The Maids International, Inc . v. Maids on Call, LLC et al
MEMORANDUM AND ORDER granting the 21 Motion for Preliminary Injunction, filed by Plaintiff, The Maids International, Inc. ("TMI") as follows: Defendants and all persons or entities acting in concert with them are restrained and enjoi ned from infringing upon TMI's trademarks, trade names, service marks, and related marks; Defendants and all persons or entities acting in concert with them are restrained and enjoined from operating a competing business in violation of the non-compete, non-solicitation, and post-termination provisions, as stated in Articles 18 and 19 of the applicable Franchise Agreements; and Defendants and all persons or entities acting in concert with them must comply with the obligations imposed upon termination or expiration, as stated in Article 18 of the Franchise Agreements. Ordered by Chief Judge Laurie Smith Camp. (MKR)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
THE MAIDS INTERNATIONAL, INC ., a
MEMORANDUM AND ORDER
MAIDS ON CALL, LLC, a Connecticut
limited liability company; MAIDS ON
CALL II, LLC, a Massachusetts limited
liability company; TIMOTHY SCUSSEL,
an individual; MARYANNE SCUSSEL,
an individual; SARA ROCK, an
individual; STACEY SCUSSEL, an
individual; and S.A.G. MANAGEMENT,
This matter is before the Court on the Motion for Preliminary Injunction, ECF No.
21, filed by Plaintiff, The Maids International, Inc. (TMI). Plaintiffs have not sought a
temporary restraining order in conjunction with the Motion for Preliminary Injunction. For
the reasons stated below, the Court concludes that the Motion will be granted.
TMI is the franchisor of the “The Maids” franchise system that provides
professional household maintenance and cleaning services to residential properties in
the United States and Canada (the Franchise System). TMI alleges that it has
developed a business system for its services using techniques, special equipment and
processes, standards and specifications, products, and other methods (the Business
System). TMI’s Business System is associated with TMI’s “The Maids” trademarks,
trade names, service marks, and related marks (referred to collectively as the Marks).
Kirwan Aff., ¶ 4, ECF No. 23-15 at Page ID 1342-43. TMI licenses franchisees to use its
Business System and Marks pursuant to the terms of written Franchise Agreements. Id.
From July 30, 2002, until on or about March 1, 2008, Defendants Timothy
Scussel, and Maryanne Scussel (collectively referred to as the Scussel Defendants)
entered into four separate Franchise Agreements in which they were granted the right to
own and operate four different “The Maids” franchised businesses in the state of
Connecticut and the Commonwealth of Massachusetts. Id. ¶ 9, ECF No. 23-15 at ECF.
1343-44; see also ECF Nos. 22-2 through 22-6.1 The Scussel Defendants operated
their former The Maids franchised businesses out of two locations: (1) 92 Weston
Street, Suite 10A, Hartford, Connecticut 06120; and (2) 1680 Riverdale Street, Unit B,
West Springfield, Massachusetts 01089. ECF No. 23-15 at Page ID 1344. Pursuant to
the terms of the Franchise Agreements, the Scussel Defendants provided maintenance
and cleaning services at customers’ homes throughout central Connecticut and southcentral Massachusetts. Defendants Sara Rock and Stacey Garon, daughters of the
Scussel Defendants, were employees and/or managers of the franchised businesses
and were involved in the operation of those businesses. ECF No. 23-15 at Page ID
During the period that the Scussel Defendants operated their The Maids
franchises, they received access to information that TMI regarded as proprietary and
confidential. This information included instructions regarding TMI’s Business System,
The documents submitted at ECF Nos. 22-2 through 22-6 are copies of each of the Franchise
Agreements. They will be collectively referred to in this Memorandum and Order as the “Franchise
Agreements.” For purposes of this Motion, the applicable terms are essentially identical.
copies of TMI’s confidential operation manuals, proprietary software programs,
information about TMI’s products and services, customer information, buying patterns
and needs of customers, audio and video training tapes, vendor information, pricing
information, supplemental training bulletins and notices, marketing and advertising
materials, business forms and other materials (collectively referred to as the Business
Information). The Franchise Agreements prohibited the Scussel Defendants and their
“us[ing] the Manuals or any information contained therein in
connection with the operation of any other business or for any purpose other than in
conjunction with the operation of” their “The Maids” franchised businesses. See, e.g.,
ECF No. 22-2, Page ID 749-50. The Scussel Defendants also received training from
TMI regarding the Business System and other marketing and cleaning techniques.
Defendants Rock and Garon2 had access to the Business Information as employees
and managers within the Scussel Defendants’ franchises.
In Fall 2014, TMI investigated the Scussel Defendants’ sales and reporting
practices and concluded that the Scussel Defendants were providing services to
customers outside of their territories and in the territories of neighboring “The Maids”
franchisees in violation of Article 2.1 of the Franchise Agreements. Kirwan Aff., ¶ 18,
ECF No. 23-15 at Page ID 1346. TMI discovered that the Scussel Defendants had failed
to accurately report all sales to TMI and failed to pay all fees owed on those sales, as
required by the Franchise Agreements. TMI notified the Scussel Defendants
The original Complaint names Defendant Stacey Scussel. However, Stacey Scussel alleges in
her affidavit that she goes by the name Stacey Garon and was mistakenly sued under the name Stacey
Scussel. Garon Aff. ¶ 2, ECF No. 31-7, Page ID 1459. The Amended Complaint corrects her name and
the Court will refer to her as Stacey Garon in this Memorandum and Order and direct that the Clerk of
Court correct the spelling of her name in the caption.
provided them with an opportunity to cure the breaches. After the Scussel Defendants
failed to cure the breaches, TMI terminated the Franchise Agreements. ECF No. 23-15
at Page ID 1346-47.
