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Dunkin' Donuts Franchising, LLC v. 14th St. Eatery, Inc.

United States District Court, D. Columbia.

May 5, 2015

DUNKIN' DONUTS FRANCHISING, LLC, Plaintiff,
v.
14th STREET EATERY, INC., et al., Defendants

For Dunkin' Donuts Franchising, LLC, Plaintiff: Chantelle M. Custodio, PESSIN KATZ LAW, P.A., Towson, MD USA.

MEMORANDUM OPINION

TANYA S. CHUTKAN, United States District Judge.

Plaintiff Dunkin' Donuts Franchising, LLC (" Dunkin' Donuts" ) brings this action against 14th Street Eatery, Inc., Mohammad Hoque, and Yasmin Parveen (collectively, the " Defendants" ) for breach of contract and trademark infringement. Dunkin' Donuts alleges that Defendants failed to pay franchise and other fees, and as a result Dunkin' Donuts terminated the franchise agreement between the parties. Despite this termination, Defendants continue to operate an eatery holding itself out as a Dunkin' Donuts franchise, thereby infringing Dunkin' Donuts' trademarks and violating the terms of a covenant not to compete. Before the Court is Dunkin' Donuts' motion for a preliminary injunction, which Defendants have failed to oppose. Upon consideration of the uncontested motion, the entire record, and for the following reasons, the motion is granted.[1]

I. BACKGROUND

Dunkin' Donuts is an international franchisor of eateries that sell doughnuts, coffee, bagels, and other related products. (Mot. 1-2). Dunkin' Donuts and its franchisees currently operate over 3,700 stores in the United States and over 1,400 stores outside the United States. ( Id. at 3). As part of its franchise model, Dunkin' Donuts has developed a standardized system of operating and maintaining its restaurants. This system includes the use of registered Dunkin' Donuts trademarks.

Dunkin' Donuts and Defendants entered a franchise agreement in 2011 that permitted Defendants to operate a Dunkin' Donuts franchise at 2001 14th Street N.W. in the District of Columbia. As part of the franchise agreement, Defendants were required to pay periodic franchise and advertising fees to Dunkin' Donuts, calculated as a percentage of gross sales. (Compl. Ex. A).

In early 2015, Defendants apparently failed to make the necessary payments. As a result, Dunkin' Donuts notified Defendants in writing that Defendants were in breach of the franchise agreement and were required to immediately pay the outstanding fees. After receiving no response, in April 2015 Dunkin' Donuts terminated the franchise agreement with Defendants. Defendants nonetheless continue to operate a restaurant purporting to be a Dunkin' Donuts franchise. According to Dunkin' Donuts, this infringes their trademarks and also violates a provision in the franchise agreement restricting Defendants right to operate a competing restaurant. As a result, Dunkin' Donuts filed the instant lawsuit and moved for a preliminary injunction enjoining the Defendants from continuing to operate an unauthorized Dunkin' Donuts franchise. The Court entered a scheduling order on the motion for a preliminary injunction which Dunkin' Donuts served on Defendants, but Defendants have failed to respond in the three weeks since service was made.

II. LEGAL STANDARD

In order to prevail on a motion for a preliminary injunction, the movant must show " that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). A preliminary injunction is an " extraordinary and drastic remedy" that is " never awarded as of right." Munaf v. Geren, 553 U.S. 674, 689-90, 128 S.Ct. 2207, 171 L.Ed.2d 1 (2008) (citations omitted). The moving party must demonstrate a likelihood of success on the merits, id, and some injury, as " the basis of injunctive relief in the federal courts has always been irreparable harm." Sampson v. Murray, 415 U.S. 61, 88, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974) (quoting Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506-07, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959)).

III. ANALYSIS

a. Jurisdiction

Because Defendants have not responded or appeared, the court will briefly address its jurisdiction to decide the motion. Dunkin' Donuts brings claims for trademark infringement, therefore the court has subject matter jurisdiction pursuant to 15 U.S.C. § § 1114 and 1116 and 28 U.S.C. § 1338, and may assert jurisdiction over additional state and common law claims pursuant to 28 U.S.C. § 1367. Dunkin' Donuts has also made a prima facie showing that the court has personal jurisdiction with respect to the Defendants. Mwani v. bin Laden, 417 F.3d 1, 7, 368 U.S.App.D.C. 1 (D.C. Cir. 2005). Defendant 14th Street Eatery, Inc. is a corporation organized under the laws of the District of Columbia with its principal place of business in the District, thus establishing personal jurisdiction. D.C. Code § 13-422. Defendants Hoque and Parveen are residents of the Commonwealth of Virginia; however, Dunkin' Donuts avers that both defendants regularly conduct business in the District via their operation of the Dunkin' Donuts franchise in the District. (Compl. ¶ ¶ 4-5). This is enough to make a prima facie showing of personal jurisdiction under the District of Columbia's long-arm statute. That statute allows a court in the District to exercise personal jurisdiction over a non-resident defendant with respect to claims arising from the defendant's conduct in, inter alia, transacting business in the District of Columbia and contracting to supply services in the District of Columbia. D.C. Code § 13-423(a). Exercising personal jurisdiction over the individual defendants here comports with the requirements of due process, as Hoque and Parveen's operation of the franchise shows that they have purposefully availed themselves of the benefits of conducting business in the District, thereby establishing the " minimum contacts" necessary to confirm that the " the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks omitted).

b. Likelihood of Success on the Merits

Dunkin' Donuts has shown a likelihood that it will succeed on the merits of its claims. According to the uncontested facts, Defendants failed to timely pay franchise, advertising, and other fees according to the terms of the franchise agreement. (Zullig Aff ¶ 17). As a result, Dunkin' Donuts notified Defendants of their breach and gave them an opportunity to cure (as was required under the agreement).[2] When Defendants failed to cure (or apparently to respond at all), Dunkin' Donuts exercised their contractual right to terminate the franchise agreement. After the ...


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