Lukins & Annis franchise litigation attorney Mike Maurer represented former Modesto, California, Red Lion Hotel franchisee MAK, LLC in defense of a damage lawsuit filed by Spokane-based franchisor Red Lion Hotels against MAK in U.S. District Court for the Eastern District of Washington. The trial court judge dismissed certain counterclaims against Red Lion Hotels that MAK had raised under both the franchisee bill of rights provisions of the Washington Franchise Investment Protection Act ("FIPA") and the Washington Consumer Protection Act ("CPA"). MAK appealed the dismissal of those counterclaims to the United States Court of Appeals for the Ninth Circuit.
The Ninth Circuit in a published December 7, 2011, decision reversed the dismissal of the FIPA and CPA counterclaims, remanding the lawsuit to the trial court to consider MAK's FIPA counterclaim, and to determine the availability of a remedy for MAK under the CPA. Although the franchise agreement between Red Lion Hotels and MAK included a provision that disputes arising out of the franchise relationship would be governed by Washington law, the trial court held that MAK (a California limited liability company) as an out-of-state franchisee operating a franchise outside the state of Washington was not entitled to benefits under FIPA or the CPA. The Ninth Circuit in a significant case of first impression under FIPA ruled otherwise, concluding that an out-of-state franchisee may assert such claims against an in-state franchisor. MAK's FIPA and CPA counterclaims against Red Lion Hotels now will proceed to trial. Mr. Maurer and Lukins & Annis franchise litigation attorneys Bryce Wilcox and Ted Stiles have been involved in other significant franchise relationship disputes which ended up in federal and state courts for resolution:
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