Court Opinion

ID: 2965904
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Date Created: 2015-09-21 21:46:12.981602+00
Date Added: 2024-06-11T11:43:07.663933
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<pre>                  United States Court of Appeals <br>                      For the First Circuit <br>                       ____________________ <br> <br>No. 98-2337 <br> <br>                      KKW ENTERPRISES, INC., <br> <br>                       Plaintiff, Appellee, <br> <br>                                v. <br> <br>                  GLORIA JEAN'S GOURMET COFFEES <br>                        FRANCHISING CORP., <br> <br>                      Defendant, Appellant. <br> <br>                       ____________________ <br> <br>           APPEAL FROM THE UNITED STATES DISTRICT COURT <br> <br>                 FOR THE DISTRICT OF RHODE ISLAND <br> <br>           [Hon. Ernest C. Torres, U.S. District Judge] <br> <br>                       ____________________ <br> <br>                              Before <br> <br>                     Torruella, Chief Judge, <br> <br>                 Campbell, Senior Circuit Judge, <br> <br>                    and Boudin, Circuit Judge. <br> <br>                      _____________________ <br> <br>    Frederic A. Cohen, with whom Norman M. Leon, Rudnick & Wolfe, <br>William M. Dolan III, Angel Taveras and Brown, Rudnick, Freed & <br>Gesmer were on brief, for appellant. <br>    George E. Lieberman, with whom Tillinghast Licht & Semonoff <br>Ltd was on brief, for appellee. <br> <br> <br>                       ____________________ <br> <br>                          July 19, 1999 <br>                       ____________________

         TORRUELLA, Chief Judge.   Defendant-appellant, Gloria <br>Jean's Gourmet Coffees Franchising Corp. ("Gloria-Jean's"), appeals <br>the district court's order partially granting the motion of <br>plaintiff-appellee, KKW Enterprises, Inc. ("KKW"), to stay <br>arbitration as to claims under the Rhode Island Franchise <br>Investment Act, R.I. Gen. Laws  19-28.1-14 ("statutory claims"), <br>and its order denying Gloria Jean's motion to stay proceedings <br>pending arbitration as to the statutory claims. <br>                            BACKGROUND <br>         Gloria Jean's is an Illinois corporation with its <br>principal place of business in Castroville, California.  Gloria <br>Jean's grants franchises to qualified persons to operate Gloria <br>Jean's Gourmet Coffee Stores throughout the United States.  KKW is <br>a franchisee of Gloria Jean's. <br>         On November 25, 1992, KKW entered into franchise <br>agreements with Gloria Jean's pursuant to which Gloria Jean's <br>granted KKW limited licenses to operate Gloria Jean's franchises at <br>the Independence Mall in Kingston, Massachusetts and in the <br>Northshore Shopping Center, in Peabody, Massachusetts.  KKW <br>subsequently entered into two subsequent franchise agreements with <br>Gloria Jean's to operate Gloria Jean's Gourmet Coffee Stores in <br>Square One Mall, in Saugus, Massachusetts, and at the University <br>Mall in South Burlington, Vermont. <br>          The franchise agreements were heavily negotiated.  KKW <br>was represented by counsel in connection with those negotiations, <br>and KKW's counsel proposed various changes to the franchise <br>agreements, all of which were incorporated into those agreements.  <br>None of the changes to the franchise agreements which KKW's counsel <br>proposed during these negotiations concerned the arbitration <br>agreements or the selection of Chicago as the forum for arbitration <br>of disputes under the agreements. <br>         In entering into each of the franchise agreements, the <br>parties explicitly agreed that they would submit all disputes <br>arising out of or relating to the franchise agreements, the <br>validity of those agreements, or the parties' relationship to <br>arbitration before the American Arbitration Association ("AAA").  <br>Paragraph 18.B of each franchise agreement, in pertinent part, <br>states: <br>                  EXCEPT INSOFAR AS THE FRANCHISOR AS PROVIDED <br>         IN PARAGRAPH A OF THIS SECTION ELECTS TO <br>         ENFORCE THIS AGREEMENT OR ANY OTHER RELATED <br>         AGREEMENT, ALL CONTROVERSIES, DISPUTES OR <br>         CLAIMS ARISING BETWEEN THE FRANCHISOR, ITS <br>         AFFILIATES, OFFICERS, DIRECTORS, AGENTS, <br>         EMPLOYEES AND ATTORNEYS (IN THEIR <br>         REPRESENTATIVE CAPACITY) AND THE FRANCHISEE <br>         (ITS OWNERS AND GUARANTORS, IF APPLICABLE) <br>         ARISING OUT OF OR RELATED TO: (1) THIS <br>         AGREEMENT OR ANY PROVISION THEREOF OR ANY <br>         RELATED AGREEMENT; (2) THE RELATIONSHIP OF THE <br>         PARTIES HERETO; (3) THE VALIDITY OF THIS <br>         AGREEMENT OR ANY RELATED AGREEMENT, OR ANY <br>         PROVISION THEREOF; OR (4) ANY SPECIFICATION, <br>         STANDARD OR OPERATING PROCEDURE RELATING TO <br>         THE ESTABLISHMENT OR OPERATION OF THE <br>         FRANCHISE SHALL BE SUBMITTED FOR ARBITRATION <br>         TO BE ADMINISTERED BY THE CHICAGO, ILLINOIS <br>         OFFICE OF THE AMERICAN ARBITRATION ASSOCIATION <br>         ON DEMAND OF EITHER PARTY.  SUCH ARBITRATION <br>         PROCEEDINGS SHALL BE CONDUCTED IN CHICAGO, <br>         ILLINOIS AND, EXCEPT AS OTHERWISE PROVIDED IN <br>         THIS AGREEMENT, SHALL BE CONDUCTED IN <br>         ACCORDANCE WITH THE THEN CURRENT COMMERCIAL <br>         ARBITRATION RULES OF THE AMERICAN ARBITRATION <br>         ASSOCIATION. <br> <br>         On May 7, 1998, KKW filed a ten count complaint against <br>Gloria Jean's in the Superior Court of the State of Rhode Island <br>for Providence County.  That action was removed by Gloria Jean's to <br>the United States District Court for the District of Rhode Island <br>on June 4, 1998.  KKW's complaint alleges that Gloria Jean's <br>fraudulently induced it to enter into certain franchise agreements <br>by misrepresenting: (1) its ability to obtain favorable leases; (2) <br>its ability to obtain certain types of store locations; and (3) the <br>success of another franchise.  Claiming that it relied upon these <br>alleged misrepresentations in entering into its franchise <br>agreements with Gloria Jean's, KKW's complaint seeks damages for <br>the losses it purportedly incurred in obtaining and operating its <br>Gloria Jean's Stores, and rescission of its two remaining franchise <br>agreements. <br>         KKW's complaint asserts four claims for damages: (1) <br>intentional misrepresentation (Count I); (2) breach of fiduciary <br>duty (Count V); (3) violation of the Rhode Island Franchise <br>Investment Act (Count VII) and violation of the Rhode Island <br>Franchise and Distributorship Investment Regulations Act (Count <br>IX); and (4) six claims which it contends entitles it to rescission <br>of its remaining franchise agreements -- intentional <br>misrepresentation (Count II), negligent misrepresentation (Count <br>III), innocent misrepresentation (Count IV), breach of fiduciary <br>duty (Count VI), violation of the Rhode Island Franchise Investment <br>Act (Count VIII) and violation of the Rhode Island Franchise and <br>Distributorship Investment Regulations Act (Count X). <br>         On June 11, 1998, Gloria Jean's moved, pursuant to <br>Section 3 of the Federal Arbitration Act ("FAA"), 9 U.S.C.  3, to <br>stay the district court action pending arbitration.  At the <br>August 7, 1998 hearing on that motion, the district court concluded <br>that all of the claims set forth in KKW's Complaint were referable <br>to arbitration under the parties' written arbitration agreements.  <br>The district court nonetheless denied Gloria Jean's Motion to Stay <br>as premature, concluding that the arbitration agreements required, <br>as a condition precedent to arbitration, that Gloria Jean's not <br>only move to stay the litigation, but actually "demand" <br>arbitration. <br>         Immediately after the August 7, 1998 hearing, on <br>August 11, 1998, Gloria Jean's filed a Demand for Arbitration with <br>the Chicago, Illinois office of the American Arbitration <br>Association seeking a declaration that it has no liability for the <br>claims asserted in KKW's Complaint.  