TMC Franchise Corporation v. Millennium Vision LLC et al

Filing 19

TEMPORARY RESTRAINING ORDER - Pla TMC Franchise Corporation's application for temporary restraining order (Doc. 11) is granted. Pla TMC Franchise Corporation's request that the Court issue a TRO without notice (Doc. 17) is granted pursuant to Rule 65(b)(1). Dft Millennium Vision LLC, its officers, agents, servants, and employees, and those persons in active concert or participation with them who receive actual notice hereof by personal service or otherwise, are prohibited from using th e CIRCLE K trademarks, trade name and trade dress and falsely associating with the CIRCLE K franchise system. Pursuant to Rule 65(c), Plaintiff TMC Franchise Corporation shall promptly post a security bond in the amount of $25,000.00. Pla TMC Fr anchise Corporation and its counsel immediately shall make a good faith and diligent effort to serve a copy of this order on Dfts. This temporary restraining order, unless extended for good cause, expires on December 30, 2010. A preliminary injunction hearing will be held on December 30, 2010 at 2:00 p.m. in Courtroom 603, 401 West Washington Street, Phoenix, AZ 85003 before Judge David G Campbell. Signed by Judge David G Campbell on 12/17/10. (NOTE: See Order for full details)(KMG)

TMC Franchise Corporation v. Millennium Vision LLC et al

Doc. 19

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

WO

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

) ) ) Plaintiff, ) ) vs. ) Millennium Vision, LLC; and Nastaran ) ) Eghtesad, ) ) Defendants. ) TMC Franchise Corporation,

No. CV-10-2423-PHX-DGC TEMPORARY RESTRAINING ORDER

TMC Franchise Corporation is the franchisor of retail convenience stores operated under the CIRCLE KŪ trademark and franchise system. On October 2, 2009, TMC and Millennium Vision LLC entered into a franchise agreement, pursuant to which Millennium was granted the right to operate a CIRCLE K store in Folsom, California. The store opened in February 2010. On November 9, 2010, TMC filed suit against Millennium and Nastaran Eghtesad, one of Millennium's principals and a guarantor to the franchise agreement. The verified complaint asserts six claims: trademark infringement, false designation of origin, violation of the Arizona Uniform Trade Secrets Act, breach of contract, breach of promissory note, and breach of personal guaranty. Doc. 1. TMC seeks injunctive relief, specific performance, damages, and attorneys' fees. Id. On November 16, 2010, TMC filed an application for a temporary restraining order (TRO) against Millennium pursuant to Rule 65 of the Federal Rules of Civil Procedure. Doc. 11. In an order dated November 22, 2010, the Court noted that the application does not

Dockets.Justia.com

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

contain a certificate showing that it has been served on Defendants, and directed TMC to comply with Rule 65(b)(1) if the application is brought without notice. Doc. 15. On December 9, 2010, TMC filed a request that the Court issue a TRO without notice pursuant to Rule 65(b)(1). Doc. 17. Having considered the requirements of Rule 65 and the standard for obtaining temporary injunctive relief, and having reviewed the well-pled factual allegations of the verified complaint, the application for a TRO, the request for issuance without notice, and the supporting affidavits and exhibits, the Court finds that a TRO should issue without notice. I. The Application for TRO. To obtain a temporary restraining order, TMC must show that it is likely to succeed on the merits, that it is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in its favor, and that an injunction is in the public interest. Winter v. Natural Res. Def. Council, 555 U.S. 7, 129 S. Ct. 365, 374 (2008). A. Success on the Merits.

TMC has shown that it is likely to succeed on its trademark infringement claims (counts one and two) and its claim for breach of contract (count four). The verified complaint and the evidence presented in support of the application for a TRO show that Millennium has breached the franchise agreement by failing to pay royalty and promotional fees to TMC, and has breached post-termination obligations of that agreement and infringed TMC's federally-registered trademarks by continuing to use the CIRCLE K marks in connection with the operation of its store. B. Irreparable Harm.

