BrightStar Franchising, LLC v. Northern Nevada Care, Inc. et al

Filing 170

MEMORANDUM Opinion and Order signed by the Honorable Virginia M. Kendall on 2/11/2020. BrightStar's Motion for Summary Judgment 141 is granted. BrightStar is awarded its attorneys' fees and costs as provided in the Franchise Agreement. D efendants are hereby ordered to:1. refrain, for a period beginning upon entry of this permanent injunction order and ending 18 months later,5 from owning, managing, operating, engaging in, or having any interest in any business that provides (a) supp lemental healthcare staff to institutional clients, such as hospitals, nursing homes and clinics, or (b) comprehensive care, including medical and non-medical services, to private duty clients within their home, within the following ZIP Codes: 89403, 89406, 89408, 89410, 89413, 89415, 89420, 89423, 89427, 89429, 89430, 89444, 89447, 89460, 89701, 89703, 89704, 89705, and 89706, or within 25 miles of any BrightStar agency (whether franchised or owned by BrightStar or its affiliates);2. refrain, f or a period beginning upon entry of this permanent injunction order and ending 18 months later,6 from soliciting business from customers of NNC's former Agency or from any National Accounts;3. cease using the telephone number 775-461-3696 and al l other telephone numbers and listings used in connection with the operation of Defendants' former BrightStar Agency;4. refrain from using any Confidential Information for any purposes;5. return to BrightStar the Confidential Information, and al l trade secrets, confidential materials, and other property owned by BrightStar; 6. file with the Court and serve upon BrightStar and its counsel within ten (10) days after entry of the permanent injunction, a written report, under oath, setting forth in detail the manner in which Defendants have complied with such permanent injunction. See Opinion for further details. Mailed notice(lk, )

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
)
)
)
)
)
)
)
)
)
)

BRIGHTSTAR FRANCHISING, LLC,
Plaintiff,
v.
NORTHERN NEVADA CARE, INC.,
STEPHEN H. NEFF and
TERESA R. NEFF,

No. 17 C 9213
Judge Virginia M. Kendall

Defendants.
MEMORANDUM OPINION AND ORDER
In June 2015, Defendant Northern Nevada Care, Inc. (“NNC”) and its owners, Stephen and
Teresa Neff, entered into a franchise agreement with BrightStar Franchising, LLC to operate a
BrightStar franchise providing home-health care in the Carson City, Nevada area. Defendants
later terminated the agreement and began operating a competing business in the same location.
BrightStar sued for breach of contract claiming that the Neffs’ new business violated multiple
terms of the franchise agreement. BrightStar now moves for summary judgment on its breach of
contract claim and asks the Court to enter a permanent injunction requiring Defendants to comply
with certain terms of the franchise agreement. For these reasons, the Court grants BrightStar’s
motion for summary judgment [Dkt. 141] and enters a permanent injunction as set forth below.
PROCEDURAL HISTORY
On December 21, 2017, BrightStar filed a one-count complaint for breach of contract
seeking injunctive relief against NNC, which it amended on January 12, 2018. (Dkt. 1, 9.) Shortly
after filing the amended complaint, BrightStar filed a motion for a preliminary injunction seeking
an order temporarily halting operations of NNC’s health services company, Allevia Living, in
1

northern Nevada pending review of the underlying complaint. (Dkt. 11, 12.) On January 22, 2018,
NNC moved to transfer the case to federal district court in Nevada, which the Court denied. NNC
answered the amended complaint on February 20, 2018 and brought a counterclaim against
BrightStar alleging consumer fraud and common law fraud in violation of Nevada law on April
16, 2018. (Dkt. 34, 48.)
On January 12, 2018, NNC filed its own complaint against BrightStar in Nevada state court
(the “Nevada Complaint”) bringing a claim similar to the counterclaims here for consumer fraud
and common law fraud arising out of activities and events related to the franchise agreement. (Dkt.
21-1, Dkt. 38 at 1); see also Northern Nevada Care, Inc., et al. v. BrightStar Franchising, LLC,
No. 18TRT000011B (1st Dist. Nev. 2018). BrightStar moved to compel arbitration of the claim
in the Nevada Complaint and the counterclaims in this case under the Federal Arbitration Act and
corresponding provisions of the franchise agreement. (Dkt. 37, 55.)

The Court granted

BrightStar’s motion to compel and ordered that the claim in the Nevada Complaint and
Defendants’ counterclaims be resolved in arbitration. BrightStar Franchising, LLC v. N. Nev.
Care, Inc., No. 17 C 9213, 2018 WL 4224454, at *10-13 (N.D. Ill. Sept. 4, 2018) (“BrightStar I”).
On June 26, 2018, the Court held a preliminary injunction hearing and heard testimony
from: 1) Thomas Gilday, chief financial officer of BrightStar Group Holdings, Inc.; 2) Peter
Morris, owner and operator of the BrightStar franchise for the Reno-Sparks, Nevada territory; 3)
Stephen Neff , co-defendant and owner of Allevia Living; and 4) James Kearns, chief technology
officer for BrightStar.

