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Keywords

lawsuitinjunctionmotion
plaintiffdefendantinjunctionhearingpleamotionwilltrade secretcivil procedure

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In re Arthur Treacher’s Franchisee Litigation, 537 F.Supp. 311

Facts

Arthur Treacher's Fish & Chips, Inc. (ATFC) filed a lawsuit against former franchisee Georgios D. Martinos after terminating his franchise agreement. The complaint alleged that Martinos violated a covenant not to compete by continuing to sell seafood products under the name 'Gulliver's Fish & Chips' in Delaware County, Pennsylvania. Martinos had been a successful franchisee, operating multiple restaurants, but the relationship deteriorated due to a decline in services from ATFC, leading to Martinos ceasing royalty payments and eventually being terminated as a franchisee.

On January 5, 1982, plaintiff-franchisor, Arthur Treacher's Fish & Chips, Inc. ('ATFC') filed an action in Delaware County Common Pleas Court against defendant-franchisee, Georgios D. Martinos.

Issue

Did ATFC demonstrate irreparable harm to warrant a preliminary injunction against Martinos for violating the covenant not to compete?

The moving party must clearly demonstrate that it is suffering irreparable harm before an injunction can issue pursuant to Federal Rule of Civil Procedure 65(a).

Rule

To obtain a preliminary injunction, the moving party must demonstrate irreparable harm that is immediate and actual, not speculative, and must show a reasonable probability of success on the merits.

This Court has held that more than a risk of irreparable harm must be demonstrated.

Analysis

The court analyzed whether ATFC could prove that it would suffer irreparable harm if the injunction was not granted. It found that ATFC's claims regarding potential harm from Martinos' continued operation were speculative and not supported by evidence. The court noted that ATFC was not in a position to refranchise Delaware County and that any potential franchisee would likely wait for the legal situation to resolve before investing.

To enjoin preliminarily the sale of seafood by defendant in Delaware County, based upon the supposition that some potential franchisee will not want to purchase a Arthur Treacher's franchise in Delaware County unless Martinos is removed, would ignore the teaching of this Circuit that preliminary injunctions are not entered 'simply to eliminate a possibility of a remote future injury.'

Conclusion

The court denied ATFC's motion for a preliminary injunction, concluding that ATFC did not establish the necessary irreparable harm.

The court at this point does not believe that an adequate factual predicate exists upon which to resolve the question of what trade secrets are possessed by plaintiff and whether they are being used by defendant.

Who won?

Georgios D. Martinos prevailed in the case because the court found that ATFC failed to demonstrate irreparable harm, which is a prerequisite for granting a preliminary injunction.

The court conducted a hearing on this motion for a preliminary injunction on February 8-11, 1982. Because the plaintiff has not demonstrated to this Court that it will suffer irreparable harm absent a grant of the preliminary injunction, the motion will be denied.

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