RULING ON MOTION FOR INJUNCTION
DORSEY, Senior District Judge.
Plaintiff (“DAI”) seeks to enjoin prosecution of the Illinois state court action
captioned
Wolf, et al. v. Doctor’s Associates, Inc., et al.,
Cause No. 98 LM 652
(“Wolf”),
in its entirety, as DAI claims that prosecution of
Wolf
by nonparty franchisees nullifies the Court’s order compelling arbitration, because the nonparty franchisees appear to be aiding or abetting parties enjoined from prosecuting
Wolf
in such a way that the parties
are
effectively prosecuting
Wolf.
The motion is granted in part.
I. BACKGROUND
DAI brings these actions because David M. Duree, on behalf of a purported class comprised of Subway franchisees, has sued DAI in Madison County, Illinois instead of arbitrating their disputes per the Subway franchise agreement. In 1998, in continuation of his repeated efforts, using each new franchisee who comes into his representation, to invalidate DAI’s franchise agreement’s arbitration clause, Duree filed two putative class actions in Madison County:
William Hargett, et al. v. Doctor’s Associates, Inc. et al.,
Cause No. 98 L 410, and
Daniel Wolf, et al. v. Doctor’s Associates, Inc. et al.,
Cause No. 98 LM 652. Pursuant to an October 29, 1999 ruling, the Court enjoined Duree and the franchisees, and anyone in active concert and participation with them, from prosecuting existing or new lawsuits relating to franchise agreement disputes. The 5 non-party franchisees were enjoined from litigating on behalf of the 51 party franchisees. On appeal, Duree represented to the Second Circuit that the 51 parties had been “carved out” of the putative class in
Wolf,
and thus argued that the injunction should be vacated as to the 5 nonparty franchisees so that they could pursue their individual claims. Based on this representation, the Second Circuit vacated the injunction as to the 5 nonparty franchisees, i.e., “to the extent that it bars non-parties’ prosecution of actions that do not constitute ‘aiding or abetting’ or ‘active concert or participation’ with defendant-franchisees that are parties before the District Court.”
Doctor’s Assoc. v. Qasim,
2000 WL 1210868, *3, 225 F.3d 645 (2d Cir. Aug. 24, 2000).
DAI now argues that the facts are in conflict with Duree’s representation to the Second Circuit as the 51 enjoined franchisees remain parties in the
Wolf
lawsuit. DAI thus seeks to modify the existing injunction to prevent Duree from prosecuting any portion of
Wolf.
II. DISCUSSION
A hearing was held on April 30, 2001 to give Duree and the 5 nonparty franchisees an opportunity to show cause why
Wolf
should not be enjoined and to allow Duree to defend the representation that he made to the Second Circuit. Interestingly, without appearing himself, Duree had local counsel, new to the case, appear at the hearing to defend the nonparty franchisees. Local counsel stated that he had no objection to requesting a severance in
Wolf,
to amending the
Wolf
complaint, or to the complete removal of the 51 enjoined parties from
Wolf.
As he only represents the nonparty franchisees, however, local counsel was constrained as to assurances that he could make that required action by the 51 enjoined parties. Post-hearing, Du-ree submitted written objections on béhalf of the nonparty franchisees asserting that he did not misrepresent the status of
Wolf
to the Second Circuit — he admits that the 51 parties
are
still parties in
Wolf
but says that they have not violated the Court’s injunction and that the first amended complaint in
Wolf
excludes them from any proposed class.
There is no question but that this Court’s injunction precludes the 51 parties from litigating any matter subject to the
arbitration clause of their franchise agreements. The reach of an injunction may extend to nonparties. A court’s order granting an injunction is binding on “the parties to the action, their officers, agents, servants, employees, and attorneys, and
upon those persons in active concert or participation with them who receive actual notice of the order.”
Fed.R.Civ.P. 65(d) (emphasis added).
Wolf’s
caption names the 51 enjoined parties. Duree admits that the 51 enjoined parties remain parties in
Wolf
While Duree states that the enjoined parties have taken no steps to prosecute
Wolf
after being enjoined, the nonparty franchisees are — perhaps unwittingly — aiding the enjoined parties in the prosecution of
Wolf.