On September 4, 2018, the Court granted BrightStar’s preliminary

injunction motion, finding first that BrightStar was likely to succeed on the merits of its breach of
contract claim. Id. at *6. The Court noted that Defendants did not dispute any of the elements of
BrightStar’s breach of contract claim and instead relied entirely on a fraudulent inducement

2

defense, which the Court rejected. Id. at *6-7. The Court also found that BrightStar would be
irreparably harmed without a preliminary injunction and that the balance of harms supported
injunctive relief. Id. at *8-9. The Court ordered Defendants, among other things, to cease
operating a business related to home healthcare or healthcare staffing in the Reno, Nevada area for
a period of 18 months and to cease using a telephone number affiliated with Defendants’ former
BrightStar franchise. Id. at *13. Defendants appealed the Court’s preliminary injunction order,
and the Court declined Defendants’ request to stay the order while the appeal was pending. (Dkt.
74, 95.) Defendants later voluntarily dismissed the appeal. See BrightStar Franchising, LLC v.
N. Nev. Care, Inc., No. 18-2994, 2018 WL 7821524, at *1 (7th Cir. Nov. 21, 2018).
On October 3, 2018, BrightStar asked the Court to sanction Defendants and hold them in
contempt for failing to comply with the preliminary injunction order. (Dkt. 84-88.) Defendants,
in turn, filed a motion to reconsider the Court’s preliminary injunction order, citing new facts they
argued warranted reversal of the injunction. (Dkt. 91.) The Court held an evidentiary hearing on
BrightStar’s motion on October 19, 2018 and heard testimony from Stephen Neff and Thomas
Gilday about two violations of the preliminary injunction order—Defendants’ failure to cease
business operations and failure to cease using the former BrightStar telephone number. See
BrightStar Franchising, LLC v. N. Nev. Care, Inc., No. 17 C 9213, 2019 WL 194369, at *3-6 (N.D.
Ill. Jan. 15, 2019) (“BrightStar II”). The Court denied Defendants’ reconsideration bid, granted
BrightStar’s motions, found Defendants in contempt of the Court’s preliminary injunction order,
and ordered Defendants to pay BrightStar’s attorneys’ fees and costs related to the rule to show
cause and contempt proceedings. Id. at *6-7.
The parties engaged in discovery and BrightStar filed this motion for summary judgment.
(Dkt. 141.) Defendants oppose the motion and the Neffs are now proceeding pro se.

3

STATEMENT OF FACTS
I.

The Neffs’ Response to BrightStar’s Motion
The Court must begin by addressing the Neffs’ response to BrightStar’s motion for

summary judgment. The Neffs, who are proceeding pro se, filed a 17-page memorandum of law
and 22 exhibits responding to BrightStar’s motion for summary judgment. (Dkt. 147.) The
memorandum of law includes a section titled “Factual History” containing 40 separate statements
of fact, a 2-page argument section titled “Injunctive Relief,” and a 2.5-page argument section titled
“Summary Judgment.”
The Neffs’ response does not include anything directly addressing BrightStar’s statement
of material facts. There is nothing in their memorandum of law responding to BrightStar’s facts,
nor is there a separately filed statement as required by the Court’s local rules. Local Rule
56.1(b)(3)(A)-(B) requires the party opposing summary judgment to respond to the moving party’s
statement of facts with “a concise response . . . that shall contain:
(A) numbered paragraphs, each corresponding to and stating a concise summary of
the paragraph to which it is directed, and
(B) a response to each numbered paragraph in the moving party’s statement,
including, in the case of any disagreement, specific references to the affidavits,
parts of the record, and other supporting materials relied upon.”
See also Ammons v. Aramark Uniform Servs., Inc., 368 F.3d 809, 816-18 (7th Cir. 2004). The
Neffs did not file anything addressing BrightStar’s statement of facts, let alone a response in the
form required by Local Rule 56.1. 1 Because the Neffs failed to respond to or dispute any of

1

BrightStar filed a Notice to Pro Se Litigant Opposing Motion for Summary Judgment, as required by
Local Rule 56.2. (Dkt. 144.) The notice explicitly informed the Neffs that:
Your response must comply with Rule 56(e) of the Federal Rules of Civil Procedure and
Local Rule 56.1 of this court. These rules are available at any law library. Your Rule 56.1
statement needs to have numbered paragraphs responding to each paragraph in the
plaintiff’s statement of facts. If you disagree with any fact offered by the plaintiff, you need
to explain how and why you disagree with the plaintiff. You also need to explain how the

