How is the 'net judgment' determined in 1 800 Packouts arbitration?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
- e. In addition to any other remedy, the arbitrator will award the "Prevailing Party" their costs, fees, reasonable attorney's fees, expert witness fees, and the like that Party expended in preparation for and the prosecution of the case at arbitration. The Prevailing Party will be the Party that has obtained the greatest "net judgment" in terms of money or money equivalent. If money or money equivalent has not been awarded, then the Prevailing Party will be that Party that has prevailed on a majority of the material issues decided. The "net judgment" is determined by subtracting the smallest award of money or money equivalent from the largest award. If there is a mixed decision involving an award of money or money equivalent and equitable relief, or if the arbitrator deems it to be in the best interest of justice, the arbitrator using their reasonable judgment, will award the above fees to the Party that it deems has prevailed over the other Party. This award applies to all matters decided by the arbitrator, including matters concerning misrepresentation or fraud.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts' 2025 Franchise Disclosure Document, the 'net judgment' in arbitration is determined by subtracting the smaller monetary award from the larger one. This calculation is used to identify the "Prevailing Party," which is the party that obtains the greatest net judgment in terms of money or its equivalent.
If no monetary award is given, the prevailing party is the one that wins on the majority of the key issues decided. The arbitrator can also use their judgment to award fees to the party they deem has prevailed, especially in cases involving mixed decisions (monetary and equitable relief) or if it's in the best interest of justice. This award covers all matters decided by the arbitrator, including misrepresentation or fraud.
This definition of 'net judgment' is important because the prevailing party in the arbitration is entitled to recover their costs, fees, reasonable attorney's fees, expert witness fees, and similar expenses incurred during the arbitration process. This can significantly reduce the financial burden of arbitration for the winning party and serves as an incentive to pursue legitimate claims or defenses.