JTH Tax, Inc. et al v. Aime et al

Filing 24

OPINION AND ORDER entered 7/29/16 and filed 8/3/16: This matter is before the Court on Plaintiff JTH Tax, Inc. d/b/a Liberty Tax Service andSiempreTax LLC's ("Plaintiff") Motion for a Temporary Restraining Order and a Preliminary Injunction Should Not Issue ("the Motion") Doc. 7 . JTH Tax. Inc. d/b/a Liberty Tax Service and SiempreTax LLC are both Plaintiffs, but for clarity only, the Court refers to them collectively as "Plaintiff." "Should N ot Issue" is an error; Plaintiff does request a preliminary injunction. Doc. 7 at 2. Plaintiff's accompanying brief is entitled "Memorandum of Law in Support of Plaintiff's Motion for a Temporary Restraining Order and Order to Show Cause Why a Preliminary Injunction Should Not Issue." Doc. 8. In a Report and Recommendation ("R&R"), the Magistrate Judge RECOMMENDED that the Motion be GRANTED IN PART. Doc. 16 , as outlined. Defenda nts Gregory Aime, Aime Consulting, LLC, Wolf Ventures, Inc., and Aime Consulting, Inc. ("Defendants") object to the R&R. Doc. 18 . For the reasons outlined in this Opinion and Order, the Court OVERRULES Defendants' obje ctions and ADOPTS, in its entirety, the Magistrate Judge's R&R. Doc. 16. The Court GRANTS IN PART Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction Should Not Issue. Doc. 7. The facts and history set fort h herein are derived from evidence tendered in the TRO hearing as well as pleadings and motions filed with this Court. These are preliminary factual findings based on the existing record which shall be used for the limited purpose of ruling on the Magistrate Judge's R&R. (See Opinion And Order and all Foot Notes for Specifics) (Signed by District Judge Henry C. Morgan, Jr. on 7/29/16). Copies provided as directed on 8/4/16. (ecav, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
Norfolk Division

JTIITAX, INC., d/b/a
LIBERTY TAX SERVICE, et al
Plaintiffs,
Civil Action No.: 2:16cv279

v.

GREGORY AIME, et al.
Defendants.

OPINION AND ORDER

This matter is before the Court on Plaintiff JTH Tax, Inc. d/b/a Liberty Tax Service and

SicmpreTax LLC's ("Plaintiff1") Motion for a Temporary Restraining Order and a Preliminary

Injunction Should Not Issue ("the Motion").2 Doc. 7. In a Report and Recommendation
("R&R"). the Magistrate Judge RECOMMENDED that the Motion be GRANTED IN PART.
Doc. 16. Defendants Gregory Aimc, Aimc Consulting, LLC, Wolf Ventures, Inc.. and Aimc

Consulting, Inc. ("Defendants") object to the R&R. Doc. 18. For the reasons below, the Court
OVERRULES Defendants' objections and ADOPTS the Magistrate Judge's R&R. Doc. 16.
I.

A.

BACKGROUND

Facts3

Plaintiff is a tax preparation company. R&R at 2. Defendants have been franchisees of
at least nine (9) Liberty Tax and SicmpreTax locations since about 2011. Id. In about January

' Jill Tax. Inc. d/b/a Liberty Tax Service and SicmpreTax LLC are both Plaintiffs, but for clarity only, the Court
refers lo them collectively as "Plaintiff."
2 "Should Not Issue" is an error; Plaintiff does request a preliminary injunction. Doc. 7 at 2. Plaintiffs

accompanying brief is entitled "Memorandum of Law in Support of Plaintiffs Motion for a Temporary Restraining
Order and Order to Show Cause Why a Preliminary Injunction Should Not Issue." Doc. 8.

3The facts and history set forth below are derived from evidence tendered in the TRO hearing as well as pleadings
and motions filed with this Court. These are preliminary factual findings based on the existing record which shall be
used for the limited purpose of ruling on the Magistrate Judge's R&R.

