Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 1 of 23 PageID: 550
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEW JERSEY—CAMDEN DIVISION
`
`DUNKIN’ DONUTS FRANCHISING LLC,
`DUNKIN’ DONUTS FRANCHISED
`RESTAURANTS LLC, DD IP HOLDER,
`LLC, and
`DUNKIN’ BRANDS, INC.,
`each a Delaware limited liability
`company,
`
`Plaintiffs,
`
`v.
`
`VICKY AND BONNY COFFEE EXPRESS
`SOMERDALE LLC,
`VICKY AND BONNY COFFEE EXPRESS
`TURNERSVILLE LLC,
`VICKY AND BONNY COFFEE EXPRESS
`SEWELL LLC,
`VICKY AND BONNY COFFEE EXPRESS
`WILLIAMSTOWN LLC,
`VICKY AND BONNY COFFEE EXPRESS
`EGG HARBOR LLC,
`VICKY AND BONNY COFFEE EXPRESS
`WINSLOW LLC,
`VICKY AND BONNY COFFEE EXPRESS
`TURNERSVILLE NORTH LLC, and
`VICKY AND BONNY COFFEE EXPRESS
`GIBBSTOWN LLC,
`
`each a New Jersey limited liability
`company;
`
`VICKY AND BONNY COFFEE EXPRESS
`SICKLERVILLE, INC. and
`VICKY AND BONNY OF PINE HILL, INC.,
`
`each a New Jersey corporation;
`and
`
`VICKY & BONNY OF AVONDALE PA LLC
`a Pennsylvania limited liability company;
`and
`
`SAILESH PATEL,
`PARESH K. PATEL,
`CHANDRAKANT M. PATEL,
`
`Oral Argument Requested
`
`
`
`
`Case No. ______________
`
`
`
`

`

`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 2 of 23 PageID: 551
`
`SAMIR PATEL,
`SUMIT PATEL,
`NISH PAREKH,and
`PRAFUL VAID,
`each a New Jersey citizen;
`Defendants.
`
`
`
`
`
`
`
`MEMORANDUM IN SUPPORT OF
`PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
`
`Bryan Couch (N.J. Bar No. 26242000)
`Connell Foley LLP
`One Newark Center
`1085 Raymond Boulevard, 19th Floor
`Newark, NJ 07102
`Telephone: 973-436-5800
`Facsimile: 973-436-5801
`bcouch@connellfoley.com
`
`Eric L. Yaffe (pro hac vice to be filed)
`Samuel A. Butler (pro hac vice to be filed)
`Lathrop GPM LLP
`The Watergate
`600 New Hampshire Avenue, NW, Suite 700
`Washington, DC 20037
`Telephone: (202) 295-2200
`Facsimile: (202) 295-2250
`eric.yaffe@lathropgpm.com
`samuel.butler@lathropgpm.com
`
`
`Kristin M. Stock (pro hac vice to be filed)
`Lathrop GPM LLP
`500 IDS Center
`80 South 8th Street
`Minneapolis, MN 55402
`Telephone: 612.632.3492
`Facsimile: 612.632.4000
`kristin.stock@lathropgpm.com
`
`Attorneys for Plaintiffs Dunkin’ Donuts Franchising LLC, Dunkin’ Donuts
`Franchised Restaurants LLC, DD IP Holder LLC, and Dunkin’ Brands, Inc.
`
`Dated: June 30, 2022
`
`
`ii
`
`

`

`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 3 of 23 PageID: 552
`
`TABLE OF CONTENTS
`
`TABLE OF AUTHORITIES ....................................................................................................... ii
`
`LIST OF EXHIBITS......................................................................................................................v
`
`INTRODUCTION..........................................................................................................................1
`
`STATEMENT OF FACTS ............................................................................................................3
`The Parties and the Franchise Agreements .....................................................................3
`Defendants’ Alleged Violations of the Franchise Agreements and the Prior
`Action ......................................................................................................................6
`The Parties’ Rights and Obligations Under the Settlement Agreement and
`Defendants’ Breaches ........................................................................................................8
`
`ARGUMENT ................................................................................................................................10
`I. Dunkin’Is Likely to Succeed on the Merits of its Claims. ........................................10
`A. The Defendants Violated the Settlement Agreement. ..................................11
`B. The Defendants Are Continuing to Operate and are Infringing on
`the Dunkin’ Marks. ..................................................................................12
`
`II. The Defendants’ Continued Operation and Use of Dunkin’s Marks are
`Causing Irreparable Harm to Dunkin’. .............................................................14
`
`III. The Balance of Equities Weighs in Dunkin’s Favor. .............................................15
`
`IV. The Public Interest Favors an Injunction. ..............................................................16
`
`CONCLUSION ............................................................................................................................16
`
`i
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`

