IP Law Daily, TRADEMARK—E.D. Mich.: Trademark infringement suit against steakhouse franchisee can proceed, (Mar 24, 2025)

By Jonathan Anderson

Franchisee argued that franchisor failed to allege trademark claims under a theory of vicarious liability, but the court was satisfied that franchisor is sufficiently alleging direct liability.

The federal district court in Detroit, Michigan, has denied a motion to dismiss a lawsuit against the franchisees of a defunct Sizzling Black Rock Steakhouse restaurant. Franchisor brought claims for federal and common law trademark infringement and breach of the franchise agreement. The court rejected arguments that it lacks personal jurisdiction, that Michigan’s statute of frauds prevents the enforcement of the franchise agreement, and that plaintiff failed to state any claims upon which relief can be granted (Sizzling Black Rock Steak House Franchising, Inc. v. Black Rock Coral Springs, LLC, No. 2:24-cv-10380-MAG-DRG (E.D. Mich. Mar. 20, 2025)).

Background. Michigan-based Sizzling Black Rock Steak House Franchising, Inc., the franchisor of Sizzling Black Rock Steakhouse restaurants, sued the franchisees of a Florida franchise that abandoned operations. Sizzling Black Rock sent a notice of default and termination to defendants, notifying them of their material default under the franchise agreement. The notice laid out defendants’ post-termination obligations, which included paying Sizzling Black Rock past-due fees and liquidated damages and changing the franchisee restaurant’s corporate name to remove Sizzling Black Rock’s trademark. Sizzling Black Rock alleges that defendants have failed to comply with these post-termination obligations.

As part of the lawsuit, plaintiff alleges federal and common law trademark infringement and breach of the franchise agreement. The majority owner of the franchise filed a motion to dismiss the complaint, arguing that the court lacks personal jurisdiction, that Michigan’s statute of frauds prevents the enforcement of the franchise agreement against them, and that plaintiff failed to state any claims upon which relief can be granted.

Personal jurisdiction. First, the court found that plaintiff sufficiently alleged that the court possesses personal jurisdiction. Although the franchise agreement contains a provision in which the parties agreed to the jurisdiction of Michigan state and federal courts, the majority owner argued that they did not consent to jurisdiction because they did not sign the franchise agreement, which instead was signed by the other co-owner. However, the court concluded that there are sufficient allegations that the majority owner “manifest[ed] an intent to be found” by the franchise agreement, including that the majority owner had acknowledged receipt of the agreement and had executed attachments to it.

Statute of frauds. Second, the court found that Michigan’s statute of frauds does not bar the action. The majority owner argued that because they did not sign the agreement and did not otherwise agree in a writing signed by them to be liable for the franchisee’s obligations, the statute of frauds precludes enforcement of the agreement against them. The majority owner cited Mich. Compl. L. § 566.132(1)(b), which provides that an agreement is void unless it “is in writing and signed with an authorized signature by the party to be charged with the agreement,” including a “special promise to answer for the debt, default, or misdoings of another person.”

However, the court held that plaintiff’s claims do not implicate the statute of frauds. The complaint alleges that the majority owner “breached their own obligations under the franchise agreement, not that they have breached their obligation to answer for the breach of the franchisee.” In the franchise agreement, the terms “you” and “your,” in addition to the names of the franchisees, are specifically included with the term “Franchisee.”

Failure to state a claim. Third, the court rejected the majority owner’s assertation that the complaint failed to state any claims upon which relief can be granted.

Federal and common law trademark infringement. Regarding the federal and common law claims for trademark infringement, the court said it was satisfied that plaintiff sufficiently alleges direct liability at this stage.

The majority owner had argued that plaintiff is seeking to hold it vicariously liable, and to do that, plaintiff would have to allege sufficient facts establishing that the corporate veil should be pierced or that the majority owner was involved in infringing activity. The majority owner claimed that because plaintiff had not alleged either, the claim for federal trademark infringement must be dismissed. Plaintiff responded that it is not seeking to bring the claims under a theory of vicarious liability, but rather against the defendants directly.

Breach of franchise agreement. Regarding plaintiff’s claim for breach of the franchise agreement, the majority owner argued that no contract exists between them and the plaintiff. The court concluded that at least for the motion-to-dismiss stage, plaintiff has sufficiently alleged a contractual agreement between itself and the majority owner, as explained when addressing personal jurisdiction and the statute of frauds.

The Case is No. 2:24-cv-10380-MAG-DRG.

Judge: Goldsmith, M.

Attorneys: Eric P. Conn (Fahey Schultz Burzych Rhodes PLC) for Sizzling Black Rock Steak House Franchising, Inc. Meghan W. Cassidy (Cassidy Law, PLC) for 7th Bite of the Apple, LLC.

Companies: Sizzling Black Rock Steak House Franchising, Inc.; 7th Bite of the Apple, LLC

Cases: Trademark MichiganNews