By mutual agreement between the parties, TMI subsequently “stayed” the
termination of the Franchise Agreements to allow the Scussel Defendants time to sell
their The Maids franchised businesses. However, the Scussel Defendants failed to sell
their businesses and, instead, abandoned those businesses in April 2017. Accordingly,
TMI lifted its stay of the termination and terminated the Franchise Agreements by letter
dated April 12, 2017 (the Termination Letter). ECF No. 23-3, Page ID 1288. In the
Termination Letter, TMI described the Scussel Defendants’ post-termination obligations,
including the non-compete and non-solicitation provisions in Article 19.3 of the
Franchise Agreements. Id., Page ID 1291.
TMI alleges in its Complaint that the Scussel Defendants have failed to comply
with the non-compete and non-solicitation provisions set forth in Article 19.3 of the
Franchise Agreements and are now operating a directly-competitive residential
maintenance and cleaning business. Defendants assert that in or around September
2016, Defendants Stacey Garon and Sara Rock established a new residential cleaning
business, SAG Management, Inc. d/b/a Two Sisters Cleaning Service (Two Sisters).
Garon Decl. ¶¶ 5-6, ECF No. 31-7, Page ID 1480. Two Sisters had a new website, new
uniforms, and new telephone numbers. Id. In December 2016, Defendant Timothy
Scussel sent a letter to customers of his The Maids franchise announcing his retirement
(the Retirement Letter). See ECF No. 31-6, Page ID 1456. Scussel stated that “SARA,
STACEY and MILLIE are ready to take over. (They really have been running the
business for many years).” Id. The Retirement Letter further explained that although
Timothy Scussel expected “most everything will remain the same,” pricing would
increase. Scussel explained that this was due to minimum wage increases in
Massachusetts and Connecticut. Thus, according to Scussel, pricing “was going to
change regardless of the start up of our new company or not.” Id., Page ID 1457.
Two Sisters carried over several items from the Scussel Defendants’ The Maids
franchise. Two Sisters operates at the same Hartford, Connecticut, and West
Springfield, Massachusetts, locations where the Scussel Defendants operated their The
Maids franchised businesses and performs the same services. At the time TMI filed its
Motion for Preliminary Injunction, Two Sisters continued to display a The Maids sign
outside the West Springfield, Massachusetts location. The Two Sisters’ Facebook page
indicated that Two Sisters used the same email address in their Two Sisters business
that the Scussel Defendants used in the operation of their former The Maids franchised
businesses. See ECF No. 23-7. The Two Sisters website states that it is “family owned
and operated” and has been “professionally cleaning homes and businesses since
Filing No. 23-9. Information from the Whois website registration service
indicates that Tim Scussel is the “registrant,” “admin,” and “tech” for the Two Sisters
website. Two Sisters continued to use the same yellow vehicles associated with The
Maids franchises. ECF No. 23-6. Motor vehicle records indicate that two of the vehicles
used by Two Sisters are still registered to Defendant Maids on Call, LLC. See ECF Nos.
TMI alleges that Defendants conspired to operate a competing residential
maintenance and cleaning service business under the Two Sisters name to circumvent
and avoid the non-compete, post-termination, and non-solicitation provisions of the
Franchise Agreements. TMI alleges that the Scussel Defendants breached the
Franchise Agreements and Personal Guaranties by failing to pay lost future fees and
failing to comply with post-termination obligations. Amended Compl., ECF No. 37, Page
ID 1638-39. TMI further alleges that all Defendants violated the non-competition and
non-solicitation provisions of the Franchise Agreements. Id., Page ID 1640. TMI also
alleges trademark infringement, unfair competition, and civil conspiracy. Id., Page ID
1641-43, 46. Finally, TMI alleges that the Garon and Rock tortiously interfered with
TMI’s business relationships. Id., Page ID 1644-45.
Application of Injunction to All Defendants
As an initial matter, the Court addresses whether each of the Defendants can be
subject to an injunction in this case. Defendants imply that under Rule 65(d)(2), an
injunction against all Defendants may only issue if the Scussel Defendants benefitted
from or are significantly involved in the operation of Two Sisters. See Df. Br. at 27, ECF
No. 32, Page ID 1497. Defendants provide no support for this contention and the plain
language of Rule 65(d)(2) permits broader application. Under Rule 65(d)(2), a
preliminary injunction may bind “(A) the parties; (B) the parties' officers, agents,
servants, employees, and attorneys; and (C) other persons who are in active concert or
participation with anyone described in Rule 65(d)(2)(A) or (B).” The Eighth Circuit has
further described those acting in active participation, stating that “[a] decree of injunction
not only binds the parties defendant but also those identified with them in interest, in
‘privity’ with them, represented by them or subject to their control.” United States v.
Yielding, 657 F.3d 722, 728 (8th Cir. 2011) (citing Thompson v. Freeman, 648 F.2d
1144, 1147 (8th Cir.1981)).
Defendants argue that although Two Sisters, Rock, and Garon are named
parties, they cannot be enjoined because Rock and Garon were not signatories to the
Franchise Agreements that form the basis for TMI’s claims. Therefore, according to
Defendants, Two Sisters, Rock, and Garon cannot be not bound by the terms of the
Franchise Agreements. Defendants also argue that Maids on Call and the Scussel
Defendants cannot be enjoined for the acts of a separate business entity. The Court
previously held that franchisees may be enjoined under Rule 65 based on the actions of
those acting in concert with them. See Merry Maids, L.P. v. WWJD Enters., Inc., No.
