Opinion
3:22-cv-206-FDW-DSC
11-17-2022
Salsarita's Franchising, LLC, Plaintiff, v. Gibson Family Enterprises, LLC, Bill E. Gibson, & Holli R. Gibson, Defendants.
BRADLEY ARANT BOULT CUMMINGS LLP Matthew S. DeAntonio Samuel M. Dearstyne Attorneys for Plaintiff Salsarita's Franchising, LLC DINSMORE & SHOHL LLP Grahmn N. Morgan Kristeena L. Johnson Attorneys for Defendants. MILLBERG GORDON STEWART PLLC Peter N. Borden Attorney for Defendants.
BRADLEY ARANT BOULT CUMMINGS LLP Matthew S. DeAntonio Samuel M. Dearstyne Attorneys for Plaintiff Salsarita's Franchising, LLC
DINSMORE & SHOHL LLP Grahmn N. Morgan Kristeena L. Johnson Attorneys for Defendants.
MILLBERG GORDON STEWART PLLC Peter N. Borden Attorney for Defendants.
CONSENT JUDGMENT AND PERMANENT INJUNCTION
Frank D. Whitney United States District Judge.
THIS MATTER is before the Court following the filing by the Parties on November 14, 2022 of a Joint Motion for Entry of Consent Judgment and Permanent Injunction (the “Motion”). (Doc. No. 47). In the Motion, and as further set forth in the Parties' supporting joint memorandum of law (Doc. No. 48), Plaintiff Salsarita's Franchising, LLC (“Salsarita's”) and Defendants Gibson Family Enterprises, LLC (“GFE”), Bill E. Gibson, and Holli R. Gibson (collectively, the “Gibsons,” and together with GFE, the “Defendants”) consent to and move this Court for entry of a final judgment and permanent injunction. This Motion represents, and the Court finds, that the Parties have entered into a Settlement Agreement filed with the Motion to resolve this action. This Court finds that the Settlement Agreement and the exhibits thereto, which are attached to this Judgment as Appendix 1, can be made the subject of this Consent Judgment and Permanent Injunction, and the Court hereby approves, adopts, and incorporates by reference herein the terms of the Settlement Agreement and exhibits thereto, thereby making the Parties' agreement a part of this Judgment.
FINDINGS OF FACT
1. On or around April 10, 2013, Salsarita's and Defendants executed a Franchise Agreement and related documents for the operation of a Salsarita's® franchised restaurant at 2380 Norman Lane, Lexington, KY 40503.
2. Defendants Bill E. Gibson and Holli R. Gibson own an interest in and participate in the operation of two restaurants operating under the name, “Burnaco's,” in Lexington, Kentucky and Paris, Kentucky, both of which sell Mexican food and beverages.
3. The Burnaco's in Lexington, Kentucky is within three miles of Defendants' franchised Salsarita's restaurant.
4. The Burnaco's in Paris, Kentucky is outside a three-mile radius of Defendants' franchised Salsarita's restaurant.
5. On or around May 9, 2022, Salsarita's sent notice to Defendants that it had terminated the Franchise Agreement.
6. Defendants disputed the validity of the termination of the Franchise Agreement and continued to operate the Lexington Salsarita's.
7. Salsarita's alleges, and Defendants dispute, that Defendants are using Salsarita's confidential information and trade secrets to operate Burnaco's in Lexington and Paris.
8. Defendants have also asserted counterclaims against Salsarita's for breach of the Franchise Agreement due to improper termination of the Agreement as well as claims for unfair and deceptive trade practices.
9. Salsarita's denies the allegations made by the Defendants in connection with these claims.
10. On November 14, 2022, the Parties entered into a Settlement Agreement to resolve all disputes among them.
11. Pursuant to Paragraph 2 of the Settlement Agreement, the Parties agreed that the Franchise Agreement would be terminated effective December 5, 2022.
CONCLUSIONS OF LAW
1. This Court has personal jurisdiction over all Parties pursuant to the Parties' forum selection clause.
2. This Court has subject matter jurisdiction over this dispute pursuant to principles of federal question jurisdiction and supplemental jurisdiction.
