LITIGATION

In Budget Blinds, Inc. v. Sherre Paschal, et al. (United States District Court, Central District of California, May 2010), Mulcahy LLP initiated a lawsuit on behalf of a franchisor against former franchisees for breach of contract, service mark infringement and injunctive relief. Mulcahy LLP successfully procured a monetary award against the defendants and a permanent injunction ordering defendants to immediately: (1) discontinue the operation of their competing business; (2) discontinue any interest in a competing business for a period of two years from the entry of the judgment; (3) discontinue use of the franchisor’s proprietary marks and materials; and (4) comply with the post-termination provisions of their franchise agreement.

In Tomcat Consulting, LLC v. Play N Trade Franchise, Inc., et al. (Orange County Superior Court and California Court of Appeal, Fourth Appellate District, May 2010), terminated Play N Trade franchisee Tomcat Consulting, LLC (“Tomcat”) initiated a lawsuit against the franchisor asserting various causes of action for: (1) the franchisor’s alleged failure to approve a transfer of Tomcat’s franchise agreement to a prospective franchisee (“Transfer Claims”); and (2) the franchisor’s alleged violations of the California Franchise Investment Laws (“CFIL Claims”). In response, Mulcahy LLP filed a Demurrer requesting that the CFIL Claims be dismissed for Tomcat’s failure to state a legal cause of action. The Court granted the Demurrer and dismissed the CFIL Claims with prejudice. Subsequently, Mulcahy LLP filed a Motion for Summary Judgment requesting that the Transfer Claims be dismissed in their entirety because, amongst other things, the undisputed evidence showed that the claims lacked merit and because the franchisor did not violate any independent duty that would give rise to such claims. In light of our Summary Judgment Motion, Tomcat voluntarily dismissed all remaining claims against the franchisor with prejudice.

On January 19, 2010, Tomcat filed a Notice of Appeal before the California Court of Appeal, Forth Appellate District, concerning the Superior Court’s dismissal of the CFIL Claims. The appeal was dismissed by Tomcat on May 18, 2010.

In Gold, et al. v. Melt Franchising, LLC, et al. (Los Angeles County Superior Court, June 2008 & California Court of Appeals, April 2010), fifteen persons and entities purporting to represent a nationwide class of franchisees of Melt Franchising filed a class action suit against Melt, alleging fraud and violations of state franchise laws. Melt retained Mulcahy LLP, who filed a demurrer to plaintiffs’ complaint on the grounds that the franchise agreement contained a class action and multi-party waiver provision based on the laws of the state of each franchisee. On June 20, 2008, after acknowledging that “it is rare to dispose of multi-party and class action allegations on demurrer,” the Court rejected plaintiffs’ arguments, granted Melt’s demurrer and dismissed the action in its entirety with prejudice on the grounds that: (1) each cause of action would improperly unite multiple parties in violation of the franchise agreements’ dispute resolution provisions prohibiting class claims or multi-party claims; (2) plaintiffs lacked sufficient unity of interest for the consolidated action because the substantive law of their respective states would apply to the claims; and (3) plaintiffs’ claims asserted under the laws of states not their own were improper pursuant to the choice of law provision in the franchise agreement. The California Court of Appeal affirmed the trial court in full on April 16, 2010.

In Budget Blinds, Inc. v. Juan Carlos Carlin (United States District Court, Central District of California, March 2010), defendant, a former licensee, continued to operating a competing business utilizing the licensor’s service marks and trade name and in violation of the noncompetition provision contained within the parties’ license agreement. The licensor retained Mulcahy LLP who immediately filed a complaint for: breach of contract, service mark infringement, false designations/unfair competition, unfair business practices, unjust enrichment, accounting, and injunctive relief. Ultimately, Mulcahy LLP obtained a judgment against defendant enforcing the noncompetition and post-termination provisions of the parties’ agreement.

In Budget Blinds, Inc. v. Asta Saknyte, et al. (United States District Court, Central District of California, January 2010), Mulcahy LLP initiated a lawsuit on behalf of a franchisor against former franchisees for their: (1) failure to come current with their monetary obligations; (2) violation of the noncompetition provision of the franchise agreement; (3) unauthorized use of the franchisor’s proprietary marks; and (4) failure to comply with the post termination provisions of the franchise agreement. Mulcahy LLP eventually obtained a significant monetary award against defendants and a permanent injunction ordering defendants to immediately: (1) discontinue the operation of their competing business; (2) discontinue any interest in a competing business for a period of two years from the entry of the judgment; (3) discontinue use of the franchisor’s proprietary marks and materials; and (4) comply with the post-termination provisions of their franchise agreement.

