure to issue a temporary restraining order. Moody’s contentions that he would be required to pay substantial sums for administrative fees, retention of counsel, and travel to Washington, D.C. are monetary injuries that can be redressed with a claim for damages. Monetary injury is not generally considered to be irreparable, since it can be replaced. Although there may be conflicting decisions between the court and arbitrator, any resulting harm would be in the form of monetary loss, the court concluded.

The case is No. C 13-5098 PJH.

Attorneys: Alan Scott Nopar (Law Office of Alan S. Nopar) for Terrance A. Moody. Calvin Lee Litsey (Faegre Baker Daniels LLP) for Metal Supermarket Franchising America, Inc.

Companies: Metal Supermarket Franchising America, Inc.

Cases: FranchisingDistribution CaliforniaNews