For example, if DAI files an unsuccessful motion to dismiss in
Wolf
for failure to state a claim, the nonparty franchisees will have advanced the case of the enjoined parties by successfully defeating the motion and created favorable “law of the case” for the enjoined parties. In short, though enjoined, by error, oversight, or design, with the 51 still being named as parties in
Wolf
and considered by Duree as parties therein, the 51 enjoined parties could be deemed to accrue a benefit from a class adjudication in
Wolf.
No reason appears why the 5 nonparty franchisees would be disadvantaged by a clear, total elimination from
Wolf
of the 51 enjoined parties. Nor does a reason appear why the 51 enjoined parties insist on remaining parties in
Wolf
when they have been compelled to arbitrate and have been enjoined from prosecuting their state court claims.
Wolf
presents an issue determined by this Court, and sustained on appeal, as being subject to arbitration. Duree’s refusal to remove the enjoined parties from
Wolf,
thereby subjecting the nonparty franchisees to repeated litigation in this Court and possibly a finding of noncompliance with the Court’s injunction, suggests a distinction of the interests of the 51 enjoined parties in these matters from those of the 5 nonparty franchisees. Thus, there may be a conflict of interest in Du-ree’s representing both the 51 enjoined parties and the 5 nonparty franchisees. The marked difference in positions between Duree and local counsel, who is
only
representing the nonparty franchisees, highlights the potential conflict in that local counsel has no objection to severance but Duree resolutely defends the status quo of the 51 in
Wolf.
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RULING ON MOTION FOR INJUNCTION
DORSEY, Senior District Judge.
Plaintiff (“DAI”) seeks to enjoin prosecution of the Illinois state court action
captioned
Wolf, et al. v. Doctor’s Associates, Inc., et al.,
Cause No. 98 LM 652
(“Wolf”),
in its entirety, as DAI claims that prosecution of
Wolf
by nonparty franchisees nullifies the Court’s order compelling arbitration, because the nonparty franchisees appear to be aiding or abetting parties enjoined from prosecuting
Wolf
in such a way that the parties
are
effectively prosecuting
Wolf.
The motion is granted in part.
I. BACKGROUND
DAI brings these actions because David M. Duree, on behalf of a purported class comprised of Subway franchisees, has sued DAI in Madison County, Illinois instead of arbitrating their disputes per the Subway franchise agreement. In 1998, in continuation of his repeated efforts, using each new franchisee who comes into his representation, to invalidate DAI’s franchise agreement’s arbitration clause, Duree filed two putative class actions in Madison County:
William Hargett, et al. v. Doctor’s Associates, Inc. et al.,
Cause No. 98 L 410, and
Daniel Wolf, et al. v. Doctor’s Associates, Inc. et al.,
Cause No. 98 LM 652. Pursuant to an October 29, 1999 ruling, the Court enjoined Duree and the franchisees, and anyone in active concert and participation with them, from prosecuting existing or new lawsuits relating to franchise agreement disputes. The 5 non-party franchisees were enjoined from litigating on behalf of the 51 party franchisees. On appeal, Duree represented to the Second Circuit that the 51 parties had been “carved out” of the putative class in
Wolf,
and thus argued that the injunction should be vacated as to the 5 nonparty franchisees so that they could pursue their individual claims. Based on this representation, the Second Circuit vacated the injunction as to the 5 nonparty franchisees, i.e., “to the extent that it bars non-parties’ prosecution of actions that do not constitute ‘aiding or abetting’ or ‘active concert or participation’ with defendant-franchisees that are parties before the District Court.”
Doctor’s Assoc. v. Qasim,
2000 WL 1210868, *3, 225 F.3d 645 (2d Cir. Aug. 24, 2000).
DAI now argues that the facts are in conflict with Duree’s representation to the Second Circuit as the 51 enjoined franchisees remain parties in the
Wolf
lawsuit. DAI thus seeks to modify the existing injunction to prevent Duree from prosecuting any portion of
Wolf.
II. DISCUSSION
A hearing was held on April 30, 2001 to give Duree and the 5 nonparty franchisees an opportunity to show cause why
Wolf
should not be enjoined and to allow Duree to defend the representation that he made to the Second Circuit. Interestingly, without appearing himself, Duree had local counsel, new to the case, appear at the hearing to defend the nonparty franchisees. Local counsel stated that he had no objection to requesting a severance in
Wolf,
to amending the
Wolf
complaint, or to the complete removal of the 51 enjoined parties from
Wolf.
