Century 21 Real Estate LLC v. All Professional Realty, Inc. et al., No. 2:2010cv02751 - Document 28 (E.D. Cal. 2011)

Court Description: MEMORANDUM AND ORDER granting 8 Motion for Preliminary Injunction signed by Judge William B. Shubb on 1/21/11. (Kaminski, H).

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Century 21 Real Estate LLC v. All Professional Realty, Inc. et al. Doc. 28 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 ----oo0oo---- 10 11 12 13 CASE NO. CIV. 2:10-2751 CENTURY 21 REAL ESTATE LLC, a Delaware Limited Liability Company formerly known as Century 21 Real Estate Corporation, 14 15 16 17 18 19 Plaintiff, v. ALL PROFESSIONAL REALTY, INC., a California corporation doing business as CENTURY 21 ALL PROFESSIONAL; STEVEN M. WRIGHT, an individual; and CAROL WRIGHT, an individual, 20 Defendants. 21 / 22 STEVE WRIGHT, CAROL WRIGHT and ALL PROFESSIONAL REALTY, INC., CASE NO. CIV. 2:10-2846 23 Plaintiffs, 24 25 26 v. MEMORANDUM AND ORDER RE: MOTIONS FOR A PRELIMINARY INJUNCTION CENTURY 21 REAL ESTATE LLC, and DOES 1-100, inclusive, 27 Defendants. 28 / 1 Dockets.Justia.com 1 ----oo0oo---2 3 Century 21 Real Estate LLC (“Century 21”) filed an 4 action against All Professional Realty, Inc. (“All 5 Professional”), Steven M. Wright, and Carol Wright arising from 6 All Professional’s continued use of Century 21’s trademarks 7 following the terminations of real estate brokerage franchise 8 agreements for unpaid fees. 9 Carol Wright, and All Professional filed a related action against (No. 2:10-2751.) Steve Wright,1 10 Century 21 arising from the franchise agreements. (No. 11 2:10-2846.) 12 for a preliminary injunction against All Professional, Steve 13 Wright, and Carol Wright in the action initiated by it and Steve 14 Wright, Carol Wright, and All Professional’s motion for a 15 preliminary injunction against Century 21 in the action initiated 16 by them. Presently before the court are Century 21’s motion Both sides’ motions for preliminary injunction were 17 18 originally set for hearing on December 20, 2010. In order to 19 accommodate the various evidentiary objections made by each side 20 to the declarations submitted by the other, the court permitted 21 the parties to file supplemental declarations to cure the alleged 22 defects and permitted the parties to call witnesses to testify in 23 support of or opposition to the motions. 24 was held on January 11, 2011. 25 I. An evidentiary hearing Factual and Procedural Background 26 27 28 1 The parties use “Steve Wright” and “Steven M. Wright.” Because he is captioned as Steve Wright in the action initiated by him, the court will use Steve Wright. 2 1 In 1994, Steve and Carol Wright formed All 2 Professional, a real estate brokerage company. (Steve Wright 3 Decl. in Supp. of Mot. for P.I. against Def. Century 21 (“Steve 4 Wright Decl. II”) ¶ 2 (No. 2:10-2846, Docket No. 9); Carol Wright 5 Decl. in Supp. of Mot. for P.I. against Def. Century 21 (“Carol 6 Wright Decl. II”) ¶ 2 (No. 2:10-2846, Docket No. 9); see also 7 Steve Wright Decl. in Opp’n to Century 21’s Mot. for P.I. against 8 Defs. (“Steve Wright Decl. I”) ¶ 2 (No. 2:10-2751, Docket No. 9 18); Carol Wright Decl. in Opp’n to Century 21’s Mot. for P.I. 10 against Defs. (“Carol Wright Decl. I”) ¶ 2 (No. 2:10-2751, Docket 11 No. 18).) 12 with Century 21 in 1995, which allowed it to operate an office 13 under the name “Century 21 All Professional.” 14 Decl. II ¶ 3; Carol Wright Decl. II ¶ 3; see also Steve Wright 15 Decl. I ¶ 3; Carol Wright Decl. I ¶ 3.) 16 franchisor of real estate brokerages. 17 Opp’n by Century 21 to Pls.’ Mot. for P.I. (“Bertet Decl.”) ¶ 3 18 (No. 2:10-2846, Docket No. 12); see also Rudin Decl. in Supp. of 19 Reply of Mot. for P.I. by Century 21 against Defs. (“Rudin Decl. 20 I”) Ex. A, ¶ 3 (No. 2:10-2751, Docket No. 22).) 21 All Professional signed its first franchise agreement (Steve Wright Century 21 is a (Bertet Decl. in Supp. of All Professional operates multiple offices and each 22 office is governed by a separate franchise agreement with Century 23 21. 24 franchise agreements with Century 21 for two offices in 25 Sacramento and one office in Folsom, California, with an 26 effective date of December 1, 2005, for each franchise agreement. 27 (Bertet Decl. Exs. A-C §§ 1.5, 1.7; see also Iuliano Decl. in 28 Supp. of Century 21’s Mot. for P.I. against Defs. (“Iuliano Decl. In November of 2005, All Professional signed three ten-year 3 1 I”) Exs. B-C §§ 1.5, 1.7 (No. 2:10-2751, Docket No. 10).) 2 Wrights state that at the time they signed the franchise 3 agreements on behalf of All Professional they were told that 4 Century 21 would be providing “new” tools and systems to grow 5 their offices. 6 ¶ 4; see also Steve Wright Decl. I ¶ 4; Carol Wright Decl. I ¶ 7 4.) 8 A-C at 43-44; see also Iuliano Decl. I Exs. B-C at 43-44.) 9 The (Steve Wright Decl. II ¶ 4; Carol Wright Decl. II The Wrights signed a personal guaranty. (Bertet Decl. Exs. Section 4.1 of the franchise agreements granted All 10 Professional the nonexclusive license to use Century 21’s “Marks” 11 and “System.” 12 Decl. I Exs. B-C § 4.1.) 13 service marks, and trade dress. 14 see also Iuliano Decl. I Exs. B-C § 3.1.8.) 15 inter alia, “policies, procedures, and techniques designed to 16 enable [] offices to compete more effectively in the real estate 17 sales market.” 18 Decl. I Exs. B-C § 3.1.14.) 19 “common use and promotion of certain Marks, copyrights, trade 20 secrets, centralized advertising programs, recruiting programs, 21 referral programs and sales management training programs.” (Id.) (Bertet Decl. Exs. A-C § 4.1; see also Iuliano “Marks” meant Century 21’s trademarks, (Bertet Decl. Exs. A-C § 3.1.8; “System” meant, (Bertet Decl. Exs. A-C § 3.1.14; see also Iuliano Century 21’s System also included 22 Century 21 has numerous registered trademarks. 23 Iuliano Decl. I ¶¶ 3-4, Ex. A; see also Iuliano Decl. in Supp. of 24 Opp’n by Century 21 to Pls.’ Mot. for P.I. (“Iuliano Decl. II”) 25 ¶¶ 3-4, Ex. A (No. 2:10-2846, Docket No. 18).) 26 Century 21, Century 21 uses the trademarks on goods and in 27 advertisements, education, training manuals, newsletters, global 28 computer networks, and residential, commercial, and mortgage 4 (See According to 1 brokerage services. 2 II ¶ 6.) 3 advertisements and promotions of goods and services offered by 4 Century 21. 5 6.) 6 (Iuliano Decl. I ¶ 6; see also Iuliano Decl. The trademarks have become well recognized because of (Iuliano Decl. I ¶ 6; see also Iuliano Decl. II ¶ In exchange for the rights granted under the franchise 7 agreements, All Professional agreed to pay royalty fees of six 8 percent of gross revenue, with an initial monthly minimum fee of 9 $500.00, due at the time of settlement or close of escrow. 