2016. Plaintiff learned that the Internal Revenue Service ("IRS") revoked the Electronic Filing

Identification Number ("EFIN") for Defendants' franchise locations as a consequence of
Defendants' activities. Doc. 8 at 3. Defendants were required to maintain the EFIN under their

franchise agreements with Plaintiff. Id.; see Doc. 6, Exs. A, B. C, D, E, F. G. II. 1. Plaintiff
could have terminated the franchise agreements under the terms o\' the contract, but instead

executed a Purchase and Sale Agreement ("PSA") with Defendants and gave them until May 8,
2016 to regain their EFIN and buy back the locations. Doc. 6. Ex. I.' 4.
Plaintiff seeks a temporary restraining order, alleging that Defendants:
(1) refused to assign leases for the franchise locations to the Plaintiff. (2) refused
to return confidential proprietary files and records, including customer lists.
related to the operation of the franchise locations, (3) refused to transfer the
franchise assets to Plaintiff. (4) failed to return Plaintiffs confidential operations
manual and other business information, and (5) indicated their intent to operate a

competing tax preparation business using Plaintiffs confidential information.
R&R at 2. Plaintiff also seeks a preliminary injunction. Doc. 7 at 2.
B.

Procedural History

On June 9. 2016. Plaintiff filed a Complaint in this Court. Doc. 1. On June 22. Plaintiff
filed an Amended Verified Complaint to add Aimc Consulting. Inc. as a Defendant. Doc. 6.
Plaintiff also filed the Motion on June 22.

Doc. 7.

On June 30. 2016. Defendants filed a

Response in Opposition to the Motion. Doc. 13. On July 1. Plaintiff filed two declarations in
support of the Motion. Docs. 14. 15. Also on July 1. Judge Leonard held a hearing on the
temporary restraining order ("FRO") and filed an R&R RECOMMENDING that the Court
GRANT IN PART Plaintiffs Motion for a TRO as to six (6) of the nine (9) Liberty Tax and

SiempreTax franchise locations in Defendants' control. R&R al 6-8; see id, at 2." The R&R

4 The Magistrate Judge noted in his R&R that two franchise locations are subject to a TRO in Defendants' favor
issued by a New York state court. "Defendants are still in control and operation of al least two locations that [bear]
the Liberty Tax name and other related trademarks." Doc. 16 al 4. "Plaintiff sought the assignment of Defendants'

also required objections to be filed within seven (7) days and responses to objections to be filed

within seven (7) days. Id, at 9. On July 8. Defendants filed five (5) objections to the R&R.
Doc. 18. On July 15, Plaintiff filed a response to Defendants' objections. Doc. 20. On July 15.
Defendants" counsel waived service for all Defendants.
II.
A.

Doc. 22.

LEGAL STANDARDS

Review of the R&R

On a motion for injunctive relief, the Magistrate Judge may make only a recommendation
to the Court. 28 U.S.C. § 636(b)(1)(A). The recommendation has no presumptive weight, and

the Court is responsible for making a final determination, Owens ex rel. Metcall'v. Barnhart.

444 F. Supp. 2d 485, 488 (D.S.C. 2006) (citing Mathews v. Weber. 423 U.S. 261. 269 (1976)).
The district court "may accept, reject, or modify, in whole or in part, the findings or
recommendations made by the magistrate judge. The judge may also receive further evidence or

recommit the matter to the magistrate judge with instructions." 28 U.S.C. § 636(b)(1)(C).
The Court reviews de novo any part of a Magistrate Judge's recommendation to which a

party has properly objected. Fed. R. Civ. P. 72(b)(3); Little v. Colvin. No. 2:15cv47. 2016 WL
778026, at *2 (E.D. Va. Feb. 24. 2016). If the Court finds that substantial evidence exists to

