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)
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.
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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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
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APPENDIX 1
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