10 (Bertet Decl. Exs. A-C §§ 7-8; see also Iuliano Decl. I Exs. B-C 11 §§ 7-8.) 12 gross revenue for a National Advertising Fund (“NAF”) for 13 advertising expenses, with an initial monthly minimum fee of 14 $562.00, due on the tenth of the following month. All Professional also agreed to pay two percent of its 15 Section 16.2.3 of the franchise agreements provided 16 that Century 21 could terminate the agreement for good cause, 17 which included curable and non-curable defaults. 18 16.2.3.) 19 defaults, provided that Century 21 could terminate the agreement 20 with 30 days notice of the “proposed termination and the 21 opportunity to cure the breach during the entire notice period, 22 or such longer or shorter notice as is required or permitted by 23 the law of the state where the Office is located,” if the curable 24 breach was the failure to pay financial obligations. 25 16.2.4.) 26 (Id. § Section 16.2.4, governing termination for curable (Id. § In addition to entering into the three franchise 27 agreements in November of 2005, All Professional borrowed 28 $75,000.00 from Century 21 pursuant to a Development Advance 5 1 Promissory Note (“Note”). 2 annual repayment plan. 3 Decl. I Ex. D.) 4 Note. 5 its franchise agreements, the yearly amount due would be forgiven 6 if All Professional reached certain gross revenue annual 7 thresholds. 8 relying on statements from Century 21 that it would provide All 9 Professional with the “necessary” tools, resources, and systems (Id.) The Note provided for a long-term, (Bertet Decl. Ex. D; see also Iuliano The Wrights signed a personal guaranty of the Provided that All Professional was not in breach of (Id.) The Wrights state that they executed the Note 10 to enable All Professional to meet the threshold requirements. 11 (Steve Wright Decl. II ¶ 7; Carol Wright Decl. II ¶ 6; see also 12 Steve Wright Decl. I ¶ 7; Carol Wright Decl. I ¶ 7.) 13 All Professional did not meet the annual thresholds and thus 14 annual payments were not forgiven. 15 Carol Wright Decl. II ¶ 7; see also Steve Wright Decl. I ¶ 8; 16 Carol Wright Decl. I ¶ 8.) 17 Professional was unable to meet the threshold requirements 18 because Century 21 failed to provide the necessary tools, 19 resources, and systems. 20 Wright Decl. II ¶ 7; see also Steve Wright Decl. I ¶ 8.; Carol 21 Wright Decl. I ¶ 8.) 22 annual payment for 2007, Century 21 offered to cancel the payment 23 in exchange for a one-year extension of each franchise agreement 24 and a general release of claims. 25 Supp. of Pls.’ Mot. for P.I. (“Suppl. Steve Wright Decl.”) ¶ 8, 26 Ex. 12 (No. 2:10-2846, Docket No. 13).) 27 rejected Century 21’s offer: “I refused to agree to release 28 Century 21 from any liability because I thought that Century 21’s Thereafter, (Steve Wright Decl. II ¶ 8; The Wrights state that All (Steve Wright Decl. II ¶ 8.; Carol When All Professional failed to make its (Suppl. Steve Wright Decl. in 6 All Professional 1 representatives had actively misrepresented material facts to me. 2 I did not believe that such a request was proper, and I felt that 3 Century 21 was violating its duties to me by asking for such a 4 waiver.” 5 I ¶ 8.) 6 (Suppl. Steve Wright Decl. ¶ 8, Ex. 12.) 7 Professional failed to make its annual payments on the Note. (Steve Wright Decl. II ¶ 8; see also Steve Wright Decl. Century 21 rejected All Professional’s counteroffer. 8 9 Thereafter, All Beginning in 2008, Steve Wright informed Century 21 about franchisees “openly competing with [him] and stealing [his] 10 business and employees” in violation of Century 21’s “Code of 11 Conduct.”2 12 Decl. II ¶ 8; Steve Wright Decl. I ¶ 9; Carol Wright Decl. I ¶ 13 9.) 14 franchisees in the area began hiring agents away from All 15 Professional and one Sacramento franchisee “stole” a commission 16 check from All Professional.3 17 also Steve Wright Decl. I ¶ 9.) (Steve Wright Decl. II ¶ 9; see also Carol Wright Steve Wright states that in about 2006 other Century 21 18 (Steve Wright Decl. II ¶ 9; see All Professional began to experience “short term cash 19 20 21 22 23 24 25 2 Century 21’s Policies and Procedures Manual stated that franchisees “should avoid” recruiting sales associates of other franchisees and “advised that aggressive sales associates recruiting practices may subject the broker involved to claims of business interference by other brokers under applicable state law.” (Steve Wright Decl. in Supp. of Mot. for P.I. against Century 21 (“Steve Wright Decl. I”) Ex. 2 (No. 2:10-2846, Docket No. 9); see also Steve Wright Decl. in Opp’n to Century 21’s Mot. for P.I. (“Steve Wright Decl. II”) Ex. 2 (No. 2:10-2751, Docket No. 18).) 3 26 27 28 Steve Wright states that Century 21 also refused to do anything when a real estate office, not affiliated with Century 21, moved into the Folsom area operating as “21st Century Realty,” arguably diluting All Professional’s trade name as “Century 21 All Professional.” (Steve Wright Decl. I ¶ 11; see also Steve Wright Decl. II ¶ 11.) 7 1 flow problems in 2009” and decided to “temporarily” close the 2 Folsom office. 3 Wright Decl. I ¶ 10.) 4 into the office that All Professional had vacated. (Steve Wright 5 Decl. II ¶ 10; see also Steve Wright Decl. I ¶ 10.) 6 states that he “continued to complain to Century 21 about the 7 misrepresentations by Century 21 and the actions of other Century 8 21 franchisees” and became “concerned” that Century 21 was 9 “actively trying” to “run us out of business.” (Steve Wright Decl. II ¶ 10; see also Steve Another Century 21 franchisee then moved Steve Wright (Steve Wright 10 Decl. II ¶ 11; Steve Wright Decl. I ¶ 11.) 11 heard “rumors” from other franchisees’ agents that All 12 Professional was being “forced out” and that other franchisees 13 should recruit All Professional’s agents. 14 ¶ 11; Steve Wright Decl. I ¶ 11.) 15 Steve Wright had (Steve Wright Decl. II With respect to Steve Wright’s complaints to Century 16 21, Century 21 had no obligation in the agreements to prevent 17 other franchisees from recruiting All Professional’s agents. 18 the contrary, Century 21 did not have the right to do so. 19 Section 21.2 provided: 20 21 22 23 24 25 To [Century 21] will have no obligation to pay your commissions, taxes, wages or other expenses, and will have no right to regulate or participate in the recruitment, selection, engagement, retention, discipline or termination of your sales associates or employees, or to determine or limit the parties from whom you may accept listings or to or for whom you may sell property, the commission rates you charge, the commission splits between you and your sales associates, your working conditions, the manner or details of work performed by you or your sales associates or employees, except as may be necessary to protect the Marks and goodwill. 