4

BrightStar’s material facts, those facts are deemed undisputed and admitted for purposes of
summary judgment. Id.; see also, e.g., Curtis v. Costco Wholesale Corp., 807 F.3d 215, 218-19
(7th Cir. 2015) (“The non-moving party’s failure to admit or deny facts as presented in the moving
party’s statement . . . render[s] the facts presented by the moving party as undisputed”); Local Rule
56.1(b)(3)(C) (“All material facts set forth in the statement required of the moving party will be
deemed to be admitted unless controverted by the statement of the opposing party.”)
The Neffs’ statement of additional material facts is also deficient in multiple ways. The
Court could disregard the Neffs’ additional facts solely because the Neffs failed to submit them in
a separate statement as required by Local Rule 56.1 and instead included them as part of their
memorandum of law responding to BrightStar’s motion. See, e.g., Cichon v. Exelon Generation
Co., LLC, 401 F.3d 803, 809-810 (7th Cir. 2005) (district court did not abuse its discretion by
disregarding non-moving party’s additional facts set forth in a response brief rather than a separate
statement in the form required by Local Rule 56.1). Still, despite the errors in form, the Court
reviewed each factual assertion the Neffs included in their brief. Many of them fail because the
Neffs did not include any citation to the record. When a non-moving party submits additional facts
they contend require denial of summary judgment, those additional facts must be supported by
“references to the affidavits, parts of the record, and other supporting materials relied upon.” See
Local Rule 56.1(b)(3)(C). The Court disregards the Neffs’ facts that are not supported by citations
to the record (i.e., ¶¶ 1, 2, 4, 10, 13-17, 19, 25-26, 28, 2 29-31, 37-40). Friend v. Valley View Cmty.
Unit Sch. Dist. 365U, 789 F.3d 707, 710-11 (7th Cir. 2015) (disregarding facts contained in non-

documents or declarations that you are submitting support your version of the facts. If you
think that some of the facts offered by the plaintiff are immaterial or irrelevant, you need
to explain why you believe that those facts should not be considered.
(Id.)
2

There are two different facts numbered 28 in the Neffs’ response. The Court disregards the “first” fact
28, which appears between facts 24 and 25, because it does not include a citation to the record.

5

moving party’s statement of additional facts that were not supported by proper citations to the
record). There are also instances where the Neffs’ facts do include citations to the record, but the
material cited does not actually support the proposed fact. Those facts have been disregarded as
well (i.e., ¶¶ 5-6, 11-12, 34).
To the extent the Neffs’ facts are relevant to the summary judgment motion and supported
by citations to the record, they have been included in the recitation of facts below. Otherwise, they
have been disregarded for the reasons outlined here.
II.

Facts
The Court takes the relevant facts from the parties’ statements of undisputed material facts

and supporting exhibits, with the limitations outlined above. The following facts are relevant,
supported by the record, and undisputed.
a.

Peter Morris’s Reno Franchise

BrightStar is an Illinois-based company that franchises its name and business model related
to companion care, personal care, skilled nursing, wound care, post-operative care, infusion
therapy, and other various forms of home-based health-related services to franchises in 37 states.
BrightStar I, 2018 WL 4224454, at *1. In April 2015, Defendant Stephen Neff had a series of
discussions with BrightStar representatives about purchasing a BrightStar franchise in the Reno,
Nevada area which was then owned and operated by Peter Morris. (Dkt. 147 ¶ 3; Dkt. 147-2.)
Neff drafted a Letter of Intent, dated May 1, 2015 and addressed to Morris, regarding Neff and his
wife’s potential purchase of Morris’s BrightStar franchise in Reno. (Dkt. 147 ¶ 7; Dkt. 147-4.)
On May 5, 2015, Morris informed Neff that the asking price for Morris’s franchise was $525,000.

6

(Dkt. 147 ¶ 9; Dkt. 147-6.) Neff responded and asked if Morris’s asking price was a typo; Morris
informed him that it was not. (Id.)
b.

The Parties’ Franchise Agreement

On June 2, 2015, BrightStar and NNC (the Neffs’ company) entered into a written franchise
agreement (the “Franchise Agreement” or “Agreement”), under which BrightStar granted NNC a
10-year license to operate a BrightStar franchise in the Carson City, Nevada area. (Dkt. 143 ¶ 7.)
At the same time, Stephen Neff (who owned a 49% interest in NNC) and Defendant Teresa Neff
(who owned a 51% interest in NNC) entered into an agreement to guarantee and be personally
bound by all of NNC’s obligations under the Franchise Agreement, including the non-competition
covenants. (Id. ¶ 10; see also Dkt. 143-5 at 71.)
c.