Gloria Jean's also demanded, <br>by letter of the same date, that KKW submit the claims pending in <br>the district court, as well as any other claims encompassed by the <br>parties' arbitration agreements, to arbitration in accordance with <br>the terms of those agreements.  On August 12, 1998, Gloria Jean's <br>filed a Renewed Motion to Stay Proceedings Pending Arbitration. <br>         On September 1, 1998, KKW moved to stay the arbitration <br>proceeding Gloria Jean's had commenced.  On October 23, 1998, oral <br>argument was held before the district court on both Gloria Jean's <br>Renewed Motion to Stay Proceedings Pending Arbitration and KKW's <br>Motion to Stay Arbitration.  By Order dated November 4, 1998, the <br>district court, inter alia, (1) granted Gloria Jean's Motion to <br>Stay Proceedings Pending Arbitration as to KKW's non-statutory <br>claims; (2) denied the Motion as to KKW's statutory claims; (3) <br>granted KKW's Motion to Stay the arbitration in Chicago, Illinois <br>as to KKW's statutory claims; and (4) denied that Motion as to the <br>non-statutory claims. <br>         Addressing KKW's common-law claims, the Court stated that <br>"[t]here's no question in the Court's mind that the dispute here, <br>or the core of the dispute, at least, [sic] the non-statutory <br>claims that are asserted by the Plaintiff are arbitrable."  The <br>district court further stated, however, that its conclusion that <br>KKW's non-statutory claims were arbitrable did not "answer the <br>question as to where the arbitration should take place as to those <br>claims, nor does it answer the question regarding [the <br>arbitrability of] the statutory claims." <br>         In discussing this question, the district court first <br>stated that "[t]he Federal Arbitration Act does not preempt <br>provisions in an agreement to arbitrate that deal with the <br>mechanics of the arbitration, where are they to take place, where <br>the arbitration is to take place and the like."  For this reason, <br>the district court concluded, it was required to determine the <br>validity of the arbitration agreements' choice-of-forum clause in <br>light of the standards set forth by the United States Supreme Court <br>in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972).  Noting <br>the strong presumption in favor of forum selection clauses <br>established by that decision and the similarly strong relationship <br>between Illinois and the underlying dispute, the district court <br>concluded, at least with respect to KKW's non-statutory claims, <br>that there was no basis for disregarding the parties' agreement to <br>arbitrate their disputes before the Chicago office of the AAA.  <br>Accordingly, the district court granted Gloria Jean's Motion to <br>Stay Proceedings Pending Arbitration as to KKW's non-statutory <br>claims, and denied KKW's motion to stay the arbitration of those <br>claims. <br>         KKW's statutory claims, the district court stated, <br>presented a "different situation."   Relying on  19-28.1-14 of the <br>Rhode Island Franchise Investment Act, the district court stated <br>that because "[t]he Rhode Island General Assembly has, <br>specifically, stated a strong policy against provisions that <br>restrict jurisdiction or venue to a forum outside of this State," <br>the choice-of-forum provision in the parties' arbitration <br>agreements was "invalid and unenforceable" with respect to KKW's <br>statutory claims.  Gloria Jean's Motion to Stay was therefore <br>denied as to those claims. <br>         On November 20, 1998, the district court issued an <br>Amended Order Granting in Part and Denying in Part Motions for <br>Stays and Enlargements of Time.  In that November 20 Amended Order, <br>the district court amended its ruling regarding Gloria Jean's <br>Motion to Stay, as follows: <br>                    The defendant Gloria Jean's motions to stay <br>         these proceedings pending the outcome of <br>         arbitration in Chicago is granted with respect <br>         to the non-statutory claims set forth in <br>         Counts I-VI [of KKW's Complaint].  