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  • Joan's Management Cross Complaint

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    The Hollywood Reporter
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    Joan's Management Cross Complaint

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    Joan's Management Cross Complaint

    Direitos autorais:

    © All Rights Reserved
    Baixe no formato PDF ou leia online no Scribd
    Sinalizar o conteúdo como inadequado
    11K visualizações134 páginas

    Joan's Management Cross Complaint

    Enviado por

    The Hollywood Reporter
    Joan's Management Cross Complaint

    Direitos autorais:

    © All Rights Reserved
    Baixe no formato PDF ou leia online no Scribd
    Sinalizar o conteúdo como inadequado
    de 134
    PY OG Mf S 2 28} ¢ JENNIFER L. BROCKETT (State Bar No, 193433) jemiferbrocker@dwt com DAVIS WRIGHT TREMAINE LLP 865 South Figueroa Strect, 24th Floor Los Angeles, California 90017-2566 ‘Telephone: (213) 633-6800 Fax: (213) 633-6899 Attomeys for Defendants and Cross-Cleimants JOAN'S ON THIRD LICENSING, LLC. ‘and JOAN'S MANAGEMENT, LEC CONFORMED copy ‘OIGINAL PIEED sugerar gun of Caton “Eeuniyatine Angas NV 9 ny Nov 8 2016 SUPERIOR COURT OF CALIFORNIA ‘COUNTY OF LOS ANGELES ~ WEST DISTRICT SANTA MONICA COURTHOUSE JOTSM, LLG, a Delaware LLC and RCEST —) 1860 COMPANY, an Illinois Corporation, Plaintiffs, ; JOAN'S ON THIRD LICENSING, LLC, 4 ) Califia LC, and ]OAN'S MANAGEMENT, } TLC, 4 Calor LLC 5 d Defendants } JOAN'S MANAGEMENT, LLC; and JOAN'S ON THIRD LICENSING, LLC; Cross-Claimants, JOTSM, LLC and RC EST 1860 COMPANY; Cross-Defendants. Coe aeet eee rr ron (1) Trademark and Trade Dress Infringement; @) Dilution of Famous Marks G) Breach of Contract (Operating Agreement); (4) Rescistion; and (8) Declaratory Relief Demand for Jury Trial 1 | 1] 16 | 19] ail xl 2 al 2s] 26 28 C ¢ CCoss-clsimants Joan's Management, LLC (“Joan's Management”) and Joan's On Licensing, LLC ("Joan's Licensing”) (collectively, “Joan’s") by and dhrough thai | counsel, respecflly make the following allegations for their complaint against Cross-defendant JOTSM, LLC (‘JOTSM”) and RC Ext 1860 Company (*RC 1860"). ‘These allegations are madd ‘upon knowledge with respect to Pini" own ats, and upon information and belief as to al othe matters, PARTIES 1, Joan's Management isa California limited Liability company, with its principal plac ‘of business in Los Angeles, California. Joan's Manegement ovms 40% of defendant JOTSM. 2 Joan's Lisensing is a California limited isitity company that owns certain ‘roprictary intellectual property, including trademarks, wade names, service mas, wae dres Jogos, designs, emblems, slogans, symbols and other commercial indicia, copyrights and othe similar materials, and certain proprietary and confidential infomation, recipes, know-how, andl trade secrets related to baking, cooking, and selling certain proprictary baked goods and food itm st caso iin ne ee asl vb ao “Third” (tn “Joan's Mark”) (coletively, the “Intellectual Property") 3, JOTSM is a Delaware limited liability company with ts principal pace of busines in Los Angele, Califomia, 4. RC 1860 san linois corporation that does busines in Las Angeles, California, JURISDICTION AND VENUE, 5. This Cour has juratton ve iain bene isan lined eae in vn the otal amount of damages sought exceeds $25,000. 6. Defendants ae subject to personel jurisdiction because they ae locsted or rosie if the County of Los Angeles, State of California and/or have transacted busines there nd ha initiated the Action there, 7. Venue is prope inthe County of Los Angeles, State of California under Califor Coée of Civil Procedure § 395(0) because a leat some ofthe defendants reside there; some of th Defends contracted to perform obligations there; and Defendants have initiated tis Action ther 1 em SOS cOMTANT ee ¢ ¢ FACTUAL ALLEGATIONS A. The Original Joan’s On Third 8, In the 1970s, Joats McNamara moved from New York City to Los Angeles, wherd she started her family, As her daughters Carol McNamara and Susie Hastings grew older, th family hosted an annual New Year's Day party in their home, which eventually grew to host ove Sve hundred guests. The popula ofthe event, a well as her experience runing Dion Lacs’ cooking school and running and owning a restaurant in New York, inspired Joan to launch catering business, 9. Im 1995, Joan founded Food & Co., Inc. to start a catering business out of co ice ao Wos Th Stn An, atin Ts Se Location”), Her daughters soon joined the business, and when an adjacent storefront becam« available in 1998, the Third Street Location expanded to include a gourmet marketplace and café allowing customers to purchase freshly prepared sandwiches, salads and baked goods by the Joan’ ‘on Third kitchen, as well as specialty foods and unique products selected by Joan. The café and} ‘marketplace opened to the public under the brand name and service mark “Soan’s on Thi thereafter, 10, In 2007, Joan’s on Third expanded the Third Stet Location again, tipling the si of