Non-Competition and Post-Termination Provisions

In the Franchise Agreement, NNC and the Neffs (together, “Defendants”) agreed they
would not operate a “competing business” for 18 months after the termination of the Agreement.
(Dkt. 143 ¶ 12; see also Dkt. 143-5 at 46, § 11.4(3).) The geographic scope of the non-competition
provision provides that Defendants may not operate a competing business at the premises of the
former BrightStar franchise location, within any of BrightStar’s “protected territory,” or within 25
miles of any other franchised or company-owned BrightStar location. (Id.) The Franchise
Agreement defines “competing business” as any business that provides “(a) supplemental
healthcare staff to institutional clients, such as hospitals, nursing homes and clinics” and/or “(b)
comprehensive care, including medical and non-medical services, to private duty clients within
their home.” (Dkt. 143 ¶ 12; see also Dkt. 143-5 at 46, § 11.4(2).) BrightStar’s “protected
territory” includes a series of zip codes in the Carson City, Nevada area. (Dkt. 143 ¶ 12; see also
Dkt. 143-5 at 12, § 1.1, and 69.) None of the zip codes in the “protected territory” are in Reno,
Nevada. (Dkt. 143 ¶¶ 29-30.) Defendants also agreed not to solicit business from BrightStar
7

customers for 18 months after the termination of the Agreement. (Dkt. 143 ¶ 13; see also Dkt.
143-5 at 46, § 11.4(4).) Both 18-month periods (non-competition and non-solicitation) are tolled
for any period in which Defendants are in breach of the Agreement or any other period during
which BrightStar seeks to enforce the agreement. (Dkt. 143 ¶¶ 12-13; see also Dkt. 143-5 at 46,
§ 11.4(5).)

Defendants also agreed that, upon termination of the Franchise Agreement, they

would immediately stop using all telephone numbers affiliated with their BrightStar franchise and
would not present or hold themselves out as former BrightStar franchisees. (Dkt. 143 ¶ 14; see
also Dkt. 143-5 at 54-55, §§ 14.1.1, 14.1.5.)
d.

Non-Reliance Provisions

Section 24 of the Franchise Agreement provides that:
Franchisee acknowledges that it is entering into this Agreement as a result of its
own independent investigation of Franchisor’s franchised business and not as a
result of any representations about Franchisor made by its shareholders,
officers, directors, employees, agents, representatives, independent
contractors, or franchisees that are contrary to the terms set forth in this
Agreement, or in any disclosure document, prospectus, or other similar document
required or permitted to be given to Franchisee pursuant to applicable law.
(Dkt. 143 ¶ 22; see also Dkt. 143-5 at 66, § 24) (emphasis added). Defendants also executed an
addendum to the Franchise Agreement that explains as follows:
The purpose of this Acknowledgment Addendum is to determine whether any
statements or promises were made to you that we have not authorized or that may
be untrue, inaccurate or misleading, and to be certain that you understand the
limitations on claims that may be made by you by reason of the offer and sale of
the franchise and operation of your business. Please review each of the following
questions carefully and provide honest responses to each question.
(Dkt. 143 ¶¶ 23-24; see also Dkt. 143-5 at 72, Ex. G.) In capital letters above the signature line at
the end of the acknowledgement addendum, it reads: “YOU UNDERSTAND THAT YOUR
ANSWERS ARE IMPORTANT TO US AND THAT WE WILL RELY ON THEM. BY
SIGNING THIS ADDENDUM, YOU ARE REPRESENTING THAT YOU HAVE
8

CONSIDERED EACH QUESTION CAREFULLY AND RESPONDED TRUTHFULLY TO
THE ABOVE QUESTIONS.” (Id.) (emphasis in original).
In the acknowledgment addendum, Defendants checked “yes” in response to Question 10,
which reads, “[d]o you understand that the Agreement and Disclosure Document contain the entire
agreement between you and us concerning your BrightStar franchise rights, meaning that any prior
oral or written statements not set out in the Agreement or Disclosure Document will not be
binding?” (Dkt. 143 ¶ 25; see also Dkt. 143-5 at 73.)
e.

Termination and Breach

In January 2017, Stephen Neff notified BrightStar that the website for Peter Morris’s Reno
franchise (the territory of which was adjacent to Defendants’ Carson City franchise) was
advertising that the Reno franchise served clients in “Carson City, Minden, Fernley, and Fallon.”
(Dkt. 147 ¶ 20; Dkt. 147-10.) Neff told BrightStar these areas were part of his franchise’s territory.
(Id.) In March 2017, Neff notified BrightStar that his Carson City franchise had begun caring for
two patients who had previously been cared for by Morris’s Reno franchise, even though the
patients lived in Neff’s Carson City franchise’s territory. (Dkt. 147 ¶ 21-22; Dkt. 147-12.) Neff
also reported that Morris cashed a reimbursement check for one of the two patients after Neff’s
franchise had taken over her care. (Id.) In May 2017, BrightStar notified Neff that because
Morris’s Reno franchise had been caring for the two patients before Neff’s Carson City franchise
opened, the patients were “grandfathered in for [Morris] to continue to service per [BrightStar’s]
Operations Manual.” (See Dkt. 147 ¶ 24; Dkt. 147-15.)
On July 7, 2017, BrightStar notified Defendants that Defendants defaulted on the Franchise
Agreement because they provided services to a client within the adjacent territory belonging to
another franchise. (Dkt. 143 ¶ 32.) The notice demanded that Defendants cure the default within