8:06CV36, 2006 WL 1720487, at *12 (D. Neb. June 20, 2006). Conversely, those acting
in concert with franchisees may be bound for actions that violate a franchise agreement,
regardless of whether they signed the agreement. Id. In this case, all Defendants may
be bound by a preliminary injunction if they are acting in concert or are in privity with
each other. Accordingly, for a preliminary injunction to issue against all Defendants, the
Court looks to whether (a) the Scussel Defendants are in privity or acting in concert with
Two Sisters, Garon, and Rock, and (b) Garon, Rock, and Two Sisters are in privity or
acting in concert with the Scussel Defendants.
1. Scussel Defendants’ Connection to Two Sisters
The Scussel Defendants argue that a preliminary injunction against them and
Maids on Call is improper because Two Sisters was created and operates as a
completely separate entity. However, several shared characteristics demonstrate that
the Scussel Defendants and Maids on Call are in privity with Two Sisters for purposes
of a preliminary injunction. Two Sisters performs the same services and operates at the
exact locations of the former The Maids franchises in Hartford and West Springfield.
See ECF No. 23-15. As of the filing of this motion, the sign at the West Springfield
location still employed the The Maids logo. ECF No. 23-16. The Two Sisters Facebook
page uses the same email address that the Scussel Defendants used in operating their
The Maids franchise. See ECF No. 23-7. At least two vehicles used by Two Sisters are
registered to Defendant Maids on Call. Filing No. 23-12.
Although the Scussel Defendants allege that Rock and Garon set up Two Sisters
separately, the evidence shows references to the Scussel Defendants’ involvement in
the creation of Two Sisters. For example, Defendant Timothy Scussel is identified as
the “Registrant”, “Admin.”, and “Tech.” for the Two Sisters website. ECF No. 23-10.
Further, Defendant Timothy Scussel’s personal email address is referenced as the
address associated with the Two Sisters website. Id. Although Defendants argue that
Two Sisters’ corporate documents show no reference to The Maids or the Scussel
Defendants, Two Sisters’ Massachusetts registration indicates that it was faxed from
Maryann Scussel from a fax number associated with the Scussel Defendants. ECF Nos.
33-1, 33-2. Timothy Scussel even admitted that he filled in for Two Sisters drivers on at
least two occasions. ECF No. 34-8, Page ID 1468.
Perhaps most telling of the Scussel Defendants’ interconnected relationship with
Two Sisters is the Retirement Letter. See ECF No. 31-6. In the letter, which Defendants
submitted as evidence of Scussel Defendants’ lack of privity, Timothy Scussel stated
that Rock and Garon were not going to be a part of The Maids franchise and were going
off on their own. However, the letter emphasized that Rock and Garon were “ready to
take over. (They really have been running the business for many years).” ECF No. 31-6,
Page ID 1456. The Retirement Letter described how Two Sisters intended to be a
continuation of the The Maids business:
With the company that they are starting (TWO SISTER [sic] CLEANING
SERVICE) most everything will be the same as you know it today. We will
have the same employees that you may know cleaning your home, using
the same products to clean your home, the same cleaning schedule, we
have the same insurance, (workers comp, liability & bonding) that we
Now, you have a choice to make. 1. Choose TWO SISTERS CLEANING
SERVICE as your cleaning company, and everything remains the same as
you know it today. 2. Choose another cleaning service, or 3. Which may or
may not happen is The Maids may start another franchise in this area.
Hopefully you have been happy with our service and will remain with us.
I said that most everything will remain the same. There is one item that is
going to change. Now this was going to change regardless of the start up
of our new company or not. That item that is changing is our pricing. As
many of you know the minimum wage is going up again beginning Jan. 1,
2017. In Massachusetts the minimum wage is going from the current
$10.00 per hour to $11.00, and in Connecticut from the current $9.60 to
$10.10. When the minimum wage goes up our workers comp, liability
insurance and payroll tax all go up because they are all based upon our
payroll. Our price increase is an average 2.7% per customer. For those of
you that have been with us for many years know that we have not raised
our price VEREY [sic] much over the years.