`

`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 4 of 23 PageID: 553
`
`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`A & H Sportswear, Inc. v. Victoria’s Secret Stores, Inc.,
`237 F.3d 198 (3d Cir. 2000) .......................................................................................................13
`
`AAMCO Transmissions, Inc. v. Dunlap,
`No. CIV.A. 11-4009, 2011 WL 3586225 (E.D. Pa. Aug. 16, 2011) ......................................... 15
`
`Audi AG v. Posh Clothing, LLC,
`No. CV 18-14254, 2019 WL 1951166 (D.N.J. May 2, 2019) ................................................... 13
`
`Bulwer v. Mount Auburn Hosp.,
`46 N.E.3d 24 (Mass. 2016) ........................................................................................................ 11
`
`Can’t Live Without It, LLC v. Closeout Surplus & Salvage, Inc.,
`No. CV1814606ESMAH, 2021 WL 1345869 (D.N.J. Apr. 9, 2021) ....................................... 13
`
`Choice Hotels Int’l, Inc. v. A Royal Touch Hosp., LLC (NC),
`409 F. Supp. 3d 559 (W.D. Va. 2019) ....................................................................................... 13
`
`Davis v. Dawson, Inc.,
`15 F. Supp. 2d 64 (D. Mass. 1998) ............................................................................................ 12
`
`Delta Air Lines, Inc. v. Fly Tech, LLC,
`No. CV 16-2599, 2018 WL 1535231 (D.N.J. Mar. 29, 2018) .................................................. 14
`
`Dunkin’ Donuts Inc. v. N. Queens Bakery, Inc.,
`216 F. Supp. 2d 31 (E.D.N.Y. 2001) ......................................................................................... 13
`
`Etonic Worldwide, LLC v. Kinetic Sports, Inc.,
`No. CIV. 05-4004 (GEB), 2005 WL 3527249 (D.N.J. Dec. 22, 2005) ..................................... 16
`
`Hayward Indus., Inc. v. Saltwater Pool Supplies,
`No. CV 20-6105 (KM)(ESK), 2021 WL 1940711 (D.N.J. May 14, 2021) .............................. 13
`
`Hopkinton Friendly Service, Inc. v. Global Companies LLC,
`384 F.Supp.3d 179 (D. Mass. 2019) .......................................................................................... 11
`
`ITT Indus., Inc. v. Wastecorp. Inc.,
`87 F. App’x 287 (3d Cir. 2004) ................................................................................................. 13
`
`Kos Pharmaceuticals, Inc. v. Andrx Corp.,
`369 F.3d 700 (3rd Cir. 2004) ..................................................................................................... 10
`
`Mallet and Company Inc. v. Lacayo,
`16 F.4th 364 (3d Cir. 2021) ....................................................................................................... 11
`
`Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharmaceuticals Co.,
`290 F.3d 578 (3rd Cir. 2002) ..................................................................................................... 15
`
`ii
`
`

