Cookie Dough Bliss Franchising, LLC v. Feed Your Soul Minn., LLC

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Cookie Dough Bliss Franchising, LLC, Plaintiff, v. Feed Your Soul Minnesota, LLC, Gina Ehrisman, and John Ehrisman, Defendants.

Civ. No. 23-1552 (JWB/TNL)

United States District Court, D. Minnesota

August 1, 2023

Hannah Camilleri Hughes, Esq., and Jeremy D. Sosna, Esq., Littler Mendleson, counsel for Plaintiff.

Elliot R. Ginsburg, Esq., Garner, Ginsburg & Johnsen, P.A. counsel for Defendants.

MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

JERRY W. BLACKWELL United States District Judge.

Plaintiff Cookie Dough Bliss Franchising, LLC (“Cookie Dough”) is a franchisor of edible cookie dough businesses, seeking a temporary restraining order and a preliminary injunction against its former franchisees. (Doc No. 6.) Defendants Feed Your Soul Minnesota, LLC (“Feed Your Soul”), and its owners Gina Ehrisman, and John Ehrisman, operated a Minnesota business selling cookie dough treats under the name “Cookie Dough Bliss” pursuant to a Franchise Agreement between the parties. Although the parties dispute who soured their once sweet relationship, they agree the Franchise Agreement is now terminated. Cookie Dough asserts that it is entitled to enjoin Defendants from competing in the edible cookie dough business pursuant to a noncompetition clause in the Franchise Agreement. The Court held a hearing on June 20, 2023.

Plaintiff has not satisfied its burden to obtain preliminary injunctive relief, and its motion is denied.

FACTUAL BACKGROUND

Cookie Dough is a North Carolina limited liability company that “owns and licenses a system of operating a retail business that sells edible cookie dough products under the commercial name and service mark Cookie Dough Bliss [and] operates in eight states.” (Doc. No. 1, Compl. ¶ 18.) Its nearest franchisee to Minnesota is approximately 1,000 miles away in Texas (Doc. No. 25 Defs.' Supp. Br. at 5). Cookie Dough “is not currently registered to sell franchises in the State of Minnesota” but “is in the process of registering its corporate entity to sell franchises there.” (Doc. No. 28, Second Suppl. Decl. ¶ 3.)

Defendants Gina Ehrisman and John Ehrisman are Minnesota residents. (Doc. No. 1, Compl. ¶¶ 13-14.) Their business, Feed Your Soul, is a Minnesota limited liability company. (Id. at ¶12.)

On November 26, 2021, the parties entered into a Franchise Agreement granting Defendants a non-exclusive license to operate a Cookie Dough franchise using Cookie Dough's products, recipes, resources, and trademark. (Doc. No. 10, Ex. A.) Through the Franchise Agreement, Defendants operated a store in Lakeville, Minnesota, as well as a food truck bearing the Cookie Dough Bliss trade name and marks. (Doc. No. 1, Compl. ¶ 2.) Each side alleges that the other failed to perform under the Franchise Agreement, committing numerous material breaches that led to termination of the Franchise Agreement. It is undisputed that the Franchise Agreement terminated on no later than May 29, 2023.

Plaintiff alleges that Defendants have violated the noncompetition provision of the Franchise Agreement by operating a competing business in the same territory. The Franchise Agreement contained a noncompetition provision prohibiting Defendants from being involved in any competitive business within a 30-mile radius of the franchise location for two years after the Franchise Agreement terminates.^[1] (Doc. No. 10, Ex. A at 35-36.)

After termination, Defendants began operating their own cookie dough treats business called “UnBakeable.” It is located at the same principal place of business as their former Cookie Dough franchise and uses the same Facebook website (albeit with a name change), the same (but rebranded) food truck, and a logo that Cookie Dough alleges is strikingly similar to its trademark's font and color. (Doc. No. 18, Suppl. Decl. ¶¶ 6-8.)

Plaintiff asserts that consumers have been confused by those similarities, citing to Facebook comments to support its position. (Id. at ¶¶ 8-9.) Plaintiff also points to various municipalities that have failed to update their websites to reflect that “UnBakeable,” and not Cookie Dough, is a vendor for certain events, contending that the municipalities are also confused by the similarities between the two entities, attributable to UnBakeable.

(Doc. No. 28, Second Suppl. Decl. ¶¶ 8-11.) Plaintiff further claims that Defendants are using its recipes and other trade secrets. (Doc. No. 18, Suppl. Decl. ¶ 14.)

