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July 2015

Gordon & Rees Team Obtains Federal Court of Appeals Affirmation of Decision in Favor of National Real Estate Franchisor

Los Angeles Commercial Litigation partner Lisa K. Garner, with a big assist from San Francisco Appellate Practice partner Don Willenburg, obtained a decision from the United States Court of Appeals for the Ninth Circuit, affirming the grant of summary judgment in favor of Gordon & Rees's client, a national real estate franchisor.

The client had terminated its former franchisees, which had offices in Northern California and Hawaii, for, among other things, failing to pay royalties.  The client sought to obtain past due royalties, liquidated damages, and injunctive relief on trademark infringement claims against the former franchisees and the individual guarantors (“Defendants”).  Defendants counter-claimed for breach of contract, fraud, violation of California and Hawaii franchise laws and unfair competition.

In June 2012, Ms. Garner, assisted by others in the Los Angeles office, filed a motion for summary judgment that, due to the complex nature of the claims and counterclaims, involved extensive briefing and evidence.  On August 8, 2012, after oral argument, the Court granted the Motion in full, awarding over $895,000 in damages, including liquidated damages and treble damages against Defendants for willful trademark infringement after termination.  The Court also granted the motion in favor of Gordon & Rees’s client on all the claims brought against them by Defendants.  Then, the Court awarded Gordon & Rees's client attorney fees and costs in the amount of nearly $300,000, bringing the total judgment to just over $1.1 million. 

Two of the individual Defendants, who had guaranteed the financial obligations of the two corporate defendants, appealed the judgment to the Ninth Circuit.  On appeal, the Defendants contended that the district court erred in finding, among others things, that New Jersey law applied to all the claims, that the liquidated damages provision was valid, that treble damages on trademark infringement were warranted, and that the client did not breach any of the franchise agreements.  The Ninth Circuit panel affirmed the district court’s decision in its entirety and even went so far as to state that even if California law applied, the Defendants would still not be able to prevail.  An excellent result after litigation that has taken years.

Lisa K. Garner
Don Willenburg