26 (Bertet Decl. Exs. A-C § 21.2; see also Iuliano Decl. I Exs. B-C 27 § 21.2.) The remedy, as brought out at the evidentiary hearing, 28 8 1 was for All Professional to sue Select, the Century 21 franchisee 2 that allegedly recruited All Professional’s agents and moved into 3 the same Folsom office that All Professional vacated. 4 According to Steve Wright’s testimony, Bob Popp, a 5 field representative for Century 21, did call Select about Steve 6 Wright’s complaints, even though Century 21 was not required to 7 do so. 8 recruiting All Professional’s agents. 9 what the court would characterize as a “he-said, she-said” It was Steve Wright’s belief that Select denied This left Century 21 in 10 dilemma. 11 business. 12 authority to enforce sanctions against either party. 13 Wright testified that he did not know what Bob Popp did beyond 14 making a call, and the court finds it quite possible that Century 15 21 did do something about Steve Wright’s complaint. 16 Select’s alleged recruiting of All Professional’s agents was no 17 excuse for All Professional to stop paying fees to Century 21. 18 Century 21 did not have the right to run either It was at best in the position of a mediator, with no Steve Regardless, There is also no evidence that Century 21 cut off 19 recruiting training because of Steve Wright’s complaints. 20 Wright complained in 2008, and in that year Tara Scholl of 21 Century 21 cut off recruiting training. 22 the recruiting training and the complaints has been shown. 23 Steve No connection between Beginning in May of 2009, All Professional stopped 24 paying many of its franchise fees. All Professional knew it had 25 failed to pay them. 26 with “detailed summaries of their account balances owed to 27 Century 21, including specific information detailing the amounts 28 owed by that franchisee, when the amounts are due, and the type Century 21’s System provides its franchisees 9 1 of amount due (i.e., royalty fee, national advertising fee fund 2 fee, Development Advance Note, etc.)[.]” 3 in Supp. of Opp’n by Century 21 to Pls.’ Mot. for P.I. (“Suppl. 4 Rodriguez Decl.”) ¶ 4 (No. 2:10-2846, Docket No. 19).); see also 5 Rudin Decl. I Ex. A ¶ 21.) 6 detailed account summaries. 7 Rudin Decl. I Ex. A ¶ 21.) 8 Account Reports for each franchise agreement. 9 Decl Ex. A; see also Iuliano Decl. I Exs. I-J.) (Suppl. Rodriguez Decl. All Professional had access to these (Suppl. Rodriguez Decl ¶ 4; see also Century 21 has provided the Custom (Suppl. Rodriguez The Custom 10 Account Report specifies the date, amount, transaction type, and 11 due date. 12 In letters dated April 5, 2010, Century 21 notified All 13 Professional of its intent to terminate the three agreements and 14 of All Professional’s opportunity to cure. 15 G; see also Iuliano Decl. I Exs. E-F.) 16 the River Park Drive office stated in pertinent part: 17 18 19 20 21 (Bertet Decl. Exs. E- The notice pertaining to Century 21 has advised you on numerous occasions that you are delinquent in the payment of your account. Upon review, we have determined that you are in default of the above-referenced Agreement for failing to pay fees when due. Your default constitutes a material breach of the Agreement, for which Century 21 may terminate the franchise. As of February 24, 2010, your account balance for this office was $59,327.41. 22 23 In order to avoid termination, you must pay the balance in full no later than May 10, 2010. 24 (Bertet Decl. Ex. E; see also Iuliano Decl. I Ex. E.) 25 also provided contact information for Jacqueline Bertet, Century 26 21’s Senior Director of Financial Services, and informed All 27 Professional that failure to pay the balance would result in 28 immediate termination of the franchise, which would then require 10 The notice 1 All Professional to pay the amount past due at the time of 2 termination, sums assessed in a post-termination audit, the 3 remaining balance of the Note, and lost profits. 4 Ex. E; see also Iuliano Decl. I Ex. E.) 5 the Florin Road, Sacramento, office contained similar language 6 and stated that the balance was $23,492.69 as of February 24, 7 2010, requiring payment by May 10, 2010. 8 see also Iuliano Decl. I Ex. F.) 9 Folsom office contained similar language and stated that the 10 balance was $13,274.34 as of February 24, 2010, and required 11 payment by May 10, 2010. 12 (Bertet Decl. The notice pertaining to (Bertet Decl. Ex. G; The notice pertaining to the (Bertet Decl. Ex. F.) Following receipt of the notices, both Steve and Carol 13 Wright called representatives of Century 21. 14 Shalina (“Shelly”) Rodriguez, a Director of Financial Services 15 for Century 21. 16 she asked for an accounting and “disputed certain discrepancies I 17 saw in the notices of default.” 18 also Carol Wright Decl. I ¶ 13.) 19 identified the following issues in the telephone call: (1) the 20 default amounts included amounts owed under the Note, which was 21 not part of a franchise agreement; (2) Century 21 was “trying” to 22 charge fees for the Folsom office even though it had been closed 23 since August of 2009; and (3) there was a credit that All 24 Professional should have received. 25 see also Carol Wright Decl. I ¶ 13.) 26 27 28 Carol Wright called Carol Wright states that in the telephone call (Carol Wright Decl. II ¶ 12; see Carol Wright states that she (Carol Wright Decl. II ¶ 12; Carol Wright “specifically asked what would be required to resolve the claimed default”: [Rodriguez] informed me that we would need to pay 11 1 $124,432.20 and that Corporate would want a promissory note since the figure was greater than $100,000. Our discussion revealed that Corporate was including the outstanding amount allegedly owed under [the Note], even though payment was not required under any of the Franchise Agreements. The pay-off amount included the Hawaii office even though that franchise was owned by a separate entity. 2 3 4 5 (Suppl. Carol Wright Decl. in Supp. Of Pls.’ Mot. for P.I. 6 (“Suppl. Carol Wright Decl.”) ¶ 4 (No. 2:10-2846, Docket No. 7 13).) 