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Our Town v. Rousseau

United States District Court, M.D. Pennsylvania

January 3, 2017

OUR TOWN, a Sole Proprietorship Plaintiff,
v.
MICHAEL ROUSSEAU and JENNIFER ROUSSEAU Defendants.

          MEMORANDUM OPINION

          ROBERT D. MARIAN JUDGE

         Presently before the Court is a Motion for Temporary Restraining Order, (Doc. 2), filed by Plaintiff Our Town. For the reasons that follow, Plaintiffs motion will be granted in part and denied in part.

         I. INTRODUCTION AND PROCEDURAL HISTORY

         On December 16, 2016, Plaintiff filed a Complaint against Defendants Michael and Jennifer Rousseau asserting three counts: (1) breach of contract; (2) tortious interference with contractual and/or prospective business relations; and (3) "misappropriation of confidential information, trade secrets, and vendor relationships/inevitable disclosure."[1](Doc. 1). That same day, Plaintiff filed a Motion for Temporary Restraining Order. (Doc. 2). The Court held a conference call with counsel for the Plaintiff and the Defendants on December 16, 2016, and held oral argument and an evidentiary hearing on December 21, 2016.[2]

         II. FINDINGS OF FACT

         Plaintiff Our Town is a sole proprietorship organized and existing under the laws of the Commonwealth of Pennsylvania with a principal place of business in Newfoundland, Pennsylvania. (Doc. 1, at ¶ 1). Our Town is a bi-monthly community print publication owned and operated by Bob and Dorothy Beierle. (Id. at ¶ 3). Each Our Town publication "contains stories, advertising, town and community news and job postings within each geography of its local publication and the publication is distributed to the public by direct delivery and at various retail establishments." (Id. at ¶ 4). Defendants Michael Rousseau and Jennifer Rousseau are husband and wife and reside in Succasunna, New Jersey. (Id. at ¶ 2).

         On February 19, 2007, Bob and Dorothy Beierle and the Defendants entered into a Franchise Agreement (the "Contract"), whereby the Defendants purchased the Our Town franchise for the exclusive territory of Morris County, New Jersey. (Id. at ¶ 12). The Contract provides that "[o]n execution of this Agreement by Franchisor, Franchisee shall pay to Franchisor, in consideration of the franchise granted here, a franchise fee of $3, 8000.00." (Doc. 1-2, at 3). "Each calendar year the Franchisee shall pay to Franchisor on a bi-weekly basis the cost of set up and printing of the bi-weekly publication as set forth on a schedule of costs attached hereto." (Id.). The Contract provides that it "shall commence on the date of execution ... and shall expire five years from the date the franchise operation opens for business, unless sooner terminated under the terms hereof." (Id.).

         The Contract also contains a non-competition clause. Specifically, the Contract provides that; Upon the sale, expiration, transfer or assignment of the franchise by the Franchisee or upon the termination of this Agreement for whatever reason, Franchisee shall refrain from engaging directly or indirectly in any business similar to that which is created by this Agreement for a period of three years, at the franchise location and within 50 miles from any OUR TOWN company-owned or franchised operation. (Id. at 12).[3] The Contract further provides that noncompliance with its terms "will cause irreparable damage to franchisor and its franchisees. Franchisee therefore agrees that if Franchisee should engage in any such unauthorized or improper use, during or after the period of the franchise, Franchisor shall be entitled to both permanent and temporary injunctive relief...."[4] (Id. at 8), According to the Plaintiff, on January 18, 2012, Robert and Dorothy Beierle and Jennifer and Michael Rousseau entered into a five-year renewal agreement of the contract, providing that "[a]ll terms and conditions of the original franchise agreement signed by Michael Rousseau and Jennifer Rousseau on February 17, 2007 will remain the same." (Doc. 1-3, at 2). Defendants emphatically testified that they never entered into such a contract and claim that the Plaintiff is perpetrating a fraud on this Court.

         On February 10, 2014, after the Defendants had sent to the Plaintiff a number of checks that had bounced, Plaintiff and the Defendants entered into an agreement providing, in relevant part:

This is an official notice from the franchisor to franchisee, Michael and Jennifer Rousseau ... that due to the continuation of bounced checks and the non-payment of West Morris Our Town Issue #167 until two weeks after the delivery date you are officially being notified that you are in default of your franchise agreement.... Due to the fact that we continue to receive checks that do not clear your bank due to non-sufficient funds for payment from you on a regular basis, personal/business checks will no longer be accepted as the main payment for the West Morris and East Morris Our Towns. From this date forward, February 10, 2014, proof of a certified check for half of the amount from the West Morris Our Town is required before printing of the West Morris Our Town edition is to begin. The second half of payment with a personal/business check will still be accepted upon delivery of the West Morris Our Town as a show of good faith on our part.

(Pl.'s Ex. G). Defendants do not dispute that they entered into this agreement with the' Beierles. Moreover, Mr. Rousseau testified that, from the date of the Contract's expiration in 2012 until November 2016, he abided by all of the terms of the Contract and continued to operate an Our Town franchise.

         On November 7, 2016, the Defendants contacted Our Town and informed it that they were terminating their Contract with Our Town. (Doc. 1, at ¶ 27). Specifically, Heather Darling, the attorney for the Defendants, sent a letter dated November 4, 2016 to Bob Beierle. The letter stated that:

As you are aware, I represent Mike Rousseau with regard to his affiliation with Our Town magazine. This letter is to notify you that Mike Rousseau has decided to rightfully terminate his franchise relationship with Our Town magazine effective immediately.
The political editorials have made it impossible for him to continue doing business in Morris County. The magazine has been losing its advertisers and distributors due to the political agenda of the publication. Additionally, many more advertisers have threatened to discontinue their advertising with Mr. Rousseau for the same reason. Mr. Rousseau's office is consistently receiving emails and telephone calls disparaging the staff personally as being racist and homophobic and for disseminating hate filled political rhetoric. Mr. Rousseau's advertisers are receiving the same disparaging calls and emails. These businesses are tired of defending themselves for advertising in the publication and fear the negative effects continued advertising in a political magazine will have on their establishments, For the same reasons set forth hereinabove, Mr. Rousseau does not believe that Our Town is a viable brand in this area any longer. Mr. Rousseau is no longer able to secure the advertising revenue to continue to pay the print bills and be self sustaining under the Our Town name and image. As such, Mr. Rousseau has elected to direct his efforts in an alternate direction with a family friendly publication and stay away from the controversy of the political arena.
Mr. Rousseau is terminating his affiliation in good faith. Mr. Rousseau has always acted in a professional and responsible mariner in dealing with you and will continue to do so. Mr. Rousseau expects the same consideration in return. Please refrain from contacting Mr. Rousseau's advertisers and dragging them through any more than what they have already endured in the form of verbal assaults stemming from their relationship with Our Town magazine.
Mr. Rousseau wishes you well in your future endeavors and has advised that, should you have any further questions with regard to this matter, you may contact me directly.

(Pl.'s Ex. I) (emphasis added).

         That same day, Our Town learned that the Defendants were operating a similar publication named Home Town in the same geographic territory defined in the Contract and using the same advertisers and distributors. (Id. at ΒΆ 28). The Defendants have since changed ...


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