ECF No. 31-6, Page ID 1456-57 (emphasis added). The emphasized portions of the
Retirement Letter show Timothy Scussel referred to Two Sisters as a continuation of the
Scussel Defendants’ The Maids franchise. Scussel indicated that things would remain
the same and referred to the Two Sisters business using terms such as “us”, “we”, and
“our.” Based on Scussel’s own language and the evidence in the record, TMI has
shown that the Scussel Defendants are in privity with Two Sisters for purposes of this
2. Two Sisters’ Connection with Scussel Defendants
Defendants argue that Two Sisters cannot be in privity with the Scussel
Defendants because Rock and Garon were not signatories to the Franchise
Agreements and set up Two Sisters as a wholly separate entity. Several courts have
addressed this argument and determined that non-signatories may not avoid an
injunction simply by being non-signatories to a franchise agreement.3 The Court
addressed a similar argument in Merry Maids, L.P. v. WWJD Enters., Inc. In Merry
Maids, a franchisor sought a preliminary injunction against the spouse of a former
franchisee who sought to avoid the conditions of a franchise agreement. 2006 WL
1720487, at *12. The spouse claimed that the cleaning business she operated was
unrelated to her husband’s franchise, and therefore could not be subject to an injunction
to enforce the franchisor’s franchise agreements with her husband. Id. The Court
granted the preliminary injunction, concluding that the evidence showed the former
franchisee and his spouse acted in concert when forming the spouse’s competing
business. Id. The Court reasoned that the franchisee gave the spouse money meant to
start the competing business and transferred the physical assets of the franchise to the
spouse in undocumented transactions and for no consideration. Id. Evidence also
See, e.g., H&R Block Tax Servs., LLC v. Strauss, 2015 WL 470644, at *6 (N.D.N.Y. Feb. 4,
2015) (enjoining non-signatories where evidence “indicate[d] that these tax preparers at Defendant's
location, if not her employees, are at minimum acting ‘in active concert or participation with’ Defendant,
and are thus subject to the covenants discussed herein.”); Victory Lane Quick Oil Change Inc. v. Darwich,
2013 WL 393020, at *2 (E.D. Mich. Jan. 31, 2013) (“Defendants made this same argument [that they
have no interest in the competing business] in response to Plaintiff’s motion for preliminary injunction, and
the court rejected it because [the ex-franchisee] remained the tenant at the [competing business] location
…”); NovaSeptum AB v. Amesil, Inc., 2010 WL 5620906, at *3–4 (D.N.J. Dec. 29, 2010) (enjoining nonparty using “substantial continuity of identity” test, “adopted as a general expression of the degree of
closeness that Rule 65(d) requires for a non-party successor to be subject to the injunction,” where nonparty party took over party’s assets and employees); Tanfran, Inc. v. Aron Alan LLC, 2007 WL 1796235
(W.D. Mich. June 20, 2007) (granting injunction against non-signatory where business continued
uninterrupted and continued using same assets).
showed that the franchisee gave confidential and proprietary information to his spouse
and that the spouse was able to use the information to contact and solicit business from
Merry Maids customers. Id. Finally, the competing business operated out of the same
location as the franchise and continued, uninterrupted, during its transition from the
franchise to the competing business “which now supplies services formerly supplied to
its customers by [the franchise].” Id. Thus, “the business property ha[d] remained within
the [franchisee’s] family, presumably to the benefit of all the defendants.” Id.
In this case, similar evidence demonstrates that Rock and Garon are in privity
with the Scussel Defendants and Maids on Call. As noted above, Two Sisters operates
out of the same offices using largely the same physical assets of the former The Maids
franchise. At the time the Motion was filed, some of the assets were still in the name of
Timothy Scussel.4 The Retirement Letter promised that Two Sisters would use the same
products, schedules, insurance, and employees to perform cleaning services. See ECF
No. 31-6, Page ID 1456. Although Defendants deny that Two Sisters kept or is using a
customer list to contact The Maids customers, their own evidence shows that the
Scussel Defendants contacted The Maids customers on Two Sisters’ behalf. Timothy
Scussel admits that he sent the Retirement Letter “to the former Maids franchise’s
customers.” ECF No. 32, Page ID 1495. The Retirement Letter urged customers of The
Maids franchise to “continue” doing business with Two Sisters. See id. (“Hopefully you
Defendants argue that they changed ownership of assets and website registration from the
Scussel Defendants to Garon and Rock or Two Sisters when they became aware of the allegations of this
lawsuit. These actions, taken in reaction to the allegations and evidence in the Motion for Preliminary
Injunction, do not alone cure the potential breach of the Franchise Agreements. Furthermore, as stated
below, Two Sisters continues to occupy the same location, use the same assets, and service the same
customers of the former The Maids franchise. Accordingly, the steps taken to separate the Scussels from
Two Sisters are not, by themselves, sufficient to avoid a preliminary injunction.
have been happy with our service and will remain with us.”). The Two Sisters website,
registered to Timothy Scussel, emphasized continuity, proudly stating that Two Sisters
is “family owned and operated” and has been “professionally cleaning homes and
businesses since 2002,” the year the Scussel Defendants’ Franchise Agreements
began with TMI. See Filing No. 23-9.
Most telling, Garon confirmed that “many of the customers” of the Scussel
Defendants’ former The Maids franchise are now patronizing the competing Two Sisters
business, instead of a “new Maids franchise” in the Scussel Defendants’ former territory.
Garon Decl., ECF No. 31-1, Page ID 1461. Thus, Defendants’ evidence shows that not
only did Scussel directly solicit The Maids customers, but succeeded in doing so. Just
as in Merry Maids, this evidence shows that the Scussel Defendants intended to ensure
that Two Sisters could continue, uninterrupted, during its transition from the The Maids
franchise. Two Sisters, Garon, and Rock benefitted from the Scussel Defendants’
actions and have acted in concert with them. Thus, for purposes of Rule 65, they are in
privity with the Scussel Defendants and may be bound by a preliminary injunction.
Factors for Issuing Preliminary Injunction
Having determined that Defendants acted in concert, the Court turns to whether
a preliminary injunction is appropriate. When determining whether to issue a preliminary
injunction, courts in the Eighth Circuit apply the factors set forth in Dataphase Sys., Inc.
v. CL Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc). Those factors are: “(1) the
threat of irreparable harm to the movant; (2) the state of balance between this harm and
the injury that granting the injunction will inflict on other parties litigant; (3) the probability
that movant will succeed on the merits; and (4) the public interest.” Id. “No single factor
is determinative.” WWP, Inc. v. Wounded Warriors, Inc., 566 F. Supp. 2d 970, 974 (D.
