Cajun Global LLC v. Swati Enters., Inc.

283 F. Supp. 3d 1325
CourtDistrict Court, N.D. Georgia
DecidedDecember 13, 2017
DocketCIVIL ACTION FILE NO.: 1:17–CV–04504–TWT
StatusPublished
Cited by5 cases

This text of 283 F. Supp. 3d 1325 (Cajun Global LLC v. Swati Enters., Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cajun Global LLC v. Swati Enters., Inc., 283 F. Supp. 3d 1325 (N.D. Ga. 2017).

Opinion

Upon the expiration of the Franchise Agreement in May 2017, Defendant Rahman re-branded the Franchised Restaurant as "Orange Fried Chicken," a similar quick-service restaurant specializing in the sale fried chicken. Orange Fried Chicken also uses a logo, marks and other décor that are confusingly similar to the Church's Chicken logo and Marks. Thereafter, Plaintiffs demanded that Defendants cease and desist the use of confusingly similar marks at the former Franchised Restaurant. Plaintiffs also demanded that Defendants cease and desist operating *1329Orange Fried Chicken, which Plaintiffs claim violates the post-expiration non-compete provision in the Franchise Agreement. Upon Defendants refusal to comply with Plaintiffs' demands, Plaintiffs filed this action seeking to enjoin all Defendants from, among other things, continuing to infringe on Plaintiffs' trademarks and continuing to violate the non-compete in the Franchise Agreement.

Specifically, the Franchise Agreement provides that upon expiration or termination of the Franchise Agreement, the franchisee may not "for a period of two years, own, maintain, engage in, or have any interest in any restaurant business that specializes in the sale of chicken or has a method of operation or trade dress similar to that employed in the System and that is located within a 25-mile radius of (i) any Franchised Location or (ii) the location of any other Church's Restaurant that is in existence as of the date of the expiration or earlier termination of this Agreement."

The Swati Defendants do not oppose the injunctive relief that Plaintiffs seek. However, the Swati Defendants claim that they cannot bring the former Franchised Restaurant into compliance with Plaintiffs' demands because they no longer own or control the Restaurant. Rahman, who acknowledges he owns and controls the Restaurant, nevertheless claims that he is not bound by the non-compete and other post-expiration obligations in the Franchise Agreement because he did not sign the Franchise Agreement. Similarly, Rahman asserts in his Motion to Dismiss that as a non-signatory to the Franchise Agreement, the personal jurisdiction and venue selection provisions contained therein do not apply to him.

ANALYSIS

Plaintiffs have satisfied their burden pursuant to Federal Rule of Civil Procedure 65 and have established (1) a substantial likelihood of success on the merits; (2) that irreparable injury will be suffered unless the injunction issues; (3) that the threatened injury to the Plaintiffs outweighs whatever damage the proposed injunction may cause the Defendants; and (4) the injunction is not adverse to the public interest. See, e.g., McDonald's Corp. v. Robertson , 147 F.3d 1301, 1306 (11th Cir. 1998).

1. PLAINTIFFS HAVE A SUBSTANTIAL LIKELIHOOD OF SUCCESS ON THE MERITS OF THEIR CLAIMS

Having determined that the Franchise Agreement's provisions are enforceable, the primary issue before the Court is whether non-signatory Rahman is bound by the obligations in the Franchise Agreement, namely, the non-compete, personal jurisdiction provision and forum selection provision. Based on these circumstances where Defendants failed to disclose the Sale to Plaintiffs or obtain Plaintiffs' approval of the same, and where Rahman, acting in concert with the Swati Defendants, performed under the Franchise Agreement for nearly the entire ten-year term of the Franchise Agreement, it is justified and warranted to extend all terms of the Franchise Agreement to non-signatory Rahman, including the personal jurisdiction provision, forum selection clause, non-compete and other post-expiration obligations.

Rule 65 extends to "the parties to the action, their officers, agents, servants, employees and attorneys, and upon those persons in active concert or participation with them." Fed. R. Civ. P. 65(d)(2)(C). Even under Rahman's theory that he knew nothing about the Franchise Agreement, Rahman falls within the ambit of Rule 65 as an owner, employee, and someone "in active *1330concert and participation" with the Swati Defendants.

In addition, while it is true that non-signatories are generally not bound by contracts, " 'traditional principles of state law' may allow 'a contract to be enforced by or against nonparties to the contract through assumption, piercing the corporate veil, alter ego, incorporation by reference, third party beneficiary theories, waiver and estoppel.' " Lawson v. Life of the S. Ins. Co. , 648 F.3d 1166 (11th Cir. 2011) (quoting Arthur Andersen LLP v. Carlisle , 556 U.S. 624, 631, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009) ). Specifically, assumption and equitable estoppel apply here to prevent Rahman from performing under and reaping the benefits of the Franchise Agreement for ten years, and then repudiating the post-expiration obligations on the basis that he did not sign the Franchise Agreement. See, generally, Employers Ins. of Wausau v. Bright Metal Specialties, Inc. , 251 F.3d 1316 (11th Cir. 2001) (holding that a non-signatory was bound by a contractual arbitration clause because even though he did not sign the contract with the arbitration provision, the non-signatory did sign a "Takeover Agreement" which "clearly reveals [his] intent to 'step in the shoes' of [the predecessor]"); A.L. Williams & Assoc., Inc. v. McMahon , 697 F.Supp. 488, 494 (N.D. Ga. 1988) (finding that "a party cannot have it both ways; it cannot rely on the contract when it works to its advantage and then repute it when it works to its disadvantage."); Quail Cruises Ship Management Ltd. v. Agencia De Viagens Cvc Tur Limitada , 2010 WL 1524313, at *4 (S.D. Fla. Apr. 14, 2010) (noting that equitable estoppel prevents a party from benefiting "from the terms of a contract while simultaneously avoiding its burdens.")

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Bluebook (online)
283 F. Supp. 3d 1325, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cajun-global-llc-v-swati-enters-inc-gand-2017.