`

`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 5 of 23 PageID: 554
`
`Opticians Ass’n of Am. V. Independent Opticians of Am.,
`920 F.2d 187 (3rd Cir. 1990) ..................................................................................................... 14
`
`Owen v. Kessler,
`778 N.E.2d 953 (Mass. App. Ct. 2002) ..................................................................................... 12
`
`Pappan Enterprises, Inc. v. Hardee’s Food Sys., Inc.,
`143 F.3d 800 (3d Cir. 1998) .......................................................................................... 13, 14, 15
`
`Penn Galvanizing Co. v. Lukens Steel Co.,
`468 F.2d 1021 (3rd Cir. 1972) ................................................................................................... 10
`
`Petition of Mal de Mer Fisheries, Inc.,
`884 F. Supp. 635 (D. Mass. 1995) ............................................................................................. 11
`
`Reilly v. City of Harrisburg,
`858 F.3d 173 (3d Cir. 2017) ...................................................................................................... 10
`
`Siemens USA Holdings Inc v. Geisenberger,
`17 F.4th 393, 2021 WL 5117837 (3d Cir. Oct. 28, 2021) ................................................... 10, 16
`
`Sunbelt Rentals, Inc. v. Love,
`No. 20-cv-17611 (RMB/AMD), 2021 WL 82370 (D.N.J. Jan. 11, 2021) ................................ 16
`
`Super 8 Motels, Inc. v. Sai Krupa Victoria, Inc.,
`No. 06–1644 (JCL), 2006 WL 2830965 (D.N.J. Sept. 29, 2006) .............................................. 13
`
`Tri-Union Seafoods, LLC v. Ecuatorianita Imp. & Exp. Corp,
`No. CV 20-9537, 2021 WL 1541054 (D.N.J. Apr. 20, 2021) ................................................... 14
`
`Statutes
`
`8 U.S.C. § 1324a(a)(1) and (2) ....................................................................................................... 6
`
`15 U.S.C. § 1065 ....................................................................................................................... 3, 13
`
`15 U.S.C. § 1116(a) ...................................................................................................................... 14
`
`
`
`
`
`iii
`
`

`

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`
`Exhibit 1.
`
`Declaration of Derek Ensminger
`
`LIST OF EXHIBITS
`
`Exhibit 1.A. Vicky and Bonny of Pine Hill, Inc. Franchise Agreement dated March 2, 2006
`
`Exhibit 1.B. Vicky and Bonny Coffee Express Sicklerville, Inc. Franchise Agreement dated
`February 26, 2007
`
`Exhibit 1.C. Vicky and Bonny Coffee Express Williamstown LLC Franchise Agreement dated
`August 17, 2009
`
`Exhibit 1.D. Vicky and Bonny Coffee Express Egg Harbor LLC Franchise Agreement dated
`August 17, 2009
`
`Exhibit 1.E. Vicky and Bonny Coffee Express Winslow LLC Franchise Agreement dated
`August 17, 2009
`
`Exhibit 1.F. Vicky & Bonny of Avondale PA LLC Franchise Agreement dated April 18, 2011
`
`Exhibit 1.G. Vicky and Bonny Coffee Express Turnersville North LLC Franchise Agreement
`dated May 25, 2011
`
`Exhibit 1.H. Vicky and Bonny Coffee Express Gibbstown LLC Franchise Agreement dated
`February 1, 2014
`
`Exhibit 1.I. Vicky and Bonny Coffee Express Turnersville LLC Franchise Agreement dated
`August 17, 2019
`
`Exhibit 1.J. Vicky and Bonny Coffee Express Sewell LLC Franchise Agreement dated July
`24, 2020
`
`Exhibit 1.K. Vicky and Bonny Coffee Express Somerdale LLC Franchise Agreement dated
`November 16, 2020
`
`Exhibit 1.L. Settlement Agreement
`
`Exhibit 1.M. Notice of Failure to Submit Asset Purchase Agreements dated June 15, 2022
`addressed to the Defendants.
`
`Exhibit 1.N. Termination Agreements
`
`
`
`
`
`i
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`

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`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 7 of 23 PageID: 556
`
`INTRODUCTION
`
`In February 2022, Plaintiffs Dunkin’ Donuts Franchising LLC, Dunkin’ Donuts Franchised
`
`Restaurants LLC, DD IP Holder, LLC, and Dunkin’ Brands, Inc., (collectively “Dunkin’”) entered
`
`into a Settlement Agreement with the Defendants to settle a lawsuit initiated by Dunkin’ alleging
`
`that the Defendants had breached the Franchise Agreements executed between the parties.
`
`Thereafter, Defendants breached the Settlement Agreement by failing to deliver executed Asset
`
`Purchase Agreements to Dunkin’ and close on the sale of the Franchises. Defendants are currently
`
`operating their Franchises and using Dunkin’s trademarks and trade dress without Dunkin’s
`
`authorization and in violation of the plain terms of the Settlement Agreement. Dunkin’ seeks to
`
`enjoin Defendants’ blatant and unauthorized use of Dunkin’s marks, procedures, and products.
`
`Over the years, Dunkin’ and the Defendants executed Franchise Agreements, pursuant to
`
`which the Defendants were licensed to operate Dunkin’ restaurants and use the federally registered
`
`Dunkin’ trademarks and service marks. Dunkin’ terminated the Franchise Agreements when it
`
`concluded that Defendants had committed significant violations of the Agreements and of federal
`
`law by, among other things, failing to verify whether employees at the restaurants were authorized
`
`to work in the United States, failing to complete and retain required records relating to work
`
`authorization, and providing false information to the federal government. They also committed
`
`fraud against Dunkin’ and the federal government in attempting to cover up these violations.
`
`Dunkin’ brought an action against the Defendants for their various breaches of the
`
`Franchise Agreements. On February 2, 2022, Dunkin’ and the Defendants executed a Settlement
`
`Agreement, attached hereto as Exhibit 1. Under the Agreement, the Defendants were required to
`
`identify a buyer or buyers for their franchise(s), deliver to Dunkin’ an executed Asset Purchase
`
`Agreement, and close on the sale of the franchise(s), among other things. In exchange, Dunkin’
`
`1
`
`

