Breadeaux's Pisa, LLC v. Beckman Bros. Ltd.
| Decision Date | 21 April 2022 |
| Docket Number | Case No. 21-06162-CV-SJ-BP |
| Citation | 599 F.Supp.3d 826 |
| Parties | BREADEAUX'S PISA, LLC, Plaintiff, v. BECKMAN BROS. LTD., d/b/a Main Street Pizza, Defendant. |
| Court | U.S. District Court — Western District of Missouri |
Jeremy M. Suhr, Boulware Law LLC, Kansas City, MO, for Plaintiff.
Andrew Mark Malzahn, Pro Hac Vice, Scott Edward Korzenowski, Pro Hac Vice, Dady & Gardner PA, Minneapolis, MN, Andrew J. Ennis, Phillip James Richard Zeeck, Polsinelli, Kansas City, MO, for Defendant.
ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION
Pending is Plaintiff's Motion for a Preliminary Injunction. (Doc. 18.) For the following reasons, the motion is DENIED .
Plaintiff Breadeaux Pisa, LLC brought this case in December 2021. (Doc. 1.) According to the Amended Complaint, which is the operative pleading in this case, Plaintiff franchises pizza restaurants throughout the Midwest. (Doc. 5, ¶ 1.) In 2006, Plaintiff's predecessor-in-interest entered a Franchise Agreement (the "Agreement") with Defendant Beckman Bros, Ltd., under which Defendant would operate a Breadeaux Pizza franchise in Mt. Pleasant, Iowa. (Id. ) The Agreement contained a noncompete covenant (the "Noncompete Covenant") which provided that "[f]or a period of two years from the effective date of termination of this Agreement ... [Defendant shall not] directly or indirectly operate or own any interest in any business selling" pizza or pizza-adjacent items "within a radius of ten (10) miles from the Franchised Restaurant ...." (Doc. 16-1, p. 32 (the Agreement).) The Agreement also provided that Defendant "acknowledges and agrees that violation of this noncompetition covenant will result in immediate and irreparable injury to [Plaintiff] for which no adequate remedy at law will be available" and "consents to the entry of an injunction prohibiting any conduct ... in violation of this noncompetition covenant." (Id. at p. 17.)
The agreement terminated in May 2021, (id. at ¶ 12); however, according to the Amended Complaint, Defendant continued to operate a pizza restaurant at the same location using the name "Main Street Pizza," and for several weeks following the termination of the Agreement, continued to use the same telephone number as the discontinued Breadeaux franchise. (Id. at ¶ 15.) Defendant has now altered the restaurant's decor to cease using a color scheme associated with Plaintiff, changed the telephone number, begun using a separate website, changed the ingredients and ingredient supplier for Main Street Pizza, and otherwise shed any public association with the Breadeaux brand. (Doc. 25-2, ¶ 5 (Beckman Dec.).) The nearest Breadeaux franchise restaurant is in Oskaloosa, Iowa, 75 miles away from Main Street Pizza, and there are only fourteen Breadeaux franchises left in operation. (Id. at pp. 4, 6–8.)
On July 28, 2021, Plaintiff sent a letter to Defendant demanding that it cease operating Main Street Pizza; Defendant did not do so. (Id. at ¶ 8.) Plaintiff then brought this suit seeking injunctive relief, and has now filed a motion seeking a preliminary injunction requiring Defendant to cease operating Main Street Pizza and any other pizza restaurant for the next two years. (Doc. 18, p. 15.) Defendant opposes the motion. (Doc. 25.) The Court resolves these issues below.
"A preliminary injunction is an extraordinary remedy never awarded as of right." Winter v. Natural Resources Defense Council, Inc. , 555 U.S. 7, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). Consequently, "[t]he burden of establishing the propriety of a preliminary injunction is on the movant." Baker Elec. Co-op., Inc. v. Chaske , 28 F.3d 1466, 1472 (8th Cir. 1994).
Courts in the Eighth Circuit consider the four so-called " Dataphase factors" to determine whether a preliminary injunction is appropriate; those factors are "(1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest." Kroupa v. Nielsen , 731 F.3d 813, 818 (8th Cir. 2013) (citing Dataphase Systems, Inc. v. C L Systems, Inc. , 640 F.2d 109, 113 (8th Cir. 1981) ). The first of these factors is often determinative, because a party cannot obtain a preliminary injunction without showing a threat of irreparable harm. Baker Elec. Co-op, Inc. , 28 F.3d at 1472.