Neb. 2008). “A preliminary injunction is an extraordinary remedy and the burden of
establishing the propriety of an injunction is on the movant.” Roudachevski v. All-Am.
Care Ctrs., Inc., 648 F.3d 701, 705 (8th Cir. 2011) (citing Watkins, Inc. v. Lewis, 346
F.3d 841, 844 (8th Cir. 2003)).
1. Likelihood of Success on the Merits
“In deciding whether to grant a preliminary injunction, likelihood of success on
the merits is most significant.” S.J.W. ex rel. Wilson v. Lee's Summit R-7 Sch. Dist., 696
F.3d 771, 776 (8th Cir. 2012) (quoting Minn. Ass'n of Nurse Anesthetists v. Unity Hosp.,
59 F.3d 80, 83 (8th Cir.1995)). TMI seeks an injunction based on three of its claims:
trademark infringement; breach of post-termination obligations; and violation of the noncompete and non-solicitation requirements of the Franchise Agreements. The Court
considers each of these claims in turn.
a. Trademark Infringement
To establish a claim for trademark infringement under the Lanham Act, §§ 1114
or 1125, TMI must show “that it has ownership or rights in the trademark and that the
defendant has used the mark in connection with goods or services in a manner likely to
cause consumer confusion as to the source or sponsorship of the goods or services.”
Cmty. of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus Christ's
Church, 634 F.3d 1005, 1009 (8th Cir. 2011). Thus, to show that it is likely to succeed
on its trademark infringement claims, TMI must show that it owns the “The Maids”
trademark and service mark (the “TMI Marks” or “Marks”), and that Defendants’ use of
the mark is likely to cause customer confusion.
i. Ownership of the Marks
Generally, the registration of a trademark is “conclusive evidence of the
registrant's . . . ownership of the trademark . . .” Dakota Indus., Inc. v. Ever Best Ltd.,
28 F.3d 910, 912 (8th Cir. 1994); see also 15 U.S.C. §§ 1115(b), 1065. Defendants
argue that TMI has failed to demonstrate that it is the registered owner of the Marks.
However, despite Defendants’ blanket claims, TMI has submitted a copy of its
trademark registration demonstrating that it has owned the Marks at all times relevant to
this lawsuit. See Trademark Registration No. 2928853, ECF No. 33-5. The Trademark
Registration is conclusive evidence of TMI’s ownership of the Marks.
ii. Likelihood of Confusion
The Lanham Act expressly prohibits the unauthorized use of another's registered
trademark without the registrant's consent in a manner that is “likely to cause confusion,
or to cause mistake, or to deceive.” 15 U.S.C. § 1114(1)(a); see also Buffalo Wild Wings
Int'l, Inc. v. Grand Canyon Equity Partners, LLC, 829 F. Supp. 2d 836, 842 (D. Minn.
2011). Unauthorized users of a registered trademark may be enjoined. § 1116(a). “[T]he
essential question in any case of alleged trademark infringement is whether purchasers
are likely to be misled or confused as to the source of the different products or
services.” Battle Sports Sci., LLC v. Shock Doctor, Inc., 225 F. Supp. 3d 824, 838 (D.
Neb. 2016) (quoting WSM, Inc. v. Hilton, 724 F.2d 1320, 1329 (8th Cir. 1984)). Where a
former franchisee continues to use the trademark of its former franchisor, “the quantum
of proof necessary to establish a likelihood of confusion is less.” Downtowner/Passport
Int'l Hotel Corp. v. Norlew, Inc., 841 F.2d 214, 219 (8th Cir. 1988). This is so because
“[c]ommon sense compels the conclusion that a strong risk of consumer confusion
arises when a terminated franchisee continues to use the former franchisor's
trademarks” Id. (quoting Burger King Corp. v. Mason, 710 F.2d 1480, 1492 (11th Cir.
1983)); See also Klipsch, Inc. v. WWR Tech., Inc., 127 F.3d 729, 738 (8th Cir. 1997) (a
former licensee’s “continued, non-permissive use” of a licensor’s trademarks “amounts to
In this case, there is compelling evidence that Defendants continued to use the
Marks after TMI terminated the Franchise Agreements. At the time the Motion was filed,
the Two Sisters Facebook page displayed an email address that employed portions of
the Marks and was the same email address the Scussel Defendants used during the
term of the Franchise Agreements. See ECF No. 37-10. Further, the Two Sisters
location in West Springfield, Massachusetts continues to use the “The Maids” sign and
distinctive mark outside the business. See Filing No. 37-11. Defendants acknowledge
this evidence but claim that no preliminary injunction should issue because, when the
Motion was filed, they changed the email address and took down the sign.
Nevertheless, TMI has shown that Defendants continued to employ the Marks after the
termination of the Franchise Agreements. The evidence demonstrates that such
continued use is likely to cause confusion. Accordingly, Defendants will be preliminarily
enjoined from using the Marks.
b. Breach of Non-Compete and Non-Solicitation Provisions
Sufficient evidence demonstrates that Defendants are violating the non-compete
and non-solicitation provisions (collectively referred to as the “Restrictive Covenants”) of
the Franchise Agreements. Under both Connecticut and Massachusetts law, restrictive
covenants are enforceable so long as the restraints are reasonable.5 See, e.g., Elida,
Inc. v. Harmor Realty Corp., 413 A.2d 1226, 1229 (1979); Boulanger v. Dunkin' Donuts
Inc., 815 N.E.2d 572 (2004). Such restraints are reasonable if they afford a fair
protection of the interest of the party in whose favor the covenant runs, is reasonably
limited in time and space, and is consonant with the public interests. Scott v. Gen. Iron
& Welding Co., 368 A.2d 111, 114–15 (1976); Boulanger, 815 N.E.2d at 576–77.