uphold the Magistrate Judge's findings, the Court must uphold them, even if evidence also exists
to support contrary findings. Little. 2016 WL 778026, at *2. When a Court conducts a de novo
leasehold interests in two other locations (369 Peninsula Blvd.. Hempstead, NY 11550, and 569 Bumside Avenue.
Inwood. NY 11096). However, as there is a state court order temporarily enjoining the Plaintiff from interfering
with those locations, and in the interests of comity, this Court declines recommending an order directing Defendants
to assign the leases and corresponding lelephone numbers for those locations." ]d, at 7 n.2. As of July 19.2016, the
Parties have not dismissed the New York case, though they intend to do so. Hearing Tr. at 47:12-15; see Aimc v.
JTHTax. Inc.. No. 653121/2016 (N.Y. 2016).

5 Defendants earlier stated, "Aime Consulting, LLC and Aimc Consulting. Inc. are not Virginia companies and are
not parties to any franchise agreements, nor have they consented to jurisdiction in this Court," Doc. 18 at 1 n.l. but
"tiling a waiver of service establishes personal jurisdiction over a defendant," 28 U.S.C. § 2361; Fed. R. Civ. P. R.
4(k)U)(C); Minn. Life Ins. Co. v. Webb. 2014 WL 1681688. at *2 (E.D. Va. Apr. 7. 2014). Because Defendants'
counsel accepted service for all four (4) Defendants, theirearlier argument that "two of the Defendants (holding four
of the leases) are not even subject to this Court's jurisdiction" is moot. Doc. 18 at 2.

review, it reexamines all relevant evidence previously reviewed by the Magistrate Judge to

determine whether any particular findings of fact raised in the objections are supported by
"substantial evidence." 42 U.S.C. § 405(g); Coffman v. Bowen, 829 F.2d 514, 517 (4th Cir.

1987); see also Richardson v. Parales. 402 U.S. 389, 390 (1971). Substantial evidence is "more
than a mere scintilla of evidence but may be somewhat less than a preponderance." See Laws v.
Celebrezze. 368 F.2d 640. 642 (4th Cir. 1966).

Substantial evidence is evidence that a

reasonable mind might accept as adequate to support a conclusion and sufficient to withstand a
directed verdict were the case before a jury. See Teaauc v. Califano. 560 F.2d 615. 618 (4th Cir.
1977). overruled by Hvatt v. Heckler. 807 F.2d 376. 378 (4th Cir. 1986).
B.

Preliminary Relief

Temporary restraining orders and preliminary injunctions are extraordinary equitable
remedies. MicroStrategv Inc. v. Motorola. Inc.. 245 F.3d 335, 339 (4th Cir. 2001): Eaglg On
Alliance v. Jewell. No. 2:13cv371. 2013 WL 6188998, at *4 (E.D. Va. Nov. 22. 2013).

A

temporary restraining order "may be issued without full notice [to the other parties], even, under
certain circumstances, ex parte." Fed. R. Civ. P. 65(b); Hoechst Diafoil Co. v. Nan Ya Plastics
Corp.. 174 F.3d 411, 422 (4th Cir. 1999). Unlike preliminary injunctions, temporary restraining
orders are of limited duration, usually lasting fourteen (14) days. Fed. R. Civ. P. 65(b)(2). But

cfi Hoechst, 174 F.3d at 422 ("frjf a temporary restraining order is continued indefinitely, it will
be evaluated on appeal as if it were a preliminary injunction.").

To receive a temporary

restraining order, a plaintiff must show through "specific facts in an affidavit or a verified
complaint . . . that immediate and irreparable injury, loss, or damage will result to the movant

before the adverse party can be heard in opposition," and "the movant's attorney [must] certifTy]
in writing any efforts made to give notice and the reasons why it should not be required." Fed.

R. Civ. P. 65(b)(1).

To receive a preliminary injunction, a plaintiff must show "that he is likely to succeed on
the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the

balance of equities tips in his favor, and that an injunction is in the public interest." Winter v.
Nat. Res. Del'. Council. Inc.. 555 U.S. 7. 20 (2008).
III.

