Skistimas v. Hotworx Franchising LLC
3:23-cv-05974
W.D. Wash.Oct 22, 2024Background
- Plaintiffs Greg and Gabriela Skistimas, Washington residents, paid $39,950 to open a HOTWORX franchise, but the studio never opened; they allege additional damages related to fees and penalties.
- Defendants consist of HOTWORX Franchising LLC (a Wyoming LLC based in Louisiana) and individual officers/employees in Louisiana and Delaware.
- Plaintiffs filed suit for statutory, contract, and tort claims after failed attempts to resolve the dispute.
- Defendants moved to dismiss for lack of personal jurisdiction and to compel compliance with contractual dispute resolution procedures (including arbitration).
- Plaintiffs challenged the enforceability and conscionability of the arbitration/dispute resolution clauses in the franchise agreement, asserting they violate Washington’s Franchise Investment Protection Act (FIPA).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over individuals | Contacts via registration and conduct suffice | No minimum contacts; only corporate contacts | Jurisdiction exists for Gattuso, Price, and Smith |
| Requirement to arbitrate | Arbitration clause unconscionable under FIPA | Clause is valid and enforceable; AAA rules apply | Arbitration compelled; arbitrator decides disputes |
| Application of Washington Addendum | Addendum was not incorporated into contract | Addendum is incorporated via FDD receipt | Addendum is incorporated and governs key issues |
| Dismissal vs. Stay pending arbitration | — | Requested dismissal or stay pending arbitration | Case stayed pending arbitration, per Supreme Court |
Key Cases Cited
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (standard for general personal jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment in jurisdiction analysis)
- Calder v. Jones, 465 U.S. 783 (1984) (effects test for tort jurisdiction)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (delegation clauses/arbitrability challenge)
- Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015) (incorporation of AAA rules suffices for delegation)
- Brainerd v. Governors of the Univ. of Alberta, 873 F.2d 1257 (9th Cir. 1989) (single tortious communication as basis for jurisdiction)