## Facts

- Suburban Leisure Center, Inc. operated retail stores in the St. Louis area selling leisure equipment.
- AMF Bowling Products, Inc. and AMF Billiards & Games, LLC manufactured pool tables and related accessories.
- The parties entered an oral franchise agreement under which Suburban could use AMF’s trade name and marks to promote and sell AMF pool tables and accessories in Suburban’s stores.
- The parties later executed a written E-Commerce Dealer Agreement under which Suburban provided delivery and installation for AMF products sold over the internet to customers in Suburban’s territory.
- The e-commerce agreement contained (1) an arbitration clause requiring binding arbitration in Richmond, Virginia for disputes “arising under” the agreement or “any invoice or agreement executed pursuant to” it, and (2) a merger clause stating the writing was the entire agreement and superseded prior oral and written agreements.
- AMF sent Suburban a letter terminating the oral franchise arrangement and directing Suburban to stop promoting AMF products.
- Suburban sued for damages based on termination of the oral franchise agreement; the suit did not assert claims under the e-commerce agreement.
- After removal to federal court, AMF moved to dismiss or compel arbitration based on the e-commerce agreement’s arbitration clause, arguing the merger clause subsumed the earlier oral franchise agreement.

## Issues

1. Whether the e-commerce agreement’s arbitration clause covered Suburban’s claims based on termination of a separate, earlier oral franchise agreement.
2. Whether the e-commerce agreement’s merger clause and the parol evidence rule barred recognition of the oral franchise agreement as a separate, enforceable collateral contract, thereby requiring arbitration.

## Decision

- The Eighth Circuit affirmed the denial of AMF’s motion to compel arbitration.
- The court held the arbitration clause did not reach Suburban’s claims because they did not “arise under” the e-commerce agreement and were not based on an agreement “executed pursuant to” it.
- The court held the merger clause and parol evidence rule did not eliminate the alleged oral franchise agreement where it addressed different subject matter and did not contradict the written e-commerce agreement.
- Suburban’s franchise-based claims could proceed in court rather than arbitration.

## Legal Principles

- Arbitration under the Federal Arbitration Act is a matter of contract; courts may compel arbitration only for disputes the parties agreed to arbitrate.
- An arbitration clause limited to disputes “arising under” a contract generally does not cover claims grounded in a separate agreement addressing different rights and obligations.
- A merger clause is evidence of integration of the writing, but it does not necessarily extinguish a separate, non-contradictory collateral agreement concerning a different subject.
- Under the collateral contract doctrine, extrinsic evidence may be considered to show an independent agreement that does not contradict or alter the written contract; the parol evidence rule does not bar such evidence.

## Conclusion

Because Suburban’s claims were premised on a distinct oral franchise arrangement concerning in-store marketing and sales rights, and because that arrangement neither conflicted with nor was executed pursuant to the later e-commerce contract, the court declined to compel arbitration despite the e-commerce agreement’s arbitration and merger clauses.


Suburban Leisure Ctr., Inc. v. AMF Bowling Prods., Inc., 468 F.3d 523 (8th Cir. 2006)