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Druco Rests., Inc. v. Steak N Shake Enters.,Inc.

United States Court of Appeals, Seventh Circuit

August 29, 2014

DRUCO RESTAURANTS, INC., Plaintiff-Appellee,
v.
STEAK N SHAKE ENTERPRISES, INC., et al., Defendants-Appellants. PEOPLE SALES & PROFIT COMPANY, INC., Plaintiff-Appellee,
v.
STEAK N SHAKE ENTERPRISES, INC., Defendant-Appellant. SCOTT'S S& S INC., Plaintiff-Appellee,
v.
STEAK N SHAKE ENTERPRISES, INC., et al., Defendants-Appellants

Argued May 19, 2014

Page 777

Appeals from the United States District Court for the Southern District of Indiana, Indianapolis Division. Nos. 1:13-cv-00560-LJM-DML, 1:13-cv-00654-LJM-DML, 1:13-cv-00655-LJM-DML -- Larry J. McKinney, Judge.

For DRUCO RESTAURANTS, INC., Plaintiff - Appellee (13-3489): Kirsten Moder Ahmad, Attorney, GREENSFELDER, HEMKER & GALE, P.C., St. Louis, MO.

For STEAK N SHAKE ENTERPRISES, INC., STEAK N SHAKE OPERATIONS, INC., Defendants - Appellants (13-3489, 13-3491): Fredric A. Cohen, Attorney, CHENG COHEN LLC, Chicago, IL.

For PEOPLE SALES & PROFIT COMPANY, INCORPORATED, Plaintiff - Appellee (13-3490): Kirsten Moder Ahmad, Attorney, GREENSFELDER, HEMKER & GALE, P.C., St. Louis, MO.

For STEAK N SHAKE ENTERPRISES, INC., Defendant - Appellant (13-3490): Fredric A. Cohen, Attorney, CHENG COHEN LLC, Chicago, IL.

For SCOTT'S S& S INCORPORATED, Plaintiff - Appellee (13-3491): Kirsten Moder Ahmad, Attorney, GREENSFELDER, HEMKER & GALE, P.C., St. Louis, MO.

Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.

OPINION

Page 778

Rovner, Circuit Judge.

At issue in this appeal is whether a franchisor may compel several of its franchisees to engage in nonbinding arbitration of diversity claims that the franchisees brought in federal court. The district court refused to stay the franchisees' lawsuits and declined to compel arbitration. We affirm.

I.

Steak n Shake owns and operates 415 eponymous restaurants that feature hamburgers and milkshakes, among other items.[1] The company also grants franchises for the operation of Steak n Shake restaurants by others, and there are approximately one hundred franchises currently operating. Druco Restaurants, Inc. (" Druco" ) operates two Steak n Shake restaurants in Missouri under franchise agreements signed in 2001 and 2004. People Sales & Profit Company, Inc. (" PSPC" ) operates five Steak n Shake restaurants in Georgia. Franchise agreements for four of the restaurants were signed in 2007. PSPC acquired its fifth franchise in 2009 for a Brunswick, Georgia restaurant from another franchisee that had signed its agreement with Steak n Shake in 1995. Because that contract is markedly different from the others, we will call it the " Brunswick Agreement." Finally, Scott's S& S Inc. (" Scott's" ) operates a single restaurant in Pennsylvania under a franchise agreement signed in 2006. We will refer to Druco, PSPC and Scott's together as the Franchisees or the plaintiffs.

According to the plaintiffs, since 1939, all Steak n Shake ...


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