8 In her declaration, Rodriguez states that she received 9 the call from Carol Wright on May 6, 2010, and Carol Wright 10 stated that she wanted to discuss a “possible payment plan for 11 the amounts owed.” (Suppl. Rodriguez Decl. ¶ 2.) Wright did not 12 ask for an accounting, nor did she state that All Professional 13 would pay the amounts due upon receipt of an accounting. (Id.) 14 Following the phone conversation, Carol Wright e-mailed 15 a letter to Rodriguez identifying “items we need to address 16 before proceeding”: (1) removing minimum royalty and NAF fees 17 from the Folsom office account balance because it had been closed 18 since August 31, 2009; (2) determining the cutoff date for “final 19 payment calculations,” with a possible date of March 31, 2010;4 20 (3) “handling” the Hawaii office separately; (4) removing minimum 21 royalty and NAF fees from January, February, and March of 2010; 22 (5) separating the Note amount owed because of a “separate issue” 23 as to why All Professional was not paying it; and (6) crediting 24 $304.50 because of a Century 21 error. Lastly, Carol Wright 25 26 27 28 4 This appears to be in reference to a possible payment plan for the amounts owed, with March 31, 2010, being the cutoff date for determining the total amount owed under the payment plan. 12 1 stated that the “totals will obviously have to be recalculated 2 before we can talk about payment arrangements” and said that she 3 would make payments on “April 2010 transactions to start anew.”5 4 (Carol Wright Decl. II Ex. 8; see also Carol Wright Decl. I Ex. 5 8.) 6 Steve Wright states that All Professional took issue 7 with the notices of default because they (1) included amounts 8 owed under the Note and (2) because there were “some questionable 9 amounts included in the calculation of default.” (Steve Wright 10 Decl. II ¶ 13; see also Steve Wright Decl. I ¶ 13.) 11 conversations with representatives of Century 21, Steve Wright 12 states that he believed that “Century 21 was working to correct 13 the accounting errors and would be contacting [them] to resolve 14 the issues so [they] could work out a plan to cure the default.” 15 (Steve Wright Decl. II ¶ 13; see also Steve Wright Decl. I ¶ 13; 16 Suppl. Steve Wright Decl. ¶ 5.) 17 Based on Shortly after May 17, 2010, when Rodriguez returned 18 from vacation, she and the Wrights spoke again about a possible 19 payment plan. 20 agree to provide the Wrights with a revised accounting “because 21 at no time did [she] tell Steve or Carol Wright that any of the 22 amounts Century 21 was seeking to collect under separate 23 franchise agreements were not in fact owed to Century 21.” (Id. ¶ (Suppl. Rodriguez Decl. ¶ 6.) Rodriguez did not 24 25 26 27 28 5 The evidentiary hearing revealed that while All Professional may have resumed paying royalty fees on current transactions, beginning in April of 2010, it still continued to fail to pay NAF fees on current transactions. (See Suppl. Rodriguez Decl. in Supp. of Opp’n by Century 21 to Pls.’ Mot. for P.I. (“Suppl. Rodriguez Decl.”) ¶ 10 (No. 2:10-2846, Docket No. 19).) Thus, All Professional continued to fall behind on its franchise fees. 13 1 6.) Rodriguez and the Wrights spoke again in mid-June “to 2 discuss the terms of a possible payment plan of amounts owed by 3 All Professional,” but these discussions were not successful, 4 according to the Wrights’ testimony and Rodriguez’s declaration. 5 (Id. ¶ 10.) 6 fees. All Professional never did pay the unpaid franchise 7 In letters dated July 7, 2010, Century 21 terminated 8 the franchise agreements governing the two Sacramento offices, 9 effective July 9, 2010.6 (Bertet Decl. Exs. H-I; see also 10 Iuliano Decl. I Exs. G-H.) The letter regarding the River Park 11 Drive office stated that the account balance was $72,407.97 as of 12 July 6, 2010, an additional $41,667.00 was owed under the Note, 13 and an additional $250,029.34 was owed for lost profits, pursuant 14 to calculations prescribed by the franchise agreement. 15 letter regarding the Florin Road office stated that the account 16 balance was $33,934.30 as of July 6, 2010, and an additional 17 $155,671.48 was owed for lost profits. 18 instructed to follow the post-termination procedures, governed by 19 section 16.47 of the franchise agreements, which required All The All Professional was 20 6 21 22 23 24 25 26 27 28 In a May 24, 2010, letter, Century 21 terminated the franchise agreement governing the Folsom office, which All Professional had closed. (Bertet Decl. in Supp. of Opp’n by Century 21 to Pls.’ Mot. for P.I. (“Bertet Decl.”) Ex. J (No. 2:10-2846, Docket No. 12).) This termination is not at issue. 7 Section 16.4 requires, inter alia, (1) returning of Century 21’s property, (2) discontinuing use of Century 21’s Marks, (3) discontinuing use of signs or cross arm signposts displaying Century 21’s logo, colors, color patterns and designs or Marks, (4) taking any affirmative action necessary to remove any use of Century 21’s Marks, (5) “de-identifying” from Century 21 in a manner that does not confuse the public about the fact that they are no longer associated with Century 21, and (6) causing internet sites or web masters to removes Century 21’s Marks from their web pages. 14 1 Professional to cease use of Century 21’s trademarks. 2 termination of the franchise agreements, Century 21 denied All 3 Professional access to Century 21’s server, e-mail, databases, 4 and the Preferred Client Club. 5 Carol Wright Decl. II ¶ 13; see also Steve Wright Decl. I ¶ 14; 6 Carol Wright Decl. I ¶ 14.) 7 Upon (Steve Wright Decl. II ¶ 14; In their declarations, the Wrights claim not to have 8 anticipated the terminations. 9 her communications with Rodriguez and Shawn Holland of Century 10 Carol Wright states that, based on 21: 11 14 I was lead [sic] to believe that we would receive an accounting of the actual amounts owed and that we would be able to work out a payment plan. I was ready to cure any default once we were provided with a proper accounting. I waited for this accounting. However, I never received an accounting or an adjustment of the amounts owed as I had requested. 15 (Carol Wright Decl. II ¶ 13; see also Carol Wright Decl. I ¶ 14.) 16 Steve Wright makes a similar statement about waiting for an 17 accounting. 18 14.) 12 13 19 (Steve Wright Decl. II ¶ 14; Steve Wright Decl. I ¶ However, the Wrights’ testimony and Steve Wright’s July 20 16, 2010, letter, requesting reinstatement show that the 21 terminations were not unanticipated. (Steve Wright Decl. II Ex. 22 3; see also Steve Wright Decl. I Ex. 3.) 23 pertinent part: 24 25 26 The letter stated in It was never our intention not to pay Century 21 the royalty fees and NAF fees due. The only part that was in contention was the repayment of the Development Advance Note. And it was that point that communications failed. . . . We are open to discussion for an acceptable payment plan. 27 28 Century 21 subsequently denied the request for reinstatement in a 15 1 letter dated July 29, 2010. (See Steve Wright Decl. II Ex. 4; 2 see also Steve Wright Decl. I Ex. 4.) 