McDonald's Corp. v. Robertson

• Citation: 147 F.3d 1301
• Decision Date: 28 July 1998
• Docket Number: No. 97-3308,97-3308
• Parties: , 47 U.S.P.Q.2d 1545, 11 Fla. L. Weekly Fed. C 1676 McDONALD'S CORPORATION, Plaintiff-Counter-defendant-Appellee, v. Roger ROBERTSON, Marilyn Robertson, trading as McDonald's Restaurant, Defendants-Counter-claimants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1301

147 F.3d 1301

41 Fed.R.Serv.3d 455, 47 U.S.P.Q.2d 1545,

11 Fla. L. Weekly Fed. C 1676

McDONALD'S CORPORATION, Plaintiff-Counter-defendant-Appellee, v. Roger ROBERTSON, Marilyn Robertson, trading as McDonald's Restaurant, Defendants-Counter-claimants-Appellants.

No. 97-3308.

United States Court of Appeals Eleventh Circuit.

July 28, 1998.

Robert M. Einhorn, Robert F. Salkowski, Robert Zarco, Miami, FL, for Defendants-Counter-claimants-Appellants.

William O'Leary, Jacksonville, FL, Deborah L. Appel, Tampa, FL, Arthur L. Pressman, Buchanan Ingersoll Professional Corp., Philadelphia, PA, Ira Feldman, Oakbrook, IL, for Plaintiff-Counter-defendant-Appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before CARNES and MARCUS, Circuit Judges, and MILLS ^*, Senior District Judge.

MARCUS, Circuit Judge:

This appeal arises out of the district court's entry without an evidentiary hearing of a preliminary injunction enjoining defendant-appellants Roger and Marilyn Robertson from continuing to run a McDonald's restaurant previously franchised to them by plaintiff-appellee McDonald's Corporation. On appeal the Robertsons challenge the district court's denial of their motion for an evidentiary hearing on McDonald's motion for preliminary injunction. Additionally, the defendants argue that the district court erred in entering the preliminary injunction because, according to the Robertsons, McDonald's did not demonstrate that it had the right to terminate the Robertsons' franchise agreement, and thus, McDonald's is not likely to succeed on the merits of its case. Because no issues of material fact were in controversy when the district court ruled on the motion for preliminary injunction, we find that the district court acted well within its discretion and did not err in declining to hold an evidentiary hearing. We also conclude that, based on this record, the district court properly found that McDonald's established all of the prerequisites necessary for a preliminary injunction. Consequently, we affirm.

I.

A detailed recitation of the operative facts is necessary to understanding our holding. McDonald's operates a well-known worldwide fast food business. Although it owns several of its own stores, McDonald's also sells franchises. By contract, all of McDonald's franchisees must operate their McDonald's restaurants in compliance with the "McDonald's System," a series of business practices and procedures employed, in part, to ensure uniform restaurant and food quality at all McDonald's locations.

A.

On September 1, 1971, the Robertsons acquired the McDonald's franchise restaurant located at 4227 Blanding Boulevard in Jacksonville, Florida. The Robertsons operated the Blanding Boulevard restaurant without incident for many years, and, on July 23, 1989, shortly before the parties' original franchise agreement was due to expire, the parties entered into a new twenty-year franchise agreement, consisting of a franchise letter agreement, a license agreement, and an operator's lease to the real property upon which the restaurant is located. Among other provisions, the 1989 license agreement required the Robertsons to operate their franchise in accordance with quality, safety, and cleanliness ("QSC") standards prescribed by the agreement and by McDonald's business and policy manuals. McDonald's QSC standards govern a wide array of its franchisees' business affairs, including, and of particular relevance to this case, the procedures to be followed in preparing, cooking, storing, and serving food, and the cleanliness and maintenance of the physical structure.

The franchise agreement plainly gave McDonald's the right to inspect the Robertsons' franchise "at all reasonable times" for compliance with McDonald's QSC standards. Additionally, it allowed McDonald's to terminate the contract if, among other contingencies, the Robertsons failed to operate the restaurant in compliance with McDonald's QSC standards. The franchise agreement and the lease contained cross-termination provisions under which, if the franchise agreement were terminated, the lease likewise would be terminated and McDonald's would receive a right to possession. Finally, the documents provided that the Robertsons would not acquire any interest in a restaurant business similar to that of McDonald's and within ten miles of the Robertsons' franchise for eighteen months after termination of the agreement.

B.