ANALYSIS

Defendants raise five (5) objections to the Magistrate Judge's R&R: (1) Defendants are

not using Plaintiffs trademarks or operating a competing business; (2) Plaintiffs untimely
declarations should not be considered; (3) Plaintiff is unlikely to succeed on the merits; (4)
Plaintiff cannot prevail under the heightened standard of review required for Defendants assign
the franchise leases; and (5) the Court should require Plaintiff to post a bond. Doc. 18 at 3.

/.

Objection I: Whether Defendants ShouldBe Enjoinedfrom Using Plaintiff's Trademarks
or Operating a Competing Business

The Magistrate Judge found that Defendants have '"continued operation of the locations.
records, and software [bearing] the Liberty 'fax name." R&R at 4. Plaintiff at the hearing

argued that Defendants could not plausibly be using the several franchise locations still under
their control for any purpose except tax preparation services. Hearing Tr. at 39:11-20. July 1.
2016 ("Why else do you maintain control of such a location unless you're going to either operate
a Liberty Tax location or operate a competing business?"). Defendants argue that they are not

currently using Libert) fax trademarks or operating a competing business. Doc. 18 at 3, and
opposed the TRO because they "are not engaging in any business that sells or advertises services
as "Liberty 'fax' or otherwise competes with Plaintiffs," Doc. 13 at 3.

Defendants claim that Plaintiff in the PSA gave Defendants an extension from May 8,

2016 to December 31, 2016 to regain their EFIN. Doc. 18 at 9. Thus, even if Defendants were

still using Plaintiffs trademarks and proprietary information. Defendants would not be
infringing. See id. Plaintiff responds that this allegation, though filed in Defendants" complaint
in the New York case, has never been confirmed or verified, and "'is directly contradicted" by the
PSA's integration clause. Doc. 20 at 14. 11.

Defendants do not allege that the IRS has reinstated their EFIN. Doc. 18 at 9 ("[I]t
remains possible—and in fact, likely—that the IRS will lift the EFIN suspension [by December

31. 2016] . . . ."). They continue to control of six (6) Liberty Tax locations and retain Plaintiffs
customer lists, computers, records, and other proprietary manuals.

R&R at 5. 7 *'4.

These

actions constitute substantial evidence to support the Magistrate Judge's finding that Defendants

are improperly using Plaintiffs trademarks and property and are likely to cause loss of Plaintiffs
customers or goodwill. See JTH Tax. Inc. v. Donofrio. No. 2:06CV47. 2006 WL 2796841. at *5

(E.D. Va. Sept. 26, 2006). Defendants' claim that they received an extension to regain their
EFIN is evidence to the contrary, but not sufficient to upset the Magistrate Judge's finding. See
Little. 2016 WL 778026. at *2. Therefore, the Court ADOPTS the Magistrate Judge's finding

that Defendants should be enjoined from using Plaintiffs trademarks and property. R&R at 6.
it

Objection 2: Whether Plaintiffs Two Declarations Are Properly Considered

Defendants object to the Magistrate Judge's consideration of Plaintiffs two (2)

documents filed the morning of the July 1. 2016 hearing.6 Docs. 18 at 3, 14, 15: see R&R at 2-3.
Titled "declarations." Plaintiff filed the documents as "Affidavit[sJ in Support" of the Motion.
Docs. 14. 15. The declarants. Vanessa Carion and Princeton Berry, work at one of Defendant
" The R&R refers to the declarations several limes, most significantly in finding that Plaintiff will suffer "irreparable
harm absent preliminary relief:

Plaintiff submitted two declarations by tax preparation employees, indicating that Defendant
Aime| ] changed the locks on two tax preparation locations that Plaintiff now owns pursuant to the
Purchase and Sale Agreement. ECF-* Nos. 14 and 15. In one declaration, an employee indicated
that computers and paperwork were missing, and that clients were lined up outside the Liberty Tax
locations, 'lookpngj confused.' ECF No. 14 ffli 4-5, 9.
R&R at 4.