3 letter, the Wrights wrote that they were “perplexed” by the 4 denial of the request for reinstatement and were “curious as to 5 what this denial of [their] reinstatement was based on since our 6 message to Shelley was that we were willing to pay what was due 7 Century 21 and that we were willing to sign [Century 21’s] note.” 8 (Steve Wright Decl. II Ex. 5; see also Steve Wright Decl. I Ex. 9 5.) In an August 2, 2010, The purpose of all of these discussions was essentially 10 11 to see if some kind of alternative payment plan could be worked 12 out between Century 21 and All Professional to relieve All 13 Professional of some of the financial hardship in which it found 14 itself. 15 amount immediately. 16 agreements or otherwise to enter into these discussions. 17 21 may or may not have proposed a note, but there is no evidence 18 of the terms of a note. 19 The Wrights’ August 2, 2010, letter’s reference to a message to 20 Rodriguez about a willingness to sign a note is too vague and 21 came only after Century 21 had terminated the agreements. 22 court cannot find any terms of an actual note or an e-mail or a 23 letter with terms to which they agreed. 24 Century 21 did not need to agree to a note, to this day the court 25 cannot find what the terms would be of a note. 26 All Professional did not pay the franchise fees was simply that 27 it could not afford the fees. 28 All Professional had an obligation to pay the full Century 21 was not obligated by the Century There is only evidence of a discussion. The Beyond the fact that The sole reason In late August, Century 21 conducted inspections of the 16 1 Sacramento offices to determine whether All Professional had 2 complied with what it believed were All Professional’s post- 3 termination obligations under the franchise agreements. 4 reports indicated that All Professional continued to use Century 5 21’s trademarks. 6 in Supp. Of Century 21’s Mot. for P.I. against Defs. (“Miles 7 Decl.”) ¶¶ 2-4, Exs. A-C (No. 2:10-2751, Docket No. 11).) 8 September 17, 2010, letter, Century 21’s counsel informed Steve 9 and Carol Wright of the results of the post-termination The (Iuliano Decl. I Exs. K-L; see also Miles Decl. In a 10 inspections and demanded that they comply with the post- 11 termination franchise agreement obligations (Steve Wright Decl. 12 II Ex. 6; see also Steve Wright Decl. I Ex. 6), to which the 13 Wrights responded with a September 21, 2010, letter, proposing 14 terms under which All Professional would continue to be a 15 franchisee of Century 21. 16 Steve Wright Decl. I Ex. 7.) 17 (Steve Wright Decl. II Ex. 7; see also On September 30, 2010, Steve Wright, Carol Wright, and 18 All Professional filed an action in state court against Century 19 21 for violation of a termination provision of the California 20 Franchise Relations Act (“CFRA”), Cal. Bus. & Prof. Code § 20020, 21 violation of California’s Unfair Competition Law (“UCL”), Cal. 22 Bus. & Prof. Code §§ 17200-17210, intentional interference with 23 business advantage, breach of contract, breach of the implied 24 covenant of good faith and fair dealing, fraud, negligent 25 interference with business advantage, and interference with 26 contract. 27 1).) 28 Carol Wright, and All Professional’s ex parte application for a (Notice of Removal Ex. A (No. 2:10-2846, Docket No. On October 6, 2010, the state court denied Steve Wright, 17 1 temporary restraining order. 2 for a preliminary injunction against it, Century 21 removed the 3 action on October 21, 2010. 4 (Id. Ex. J.) With a pending motion On October 12, 2010, Century 21 filed a separate action 5 in this court against All Professional, Steve Wright, and Carol 6 Wright for claims of federal trademark infringement, 15 U.S.C. § 7 1114, common law trademark infringement, federal unfair 8 competition, 14 U.S.C. § 1125, California statutory trademark 9 infringement, Cal. Bus. & Prof. Code § 14340, violation of the 10 UCL, breach of contract, breach of guaranty, breach of promissory 11 note, account stated, quantum meruit, and accounting. 12 2751, Docket No. 1.) 13 (No. 2:10- On November 1, 2010, Century 21 filed the instant 14 motion for a preliminary injunction. 15 8.) 16 termination obligations under the franchise agreements, which 17 include All Professional’s cessation of the use of Century 21’s 18 trademarks. 19 and All Professional filed the instant motion for a preliminary 20 injunction against Century 21. 21 They request that the court require Century 21 to restore All 22 Professional’s benefits under the franchise agreements, including 23 access to Century 21’s server, electronic mail, advertisement, 24 property listing services, prospecting databases and the 25 Preferred Client Club, and to enjoin Century 21 from denying All 26 Professional the right to use Century 21’s trademarks. 27 II. 28 (No. 2:10-2751, Docket No. Century 21 requests that the court enforce the post- On November 19, 2010, Steve Wright, Carol Wright, (No. 2:10-2846, Docket No. 9.) Discussion In the Ninth Circuit, “‘serious questions going to the 18 1 merits’ and a hardship balance that tips sharply towards the 2 plaintiff can support issuance of an injunction, so long as the 3 plaintiff also shows a likelihood of irreparable injury and that 4 the injunction is in the public interest.” 5 Rockies v. Cottrell, 622 F.3d 1045, 1053 (9th Cir. 2010).8 6 7 A. Alliance for the Wild Merits The merits of Century 21’s claims depend in part on 8 whether Century 21 properly terminated the franchise agreements. 9 See McDonald’s Corp. v. Robertson, 147 F.3d 1301, 1308 (11th Cir. 10 1998) (“[W]e find that the Lanham Act’s requirement that a 11 franchisor demonstrate that unauthorized trademark use occurred 12 to prevail on the merits of a trademark infringement claim 13 against a franchisee necessitates some type of showing that the 14 franchisor properly terminated the contract purporting to 15 authorize the trademarks’ use, thus resulting in the unauthorized 16 use of trademarks by the former franchisee.”); S & R Corp. v. 17 Jiffy Lube Int’l, Inc., 968 F.2d 371, 375 (3d Cir. 1992) (“Once a 18 franchise is terminated, the franchisor has the right to enjoin 19 unauthorized use of its trademark under the Lanham Act. 20 Jiffy Lube will merit preliminary injunctive relief if it can 21 adduce sufficient facts indicating that its termination of 22 Durst’s franchises was proper.”); see also Re/Max N. Cent., Inc. 23 v. Cook, 272 F.3d 424, 430 (7th Cir. 2001). 