Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_07-cv-00807/USCOURTS-almd-2_07-cv-00807-0/pdf.json

Nature of Suit Code: 196
Nature of Suit: Franchise
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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IN THE DISTRICT COURT OF THE UNITED STATES FOR THE

MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

CURVES INTERNATIONAL, )

INC., )

)

Plaintiff, )

) CIVIL ACTION NO.

v. ) 2:07cv807-MHT

) (WO)

LISA MOSBARGER, )

)

Defendant. )

OPINION

In this lawsuit, plaintiff Curves International,

Inc., a fitness-center franchiser, charges one of its

former franchisees, defendant Lisa Lewis (formerly Lisa

Mosbarger), with, among other things, breach of a noncompete agreement. The diversity-of-citizenship

jurisdiction of the court has been invoked pursuant 28

U.S.C. § 1332.

The court now has before it Curves International’s

motion for preliminary injunction asking that, among

other things, Lewis be enjoined from operating a fitness

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1. Curves International also moves to enjoin Lewis to

return confidential and proprietary business information.

However, neither the briefing nor the evidence at the

preliminary-injunction hearing indicates what

confidential information Lewis possesses. Additionally,

Curves International moves to require Lewis to change the

telephone number of her fitness business on the ground

that the number is the same that she used when she

operated one of Curves International’s franchises. The

evidence reflects, however, that the phone number has

already been changed.

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center pending resolution of this lawsuit.1

 Based on the

evidence presented and argument of counsel, the court

concludes that the motion should be denied.

I. BACKGROUND

The evidence presented to the court reflected the

following:

April 1999: Curves International and Lewis entered

into a franchise agreement that permitted Lewis to open

and operate a Curves fitness-facility in Deatsville,

Alabama for a period of ten years. The agreement further

provided in relevant part: if Lewis abandoned the

franchise, she would be deemed in default and Curves

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International could terminate the franchise; if the

agreement were terminated, Lewis would be prohibited

from engaging in any similar business within 40 miles of

Deatsville for a period of three years; and this noncompete prohibition included serving in any of the

following roles for a nearby competitor: “proprietor,

partner, investor, shareholder, member, director,

officer, employer, employee, principal, agent, adviser,

franchiser, franchisee, consultant or in any other

individual or representative capacity,” Pl. Exh. 4,

§ 9(B). The agreement also provided for one exception to

this non-compete prohibition: if Lewis had an ownershipinterest in a competitor at the time she entered the

franchise agreement, she could continue involvement with

that competitor.

April 2006: As a part of a divorce settlement, Lewis

was awarded a fitness-facility named “Mike’s Gym.” She

renamed the facility “Jordan’s Gym,” after her son, and

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2. At the evidentiary hearing, Lewis and Johnson

testified that Jordan’s Gym is now called Jordan’s

Community Center. However, a sign still remains on the

building carrying the name “Jordan’s Gym.” Pl. Exh. 2.

Additionally, witnesses used the two names

interchangeably. For clarity’s sake, the court will

refer to the facility as Jordan’s Gym.

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has operated the facility ever since, either by herself

or with someone else.2

 

July 2006: Lewis discontinued operation of her

Curves fitness facility. 

October 2006: Lewis informed Curves International

that her Curves facility had closed and would not reopen.

November 16, 2006: Curves International informed

Lewis that her franchise rights were officially

terminated.

August 27, 2007: Acting on complaints from other

Curves franchisees, a Curves official visited Jordan’s

Gym and saw that, indeed, it was a fitness-facility

within 40 miles of Deatsville; the offiical also saw

Lewis conducting an aerobics class in the gym.

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September 7, 2007: Curves International brought this

lawsuit against Lewis, charging (1) breach of contract;

(2) misappropriation of goodwill; (3) trademark

infringement; (4) trademark dilution; and (5) false

designation and misrepresentation of origin. On the same

day, Curves International filed the pending motion for a

preliminary injunction.

II. DISCUSSION

For a preliminary injunction to issue, a moving party

must establish the following: (1) a substantial

likelihood of success on the merits; (2) a substantial

threat of irreparable injury if the preliminary

injunction is not granted; (3) that the threatened injury

to the movant outweighs the threatened harm that the

injunction may cause the opposing party; and (4) that

granting preliminary injunctive relief is not adverse to

the public interest. Ferrero v. Associated Materials,

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Inc., 923 F.2d 1441, 1448 (11th Cir. 1991); Cate v.

Oldham, 707 F.2d 1176, 1185 (11th Cir. 1983).

A. Likelihood of Success on the Merits

Curves maintains that it is likely to succeed on at

least two of its claims: its breach-of-contract claim and

its trademark-infringement claim. 