The motion <br>         is denied with respect to the statutory claims <br>         set forth in Counts VII-X without prejudice to <br>         being renewed if and when arbitration is <br>         demanded in a forum permitted by Gen. Laws <br>         R.I.  19-28.1-14. <br> <br>Gloria Jean's filed its Notice of Appeal on December 4, 1998. <br>                            DISCUSSION <br>I.  Jurisdiction <br>         KKW argues that this Court lacks jurisdiction over the <br>appeal.  It alleges that: (1) the district court's amended order <br>simply gives preference to arbitration over litigation and does not <br>enjoin arbitration from proceeding; (2) an order declining to <br>enforce a forum selection clause is not appealable; and (3) Gloria <br>Jean's conduct in connection with the Pre-Trial Conference, its <br>failure to timely inform the district court of its petition <br>concerning staying the proceedings, and its repeated requests for <br>extensions of time to respond to the complaint and discovery <br>forfeited any right it might have had to a pre-trial appeal and <br>waived any right to arbitrate.  We disagree. <br>         In its November 4, 1998 Order addressing KKW's Motion to <br>Stay the arbitration proceeding which Gloria Jean's had commenced <br>before the AAA in Chicago, the district court stated: "The Motion <br>of Plaintiff [KKW] to Stay Arbitration in Chicago, Illinois . . . <br>is granted as to the statutory claims."  The district court <br>reiterated its stance in its November 20, 1998 Amended Order, <br>stating: "The plaintiff KKW's motion to stay arbitration in Chicago <br>is denied with respect to the non-statutory claims and granted with <br>respect to arbitration of the statutory claims in Chicago." <br>         The district court's orders stayed a pending arbitration <br>proceeding and are immediately appealable.  See PCS 2000 LP v. <br>Romulus Telecomm., Inc., 148 F.3d 32, 34 (1st Cir. 1998) ("Because <br>the district court's stay order is in the nature of an injunction, <br>we have appellate jurisdiction."); see also 9 U.S.C.  16(a)(2) <br>(authorizing an immediate appeal from "an interlocutory order <br>granting . . . an injunction against an arbitration that is subject <br>to this title"); 28 U.S.C.  1292(a)(1) (permitting interlocutory <br>appeals from injunctions). <br>         Similarly, the district court's orders are appealable so <br>far as they refuse to stay the district court's own litigation on <br>issues subject to arbitration under an agreement governed by the <br>FAA.  Section 3 of the FAA expressly provides that if suit is <br>brought on an issue referable to arbitration under a written <br>agreement, the court shall stay the matter until arbitration "has <br>been had in accordance with the terms of the Agreement."  9 U.S.C. <br> 3.  And the statute further provides that an appeal may be taken <br>from an order "refusing to stay any action under Section 3 of this <br>title."  9 U.S.C.  16. <br>         KKW says that "all Gloria Jean's needs to do in order to <br>have the statutory claims arbitrated is simply to demand <br>arbitration."  (KKW Br. at 18).  However, Gloria Jean's has already <br>demanded arbitration, and the district court has refused either to <br>compel arbitration on KKW's statutory claims or to stay its own <br>litigation as to those claims.  Since both the district court and <br>KKW recognize that all the claims set forth in KKW's complaint fall <br>within the scope of the arbitration agreements, the district <br>court's action is in both respects immediately appealable. <br>         KKW also says that the district court's November 20 Order <br>is not truly an order staying or enjoining arbitration but is <br>merely an order declining to enforce a forum selection clause.  <br>This claim is wrong.  "Under the FAA, the court must order the <br>parties to arbitrate 'in accordance with the terms of the <br>agreement'; one term of the agreement is the parties' forum <br>selection clause."  