On October 3, 1997, McDonald's filed an amended complaint against the Robertsons, alleging claims for trademark infringement, dilution and false designation of origin in violation of the Lanham Act, misappropriation of trade secrets, and breach of the covenant not to compete. The amended complaint also sought a declaratory judgment terminating the franchise agreement and ejecting the Robertsons from the disputed premises. With its amended complaint McDonald's contemporaneously filed an application for a preliminary injunction. McDonald's supported this application, which sought preliminary injunctive relief on McDonald's trademark infringement and non-competition covenant claims, with the thirteen-page affidavit of Kathy Grass, a McDonald's Business Consultant in McDonald's Tampa Bay Region. Upon receiving McDonald's motion for preliminary injunction, the district court entered an order on October 6 scheduling the motion for a hearing on October 17 limited to oral argument. Additionally, the October 6 order stated, "Any materials the Defendants wish to submit in opposition to the Plaintiff's application must be filed with the Court by 5:00 p.m. on Thursday, October 16, 1997." The Robertsons filed a motion for expedited discovery and sought an evidentiary hearing on McDonald's motion for preliminary injunction. By order dated October 14, 1997, the district court denied both motions but ordered McDonald's to produce certain business manuals incorporated into the franchise agreement. On October 16,1997, the Robertsons filed their opposition to McDonald's motion for preliminary injunction. They opposed McDonald's motion with, among other materials the affidavit of Roger Robertson ("Robertson").

C.

Based on the affidavits of Grass and Robertson, as well as other relevant evidence, the record reveals the following undisputed facts. As a Business Consultant, Grass serves as the liaison between certain McDonald's franchisees and McDonald's and ensures that the franchisees consistently comply with McDonald's QSC standards. In her capacity as a McDonald's Business Consultant, Grass had conducted several QSC audits on the Robertsons' restaurant. Through 1994, McDonald's had rated the Robertsons' restaurant generally satisfactory in terms of QSC compliance.

On February 24, 1995, McDonald's conducted an unannounced food safety audit of the Robertsons' franchise. Notably, the audit disclosed that the Robertsons' restaurant was producing undercooked meat patties, meat patties showing pink or red interiors, and meat patties with an average internal temperature nine degrees below the internal temperature required by McDonald's to reduce the risk of bacteria. Additionally, the audit revealed that the Robertsons' restaurant had failed to complete and maintain daily food safety checklists in accordance with McDonald's standards, and it had failed to maintain the shake machine refrigeration temperature at 38 degrees or lower. McDonald's reviewed the findings of the inspection with Mr. Robertson and sent him a written summary of the results, advising him of the deficiencies and recommending corrective action.

Approximately one month later, on March 21, 1995, McDonald's conducted an announced follow-up audit. The Robertsons had failed to remedy some of the deficiencies identified in the February 24 food safety audit. The inspection also disclosed additional problems. Among others, the audit revealed the following: (1) cooked meat and poultry products were being held in staging cabinets at eight and three degrees below McDonald's prescribed temperatures, respectively, raising the risk of bacteria growth; (2) equipment, including a meat staging cabinet, was not maintained in good, clean, and operable condition and repair and in compliance with McDonald's standards; and (3) towels were not being sanitized.

On September 12, 1995, the Robertsons failed still another food safety audit. ¹ The auditors found several sanitation and food-handling violations, including the following: (1) the sundae machine refrigeration temperature was maintained twelve degrees above the maximum McDonald's recommended temperature, increasing the risk of bacteria growth; (2) the equipment was not kept in good, clean, and operable condition and repair (the sundae machine had bugs in it); and (3) the staff failed to maintain and use clean and sanitized towels in the grill area, thereby increasing the potential for cross-contamination. The Robertsons' restaurant also failed an audit for similar reasons on March 7, 1996. Among other deficiencies, this audit cited the Robertsons for failure to store raw vegetable, fish, and cheese products properly, failure to maintain equipment in a good, clean, and operable condition and repair, failure to maintain and monitor proper holding times for product, improper sanitation practices, which, McDonald's found, posed "serious public health concerns," failure to maintain various aspects of the restaurant in an acceptable condition, failure to maintain grill integrity, failure to maintain and use clean, sanitized towels in the grill and lobby areas, failure to meet finished product standards, and failure to provide timely customer service.

Twelve days later, on March 19, 1996, two McDonald's representatives visited the Robertsons and advised them that McDonald's had purchased property approximately one block away from their restaurant for the purpose of building a new restaurant. McDonald's told the Robertsons that the...