24 franchise agreement may be improper under either the terms of the Thus, Termination of a 25 26 27 28 8 To the extent a party seeks a mandatory injunction, “the district court should deny such relief unless the facts and law clearly favor the moving party.” Stanley v. Univ. of So. Cal., 13 F.3d 1313, 1320 (9th Cir. 1994) (internal quotation marks omitted). 19 1 agreement or state franchise laws. 2 at 430. 3 See Re/Max N. Cent., 272 F.3d Section 16.2.3 of the agreements provided that Century 4 21 could terminate the agreement for good cause, which included 5 curable and non-curable defaults. 6 termination for curable defaults, provided that Century 21 could 7 terminate the agreement with 30 days notice of the “proposed 8 termination and the opportunity to cure the breach during the 9 entire notice period, or such longer or shorter notice as is Section 16.2.4, governing 10 required or permitted by the law of the state where the Office is 11 located,” if the curable breach was the failure to pay financial 12 obligations. 13 The CFRA, which the agreements incorporated by 14 reference, prohibits a franchisor from terminating a franchise 15 agreement absent good cause. 16 Good cause includes failure to comply with the franchise 17 agreement “after being given notice thereof and a reasonable 18 opportunity, which in no event need be more than 30 days, to cure 19 the failure.” 20 opportunity to cure is permitted when the “franchisee fails to 21 pay any franchise fees or other amounts due to the franchisor or 22 its affiliate within five days after receiving written notice 23 that such fees are overdue.” 24 Id. Cal. Bus. & Prof. Code § 20020. Immediate notice of termination without Id. § 20021(j). Here, it appears from the evidence that Century 21 25 properly terminated the franchise agreements under the terms of 26 the franchise agreements and the CFRA. 27 Professional of its intent to terminate the franchise agreements 28 and the opportunity to cure in April 5, 2010, letters, following 20 Century 21 notified All 1 prior informal notices of failure to pay amounts due that All 2 Professional had ignored. 3 the undisputed fees, Century 21 terminated the Sacramento office 4 agreements effective July 9, 2010. 5 Having not received payment of even It was unequivocally clear from the testimony of the 6 Wrights that the only reason they did not pay the franchise fees 7 owed by them to Century 21 was that they did not have the money. 8 It was not because All Professional did not know the amount to 9 pay; nor was it because Century 21 had defaulted on its 10 obligations. 11 in the business of home sales, the court can sympathize with the 12 Wrights’ predicament, but it was simply no excuse for their 13 failure to pay the fees lawfully owed to Century 21 under the 14 agreements. 15 Considering the economy at that time, particularly The testimony was that over the period of the franchise 16 relationship, All Professional paid over $2 million in fees to 17 Century 21. 18 eight percent of its income in fees, this means that All 19 Professional made approximately $20 million in income over that 20 period. 21 franchisee. 22 Century 21 dealer. 23 immeasurable value to them, but that was only part of the 24 benefit. 25 server, e-mail, databases, and the Preferred Client Club. 26 Professional chose not to prioritize the amount it owed to 27 Century 21 to maintain that privilege. 28 to pay their other debts ahead of the relatively small percentage Considering that All Professional paid approximately The Wrights knew how important it was to be a Century 21 Each one testified to how crucial it was to be a Just to use the trademarks was of Century 21 also granted them access to Century 21’s 21 All When the Wrights elected 1 of their income it would have taken to maintain their Century 21 2 franchise, they made the decision that got them into this 3 situation. 4 Century 21’s trademark and unfair competition claims 5 depend only in part on the proper termination of the franchise 6 agreements. 7 to section 32 of the Lanham Act also requires (1) ownership of a 8 registered trademark; (2) use of that mark beginning before the 9 alleged infringer’s use; (3) the alleged infringer’s use without A federal claim for trademark infringement pursuant 10 the alleged owner’s consent; and (4) that the alleged infringer’s 11 use is likely to cause confusion, or to cause mistake, or to 12 deceive. 13 Sandlin, 846 F.2d 1175, 1178 (9th Cir. 1998); Intel Corp. v. 14 Americas News Intel Pub., LLC, No. C 09-05085, 2010 WL 2740063, 15 at *2 (N.D. Cal. July 12, 2010). 16 unfair competition claim for false designation of origin of 17 services under section 43(a) of the Lanham Act is identical to 18 the federal trademark infringement claim, with the exception that 19 the trademark need not be registered. 20 Intel Corp., See 15 U.S.C. § 1114(a); Century 21 Real Estate v. The elements of a federal See 15 U.S.C. § 1125(a); 2010 WL 2740063, at *2. 21 The same “ultimate test” governs both federal claims: 22 “whether the public is likely to be deceived or confused by the 23 similarity of the marks.” 24 Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 632 (9th Cir. 25 2008). 26 possibility.” 27 (9th Cir. 1996). 28 trademark infringement and unfair competition, courts apply the Century 21, 846 F.2d at 1178; see also The “confusion must be probable, not simply a Murray v. Cable Nat’l Broad. Co., 86 F.3d 858, 861 With respect to California law claims for 22 1 same likelihood of confusion test applied to a federal trademark 2 infringement claim. 3 F. Supp. 2d 1084, 1096 (N.D. Cal. 2009) (“Accordingly, the 4 analysis set forth above under Plaintiff’s federal trademark 5 infringement claim applies equally to Plaintiff’s trademark and 6 unfair competition claims under California law.”); see also Jada 7 Toys, Inc., 518 F.3d at 632 (federal claims for trademark 8 infringement and unfair competition and UCL claim were subject to 9 the same test); CytoSport, Inc. v. Vital Pharma., Inc., 617 F. Levi Strauss & Co. v. Toyo Enterp. Co., 665 10 Supp. 2d 1051, 1066 n.1 (E.D. Cal. 2009) (“Likelihood of 11 confusion is also the test for trademark infringement and unfair 12 competition under California common and statutory law.”). The Ninth Circuit has established eight non-exhaustive 13 14 factors that are relevant to a likelihood-of-confusion 15 determination: (1) the strength of the alleged owner’s trademark; 16 (2) proximity of the goods or services; (3) similarity of the 17 trademarks; (4) evidence of actual confusion; (5) marketing 18 channels used; (6) type of goods or services and the degree of 19 care likely to be used by the purchaser; (7) alleged infringer’s 20 intent in selecting the mark; and (8) likelihood of expansion of 21 the product lines. 