Based upon the evidence before the Court at this stage, TMI is likely to prove that the
Restrictive Covenants are fair protections of reasonable interests and are reasonably
Courts in both Connecticut and Massachusetts have held that a business has an
interest in protecting its goodwill, customer lists, know-how, trade secrets, trademarks,
and the integrity of its franchise system. See Carvel Corp. v. Leopold DePaola, No.
CV505443, 2001 WL 528203, at *11–12 (Conn. Super. Ct. Apr. 24, 2001); New Haven
Tobacco Co. v. Perrelli, 528 A.2d 865, 867 (Conn. 1987); Certified Pest Control Co. v.
Kuiper, 294 N.E.2d 548, 551 (Mass. App. 1973). The restrictive covenants in the
Franchise Agreements seek to protect the goodwill associated with the Marks, the
Business Information, and the integrity of the TMI franchise system. There is no dispute
that TMI has a reasonable interest in protecting these interests through the restrictive
The Franchise Agreements state that, “[e]xcept to the extent governed by the United States
Trademark Act of 1946 (Lanham Act, 15 U.S.C. § 1051 et seq.), [the Franchise Agreements] and the
relationship between TMI and the [Defendants] will be governed by the laws of the state in which the
Exclusive Market Area is located.” See, e.g., ECF No. 22-2 at Page ID 782. Defendants do not assert that
another state’s law governs, but cite to several jurisdictions throughout the brief. At this stage, the Court is
satisfied that the laws of Connecticut govern the terms of the 2002, 2003, and 2004 Franchise
Agreements, and the laws of Massachusetts govern the terms of the 2008 Franchise Agreement.
The Restrictive Covenants are also reasonable in scope and consonant with the
public interest. They limit the Scussel Defendants from operating a competing cleaning
business within 20 miles of their former franchises for a period of 15 months. Courts in
both Connecticut and Massachusetts have enforced restrictive covenants that limit
competition for longer periods of time over a larger geographical area. 6 The public
interest supports enforcement of the Restrictive Covenants, because the Scussel
Defendants agreed to the covenants in the Franchise Agreements in exchange for
receiving the benefits of the franchise. See Get In Shape Franchise, Inc. v. TFL Fishers,
LLC, 167 F. Supp. 3d 173, 200 (D. Mass. 2016) (“Here, the non-compete clause does
not offend the public interest because [the former employee] knowingly agreed to
reasonable restrictions on her post-franchise employment options in exchange for the
benefits of participating in a franchise system.”). Because the Restrictive Covenants are
reasonably limited in time and scope, and do not offend the public interest, they are
The evidence at this stage demonstrates that TMI is likely to show that
Defendants are violating the Restrictive Covenants. As noted above, Two Sisters
operates out of the same offices using largely the same physical assets of the former
The Maids franchise. The Retirement Letter directly solicited customers of the former
The Maids franchise on behalf of Two Sisters. See ECF No. 31-6, Page ID 1456. Many
See, e.g., Grease Monkey Intern., Inc., 808 F. Supp. 111, 119-20 (D. Conn. 1992) (applying
Connecticut law to enforce 50 mile restrictive covenant); Money Mailer Franchise Corp. v. Wheeler, No.
CV084010066S, 2008 WL 4415942, at *5 (Conn. Super. Ct. Sept. 16, 2008) (enforcing 50 mile restrictive
covenant to apply to radius surrounding both the franchisees’ former territories and current franchisees’
territories); In re Ward, 194 B.R. 703 (Bankr. D. Mass. 1996) (recognizing validity of two year, fifty (50)
mile restrictive covenant against former The Maids® franchisee); All Stainless, Inc. v. Colby, 308 N.E.2d
481, 468 (Mass. 1974) (enforcing two-year restrictive covenant); Blackwell v. Helides, 331 N.E.2d 54, 56
(Mass. 1975) (enforcing three (3) year restrictive covenant);
of these customers are now customers of the Two Sisters business, instead of a “new
Maids franchise” in the Scussel Defendants’ former territory. Garon Decl., ECF No. 311, Page ID 1461. The evidence shows that Two Sisters is competing in the geographic
area for the same customers as the former The Maids franchise, using the same
methods, products, and employees. Accordingly, TMI has demonstrated likelihood of
success on its claim for breach of the Restrictive Covenants.
c. Breach of Post-Termination Obligations
TMI argues that Defendants have failed to comply with their post-termination
obligations under Article 18 of the Franchise Agreements.7 See Franchise Agreement,
ECF No. 22-2, Page ID 771-72. Article 18 requires, in relevant part, that, upon
termination or expiration of the Franchise Agreements, Defendants must: comply with
the Restrictive Covenants; cease using TMI’s Marks; return all manuals, proprietary
information, confidential material, marketing and advertising materials, the required
software, videotapes, and any other written materials containing any of TMI’s
trademarks or otherwise relating to their former The Maids franchised businesses; alter
the automobiles used in their business to eliminate the distinctive appearance of a The
administrative or advertising techniques, systems or know-how, or trade secrets TMI
disclosed to them; refrain from engaging in any contacts with customers or former
customers of their former The Maids franchised businesses; and assign all telephone
Article 18 is also referred to in this Memorandum and Order as the “Post-Termination
numbers, fax numbers, telephone directory listings, domain names and email addresses
associated with their former The Maids franchised businesses to TMI. Id.