Synder v. Smith, 736 F.2d 409, 418 (7th Cir.) <br>(footnote omitted), cert. denied, 469 U.S. 1037 (1984), overruled <br>on other grounds, Felzer v. Andreas, 134 F.3d 873 (7th Cir. 1998). <br>         Finally, KKW contends that Gloria Jean's forfeited any <br>right it might have had to a pre-trial appeal and waived any right <br>to arbitrate through: (1) its conduct in connection with the Pre- <br>Trial Conference; (2) its failure to timely inform the district <br>court of its petition concerning staying proceedings; and (3) its <br>repeated requests for extensions of time to respond to the <br>complaint and discovery. <br>         On the "forfeiture" issue, KKW fails to cite any relevant <br>cases in support of its proposition.  Without such a basis in law, <br>we reject this contention out of hand.  On the "waiver" issue, this <br>contention was not raised by KKW until December 23, 1998 -- almost <br>three weeks after Gloria Jean's filed its notice of appeal and a <br>month after the district court issued its November 20, 1998 Amended <br>Order.  Thus, KKW's argument is not properly before the court.  See <br>United States v. Walker, 601 F.2d 1051, 1055 (9th Cir. 1979) ("We <br>are here concerned only with the record before the trial judge when <br>his decision was made."). <br>II.  Validity of the Arbitration Clause <br>         A.  Standard of Review <br>         We review de novo the district court's denial of a Motion <br>To Stay Proceedings Pending Arbitration.  See Haviland v. Goldman, <br>Sachs & Co., 947 F.2d 601, 604 (2d Cir. 1991).  We also review de <br>novo the district court's order granting KKW's Motion to Stay.  <br>While "[a]n order staying an arbitration proceeding is in <br>substance, and often in form, a directive to the parties to cease <br>the arbitration" and is a result "injunctive in character," Tejidos <br>de Coamo, Inc. v. ILGWU, 22 F.3d 8, 10 (1st Cir. 1994), the <br>district court's order is not entitled to the abuse of discretion <br>standard normally accorded the grant of injunctive relief.  "[I]f  <br>a district court's ruling rests solely on a premise as to the <br>applicable rule of law . . . and the facts are established or of no <br>controlling relevance, that ruling may be reviewed [de novo] even <br>though the appeal is from the entry of a preliminary injunction.  <br>Thornburgh v. American College of Obstetricians and Gynecologists, <br>476 U.S. 747, 757 (1986).

         B.  Preemption <br>         The central issue before this Court is whether  19-28.1- <br>14 of the Rhode Island Franchise Investment Act, which renders <br>unenforceable "[a] provision in a franchise agreement restricting <br>jurisdiction or venue to a forum outside [Rhode Island] . . . with <br>respect to a claim otherwise enforceable under this Act," is <br>preempted by the FAA. <br>         The district court ruled that the "forum selection <br>portion of the arbitration clause," which designates Chicago as the <br>situs for any arbitration proceeding, was "invalid and <br>unenforceable" as to KKW's statutory claims under the Rhode Island <br>Franchise Investment Act.  It further stated that "[t]he Federal <br>Arbitration Act does not preempt provisions in an agreement to <br>arbitrate that deal with the mechanics of arbitration, where are <br>they to take place, where the arbitration is to take place and the <br>like." <br>         The contracts to which the statute applies implicate <br>interstate commerce, thus subjecting them to the reach of the FAA.  <br>See 9 U.S.C.  1; see generally Socit Generale de Surveillance, <br>S.A. v. Raytheon European Management and Systems Co., 643 F.2d 863, <br>867 (1st Cir. 1981) (the term "commerce" as used in the Act is to <br>be broadly construed). <br>         Any analysis of a party's challenge to the enforcement of <br>an arbitration agreement must begin by recognizing the FAA's strong <br>policy in favor of rigorously enforcing arbitration agreements.  <br>See Perry v. Thomas, 482 U.S. 483, 490 (1987).  The Supreme Court <br>has observed that "'[t]he preeminent concern of Congress in passing <br>the Act was to enforce private agreements into which parties had <br>entered.'"  Id. (quoting Dean Witter Reynolds v. Byrd, 470 U.S. <br>213, 221 (1985)) (alteration in original).  In harmony with that <br>purpose, the Act declares "a liberal federal policy favoring <br>arbitration agreements."  