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Southland Corp. v. Keating
United States Supreme Court
465 U.S. 1 (1984)
Keating (plaintiff), a 7-Eleven convenience store franchisee, filed a class-action lawsuit in California superior court against franchisor Southland Corporation (defendant), alleging causes of action arising from the parties’ franchise agreement and from the California Franchise Investment Law (California statute). Southland moved to compel arbitration, arguing that the parties’ franchise agreement contained an arbitration clause applicable to all claims arising out of the agreement or its breach. The trial court, reasoning that the California statute prohibited arbitration of claims made pursuant to it, compelled arbitration of all claims except for those based on the California statute. The appellate court reversed, holding that all of Keating’s claims, including those based on the California statute, were arbitrable. To hold otherwise, the court reasoned, would be to interpret the California statute as violating the Federal Arbitration Act (FAA), rendering the California statute invalid pursuant to the Supremacy Clause of the United States Constitution. The California Supreme Court reversed, holding that claims controlled by the California statute were not arbitrable but that the statute nonetheless did not violate the Supremacy Clause. The United States Supreme Court granted certiorari.
Rule of Law
Holding and Reasoning (Burger, C.J.)
Dissent (O’Connor, J.)
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