As he only represents the nonparty franchisees, however, local counsel was constrained as to assurances that he could make that required action by the 51 enjoined parties. Post-hearing, Du-ree submitted written objections on béhalf of the nonparty franchisees asserting that he did not misrepresent the status of
Wolf
to the Second Circuit — he admits that the 51 parties
are
still parties in
Wolf
but says that they have not violated the Court’s injunction and that the first amended complaint in
Wolf
excludes them from any proposed class.
There is no question but that this Court’s injunction precludes the 51 parties from litigating any matter subject to the
arbitration clause of their franchise agreements. The reach of an injunction may extend to nonparties. A court’s order granting an injunction is binding on “the parties to the action, their officers, agents, servants, employees, and attorneys, and
upon those persons in active concert or participation with them who receive actual notice of the order.”
Fed.R.Civ.P. 65(d) (emphasis added).
Wolf’s
caption names the 51 enjoined parties. Duree admits that the 51 enjoined parties remain parties in
Wolf
While Duree states that the enjoined parties have taken no steps to prosecute
Wolf
after being enjoined, the nonparty franchisees are — perhaps unwittingly — aiding the enjoined parties in the prosecution of
Wolf.
For example, if DAI files an unsuccessful motion to dismiss in
Wolf
for failure to state a claim, the nonparty franchisees will have advanced the case of the enjoined parties by successfully defeating the motion and created favorable “law of the case” for the enjoined parties. In short, though enjoined, by error, oversight, or design, with the 51 still being named as parties in
Wolf
and considered by Duree as parties therein, the 51 enjoined parties could be deemed to accrue a benefit from a class adjudication in
Wolf.
No reason appears why the 5 nonparty franchisees would be disadvantaged by a clear, total elimination from
Wolf
of the 51 enjoined parties. Nor does a reason appear why the 51 enjoined parties insist on remaining parties in
Wolf
when they have been compelled to arbitrate and have been enjoined from prosecuting their state court claims.
Wolf
presents an issue determined by this Court, and sustained on appeal, as being subject to arbitration. Duree’s refusal to remove the enjoined parties from
Wolf,
thereby subjecting the nonparty franchisees to repeated litigation in this Court and possibly a finding of noncompliance with the Court’s injunction, suggests a distinction of the interests of the 51 enjoined parties in these matters from those of the 5 nonparty franchisees. Thus, there may be a conflict of interest in Du-ree’s representing both the 51 enjoined parties and the 5 nonparty franchisees. The marked difference in positions between Duree and local counsel, who is
only
representing the nonparty franchisees, highlights the potential conflict in that local counsel has no objection to severance but Duree resolutely defends the status quo of the 51 in
Wolf.
Accordingly, it is found that the nonparty franchisees, by retaining the 51 enjoined franchisees as parties and as named plaintiffs, are aiding and abetting the 51 enjoined parties in prosecuting
Wolf.
It is further found that the 51 enjoined parties continue to prosecute
Wolf
by remaining in the case, potentially allowing the nonparty franchisees to advance their cause. Thus, it is hereby ORDERED that: Mr. Duree and the 51 enjoined franchisees dismiss the 51 enjoined franchisees as parties and class members in
Wolf
and, by an appropriate amendment of the complaint, remove any reference or naming of then in the caption or body of the complaint. Any such curative pleading(s) must (a) make clear that the 51 enjoined franchisees compelled to arbitrate are not, in fact, parties to or in any way participating in
Wolf
as plaintiffs, class representatives, or class members, nor are any rights or claims of any and all of the 51 enjoined parties claimed or intended to be adjudicated, in any respect, on their behalf as class members, and (b) clarify by elimination, and not merely by disclaimer, that the class the 5 nonparty franchisees seek to represent does not include the 51 enjoined franchisees, or any other franchisees who are currently subject to orders compelling arbitration or enjoining litigation. This order is entered to clarify the
existing injunction in this case, which remains in full force and effect as modified and approved by the Second Circuit on August 24, 2000.
III. CONCLUSION
The motion for an injunction (doc. 75) is hereby granted in part. The clerk shall close the file.
SO ORDERED.