9

30 days by transitioning the account to the neighboring franchise and making a restitution payment
of approximately $32,000 to the neighboring franchise. (Id. ¶ 33.) Defendants did not make the
restitution payment. (Id. ¶ 34.) Instead, on October 26, 2017, Stephen Neff emailed BrightStar
and said “we are closing our doors as a BrightStar Care effective immediately. We have vacated
our premises. I am informed that all clients have successfully transitioned to other care providers.”
(Id. ¶ 35.) Four days later, BrightStar sent Defendants a notice terminating the Franchise
Agreement. (Id. ¶ 36.) The termination notice reminded Defendants of their obligations under the
Agreement not to use BrightStar’s confidential information and not to operate a competing
business within the specified geographic areas for 18 months. (Id. ¶ 37.)
After receiving the termination notice from BrightStar, Defendants continued operating a
home health care agency in the Carson City area called Allevia Living. (Id. ¶ 38.) Allevia Living
provided care, including medical and non-medical services, to clients within their homes. (Id. ¶
39.) Allevia Living serviced patients within the protected territory of Defendants’ former Carson
City BrightStar franchise. (Id. ¶ 40.) Defendants operated Allevia Living from the same office
complex and used the same phone number as their former BrightStar franchise. (Id. ¶¶ 41-42.)
Defendants employed the same nurses and care providers that had worked for their previous
BrightStar franchise. (Id. ¶ 43.) Defendants also held themselves out as former BrightStar
franchisees to BrightStar account partners and other businesses. (Id. ¶¶ 44-46.) Defendants
operated Allevia Living until at least December 2018. (Id. ¶ 47.)

10

DISCUSSION
BrightStar now moves for summary judgment against the Neffs and NNC 3 on its breach
of contract claim and asks the Court to grant a permanent injunction ensuring Defendants’
compliance with certain terms of the Franchise Agreement.
I.

Legal Standard
Summary judgment is warranted “if the movant shows that there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). A genuine factual dispute exists if a reasonable jury could find for either party. Pagel v.
TIN Inc., 695 F.3d 622, 626 (7th Cir. 2012). A material fact is one that affects the outcome of the
suit. Monroe v. Ind. Dep’t of Transp., 871 F.3d 495, 503 (7th Cir. 2017). On summary judgment,
the Court construes all facts and draws all reasonable inferences in favor of the non-moving party.
Bell v. Taylor, 827 F.3d 699, 704 (7th Cir. 2016). To defeat summary judgment, a nonmovant
must produce more than a “mere scintilla of evidence” and come forward with “specific facts
showing that there is a genuine issue for trial.” Johnson v. Advocate Health and Hosps. Corp.,
892 F.3d 887, 894, 896 (7th Cir. 2018). Ultimately, summary judgment is warranted only if a

3

In its reply in support of its summary judgment motion, BrightStar notified the Court that NNC voluntarily
filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the District of Nevada on June
25, 2019 (after BrightStar filed for summary judgment but before briefing was complete). (See Dkt. 149 at
1 n.1.) Accordingly, BrightStar indicated that it was no longer seeking summary judgment on its claim
against NNC due to the automatic stay provisions of 11 U.S.C. § 362(a), but that it still sought summary
judgment against the Neffs individually. However, NNC’s Chapter 7 case was closed on February 3, 2020.
See Final Decree Discharge of Trustee and Closing of Chapter 7 Case, In re Northern Nevada Care, Inc.,
No. 19-50743-BTB (Bankr. D. Nev. Feb. 3, 2020), ECF No. 16. Because NNC’s bankruptcy case is closed,
the automatic stay is no longer in effect. See 11 U.S.C. § 362(c)(2)(A) (“the stay of any other act under
subsection (a) of this section continues until . . . the time the case is closed”); see also DeliverMed Holdings,
LLC v. Schaltenbrand, 734 F.3d 616, 621 n.1 (7th Cir. 2013) (“the automatic stay of actions against the
debtor ends at the close of its bankruptcy case”) (citing 11 U.S.C. § 362(c)(2)(A)). Because the automatic
stay of actions against NNC is no longer in effect, the Court will consider BrightStar’s summary judgment
motion as to both NNC and the Neffs individually.

11

reasonable jury could not return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986).
II.