The evidence at this stage demonstrates that Defendants are using techniques,
the proprietary Business System, customer lists, and contact information in violation of
the Post-Termination Obligations. Defendants admit that they are using the same,
distinctive yellow-colored vehicles associated with the The Maids franchise. Defendants
also have used or are using TMI’s Marks and goodwill associated with the The Maids
franchise to solicit customers away from TMI.
The evidence demonstrates that
Defendants have failed to return manuals, proprietary information, confidential material,
marketing and advertising materials, the required software, videotapes, and other
written materials belonging to TMI. Defendants do not directly refute their failure to
comply with the Post-Termination Obligations, but argue they are not required to fulfill
their Obligations because Two Sisters is a separate entity. This argument fails to
address why Defendants are excused from the requirements of Article 18. Accordingly,
the Court will require Defendants to comply with the Post-Termination Obligations.
For the reasons stated above, the evidence at this stage of the proceedings
shows that TMI is likely to succeed on its claims for trademark infringement, breach of
the Restrictive Covenants, and breach of Post-Termination Obligations. Accordingly,
this factor favors issuance of a preliminary injunction.
2. Threat of Irreparable Harm
TMI has demonstrated a threat of irreparable harm because Defendants are
directly benefitting from the franchise relationship while successfully operating a
competing business. “It is well established that ‘[i]rreparable harm occurs when a party
has no adequate remedy at law, typically because its injuries cannot be fully
compensated through an award of damages.’” Grasso Enters., LLC v. Express Scripts,
Inc., 809 F.3d 1033, 1040 (8th Cir. 2016) (quoting Gen. Motors Corp. v. Harry Brown's,
LLC, 563 F.3d 312, 319 (8th Cir.2009)). TMI established irreparable harm on its
trademark infringement claims by showing likelihood of success on the merits. See Gen.
Mills, Inc. v. Kellogg Co., 824 F.2d 622, 625 (8th Cir. 1987) (stating that irreparable
harm could be presumed where movant shows probable success in proving a likelihood
of consumer confusion).
TMI has also demonstrated the threat of irreparable harm under its claims for
breach of the Restrictive Covenants and Post-Termination Obligations. In the context of
a franchise agreement, several Courts have held that “harm to goodwill, like harm to
reputation, is the type of harm not readily measurable or fully compensable in
damages—and for that reason, more likely to be found ‘irreparable.’” K–Mart Corp. v.
Oriental Plaza, Inc., 875 F.2d 907, 915 (1st Cir.1989). For example, in Get In Shape
Franchise, Inc. v. TFL Fishers, LLC, 167 F. Supp. 3d 173, 202 (D. Mass. 2016), the
court, applying Massachusetts law, concluded that irreparable injury was shown
because “[t]he existence of a competing small-group, women's fitness studio at the
location of the former [franchisee’s] studio will likely harm [the franchisor’s] goodwill and
impair its ability to establish another studio.” Similarly, in Jiffy Lube Int’l, Inc. v. Weiss
Bros., 834 F. Supp. 683, 692–93 (D.N.J.1993), the court found irreparable harm,
explaining that “the good will of the franchisor would be harmed by the existence of a
competing service center at the very site of the former Jiffy Lube center.” Id. See also
Bad Ass Coffee Co. of Hawaii v. JH Nterprises, L.L.C., 636 F. Supp. 2d 1237, 1249 (D.
Utah 2009) (“[T]he majority of courts that have considered the question have concluded
that franchising companies suffer irreparable harm when their former franchisees are
allowed to ignore reasonable covenants not to compete.”); Quizno's Corp. v.
Kampendahl, No. 01 C 6433, 2002 WL 1012997, at *7 (N.D. Ill. May 20, 2002) (finding
irreparable harm where violation of non-compete clause would result in lost sales,
goodwill, and market presence the franchisor once had in the area, and would threaten
the franchise system as a whole).
The factors establishing irreparable harm in other cases demonstrate threat of
irreparable harm to TMI in this case. Two Sisters operates out of the same locations as
the former The Maids franchises. Until the filing of this Motion, at least one of the
locations continued to use the The Maids logo on signage outside the location. Timothy
Scussel assured then-customers of his The Maids franchise that if they chose to
continue with Two Sisters, most everything would remain the same. Thus, customers of
the former The Maids franchise were not merely confused by the transition, but were
expressly told, by Scussel, that they would benefit from a continuity of operations if they
remained with Two Sisters. The result of these actions is not speculative. Defendants
have admitted that several The Maids customers are now customers of Two Sisters. As
a result of these actions, TMI has lost actual customers in the areas protected by the
Franchise Agreements, and could irreparably lose market presence in the area.
Accordingly, TMI has demonstrated the threat of irreparable harm.8
Defendants argue that TMI’s delay in enforcing its rights under the Franchise Agreement
undermines its claim of irreparable harm. “In order to demonstrate irreparable harm, a party must show
that the harm is certain and great and of such imminence that there is a clear and present need for
equitable relief.” Novus Franchising, Inc. v. Dawson, 725 F.3d 885, 895 (8th Cir. 2013). The Eighth Circuit
has held that a significant delay in seeking injunctive relief may undermine a party’s claim of irreparable
harm. See id. at 894. Defendants argue that TMI’s delay of nearly six months before seeking injunctive
3. Balance of the Harms
The primary question when issuing a preliminary injunction is whether the
“balance of equities so favors the movant that justice requires the court to intervene to
preserve the status quo until the merits are determined.” Dataphase, 640 F.2d at 113.
