Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-02565/USCOURTS-azd-2_09-cv-02565-1/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1051 Trademark Infringement

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NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Native New Yorker Franchising, Inc.

Plaintiff, 

vs.

Shabaz, Inc., et al. 

Defendants. 

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No. CV-09-2565-PHX-GMS

ORDER

Pending before the Court is the Motion for Preliminary Injunction (Dkt. # 6.) filed by

Plaintiff Native New Yorker Franchising, Inc. (“Native New Yorker”) against Defendants

Shabaz, Inc., Parham and Jane Doe Shabaniani, Kamran and Jane Roe Shabaniani, and Kathy

and John Doe Larson (collectively “Defendants”). Specifically, Native New Yorker seeks

an injunction against Defendants, who previously operated a Native New Yorker Franchise,

to prevent them from misusing its intellectual property, to enforce a non-compete agreement

between the parties, and to enforce Defendants’ agreement to assign its telephone listings to

Native New Yorker. (Id.) The Court grants the Motion, as set forth below. 

DISCUSSION

The Federal Rules of Civil Procedure authorize the Court to issue a preliminary

injunction upon a proper showing. Fed. R. Civ. Pro. 65(a). To prevail on a request for a

preliminary injunction, a plaintiff must show either “(a) probable success on the merits

Case 2:09-cv-02565-GMS Document 26 Filed 04/29/10 Page 1 of 4
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At a status conference held on April 28, 2010, Native New Yorker’s counsel

conceded that Defendants had returned its intellectual property and that a preliminary

injunction was no longer necessary to protect Native New Yorker’s intellectual property

rights. 

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combined with the possibility of irreparable injury or (b) that [it] has raised serious questions

going to the merits, and that the balance of hardships tips sharply in [its] favor.” Bernhardt

v. L.A. County, 339 F.3d 920, 925 (9th Cir. 2003). The Ninth Circuit has explained that

“these two alternatives represent ‘extremes of a single continuum,’ rather than two separate

tests. Thus, the greater the relative hardship to the moving party, the less probability of

success must be shown.” Immigrant Assistant Project of L.A. County Fed’n of Labor

(AFL-CIO) v. INS, 306 F.3d 842, 873 (9th Cir.2002) (citation omitted).

The Ninth Circuit’s test for a preliminary injunction is met in this case, at least with

respect to Native New Yorker’s claims for breach of the parties’ franchise agreement.1

 First,

Native New Yorker has demonstrated a likelihood of success on the merits. With respect to

their claim that Defendants are in breach of the franchise agreement’s non-compete clause,

Native New Yorker has presented undisputed evidence that Defendants were still operating

a competing restaurant in Maricopa County as of November 5, 2009. (Dkt. # 6, Ex. B.)

Native New Yorker has also presented evidence that the non-compete agreement was

reasonable in both geographic scope and time. (See id., Ex. A at ¶ 12.) The potential for

irreparable injury exists in this case because Native New Yorker’s “goodwill and reputation

would be damaged” if Defendants are permitted to operate their restaurant, which is similar

in feel and cuisine to that of Native New Yorker’s franchises, in the exact location that was

formerly a Native New Yorker restaurant. See Lockhart v. Home-Grown Inds., Inc. 2007 WL

2688551, at *4 (W.D. N.C. Sept. 10, 2007) (enforcing a post-termination covenant not to

compete and enjoining former franchisee from operating similar restaurants at the former

franchise locations). Similarly, Native New Yorker has presented undisputed evidence that

Defendants have not yet transferred their telephone listing to Native New Yorker, in breach

of the Franchise Agreement. (Id. at Ex. A ¶ 10.) This presents the possibility of irreparable

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harm because customers calling to do business with a Native New Yorker franchise may be

drawn to Defendants’ competing business, and Native New Yorker’s reputation and goodwill

may subsequently suffer. C.f. Lockhart v. Home-Grown Inds., Inc. 2007 WL 2688551, at *4.

The fact that Defendants may have temporarily abated their misconduct does not alter

this analysis. According to the Ninth Circuit, “An action for an injunction does not become

moot merely because the conduct complained of was terminated.” See FTC v. Affordable

Media, LLC, 179 F.3d 1228, 1237 (9th Cir. 1999). “[O]therwise the defendant[] would be

free to return to [his] old ways.” Id. In order to successfully show that “injunctive litigation

is now moot,” a defendant must “demonstrate that there is no reasonable expectation that the

wrong will be repeated.” Lynn v. Biderman, 536 F.2d 820, 825 (3rd Cir. 1976). On March

24, 2010, Defendants’ former attorney filed a motion to withdraw, noting that “[D]efendants

have ceased operations of their business,” and that they “will not be able to afford to pay any

attorney fees or cost associated with this matter.” (Dkt. # 16.) Defendants’ former attorney

further noted that “[s]everal of the [D]efendants . . . intend to file bankruptcy, thus ultimately

ending the prosecution of this matter.” (Id.) To date, however, it appears as though none of

the Defendants have filed bankruptcy, and none have expressed their intent to do so.

Defendants further have not presented any evidence of their alleged insolvency. Defendants,

therefore, have not met their burden of “demonstrat[ing] that there is no reasonable

expectation that the wrong will be repeated.” See Lynn, 536 F.2d at 825. Accordingly, to the

extent that Native New Yorker contends that Defendants are in breach of their non-compete

agreement and that Defendants have failed to transfer their telephone listing to Native New

Yorker, the Court grants the Motion for Preliminary Injunction.

IT IS THEREFORE ORDERED that Native New Yorker’s Motion for Preliminary

Injunction is GRANTED (Dkt. # 6) as follows:

(1) During the pendency of this litigation, Defendants, their affiliates, subsidiaries,

officers, agents, employees, and those persons acting in concert or participation with them,

or under their control, are ORDERED to abide by the restrictions described in the party’s

Franchise Agreement (see Dkt. # 6, Ex. A.);

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(2) Defendants are ORDERED to assign to Native New Yorker any telephone

numbers used in connection with the operation of their former Native New Yorker

Restaurant. 

(3) Within fourteen (14) days from the issuance of this Order, Defendants SHALL

also provide any necessary documentation to Native New Yorker demonstrating that the

telephone listings have been properly assigned. 

IT IS FURTHER ORDERED that, pursuant to Federal Rule of Civil Procedure

65(c), Native New Yorker SHALL post a $5,000 bond as security for this preliminary

injunction. The bond SHALL be posted no more than seven (7) days from the date of this

Order. 

IT IS FURTHER ORDERED directing Native New Yorker to serve notification of

this Order upon all Defendants within seven (7) days from the issuance of this Order. 

DATED this 29th day of April, 2010.

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