Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—N.D. Ga.: Moe’s Southwest Grill recovers $44K after franchisee’s claims fail, (Oct 6, 2015)

By Greg Hammond, J.D.

Moe’s Southwest Grill, LLC was entitled to nearly $44,000 in costs after franchisees failed to prove fraud, misrepresentation, and state RICO claims. The federal district court in Atlanta determined that most of the deposition transcripts, trail transcripts, and copy costs were necessary (Massey, Inc. v. Moe’s Southwest Grill, LLC, October 5, 2015, Story, R.).

A group of 39 franchisees brought fraud, misrepresentation, and Georgia RICO claims against Moe’s, alleging that the franchisor’s CEO received undisclosed “kickbacks” provided by Moe’s suppliers. Moe’s Uniform Franchise Offering Circular obligated franchisees to purchase certain products from Moe’s-approved suppliers in 2002 and 2003, stating that the required suppliers were not affiliated with the franchisor and that “neither we nor any of our affiliates” would derive any income from the required purchases. The circulars were then revised in 2005, disclosing that Moe’s CEO had an ownership interest in one of Moe’s suppliers, as well as other suppliers, but that the franchisor did not “derive revenue, directly or indirectly, from any of these suppliers in connection with the services or products they provide to our franchisees.” The court found that the franchisees failed to prove their fraud, Georgia RICO, and Tennessee Consumer Protection Act claims. Moe’s then filed a bill of costs, which it later reduced to approximately $50,000.

The court overruled all but one objection to the costs associated with the deposition transcripts, trial transcripts, and copies, finding most of the costs necessary. The objection to nearly $6,000 in expenses associated with the depositions of nine plaintiffs against whom judgment was not entered was sustained, however, because those costs could not be attributable to the limited plaintiffs from whom Moe’s now seeks costs. The court therefore granted Moe’s reduced costs of just under $44,000.

The case number is 1:07-CV-00741-RWS.

Attorneys: K. Brian Roller (Zarco, Einhorn, Salkowski & Brito, PA) and Leon Hirzel (Hirzel & Dreyfuss, PA) for Barco Grills, LLC. Blakely Holloway Frye (Hill Kertscher & Wharton) for Moe's Southwest Grill, LLC, Raving Brand Holdings, Inc., and Raving Brands, Inc.

Companies: Barco Grills, LLC; Moe's Southwest Grill, LLC; Raving Brand Holdings, Inc.; Raving Brands, Inc.; Massey, Inc.

Cases: FranchisingDistribution RICO StateUnfairTradePractices GeorgiaNews