James L. Ticknor Janet Ticknor Larry Ticknor Tickco Holding, L.L.C. Ticknor Lodging Corporation v. Choice Hotels International, Inc.

In this appeal, we consider whether the Federal Arbitration Act preempts state law governing the unconscionability of adhesion contracts. Under the circumstances presented by this case, we conclude that it does not, and we affirm the order of the district court denying the motion to compel arbitration.

I

In 1998, James Ticknor and the Ticknor Lodging Corporation (collectively, “Tick-nor”) executed an Econo Lodge Franchise Agreement (“Franchise Agreement”) with Choice Hotels, International, Inc. (“Choice”) for the operation of a hotel located in Bozeman, Montana. In return for the payment of franchise fees, Ticknor was granted a non-exclusive license to use the Econo-Lodge mark in connection with the motel. In addition, Choice was to integrate the motel into its national advertising and reservations system and provide other assistance. James Ticknor’s parents, Janet and Larry Ticknor and Tickco Holding LLC (their company) guaranteed the performance of the Agreement. Tick-nor and Ticknor Lodging also executed the separate guaranty agreement (“Guaranty Agreement”).

The Franchise Agreement, which was a pre-printed standard form instrument drafted by Choice, contained an arbitration…

dissenting:

Because I do not believe that the contract at issue was an adhesion contract or that its arbitration clause was so one-sided as to make it unconscionable, I respectfully dissent. The arbitration clause does not violate Montana’s public policy; therefore, Maryland law should apply. Because I also conclude that Maryland law would not prevent the enforcement of the arbitration clause, I would reverse the district court’s denial of Choice’s motion to dismiss or to compel arbitration. 1

The concept of adhesion first arose in the insurance context, see Fitzgerald v. Aetna Ins. Co., 176 Mont. 186 , 577 P.2d 370, 373 (1978) (finding “insurance policy [to be] an adhesion contract”), but has since been applied to other areas. See, e.g., Anderson v. Baker, 196 Mont. 494 , 641 P.2d 1035, 1039 (1982) (consumer and bank); Passage v. Prudential-Bache Sec., Inc., 223 Mont. 60 , 727 P.2d 1298, 1301 (1986) (finding a contract of adhesion where consumer was “faced with an industry wide practice of including Arbitration Clauses in standardized brokerage contracts” and thus “face[d] the possibility of being excluded from the securities market unless he accepted] a contract with such an…

265 F.3d 931 (9th Cir. 2001) JAMES L. TICKNOR; JANET TICKNOR; LARRY TICKNOR; TICKCO HOLDING, L.L.C.; TICKNOR LODGING CORPORATION, PLAINTIFFS-APPELLEES, v. CHOICE HOTELS INTERNATIONAL, INC., DEFENDANT-APPELLANT. No. 00-35048 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Argued and Submitted July 19, 2001 Filed September 12, 2001 [Copyrighted Material Omitted][Copyrighted Material Omitted][Copyrighted Material Omitted] Patrick M. Sullivan; Butte, Montana; Attorney for the appellant. Robert K. Baldwin; Bozeman, Montana; Attorney for the appellee Appeal from the United States District Court for the District of Montana Donald W. Molloy, District Judge, Presiding. D.C. No. CV-99-00047-DWM Before: Harry Pregerson, A. Wallace Tashima and Sidney R. Thomas, Circuit Judges. Thomas, Circuit Judge 1 Opinion by Judge Thomas; Dissent by Judge Tashima 2 In this appeal, we consider whether the Federal Arbitration Act preempts state law governing the unconscionability of adhesion contracts. Under the circumstances presented by this case, we conclude that it does not, and we affirm the order of the district court denying the motion to compel arbitration. I. 3 In 1998, James Ticknor and the…