In Budget Blinds, Inc. v. Budget Blinds & Shutters, et al. (United States District Court, Central District of California, January 2010), defendant commenced operation of a competing business utilizing a trade name confusingly similar to that of franchisor Budget Blinds, Inc.’s proprietary marks. Budget Blinds, Inc. retained Mulcahy LLP, who filed a complaint for service mark infringement, false designation/unfair competition, unfair business practices, injunctive relief, unjust enrichment and accounting. Ultimately, Mulcahy LLP obtained a judgment against defendant permanently enjoining it from using the franchisor’s marks, or any confusingly similar variation thereof, and an order for defendant to produce all books and records necessary to compute profits realized as a result of sales made while operating under the franchisor’s marks in order to calculate franchisor’s damage award.

In Budget Blinds, Inc. v. Lyle Hayman et. al. (AAA, Orange County, California and United States District Court, Central District of California, September 2009), Mulcahy LLP was retained to file a demand for arbitration against defendants, former franchisees, as a result of their operation of a competing window covering business in violation of their franchise agreement. Defendants refused to participate in the arbitration. As a result, Mulcahy LLP subsequently filed a diversity action in the United States District Court asserting causes of action for: breach of written contract; civil conspiracy for unfair competition; intentional interference with prospective economic advantage; negligent interference with prospective economic advantage; and injunctive relief. Ultimately, Mulcahy LLP obtained injunctive relief for its client ordering defendants to discontinue their competing business for a period of two years.

In KFC Corporation v. Parvez Shaikh, et al. (United States District Court, Central District of California, April 2009), Mulcahy LLP initiated a lawsuit on behalf of a franchisor against a former franchisee for claims of breach of contract, trademark infringement, and unfair business practices, among others. Mulcahy LLP successfully secured a preliminary injunction stopping the franchisee from using the franchisor’s proprietary trademarks. The case settled shortly thereafter.

In Melt Franchising , LLC v. PMI Enterprises, Inc. (U.S. District Court, Central District of California, August 2008), Melt Franchising, a gelato italiano franchisor, terminated a Massachusetts franchisee for violating terms of the franchise agreement. Following the termination, Melt retained Mulcahy LLP, who immediately filed a motion for preliminary injunction requesting that the franchisee comply with the post-termination provisions of the franchise agreement. On August 18, 2008, the District Court granted Melt’s preliminary injunction and ordered the franchisee: (1) to allow Melt to assume management of the store; (2) to cease all use of Melt’s trademarks; (3) to submit all necessary paperwork to assign its lease in the store to Melt; and (4) to sell all or any portion of the assets at the store in compliance with the franchise agreement.

In Meyers v. Conehead Investments, Inc. (Los Angeles County Superior Court) the firm represented a Cold Stone Creamery franchise and prevailed on a cutting edge question regarding the enforceability of an arbitration provision in a franchise agreement. “The law is now becoming very clear in California. Franchisors need to look at the arbitration provisions in their agreements, which may be subject to the possibility that they will not be enforced and that they will not be able to pursue arbitration,” said Jim Mulcahy in public comments quoted in the press. April 2007 Los Angeles Daily Journal, National Law Journal

In Fladeboe v. American Isuzu (Orange County Superior Court) the firm represented the U.S. distributor of Isuzu vehicles, defending the claims of a vehicle dealer who alleged that the distributor had wrongfully withheld consent to the transfer of the franchise. Not only did the firm prevail on the dealer’s claims, the firm successfully countersued alleging fraud and unfair business practices, securing a jury verdict and then a court judgment after a six-week trial. The firm also successfully handled the appeal of the matter. The California Court of Appeal affirmed the trial court in full on April 23, 2007.