Plaintiff contends that Defendant waived the right to contest its request for a preliminary injunction, because in the Agreement, Defendant consented to the entry of a preliminary injunction should it breach the Noncompete Covenant. (Doc. 18, p. 10; Doc. 32, p. 8.) But although the Eighth Circuit has not expressly ruled on this issue, a large majority of courts have held the language of a contract, standing alone, is not sufficient to require the entry of injunctive relief—nor does such language, by itself, establish a threat of irreparable harm. Fulton v. Honkamp Krueger Financial Services, Inc. , 2020 WL 7041766, at *11 and n.15 (D. Minn. Dec. 1, 2020) (collecting cases); Leggett & Platt, Inc. v. Fleetwood Industries, Inc. , 2015 WL 4160401, at *3 (W.D. Mo. July 9, 2015) ; see also Barranco v. 3D Systems Corporation , 952 F.3d 1122, 1130 (9th Cir. 2020) (); Dominion Video Satellite, Inc. v. Echostar Satellite Corp. , 356 F.3d 1256, 1266 (10th Cir. 2004) (); Smith, Bucklin & Associates, Inc. v. Sonntag , 83 F.3d 476, 481 (D.C. Cir. 1996) ; Baker's Aid. v. Hussmann Foodservice Co. , 830 F.2d 13, 16 (2d Cir. 1987) ; see also RESTATEMENT (SECOND) OF CONTRACTS § 359, comment a ("[B]ecause the availability of equitable relief was historically viewed as a matter of jurisdiction, the parties cannot vary by agreement the requirement of inadequacy of damages ...."). Therefore, although the Court considers the language in the Agreement, it does so alongside the other factors that determine whether a preliminary injunction is appropriate.1
Thus, the Court must assess whether Plaintiff has shown that it is entitled to a preliminary injunction under the Dataphase factors. The Court begins its assessment with the threat of irreparable harm, because without such a showing, Plaintiff cannot demonstrate that it is entitled to equitable relief. E.g., Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc. , 182 F.3d 598, 603 (8th Cir. 1999) ; see also Novus Franchising, Inc. v. Dawson , 725 F.3d 885, 893 (8th Cir. 2013) () (citation omitted). "In order to demonstrate irreparable harm, a party must show that the harm is certain and great and of such imminence that there is a clear and present need for equitable relief." Iowa Utilities Bd. v. F.C.C. , 109 F.3d 418, 425 (8th Cir. 1996). Harm is irreparable if legal remedies, such as monetary damages, are inadequate to address the harm. Sampson v. Murray , 415 U.S. 61, 88, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974). Thus, "economic loss does not, in and of itself, constitute irreparable harm" because the party suffering the economic loss can receive full compensation through monetary damages. Iowa Utilities Bd. , 109 F.3d at 426.
In its initial motion and reply suggestions, Plaintiff raises three arguments to support its position that it faces a threat of irreparable harm; the Court finds that none of these arguments are sufficient to sustain Plaintiff's burden of proving a threat of irreparable harm. First, Plaintiff contends that the language in the Agreement providing that "violation of this noncompetition covenant will result in immediate and irreparable injury" is sufficient to establish a threat of irreparable harm. (Doc. 18, p. 12; Doc. 32, p. 16.) For the reasons discussed above, the Court disagrees. While the language in the Agreement may augment other showings of irreparable harm, it is not, in and of itself, sufficient.
Second, Plaintiff contends that there is precedent in the Eighth Circuit suggesting that "breach of a non-compete agreement typically amounts to a per se irreparable injury." E.g., Imo's Franchising, Inc. v. Kanzoua, Inc. , 2020 WL 5534425, at *3 (E.D. Mo. Sept. 14, 2020) (citing N.I.S. Corp. v. Swindle , 724 F.2d 707, 710 (8th Cir. 1984) ). Regardless of whether such a presumption exists under Eighth Circuit law,2 the reason for the presumption is that unrestrained competition by a former franchisee can result in the franchisor suffering "damage [to] its goodwill, reputation, and customer relationships, [and/or] depriv[ation] [of] control over its trademarks." General Motors Corp. v. Harry Brown's, LLC , 563 F.3d 312, 319 (8th Cir. 2009). And there is no hint of any such risks here. The nearest Breadeaux location is 75 miles from Main Street Pizza, so it is extraordinarily unlikely that Defendant has robbed Plaintiff of any of its customers; any such customer would need to drive over an hour out of her way to even reach Defendant's location. (See Doc. 25-2, p. 4.) Moreover, Defendant has ceased using the Breadeaux name, branding, color scheme, or telephone number, so there is no appreciable danger of damaging Breadeaux's trademarks or customer goodwill. (Id. at ¶ 5.) At any rate, Plaintiff has not introduced any concrete evidence of any lost customers, and the Court does not believe that the mere fact that Defendant allegedly breached a non-compete agreement establishes a threat of irreparable harm.
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