To determine the harms that must be weighed, the Eighth Circuit has looked at the
threat to each of the parties' rights that would result from granting or denying the
injunction. Baker Elec. Co-op., Inc. v. Chaske, 28 F.3d 1466, 1473 (8th Cir. 1994). A
Court also must consider the potential economic harm to each of the parties and to
interested third parties. Id.
Defendants argue that the balance of harms weighs in favor of Defendants
because an injunction to enforce the Franchise Agreements would effectively put Two
Sisters out of business. However, this factor cannot weigh in Defendants’ favor where
their hardship is a result of their misappropriation and breach of contract. Where a party
brings harm upon itself by “virtue of [its own] recalcitrant behavior, the [party opposing
the injunction] can hardly claim to be harmed, since it brought any and all difficulties
occasioned by the issuance of an injunction upon itself.” Novartis Consumer Health,
Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 596 (3d Cir.
2002); see also Pappan Enters., Inc. v. Hardee's Food Sys., Inc., 143 F.3d 800, 806 (3d
relief shows a lack of threat of irreparable harm. The Court is mindful of the delay, and the fact that TMI
failed to seek a temporary restraining order. However, these facts alone do not extinguish the threat of
irreparable harm. Even if TMI became aware of Two Sisters in December of 2016, there is no indication
that it was aware of the Defendants’ relationship with Two Sisters, nor is there evidence that TMI was
aware of Defendants’ intent that Two Sisters continue as the same business until several months later.
Further, the delay in this case was much shorter than the delays in cases where irreparable harm was not
shown. See id. (seventeen months); Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F.3d
598, 603 (8th Cir. 1999) (nine years); see also Tough Traveler, Ltd. v. Outbound Prods., 60 F.3d 964 (2d
Cir. 1995) (concluding that nine months’ delay justified denial of a preliminary injunction because the
delay was unexplainable in light of a plaintiff's knowledge of the conduct of the defendant).
Cir. 1998) (“[A] party's self-inflicted harm by choosing to stop its own performance under
the contract and thus effectively terminating the agreement is outweighed by the
immeasurable damage done to the franchisor of the mark.”).
Although Defendants may be burdened by enforcement of the post-termination
and non-compete restrictions contained in the Franchise Agreements, they accepted
the restrictions in exchange for the benefits of the Franchise Agreements. Defendants
have since benefitted from their franchise relationship with TMI in their operation of Two
Sisters. “The often painful harm which follows a defendant who willfully breaches a
contractual undertaking is not a basis for denying a plaintiff the relief to which it is legally
entitled.” Jiffy Lube, 834 F. Supp. at 693. Although enforcement of the restrictive
covenants and post-termination obligations will harm Defendants, such harm is the
result of their breach of those obligations. Accordingly, the balance of harms weighs in
favor of issuing a preliminary injunction.
4. Public Interest
The Court concludes that the public interest favors issuance of a preliminary
injunction. The Court recognizes that the value of free competition should be weighed
against TMI’s interest in its Marks, Business Information, and rights under the Franchise
Agreements. Cf. Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc., 815 F.2d 500, 505
(8th Cir.1987). “Public interest can be defined a number of ways, but in a trademark case, it
is most often a synonym for the right of the public not to be deceived or confused.” Pappan,
143 F.3d at 807 (quotations omitted). Additionally, the enforcement of valid restrictive
agreements serves the public interest. N.I.S. Corp. v. Swindle, 724 F.2d 707, 710 (8th
Cir.1984) (“[I]f these noncompete agreements are valid, the public interest calls for their
enforcement.”). Courts have held that where the moving party has demonstrated that
misrepresentations are being made in the marketplace, the public interest favors
injunctive relief. See e.g. Minnesota Mining & Mfg. Co. v. Rauh Rubber, Inc., 943
F.Supp. 1117, 1134 (D.Minn.1996), aff'd sub nom. Minnesota Min. & Mfg. Co. v. Rauh
Rubber, Inc., 130 F.3d 1305 (8th Cir.1997).
TMI has demonstrated the potential for confusion in the marketplace based on
Defendants’ use of the Marks and their representations regarding the continuation of
The Maids business. For the reasons stated above, the Court concludes that a
preliminary injunction favors the public interest.
TMI has demonstrated that the Dataphase factors have been satisfied in this
case. The Court also concludes that all the Defendants are acting in active concert and
a preliminary injunction is properly enforceable against all Defendants. Accordingly, the
Motion for Preliminary Injunction will be granted.
IT IS ORDERED: that the Motion for Preliminary Injunction, ECF No. 21, filed by
Plaintiff, The Maids International, Inc. (“TMI”), is granted as follows:
Defendants and all persons or entities acting in concert with them are
restrained and enjoined from infringing upon TMI’s trademarks, trade
names, service marks, and related marks;
Defendants and all persons or entities acting in concert with them are
restrained and enjoined from operating a competing business in violation of
the non-compete, non-solicitation, and post-termination provisions, as
stated in Articles 18 and 19 of the applicable Franchise Agreements; and
Defendants and all persons or entities acting in concert with them must
comply with the obligations imposed upon termination or expiration, as
stated in Article 18 of the Franchise Agreements.
Dated this 25th day of September, 2017.
BY THE COURT:
s/Laurie Smith Camp
Chief United States District Judge
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