22 348-49 (9th Cir. 1979). AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 23 Here, the Wrights and All Professional have not argued 24 that All Professional’s continued use of Century 21’s trademarks 25 is not likely to cause confusion. 26 apply the Sleekcraft factors. 27 Professional has undisputably continued to use Century 21’s 28 trademarks. Nonetheless, the court will On the similarity factor, All All Professional has not altered them. 23 See, e.g., 1 Century 21, 846 F.2d at 1179 (former franchisee argued against 2 likelihood of confusion when it omitted “21” from name). 3 court also finds that Century 21’s trademarks are strong. 4 Iuliano Decl. I ¶ 6). 5 at 1179, the Ninth Circuit found Century 21’s trademarks strong 6 on the facts of that case based in part on the money spent on 7 advertisements containing the trademarks and the revenue 8 generated by use of the trademarks. 9 The (See In Century 21 Real Estate Corp., 846 F.2d Id. While the court has not been presented with actual 10 evidence of confusion, the Wrights’ declarations and testimony 11 suggest that All Professional desires to use Century 21’s 12 trademarks to attract listings and qualified agents. (Steve 13 Wright Decl. I ¶ 17; Carol Wright Decl. I ¶ 17.) 14 Professional uses Century 21’s trademarks in connection with real 15 estate brokerage services, the same services offered by Century 16 21’s franchisees. 17 Decl. ¶¶ 2-4, Exs. A-C.) 18 All Professional markets its services through signs, business 19 cards, and the internet. 20 L; Miles Decl. ¶¶ 2-4, Exs. A-C.) 21 likelihood of confusion based on the Sleekcraft factors. 22 it appears from the evidence that Century 21 properly terminated 23 the franchise agreements and that All Professional’s continued 24 use of Century 21’s trademarks will likely confuse the public, 25 the court finds that it is likely that Century 21 will succeed on 26 its federal and state trademark infringement and unfair 27 competition claims. 28 All (Iuliano Decl. I ¶¶ 5, 21-22, Exs. K-L; Miles Lastly, like Century 21 franchisees, (Iuliano Decl. I ¶¶ 4-6, 21-22, Exs. KAccordingly, the court finds a However, the court does not find the evidence 24 Because 1 sufficient to support an injunction against Century 21 based on 2 All Professional’s claims for violation of a termination 3 provision of the CFRA, violation of the UCL, intentional 4 interference with business advantage, breach of contract, breach 5 of the implied covenant of good faith and fair dealing, fraud, 6 negligent interference with business advantage, and interference 7 with contract. 8 B. Irreparable Harm 1. 9 Century 21 Before Winter v. Natural Resources Defense Council, 10 11 Inc., 555 U.S. 7 (2008), and eBay Inc. v. MercExchange, L.L.C., 12 547 U.S. 388, 393-94 (2006) (concluding that district courts must 13 apply traditional principles of equity, including assessing the 14 likelihood of irreparable harm, when granting a permanent 15 injunction in the context of patent infringement), courts applied 16 a presumption of irreparable harm upon a showing of a likelihood 17 of success on the merits in intellectual property infringement 18 cases.9 19 (9th Cir. 2003) (trademark infringement case); GoTo.Com, Inc. v. 20 Walt Disney Co., 202 F.3d 1199, 1205 n.4 (9th Cir. 2000) (same). 21 Subsequent to and in light of Winter and eBay, some courts 22 declined to apply the presumption. 23 Supp. 2d at 1065 (trademark and trade dress infringement case); See El Pollo Loco, Inc. v. Hashim, 316 F.3d 1032, 1038 See, e.g., CytoSport, 617 F. 24 25 26 27 28 9 In the trademark infringement context, the reason for the presumption “is that once a probability of proving likelihood of confusion at trial is shown, the trademark owner’s business goodwill and reputation are at risk.” Volkswagen AG v. Verdier Microbus and Camper, Inc., No. C 09-00231, 2009 WL 928130, at *6 (N.D. Cal. 2009). 25 1 Volkswagen AG v. Verdier Microbus and Camper, Inc., No. C 2 09-00231, 2009 WL 928130, at *6 (N.D. Cal. 2009). 3 In Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & 4 Co., 571 F.3d 873, 877 (9th Cir. 2009), the Ninth Circuit upheld 5 a district court’s application of the presumption in a trademark 6 infringement case. 7 success on the merits, it reasonably presumed irreparable injury 8 . . . .”); see also TMX Funding, Inc. v. Impero Techns., Inc., 9 No. C 10-00202, 2010 WL 2745484, at *7 (N.D. Cal. July 9, 2010) Id. (“Because the court found a likelihood of 10 (describing Marlyn as reaffirming the presumption in trademark 11 infringement cases); Protectmarriage.com v. Courage Campaign, 680 12 F. Supp. 2d 1225, 1228 (E.D. Cal. 2010) (explaining in dicta that 13 the presumption applies to trademark infringement cases). 14 see Aurora World, Inc. v. Ty Inc., 719 F. Supp. 2d 1115, 1169 15 (C.D. Cal. 2009) (“The Marlyn court appeared to apply Winter and 16 did not consider the impact of the Supreme Court’s decision in 17 eBay.”) (copyright infringement case); see also Credit Bureau 18 Connection, Inc. v. Pardini, --- F. Supp. 2d ----, ----, 2010 WL 19 2737128, at *14 (E.D. Cal. July 12, 2010) (finding irreparable 20 harm in a copyright infringement case but citing eBay and 21 declining to presume irreparable harm). 22 But In light of the foregoing, the viability of the 23 presumption of irreparable harm caused by trademark infringement 24 is at best still an open question. 25 presumption still applies, in this case it is clear that Century 26 21 will suffer irreparable harm if All Professional is not 27 enjoined from using its trademarks. 28 does not support a finding of irreparable harm, because such 26 Regardless of whether the While “economic injury alone 1 injury can be remedied by a damage award,” Rent-A-Center, Inc. v. 2 Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 3 (9th Cir. 1991), the Ninth Circuit has recognized that damage to 4 goodwill is an irreparable harm. 5 a company’s reputation. See WMX Techs. v. Miller, 80 F.3d 1315, 6 1325 (9th Cir. 1996). 7 Id. Business goodwill includes It appears obvious from the testimony of Steve Wright 8 and the e-mails and other communications exchanged between the 9 parties (see, e.g., Suppl. Steve Wright Decl. Ex. 12), that 10 Century 21 and All Professional, under the ownership of Steve and 11 Carol Wright, will never be able to resume a relationship of 12 mutual trust and respect. 