American Dairy Queen Corporation v. Universal Investment Corporation, 3:16-cv-00323

Background

American Dairy Queen Corporation (ADQ) sued Universal Investment Corporation (Universal) under the Lanham Act and both parties assert claims under the Wisconsin Fair Dealership Law (WFDL); jury trial set for Sept. 25, 2017.
ADQ terminated Universal’s Dairy Queen license; central WFDL question is whether ADQ had “good cause” by showing Universal failed to comply with essential, reasonable, and non‑discriminatory requirements.
ADQ moved in limine to exclude evidence of non‑compliance by ~40 other Dairy Queen franchisees and to exclude Universal’s damages expert (James Devine); Universal moved to preclude ADQ from arguing Universal failed to cure issues not specified in ADQ’s cure notice.
ADQ also moved (unopposed) to exclude certain evidence under FRE 408 and to exclude damages disclosed after discovery; the court granted those unopposed motions.
The parties dispute (1) relevance and prejudice of third‑franchisee non‑compliance evidence for showing requirements were not essential/reasonable or were enforced discriminatorily, (2) admissibility and reliability of Devine’s simple damages opinion, and (3) whether ADQ may argue Universal refused to communicate or allow inspections as bases for default.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Admissibility of evidence about other franchisees’ non‑compliance	Such evidence is irrelevant because other franchisees are not similarly situated (different contracts, compliance mix, jurisdictions) and would create mini‑trials (Rule 403).	Evidence is relevant to whether ADQ tolerated variances and thus whether requirements were "reasonable and essential"; may also show discrimination.	Denied in part and reserved in part: evidence is relevant to "reasonable and essential" and possibly discrimination; court will address scope/presentation at final pretrial to avoid mini‑trials.
Exclusion of Universal’s damages expert (James Devine) under Daubert/Rule 702	Devine lacks formal qualifications in forecasting/valuation and used no recognized methodology; opinion unreliable.	Devine bases opinion on personal observations and experience with comparable local stores; methodology is simple but appropriate to narrow opinion.	Denied: expert admissible; qualifications based on experience suffice and the simple methodology goes to weight, not admissibility.
Exclusion of ADQ arguments that Universal failed to cure matters not specified in cure notice	ADQ should be barred from arguing non‑cured items not identified in the cure letter.	ADQ contends some communication failures and inspection refusals were identified or necessarily implicated by identified defaults.	Denied: ADQ may present and argue Universal refused to communicate and declined inspections; those relate to identified cure obligations.
Handling of unopposed motions re: FRE 408 and late damages	(No opposition)	(No opposition)	Granted as unopposed.

Key Cases Cited

Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) (district courts act as gatekeepers for expert testimony; Rule 702 admissibility framework)
Walker v. Soo Line R.R. Co., 208 F.3d 581 (7th Cir.) (Rule 702 permits experts whose knowledge is based on experience)
Weir v. Crown Equip. Corp., 217 F.3d 453 (7th Cir.) (Daubert challenges that attack weight, not admissibility, may be addressed through cross‑examination)
Ervin v. Johnson & Johnson, Inc., 492 F.3d 901 (7th Cir.) (three‑part admissibility test for expert testimony under Rule 702 and Daubert)
Morley‑Murphy Co. v. Zenith Elecs. Corp., 142 F.3d 373 (7th Cir.) (Commerce Clause concerns discussed in franchise/dealer contexts)
Ralph Gentile, Inc. v. State Div. of Hearing & Appeals, 334 Wis. 2d 712 (Wis.) (discusses potential Commerce Clause limits on state statutory interpretation)
Johnsted, United States v., 30 F. Supp. 3d 814 (W.D. Wis.) (discusses relevance/reliability standards for expert evidence)