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DAI v. Downey: Associational Standing and Arbitration

July 18, 2007

Franchise Law Journal, Volume 27, Number 1, Summer 2007 by the American Bar Association

Erika L. Amarante

The test for an association’s standing to sue on behalf of its members has existed for thirty years, dating back to the U.S. Supreme Court’s decision in Hunt v. Washington State Apple Advertising Commission. It appears that franchisee associations have often encountered difficulty passing this test, although the reported authority on associational standing in franchise cases is sparse. Common sense suggests that the standing challenge confronting franchisee associations should be even greater when their members’ franchise agreements contain arbitration clauses: if the individual members of an association have promised to arbitrate a particular category of disputes, permitting the association to litigate those disputes on its members’ behalf would enable easy evasion of the obligation to arbitrate—an outcome squarely at odds with the Federal Arbitration Act (FA ) and decades of Supreme Court precedent.

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