13 relationship between the parties has irreparably broken down. 14 For example, on May 13, 2009, Steve Wright went so far as to 15 threaten Century 21 with an action for fraud if Century 21 did 16 not compromise regarding the debt on the Note. 17 circumstances, to allow All Professional to hold itself out to 18 potential buyers and sellers of real estate as the agent or 19 representative of Century 21 would be only to invite injury to 20 Century 21's good will and reputation. 21 22 23 24 25 26 27 It is clear to the court that the Under the In CytoSport, 617 F. Supp. 2d at 1080, Judge Damrell pointed out that: Trademarks serve as the identity of their owners and in them resides the reputation and goodwill of their owners. Thus, if another person infringes the marks, that person borrows the owner’s reputation, whose quality no longer lies within the owner’s control. A trademark owner’s loss of the ability to control its marks, thus, creates the potential for damage to its reputation. [citing Opticians Ass’n of Am. V. Indep. Opticians of Am., 920 F.2d 187, 196 (3rd Cir. 1990).] 28 27 1 2. Wrights & All Professional 2 It is also clear to the court that the Wrights and All 3 Professional will likely suffer irreparable injury if they are 4 enjoined from using Century 21's trademarks. 5 that All Professional has already suffered economic damages by 6 its being denied access to Century 21’s System. 7 II ¶¶ 17-19; Carol Wright II ¶¶ 17-19; Suppl. Steve Wright Decl. 8 ¶ 7.) 9 use Century 21’s trademarks would increase the economic harm. The evidence shows (Steve Wright It is likely that denying All Professional the right to 10 Primarily, the System and trademarks attract listings and 11 qualified agents who generate revenue. 12 However, mere monetary harm is not irreparable harm. 13 Rent-A-Center, Inc., 944 F.2d at 603; Am. Trucking Ass’ns v. 14 City of L.A., 559 F.3d 1046, 1057 (9th Cir. 2009); see also 15 Dunkin’ Donuts Franchised Restaurants LLC v. KEV Enterps., Inc., 16 634 F. Supp. 2d 1324, 1336 (M.D. Fla. 2009) (“While the Court 17 recognizes that Defendants will sustain financial losses if a 18 preliminary injunction issues, that harm is the result of 19 Defendants’ failure to comply with the requirements of the 20 Franchise Agreements. 21 injury against Plaintiffs’ immeasurable losses to its 22 hard-earned goodwill, the Court finds the balance of harms 23 weighs decisively in favor of granting the requested relief.”). 24 Weighing Defendants’ self-inflicted Nonetheless, intangible injuries that are incapable of 25 measurement, like reputation, recruiting efforts, and goodwill, 26 may constitute irreparable harm. 27 F.2d at 603. 28 qualified agents and All Professional considers Century 21’s Rent-A-Center, Inc., Inc., 944 Century 21’s System and trademarks attract 28 1 trademarks to be essential to its name “Century 21 All 2 Professional.” 3 Wright Decl. II ¶ 17-18; Steve Wright Decl. I ¶¶ 17-19.) 4 whatever the court decides on the pending motions will likely 5 result in irreparable harm to one side in this dispute. 6 7 C. (See Suppl. Steve Wright Decl. ¶¶ 2-4; Steve Thus, Balance of Equities and Public Interest A court looks to the balance of equities and the 8 public interest in deciding whether to issue an injunction. 9 Maxim Integrated Prods., Inc. v. Quintana, 654 F. Supp.2d 1024, 10 1035-26 (N.D. Cal. 2009). 11 irreparable harm that will befall each party in this action, the 12 court finds that the public interest weighs heavily in favor of 13 issuing an injunction in favor of Century 21. 14 context, the public interest is usually the right of the public 15 not to be deceived or confused. 16 Inc. v. Milon-DiGiorgio Enters., Inc., 559 F.3d 985, 993-94 (9th 17 Cir. 2009); see e.g., CytoSport, 617 F. Supp. 2d at 1080; 18 Moroccanoil, Inc. v. Moroccan Gold, LLC, 590 F. Supp. 2d 1271, 19 1282 (C.D. Cal. 2008). 20 While the court cannot quantify the In the trademark See Internet Specialties West, All Professional’s continued use of the trademarks 21 will not only falsely represent to the public that All 22 Professional is a Century 21 broker in the good graces of its 23 franchisor, but will also deceive the public into believing that 24 All Professional enjoys all the tools, resources, and systems 25 normally provided by Century 21 to its franchisees. 26 such deception is strongly in the public interest. 27 28 Preventing Accordingly, the court will grant Century 21’s motion for a preliminary injunction and deny the Wrights’ and All 29 1 Professional’s motion for a preliminary injunction. 2 Century 21 has requested that the court enforce All 3 Professional’s post-termination obligations under the 4 agreements, which exceed cessation of the use of Century 21’s 5 trademarks. 6 preserve the status quo in this case, and the court accordingly 7 will not order such relief in this preliminary injunction. 8 court will only enjoin the Wrights and All Professional from 9 further unauthorized use of Century 21’s Marks, as defined under Such an injunction would not be necessary to The 10 the franchise agreements. 11 to ensure that the public does not mistakenly believe that All 12 Professional is a Century 21 franchisee. 13 14 15 16 17 18 D. Such injunction should be sufficient Bond Rule 65(c) of the Federal Rules of Civil Procedure provides that: The court may issue a preliminary injunction . . . only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained. 19 20 The parties have not addressed the amount of bond to be posted. 21 From the record presently before the court it is impossible to 22 quantify the damages All Professional may sustain as a result of 23 this injunction. 24 they are likely to be substantial. 25 in the sum of $100,000 to be appropriate under the 26 circumstances. From the testimony, however, it appears that The court considers a bond 27 IT IS THEREFORE ORDERED that: 28 (1) Steve Wright, Carol Wright, and All Professional’s 30 1 motion for a preliminary injunction be, and the same hereby is, 2 DENIED; and 3 (2) Century 21’s motion for a preliminary injunction 4 be, and the same hereby is, GRANTED. 5 the merits of the parties’ claims, or until otherwise ordered by 6 this court, Steve Wright, Carol Wright, and All Professional are 7 HEREBY ENJOINED from further unauthorized use of Century 21’s 8 Marks, as defined in the franchise agreements. 9 injunction shall become effective upon the posting by Century 21 10 of valid security in the amount of $100,000. 11 12 Pending final hearing on IT IS SO ORDERED. DATED: January 21, 2011 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 31 This preliminary

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