`

`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 8 of 23 PageID: 557
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`agreed to settle all claims between it and the Defendants and voluntarily dismissed the pending
`
`lawsuit.
`
`The Defendants failed to meet their obligations under the Settlement Agreement. A few of
`
`the Defendants sent Dunkin’ an Asset Purchase Agreement for one of the eleven franchises that
`
`are part of this action; however, it was submitted just days ago and months the past the deadline
`
`set forth in the Settlement Agreement. The Defendants did not close on the sale of any of the
`
`franchises. After providing seven business days’ notice to Defendants of their violations (as
`
`required by the Settlement Agreement), Dunkin’ countersigned the Franchise Termination and
`
`Surrender Agreement and Release forms that Defendants previously had signed. Upon Dunkin’s
`
`execution of these forms, the Defendants were required to cease their operations of their Dunkin’
`
`stores and comply with their post-termination obligations as provided in the Franchise
`
`Agreements. They have failed to do so and continue -- without authorization -- to operate and hold
`
`themselves out as Dunkin’ franchisees.
`
`On June 30, 2022 Dunkin’ filed the present lawsuit against the Defendants alleging breach
`
`of the Settlement Agreement and trademark infringement. The continued unauthorized use of
`
`Dunkin’s Marks at the franchises harms Dunkin’, constitutes trademark infringement and, in the
`
`circumstances present here, entitles Dunkin’ to immediate injunctive relief.
`
`Dunkin’ is likely to succeed on the merits of its claims for breaches of the Settlement
`
`Agreement and trademark infringement because the Defendants have not complied with their
`
`obligations under the agreement while Dunkin’ has met its obligations. Dunkin’ has suffered and
`
`will continue to suffer irreparable harm because Defendants’ breaches of the Settlement
`
`Agreement and trademark infringement have caused and will cause irreparable harm. The
`
`Defendants’ failure to deidentify their former franchises as Dunkin’ restaurants damages the
`
`2
`
`

`

`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 9 of 23 PageID: 558
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`reputation and goodwill associated with the Dunkin’ Marks and System, and prevents Dunkin’
`
`from exercising appropriate control over its Marks. These types of harm are by their nature and
`
`under long-standing law irreparable and support entry of an injunction; indeed, trademark claims
`
`are subject to a statutory presumption of irreparable harm. By contrast, to the extent that
`
`Defendants might suffer any harm from entry of an injunction, it is self-inflicted and a consequence
`
`of their own failure to fulfill their obligations under the Settlement Agreement. Accordingly, the
`
`requested preliminary injunction should be granted, and Defendants should immediately be
`
`required to cease infringing the Dunkin’ Marks and to comply with their post-term contractual
`
`obligations as set forth in the Franchise Agreements and Section 6 of the Settlement Agreement.
`
`STATEMENT OF FACTS
`The Parties and the Franchise Agreements
`
`1.
`
`Dunkin’ Franchising (and, prior to 2007, Dunkin’ Donuts Franchised Restaurants)
`
`franchises independent businesspersons to operate Dunkin’ restaurants throughout the United
`
`States. (Ensminger Decl., Ex. 1, at ¶ 6.) Dunkin’ franchisees are licensed to use the tradenames,
`
`service marks, and trademarks of Dunkin’ and to operate under the Dunkin’ System, which
`
`involves the production, merchandising, and sale of doughnuts, coffee, and related products
`
`utilizing specially designed buildings with special equipment, equipment layouts, interior and
`
`exterior accessories, identification schemes, products, standards, specifications, proprietary marks,
`
`and identification. (Id.)
`
`2.
`
`DD IP Holder LLC owns the trademark, service mark, and tradename “Dunkin’”
`
`and related marks. (Id. at ¶ 7.) Among those Marks are Registration Nos. 748,901; 1,148,165;
`
`1,159,354; 3,328,278; and 4,290,078, each of which is in full force and effect, and incontestable
`
`pursuant to 15 U.S.C. § 1065. (Id.) The Dunkin’ Marks and tradenames have been widely and
`
`continuously used in interstate commerce for decades in connection with Dunkin’ restaurants and
`
`3
`
`