Moses H. Cone Memorial Hosp. v. Mercury <br>Constr. Corp., 460 U.S. 1, 24 (1983). <br>         The Supremacy Clause of Article VI of the United States <br>Constitution prevents the states from impinging on federal law and <br>policy.  See Louisiana Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 368 <br>(1986).  "[A]ny state law, however clearly within a State's <br>acknowledged power, which interferes with or is contrary to federal <br>law, must yield."  Gade v. National Solid Waste Management Ass'n, <br>505 U.S. 88, 108 (1992) (internal quotation marks and citations <br>omitted).  Preemption "may be either express or implied, and is <br>compelled whether Congress's command is explicitly stated in the <br>statute's language or implicitly contained in its structure and <br>purpose."  Id. at 98 (internal quotation marks and citations <br>omitted).  "[S]tate law may nonetheless be preempted to the extent <br>that it actually conflicts with federal law -- that is, to the <br>extent that it 'stands as an obstacle to the full accomplishment <br>and execution of the full purposes and objectives of Congress.'"  <br>Volt Information Sciences, Inc. v. Board of Trustees of Leland <br>Stanford Junior Univ., 489 U.S. 468, 477 (1989) (quoting Hines v. <br>Davidowitz, 312 U.S. 52, 67 (1941)).  "[A] direct, facial <br>contradiction between state and federal law is not necessary to <br>catalyze an 'actual[] conflict' within the doctrinal parameters of <br>the Supremacy Clause . . . [as] a state law or regulation cannot <br>take root if it looms as an obstacle to the achievement of the full <br>purposes and ends which Congress has itself set out to accomplish."  <br>See Securities Indus. Assoc. v. Connolly, 883 F.2d 1114, 1118 (1st <br>Cir. 1989). <br>         "The FAA contains no express pre-emptive provision nor <br>does it reflect a congressional intent to occupy the entire field <br>of arbitration."  Volt, 489 U.S. at 477.  However, to the extent <br>that the Rhode Island Franchise Investment Act is construed to <br>prohibit any provision in a franchise agreement which designates a <br>forum for arbitration outside of Rhode Island, it presents an <br>obstacle to the achievement of the full purposes and ends which <br>Congress set out to accomplish in enacting the FAA -- that "courts <br>. . . [will] enforce privately negotiated agreements to arbitrate, <br>like other contracts, in accordance with their terms."  See id. at <br>478. <br>         Where, as here, "there is an agreement to arbitrate, the <br>FAA reflects a strong, well-established, and widely recognized <br>federal policy in favor of arbitration."  Vimar Seguros y <br>Reaseguros, S.A. v. M/V Sky Reefer, 29 F.3d 727, 730 (1st Cir.), <br>aff'd, 515 U.S. 528 (1995).  Section 3 of the FAA provides that if <br>a suit is brought on an issue referable to arbitration under a <br>written arbitration agreement, the court shall stay a matter until <br>the arbitration "has been had in accordance with the Agreement."  <br>9 U.S.C.  3.  Likewise,  4 of the FAA requires that a court, <br>"upon being satisfied that the making of the agreement for <br>arbitration or the failure to comply therewith is not in issue, <br>. . . shall make an order directing the parties to proceed to <br>arbitration in accordance with the terms of the agreement."  9 <br>U.S.C.  4. <br>         The venue in which arbitration is to take place is a <br>"term" of the parties' arbitration agreements.  See Snyder, 736 <br>F.2d at 418 ("under [the FAA], the court must order the parties to <br>arbitrate 'in accordance with the terms of the agreement'; one such <br>term of the agreement is the parties' forum selection clause").  As <br>we shall discuss in more detail below, see infra at C., a statute <br>seeking to override that term, such as the Rhode Island Franchise <br>Investment Act, is preempted by the FAA assuming that the FAA <br>applies to the agreement.  