Salsarita's Franchising, LLC v. Gibson Family Enterprises, LLC et al

Filing 52

CONSENT JUDGMENT AND PERMANENT INJUNCTION. Signed by District Judge Frank D. Whitney on 11/17/22. (clc)

Download PDF
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION Case No.: 3:22-cv-206-FDW-DSC Salsarita’s Franchising, LLC, Plaintiff, v. Gibson Family Enterprises, LLC, Bill E. Gibson, & Holli R. Gibson, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) CONSENT JUDGMENT AND PERMANENT INJUNCTION THIS MATTER is before the Court following the filing by the Parties on November 14, 2022 of a Joint Motion for Entry of Consent Judgment and Permanent Injunction (the “Motion”). (Doc. No. 47). In the Motion, and as further set forth in the Parties’ supporting joint memorandum of law (Doc. No. 48), Plaintiff Salsarita’s Franchising, LLC (“Salsarita’s”) and Defendants Gibson Family Enterprises, LLC (“GFE”), Bill E. Gibson, and Holli R. Gibson (collectively, the “Gibsons,” and together with GFE, the “Defendants”) consent to and move this Court for entry of a final judgment and permanent injunction. This Motion represents, and the Court finds, that the Parties have entered into a Settlement Agreement filed with the Motion to resolve this action. This Court finds that the Settlement Agreement and the exhibits thereto, which are attached to this Judgment as Appendix 1, can be made the subject of this Consent Judgment and Permanent Injunction, and the Court hereby approves, adopts, and incorporates by reference herein the terms of the Settlement Agreement and exhibits thereto, thereby making the Parties’ agreement a part of this Judgment. 1 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 1 of 100 FINDINGS OF FACT 1. On or around April 10, 2013, Salsarita’s and Defendants executed a Franchise Agreement and related documents for the operation of a Salsarita’s® franchised restaurant at 2380 Norman Lane, Lexington, KY 40503. 2. Defendants Bill E. Gibson and Holli R. Gibson own an interest in and participate in the operation of two restaurants operating under the name, “Burnaco’s,” in Lexington, Kentucky and Paris, Kentucky, both of which sell Mexican food and beverages. 3. The Burnaco’s in Lexington, Kentucky is within three miles of Defendants’ franchised Salsarita’s restaurant. 4. The Burnaco’s in Paris, Kentucky is outside a three-mile radius of Defendants’ franchised Salsarita’s restaurant. 5. On or around May 9, 2022, Salsarita’s sent notice to Defendants that it had terminated the Franchise Agreement. 6. Defendants disputed the validity of the termination of the Franchise Agreement and continued to operate the Lexington Salsarita’s. 7. Salsarita’s alleges, and Defendants dispute, that Defendants are using Salsarita’s confidential information and trade secrets to operate Burnaco’s in Lexington and Paris. 8. Defendants have also asserted counterclaims against Salsarita’s for breach of the Franchise Agreement due to improper termination of the Agreement as well as claims for unfair and deceptive trade practices. 9. Salsarita’s denies the allegations made by the Defendants in connection with these 10. On November 14, 2022, the Parties entered into a Settlement Agreement to resolve claims. all disputes among them. 2 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 2 of 100 11. Pursuant to Paragraph 2 of the Settlement Agreement, the Parties agreed that the Franchise Agreement would be terminated effective December 5, 2022. CONCLUSIONS OF LAW 1. This Court has personal jurisdiction over all Parties pursuant to the Parties’ forum selection clause. 2. This Court has subject matter jurisdiction over this dispute pursuant to principles of federal question jurisdiction and supplemental jurisdiction. 3. Salsarita’s presented evidence that it argues supports its claims for breach of contract, trademark infringement, unfair competition and false advertising, misappropriation of trade secrets, and unfair and deceptive trade practices. Defendants deny Salsarita’s evidence supports those claims and contend that the evidence supports their claims for breach of contract and unfair and deceptive trade practices. 4. The provisions of the Settlement Agreement represent a compromise that grants the relief awarded in this Consent Judgment and Permanent Injunction to Salsarita’s. 5. Salsarita’s asserts that it has an inadequate remedy at law and will suffer irreparable harm without an injunction, that the balance of the harms weighs in favor of the injunctive relief awarded in this Order, and that the public interests favor entry of this Order. While the Defendants dispute these allegations, they are agreeable to the terms of this Consent Judgment and Permanent Injunction as part of settlement of the disputes between the parties. 6. Entry of this Consent Judgment and Permanent Injunction fully and finally resolves all claims and defenses asserted in this litigation, except for any proceeding to enforce the terms of this Order and except for any claims made pursuant to Paragraph 13 of the Settlement Agreement, which will be decided outside this litigation. 3 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 3 of 100 7. This Consent Judgment and Permanent Injunction is binding and enforceable both as to form and scope pursuant to Federal Rule of Civil Procedure 65(d). 