Ame's Liberty Tax locations in New York. Docs. 14, 15. Their declarations describe unusual
events that occurred at the location on June 17. 2016. Docs. 14. 15.

In deciding whether to grant preliminary relief, a Court may take as true "'all of the wellpleaded allegations of [the plaintiffs] complaint and uncontroverted affidavits filed in support of

the motion for a preliminary injunction." Elrod v. Burns 427 U.S. 347, 350 n.1 (1976). Federal
Rule of Civil Procedure 6(C)(2) requires that *"[a]ny affidavit supporting a motion must be served
with the motion." Fed. R. Civ. P. 6(C)(2).

Here. Plaintiff filed the Verified Complaint. Doc. 6. and the Motion. Doc. 7. on June 22,
2016. Plaintiffs brief in support of the 'PRO included two exhibits: a franchise agreement and a
document from the related New York case. Doc. 8, Exs. A, B. On July 1. however, the day of

the hearing and nine (9) days after filing the Motion, Plaintiff filed the Carion and Berry
declarations. Docs. 14. 15. Defendants argue that the Magistrate Judge improperly considered
the declarations in recommending a PRO because they were untimely.

Doc. 18 at 7. They

concern June 17 events, but Plaintiff filed them on July 1. more than a week after filing the
Motion. Docs. 14. 15, 7. Plaintiffs filing the declarations on the morning of the TRO hearing

also prohibited Defendants from subpoenaing the declarants for the hearing. Doc. 18 at 3 n.2.
Plaintiff responds that a PRO can. under Rule 65(b), be granted without any notice to
Defendants if Plaintiff files a verified complaint or affidavit in support of its motion. Doc. 20 at

8: see 28 U.S.C. § 1746: Fed. R. Civ. P. 65(b)(1)(A). Plaintiff not only notified Defendants, but
filed both a Verified Complaint and the two declarations hours before the hearing. Doc. 20 at 8.
In Audio-Video Group. LLC v. Green, this Court granted in part the plaintiffs motion for a TRO

despite the plaintiffs filing a supporting declaration six (6) days after the motion and only one

(1) day before the hearing. No. I:14cvl69. 2014 WL 793535, at *2 (E.D. Va. Feb. 26. 2014);

see Decl. of Stephen Bon in Supp. of PL's Emergency Mot. for 'PRO and Prelim. Inj. Though
the Court did not cite the later declaration in its order or comment on its timeliness, the Court

heavily relied on another declaration filed separately from but on the same day as the motion.

2014 WL 793535, at *3-6; see Decl. of Eric J. Johnson in Supp. of PL's Emergency Mot. for
PRO and Prelim. Inj.

Rule 6(C)(2) thus should not be understood to prohibit a party from

separately filing declarations clearly designated to support a motion for a TRO.
Though Plaintiff had the opportunity to attach the declarations to a reply brief on the
Motion. Plaintiff filed the two declarations alone on the morning of the hearing. Docs. 14. 15.

The best practice is to provide reasonable notice for Defendants to "address the declarations,
investigate or subpoena witnesses." Doc. 18 al 7. Nevertheless, as in Audio-Video Group, it is
appropriate for this Court to examine Plaintiffs two (2) timely declarations in deciding whether
a TRO is necessary. Therefore, substantial evidence exists to support the Magistrate Judge's
consideration of the declarations, and the Court ADOPTS the Magistrate Judge's finding that the
declarations are material to the 'PRO decision. R&R at 2-4.

Hi.

