Huntington Learning Centers Inc v. BMW Education LLC et al

Filing 26

ORDER enjoining and restraining BMW Education, LLC, Paul B. Butler and Kathleen M. Butler, their employees, agents, affiliates, subsidiaries, independent contractors, and all those who act in concert or participation with them[see order for details]; this matter is TRANSFERRED to the chambers of Magistrate Judge Patricia J. Gorence for all further proceedings. Signed by Judge Rudolph T Randa on 03/15/2010. (cc: all counsel)(Koll, J)

UNITED STATES DISTRICT COURT E A S T E R N DISTRICT OF WISCONSIN
H U N T I N G T O N LEARNING CENTERS, Inc., P l a in tif f , C a s e No. 10-C-79 -vsB M W EDUCATION, LLC, P A U L B. BUTLER and K A T H L E E N M. BUTLER, Defendants.

D E C IS IO N AND ORDER
O n March 5, the Court held that it would enjoin the defendants from operating the H untington Learning Center in Mequon, Wisconsin, pending consideration of the appropriate a m o u n t of security. Rule 65(c) provides that a court "may issue a preliminary injunction or a temporary restraining order only if the movant gives security in an amount that the court c o n sid e rs proper to pay the costs and damages sustained by any party found to have been w ron g fu lly enjoined or restrained." Fed. R. Civ. P. 65(c). D e sp ite the "seemingly mandatory language, Rule 65(c) invests the district court with d is c re tio n as to the amount of security required, if any. In particular, `[t]he district court may d ispe n se with the filing of a bond when it concludes there is no realistic likelihood of harm to the defendant from enjoining his or her conduct.'" Johnson v. Couturier, 572 F.3d 1067, 1 0 8 6 (9th Cir. 2009) (quoting Jorgensen v. Cassiday, 320 F.3d 906, 919 (9th Cir. 2003)); see a ls o Scherr v. Volpe, 466 F.2d 1027, 1035 (7th Cir. 1972) ("the matter of requiring a security in the first instance [rests] within the discretion of the district judge"). Furthermore, "[a]

b o n d may not be required, or may be minimal . . . where the movant has demonstrated a lik e lih o o d of success." Ticketmaster L.L.C. v. RMT Techs., Inc., 507 F. Supp. 2d 1096, 1116 (C .D . Cal. 2007). D e f en d a n ts argue that the Court should require security in the amount of $300,000, th e estimated amount of consequential damages if they are forced to shut down the Mequon f a c i l i t y. The security requirement is not meant to provide compensation for the Damages are recoverable only if the

s tra ig h tf o rw a rd consequences of an injunction.

d e f e n d a n t is "wrongfully enjoined." "A party has been `wrongfully enjoined' under Fed. R. C iv . P. 65(c) if it is ultimately found that the enjoined party had at all times the right to do th e enjoined act." Blumenthal v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 910 F.2d 1 0 4 9 , 1054 (2d Cir. 1990); Nintendo of America, Inc. v. Lewis Galoob Toys, Inc., 16 F.3d 1 0 3 2 , 1036 (9th Cir. 1994) ("a party has been wrongfully enjoined within the meaning of R u l e 65(c) when it turns out the party enjoined had the right all along to do what it was e n jo in e d from doing"). Accordingly, the "purpose of an injunction bond is to compensate th e defendant, in the event he prevails on the merits, for the harm that an injunction entered b e f o re the final decision caused him." Ty, Inc. v. Publ'ns, Inc., 292 F.3d 512, 517 (7th Cir. 2 0 0 2 ) (emphasis added). D e sp ite multiple opportunities, the defendants failed to demonstrate that they have a n y likelihood of prevailing on the merits in this litigation. As the Court previously o b s e rv e d , the defendants admit that they continue to operate the learning center despite the e x p ira tio n of their franchise agreement. The defendants offered no substantive opposition to the merits of the plaintiff's motion for a preliminary injunction. The defendants pleaded

