# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 3- 13 87

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H&R Bl oc k Tax Serv ic es LLC

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Lut ga rd o Ace ve do -Lop ez

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

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App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Weste rn Dis tri ct of M is so ur i - Kan sa s C it y

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Su bm it te d: Sep te m

be r 24 , 20 13
Fil ed : Fe br

ua ry 12 , 20 14

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Befo re LOKEN, COLLO TON, and BENTON, Circu it Ju dg es

.

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LOKEN, Ci rcu it Ju dg e

Thi s is a di ve rs it y act io n be twee n H&R Bl oc k Ta x Serv ic es LLC (“ Bl oc k” ),

a Mi ss ou ri co m

pa ny he ad qu art ered in Kan sa s Ci ty, an d a Pu e r t o R i c an fran ch is ee,

Lut ga rd o Acev ed o- Lop ez. Bl oc k ap pe al s a di st ric t co ur t or de r de nyin g B l oc k’s

m ot io n fo r a p rel im in ary in jun ct io n re qu iri ng Acev ed o- Lop ez t o c om pl y wit h p os tte rm in at io n co ve na nt s i n th e fran ch is e ag reem en t. The di st ric t co ur t de ni ed apr el im in ary in jun ct io n be cau se Bl oc k “ ha s no t de m on st rat ed th a t i t wil l su ffer

irr ep arab le ha rm if th e Co ur t do es no t iss ue an in jun ct io n.” W e ha ve juri sd ic ti on to

rev ie w “ or de rs

. . . refu si ng

. . . in jun ct io ns .” 28 U.S.C. § 12 92 (a)( 1)

. W e co nc lu de

th e di st ric t co ur t’s fai lu re to m ak e sp eci fic fin di ng s an d ex pl ai n it s ru li ng , as Fed

. R.

Ci v. P. 52 (a)( 2) req ui res , res ul ts in a reco rd th at do es no t “ su ffi ci en tl y in fo rm [ th is ]

co ur t of th e ba si s fo r th e tri al co ur t’s de ci si on on th e m at eri al is su e.” Fi nn ey v. Ark

. Bd

. of Co rr., 50 5 F.2 d 19 4, 21 2 n.1 6 (8 th Ci r. 19 74 ). Acco rd in gl y , w e v a c at e th e

or de r an d re m an d.

I.

The reco rd on ap pe al pr ov id es on ly li m it ed ba ck gr ou nd fact s, pr im ari ly in th e pl ead in gs an d i n co nt ract do cu m en ts at ta ch ed as ex hi bi ts to Bl oc k’s Co m pl ai nt . In
Aug us t 20 07

, Bl oc k pa id $1 ,00 0,0 00 fo r th e cl ie nt li st s of Acev ed o- Lop ez’s ex is ti ng

ta x pr ep arat io n bu si ne ss in Pu ert o Ri co ; Acev ed o- Lop ez ag reed to co nv ert hi s

ex is ti ng of

fic e lo cat i o n s in to “ Bl oc k br an de d fran ch is e of fic es ” op erat in g un de r a

st an da rd Bl oc k Fran ch is e Lice ns e Agr eem en t, as m od ifi ed by th e pa rti es ’ Co nv ers io n Agr eem en t. The Co nv ers io n Agr eem en t pr ov id ed th at Bl oc k li cen se d th e cl ie nt li st s

to Acev ed o- Lop ez fo r us e “ pu rs ua nt to ” th e Fran ch is e Lice ns e Agr eem en t. Lik e th e

pa rti es ’ do cu m en ts , we wil l re fer t o t ha t l at te r ag reem en t as th e FLA.

In Ja nu ary 20 12

, Bl oc k lo an ed Acev ed o- Lop ez $8 00 ,00 0 to acq ui re cl ie nt li st s

an d ot he r as se ts of a ta x ad vi so r do in g bu si ne ss at fo ur lo cat io ns th at be cam e
ad di ti on al “ App ro v e d Lo cat io ns ” un de r th e FLA. On Aug us t 21 , 2 01 2, Bl oc k se nt

Acev ed o- Lop ez a Not ic e of Brea ch de cl ari ng th at he owe d $5 31 ,40 5.4 6 “ in ov erd ue

ro y al ty pa y m en ts an d ot he r ch arg es ” an d $30, 000 un de r a pr io r se tt le m en t ag reem en t.

