Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—W.D. N.C.: Former Meineke franchisees held in contempt for violating default judgment order, (Mar 3, 2016)

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

Former Meineke Car Care Center franchisees were found to be in contempt of a default judgment order that required them to cease operating a Meineke franchise. To coerce compliance with the order, the federal district court in Charlotte, North Carolina, ordered that one of the franchisees be taken into custody (Meineke Car Care Centers, LLC v. ASAR Incorporated, LLC, March 2, 2016, Conrad, R.).

A default judgment order against Ralph Ahmad, Ashvinder Ahmad, and ASAR Incorporated, LLC directed them to immediately cease and refrain from operating a Meineke Car Care Center franchise. After the defendants failed to take any steps toward complying with the order, the court ordered them to appear to show cause why they should not be held in contempt. The defendants failed to file any response or appear at the hearing.

The courted noted that, to establish civil contempt, a movant must show that: (1) there was a valid decree of which the party alleged to be in contempt had actual or constructive knowledge; (2) the decree was in the movant’s favor; (3) the party alleged to be in contempt knowingly violated the terms of the decree; and (4) the movant suffered harm as a result. It determined that the franchisor, Meineke Car Care Centers, LLC, established each of these elements and that the defendants failed to appear or respond in any way. Consequently, the court found the defendants in contempt of court.

The court also noted that it had inherent power to coerce compliance with its orders by requiring a non-compliant party to be incarcerated or pay a fine. Because the defendants disregarded the order, did not respond to the court’s show cause orders, and were on notice regarding the potential of incarceration in order to achieve compliance with the order, the court determined that giving them a second period of time in which to comply with the order before being incarcerated would not accomplish compliance. Therefore, the court ordered that the defendant, Ralph Ahmad, be taken into custody and held there until the defendants had purged themselves of contempt.

The case is No. 3:14-cv-129-RJC.

Attorneys: Robert L. Zisk (Gray, Plant, Mooty, Mooty & Bennett, PA) for Meineke Car Care Centers LLC.

Companies: Meineke Car Care Centers LLC ; ASAR Inc., LLC

Cases: FranchisingDistribution NorthCarolinaNews