Additional Cases

In Lunkenheimer v. Tomkins, P.L.C. (U.S. District Court, Southern District of Ohio) Jim Mulcahy was the lead trial counsel for Tomkins, P.L.C., a multinational company based in the United Kingdom, in a suit brought by an industrial valve company alleging breach of contract, fraud, trademark infringement, antitrust violations, theft of trade secrets and unfair competition. The plaintiff asked the jury for $45 million and punitive damages. After a 3-month trial, the jury found for Tomkins and entered a $7.12 million verdict in favor of Tomkins on its counterclaims alleging fraud, breach of contract, and tortious interference.

In Cascade v. American Suzuki (U.S. District Court, District of Oregon) the firm, representing the U.S. distributor of Suzuki vehicles, defended numerous claims asserted by a terminated vehicle dealer against the distributor and the dealer who replaced the terminated dealer. The firm secured the dismissal of the plaintiff’s Robinson-Patman Act claim prior to filing a motion for summary judgment as to all other claims, which led to a settlement of the case.

In American Isuzu v. Fladeboe (U.S. District Court, Central District of California) the firm, on behalf of the U.S. distributor of Isuzu vehicles, successfully prosecuted a vehicle dealer for trademark infringement after the dealer sued for breach of contract. The firm won a jury verdict in excess of $375,000 in favor of the distributor, as well as an order to pay over $45,000 in costs.

In Dousette v. Red Brick Pizza (Los Angeles County Superior Court) the firm, representing a franchisor, successfully petitioned the court to grant a new trial following a trial handled by other counsel. The court vacated the $6.5 million jury verdict against the franchisor and ordered a new trial after the firm convinced the judge to take the unusual step of re-opening discovery and conducting post-trial hearings. The firm prevailed after seven months of discovery and hearings, after which the court found that the plaintiff had withheld evidence during the trial. The decision was affirmed on appeal.

In Clark Equipment Company v. Lift Parts Mfg. (U.S. District Court, Northern District of Illinois) and Harlan Corporation v. Clark Equipment Company (U.S. District Court, Kansas) Jim Mulcahy successfully represented Clark Equipment in cases brought under the United States Copyright Act, Section 43(a) of the Lanham Act, federal and state unfair competition law, and under sections 1 and 2 of the Sherman Act, their counterparts under state antitrust laws, and the Robinson Patman Act.

In Stuft Pizza v. Rai (Orange County Superior Court) the firm represented a franchisor who sued four terminated franchisees for trademark infringement and related claims. The firm also defended the franchisees’ $3.5 million counterclaim for fraud and breach of contract. Following a five week trial, the firm obtained a jury verdict in favor of the franchisor on both the franchisor’s claim and the counterclaim. The verdict was in excess of the damages sought by the franchisor. The firm also secured an award of treble damages and attorney’s fees, as well as a permanent injunction. The award was not only against the corporate franchisees, but also their principals, as the firm successfully pierced the corporate veil.

In Continental Sales v. American Suzuki (Utah Department of Motor Vehicles) the firm, representing the U.S. distributor of Suzuki vehicles, opposed a vehicle dealer’s petition to prevent the relocation of another vehicle dealer of the same line make in the relevant market area. The commissioner of the Utah DMV ruled in favor of the firm’s client and dismissed the petition following a full evidentiary hearing.

In Lippo v. Mobil Oil Corporation (U.S. District Court, Northern District of Illinois), Lawmen’s and Shooter’s Supply, Inc. v. Smith and Wesson (U.S. District Court, Southern District of Florida), and Smith and Wesson v. Knight Enterprises (U.S. District Court, Arizona) Jim Mulcahy was lead trial counsel for Smith and Wesson and Mobil in claims alleging violations of antitrust laws, trademark infringement, violation of franchising statutes, and breach of manufacturer/dealer contracts.

In Barnett’s v. American Suzuki (North Carolina Department of Motor Vehicles) the firm, on behalf of the U.S. distributor of Suzuki vehicles, defended a vehicle dealer’s protest of the addition of a new dealer and claim of unfair allocation of product in violation of North Carolina law. The firm prevailed on the add-point claim via a motion for summary judgment, and the dealer voluntarily dismissed the unfair allocation claim prior to hearing.

In LA Suzuki v. Suzuki (California New Motor Vehicle Board) the firm represented the distributor of Suzuki vehicles when one of its dealers protested the addition of a new dealer. The firm’s handling of the matter led the dealer to dismiss its claims with prejudice during discovery.

