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The Coffee Beanery, Ltd. v. WW, LLC

Topic(s): Arbitration
Consumer Justice

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Description:

In this case, we represent Richard Welshans and Deborah Williams, who bought a franchise for a Coffee Beanery store based on a fraudulent sales pitch that made the company’s stores seem far more profitable than they really were. In fact, most of Coffee Beanery’s stores have failed, the company makes its money by requiring franchisees to buy overpriced equipment, and the executive who sold Richard and Deborah the franchise was a convicted felon. Despite their best efforts, Richard and Debroah lost their life savings and were forced into bankruptcy.

Richard and Deborah sued Coffee Beanery, but were forced into binding arbitration based on a clause in their franchise contract. Even though state regulators found that Coffee Beanery’s misrepresentations violated state franchise law, the company’s hand-picked arbitrator ruled against the couple. The Sixth Circuit overturned the arbitration award, holding that the arbitrator manifestly disregarded the law. Coffee Beanery then filed a petition with the U.S. Supreme Court, arguing that arbitration awards should not be overturned even when arbitrators have manifestly disregard the law.

We filed a brief in opposition, explaining that manifest-disregard review is consistent with Supreme Court decisions and there is no circuit split on the issue. The court denied the petition.

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