Burger King Corp. v. Majeed
| Decision Date | 21 August 1992 |
| Docket Number | No. 92-1572-CIV,89-0260-CIV.,92-1572-CIV |
| Citation | 805 F. Supp. 994 |
| Court | U.S. District Court — Southern District of Florida |
| Parties | BURGER KING CORPORATION, Plaintiff, v. Nasif R. MAJEED, A & M Fast Foods, Inc., Reginald Underwood, Anna J. Hollis, Leroy Kelly, Dorothy Allen, Leedot Enterprises, Inc., Rubin Dale McCollum, Adrienne M. McCollum, John Davis, Judith G. Davis and Ferryboat Associates, Defendants. Carole HALL, et al., Plaintiffs, v. BURGER KING CORPORATION, Defendant. |
COPYRIGHT MATERIAL OMITTED
Stephen R. Lang, Howard Wolfson, Breed Abbott & Morgan, New York City, T. Joan Lawrence, Averill & Lawrence, Miami, Fla., for plaintiff.
Russell Frisby, Jr., John H. Morris, Jr., Venable, Baetjer & Howard, Baltimore, Md., Robert Jarco, Miami, Fla., for defendants.
ORDER GRANTING BURGER KING CORPORATION'S MOTION FOR A PRELIMINARY INJUNCTION AND DENYING DEFENDANTS' MOTION FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION
This matter came before the Court on July 17, 1992, on Plaintiff Burger King Corporation's (hereinafter "BKC") Motion in Burger King Corp. v. Majeed, et al., Case No. 92-1572-Civ-Kehoe, for a Preliminary Injunction to enjoin Defendants Nasif R. Majeed, A & M Fast Foods, Inc., Reginald Underwood, Anna J. Hollis, Leroy Kelly, Dorothy Allen, Leedot Enterprises, Inc., Rubin Dale McCollum, Adrienne M. McCollum, John Davis, Judith G. Davis and Ferryboat Associates (hereinafter collectively the "defendants")1 from their unauthorized operation of Burger King® restaurants and use of BKC's registered trademarks and service marks (the "BKC Marks"). This matter is also before the Court on defendants' Motion for issuance of a Temporary Restraining Order and Preliminary Injunction in a companion action, Carole Hall, et al. v. Burger King Corporation, Case No. 89-0260-Civ-Kehoe, which is presently pending before this Court. Defendants, who are plaintiffs and counterclaim-defendants in the companion Hall action, seek to restrain and enjoin BKC from ejecting them from their Burger King® restaurants during the pendency of that action.
Having considered the memoranda and affidavits filed in support of and in opposition to the parties' respective motions, the evidence submitted at the preliminary injunction hearing on July 17, 1992,2 and the arguments of counsel for the parties, this Court finds as follows:
FINDINGS OF FACT
1. BKC is incorporated under the laws of the State of Florida and maintains its principal place of business in Miami, Florida. BKC is engaged in the business of operating a national and worldwide system of company-owned and franchised Burger King® restaurants.
2. Defendants are former franchisees of BKC. Their franchises were terminated for nonpayment of contractual royalties and advertising and sales promotion contributions.
3. BKC employs, advertises and publicizes throughout the United States certain trademarks and service marks, collectively referred to as the "BKC Marks".
4. The following BKC Marks are registered in the United States Patent and Trademark Office:
Reg. No. Description Year Registered
782,990 HOME OF THE WHOPPER 1965
869,775 BURGER KING 1969
899,775 WHOPPER 1970
901,311 BURGER KING with logo 1970
961,014 BURGER KING with logo 1973
1,057,250 BURGER KING (Design) 1977
(lined for the colors orange and
red)
1,070,331 WHALER 1977
1,076,177 BURGER KING (Stylized) 1977
1,146,721 BURGER KING (with logo) 1981
1,451,533 A.M. EXPRESS 1987
1,550,398 CROISSAN'WICH 1989
(See the Affidavit of Emily Patricios, sworn to July 6, 1992, ¶ 4, "Patricios Aff.")
5. The registrations of the BKC Marks are currently in full force and effect.
6. Nine of the eleven BKC Marks were registered over five years ago and are therefore now incontestable pursuant to 15 U.S.C. § 1065.
7. All right, title and interest to the BKC Marks and the design, decor and image of Burger King® restaurants is vested solely in BKC and its wholly-owned subsidiary, Burger King Brands, Inc. (See Patricios Aff. ¶ 2.)
8. BKC and its franchisees have for many years spent vast sums of money advertising and promoting Burger King® restaurants, and the products and services sold under the various BKC marks. In the year 1990 alone, BKC spent approximately $230 million. (See the Affidavit of Mark Giresi, sworn to July 6, 1992, ¶ 3, "Giresi Aff.")