Objection 3: Whether PlaintiffIs Likely to Succeedon the Merits

The Magistrate Judge found that Plaintiff is likely to succeed on the merits: "It is
undisputed that Defendants were expelled from the IRS's EFIN program—a ground for
immediate termination of the franchise agrcements[,]" yet "Defendants failed to comply with

post-termination obligations . . . ." R&R at 4. "[IJt is likely (not merely possible) that Plaintiff
will suffer irreparable harm absent preliminary relief because Defendants continue to control
and operate tax preparation locations "that [bear] the Liberty Tax name and other related
trademarks." R&R at 4.

Defendants argue that the Court should consider both the PSA's extension until

December 31. 2016 for Defendants to regain their EFIN and "the agreement that Defendants
would remain in possession of the franchise locations and no actual transfer would take place."

Doc. 18 at 8. Defendants cited these facts in their verified complaint in the New York case and
claim that they "sufficiently establish why Plaintiffs are not likely to succeed on the merits."
Id. Defendants also assert that Allcizra Network LLC v. Reeder is distinguishable from this case
because the Court gave the Alleura franchisor a preliminary injunction "based on actual evidence

that the franchisee continued to use the franchisor's trademark and operate under the franchise
name after it moved to a new location in violation of the franchise agreement." Doc. 18 at 4
(citing No. l:09-cv-912, 2009 WL 3734288 (E.D. Va. Nov. 4, 2009)). Plaintiff responds that

Defendants" verified complaint allegations are self-serving and. as the Magistrate Judge agreed

at the hearing, "almost entirely [ ] based on information and belief." Doc. 20 at 14. 16 (quoting
Hearing Tr. at 28:8-10. July 1. 2016). Plaintiff restates that it is likely to succeed on the merits
under several theories, including trademark infringement (Defendants continue to operate tax

preparation locations under Plaintiffs name, sec Allegra, 2009 WL 3734288, at *7-8); breach of
contract (Defendants remain at the Liberty 'fax locations despite the revocation of their EFIN):

and misappropriation of trade secrets and conversion ("'Defendants do not deny that they have
refused to return confidential and proprietary franchise assets to Liberty"). Doc. 20 at 12-13.

Defendants have not alleged that Plaintiffs claims are baseless.

In fact, Defendants'

counsel conceded that Defendant Aime '"still is the leasehold owner" of the Liberty Tax locations
and has control over them. Hearing Tr. at 26:10-11. July 1. 2016. despite their current signage.
"The only access that Liberty has had to these locations is because he's been cooperating and
granted them access to get their customer files and things out." IcL at 26:12-14. The locations in

dispute are marked with Liberty 'Pax signage inside and outside the buildings, and Defendants

have kept "confidential and proprietary information . . . inside those locations." Id. at 22:4-13.
Despite Defendants' objections, the Magistrate Judge noted that Plaintiff made "most of
the factual allegations ... in the form of a verified complaint, which ordinarily is sufficient... in

a TRO context."

Id. at 28:23-29:1.

Therefore, substantial evidence exists to support the

Magistrate Judge's finding that Plaintiff is likely to succeed on the merits, and the Court
ADOPTS the Magistrate Judge's finding that Plaintiff is likely to succeed on the merits. R&R at
4.

iv.

Objection 4: Whether Plaintiff's Request Requires a Heightened Standard ofReview
Arguing that the Magistrate Judge applied a lower standard than is necessary, Defendants

object to the imposition of a mandatory injunction regarding the assignment of the six (6) Liberty
Tax leases to Plaintiff.

Doc. 18 at 11-12.

Plaintiff responds that the Magistrate Judge

acknowledged that "a few of Liberty's requests do ask this Court to impose mandatory duty on

the part of the defendants" and accordingly applied the heightened standard. Doc. 20 at 14:
Hearing Tr. at 33:1—5, My 1.2016.

A mandatory injunction requires the nonmoving party to take action to relieve a burden
on the movant's rights. Pashbv v. Delia. 709 F.3d 307. 319 (4th Cir. 2013) (quoting Sun
Microsystems. Inc. v. Microsoft Corp., 333 F.3d 517. 525 (4th Cir. 2003), abrogated on other
urounds by eBay. Inc. v. McrcExchanue. L.L.C.. 547 U.S. 388 (2006)). "Mandatory preliminary

injunctive relief in any circumstance is disfavored, and warranted only in the most extraordinary
circumstances."

