Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—S.D. Ind.: Summary judgment on franchisor’s unfair competition claims denied as premature, (Jul 29, 2015)

By Michael Menzhuber, J.D., LL.M.

A pizza franchisor’s motion for partial summary judgment on its unfair competition and breach of contract claims against a former franchisee was denied by the federal district court in Indianapolis as premature. The motion was denied because the franchisee was entitled to additional time to conduct discovery in order to properly respond to the franchisor’s allegations in its complaint; and a motion for partial summary judgment was against the policy of the court (Noble Roman’s, Inc. v. Hattenhauer Distributing Company, July 27, 2015, Lawrence, W.).

Background. Noble Roman’s Inc. entered into franchise agreements with Hattenhauer Distributing Company, an operator of convenience stores, for the sale of Noble Roman’s pizza and sandwich products at Hattenhauer’s locations in Wasco, Oregon and Goldendale, Washington. Several years later, Noble Roman’s performed an audit of the franchises and found that Hattenhauer had under-reported its sales. In addition to the unpaid royalty fees as a result of the under-reporting, Noble Roman’s claimed that Hattenhauer had not been using Noble Roman’s proprietary cheeses on its pizzas as required by the franchise agreements.

In October 2014, Noble Roman’s filed a suit against Hattenhauer that alleged unfair competition and breach of contract. A case management plan (CMP) was entered providing a discovery deadline of August 23, 2015, and a summary judgment deadline of October 23, 2015. Less than ten weeks after the entry of the CMP, and four months before the close of discovery, Noble Roman’s moved for partial summary judgment (1) on the liability question on its Lanham Act claims; (2) on its right to audit using purchase records; and (3) as to its breach of contract claim premised on Hattenhauer using inferior-quality pizza cheese.

Hattenhauer, pursuant to Federal Rule of Civil Procedure 56(d), moved for a sufficient and meaningful opportunity to conduct discovery to refute the allegations in Noble Roman’s complaint. The court agreed that Hattenhauer needed additional time to conduct discovery in order to properly respond to the complaint’s allegations. The court also determined that Noble Roman’s motion for summary judgment was against the policy of the court. The motion clearly contemplated filing additional motions with the court and such serial summary judgment motions were at least discouraged, if not prohibited, by the court’s policy.

The case is No. 1:14-cv-1734-WTL-DML

Attorneys: Andrew M. McNeil (Bose McKinney & Evans, LLP) for Noble Roman's, Inc. Dawn M. Johnson (Greensfelder, Hemker & Gale, PC) for Hattenhauer Distributing Company.

Companies: Noble Roman's, Inc.; Hattenhauer Distributing Company.

Cases: FranchisingDistribution IndianaNews