The No t i c e s t at ed th at

, if Acev ed o- Lop ez di d no t cu re th is br each by Sep te m be r 6,

“ y o u r f r an ch is e ag reem en t(s ) wil l be im m ed ia te ly te rm in at ed .” On Sep te m be r 11

, Bl oc k se nt Acev e do -Lop ez a Not ic e of Term in at io n st at in g th at

, as th e ov erd ue

am ou nt s rem ai ne d un pa id

, “ y ou r FL A i s t e r m in at ed effe ct iv e as of th e da te of th is

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-le tt er.” Th e Not ic e d em an de d p ay m en t o f th e Ja nu ary 20 12 lo an an d “ al l s um s d ue

an d owi ng ,” im m ed ia te de li ve ry to Bl oc k of al l cl ie nt li st s an d da ta

, an d co m pl ia nc e
wit h th e po st

- t e r mi n at io n co ve na nt s in Sect io n 12 of th e FLA. Tho se co ve na nt s

in cl ud e a pr ov is io n th at Acev ed o- Lop ez an d h i s a s so ci at es sh al l no t fo r two y ears

“ en ga ge in an y bu si ne ss wh i c h o f f e r s a ny p ro du ct or se rv ic e th e sa m e as or si m il ar

to an y Aut ho riz ed Serv ic e in or wi th in 25 m il es of t he Fran ch is e Terri to ry .”

On Nov em

be r 1, 20 12

, B l oc k fil ed th is act io n in th e W es te rn Dis tri ct of

Mi ss ou ri, as se rti ng fiv e br each of co nt ract ca use s of act io n an d se ek in g co m pe ns at or y
da m ag es an d pr el im in ary an d pe rm an en t in jun ct iv e rel ie f. Less th an on e week la te r,

Bl oc k fil ed it s m ot io n fo r a pr el im in ary in jun ct ion or de rin g Acev ed o- Lop ez to de li ve r

th e cl ie nt li st s an d ot he r m at eri al s he ha d wro ng fu ll y ret ai ne d an d “ to refr ai n fro m

op erat in g an y ta x ret ur n pr ep arat io n bu si ne ss wit hi n 2 5 m il es of hi s fo rm erl y
fran ch is ed lo cat io ns .” Fo ll owi ng se rv ic e on Nov em be r 30 an d br ie f e x t e n s i on s

gr an te d Ace ve do -Lop ez t o h ire lo cal co un se l and res po nd , Acev ed o- Lop ez fi le d a n

an swe r, co un te rcl ai m , an d op po si ti on to th e m ot io n fo r pr el im in ary in jun ct io n. The se

p le ad in gs (i) de ni ed th at he ha d br each ed th e FLA be cau se he ha d co mp l i e d w i t h

“ ve rb a l i n s t ru ct io ns ” by na m ed “ Exe cu ti ve Offi cers ” of Bl oc k to pr ep are “ se t-o ff”

cal cu la ti on s; (ii ) as se rte d th at Bl oc k owe d hi m $3 50 ,00 0 un de r th e Ja nu ary 20 12 lo an

ag reem en t; an d (ii i) ar g u e d t h at Bl oc k wou ld no t li ke ly su ffer irr ep arab le in jury

be cau se Acev ed o- Lop ez was st il l a fran ch is ee an d was av ai la bl e “ to pe rfo rm se rv ic es

as a B l o c k F r a nc hi se e un ti l th e cas e was res ol ve d.” Elev en da y s la te r, wit ho ut

ho ld in g a n e v i d en ti ary he ari ng , th e di st ric t co ur t en te red th e on e-p ag e Ord er be in g

ap pe al ed , whi ch st at ed :

The Co ur t fin ds th at pl ai nt iff is no t en ti tl ed to a pr el im in ary i n ju n c t i o n a f

te r

care fu ll y co ns id eri ng th e Data ph as e fact or s. See Data ph as e Sy s., In c. v. CL Sy s., In c., 64 0 F

. 2d 10 9 (8 th Ci r. 19 81 ). Sp eci fic al ly, pl ai nt iff ha s no t de m on st rat ed th at it wil l su ffer irr ep arab le ha rm if th e Co ur t do es no t is su e an in jun ct io n.