Tavlor v. Freeman. 34 F.3d 266. 270 n.2 (4th Cir. 1994) (citing Wetzel v.

Edwards. 635 F.2d 383. 286 (4th Cir. 1980)).

Plaintiff does not dispute that the assignment of leases requires a mandatory injunction

because the "last uncontested status between the parties" included Defendants' possession of the

Liberty Tax leases and locations. Docs. 18 at 11. 20 at 17. However, Plaintiff considers the
status of the parties "irrelevant" because the "urgency" present is sufficient for a mandatory
injunction. Doc. 20 at 17; see Wetzel. 635 F.2d at 286 ("Mandatory preliminary injunctions . . .

normally should be granted only in those circumstances when the exigencies of the situation
demand such relief"). Indeed, the Magistrate Judge found that Defendant Aime created urgent

situations' when he ""changed the locks on two tax preparation locations that Plaintiff now
owns," and "confused" clients with the Liberty Tax location signage and his conflicting
behavior. R&R at 4. These circumstances will continually result in Plaintiffs loss of goodwill

and reputation without an injunction: thus, the Motion is "urgent." Id. at 9. Substantial evidence
supports the Magistrate Judge's finding that the Motion is sufficiently urgent to warrant a

mandatory injunction. Because it is evident that the Magistrate Judge applied the heightened
standard of review and found that a mandatory preliminary injunction is warranted, the Court

ADOPTS the Magistrate Judge's finding that a mandatory preliminary injunction is warranted.
R&R at 4.

v.

Objection 5: Whether A BondShould Be Required

Defendants argue that a bond should be required for Plaintiffs temporary restraining
order because the harm to Defendants if they prevail at trial "cannot be undone." Doc. 18 at 13.
Here, the Parties contracted away the requirement of a bond in event of preliminary relief. Doc.

6, Ex. A at 16 ("[lf| Liberty is entitled to a temporary restraining order. . . . such an order or
injunctions shall issue without the posting of any bond by Liberty."). With regard to a bond, the
Court can exercise its discretion in binding the parties by their contractual terms.

See, e.g..

Winmark Corp. v. Brenobv Sports. Inc.. 32 F. Supp. 3d 1206, 1225 (S.D. Fla. 2014) ("Although

the Court is mindful that the Franchise Agreement states that Winmark could be entitled to an
7According to Plaintiffs declarants, Defendant Aime's behavior required police presence. Docs. 14 ffi| 7-8, 15 H6.

injunction without posting a bond, the Court is not bound by this provision.").

However,

Plaintiff stated at the hearing that Liberty Pax is a ""heavy hitter" and has sufficient resources to

provide damages to Defendants if they prevail al trial.

Hearing Tr. at 40:10, July 1, 2016.

Therefore, substantial evidence exists to support the Magistrate Judge's finding that '"Defendants

waived any requirement that bond ought to be posted." R&R at 8. The Court ADOPTS the
Magistrate Judge's finding that a bond is unnecessary.
IV.

CONCLUSION

Therefore, the Court OVERRULES Defendants' objections, Doc. 18. and ADOPTS, in

its entirely, the Magistrate Judge's Report and Recommendation. Doc. 16. The Court GRANTS
IN PART Plaintiffs Motion for a Temporary Restraining Order and a Preliminary Injunction
Should Not Issue. Doc. 7.

The Clerk is REQUESTED to send a copy of this order to all counsel of record.
It is so ORDERED.

/s/

Henry Coke Morgan, Jr.

Senior United Slates District Judge q f

HENRY COKE MORGAN, JR. M^.
SENIOR UNI'PED STATES DISTRICT JUDGE

Norfolk, Virginia

kda 2^.2oi6

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