the marketplace and adding more café seating. The Third Street Location includes a rusti ‘communal table inspired cuisine, grab-and-go and private label offerings, and @ distinctive selection of cheeses| set amid an open kitchen, with stations for an abundant selection of seasonall lives and gourmet retail items fom around the worl. 11. Thanks to Joan’s careful attention to detail to the quality and presentation of thd food, décor, and ambiance, the Joan's on Thied brand has grown to great prominence, withthe LA Times refering ‘0 Joan's on Thitd a8 “an LA. institution” and calling Joan the “rea ‘mastermind whose vision is manifested in every detail” Bon Appetit magazine raved tha at Joan’ on Thin, “felveryhing looks—and ia—delicious”” Easier tis year, The Hollywood Reporte named Joan's on Thind one of Hollywood's “Top Power Lune” spots that i thronged fri ig-ndcomfor csi.” Jon's on Tit a ee etre inal nd nation magn th 2 arene Tes ‘TROSS-CONPLANT Pe Dwr zronsis oom omens alts ail a 2) 2 25] 27) 28 ¢ ¢ os Angeles Times, the New York Times Magazine, nSiple, Las Angeles, Angelenio, Sunset, GO| Variety, The Wall Street Journal, and many more, Josn’s on Thitd and Joan McNamara have also ‘been featured repeatedly on local and national television outlets, with television appearances on Food Network, The Hallmark Channel KTLA, and others, and more. Joan's on Thi also has q robust social media following, with over $000 followers on Twiter and over 11,000 followers oof Instagram. 12, To facilitate further expansion, Food & Co, the ovner and operator of the origina} Joan's on Third Café and Marketplace, transfered the mark end other intellectual property (i “Joan's Intellectual Property”) to Cross-laimant Joan's Licensing, Joan's Licensing continues license the Joan's Mark to Food & Co., as wel as for use ata second location in Studio City thay ‘opened in 2014, Both the original and Studio City locations operate under the name “Yoan’s on “Thi.” Both locations are managed by Joan MeNamara and her family 13, To proteet its merks, on April 6, 2015, Jon's Licensing obtained « registration o the Service mark “Joan's on Third” and the accompanying logo. A true and correct copy of Joan’ ‘registration is atached hereto as Exhibit A. B. _ JOTSM’s Santa Monica Joan's on Third-branded Restaurant 14, On about May 15, 2014, Joan's Management and RC 1860 formed a Delaws limited ibility company, JOTSM, LLC (‘JOTSM’) for the purpose of operating a “Joan's “Third” restaurant in Santa Monica, Califomia (the “Santa Monica Location”), ‘The parties that RC 1860 would act a= mansger of JOTSM. At the same time, JOTSM entered into a lien agreement (the “License Agreement”) with Joan's Licensing to pemmit JOTSM to use Joan’ Licensing's Intellectual Property in connection with the operation of the Santa Monica Locatio ‘The License Agreement provided thatthe operation ofthe Santa Monica Location unr the Joa Mark was subject to Joan's Licensing’s approval. A true and correct copy of the Operating ‘Agroement between RC 1860 and Joan's Management for JOTSM is attached herto as Exhibit B and a true and corret copy of the License Agreement between Joan's Licensing and JOTSM i attached hereto as Exhibit C, =E——- ? ee SUSAN Se Dur zest oa reso | 3 u] 15 | 1 19 2 | a 2 as 21 23 € ( 15, In adkition, the parties contemplated that RC 1860 and Joan's would partner io ‘opening multiple Joan’s On Third-branded locations. RC 1860 and Joan's Licensing partial documented that understanding in letter agreement dated May 15,2014 (the “Letter Agreement”) ‘A true and correct copy ofthe Letter Agreement is attached hereto as Exhibit D. 16. Joan's advised JOTSM regarding the development and operation of the Sant Monica Location, including multiple meetings with JOTSM’s architect, advising JOTSM regard key hiring decisions, recommending contractors, and providing a detailed list of trade dress and items. However, JOTSM effectively shut Joan's out ofthe development process, refi respon to Joan's ingires regarding the progress ofthe development 17, To obtain some information regarding JOTSM’s progress, Joan's Licensing noticed 4 pre-opening walk-through under te terms of the License Agreement. Pursuant fo that request, 0 Jane 16, 2015, Joan’s performed a walkthrough of the Santa Monica Location while it was unde} gt construction, 18, During the walkthrough, problems were immediately apparent, That same day| Joan's wrote to Perkoweiz, as RC’s representative, ofthese shortcomings and requested that thd inconsistent items be replaced or removed. However, RC 1860 refused to replace or remove thd inconsistent items, instead responding that Joan's had no authority to prohibit the use of thd inconsistent items. Accordingly, on June 22, 2015, Joan’s Licensing issued its frst Notice of ‘Default and Termination, requesting thatthe defective trade dress be remedied. A true and correc} ‘copy of the June 22 Notice is atached hereto as Exhibit B 19. The Santa Monica Location opened on or about June 30, 2015. After it open representatives of Joan’s Licensing observed thatthe