8. The Settlement Agreement and all of its exhibits, with the exception of Exhibit E,1 are attached as Appendix 1 to this Order and are made part of this Order. All capitalized terms not otherwise defined in this Order shall have the meaning given to those terms in the Settlement Agreement. 9. The Parties stipulate to entry of this Consent Judgment and Permanent Injunction. 10. By stipulating to entry of this Consent Judgment and Permanent Injunction, Defendants do not admit any of the allegations set forth in the Amended Complaint, other than that this Court has personal jurisdictional and subject matter jurisdiction to enter this Order. 11. The Parties have all waived any right to appeal this Consent Judgment and Permanent Injunction. 12. The Parties understand the undertakings, obligations, and terms of this Consent Judgment and Permanent Injunction. 13. The Parties acknowledge they have knowingly and voluntarily agreed to the entry of this Consent Judgment and Permanent Injunction after reviewing the same with their counsel and having had ample opportunity to consult with counsel. ORDER Accordingly, by agreement and consent of the Parties, their Joint Motion for Entry of Consent Judgment and Permanent Injunction, (Doc. No. 47), is GRANTED. It is hereby ORDERED, ADJUDGED, and DECREED, and Defendants are PERMANENTLY ENJOINED, as follows: 1 Exhibit E, which contains confidential and proprietary information, as well as trade secrets, has been filed under permanent seal with the Court. (Doc. No. 49). The redaction appears in this Order. 4 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 4 of 100 14. By December 5, 2022, Defendants must permanently cease to operate the Lexington Salsarita’s and shall permanently cease to use the Salsarita’s System or the Salsarita’s Proprietary marks. Until that time, Defendants shall strictly comply with the requirements of the Franchise Agreement. Thereafter, Defendants shall not represent themselves to the public or hold themselves out as present or former Salsarita’s franchisees. 15. By December 5, 2022, Defendants must make all necessary modifications or alterations to the premises of the Lexington Salsarita’s to distinguish the appearance of the premises from that of any other Salsarita’s® restaurant. Specifically, Defendants shall complete the requirements for de-identification set forth in the De-Identification Checklist attached to the Settlement Agreement as Exhibit B. Defendants must permit Salsarita’s to inspect the Lexington Salsarita’s premises to determine compliance with the De-Identification Checklist in accordance with the timeline set forth in Paragraph 4 of the Settlement Agreement. 16. For the two-year period beginning November 14, 2022, and except as otherwise permitted by Paragraph 14 of this Order, Defendants shall not, by themselves or through or in conjunction with any other person or entity, own, manage, operate, maintain, advise, consult with, invest in, be employed by, or engage in any restaurant that sells Tex-Mex or Mexican food or beverages. This restriction shall apply to the following geographic areas: (a) at the Lexington Salsarita’s premises; (b) within a three-mile radius from the Lexington Salsarita’s premises; or (c) within a two-mile radius of any other Salsarita’s franchisee currently in operation as of the Effective Date. For example, and without limitation, this restriction prohibits Defendants from providing Mexican food or beverage catering services within the restricted geographic areas, but not outside the restricted geographic areas. For another example, and without limitation, this restriction prohibits Defendants from operating a Mexican food or beverage food truck within the 5 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 5 of 100 restricted geographic areas, but not outside the restricted geographic areas. This restriction does not prohibit Defendants from owning less than a five percent (5%) beneficial interest in the outstanding equity securities of any publicly held corporation. 17. On or before December 5, 2022, Defendants shall cause the Lexington Burnaco’s to modify its menu in accordance with Paragraph 6 of the Settlement Agreement. Defendants’ obligations under this Paragraph shall expire November 14, 2024. 18. Effective November 14, 2022, Defendants shall not publish, disclose, transfer, release, divulge, or use any of Salsarita’s Confidential Information or Trade Secrets, including without limitation for the benefit of any other enterprise such as the Lexington Burnaco’s or the Paris Burnaco’s as provided in the parties’ now terminated Franchise Agreement. This restriction does not prohibit Defendants from using Salsarita’s Confidential Information and Trade Secrets for the operation of the Lexington Salsarita’s through December 5, 2022, as permitted in Paragraph 14 of this Order. On or before December 5, 2022, Defendants shall return to Salsarita’s and shall not retain any copies of all Confidential Information and Trade Secrets in their custody or control, whether in electronic, hard copy, or any other form. 19. Effective November 14, 2022, Defendants shall ensure the Paris Burnaco’s is not using any of Salsarita’s Confidential Information or Trade Secrets. Effective December 5, 2022, Defendants shall cause the Paris Burnaco’s to modify its menu and undertake the obligations set forth in Paragraph 8 of the Settlement Agreement. 