In response, Defendants deny that they are using Cookie Dough's recipes or trademark and, at oral argument, also represented that they have not derived their recipes from Cookie Dough's recipes. Additionally, Defendants assert that they contacted the various municipalities to update the name of their business where websites mistakenly list Cookie Dough, and not Unbakeable, as a vendor for events. (Doc. No. 32, Suppl. Decl. ¶ 9.) Defendants further contend that Plaintiff is itself to blame for any of the confusion about which it complains.

On May 25, 2023, Cookie Dough initiated suit and simultaneously filed a motion for a temporary restraining order and preliminary injunction to enforce the noncompetition provision of the Franchise Agreement.^[2] (Doc. No. 6.)

DISCUSSION

Federal Rule of Civil Procedure 65 governs temporary restraining orders and preliminary injunctions. Because Defendants have responded, Plaintiff's request for expedited relief is construed as a request for a preliminary injunction under Rule 65(b) rather than a temporary restraining order under Rule 65(a).

I. Legal Standard

A preliminary injunction is an “extraordinary remedy.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008); Watkins Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003). “In deciding whether to issue a preliminary injunction, the district court considers four factors: ‘(1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that [the] movant will succeed on the merits; and (4) the public interest.'” Sleep No. Corp. v. Young, 33 F.4th 1012, 1016 (8th Cir. 2022) (quoting Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc)). The core question is whether the equities “so favor[] the movant that justice requires the court to intervene to preserve the status quo until the merits are determined.” Dataphase, 640 F.2d at 113 (footnote omitted). “The burden of establishing the four factors lies with the party seeking injunctive relief.” CPI Card Grp., Inc. v. Dwyer, 294 F.Supp.3d 791, 807 (D. Minn. 2018). This inquiry requires consideration of each factor, and no single factor is determinative. United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1179 (8th Cir. 1998).

II. The Dataphase Factors

A. Threat of Irreparable Harm

Irreparable harm “occurs when a party has no adequate remedy at law, typically because its injuries cannot be fully compensated through an award of damages.” Gen. Motors Corp. v. Harry Brown's, LLC, 563 F.3d 312, 319 (8th Cir. 2009). “The movant must show that ‘irreparable injury is likely in the absence of an injunction, not merely a ‘possibility' of irreparable harm before a decision on the merits can be rendered.” Tumey v. Mycroft AI, Inc., 27 F.4th 657, 665 (8th Cir. 2022) (quoting Winter, 555 U.S. at 20). “Failure to show irreparable harm is an independently sufficient ground upon which to deny a preliminary injunction.” Watkins, 346 F.3d at 844; see also Gamble v. Minn. State Indus., Civ. No. 16-2720 (JRT/KMM), 2017 WL 6611570, at *2 (D. Minn. Dec. 1, 2017) (collecting cases).

Cookie Dough alleges that Defendants are irreparably harming its goodwill and brand through (1) consumer confusion, (2) frustrating its ability to refranchise the area because prospective franchisees will have direct competition in the area, and (3) encouraging other franchisees to disregard the terms of their franchise agreements. None of these allegations supports a finding of irreparable harm here.

First, Plaintiff has not established consumer confusion and subsequent harm. To the extent there is any confusion, the record includes evidence that Plaintiff may be contributing to the very confusion about which it complains. Defendants point out that as late as two weeks post termination, Cookie Dough's own website misrepresented that it still has a “mobile concession trailer” in Minnesota, when it does not. (Doc. No. 33-1, Suppl. Decl., Ex. 1.) This misrepresentation possibly leads to consumer confusion because while Plaintiff does not in fact continue to have a mobile concession trailer selling cookie dough treats in Minnesota, Defendants do.

Second, Plaintiff is presently unable to sell franchises in Minnesota. Because Cookie Dough cannot currently sell franchises here, any potential harm related to re- franchising is uncertain, speculative, and not immediate.^[3] See Iowa Utilities Bd. v. F.C.C., 109 F.3d 418, 425 (8th Cir. 1996) (“[A] party must show that the harm is certain and great and of such imminence that there is a clear and present need for equitable relief.”); Midwest Sign & Screen Printing Supply Co. v. Dalpe, 386 F.Supp.3d 1037, 1055 (D. Minn. 2019) (“A plaintiff must show more than a future risk of irreparable harm.”). It is reasonable that Cookie Dough's current claim on its website to still be operating a mobile concession trailer selling cookie dough treats in Minnesota in the same region would be its greatest impediment to re-franchising that region, even if it had the proper Minnesota registration to sell franchises.

And third, it is similarly speculative to conclude that other franchisees will disregard the terms of their agreements if ...