Terrier, LLC v. HCAFranchise Corporation, 2:22-cv-01325-GMN-EJY

Background:

Plaintiffs Terrier, LLC and two individual owners entered a 2006 franchise agreement with HCAFranchise Corp. to operate a home-care franchise in four New Mexico counties; original term 15 years with conditional renewals (potentially aggregating to 65 years).
Plaintiffs transferred operations to Terrier in 2019 and remained bound by the Agreement’s post-term non‑compete; they invested over $500,000 in the business.
Plaintiffs exercised a renewal right in May 2021; defendant later supplied a September 2021 "Demand Agreement" (renewal form) that included a discretionary franchisor purchase/right‑to‑buy provision; Plaintiffs refused to sign.
Parties executed multiple short extensions of the existing Agreement; the latest extension expired September 15, 2022; Plaintiffs sued in August 2022 seeking injunctive/declaratory relief and to seal filings.
Plaintiffs sought emergency TRO and preliminary injunction to prevent enforcement of the purchase right or the post‑term non‑compete; they also moved to seal complaint and exhibits as confidential.
The court denied the TRO and preliminary injunction for failure to satisfy Winter factors and denied the motion to seal without prejudice for lack of compelling reasons/redaction specificity.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
Motion to Seal judicial filings	Documents contain confidential proprietary franchise negotiation terms and a confidentiality agreement requires sealing	Plaintiffs failed to show compelling reasons or identify redactions	Motion to seal denied without prejudice; court invited renewed, specific motion
Enforceability of post‑term covenant not to compete	Non‑compete is unenforceable facially and as‑applied	Non‑compete is reasonable and not justiciable now	Court held covenant is likely reasonable under NM and NV law; plaintiffs not likely to succeed
Breach of contract re: renewal and purchase‑right addition	Franchisor breached by imposing substantially different terms (including purchase right) and acted unconscionably	Agreement expressly permits franchisor, at its sole discretion, to include substantially different renewal terms	Court held Agreement unambiguous; renewal clause permits substantially different terms; plaintiffs unlikely to prevail on breach claim
Implied covenant & injunctive relief (Winter factors: likelihood, irreparable harm, equities, public interest)	Franchisor’s actions (demand agreement or invoking non‑compete) would cause irreparable harm and public harm by stopping care services	Alleged harms arise from express contract terms; injuries are self‑inflicted; enforcement furthers contractual predictability	Court found plaintiffs failed to show likelihood of success or irreparable harm; equities and public interest favor defendant; TRO/PI denied

Key Cases Cited

Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) (establishes four‑factor preliminary injunction standard)
Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172 (9th Cir. 2006) (compelling‑reasons standard for sealing judicial records)
Nixon v. Warner Commc'ns Inc., 435 U.S. 589 (1978) (public access to court records principle)
Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122 (9th Cir. 2003) (limits on sealing for mere embarrassment or litigation exposure)
Bowen v. Carlsbad Ins. & Real Estate, Inc., 724 P.2d 223 (N.M. 1986) (restrictive covenant reasonableness analysis)
Shores v. Global Experience Specialists, Inc., 422 P.3d 1238 (Nev. 2018) (Nevada framework for scrutinizing post‑employment covenants)
Jones v. Deeter, 913 P.2d 1272 (Nev. 1996) (protecting business goodwill via reasonable restrictions)
Rent‑A‑Center, Inc. v. Canyon Tele. & Appliance Rental, Inc., 944 F.2d 597 (9th Cir. 1991) (economic loss alone generally does not constitute irreparable harm)
Am. Trucking Ass'ns, Inc. v. City of Los Angeles, 559 F.3d 1046 (9th Cir. 2009) (intangible injuries, e.g., goodwill, can be irreparable)