Breach of Contract
To prevail on its breach of contract claim under Illinois law, 4 BrightStar must show: (1) a

valid and enforceable contract exists, (2) it substantially performed the contract, (3) Defendants
breached the contract, and (4) damages caused by the breach. Swyear v. Fare Foods Corp., 911
F.3d 874, 886 (7th Cir. 2018). BrightStar has met each element. The evidentiary record presented
by BrightStar shows that the Franchise Agreement is valid and enforceable and that BrightStar
substantially performed under the Agreement. (Dkt. 143 ¶ 21; Dkt. 13 ¶ 18.) The record shows
that Defendants breached the Franchise Agreement by operating a competing business within the
protected territory of their former BrightStar franchise (Dkt. 143 ¶¶ 12, 38-41), by doing so at the
premises of their former BrightStar franchise (id. ¶¶ 12, 41), by continuing to use the former
BrightStar franchise’s phone number (id. ¶¶ 14, 42), and by presenting themselves as a former
BrightStar franchisees (id. ¶¶ 14, 44-46; Dkt. 143-5 at 54, § 14.1.1). Finally, the record shows that
Defendants’ breaches have harmed BrightStar’s brand, its goodwill, its relationships with
customers, and its ability to refranchise in the Carson City area. (Dkt. 143 ¶¶ 48-52.)
a.

Fraudulent Inducement Defense

Defendants do not dispute that BrightStar has proved each element of its claim, and they
do not try to create a genuine dispute of material fact as to any element. Instead, Defendants argue
they were fraudulently induced to enter the Franchise Agreement.
To survive summary judgment based on a fraudulent inducement defense, Defendants must
show that: (1) BrightStar made a false statement of material fact; (2) knowing it was false or in

4

The Franchise Agreement contains an Illinois choice-of-law provision (Dkt. 143-5 at 54, § 22) and the
parties do not dispute that Illinois law applies to BrightStar’s claim.

12

reckless disregard of its truth or falsity; (3) with intent to induce Defendants to enter into the
Franchise Agreement; (4) Defendants reasonably believed the false statement to be true and acted
in justifiable reliance on it; and (5) that Defendants were damaged as a result of their reliance on
the misrepresentation. JPMorgan Chase Bank, N.A. v. Asia Pulp & Paper Co., Ltd., 707 F.3d 853,
864 (7th Cir. 2013) (applying Illinois law).
Defendants argue they were fraudulently induced to enter the Franchise Agreement based
on a number of supposed false statements by BrightStar. Ultimately, each argument fails because
Defendants do not produce any record evidence to support their contentions. First, Defendants
argue BrightStar told them that their Carson City-area franchise territory belonged solely to them,
when in reality the territory contained “several” patients of Peter Morris’s neighboring Reno
franchise. (Dkt. 147 at 15-16.) According to Defendants, Brightstar had “full knowledge” that
Morris was operating in Defendants’ territory both before and after Defendants entered the
Franchise Agreement. Id. Though Defendants do not cite any facts to support this argument, the
Court nonetheless reviewed Defendants’ statement of facts and it appears only a handful of facts
relate to or could arguably support this argument. The Court will examine each one. Defendants
contend that a representative from BrightStar sent them a map in May 2015 showing Morris’s
Reno territory in red and Defendants’ proposed Carson City territory in yellow, and “at no time
did there appear to be red (Morris’ territory) in the yellow (Defendant[s’] territory).” (Dkt. 147 ¶
11, Dkt. 147-7.) The Court ultimately disregarded this fact for a number of reasons: there is no
indication in the record that anyone from BrightStar created the map or sent it to Defendants, the
map is undated, and it was submitted to the Court in black and white, making it difficult to make
sense of Defendants’ color descriptions. Even setting those issues aside, it is not reasonable to
interpret a single map, standing alone, as a statement by BrightStar that Defendants’ franchise

13

territory did not include any patients being served by a neighboring franchise, as Defendants argue.
Defendants also contend that the website for Morris’s franchise advertised the fact that it served
patients in Defendants’ territory. (See Dkt. 147 ¶ 18; Dkt. 147-9.) Defendants submit screenshots
from Morris’s franchise’s website which do appear to advertise services in Carson City, but at
most, this proves that Morris was operating in Defendants’ territory (or was at least trying to) at
some point in time. It does not prove that BrightStar made any particular promise or false
statement of material fact to Defendants, which is an essential element of a fraudulent inducement
defense. Other facts that seem to support this argument were disregarded because they did not
contain any citations to the record. (See Dkt. 147 ¶¶ 14, 19, 31.) Defendants cannot create a triable
issue of fact and survive summary judgment without presenting relevant evidence to support their
arguments. They have not done so, so this argument fails. See, e.g., Springer v. Durflinger, 518
F.3d 479, 484-85 (7th Cir. 2008) (party cannot survive summary judgment without presenting
evidence to support its claims, because “summary judgment is the put up or shut up moment in a
lawsuit, when a party must show what evidence it has that would convince a trier of fact to accept
its version of the events”) (citation and internal quotation marks omitted).
Next, Defendants argue they were fraudulently induced to enter the Franchise Agreement
because BrightStar told Defendants “that the sale of the Carson [City] territory was predicated
upon the later sale/assumption of the Reno territory.” (Dkt. 147 at 16.) Defendants contend that
“BrightStar falsely asserted that the Reno territory would be Defendants[’] within 6 months and
that the Carson [City] area was just to get them going until the entire region would be
Defendants[’].” (Id.) Again, Defendants fail to cite any facts or evidence to support these
assertions. Their statement of facts contains a few proposed facts that seem to support this
argument, but like Defendants’ previous argument, none of the facts are supported by relevant