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-II

.

A. On ap pe al

, Bl oc k fir st arg ue s th at th e di st ric t c o u r t’s Ord er m us t be

rev ers ed be cau se th e co ur t fai le d to fin d fact s wit h th e pa rti cu la rit y req ui red by Ru le

52 (a)( 2)

. Tho ug h th e Ru le is st at ed cat eg or i c a l l y

- - “t h e co ur t m us t

. . . st at e th e

fin di ng s an d co nc lu si on s th at su pp or t” it s gr an t or de ni al of a pr el im in ary in jun ct io n

-- we m eas ur e co m

pl ia nc e by a pr act ic al , n ot a fo rm al is ti c, st an da rd : “ th e [d is tri ct ]
ju d g e n e ed on ly m ak e br ie f, de fin it e, pe rti ne nt fin di ng s an d co nc lu si on s up on th e

co nt es te d m at te rs ; t h ere is no ne ces si ty fo r ov er-e la bo rat io n of de ta il or

pa rti cu la riz at io n of fact s. Mer el y in di cat in g th e fact ua l ba si s fo r th e ul ti m at e

co nc lu si on wil l su ffi ce in m os t cas es .” Ost hu s v. W hi te se ll Co rp ., 63 9 F.3 d 84 1, 84 5
( 8 t h Ci r. 20 11 ) (q uo ta ti on s an d ci ta ti on s om it te d)

. The fin di ng s req ui red are n o t juri sd ic ti on a l

. “ An ap pe ll at e co ur t m ay ren de r a de ci si on in th ei r ab se nc e if it feel s

th at it is in a po si ti on to do so

. [Bu t] it m ay no t mak e i t s o w n f i n d i ng s of fact .”

Fi nn ey , 50 5 F .2d at 2 12 n.1 6.

App lying th is pe rm is si ve st an da rd

, th e qu es ti on is whe th er th e di st ric t co ur t’s

cu rs or y st at em en t th at Bl oc k fai le d to de m on st rat e “ th at it wil l su ffer i r r e p a r a b le

ha rm ” ab se nt a pr el im in ary in jun ct io n “ su ffi ced

. ” The co ur t cl ari fie d th at it ha d

pr op erl y co ns id ered th e fo ur “Da t a p ha se fact or s,” whi ch are th reat of irr ep arab le

in jury to t he m ov an t, t he ba la nc e b et ween th is ha rm an d h arm

th e in jun ct io n wo ul d

in fli ct

, th e m ov an t’s li ke li ho od of su cces s on th e m eri ts

, an d th e pu bl ic in te res t. See,

e.g ., Hom e In st ead

, In c. v. Fl or en ce, 72 1 F.3 d 49 4, 49 7 ( 8 t h C ir. 20 13 ). W it ho ut

qu es ti on th e co ur t th e n f o c u s e d on an es se nt ia l pa rt of th at te st

. “ Is su in g a

pr el im in ary in

jun ct io n ba se d on ly on a po ss ib il it y of irr ep arab le ha rm is in co ns is te nt

wit h ou r ch ara c t e r i zat io n of in jun ct iv e rel ie f as an ex tra or di na ry rem ed y th at m ay

on ly be award ed up on a cl ear sh owi ng th at th e pl ai nt iff is en ti tl e d to su ch rel ie f.”

W in te r v. Nat. Res

. Defen se Co un ci l, In c., 12 9 S. Ct

. 36 5, 37 5- 76 (2 00 8)

. Bu t Ru le

52 (a)( 2) st il l req ui res a cl os e lo ok at th e na tu re of t h e l a w s u i t a nd th e sh owi ng of

irr ep arab le in

jury that Blo ck in fact m ad e.