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s o m e boilerplate affirmative defenses (failure to state a claim, lack of subject matter ju r is d i c t i o n ,1 lack of personal jurisdiction), but the defendants did not develop these a rg u m e n ts . If these defenses had any merit, it is reasonable to conclude that they would have b ee n raised in opposition to Huntington's request for injunctive relief. Therefore, the Court f in d s that there is virtually no risk that the defendants will be wrongfully enjoined by the f o rth c o m i n g injunction. No security is required.2 N O W , THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY O R D E R E D THAT effective immediately, BMW Education, LLC, Paul B. Butler and K athleen M. Butler, their employees, agents, affiliates, subsidiaries, independent contractors, a n d all those who act in concert or participation with them, are hereby enjoined and re s tra in e d from: 1. M a rk e tin g or promoting supplemental education services, individualized

in s tru c tio n in reading, phonics, study skills, mathematics, or related areas and any other b u s in e ss e s, together with or separate from Huntington's trademarks, service marks and logos (th e "Huntington Marks") at 10906 North Port Washington Road, Mequon, WI ("Mequon C e n ter " ) or within a five (5) mile radius of it;

Of course, the Court has an independent duty to police the borders of its own jurisdiction. See Hammes v. A A M C O Transmissions, Inc., 33 F.3d 774, 778 (7th Cir. 1994). The Court has subject matter jurisdiction pursuant to the p la i n tiff's claims under the Lanham Act. 28 U.S.C. § 1331. The Court may exercise supplemental jurisdiction over the p e n d e n t state law claims because they are part of the same case or controversy. 28 U.S.C. § 1367(a). See, e.g., Petro Franchise Sys., LLC v. All Am. Prop., Inc., 607 F. Supp. 2d 781, 801 (W.D. Tex. 2009) (citing D u n k in ' Donuts Franchised Rest. LLC v. Shrijee Inv., Inc., No. 08-12836, 08-14213, 2008 W L 5384077, at *9 (E.D. M i c h . Dec. 23, 2008) ("the strength of Dunkin's likelihood of success on the merits obviates any need for a bond. Accordingly, none shall be required")); Winnett v. Caterpillar, Inc., 579 F. Supp. 2d 1008, 1043 (M.D. Tenn. 2008) ( w a i v i n g bond requirement in light of plaintiff's strong likelihood of success on the merits); Hadix v. Caruso, 461 F. S u p p . 2d 574, 600 (W.D. Mich. 2006) (same).
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2.

D iv e rtin g or attempting to divert any present or prospective business or

c u sto m e r of any Huntington Learning Center to any Huntington competitor; or 3. O w n in g , maintaining, operating, engaging in, being employed by, being a

c o n s u lta n t to or having any interest in (as owner or otherwise), any business that is the same as, or similar to, a Huntington Learning Center within five (5) miles of 10906 North Port W a sh in g to n , Mequon, WI, through December 31, 2011. I T IS FURTHER ORDERED THAT effective immediately, BMW Education, LLC, P a u l B. Butler and Kathleen M. Butler, their employees, agents, affiliates, subsidiaries, in d e p e n d e n t contractors, and all those who act in concert or participation with them shall re tu rn to or provide to Huntington: 1. A ll Huntington confidential information associated with the Mequon Center,

in c lu d in g , but not limited to, the Operations Manual and curriculum; 2. 3. 4. A ll Mequon Center student contracts; A list of all Mequon Center customer names; and C o n tact information for each Mequon Center customer.

I T IS FURTHER ORDERED THAT BMW Education, LLC, Paul B. Butler and K ath lee n M. Butler, their employees, agents, affiliates, subsidiaries, independent contractors, a n d all those who act in concert or participation with them shall assign to Huntington all telep h o n e numbers associated with the Mequon Center; I T IS FURTHER ORDERED THAT, in accordance with 28 U.S.C. § 636(c) and R u l e 73(b) of the Federal Rules of Civil Procedure, this matter is TRANSFERRED to the c h a m b e r s of Magistrate Judge Patricia J. Gorence for all further proceedings.

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D a te d at Milwaukee, Wisconsin, this 15th day of March, 2010. S O ORDERED,

s / Rudolph T. Randa HON. RUDOLPH T. RANDA U.S. District Judge

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