A.B. Corp. v. Dunkin' Donuts Franchising LLC

CourtDistrict Court, D. Connecticut
DecidedNovember 30, 2022
Docket3:22-cv-01474
StatusUnknown

This text of A.B. Corp. v. Dunkin' Donuts Franchising LLC (A.B. Corp. v. Dunkin' Donuts Franchising LLC) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A.B. Corp. v. Dunkin' Donuts Franchising LLC, (D. Conn. 2022).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT A.B. CORP., ) 3:22-CV-1474 (SVN) Plaintiff, ) ) v. ) ) DUNKIN’ DONUTS FRANCHISING, ) LLC, ) November 30, 2022 Defendant. ) RULING ON PLAINTIFF’S MOTION FOR INTERIM TEMPORARY RESTRAINING ORDER Sarala V. Nagala, United States District Judge. In this diversity action, Plaintiff, A.B. Corp., claims that Defendant, Dunkin’ Donuts Franchising, LLC, improperly terminated the parties’ franchise agreement in violation of the Connecticut Franchise Act, Conn. Gen. Stat. § 42-133e et seq. (the “CFA”), and the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110b et seq. (“CUTPA”). Plaintiff has filed two motions for injunctive relief: first, a motion for a preliminary injunction, ECF No. 6, which remains pending until an evidentiary hearing scheduled for December 15, 2022; and second, the present motion for an interim temporary restraining order (“TRO”), ECF No. 19. In both motions, Plaintiff seeks a Court order directing Defendant to restore the parties’ franchise agreement and permit Plaintiff to continue using Defendant’s trademarks, products, and online customer ordering platform. For the following reasons, the Court DENIES Plaintiff’s second motion for a TRO, and it will hold in abeyance Plaintiff’s first motion for a preliminary injunction until the scheduled evidentiary hearing. I. FACTUAL BACKGROUND & PROCEDURAL HISTORY The complaint, ECF No. 1-1, sets forth the following facts. On October 5, 2016, Plaintiff and Defendant entered into a twenty-year franchise agreement. Ex. B to Compl., ECF No. 1-1 at 13. Pursuant to the agreement, Plaintiff operated a Dunkin’ Donuts restaurant located at 3040 Main Street in Glastonbury, Connecticut, and Plaintiff used Defendant’s trademark and exclusively sold Defendant’s products. Compl. ¶¶ 3, 7. In turn, the franchise agreement required Plaintiff to “operate under the rules, guidelines, policies, procedures, manuals and other requirements imposed by” the agreement. Id. ¶ 9; see also Ex. B to Compl., ECF No. 1-1 at 14,

18–19 (requiring Plaintiff to comply with Defendant’s operating standards). Relevant here, Section 14 of the agreement provided that Plaintiff would be in “default” if it breached any “obligation” under the franchise agreement. Ex. B to Compl., ECF No. 1-1 at 24. Section 14.6 stated that Defendant could terminate the franchise agreement, effective immediately, if Plaintiff failed to timely cure a default, unless a notice period is required by law. Id. at 26. Thereafter, the franchisee must cease operation, no longer represent itself as a franchisee, and cease using Dunkin’ Donuts trademarks and products. Id. Defendant provides certain additional facts relevant to the present motion.1 Specifically, on July 15, 2022, Defendant conducted “a routine inspection, known as a Food Safety Review” of

Plaintiff’s restaurant to ensure compliance with franchise standards. Pia Decl., ECF No. 26-1, ¶ 12; Ex. B to Pia Decl., ECF No. 26-1 at 29. Plaintiff’s restaurant failed the inspection and received an overall compliance score of 40%. Ex. B to Pia Decl., ECF No. 26-1 at 29. On July 27, 2022, Defendant conducted a second Food Safety Review to determine whether Plaintiff improved its compliance with brand standards, but Plaintiff’s restaurant again failed the inspection, this time with an overall compliance score of 60%. Pia Decl., ECF No. 26-1, ¶ 14; Ex. C to Pia Decl., ECF No 26-1 at 50.

