Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—3rd Cir.: Absent irreparable harm, former franchisees not barred from operating home care business, (Feb 24, 2016)

A federal district court properly denied an in-home care franchisor’s request for a preliminary injunction against former franchisees’ operation of a home care business based on the franchisor’s failure to show that it would suffer irreparable harm absent the injunction. The U.S. Court of Appeals in Philadelphia upheld the district court’s order (Executive Home Care Franchising LLC v. Marshall Health Corp., February 23, 2016, Cowen, R.).

In February of 2013, Clint, Massare, and Greer Marshall entered into a franchise agreement with Executive Home Care Franchising LLC to operate an in-home health care business. They subsequently abandoned the franchise in January of 2015. Executive Care responded by filing suit and an application for injunctive relief to enjoin the former franchisees from: (1) continuing to operate its franchise; (2) operating a competing, independent in-home care business; (3) violating the non-disclosure, non-competition, and non-solicitation clauses of the franchise agreement; and (4) using proprietary material, trademarks, trade names, or trade dress.

The federal district court in Newark, New Jersey denied Executive Care’s motion for injunctive relief after Executive Care failed to show that it would suffer irreparable harm if injunctive relief was denied. The appellate court affirmed the federal district court’s decision, noting that the former franchisees: (1) had returned documents, stationary, marketing materials, and other items to Executive Care; (2) were no longer operating out of the franchised location; (3) were no longer using Executive Care’s mark or trade name; (4) were working to transfer the telephone number back to Executive Care; and (5) had informed their existing clients that they were no longer associated with the Executive Care system.

The case is No. 15-1887.

Attorneys: Evan M. Goldman (Hill Wallack LLP) and Justin M. Klein (Marks & Klein, LLP) for Executive Home Care Franchising LLC. Louis H. Miron (Law Office of Louis H. Miron) for Marshall Health Corp., Well Being Home Care Corp. and Clint Marshall.

Companies: Executive Home Care Franchising LLC; Marshall Health Corp.; Well Being Home Care Corp.

Cases: FranchisingDistribution DelawareNews NewJerseyNews PennsylvaniaNews