TMC has shown that it is likely to suffer irreparable harm in the absence of a TRO. The damage to TMC's reputation and customer goodwill constitutes irreparable harm. See MySpace, Inc. v. Wallace, 498 F. Supp. 2d 1293, 1305 (C.D. Cal. 2007) ("Harm to business goodwill and reputation is unquantifiable and considered irreparable."). Indeed, "[i]n a trademark infringement claim, `irreparable injury may be presumed from a showing of likelihood of success on the merits.'" GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, -2-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

1204 n.4 (9th Cir. 2000) (quoting Brookfield Communications, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1066 (9th Cir.1999)). "This presumption effectively conflates the dual inquiries of this prong into the single question of whether the plaintiff has shown a likelihood of success on the merits." Id. C. Balance of Hardships.

Where, as in this case, the plaintiff shows intentional infringement, the defendant "cannot complain of the harm that will befall it when properly forced to desist from its infringing activities." Triad Sys. Corp. v. Se. Express Co., 64 F.3d 1330, 1338 (9th Cir. 1995). Indeed, "[w]here the only hardship that the defendant will suffer is lost profits from an activity which has been shown likely to be infringing, such an argument in defense `merits little equitable consideration[.]'" Id. (citation omitted). Because TMC has shown that it is likely to succeed on its trademark infringement claims, the balance of hardships tips in its favor. D. Public Interest.

The "public interests favors elimination of consumer confusion" caused by trademark infringement. Starcom Mediavest Group, Inc. v. Mediavestw.com, No. 10-CV-04025-LHK, 2010 WL 3564845, at *1 (N.D. Cal. Sept. 13, 2010). Given that Millennium is operating a convenience store that serves dozens, if not hundreds, of consumers each day, the public interest is served by eliminating confusion as to whether Millennium's store is a legitimate CIRCLE K store. II. The Request for Issuance Without Notice. TMC has presented evidence showing that it made repeated attempts to serve process on Defendants and give them notice of the application for a TRO. Doc. 17-1. It appears that Defendants may be evading service. TMC also has shown that Defendants have actual knowledge of this suit and the underlying dispute arising out of the franchise agreement. Id. Specific facts in the verified complaint and supporting affidavits show that TMC has suffered, and continues to suffer, irreparable harm to its reputation and customer goodwill from the alleged infringing activities of Millennium. The Court finds, pursuant to Rule -3-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

65(b)(1), that a TRO should issue without notice to Millennium. III. Conclusion. TMC has met its burden for obtaining a TRO without notice, that is, it has shown that it is likely to succeed on the merits of its trademark infringement and breach of contract claims, that it is will suffer immediate and irreparable harm if a TRO is not issued before Millennium can be heard in opposition, that the balance of equities tips in its favor, that an injunction is in the public interest, and that it has made diligent and good faith efforts to give notice to Millennium. Given the nature of Millennium's business, and TMC's likelihood of success on the merits, the Court concludes that security in the amount of $25,000 will reasonably protect Millennium against injury if this injunction is entered incorrectly. IT IS ORDERED: 1. Plaintiff TMC Franchise Corporation's application for temporary restraining order (Doc. 11) is granted. 2. Plaintiff TMC Franchise Corporation's request that the Court issue a TRO without notice (Doc. 17) is granted pursuant to Rule 65(b)(1). 3. Defendant Millennium Vision LLC, its officers, agents, servants, and employees, and those persons in active concert or participation with them who receive actual notice hereof by personal service or otherwise, are prohibited from using the CIRCLE KŪ trademarks, trade name and trade dress and falsely associating with the CIRCLE KŪ franchise system. 4 Defendant Millennium Vision LLC is required to comply fully with its posttermination obligation to de-identify contained in paragraph 12.7(C) of the parties' franchise agreement (Doc. 1-1 at 36). Specifically, Millennium Vision shall (a) immediately cease using the CIRCLE KŪ Marks or any name, logo, slogans, or symbols or other designations that might tend to mislead or confuse the public or give the impression that Millennium Vision's store, located at 301 E. Bidwell Street, Folsom, California, is associated with Plaintiff TMC Franchise Corporation's or its CIRCLE KŪ brand. -4-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

5.

Pursuant to Rule 65(c), Plaintiff TMC Franchise Corporation shall promptly post a security bond in the amount of $25,000.00.

6.

Plaintiff TMC Franchise Corporation and its counsel immediately shall make a good faith and diligent effort to serve a copy of this order on Defendants.

7.

This temporary restraining order, unless extended for good cause, expires on December 30, 2010.

8.

A preliminary injunction hearing will be held on December 30, 2010 at 2:00 p.m.

DATED this 17th day of December, 2010 at 12:25 p.m..

-5-