See Alphagraphics Franchising, Inc. v. <br>Whaler Graphics, Inc., 840 F. Supp. 708, 710 (D. Ariz. 1993) <br>(holding that a provision of the Michigan Franchise Investment Law <br>which rendered void and unenforceable "[a] provision requiring that <br>arbitration or litigation be conducted outside [Michigan]" imposed <br>"limitations on the method and manner by which the parties agreed <br>to arbitrate their disputes" and was preempted by the FAA). <br>         C.  Forum Selection Clause <br>         Gloria Jean's argues that the Rhode Island Franchise <br>Investment Act's bar of all but in-state arbitration fora violates <br> 2 of the FAA.  We agree. <br>         The Supreme Court has stated: <br>                  We discern only two limitations on the <br>         enforceability of arbitration provisions <br>         governed by the Federal Arbitration Act: they <br>         must be part of a written maritime contract or <br>         a contract "evidencing a transaction involving <br>         commerce" and such clauses may be revoked upon <br>         "grounds as exist at law or in equity for the <br>         revocation of any contract."  We see nothing <br>         in the Act indicating that the broad principle <br>         of enforceability is subject to any additional <br>         limitations under State law. <br> <br>Southland Corp. v. Keating, 465 U.S. 1, 10-11 (1984) (quoting 9 <br>U.S.C.  2) (footnote omitted) (emphasis added). <br>         "[S]tate law, whether of legislative or judicial origin, <br>is applicable [in the sense that it would affect the validity of an <br>arbitration agreement, only] if that law arose to govern issues <br>concerning the validity, revocability and enforceability of <br>contracts generally."  Perry v. Thomas, 482 U.S. 483, 492 n.9 <br>(1987).  Only "generally applicable contract defenses, such as <br>fraud, duress or unconscionability, may be applied to invalidate <br>arbitration agreements without contravening  2 [of the FAA]."  <br>Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996). <br>         Here, the Rhode Island statute states that: "A provision <br>in a franchise agreement restricting jurisdiction or venue to a <br>forum outside this state . . . is void with respect to a claim <br>otherwise enforceable under this act."  R.I. Gen. Laws  19-28.1- <br>14.  Because this proscription limits the statute's application to <br>one type of provision, venue clauses, in one type of agreement, <br>franchise agreements, the statute does not apply to any contract.  <br>Writ simple, because  19-28.1-14 is not a generally applicable <br>contract defense, it is, if applied to arbitration agreements, <br>preempted by  2 of the FAA. <br>         We find more than ample support for this position in our <br>prior case law, and opinions from our sister circuits.  In <br>Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc, 723 F.2d <br>155 (1st Cir. 1983), cert. granted, 469 U.S. 916 (1984), aff'd in <br>part, rev'd in part on other grounds, 473 U.S. 614 (1985), a <br>plaintiff-franchisor brought suit against the defendant, one of its <br>dealers, seeking an order pursuant to  4 of the FAA compelling <br>arbitration of a dispute which had arisen between the parties.  <br>After the district court granted in part the motion to compel, the <br>dealer appealed contending that the arbitration agreement, which <br>specified that any arbitration was to take place in Japan, was <br>unenforceable.  The dealer relied on a section of the Puerto Rico <br>Dealers' Act, P.R. Laws Ann. tit. 10,  278, which states that <br>"[a]ny stipulation that obligates a dealer to adjust, arbitrate or <br>litigate any controversy that comes up regarding his dealer's <br>contract outside of Puerto Rico . . . shall be likewise considered <br>as violating the public policy set forth by this chapter and is <br>therefore null and void."  Id. at  278b-2. <br>         We held that federal law preempts the direct application <br>of  278b-2, because the ground cited in the statute for <br>invalidating a provision stipulating arbitration in a dealer's <br>contract was not among the grounds that "exist at law or in equity <br>for the revocation of any contract."  See Mitsubishi, 723 F.2d at <br>158 (quoting 9 U.S.C.  2). <br>         In Doctor's Associates, Inc. v. Hamilton, 150 F.3d 157 <br>(2d Cir. 1998), the plaintiff-franchisor filed a petition to compel <br>arbitration of a lawsuit that the defendant-franchisee had filed in <br>New Jersey state court.  