## Facts

- A multistate junk-removal franchisor entered into a franchise agreement with a California franchisee to operate in Southern California.
- The agreement included a choice-of-law clause requiring interpretation under Washington law.
- The franchisor terminated the franchise after concluding the franchisee failed to report and remit a required percentage of revenue from certain jobs.
- The franchisee sued for wrongful termination and relied on Washington law, asserting Washington permitted summary termination without an opportunity to cure only in limited circumstances not present.
- The franchisor argued California law should apply; California allowed summary termination in more enumerated circumstances and included statutory protections described as nonwaivable.
- The franchisor’s founder submitted a declaration stating he was unaware why Washington law was selected.

## Issues

1. Whether there was a reasonable basis (or substantial relationship) supporting the contractual selection of Washington law.
2. If so, whether applying Washington law was barred because it would contravene a fundamental California public policy in a context where California had a materially greater interest.

## Decision

- The Court of Appeal denied the franchisor’s petition for writ of mandate seeking to compel application of California law.
- The court held there was a reasonable basis for the Washington choice-of-law clause, including the franchisor’s multistate interest in uniform governing law and Washington’s geographic connection to the franchisor’s headquarters region.
- The court held application of Washington law was not precluded by fundamental California public policy on the record presented.
- The trial court’s order applying Washington law remained in effect.

## Legal Principles

- California generally enforces contractual choice-of-law provisions if (1) the chosen state has a substantial relationship to the parties or transaction, or there is another reasonable basis for the choice, and (2) application of the chosen law does not violate a fundamental California policy in a situation where California has a materially greater interest.
- A multistate franchisor may have a reasonable basis to select a single jurisdiction’s law to achieve uniformity across franchise agreements.
- A party’s lack of subjective recollection for selecting the chosen law does not defeat enforcement where an objective reasonable basis exists.
- California franchise-related protections and antiwaiver concepts do not automatically invalidate a choice-of-law clause; invalidation requires a showing of a fundamental policy conflict under the governing conflicts framework.

## Conclusion

The court enforced the Washington choice-of-law clause in a California franchise termination dispute because the selection had an objectively reasonable basis and the franchisor did not show that applying Washington law would violate a fundamental California policy under California’s Restatement-based choice-of-law analysis.


1-800-Got Junk? LLC v. Superior Court of L.A. Cnty., 189 Cal. App. 4th 500, 116 Cal. Rptr. 3d 923 (Ct. App. 2d Dist. 2010)