20. Effective November 14, 2022, and except as otherwise permitted by Paragraph 14 of this Order, Defendants shall permanently cease all use of the Proprietary Marks and any other marks confusingly similar thereto and shall not identify themselves or their businesses in any way that suggests a connection or associate with, or an endorsement or sponsorship by, Salsarita’s. On 6 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 6 of 100 or before December 5, 2022, Defendants shall deliver to Salsarita’s all materials bearing the Proprietary Marks, whether in electronic, hard copy, or other form. 21. Defendants must abide by all provisions of the Franchise Agreement (attached to the Settlement Agreement as Exhibit A) that, by their terms, extend beyond termination. These provisions of the Franchise Agreement, which will remain in full force and effect, include: Section IX.A.1.; Section XI.A.; Section XI.F.; Section XII.A.; Section XII.B.; Section XII.C.; Section XVI.B. through I.; Section XVII.B.; Section XVIII.; Section XXII. (except subsections G and M).; and all applicable provisions of the Payment and Performance Guarantee. 22. Defendants must otherwise strictly comply with the Settlement Agreement in all respects. 23. This Consent Judgment and Permanent Injunction is binding upon Defendants, together with their respective officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with any of them who receive actual notice in any manner of this Consent Judgment and Permanent Injunction by personal service or otherwise. 24. This Consent Judgment and Permanent Injunction coupled with the Settlement Agreement is a full and final resolution of all claims that were asserted or that could have been asserted by the Parties in this action, including damages, except for any claims made pursuant to Paragraph 13 of the Settlement Agreement, which will be decided outside this litigation, and subject to the following provision: This Court shall retain jurisdiction to enforce the terms of this Consent Judgment and Permanent Injunction and the Settlement Agreement. Should the Court find, upon motion filed by an aggrieved party, that there has been a violation of the Consent Judgment and Permanent Injunction or Settlement Agreement, the Court is empowered to 7 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 7 of 100 determine the appropriate remedy for said violation, including, if the Court deems appropriate, invocation of the Court’s power of contempt. 25. The Court retains jurisdiction over any motion or action to enforce this Consent Judgment and Permanent Injunction or the Settlement Agreement. Otherwise, this Consent Judgment resolves this action and is a final judgment. Each party hereto shall bear his or its own costs and attorneys’ fees incurred to date. 26. The Clerk is respectfully directed to CLOSE THE CASE and TERMINATE all pending motions. IT IS SO ORDERED. Signed: November 17, 2022 8 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 8 of 100 CONSENTED TO: BRADLEY ARANT BOULT CUMMINGS LLP /s/ Matthew S. DeAntonio Matthew S. DeAntonio (N.C. Bar No. 39625) Samuel M. Dearstyne (N.C. Bar No. 54803) mdeantonio@bradley.com sdearstyne@bradley.com 214 North Tryon Street, Suite 3700 Charlotte, NC 28202/ Telephone: (704) 338-6000 Fax: (704) 332-8858 Attorneys for Plaintiff Salsarita’s Franchising, LLC DINSMORE & SHOHL LLP /s/ Grahmn N. Morgan (with permission) Grahmn N. Morgan (admitted pro hac vice) Kristeena L. Johnson (admitted pro hac vice) 100 W. Main Street, Ste. 900 Lexington, Kentucky 40507 T: (859) 425-1000 F: (859) 425-1099 Grahmn.morgan@dinsmore.com Kristeena.johnson@dinsmore.com Attorneys for Defendants AND MILLBERG GORDON STEWART PLLC /s/ Peter N. Borden (with permission) Peter N. Borden (N.C. Bar No. 53389) 1101 Haynes St., Ste. 104 Raleigh, North Carolina 27604 T: (919) 836-0090 F: (919) 836-8027 pborden@mgsattorneys.com Attorney for Defendants 9 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 9 of 100 APPENDIX 1 10 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 10 of 100 11 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 11 of 100 12 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 12 of 100 13 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 13 of 100 14 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 14 of 100 15 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 15 of 100 16 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 16 of 100 17 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 17 of 100 18 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 18 of 100 19 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 19 of 100 20 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 20 of 100 21 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 21 of 100 22 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 22 of 100 23 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 