Coscarelli v. Esquared Hospitality LLC

364 F. Supp. 3d 207
CourtDistrict Court, S.D. Illinois
DecidedJanuary 31, 2019
Docket18-CV-5943 (JMF)
StatusPublished
Cited by36 cases

This text of 364 F. Supp. 3d 207 (Coscarelli v. Esquared Hospitality LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coscarelli v. Esquared Hospitality LLC, 364 F. Supp. 3d 207 (S.D. Ill. 2019).

Opinion

JESSE M. FURMAN, United States District Judge

This action emerges from the soured relationship between celebrity vegan chef Chloe Coscarelli and her former partner. Coscarelli and three LLCs of which she is sole owner or member - Chef Chloe LLC, CC Hospitality Holdings LLC, and CKC Sales, LLC - bring twenty-one claims against ESquared Hospitality LLC and BC Hospitality Group LLC (formerly known as CCSW LLC). See Docket No. 1 *212("Compl.").1 The Complaint alleges everything from breach of contract and unjust enrichment to federal trademark and cyber piracy violations. Id. Now pending are a slew of motions and cross-motions. First, Coscarelli and Chef Chloe LLC seek a preliminary injunction preventing Defendants from launching or participating in retail food sales under the "by Chloe" name and a declaration that Chef Chloe LLC holds a fifty-percent membership interest in BC Hospitality Group. Docket No. 22 ("Pls.' PI Mem."). For their part, Defendants move to dismiss all twenty-one claims on the ground that they are subject to a mandatory arbitration agreement or, in the alternative, five claims pleaded under California law on the ground that New York law applies. Docket No. 28. Finally, Plaintiffs move to strike various declarations filed with Defendants' motion papers. Docket Nos. 39, 46, 48.

For the reasons that follow, the Court (1) denies Defendants' motion to dismiss to the extent it seek to compel arbitration of all Plaintiffs' claims in advance of the Court's ruling on Plaintiffs' motion for a preliminary injunction, but (2) grants it the extent that it seeks dismissal of Coscarelli's California-law claims (albeit with leave to replead those claims); (3) denies Plaintiffs' motion for preliminary injunctive relief and motions to strike; and (4) stays further proceedings as to Counts 2, 5, and 6 of the Complaint pending arbitration, while reserving judgment on whether the remaining claims should also be stayed.

BACKGROUND2

Coscarelli is a well-known vegan chef and culinary author and the sole owner of Chef Chloe LLC. See Compl. ¶¶ 24-28. In 2014, Chef Chloe LLC and ESquared entered into a partnership with the goal of opening a "fast casual" vegan restaurant and collaborating on other food-related "Approved Projects." See id. ¶¶ 7, 39-40, 82. Through an Operating Agreement, the two entities formed CCSW LLC (since renamed BC Hospitality Group). See id. ¶ 7; see also Docket No. 1-3 ("Operating Agreement" or "OA"), at 1. Coscarelli signed the Operating Agreement three times - once on behalf of Chef Chloe LLC; a second time as a "Manager" of the newly-formed entity, CCSW; and finally underneath a line of text reading "Acknowledged and Agreed as to the Rights and Obligations Set Forth Herein." OA 53. The same day, CCSW entered into a "Name, Face and Likeness Agreement" with Coscarelli in her individual capacity; as its name suggests, that Agreement governs the use of Coscarelli's name and publicity rights. See Docket No. 1-2 ("NFL Agreement").

The Operating Agreement establishes the basic operating rules for CCSW and spells out the rights and duties of the two members, originally ESquared and Chef Chloe LLC. Five provisions of the Operating Agreement are particularly relevant here. First, Section 4.1 of the Agreement identifies the "Business" of CCSW as being *213(1) the management of fast-casual vegan restaurants and (2) so-called "Approved Projects." OA § 4.1. An "Approved Project" is defined, in turn, as "any project related to the food and beverage industry that utilizes one or more of the NFL Rights or the By Chloe Mark , and which has been pre-approved in writing by [Chef Chloe LLC ]." Id. (emphasis added). Second, the Agreement defines the "By Chloe Mark" to mean the "By Chloe Word Mark," which is the "standard character mark 'BY CHLOE' in connection with the goods and services of the Business," and the "By Chloe Design Mark," which is "any logo ... incorporating the By Chloe Word Mark in stylized font ... and used in connection with the goods and services of the Business." Id. § 1.1, at 3-4. Third, under the Agreement, "[t]he parties acknowledge and agree that the By Chloe Mark incorporates [Coscarelli's] first name, and that nothing contained in this Agreement is intended to bestow upon [CCSW] any rights to [Coscarelli's] NFL Rights (as defined in the NFL License Agreement)." Id. § 4.4. CCSW, however, "own[s] all right, title and interest in and to the By Chloe Mark." Id. § 4.4(a).

Fourth, the Operating Agreement named Chef Chloe LLC as the "Service Member" and laid out certain duties to be performed by Chef Chloe LLC through Coscarelli, including developing the fast-casual vegan restaurant "concept" and helping to run the restaurant. Id. §§ 19.1, 19.2. The Agreement provided, however, that Chef Chloe LLC could be terminated as the Service Member "for Cause or upon the occurrence of a Termination Event." Id. § 19.3(a). Should Chef Chloe LLC be so terminated, CCSW retained the right to use Coscarelli's pre-existing intellectual property and her name, face, and likeness rights "in the operation of the Restaurants (including New Restaurants) and Approved Projects (including new Approved Projects approved as set forth in the NFL License Agreement)." Id. § 19.3(c). Finally, the Operating Agreement also included an arbitration provision stating in relevant part as follows: "All claims, disputes, deadlocks and other matters in question between the parties arising out of, or relating to, this Agreement or the breach hereof ... shall be decided by arbitration in accordance with this Section 20.19 unless otherwise mutually agreed to by the parties." OA § 20.19(a). The provision, however, contains an explicit carve-out for disputes involving claims for "immediate injunctive relief": "Notwithstanding the foregoing [arbitration clause], in the event the Dispute involves a claim for which immediate injunctive relief is being sought, a party shall have the right to bring an action for such relief in a court of competent jurisdiction prior to commencing an arbitration action." Id. § 20.19(e).

As noted, the NFL Agreement - executed on the same day as the Operating Agreement - governs the use of Coscarelli's name and publicity rights. Specifically, the Agreement bestowed upon CCSW the right to use Coscarelli's "full and formal name, nickname or variations of her name" and "versions of her image, signature, voice, likeness and other elements or attributes of her persona, identity, or personality." NFL Agreement 1. Those rights were not unlimited, however. Under the terms of the Agreement, CCSW is entitled to use them "solely in connection with the operation, marketing and promotion of the Restaurants, and ... solely in connection with the manufacturing, distribution, advertising and promotion ... of products and services bearing the company IP and associated with the Approved Projects." Id. § 1(a). Moreover, Coscarelli "retain[ed] the right to use the NFL Rights in any whatsoever except in connection with the By Chloe Mark , including but not limited *214to ... packaged foods and beverages." Id. § 1(b) (emphasis added). The NFL Agreement emphasized that "[a]ll rights in and to the By Chloe Mark are reserved by [CCSW] as stated in the Operating Agreement." Id.

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Bluebook (online)
364 F. Supp. 3d 207, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coscarelli-v-esquared-hospitality-llc-ilsd-2019.