In PRASA v. Beatrice Corp. (U.S. District Court, District of Puerto Rico) Jim Mulcahy was the lead trial counsel for Beatrice in a $100 million suit alleging breach of implied and express warranties after Puerto Rico’s water supply system failed.

In both Zee One v. Suzuki and Gerald Suzuki v. Suzuki (U.S. District Court, Northern District of Illinois) the firm, working on behalf of the distributor of Suzuki vehicles, defended claims filed by dealers challenging their termination. The firm obtained temporary restraining orders and preliminary injunctions from the federal court under the Federal Arbitration Act, enjoining the dealers from proceeding before the Illinois Department of Motor Vehicles. As a result, the cases were forced to arbitration, at which point the dealers dismissed their claims.

In Bosch v. Suzuki (California New Motor Vehicle Board) the firm, on behalf of the distributor of Suzuki vehicles, defended a dealer’s protest of its termination. The firm obtained a stipulated order dismissing the proceeding, with the dealer paying the firm’s client for its fees and expenses.

In Hauck v. Centel Telephone Company (Circuit Court of Cook County, Illinois) Jim Mulcahy as lead trial counsel successfully defended a $38 million action alleging the defective design and installation of telephone system infrastructure.

In Childress v. Suzuki (Arizona Motor Vehicle Board) the firm represented the distributor of Suzuki vehicles and obtained a dismissal of a dealer’s protest of its termination. The firm then successfully handled the opposition to the dealer’s appeal.

In Submarina v. S&D # 4 (San Diego Superior Court) the firm successfully enforced the termination of a franchise and obtained preliminary and permanent injunctions on behalf of a franchisor against a franchisee who had failed to pay royalties.

In Submarina v. Sial (U.S. District Court, Southern District of California) the firm obtained a TRO on behalf of a franchisor against a franchisee for violation of the Lanham Act. The TRO not only enjoined the operation of a store by the franchisee, but also permitted the franchisor to assume control of it. The firm then obtained a preliminary injunction, after which the matter settled, with the franchisee paying all past due royalties, agreeing to terminate the franchise, and paying the firm’s client its attorneys’ fees and costs.

In Bernard v. Resort Development (U.S. District Court, Southern District of Illinois), Durian v. Kock (U.S. District Court, Southern District of Illinois), Korpai v. Bingham (U.S. District Court, Northern District of Illinois), In Re Financed Precious Metals Litigation (U.S. District Court, Central District of California), and Kashwer v. Skowron (U.S. District Court, Southern District of Illinois) Jim Mulcahy was lead trial counsel for an accountant and registered representatives in federal securities fraud actions and disciplinary proceedings before the NASD arising out of the issuance of promissory notes, the sales of condominium units in a resort development, and the marketing of precious metals contracts.

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ADR

In Closet Tailors, LLC v. Gary Neil Poisson (JAMS, Orange County, January 2010), a former multi-unit licensee was in violation of his license agreements for: (1) failing to pay monies due to the licensor; (2) violating the noncompetition provision of the license agreements; and (3) failing to comply with the post termination provisions of the license agreements. The licensor retained Mulcahy LLP who filed a demand for arbitration asserting claims for: breach of the license agreement, and injunctive relief. Mulcahy LLP ultimately procured a monetary award and permanent injunction, in addition to attorneys’ fees and costs, in favor of the licensor.

In IAG Coffee Franchise LLC v. Sanders (AAA, Orange County, September 2008), It’s A Grind (“IAG”) coffeehouse franchisor terminated a franchisee’s franchise agreement for breaching the agreement. In response, the franchisee filed a lawsuit in Placer County Superior Court alleging fraud, violations of the California Franchise Investment Law, and price fixing in violation of the Cartwright Act. The franchisee claimed damages in excess of $700,000 and attorneys fees. IAG retained Mulcahy LLP, who immediately initiated a binding arbitration with AAA seeking declaratory relief that the termination was valid, in addition to damages and attorneys’ fees. Mulcahy LLP then filed a motion to compel arbitration with the Court requesting that the case be arbitrated in compliance with the parties’ franchise agreement. The motion was granted and the franchisee asserted its court claims as counterclaims in the arbitration action. On September 19, 2008, following a nine-day trial, the arbitrator found in IAG’s favor, denying all counterclaims asserted by the franchisee and granting IAG’s request for damages and attorneys’ fees, totaling in excess of $390,000.

