857 F. Supp. 2d 489
D. Del.2012Background
- Capriotti’s filed suit in Delaware on Jan 17, 2012 against TFH and Taylor, seeking to terminate the Nevada franchise based on alleged unauthorized use of Capriotti’s marks.
- Capriotti’s asserted the Crazy Horse III happy-hour promotion used Capriotti’s marks without authorization, linking the brand to adult entertainment.
- Franchise agreement (Mar 17, 2003) required franchisor-approved advertising and compliance with franchisor standards; termination if noncompliance occurred.
- Capriotti’s notified defendants of default (Nov 15, 2011) and termination (Nov 28, 2011) for alleged breach related to the promotion; defendants continued operating the franchise.
- Delaware court held a limited evidentiary hearing (Apr 11, 2012) after initial scheduling and a later motion to transfer, with Waugh’s credibility central to the dispute.
- Court granted in part the motion to dismiss or transfer (to Nevada) and denied the preliminary injunction request without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction and proper venue | Capriotti’s argues Delaware has jurisdiction; waiver via filing in Delaware. | Defendants contend lack of jurisdiction/venue in Delaware. | Consistent with consent/waiver, jurisdiction and venue are proper; transfer to Nevada granted. |
| Whether a preliminary injunction should be issued | Capriotti’s seeks to prevent ongoing franchise operation pending resolution. | Defendants argue no likelihood of success and potential prejudice; credibility issues with key witness. | Denied preliminary injunction without prejudice. |
| Whether the case should be transferred to District of Nevada | Delaware forum is appropriate; no strong private/public factors favor transfer. | Nevada is more convenient due to witnesses and origins of dispute; public/private factors weigh in favor transfer. | Motion to transfer granted to District of Nevada. |
| Breach of franchise agreement by Taylor or TFH | Taylor/TFH failed to prevent unauthorized Capriotti’s use by Crazy Horse and promoted a quasi-sponsor relation. | Defendants dispute that they breached or that any authorization was granted. | Breach and remedies unresolved on record; injunction denied pending further evidence. |
| Lanham Act and related claims surviving termination | Unauthorized promotion harmed Capriotti’s goodwill and marks. | Defendants deny liability and rely on defense to termination. | Claims remain contingent on merits; court did not grant injunction and left relief open. |
Key Cases Cited
- Interpole, Inc. v. Res. Ventures, Inc., 940 F.2d 20 (1st Cir. 1991) (consent/waiver can confer jurisdiction; broad take on submitting to forum)
- Marron v. Whitney Group, 662 F. Supp. 2d 198 (D. Mass. 2009) (consent/waiver of jurisdiction via related proceedings in forum)
- Larson v. Galliher, 2007 WL 81930 (D. Nev. 2007) (waiver/consent concepts used to justify jurisdictional reach)
- Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) (broader, multifactor transfer analysis (private/public factors))
- Interpole, Inc., 940 F.2d 20 (1st Cir. 1991) (consent/waiver and jurisdictional analysis in context of related actions)
- Praetorian Specialty Insurance Co. v. Auguillard Construction Co., Inc., 829 F. Supp. 2d 456 (W.D. La. 2010) (out-of-state defendants filing suit in state court may affect jurisdiction in related federal actions)
- Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61 (3d Cir. 1984) (requirements for a preliminary injunction; burden on movant)
- eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (S. Ct. 2006) (injunctions are extraordinary; likelihood of success and irreparable harm required)