1. Breach-of-Contract Claim

The franchise agreement contains a provision stating

that “the relationship, rights, and obligations of the

parties of this Franchise Agreement shall be governed by

the internal laws of the state of Texas, except to the

extent governed by the United States Trademark Act of

1946 ....” Pl. Ex. 4, § 14(N). Because the choice-oflaw issue has not been briefed by both parties at this

time, and because the laws of both Texas and Alabama do

not differ materially on the issues before the court, the

court does not resolve which State’s laws apply.

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Under the laws of Alabama and Texas, covenants-notto-compete are enforceable if certain conditions are met.

Gafnea v. Pasquale Food Co., Inc., 454 So.2d 1366 (Ala.

1984); Meineke Discount Muffler v. Jaynes, 999 F.2d 120,

123 (5th Cir. 1993). Alabama law provides that such a

covenant is enforceable if: (1) the party seeking

enforcement demonstrates a protectable interest; (2) the

restriction is reasonably related to that interest; (3)

the scope of the restriction is reasonable; and (4) the

restriction does not impose an undue hardship on the

other party. Benchmark Med. Holdings, Inc. v. Barnes,

328 F. Supp. 2d 1236, 1257 (M.D. Ala. 2004) (Albritton,

J.). According to Texas law, “a covenant not to compete

is enforceable if it is ancillary to or part of an

otherwise enforceable agreement at the time the agreement

is made to the extent that it contains limitations as to

time, geographical area, and scope of activity to be

restrained that are reasonable and do not impose a

greater restraint than is necessary to protect the

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goodwill or other business interest of the promisee.”

Tex. Bus. & Com.Code Ann. § 15.50(a); see also Alex

Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644,

648 (Tex. 2006). 

Lewis does not dispute, at this stage of the

litigation, that the covenant-not-to-compete contained in

the franchise agreement is enforceable under both Texas

and Alabama law. Therefore, the critical question with

regard to this breach-of-contract claim is whether Lewis

breached the agreement.

Lewis offers two reasons why she did not violate the

covenant-not-to-compete: first, she does not operate or

have any financial interest in Jordan’s Gym; and, second,

even if she did own and operate Jordan’s Gym, her actions

were permissible under the franchise agreement because

she already owned that gym at the time she signed the

franchise agreement.

Curves International has established by a

preponderance of the evidence that Lewis is an owner and

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operator of Jordan’s Gym. Lewis received Jordan’s Gym as

part of a divorce decree, and the court is firmly

convinced that Lewis did not sell all her interest in the

gym to Johnson and that, instead, Lewis and Johnson own

and operate Jordan’s Gym together. To be sure, she and

Johnson testified that she sold the gym to him in

exchange for one-percent ownership a horticultural center

called Natural Beauty Garden Center and that he then

leased space from her to house the gym. However, despite

being a part-owner of the garden center for roughly a

year, Lewis has not received any monetary payments

arising out of her ownership interest; Johnson and Lewis

have no documents whatsoever to evidence the substantial

monthly lease-payments they say he made to her; until

recently, Jordan’s Gym used the same phone number as that

used by the Curves gym; when the phone number for

Jordan’s Gym was changed, Lewis, not Johnson, contacted

the phone company and had the gym’s number changed; Lewis

has paid for, or is financially responsible for, the

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legal services Johnson has incurred for his businesses;

Lewis was seen conducting an exercise class at Jordan’s

Gym; Jordan’s Gym bears the name of her son; Jordan’s Gym

is located, in Lewis’s word, in her “backyard”; and,

perhaps most tellingly, in her testimony to this court,

she referred in the present tense to the owners of

Jordan’s Gym as “we” and to the gym itself as “my gym.”

Next, this court turns to Lewis’s alternative

argument that Jordan’s Gym is a successor to a gym she

owned at the time she entered a franchise agreement with

Curves International. By its terms, the contract’s noncompete clause exempts “any interest which Franchisee has

in a competitive business on the effective date of this

Agreement.” Pl. Exh. 4, at § 9(B). However, when Lewis

entered the franchise agreement on April 5, 1999, she did

not own Jordan’s Gym, or its predecessor, Mike’s Gym, and

was awarded the gym in April 2006 as part of a divorce

decree. 

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Admittedly, Lewis testified that she owned and

operated Mike’s Gym before the divorce decree. The law

is, however, clear that the court may believe or

disbelieve a witness, in whole or in part, where that

witness has testified falsely concerning some important

matter. Alexander v. Chattahoochee Valley Community

College, 325 F.Supp.2d 1274, 1292 n.31 (M.D. Ala. 2004)

(Thompson, J.); Eleventh Circuit Pattern Jury

Instructions (Civil Cases), Basic Instructions 3 & 4.1.

