Little Caesar Enterprises, Inc. et al v. Miramar Quick Service Restaurant Corporation et al
Filing
58
ORDER denying 55 Motion to Stay. Signed by District Judge Terrence G. Berg. (AChu)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
LITTLE CAESAR
ENTERPRISES, INC., et al.,
2:18-cv-10767
HON. TERRENCE G. BERG
Plaintiffs,
v.
MIRAMAR QUICK SERVICE
RESTAURANT CORPORATION
et al.,
ORDER DENYING
DEFENDANTS’ MOTION TO
STAY
Defendants.
Plaintiffs Little Caesar Enterprises, Inc. and LC Trademarks, Inc.,
which owns the Little Caesars trademark, are suing several of their
former pizza restaurant franchisees for violating the franchise
agreement that governed the parties’ relationships and mutual
obligations. This Court previously entered a preliminary injunction
enjoining Defendants Miramar Quick Service Restaurant Corporation,
Silon Corporation, Khalid Drihmi, and Abdel Drihmi from continuing to
operate their Little Caesars restaurants, infringing on the Little Caesars
marks, and violating post-termination provisions of the franchise
agreement. Defendants wish to appeal the Court’s preliminary injunction
and now request that the Court stay enforcement of the preliminary
injunction orders (ECF Nos. 51, 52) pending their interlocutory appeal to
the Sixth Circuit. For reasons explained below, the motion to stay will be
denied.
The appellate court reviews a district court’s decision to grant a
motion for preliminary injunction for an abuse of discretion. Hamilton’s
Bogarts, Inc. v. Michigan, 501 F.3d 644, 649 (6th Cir. 2007); Six Clinics
Holding Corp., II v. Cafcomp Sys., Inc., 119 F.3d 393, 399 (6th Cir. 1997).
The district court’s decision will only be disturbed if the court “relied upon
clearly erroneous findings of fact, improperly applied the governing law,
or used an erroneous legal standard.” Mich. Coalition of Radioactive
Material Users, Inc. v. Griepentrog, 845 F.2d 150, 153 (6th Cir. 1991)
(citing NAACP v. City of Mansfield, 866 F.2d 162, 166–67 (6th Cir. 1989)).
Rule 62(d) of the Federal Rules of Civil Procedure provides that
while an appeal from an interlocutory order granting an injunction is
pending, “the court may suspend, modify, restore, or grant an injunction
on terms for bond or other terms that secure the opposing party’s rights.”
District courts consider largely the same factors in assessing whether
such a stay is appropriate pending resolution of the interlocutory appeal
as they do in do in deciding whether to issue a preliminary injunction in
the first place. Coalition to Defend Affirmative Action v. Granholm, 473
F.3d 237, 244 (6th Cir. 2006). Those factors are: “(1) the likelihood that
the party seeking the stay will prevail on the merits of the appeal; (2) the
likelihood that the moving party will be irreparably harmed absent a
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stay; (3) the prospect that others will be harmed if the court grants the
stay; and (4) the public interest in granting the stay.” Griepentrog, 845
F.2d at 153. These four factors are “interconnected considerations that
must be balanced together.” Coalition to Defend Affirmative Action, 473
F.3d at 244.
A. Likelihood of Success on Appeal
The motion to stay advances no new factual or legal arguments but
instead repeats the same positions previously rejected by this Court in
its order granting Plaintiffs’ motion for a preliminary injunction and
denying Defendants’ motion. ECF No. 51. For example, Defendants
repeat the allegations that Plaintiffs’ termination of the franchise
agreement was the culmination of a series of retaliatory actions taken in
response to Defendants’ refusal to purchase stores from a large
franchisee favored by Plaintiffs, and that Plaintiffs’ behavior was also
motivated by national-origin discrimination. ECF No. 55 PageID.1038.
But the evidence in support of these allegations is not strong. Moreover,
Defendants have failed to rebut compelling evidence in the record that
Defendants violated key provisions of the franchise agreement, thereby
warranting termination under the agreement’s plain language.
For example, Defendants previously acknowledged that they
missed several required payments to Plaintiffs—an omission that
justifies termination according to the franchise agreement. See ECF No.