`

`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 10 of 23 PageID: 559
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`the doughnuts, pastries, coffee, and other products associated with these restaurants. (Id.) Between
`
`1971 and 2019, Dunkin’ and its franchisees spent over $5 billion on advertising and promoting the
`
`Dunkin’ Marks. Dunkin’ spent approximately $470 million in 2019 alone on advertising and
`
`promotion. (Id.) Dunkin’ franchisees currently operate over 9,000 Dunkin’ restaurants in the
`
`United States and over 3,000 restaurants internationally. (Id.)
`
`3.
`
`As a result of the extensive sales, advertising, and promotion of items identified by
`
`the Dunkin’ Marks, the public has come to know and recognize the Dunkin’ Marks, and to
`
`associate them exclusively with products and services offered by Dunkin’ franchisees. (Id. at ¶ 8.)
`
`The Dunkin’ Marks are famous. (Id.) They are among the best and most widely known and
`
`recognized trademarks in the United States today, and are assets of inestimable value to Dunkin’,
`
`representing and embodying Dunkin’s considerable goodwill and favorable reputation. (Id.)
`
`4.
`
`Between 2006 and 2020, Dunkin’ entered into eleven Franchise Agreements with
`
`the Defendants which form the basis for this action. True and correct copies of the Franchise
`
`Agreements are attached as Exhibits 1.A–1.K. (Id. at ¶ 9.) The dates of the Franchise Agreements
`
`and the addresses of the franchises are as follows:
`
`Franchisee
`
`Vicky and Bonny of
`Pine Hill, Inc. (“Pine Hill”)
`
`Vicky and Bonny Coffee Express
`Sicklerville, Inc. (“Sicklerville”)
`
`Vicky and Bonny Coffee Express
`Williamstown LLC (“Williamstown”)
`
`Vicky and Bonny Coffee Express
`Egg Harbor LLC (“Egg Harbor”)
`
`Vicky and Bonny Coffee Express
`Winslow LLC (“Winslow”)
`
`Franchise Address
`
`111 Cross Keys Road
`Berlin, NJ
`2801 Route 42
`Turnersville, NJ
`
`Franchise
`Agreement Date
`
`March 2, 2006
`
`February 26, 2007
`
`50 S. Black Horse Pike,
`Williamstown, NJ
`
`August 17, 2009
`
`300 Egg Harbor Road
`Sewell, NJ
`
`August 17, 2009
`
`334 Sicklerville Road,
`Sicklerville, NJ
`
`August 17, 2009
`
`4
`
`