Here, Lewis’s testimony that she no longer operated or

had any financial interest in Jordan’s Gym was no mere

tarradiddle; it was wilfully misleading. Because of her

intentionally false statement about Jordan’s Gym, the

court does not credit her statement that she owned and

operated Mike’s Gym before the divorce decree. 

2. Trademark Infringement

Because Curves International is likely to succeed on

its breach-of-contract claim, “the cardinal principle of

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judicial restraint” counsels that this court not

determine whether Curves International is likely to

succeed on its trademark-infringement claim. Morse v.

Frederick, 127 S.Ct. 2618, 2641-42 (2007) (Breyer, J.,

concurring) (“And the cardinal principle of judicial

restraint is that if it is not necessary to decide more,

it is necessary not to decide more.”) (internal

quotation marks omitted); Goodman v. Praxair, Inc., 494

F.3d 458, 476 (4th Cir. 2007) (“we should adhere to the

cardinal principal of judicial restraint, that if it is

not necessary to decide more, it is necessary not to

decide more.”) (internal quotation marks omitted).

 B. Irreparable Harm

Curves International argues that, because the company

would lose customers and goodwill if an injunction were

not issued, it would suffer “irreparable harm.” This

claim of irreparable harm runs up against an axiomatic

principle, however. To show irreparable harm, a movant

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must show that the injury “cannot be undone through

monetary remedies.” Ferrero v. Associated Materials,

Inc., 923 F.2d 1441, 1449 (11th Cir. 1991) (quoting Cate

v. Oldham, 707 F.2d 1176, 1189 (11th Cir. 1983)); see

also BellSouth Telecomm., Inc. v. MCIMetro Access

Transmission Servs., LLC, 425 F.3d 964, 970 (11th Cir.

2005) (“economic losses alone do not justify a

preliminary injunction”).

Curves International has not demonstrated that it is

likely to suffer harm that cannot be corrected monetarily

if a preliminary injunction is not issued. It is true

that “the loss of customers and goodwill is an

‘irreparable’ injury.” Ferrero, 923 F.2d at 1449. Yet,

Curves International has not shown that loss of goodwill

and customers is likely if this court does not

immediately enjoin Lewis from operating Jordan’s Gym.

Curves International has not lost customers as a

result of the existence of Jordan’s Gym; nor is there

evidence that anyone has confused, or is likely to

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confuse, Jordan’s Gym with a Curves franchise. Jordan’s

Gym boasts a large sign that states clearly, “Jordan’s

Gym.” Pl. Exh. 2. Moreover, the equipment used at

Jordan’s Gym is not the same equipment used in Curves

gyms, and, while some of equipment in Jordan’s Gym was

arranged similarly to the way Curves International

arranges its equipment, there is nothing the record to

substantiate that such an arrangement is unique to

Curves. And, finally, while a Curves International

official testified that it might be difficult, or even

“impossible,” to convince a new franchisee to open a

Curves franchise near Jordan’s Gym, the official offers

nothing other than this bare assertion to make the point.

A claim of irreparable injury “must be neither remote

nor speculative, but actual and imminent.” Northeastern

Fla. Chapter of the Ass'n of Gen. Contractors v. City of

Jacksonville, 896 F.2d 1283, 1285 (11th Cir. 1990)

(quoting Tucker Anthony Realty Corp. v. Schlesinger, 888

F.2d 969, 973 (2d Cir. 1989)). Curves International’s

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allegation of loss goodwill does not meet this

prerequisite. Compare BellSouth Telecommunications,

Inc., 425 F.3d at 970 (record showed that, in the absence

of an injunction, “BellSouth was losing about 3200

customers per week”); Spiegel v. City of Houston, 636

F.2d 997, 1001-1002 (5th Cir. 1981) (record showed

business had decreased 50% in the absence of an

injunction) with Rubenstein v. Bauman, No. 1:07cv798,

2007 WL 3120258 (M.D. Ala. Oct. 23, 2007) (Thompson, J.)

(adopting magistrate judge’s opinion denying a

preliminary injunction where speculative assertions

lacked evidence).

C. Weighing the Hardships and the Public Interest

Because Curves International has not demonstrated

irreparable harm, there is no need for the court to weigh

the competing hardships or assess a preliminary

injunction’s impact on the public interest.

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III. CONCLUSION

Because Curves International has not demonstrated

that it will suffer irreparable harm in the absence of an

injunction, its motion for a preliminary injunction will

be denied. An appropriate order will be entered.

DONE, this the 5th day of December, 2007.

 /s/ Myron H. Thompson 

UNITED STATES DISTRICT JUDGE

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