David Schwartz v. Rent A Wreck of America Incorporated
468 F. App'x 238
4th Cir.2012Background
- Consolidated appeals stem from a jury verdict recognizing a contract based on a course of dealing between RAWA/Bundy and RAWI/Schwartz regarding Schwartz’s West Los Angeles operation.
- The 1977 and 1988 assignments allegedly extinguished rights in the Rent-A-Wreck mark, but the 1985 Agreement preserved Schwartz’s right to concurrent use at his West Los Angeles facility.
- RAWA leased and operated Schwartz’s West Los Angeles location starting in 1987, then terminated the lease in 1990, after which Schwartz continued using the marks.
- RAWA’s UFOCs (2001–2002) listed Schwartz as a current franchisee and referenced a royalty-free arrangement, though no formal franchise agreement existed.
- The district court granted partial Rule 50(b) relief in favor of plaintiffs on some issues and denied others, and later ordered modifications to the defendants’ website.
- The appeals raise whether the jury verdict was advisory or binding, the scope and duration of any implied contract, and the validity and scope of exclusivity within California law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of a contract implied by course of dealing | Schwartz/RAWI proved implied contract. | Assignments extinguished rights; no implied term. | Yes, implied contract found. |
| Duration of the implied contract | Duration should extend beyond life; implied term indefinite. | Duration fixed by law as remaining term. | Duration is life of Schwartz. |
| Validity of exclusivity under § 16600 | Exclusive territory justified to protect trademark/goodwill. | In-term restraint void; forecloses competition. | Question of foreclosure to go to jury; not per se void. |
| FRANCHISE-like obligations and royalties | Appellees should receive franchise benefits without obligations. | If implied as franchise, they must meet obligations and royalties. | Appellees not entitled to royalty-free status; must meet obligations. |
| Impact of Priceless entities within exclusive territory | Priceless cannot operate within Schwartz’s territory. | Priceless operations allowed. | Priceless excluded from exclusive territory by remand; depends on exclusive contract terms. |
Key Cases Cited
- F.B.T. Prods., LLC v. Aftermath Records, 621 F.3d 958 (9th Cir. 2010) (contract interpretation when unambiguous; parol evidence limited)
- Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC, 111 Cal. Rptr. 3d 173 (Cal. Ct. App. 2010) (implied terms; read with express terms)
- Fisherman’s Wharf Bay Cruise Corp. v. Superior Court, 7 Cal. Rptr. 3d 628 (Cal. Ct. App. 2003) (exclusive dealing may be permissible; depends on market foreclosure)
- Comedy Club, Inc. v. Improv West Assocs., 553 F.3d 1277 (9th Cir. 2009) (in-term covenants to not compete; reasonableness in market share context)
- Dayton Time Lock Serv., Inc. v. Silent Watchman Corp., 124 Cal. Rptr. 678 (Cal. Ct. App. 1975) (in-term exclusive deals; not void if not foreclosing substantial market)