`

`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 11 of 23 PageID: 560
`
`
`Vicky & Bonny of
`Avondale PA LLC (“Avondale”)
`
`Vicky and Bonny Coffee Express
`Turnersville North LLC (“Turnersville North”)
`
`Vicky and Bonny Coffee Express
`Gibbstown LLC (“Gibbstown”)
`
`Vicky and Bonny Coffee Express
`Turnersville LLC (“Turnersville”)
`
`Vicky and Bonny Coffee Express
`Sewell LLC (“Sewell”)
`
`Vicky and Bonny Coffee Express
`Somerdale LLC (“Somerdale”)
`
`81 Baltimore Pike
`Avondale, PA
`
`5400 Route 42
`Turnersville, NJ
`
`April 18, 2011
`
`May 25, 2011
`
`431 Harmony Road
`Gibbstown, NJ
`
`February 1, 2014
`
`5751 Route 42 South,
`Turnersville, NJ
`
`August 17, 2019
`
`1551 Hurffville Road
`Sewell, NJ
`
`July 24, 2020
`
`150 S. White Horse Pike
`Somerdale, NJ
`
`November 16, 2020
`
`5.
`
`Each Franchise Agreement was personally guaranteed by two or more of the
`
`Guarantor Defendants pursuant to personal guarantees attached to the Franchise Agreements and
`
`included in Exhibits 1.A–1.K. (Id.) The Guarantor Defendants guaranteed the Franchise
`
`Agreements as follows:
`
`Paresh K. Patel
`Sailesh Patel
`Guarantors
`Franchises Pine Hill,
`Sicklerville
`
`Paresh K. Patel,
`Sailesh Patel,
`Nish Parekh,
`Praful Vaid
`Avondale
`
`Paresh K. Patel,
`Sailesh Patel,
`Chandrakant M. Patel,
`Samir Patel,
`Sumit Patel
`Williamstown,
`Egg Harbor,
`Winslow,
`Turnersville North,
`Gibbstown,
`Turnersville,
`Sewell,
`Somerdale
`
`5
`
`

`

`Case 1:22-cv-04376-KMW-EAP Document 4 Filed 06/30/22 Page 12 of 23 PageID: 561
`
`6.
`
`Under the terms of the Franchise Agreements,1 the Defendants agreed that they
`
`would comply with all civil and criminal laws, ordinances, rules, regulations, and orders of public
`
`authorities pertaining to the operation of the restaurants. (Franchise Agreements § 7.1.) They
`
`agreed to operate their franchised businesses in accordance with all of Dunkin’s Brand Standards
`
`(id. § 7.0), and not to perform any act injurious or prejudicial to the goodwill associated with the
`
`Dunkin’ Marks and System (id. § 10.1). They agreed to keep and maintain the business records of
`
`the franchise as required by law and in a form and manner as Dunkin’ may mandate, (id. § 11.0),
`
`and to make available and produce each franchise’s books and records to Dunkin’ (id. § 11.2).
`
`Defendants’ Alleged Violations of the Franchise Agreements and the Prior Action
`
`7.
`
`By way of background, the Settlement Agreement was entered into following a
`
`lawsuit brought by Dunkin’ against the Defendants. Federal law prohibits hiring or continuing to
`
`employ individuals not authorized to work in the United States. 8 U.S.C. § 1324a(a)(1) and (2).
`
`To ensure compliance with this requirement, the governing statute establishes an employment
`
`verification system. The statute requires the employer to execute an employment verification form
`
`for each employee, known as an I-9 Form, attesting, under penalty of perjury, that the employer
`
`has verified the employee’s identity and employment eligibility by examining one or a
`
`combination of specified documents. Id. § 1324a(b)(1)(A). These forms constitute an attestation
`
`by an employer that its hired employees are not unauthorized aliens. Id. The employer must retain
`
`its I-9 Forms and make them available for inspection. Id. § 1324a(b)(3).
`
`8.
`
`In the Dunkin’ System, since June 1, 2006, all franchisees have been required as a
`
`brand standard under section 7.0 of the Franchise Agreements to use the “E-Verify” system to
`
`
`1 The Franchise Agreements under which the Defendants operated are substantially similar in their
`entirety and are identical regarding the provisions identified in the following paragraphs.
`Accordingly, they are collectively referred to as the “Franchise Agreements.”
`
`6
`
`