9. As a result of this extensive advertising and promotion, valuable goodwill has been developed for the BKC Marks and for the restaurants, products and services which bear the BKC Marks and thus identify BKC as their sponsor and source. (See Patricios Aff. ¶ 3.)
10. BKC franchisees are granted a limited license to use and display the BKC Marks during the term of their franchise agreements. Franchisees are not, however, authorized to use the BKC Marks following the expiration or termination of their franchises. Thus, for example, defendants' franchise agreements expressly provide that upon termination, defendants' right to use or display the BKC Marks "shall terminate" and defendants "shall not thereafter identify themselves as a Burger King franchisee ... or use any of BKC's trade secrets, operating procedures, promotional materials, Marks or any mark confusingly similar." (See Giresi Aff. ¶ 23.)
11. BKC and the defendants are parties to various agreements, the terms and provisions of which are summarized below.
12. On April 17, 1981, BKC entered into a Franchise Agreement with defendant Nasif R. Majeed, pursuant to which BKC franchised Majeed to operate Burger King® Restaurant No. 3154 in Charlotte, North Carolina, and granted Majeed a limited license to use the BKC Marks and the Burger King® system of restaurant operation in connection with the restaurant. With BKC's consent, Majeed thereafter assigned the Franchise Agreement to defendant A & M Fast Foods, Inc. ("A & M"). (See Giresi Aff. ¶ 7.)
13. On February 14, 1986, BKC entered into a Franchise Agreement with defendant Reginald Underwood, pursuant to which BKC franchised Underwood to operate Burger King® Restaurant No. 3550 in Fredericksburg, Virginia, and granted Underwood a limited license to use the BKC Marks and the Burger King® system of restaurant operation in connection with the restaurant. (See Giresi Aff. ¶ 8.)
14. On May 6, 1981 and January 12, 1986, BKC entered into Franchise Agreements with defendants Dorothy Allen and Leroy Kelly, pursuant to which BKC franchised Allen and Kelly to operate, respectively, Burger King® Restaurant Nos. 3138 and 2117 in Philadelphia, Pennsylvania, and granted them limited licenses to use the BKC Marks and the Burger King® system of restaurant operation in connection with the restaurants. With BKC's consent, Allen and Kelly thereafter assigned the Franchise Agreements to defendant Leedot Enterprises, Inc. ("Leedot"). (See Giresi Aff. ¶ 10.)
15. On June 11, 1985, BKC entered into a Franchise Agreement with defendants Rubin and Adrienne McCollum to operate Burger King® Restaurant No. 4482 in Brooklyn Park, Maryland. On or about November 20, 1986, BKC also entered into a Franchise Agreement with defendant Ferryboat Associates ("Ferryboat"), whose partners are Rubin and Adrienne McCollum, to operate Burger King® Restaurant No. 201 in Fairfax, Virginia. Pursuant to these Franchise Agreements, BKC granted the McCollums and Ferryboat limited licenses to use the BKC Marks and the Burger King® system of restaurant operation in connection with the restaurants. With BKC's consent, the McCollums and Ferryboat assigned a twenty-five percent ownership interest in each restaurant to defendants John and Judith Davis. (See Giresi Aff. ¶ 11.)
16. In addition to the Franchise Agreements described above, defendants are also the original parties to, or the assignees of, Lease Agreements with BKC (or with BKC's assignor) for their Burger King® restaurants. (See Giresi Aff. ¶ 12.)
17. Under the terms of defendants' Franchise Agreements with BKC, in consideration for the license to operate Burger King® restaurants and use the BKC Marks, defendants agreed to pay monthly royalties and advertising and sales promotion contributions to BKC based upon their restaurant's monthly gross sales. Most importantly, the Franchise Agreements each specifically provide that the failure to pay any royalty or advertising and sales promotion contribution constitutes an act of default under the agreements. (See Giresi Aff. ¶ 13; Franchise Agreement Restaurant Nos. 3154, 3550, 3138, 2117, 4482 and 201, Section 16.A.(2); Franchise Agreement Restaurant No. 1648, Section XII.)
18. Similarly, in their Lease Agreements, defendants agreed to pay rent to BKC along with all taxes, assessments and other charges which come due and payable in connection with their occupancy or possession of the restaurants' premises. The Lease Agreements provide that the failure to pay rent or real estate taxes to BKC constitutes an act of default under the agreements. (See Giresi Aff. ¶ 14.)
19. Shortly before the defendants' filing of their alleged damage action against BKC, Carole Hall, et al. v. Burger King Corporation, Case No. 89-0260-Civ-Kehoe,3 defendants stopped paying their monthly financial obligations to BKC under their Franchise and Lease Agreements. (See Exhibit "A" to the Affidavit of Cynthia Hartmann, sworn to July 6, 1992, "Hartmann Aff.") Apparently believing...
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