3. Salsarita's presented evidence that it argues supports its claims for breach of contract, trademark infringement, unfair competition and false advertising, misappropriation of trade secrets, and unfair and deceptive trade practices. Defendants deny Salsarita's evidence supports those claims and contend that the evidence supports their claims for breach of contract and unfair and deceptive trade practices.
4. The provisions of the Settlement Agreement represent a compromise that grants the relief awarded in this Consent Judgment and Permanent Injunction to Salsarita's.
5. Salsarita's asserts that it has an inadequate remedy at law and will suffer irreparable harm without an injunction, that the balance of the harms weighs in favor of the injunctive relief awarded in this Order, and that the public interests favor entry of this Order. While the Defendants dispute these allegations, they are agreeable to the terms of this Consent Judgment and Permanent Injunction as part of settlement of the disputes between the parties.
6. Entry of this Consent Judgment and Permanent Injunction fully and finally resolves all claims and defenses asserted in this litigation, except for any proceeding to enforce the terms of this Order and except for any claims made pursuant to Paragraph 13 of the Settlement Agreement, which will be decided outside this litigation.
7. This Consent Judgment and Permanent Injunction is binding and enforceable both as to form and scope pursuant to Federal Rule of Civil Procedure 65(d).
8. The Settlement Agreement and all of its exhibits, with the exception of Exhibit E, are attached as Appendix 1 to this Order and are made part of this Order. All capitalized terms not otherwise defined in this Order shall have the meaning given to those terms in the Settlement Agreement.
Exhibit E, which contains confidential and proprietary information, as well as trade secrets, has been filed under permanent seal with the Court. (Doc. No. 49). The redaction appears in this Order.
9. The Parties stipulate to entry of this Consent Judgment and Permanent Injunction.
10. By stipulating to entry of this Consent Judgment and Permanent Injunction, Defendants do not admit any of the allegations set forth in the Amended Complaint, other than that this Court has personal jurisdictional and subject matter jurisdiction to enter this Order.
11. The Parties have all waived any right to appeal this Consent Judgment and Permanent Injunction.
12. The Parties understand the undertakings, obligations, and terms of this Consent Judgment and Permanent Injunction.
13. The Parties acknowledge they have knowingly and voluntarily agreed to the entry of this Consent Judgment and Permanent Injunction after reviewing the same with their counsel and having had ample opportunity to consult with counsel.
ORDER
Accordingly, by agreement and consent of the Parties, their Joint Motion for Entry of Consent Judgment and Permanent Injunction, (Doc. No. 47), is GRANTED. It is hereby ORDERED, ADJUDGED, and DECREED, and Defendants are PERMANENTLY ENJOINED, as follows:
14. By December 5, 2022, Defendants must permanently cease to operate the Lexington Salsarita's and shall permanently cease to use the Salsarita's System or the Salsarita's Proprietary marks. Until that time, Defendants shall strictly comply with the requirements of the Franchise Agreement. Thereafter, Defendants shall not represent themselves to the public or hold themselves out as present or former Salsarita's franchisees.
15. By December 5, 2022, Defendants must make all necessary modifications or alterations to the premises of the Lexington Salsarita's to distinguish the appearance of the premises from that of any other Salsarita's® restaurant. Specifically, Defendants shall complete the requirements for de-identification set forth in the De-Identification Checklist attached to the Settlement Agreement as Exhibit B. Defendants must permit Salsarita's to inspect the Lexington Salsarita's premises to determine compliance with the De-Identification Checklist in accordance with the timeline set forth in Paragraph 4 of the Settlement Agreement.
16. For the two-year period beginning November 14, 2022, and except as otherwise permitted by Paragraph 14 of this Order, Defendants shall not, by themselves or through or in conjunction with any other person or entity, own, manage, operate, maintain, advise, consult with, invest in, be employed by, or engage in any restaurant that sells Tex-Mex or Mexican food or beverages. This restriction shall apply to the following geographic areas: (a) at the Lexington Salsarita's premises; (b) within a three-mile radius from the Lexington Salsarita's premises; or (c) within a two-mile radius of any other Salsarita's franchisee currently in operation as of the Effective Date. For example, and without limitation, this restriction prohibits Defendants from providing Mexican food or beverage catering services within the restricted geographic areas, but not outside the restricted geographic areas. For another example, and without limitation, this restriction prohibits Defendants from operating a Mexican food or beverage food truck within the restricted geographic areas, but not outside the restricted geographic areas. This restriction does not prohibit Defendants from owning less than a five percent (5%) beneficial interest in the outstanding equity securities of any publicly held corporation.