`

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`verify with the Department of Homeland Security (“DHS”) the authorization to work of each
`
`newly-hired employee. (Ensminger Decl., Ex. 1, at ¶ 10.)
`
`9.
`
`Dunkin’ requested that the Defendants produce for Dunkin’s review certain
`
`employment, tax, and other records dating back to January 2018. Dunkin’ reviewed the documents
`
`that the Defendants produced. (Id. at ¶¶ 10-11.) Dunkin’ alleged in the lawsuit that it later filed
`
`that the review demonstrated pervasive and substantial noncompliance by the Defendants with the
`
`Federal law. (Id. at ¶ 11.)
`
`10.
`
`In addition, Dunkin’ alleged that through their failure to obtain or maintain required
`
`employment documentation, the Defendants failed to maintain complete and accurate business
`
`records, in violation of section 11.0 of the Franchise Agreements. (Id.)
`
`11.
`
`Finally, Dunkin’ alleged that the Defendants fabricated documents to cover up the
`
`incompleteness of their records and false start dates in E-Verify reports, and that this conduct
`
`constituted fraud upon Dunkin’ with respect to their performance of the Franchise Agreements.
`
`(Id.)
`
`12.
`
`As a result of these alleged violations of the Franchise Agreements, and pursuant
`
`to the applicable provisions of the Franchise Agreements, Dunkin’ served Defendants with a
`
`Notice of Default and Termination. (Id. at ¶ 12.)
`
`13.
`
`On September 28, 2021, Dunkin’ Donuts Franchising LLC, Dunkin’ Donuts
`
`Franchised Restaurants LLC and DD IP Holder LLC filed a Complaint against the Defendants and
`
`others in the United States District Court for the District of New Jersey in an action captioned
`
`Dunkin Donuts Franchising LLC, et al. v. Vicky and Bonny Coffee Express Somerdale LLC, et.
`
`al., Civil Action No. 21-cv-17719 (the “Prior Action”). (Id. at ¶ 13.)
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`14.
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`In the Prior Action, Dunkin’ asserted claims for various breaches of contract,
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`declaratory relief, dilution by tarnishment of famous marks, trademark infringement, and trade
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`dress infringement based upon the conduct described in the preceding paragraphs. (Id.)
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`The Parties’ Rights and Obligations Under the Settlement Agreement and Defendants’
`Breaches
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`15. While the Prior Action was pending, Dunkin’ and the Defendants reached a
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`settlement and memorialized the terms in a Settlement Agreement. The Settlement Agreement is
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`15 pages in length and contains numerous provisions. Certain relevant provisions are identified
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`below. (Id. at ¶ 14.)
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`16.
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`Section 4 of the Settlement Agreement provides:
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`“THE FRANCHISEES shall, on or before March 31, 2022, submit to
`DUNKIN’ fully executed Asset Purchase Agreement(s), including completed
`Rider(s) to Contract for Sale (along with all supporting documentation), to
`transfer the Franchises (the “APA Submission Date”). Both the APA(s) and
`the prospective transferee(s) are subject to DUNKIN’s review and approval,
`which will not be unreasonably withheld. . . .
`
`Subject to the limited exception herein contained, the FRANCHISEES must
`close the sale and transfer of the Franchises within sixty (60) days of
`DUNKIN’s written approval of the APA(s) (referred to in this Section as the
`“Closing Date”). . . .
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`Time is of the essence.
`
`(Id. at ¶ 15, Ex. 1.L.)
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`
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`17.
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`None of the Defendants provided Dunkin’ with fully executed Asset Purchase
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`Agreements by March 31, 2022. (Id. at ¶ 21.) Defendants Paresh K. Patel, Sailest Patel, Nish
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`Parekh, Praful Vaid, and Vicky & Bonny of Avondale PA LLC provided an Asset Purchase
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`Agreement on or about June 21, 2022 seeking to sell the Avondale Franchise, only after Dunkin’
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`had sent a Notice to the Defendants on June 15, 2022 that it would be signing the Termination
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`Agreements. (Id. at ¶¶ 19-20.)
`
`18.
`
`Section 5 of the Settlement Agreement provides:
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`“The FRANCHISEES shall execute separately with this Agreement
`DUNKIN’s standard form Franchise Termination and Surrender Agreement
`and Release (attached as Exhibit B) for each of the Franchises, to be held by
`counsel for DUNKIN’. Upon the occurrence of any of the following: (a) a
`default of any of the terms of this Agreement, (b) the FRANCHISEES’
`failure to submit APA Agreement(s) for the transfer of the Franchises
`pursuant to Section 4 of this Agreement or Dunkin’s disapproval of the same;
`or (c) the failure to close on the sale of any of the Franchises, and after
`providing seven (7) business days’ notice to FRANCHISEES, Dunkin’ is