The franchisee opposed the petition to <br>compel, asserting that the arbitration clause in the parties' <br>franchise agreement, which specified that arbitration would be held <br>in Connecticut, was void and unenforceable as against the policy of <br>New Jersey.  The Second Circuit stated: <br>                  Despite the clear language in Southland, <br>         Hamilton [the franchisee] urges us to rely on <br>         Kubis & Perszyk Assocs. v. Sun Microsystems, <br>         146 N.J. 176, 680 A.2d 618 (1996), to <br>         invalidate the Agreement's arbitral forum <br>         selection clause.  Recognizing that state law <br>         may affect the validity and enforceability of <br>         arbitration to the extent that the state law <br>         applies to "the revocation of any contract," 9 <br>         U.S.C.  2 (emphasis added), Hamilton <br>         maintains that the rule set forth in Kubis <br>         applies to all contracts, including the <br>         Agreement here. <br>                    We disagree.  Kubis did not establish a <br>         "generally applicable" contract defense that <br>         applies to "any" contract;  it invalidated a <br>         franchise agreement's forum selection clause <br>         under the New Jersey Franchise Practices Act <br>         because it required the franchisee to sue in <br>         another jurisdiction.  The Kubis decision <br>         applies to one sort of contract provision <br>         (forum selection) in only one type of contract <br>         (a franchise agreement).  Therefore, to the <br>         extent that Kubis can be read to invalidate <br>         arbitral forum selection clauses in franchise <br>         agreements, it is preempted by the FAA. <br> <br>Hamilton, 150 F.3d at 163; see Management Recruiters Int'l v. <br>Bloor, 129 F.3d 851, 856 (6th Cir. 1997) (if the Washington <br>Franchise Investment Protection Act "imposed an absolute <br>requirement of in-state arbitration notwithstanding the parties' <br>agreement to arbitrate [elsewhere], its validity would be in <br>serious doubt as a result of the preemptive effect of the FAA"). <br>         Section 19-28.1-14's requirement that all claims arising <br>under the Rhode Island Franchise Investment Act be brought in Rhode <br>Island does not apply to all contracts and does not establish a <br>generally applicable contract defense.  Its prohibition of non- <br>Rhode Island venues purports to restrict the enforcement of only <br>one sort of contract provision, forum selection clauses, in only <br>one type of contract, franchise agreements.  Under  2 of the FAA, <br>that is impermissible. <br>         "Courts must give effect to . . . freely-negotiated forum <br>selection clauses."  See Snyder, 736 F.2d at 419.  "The choice of <br>[ ] forum was made in an arms-length negotiation by experienced and <br>sophisticated businessmen, and absent some compelling and <br>countervailing reason it should be honored by the parties and <br>enforced by the courts."  M/S Bremen v. Zapata Off-Shore Co., 407 <br>U.S. 1, 12 (1972). <br>         Here, Gloria Jean's and KKW chose Chicago, Illinois as <br>the forum for the arbitration of their disputes.  Their choice of <br>arbitral forum should have been honored by the district court. <br>Courts may not rewrite the parties' agreements and compel <br>arbitration of their dispute in a forum which is not one of those <br>enumerated in an arbitration agreement's forum selection clause.  <br>See Dean Witter Reynolds Inc. v. Prouse, 831 F. Supp. 328, 330 <br>(S.D.N.Y. 1993). <br>                            CONCLUSION <br>         For the foregoing reasons, we reverse the district <br>court's partial denial of Gloria Jean's Motion to Stay Pending <br>Arbitration, and vacate its order granting KKW's Motion to Stay <br>Arbitration in Chicago with respect to the statutory claims under <br>the Rhode Island Franchise Investment Act.  Costs to appellant. <br></pre>

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