Black Rock Coffee Bar, LLC v. Br Coffee, LLC
24-2949
| 9th Cir. | Jul 22, 2025Background
- Black Rock Coffee Bar, LLC (Black Rock), an Oregon coffee shop franchisor, engaged in a protracted dispute with its franchisees and their owners regarding breach of franchise agreements.
- The dispute involved parallel state, federal, and arbitration proceedings over several years.
- An arbitrator issued a substantial award for Black Rock, including damages, attorneys’ fees, and sanctions, jointly against both the franchisees (signatories) and their owners (non-signatories).
- The franchise agreements had an arbitration clause but ambiguity about its scope over non-signatory owners; the owners challenged arbitrability in court.
- The district court previously ruled only it, not the arbitrator, could decide if the non-signatory owners were bound by the arbitration clause, found they were not, and enjoined enforcement against them.
- Black Rock, on appeal, sought to enforce the award only against the franchisees, but the district court vacated the award as not divisible; the Ninth Circuit affirmed, despite a dissent arguing for divisibility and partial enforcement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Arbitrator's authority over non-signatories | Arbitrator could bind owners via contract clause | Only court can bind non-signatories to arbitration | District court decides; owners not bound |
| Enforceability of joint arbitration award | Award can be enforced against franchisees only | Award is indivisible, must be vacated | Not divisible, full vacatur affirmed |
| Arbitrator's alleged misconduct/fair process | Arbitrator acted within his discretion | Arbitrator’s process tainted by error | No fundamental unfairness or misconduct |
| Manifest disregard of law standard | Arbitrator made a legal error, not manifest disregard | Arbitrator disregarded clear law | No manifest disregard of law found |
Key Cases Cited
- Schoenduve Corp. v. Lucent Techs., Inc., 442 F.3d 727 (9th Cir. 2006) (review of arbitration awards is limited and highly deferential)
- Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277 (9th Cir. 2009) (arbitration awards may be vacated or partially enforced based on divisibility)
- HayDay Farms, Inc. v. FeeDx Holdings, Inc., 55 F.4th 1232 (9th Cir. 2022) (manifest disregard requires more than a mere legal error)
- Bosack v. Soward, 586 F.3d 1096 (9th Cir. 2009) (arbitrator's interpretation of contract subject to high deference)
- United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (1987) (standard for arbitrator misconduct sufficient to vacate an award)