23 of 100 24 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 24 of 100 25 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 25 of 100 26 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 26 of 100 27 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 27 of 100 28 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 28 of 100 29 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 29 of 100 30 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 30 of 100 31 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 31 of 100 32 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 32 of 100 33 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 33 of 100 34 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 34 of 100 35 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 35 of 100 36 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 36 of 100 37 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 37 of 100 38 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 38 of 100 39 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 39 of 100 40 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 40 of 100 41 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 41 of 100 42 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 42 of 100 43 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 43 of 100 44 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 44 of 100 45 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 45 of 100 46 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 46 of 100 47 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 47 of 100 48 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 48 of 100 49 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 49 of 100 50 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 50 of 100 51 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 51 of 100 52 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 52 of 100 53 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 53 of 100 54 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 54 of 100 55 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 55 of 100 56 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 56 of 100 57 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 57 of 100 58 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 58 of 100 59 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 59 of 100 60 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 60 of 100 61 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 61 of 100 62 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 62 of 100 63 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 63 of 100 64 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 64 of 100 65 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 65 of 100 66 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 66 of 100 67 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 67 of 100 68 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 68 of 100 69 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 69 of 100 70 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 70 of 100 71 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 71 of 100 72 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 72 of 100 73 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 73 of 100 74 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 74 of 100 75 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 75 of 100 76 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 76 of 100 77 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 77 of 100 78 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 78 of 100 79 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 79 of 100 80 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 80 of 100 81 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 81 of 100 82 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 82 of 100 83 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 83 of 100 84 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 84 of 100 85 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 85 of 100 86 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 86 of 100 87 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 87 of 100 88 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 88 of 100 89 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 89 of 100 90 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 90 of 100 91 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 91 of 100 92 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 92 of 100 93 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 93 of 100 94 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 94 of 100 95 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 95 of 100 96 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 96 of 100 97 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 97 of 100 98 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 98 of 100 99 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 99 of 100 100 Case 3:22-cv-00206-FDW-DSC Document 52 Filed 11/17/22 Page 100 of 100

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?