-4

-Fran ch is e te rm in at io n li ti ga ti on ha s be en pr ev al en t i n rece nt de cad es , an d

m ot io ns fo r pr el im in ary in jun ct iv e re lie f by fran ch is or s an d fran ch is ees are a co m m on

feat ur e of th es e la wsu it s. A fran ch is ee m ay pe rs ua de th e co ur t t o g ran t p rel im in ary
rel ie f if te rm in at io n th reat en s th e to ta l de st ru ct io n of an es ta bl is he d bu si ne ss

. On th e

ot he r ha nd

, th e fran ch is or is of te n -- bu t n o t a l w a ys -- gr an te d a pr el im in ary

in jun ct io n if th e fran ch is ee ha s t e r mi n a t e d th e ag reem en t an d co nt in ue s to us e th e

fran ch is or ’s tra de m ark s or tra de se cret s or is vi ol at in g a po st -te rmi n a t io n co ve na nt

no t to co m

pe te by so li ci ti ng fo rm er cu st om ers to ab an do n es ta bl is he d lo y al ti es

. See

a le ng th y rev ie w of th es e au th or it ie s in 3 W

. Mi ch ael Garn er, Fran ch Dis tri b Law &

Prac §§ 17 .40 -1 7.4 1 (2 01 3)

. Su rv ey in g cas es whe re fran ch is or s so ug ht pr el im in ary

in jun ct iv e rel ie f, th e au th or co m m en te d, “ Co ur ts ha ve re a c h ed ve ry di ffer en t

co nc lu si on s ab ou t irr ep arab le in jury on ve ry si m il ar fact s.” Id

. at § 17 .41

, p. 28 4. W e

rev ie w th e gr an t or de ni al of a pr el im in ary in jun ct io n fo r ab us e of th e di st ric t co ur t’s

br oa d di sc ret io n. CDI Ene rg y Serv s., In c. v. W

. Ri ve r Pu m ps , In c., 56 7 F.3 d 39 8, 40 1
(8 th Ci r. 20 09 )

. I n th es e ki nd s of cas es , whe re th e co m pe ti ng eq ui ti es are se ld om
ob vi ou s an d m an y fact or s be ar on th is di sc ret io na ry de ci si on , pa rti cu la riz ed fin di ng s

an d re as on s ar e n eed ed for m ean in gf ul ap pe ll at e rev ie w.

Here, Bl oc k as se rte d to th e di st ric t c o u r t

, i n on e-p ag e se ct io ns of it s two

su pp or ti ng m em or an da

, t h a t A c ev ed o- Lop ez’s refu sa l to ret ur n Bl oc k’s cl ie nt li st s

an d reco rd s, an d hi s co nt in ui ng to op erat e “ th e sa me t a x bu si ne ss , at th e sa m e
lo cat io ns , of

feri ng th e sa m e se rv ic es , as hi s pr ev io us ly fran ch is ed bu si ne ss ,” was “ a
cl as si c in st an ce of irr ep arab le ha rm .” Bl oc k su bm it te d no fact affi da vi t or ex pe rt

op in io n su pp or ti ng it s cl ai m of m or e t h a n t h e m ere po ss ib il it y of irr ep arab le in jury

du rin g th e pe nd en cy of it s la wsu it

. The sh owi ng was m in im al

, an d “ [p ]art of th e
di st ric t co ur t’s di sc ret io n is as se ss in g whe th e r a n a ll eg ed ha rm req ui res m or e

su bs ta nt ia l pr oo f.” Gen

. Mo to rs Co rp

. v. Harry Bro wn’s, LLC, 56 3 F. 3 d 31 2, 32 0
(8 th Ci r. 20 09 ) (aff

irming th e de ni al of a fran ch is or ’s pr el im in ary in jun ct io n m ot io n)