41-4 (Drhimi Aff.). In support of their request for a stay, Defendants now
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attach new spreadsheets, which they present as “a record of payment of
their royalty and other payments that is more credible than the one the
plaintiff presented in their motion.” ECF No. 55 PageID.1041; ECF Nos.
55-1, 55-2. But Defendants do not explain whether or how these charts
contravene evidence of their apparently outstanding payments presented
by Plaintiffs—only that these charts are more credible than any evidence
of non-payment produced by Plaintiffs. Further, Defendants do not
explain the origin of these spreadsheets, or attempt to authenticate them.
For that reason, the Court considers them to have limited evidentiary
value. And significantly, Defendants do not deny that they failed to make
the required payments within the time-period provided for by the
franchise agreement. Even payment-in-full of the amounts Defendants
owed Plaintiffs—well after the cure-period deadline—would not be a
compelling defense to Plaintiffs’ claims arising from breach of the
franchise agreement and, accordingly, would not change this Court’s
analysis of Defendants’ likelihood of success on appeal. Because
Defendants have not convinced the Court that they are likely to succeed
on their interlocutory appeal, this factor favors denial of the motion to
stay the preliminary injunction.
B. Likelihood of Irreparable Harm
The Court acknowledges that the preliminary injunction requires
Defendants to cease operating their Little Caesars pizza restaurant
franchises and that consequently Defendants may experience financial
4
hardship as a result of their compliance with the Court’s order. This harm
is not irreparable, however, because it is readily compensable by
monetary damages. Fundamentally, this case involves the operation of
four franchise restaurants. As explained by another court in this district
deciding a similar case, injury to a franchisee stemming from termination
of a franchise agreement is “clearly compensable by money damages.”
Little Caesar Enter., Inc. v. R-J-L Foods, Inc., 796 F. Supp. 1026, 1035
(E.D. Mich. 1992). In their motion, Defendants themselves emphasize
that the harm they seek to avoid by requesting the stay is that related to
“suspend[ing] all operations or clos[ing] the doors to all the four (4)
franchises they owned.” ECF No. 55 PageID.1036. The Court finds
Defendants have not established a likelihood of irreparable harm—that
is, harm not compensable by monetary damages—that would weigh in
favor of issuing a stay.
C. Harm to Others
As set forth in its previous order, the Court has already determined
that Plaintiffs will suffer harm absent a preliminary injunction
prohibiting
Defendants
from
continuing
to
operate
their
now-
unauthorized Little Caesars franchises. See ECF No. 51 PageID.1016–
17. The likelihood of confusion or potential reputational damage in a
trademark infringement case such as this, according to the Sixth Circuit,
demonstrates irreparable injury to the trademark owner. See Lucky’s
Detroit, LLC v. Double L, Inc., 533 F. App’x 553, 555 (6th Cir. 2013);
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Basicomputer Corp. v. Scott, 973 F.2d 507, 511 (6th Cir. 1992). Because
the franchise agreement has been terminated and Defendants are no
longer making required payments to Plaintiffs (and failing to comply
with other post-termination obligations), staying the preliminary
injunction will cause harm to Plaintiffs.
D. Public Interest
Other courts in this district as well as the Sixth Circuit have
recognized that there is a public interest in protecting a trademark
holder’s property interest in its marks, and in preventing consumer
confusion that could result where a former franchisee no longer in
compliance with the franchise agreement continues to hold itself out as a
restaurant authorized by the franchisor. Lorillard Tobacco Co. v.
Amouri’s Grand Foods, Inc., 453 F.3d 377, 383 (6th Cir. 2006); R-J-L
Foods, Inc., 796 F. Supp. at 1036. Based on this jurisprudence, the Court
finds that staying the preliminary injunction would not promote the
public interest.
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CONCLUSION
For these reasons, Defendants’ motion to stay the preliminary
injunction orders pending the appellate court’s adjudication of their
interlocutory appeal ((ECF No. 55) is DENIED.
Dated: August 23, 2019
s/Terrence G. Berg
TERRENCE G. BERG
UNITED STATES DISTRICT JUDGE
Certificate of Service
I hereby certify that this Order was electronically filed, and the
parties and/or counsel of record were served on August 23, 2019.
s/A. Chubb
Case Manager
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