Boston partners Jim Messenger and Brian Wall and New Jersey/Charleston partner Peter Siachos recently obtained a significant contempt award in the U.S. District Court for the Eastern District of New York on behalf of one the largest tax preparation service franchisors in the country. In May 2022, the firm secured the entry of a preliminary injunction providing the client with extensive injunctive relief, including enforcement of a covenant not to compete and not to solicit for a period of 24 months and enjoining not only the individual former franchisees, but non-signatories to the franchise agreement who started a competing tax preparation business in violation of the covenant not to compete.
The client initiated the motion for contempt when it discovered that former franchisees were violating the preliminary injunction order by operating a competing business through a new entity. Following an evidentiary hearing, the Court held the defendants in contempt, ordered the former franchisees to reimburse the client’s attorney’s fees and costs, disgorgement of all profits, and payment daily escalating fines until full compliance with the injunction. The franchisor client is involved in dozens of injunction cases throughout the country and is thrilled with the firm obtaining an award of fees, disgorgement and fines. Such successes assist the client, along with other franchisors nationwide with future enforcement of its franchise agreements and serve as a deterrent to franchisees who believe they can ignore non-competes, and worse, court orders.
Boston Legal Assistant Gabrielle Spurlock provided excellent support in preparation for the hearing, including creating exhibits, drafting examination outlines, and participating in mock arguments.