14

evidence. (See Dkt. 147 ¶ 12, 35.) Defendants do submit evidence showing that before they
entered the Franchise Agreement, they negotiated with BrightStar and Morris to purchase Morris’s
Reno franchise, but that the deal eventually fell through when they could not agree on a purchase
price. (Dkt. 147 ¶¶ 3, 7, 9.) Of course, that does not prove that BrightStar told Defendants they
would eventually acquire the Reno franchise or that the Franchise Agreement for Defendants to
run the Carson City franchise was “predicated upon” Defendants eventually acquiring the Reno
franchise as well, as Defendants insist. Other proposed facts that seem to support this argument
were disregarded because they did not contain citations to the record. (Dkt. 147 ¶¶ 10, 13, 14, 31.)
Defendants also argue they were fraudulently induced to enter the Franchise Agreement
because BrightStar stated that it was an “expert in the skilled care business” and that it had
industry-leading software to support Defendants’ medical billing and other administrative
functions. According to Defendants, that was not true and BrightStar knew all along that its
software “could not support the type of skilled care business that Defendants intended to operate.”
(See Dkt. 147 at 15.) Defendants do not cite any facts to support this argument, and the paragraphs
in their statement of facts that appear to relate to this argument (see Dkt. 147 ¶¶ 15-16) are not
supported by citations to the record. Conclusory claims without evidentiary support cannot create
a triable issue of fact. See Springer, 518 F.3d at 484-85.
Finally, Defendants also point out that BrightStar relies on the testimony of Thomas Gilday
to prove its case, and they argue that Gilday “recanted most of his Declaration” at a March 2018
deposition and instead testified in support of Defendants’ fraudulent inducement theory. (See Dkt.
147 at 15.) According to Defendants, Gilday’s supposed recantation creates a genuine dispute of
material fact on the issue of breach. But despite a few other references to Gilday’s supposedly
false testimony throughout their brief, Defendants do not cite any facts or evidence to support this

15

claim (such as Gilday’s March 2018 deposition testimony where he allegedly recanted the
statements in his declaration) or otherwise develop the argument in any meaningful way. For these
reasons, Defendants’ argument fails. See Springer, 518 F.3d at 484-85.
Because Defendants’ fraudulent inducement defense fails, and because BrightStar has met
each element of its breach of contract claim, BrightStar is entitled to summary judgment.
III.

Injunction
With the merits resolved, the Court turns to BrightStar’s request for a permanent injunction.

BrightStar seeks a permanent injunction preventing Defendants from: (1) operating a competing
business for 18 months within a defined geographic area; (2) soliciting business from customers
of Defendants’ former BrightStar franchise; (3) using the phone number associated with
Defendants’ former BrightStar franchise; and (4) using Confidential Information as defined in the
Franchise Agreement; and requiring Defendants to: (5) return Confidential Information, trade
secrets, and other property to BrightStar, and (6) file with the Court a written report under oath
detailing its compliance with the permanent injunction.
BrightStar is entitled to a permanent injunction if shows that: (1) it has suffered an
irreparable injury; (2) legal remedies, such as monetary damages, cannot adequately compensate
for that injury; (3) the balance of hardships between the parties warrants an equitable remedy; and
(4) a permanent injunction would not harm the public interest. eBay Inc. v. MercExchange, LLC,
547 U.S. 388, 391 (2006); see also, e.g., Entm’t One UK Ltd. v. 2012Shiliang, 384 F. Supp. 3d
941, 955 (N.D. Ill. 2019). BrightStar has satisfied each factor.
First, BrightStar has shown that Defendants violated non-competition provisions of the
Franchise Agreement, as discussed above, and “the injuries that flow from the violation of a noncompete are difficult to prove and quantify,” making such an injury “a canonical form of