1 The Court understands Plaintiff contests whether there was a breach of the franchise agreement justifying termination, and sets forth these facts only as background. On July 29, 2022, based on the second failed Food Safety Review, Defendant delivered a “Notice of Default and Impending Termination For Failure to Comply with Brand Standards.” Ex. D to Pia Decl., ECF No 26-1 at 62. The letter informed Plaintiff that it was in default pursuant to Section 14.1.1 of the franchise agreement and directed Plaintiff to cure the defects within sixty days. Id. The letter informed Plaintiff that, if it failed to cure the defects, Defendant “stand[s]

ready to take legal action to enforce your compliance with Standards, including without limitation, the termination of” the franchise agreement. Id. at 63. Defendant further contends that Plaintiff failed the third Food Safety Review, conducted on October 10, 2022, this time with a score of 62% overall compliance. Pia Decl., ECF No. 26-1 ¶ 19; Ex. E to Pia Decl., ECF No. 26-1 at 76. Plaintiff alleges that, on October 28, 2022, an entity called “Dunkin Donuts Franchisor LLC” delivered a “Notice of Termination of Franchise Agreement,” stating that the franchise agreement between Plaintiff and Defendant was terminated effective immediately. Ex. A to Compl., ECF No. 1-1 at 10. Defendant contends that it sent the termination letter. Pia Decl., ECF No. 26-1 ¶¶ 22–23. The termination letter referenced the default notice dated July 29, 2022, as

well as the Food Safety Review conducted on October 10, 2022, and explained that the compliance defects identified in the default notice had not been cured. Id. Following the termination notice, Defendant denied Plaintiff access to its online customer ordering platform. Compl. ¶ 14. On November 15, 2022, Plaintiff filed a two-count complaint in Connecticut state court, claiming that Defendant’s improper termination of the franchise agreement violated the CFA and CUTPA. Id. ¶¶ 19, 22. At the same time, Plaintiff filed an “Application for Temporary Injunction, Order to Show Cause, and Request for Emergency Hearing,” seeking an order “maintaining the status quo pending full and final resolution of” Plaintiff’s CFA claim.2 ECF No. 6 at 2.

2 Plaintiff’s two motions requesting injunctive relief pertain only to its CFA claim, not its CUTPA claim. On November 18, 2022, Defendant removed the action to federal court, invoking the Court’s diversity jurisdiction. Notice of Removal, ECF No. 1. At a status conference on November 21, 2022, the parties agreed to a briefing schedule on Plaintiff’s first motion. See ECF No. 18. Although the Court scheduled an evidentiary hearing on the motion for December 15, 2022, Plaintiff also sought a temporary restraining order pending resolution of its earlier filed

motion for preliminary injunctive relief. ECF Nos. 18, 19. II. LEGAL STANDARD A. Preliminary Injunctive Relief Injunctive relief in the form of a TRO or preliminary injunction is “an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.” Moore v. Consol. Edison Co. of N.Y., 409 F.3d 506, 510 (2d Cir. 2005) (citation and internal quotation marks omitted); see also Free Country Ltd. v. Drennen, 235 F. Supp. 3d 559, 565 (S.D.N.Y. 2016) (noting that a TRO, “perhaps even more so than a preliminary injunction,” is an extraordinary and drastic remedy). A TRO, like a preliminary injunction, is

“never awarded as of right,” and the Court must “balance the competing claims of injury and must consider the effect on each part of the granting or withholding of the requested relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008) (citation and internal quotation marks omitted). Whether to grant such relief “rests in the sound discretion of the district court.” JSG Trading Corp. v.

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Bluebook (online)
A.B. Corp. v. Dunkin' Donuts Franchising LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ab-corp-v-dunkin-donuts-franchising-llc-ctd-2022.