17. On or before December 5, 2022, Defendants shall cause the Lexington Burnaco's to modify its menu in accordance with Paragraph 6 of the Settlement Agreement. Defendants' obligations under this Paragraph shall expire November 14, 2024.
18. Effective November 14, 2022, Defendants shall not publish, disclose, transfer, release, divulge, or use any of Salsarita's Confidential Information or Trade Secrets, including without limitation for the benefit of any other enterprise such as the Lexington Burnaco's or the Paris Burnaco's as provided in the parties' now terminated Franchise Agreement. This restriction does not prohibit Defendants from using Salsarita's Confidential Information and Trade Secrets for the operation of the Lexington Salsarita's through December 5, 2022, as permitted in Paragraph 14 of this Order. On or before December 5, 2022, Defendants shall return to Salsarita's and shall not retain any copies of all Confidential Information and Trade Secrets in their custody or control, whether in electronic, hard copy, or any other form.
19. Effective November 14, 2022, Defendants shall ensure the Paris Burnaco's is not using any of Salsarita's Confidential Information or Trade Secrets. Effective December 5, 2022, Defendants shall cause the Paris Burnaco's to modify its menu and undertake the obligations set forth in Paragraph 8 of the Settlement Agreement.
20. Effective November 14, 2022, and except as otherwise permitted by Paragraph 14 of this Order, Defendants shall permanently cease all use of the Proprietary Marks and any other marks confusingly similar thereto and shall not identify themselves or their businesses in any way that suggests a connection or associate with, or an endorsement or sponsorship by, Salsarita's. On or before December 5, 2022, Defendants shall deliver to Salsarita's all materials bearing the Proprietary Marks, whether in electronic, hard copy, or other form.
21. Defendants must abide by all provisions of the Franchise Agreement (attached to the Settlement Agreement as Exhibit A) that, by their terms, extend beyond termination. These provisions of the Franchise Agreement, which will remain in full force and effect, include: Section IX.A.1.; Section XI.A.; Section XI.F.; Section XII.A.; Section XII.B.; Section XII.C.; Section XVI.B. through I.; Section XVII.B.; Section XVIII.; Section XXII. (except subsections G and M).; and all applicable provisions of the Payment and Performance Guarantee.
22. Defendants must otherwise strictly comply with the Settlement Agreement in all respects.
23. This Consent Judgment and Permanent Injunction is binding upon Defendants, together with their respective officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with any of them who receive actual notice in any manner of this Consent Judgment and Permanent Injunction by personal service or otherwise.
24. This Consent Judgment and Permanent Injunction coupled with the Settlement Agreement is a full and final resolution of all claims that were asserted or that could have been asserted by the Parties in this action, including damages, except for any claims made pursuant to Paragraph 13 of the Settlement Agreement, which will be decided outside this litigation, and subject to the following provision: This Court shall retain jurisdiction to enforce the terms of this Consent Judgment and Permanent Injunction and the Settlement Agreement. Should the Court find, upon motion filed by an aggrieved party, that there has been a violation of the Consent Judgment and Permanent Injunction or Settlement Agreement, the Court is empowered to determine the appropriate remedy for said violation, including, if the Court deems appropriate, invocation of the Court's power of contempt.
25. The Court retains jurisdiction over any motion or action to enforce this Consent Judgment and Permanent Injunction or the Settlement Agreement. Otherwise, this Consent Judgment resolves this action and is a final judgment. Each party hereto shall bear his or its own costs and attorneys' fees incurred to date.
26. The Clerk is respectfully directed to CLOSE THE CASE and TERMINATE all pending motions.
IT IS SO ORDERED.
(Appendix Omitted)