. Bu t th e types o f i r r e p a rab le in jury Bl oc k as se rte d ha ve su pp or te d th e gr an t of

pr el im in ary in

jun ct iv e rel ie f in cas e s su ch as Em ers on Elec tri c Co

. v. Ro ge rs , 41 8

-5

-F. 3d 841, 845 (8th Ci r. 20 05 ) (ap pl y in g Mi ss ou ri la w), an d Acev ed o- Lop ez su bm it te d

no fact ua l affi da vi t or ex pe rt op in io n su pp or ti ng hi s no -ir rep arab le -in jury as se rti on

. Mo reo ve r, ev en if th e reco rd pe rm it te d us to in fer why th e di st ric t co ur t c on cl ud ed

Bl oc k’s in it ia l sh owi ng of irr ep arab le in jury was in ad eq ua te

, wit ho ut ad eq ua te Ru le

52 (a) fin di ng s an d r e a s o n s w e can no t ev al ua te whe th er su m m ary d en ia l of Bl oc k’s

m ot io n wit ho ut an ev id en ti ary he ari ng w a s an ab us e of di sc ret io n, whe n ot he r

pr oc ed ur al alt ern at iv es were cl earl y av ai la bl e. Thu s, we m

us t re m an d.

B. Bl oc k fu rth er arg ue s th at th e ba re reco rd on ap pe al so cl earl y es ta bl is he s

it s rig ht to a pr el im in ary in jun ct io n th at we sh ou ld di rect th e di st ric t co ur t to en te r th e

req ue st ed in

jun ct io n on rem an d. W it ho ut qu es ti on in g o ur po wer t o t ak e th is act io n

in an ap pr op ria te cas e, se e Max well v. Mas on , 66 8 F.2 d 36 1, 36 2 (8 th Ci r. 19 81 ), we
de cl in e to d o so he re. The di st ric t co ur t m ad e no ru li ng on th ree of th e fo ur

Data ph as e fact or s th at m

us t be co ns id ered in ex erci si ng a co ur t’s di sc ret io n to gr an t

or de ny a pr el im in ary in

jun ct io n. The m in im al reco rd be fo re us s u g g e st s th at th e
di sp ut e in vo lv es , in su bs ta nc e, a sa le -an d- le as e-b ack tra ns act io n in whi c h bu y erle ss or Bl oc k see ks th e be ne fit of it s ba rg ai n fo ll owi ng br each of th e le as e (ref le ct ed

in Bl oc k’s st an da rd fo rm FLA), an d se ll er-l es se e Acev ed o- Lop ez co nt en ds th ere ha s
be en no br each warra nt in g te rm in at io n of th at le as e. Viewe d in th is li gh t, Bl oc k do es

no t se ek a pr el im in ary in

jun ct io n pr es erv in g th e st at us qu o , th e ba si c pu rp os e of su ch

rel ie f. Rat he r, it se ek s a pr el im in ary in jun ct io n gr an ti ng th e eq ui ta bl e rel ie f it may be

gr an te d if it pr ev ai ls on th e m eri ts of it s co nt ract ua l cl ai m s. Thi s m ay well

ov ers im pl ify a co m

pl ex di sp ut e, bu t th e sp ars e pr el im in ary in jun ct io n reco rd is th e

res ul t of Bl oc k se ek in g pr el im in ary in jun ct iv e rel ie f ba se d on th e sl im m es t of fact ua l

sh owi ng s.

In th es e ci rcu m st an ces , al l fo ur of th e Data ph as e fact or s ap pe ar to be in do ub t,

an d th e di sc ret io n of a tri al co ur t is cl earl y ne ed ed

. If Bl oc k pu rs ue s it s m ot io n o n

rem an d, th e co ur t wou l d h a v e a nu m be r of pr oc ed ur al op ti on s fo r de al in g wit h th e
is su e as th e cas e pr og res se s, so m e o f whi ch wou ld no t be im m ed ia te ly ap pe al ab le

.

-6

-See Fed

. R. Ci v. P. 65 (a)( 2)

. Fo r th es e reas on s, we va cat e th e di st ric t cou rt’s Order

da te d Feb ru ary 11

, 20 13

, an d rem an d fo r fu rth er pr oc eed in gs no t in co ns is te nt wit h

th is op in io n.

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