16

irreparable harm” and making “restrictive covenants prime candidates for injunctive relief.”
Turnell v. CentiMark Corp., 796 F.3d 656, 666-67 (7th Cir. 2015); see also Hess Newmark Owens
Wolf, Inc. v. Owens, 415 F.3d 630, 632 (7th Cir. 2005) (in violations of restrictive covenants, “it
is precisely the difficulty of pinning down what business has been or will be lost that makes an
injury ‘irreparable’”). BrightStar also showed that Defendants’ breaches harmed its brand and
goodwill, as discussed above. “These type[s] of injuries are presumed to be irreparable because it
is virtually impossible to ascertain the precise economic consequences of intangible harms, such
as damage to reputation and loss of goodwill.” Ty, Inc. v. Jones Grp., Inc., 237 F.3d 891, 902 (7th
Cir. 2001) (internal quotation marks and citation omitted).
Next, the balance of hardships favors the entry of a permanent injunction. Defendants do
not identify any hardships they would face from BrightStar’s proposed permanent injunction (see
Dkt. 147 at 12-14), and the Court is not required to speculate as to the harms Defendants might
face or make arguments on their behalf. See, e.g., Econ. Folding Box Corp. v. Anchor Frozen
Foods Corp., 515 F.3d 718, 721 (7th Cir. 2008) (“It is not the court’s responsibility to research the
law and construct the parties’ arguments for them.”). BrightStar, on the other hand, has identified
the irreparable harms discussed above. This makes the Court’s balancing task easy. The balance
of hardships favors BrightStar and the issuance of a permanent injunction.
Finally, a permanent injunction would not harm the public interest. Again, Defendants do
not make any arguments to the contrary, and the Court will not do so on Defendants’ behalf. To
the extent Defendants’ current patients might be harmed if Defendants are forced to stop providing
care for them, BrightStar has shown that there are other providers in the Carson City area who can
offer the same services. (Dkt. 143 ¶¶ 55-56.) And it is in the public interest to enforce noncompetition provisions where, like here, they are “reasonably limited in time and geographical

17

scope.” Preferred Landscape and Lighting, LLC v. Alban, 162 F. Supp. 3d 746, 752 (N.D. Ill.
2016). For these reasons, the Court grants BrightStar’s request and enters a permanent injunction,
which is set forth in detail below.
IV.

BrightStar’s Attorneys’ Fees
The Franchise Agreement provides that if BrightStar incurs costs and expenses to enforce

its rights or Defendants’ obligation under the Agreement because Defendants fail to comply with
the Agreement, Defendants agree to reimburse BrightStar the costs and expenses it incurs,
including attorneys’ fees. (See Dkt. 143 ¶ 19; Dkt. 143-5 at 63 § 19.2.) Accordingly, BrightStar
is awarded its attorneys’ fees and costs as provided in the Franchise Agreement. BrightStar must
file a fee petition within 90 days of the entry of this order. Additionally, the Court previously
awarded BrightStar its attorneys’ fees in connection with bringing a successful protective order.
(Dkt. 162.) BrightStar filed a fee petition as ordered, which Defendants objected to. (Dkt. 163,
164.) BrightStar should include those fees in its forthcoming fee petition so they can be included
in the Court’s consideration of the final attorneys’ fees award. Defendants will have an opportunity
to object to BrightStar’s forthcoming fee petition. The parties should carefully review Local Rule
54.3, which governs attorneys’ fees petitions and requires the parties to “confer and attempt in
good faith to agree on the amount of fees or related nontaxable expenses that should be awarded,”
and sets forth a detailed process for doing so. L.R. 54.3(d).

18

CONCLUSION
BrightStar’s motion for summary judgment [Dkt. 141] is granted. BrightStar is awarded
its attorneys’ fees and costs as provided in the Franchise Agreement. Defendants are hereby
ordered to:
1. refrain, for a period beginning upon entry of this permanent injunction order and ending
18 months later, 5 from owning, managing, operating, engaging in, or having any interest
in any business that provides (a) supplemental healthcare staff to institutional clients, such
as hospitals, nursing homes and clinics, or (b) comprehensive care, including medical and
non-medical services, to private duty clients within their home, within the following ZIP
Codes: 89403, 89406, 89408, 89410, 89413, 89415, 89420, 89423, 89427, 89429, 89430,
89444, 89447, 89460, 89701, 89703, 89704, 89705, and 89706, or within 25 miles of any
BrightStar agency (whether franchised or owned by BrightStar or its affiliates);
2. refrain, for a period beginning upon entry of this permanent injunction order and ending
18 months later, 6 from soliciting business from customers of NNC’s former Agency or
from any National Accounts;
3. cease using the telephone number 775-461-3696 and all other telephone numbers and
listings used in connection with the operation of Defendants’ former BrightStar Agency;
4. refrain from using any Confidential Information for any purposes;
5. return to BrightStar the Confidential Information, and all trade secrets, confidential
materials, and other property owned by BrightStar; and

5

Under the Franchise Agreement at issue, the 18-month period shall be tolled for any period during which
Defendants are in breach of the covenant
6

Under the Franchise Agreement at issue, the 18-month period shall be tolled for any period during which
Defendants are in breach of the covenant.

19

6. file with the Court and serve upon BrightStar and its counsel within ten (10) days after
entry of the permanent injunction, a written report, under oath, setting forth in detail the
manner in which Defendants have complied with such permanent injunction.

____________________________________
Virginia M. Kendall
United States District Judge
Date: February 11, 2020

20