In Mustard Franchise Corporation v. YEK, Inc. (AAA, Orange County, March 2008), Mustard Franchise Corporation retained Mulcahy LLP for assistance in terminating a franchisee’s agreement for its violation of the terms of its franchise agreement. Mulcahy LLP filed a demand for arbitration before the AAA seeking a declaration from the arbitrator that the franchisee violated its agreement with Mustard and that the subsequent termination was valid. In response, the franchisee filed counterclaims alleging fraud and violations of the franchise agreement by Mustard. Following a nine-day trial, the arbitrator ruled: (1) that Mustard was entitled to terminate the franchise agreement; and, (2) that the franchisee’s claims were without merit. In accordance with the post-termination obligations of the parties, Mustard was entitled to purchase the franchisee’s business and take immediate possession of the restaurant pending finalization of the purchase. The franchisee refused to comply either with its post-termination obligations or the arbitrator’s award. Mulcahy LLP thereafter filed an action in the Orange County Superior Court seeking confirmation of the arbitrator’s award and a TRO and preliminary injunction. The Court granted Mustard’s requests, entered injunctions against the franchisee, and ordered the franchisee to turn over possession of the restaurant. When the franchisor still refused to turn over possession, Mulcahy LLP obtained a writ of execution, and secured Mustard’s possession of the restaurant.

In Hartmann-Lausanne, Inc. v. Hemocue (Orange County Superior Court; JAMS Orange County) the firm tried the claims of a Texas distributor of medical products for unpaid post-termination commissions against the U.S. subsidiary of the Swedish manufacturer of the products. A three-judge arbitration panel awarded the firm’s client over $418,000 in damages and over $788,000 in attorneys’ fees and costs following a lengthy arbitration. When the defendant moved the Superior Court to vacate the award, the court not only denied the motion but also awarded the firm’s client its fees and costs incurred in connection with the motion.

In Fanfare Investments v. FS Concepts (AAA, Los Angeles) the firm defended the regional franchisor for Fantastic Sams hair salons in Hawaii against the claims of a franchisee who alleged fraud and violation of the California Franchise Investment Law. The firm obtained an award which not only dismissed the franchisee’s claims, but also awarded the regional franchisor over $42,000 in attorneys’ fees and costs.

In Eagle Rider v. Eagle Rider Harley Rental of San Antonio (AAA, Los Angeles) the firm defended against a franchisee’s claim that his franchise was wrongfully terminated. The firm obtained a judgment in favor of the franchisor after a week-long arbitration hearing.

In Vallochia v. Cinque Amici LLC (Orange County Superior Court; Judicate West, Orange County) the firm defended against claims brought by a member of an LLC against the LLC regarding the ownership of a popular restaurant and the rights and duties of the members of the LLC. The arbitrator ruled in favor of the LLC after a two-day arbitration hearing.

In Shaw v. Iowa Grain Co., Kanz v. U.S. Futures and First Options Co., and Sussman v. Refco, Inc. (National Futures Association, Chicago) the firm arbitrated claims brought before the NFA alleging unauthorized trading, failure to liquidate open positions, and failure to supervise broker activity in customer accounts.

In Gregor v. Pacific Brokerage Services, Toro v. Bosworth, Beckney v. Chatfield Dean & Co., Jones v. Royal Alliance Associates, PKB Construction v. Santa Barbara Securities, Inc., Prudential Securities, Inc. v. Gordica, Kellner v. Paine Webber, Inc., Hazel L. Allan Trust v. Dean Witter Reynolds, Inc., Appleton v. Shearson Lehman Hutton, Inc., Simon v. Baraban Securities, Inc., Teiura v. Corporate Benefits Securities, Inc., Arafat v. W,J. Nolan & Co., Brandlin v. Bear, Stearns & Co., and Plycraft Industries v. BOA the firm arbitrated claims brought before the NASD alleging registration, fiduciary duty, and disclosure violations, among other claims, in connection with the offering and sale of financial products.

In Sign-A-Rama v. Mapel (AAA, Orange County) the firm arbitrated an action before the AAA on behalf of the franchisor, which resulted in the termination of the franchisee and an award of damages to the franchisor.

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