`authorized to date and counter-sign the Franchise Termination and Surrender
`Agreement and Release form for each unsold Franchise. Upon [sic] Dunkin’s
`counter-signing of a Franchise Termination and Surrender Agreement and
`Release form (hereinafter “Termination Agreement”) pursuant to this
`Section,
`the FRANCHISEES shall
`immediately comply with
`their
`obligations pursuant to Section 6 of this Agreement with regard to that
`particular Franchise.”
`
`(Id. at ¶ 16, Ex. 1.L.)
`
`19.
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`The Defendants executed Franchise Termination and Surrender Agreement and
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`Release forms (“Termination Agreements”) as required by Section 5. The Defendants did not close
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`on the sale of any of the Franchises. (Id. at ¶ 17.)
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`20.
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`Section 6 of the Settlement Agreements provides that after Dunkin’ provides 7
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`business days’ notice to the Defendants and countersigns the Termination Agreements, it may
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`exercise its option to assume a lease for the Franchise and that Defendants must assign to Dunkin’
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`any interest which they or any one of them has in any lease or sublease for the premises, vacate
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`the premises, and assist Dunkin’ with taking immediate possession of the premises. (Id. at ¶ 18.)
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`21.
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`Pursuant to Section 6 paragraph c, Defendants “agree that any unauthorized use of
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`any of DUNKIN’s methods, trademarks, trade secrets, and propriety marks after Dunkin’s
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`countersigning of any of the Termination Agreement, the [Defendants’] assignment of the leases
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`for the Franchise’s premises, or the Deidentification Date shall constitute irreparable harm to
`
`DUNKIN’, entitling DUNKIN’ to injunctive relief.” Section 6 of the Settlement Agreements
`
`require Defendants to “comply with all post-termination obligations set forth in the Franchise
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`Agreement[.]” (Id. at ¶ 14, Ex. 1.L.)
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`22.
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`On June 15, 2022, Dunkin’ sent a Notice of Failure to Submit Asset Purchase
`
`Agreements to the Defendants, providing them 7 business days’ notice as required by the
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`Settlement Agreement. The notice period expired on June 28, 2022. (Id. at ¶ 19.)
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`23.
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`On June 29, 2022, Dunkin’ countersigned the Termination Agreements.
`
`Notwithstanding their obligations to de-identify and cease operating the franchises, however, the
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`Defendants are continuing to operate their Franchises using Dunkin’s mark, procedures, and
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`products without Dunkin’s approval. (Id. at ¶ 24.)
`
`ARGUMENT
`
`
`
`A district court has wide discretion in deciding whether to grant a preliminary injunction.
`
`Penn Galvanizing Co. v. Lukens Steel Co., 468 F.2d 1021, 1023 (3rd Cir. 1972).2 When seeking
`
`injunctive relief a moving party must show: (1) the likelihood that the moving party will succeed
`
`on the merits; (2) the extent to which the moving party will suffer irreparable harm without
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`injunctive relief; (3) that the injury that the moving party will incur if injunctive relief is not granted
`
`will outweigh the harm inflicted on the nonmoving party if injunctive relief is granted; and (4)
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`public interest favors an injunction. Siemens USA Holdings Inc v. Geisenberger, 17 F.4th 393,
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`2021 WL 5117837, at *8 (3d Cir. Oct. 28, 2021). Applying the standard to this case, Dunkin’ is
`
`entitled to the injunctive relief it seeks.
`
`I.
`
`Dunkin’ Is Likely to Succeed on the Merits of its Claims.
`
`To show that it is likely to succeed on the merits of its claims, a plaintiff need not show
`
`that it is more likely than not to succeed. Reilly v. City of Harrisburg, 858 F.3d 173, 179 (3d Cir.
`
`
`2A preliminary injunction “is customarily granted on the basis of procedures that are less formal
`and evidence that is less complete than in a trial on the merits.” Kos Pharmaceuticals, Inc. v.
`Andrx Corp., 369 F.3d 700, 718 (3rd Cir. 2004). A district court may rely on hearsay and
`affidavits at the preliminary injunction stage. Id.
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`2017), as amended (June 26, 2017). Rather, a plaintiff need only show that there is a “reasonable
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`chance, or probability, of winning.” Mallet and Company Inc. v. Lacayo, 16 F.4th 364, 380 (3d
`
`Cir. 2021) (quotation omitted). Dunkin’ has complied with its obligations under the Settlement
`
`Agreement. Defendants, on the other hand, have failed to fulfill their commitments under the
`
`Agreement. In response, and pursuant to the terms of the Settlement Agre