Novus Franchising, Inc. v. Michael Dawson
2013 U.S. App. LEXIS 16103
| 8th Cir. | 2013Background
- Novus operates automotive glass repair franchises with a Minnesota base and sued Dawson in Minnesota federal court for breach of the 2008 franchise agreement and related claims.
- Dawson, a long-time Novus franchisee in Virginia, stopped paying royalties in October 2010 after a franchise was granted in his APR to another operator, creating inter-franchise competition.
- Novus sought a preliminary injunction to enforce the non-compete and to bar Dawson from using Novus marks/products; the district court granted relief on marks but denied the non-compete and dismissed CarMike for lack of Minnesota personal jurisdiction.
- The district court dismissed CarMike, Inc. from the suit for lack of personal jurisdiction, ruling Novus failed to show CarMike’s independent contacts or that Dawson acted as CarMike’s agent.
- Dawson later answered and asserted counterclaims; Novus timely appealed the injunction decision and the CarMike dismissal and the extension of time to answer.
- On appeal, the Eighth Circuit dismissed the CarMike dismissal and answer-extension challenges for lack of appellate jurisdiction, and affirmed the preliminary injunction denying enforcement of the non-compete.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CarMike’s dismissal is appealable | Novus asserts appellate review of the injunctive-order package includes CarMike. | Dawson argues CarMike’s dismissal is tied to the injunction and appellate review is proper. | Appellate jurisdiction lacking; CarMike’s dismissal not appealable. |
| Whether the extension of time to answer is appealable | Novus challenges the extended deadline as part of the injunction order. | Dawson contends extension is a non-appealable interlocutory issue not inseparable from the injunction. | Appellate jurisdiction lacking; extension order dismissed. |
| Whether the district court abused its discretion by denying enforcement of the non-compete in the preliminary injunction | Novus argues irreparable harm and likelihood of success warrant enforcing the non-compete. | Dawson argues no irreparable harm, delay undermines inference of harm, and eBay-type presumptions do not apply. | The district court did not abuse its discretion; irreparable harm not shown under the facts. |
Key Cases Cited
- Carson v. American Brands, Inc., 450 U.S. 79 (1981) (distinction between denials of injunctive relief and practical denials; need for immediate appeal in certain cases)
- General Electric Co. v. Marvel Rare Metals Co., 287 U.S. 430 (1932) (dual inquiry for appellate review of injunctive-denial-like orders; early precedent cited by Carson)
- McNally v. Pulitzer Publ'g Co., 532 F.2d 69 (8th Cir. 1976) (broad statement on appellate review of injunction orders later narrowed by Supreme Court decision)
- Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F.3d 598 (8th Cir. 1999) (delay in seeking relief may defeat irreparable harm in preliminary injunction analysis)