defects it had brought to RC’s attention not been corrected, Representatives also observed that there were several addtional defects at Santa Monica Location, including unapproved retail product sclestions offered for sale, as well af labels and signs that inchuded misspelled words 20, In addition, representatives observed several deftets in the food offerings at the ‘Santa Monica Location, For example, many of the menu items offered for sale were not prepares according to Joan's recipes. The Mac & Cheese dish, a signature dish lauded by the Food Networ 4 eae amon aesS, ‘ROSS COMPLAINT sie Dw rnszesi oiaNeoman etn 19) 4 re 4 | 15) 16 | 18 20} a a3 a as 2 ( ¢ and the L.A. Times, was served at an incorrect depth and portion size at the Santa Monica Location| “The Joan's omelette is meant to be prepared using a specific technique using low heat to create light, Huffy, French-style omelette that Saveur magazine described as “sheer heaven.” AlthougH the manager et the Sants Monica Location, Michael Mirands was fully trained in that technique, knowingly permitted the staff at the Santa Monica Location to prepare omeletes by leaving the eggs in the pan unstirred to be finished under a broiler, resulting in tougher, heavier omelette tha ‘eas litle resemblance to the omelete that Joan’s on Third is known for, A multitude of other dishes were similarly prepared in ways that Joan's Licensing did not and does not approve of} ‘demonstrating a systemic inability or unwillingness to comply with Joan's standards and vision fo her restaurants and directly harming the Plaintiff" goodwill, 21, ‘The unapproved activites at the Santa Monica Location did not stop at food displ ‘or preparation, but extended to actions that endangered customers’ health. The cheese display at th ‘Sanla Monica Location, in addition to containing incorrectly labeled and unlabeled cheeses} included cheese obviously covered in white and green or black mold, Other products were sod i obviously rancid or stale condition, When representatives of Joan’s requested inspection of thd Santa Monica Location’s on-site and offsite kitchens to see how far these problems extended, the requests were refused, and JOTSM denied Joan's personnel access to its on-site and off-sit kitchen. 22, In order to hide its activities from Joan's and interfere with Joan's ability to maint limos OT em apn wth in JTS el ‘Joan's representative from its premises and threatened to call the police if she did not leave, On| ‘other visits, JOTSM permite Joan’s representatives on the premises but prevented them from exercising quality control by refusing to sell them any food, Not only did this conduct interferd ‘with brand management, it also violated the License Agreement. 23. Plaintiffs also received numerous complaints from JOTSM customers, For example ‘one customer informed Plaintiffs thatthe sandwich he had ordered from the Santa Monica Location, geen re ear Se] voce eg 5 Eroaa eee ‘CROSS-COMPLAINT vofacEr an fi « JOTSM are attached hereto as Exhibit F, Additonal complains have been received orally, by| telephone or in person, and many customers also have posted complaints on social media, harming) the Joan’ brand. 24, In light of these problems, and JOTSM's mulple clear violkons of the Licensd ‘Agreement, Joan's Licensing sent JOTSM futher Noties of Default and Termination on July 14 2015, July 24,2015 and Jay 28,2015, demanding that JOTSM cure those breaches by August 16 2015, August 27,2015 and September 1, 2015, respectively, Attached hereto as Exhibits G-1 are true and comest copies of these Notice, and further follow-up correspondence is attached aq Exhibit. 2S. Apparently unsatisied with violating the express terms of the License Agreement upon information and belief, JOTSM engaged in @ concerted effort to surreptitiously entice away ‘kitchen staff ftom the Third Steet and Stalio City Locations, using their insider knowledge of staf compensation. For example, while Schenk was employed by Joan’s Management, and thereafter he told other employees that they could “always” come work for him in Santa Monica, and suggested the he would pay them more than Joan's was paying. When Michael Miranda, th ‘manager of the Santa Moniea Location, gave notice that he was leaving to work atthe San Monica Location, he stated that he had been recmited with promises of a better salary, 0% {information and belief, Defendants have caused JOTSM managers to call employees ofthe Thi ‘Street and Studio City Locations on their peivate numbers and cel phones ~ coat nformation is ents do ewe, en oh ey a employment by JOTSM, In addition, former members of the tf atthe Third Steet and Studi City Locations have been asked to bring unlicensed recipes for dishes to be served at the Sani ‘Moniee Location, without any authorization ftom Plaintiffs (such as recipes under development), ‘There is even a Joan's employee who, while claiming total disability under worker's compensation, and therefore on leave ftom his employment atthe Studio City Location, began working at thd Santa Monica Location, 26, JOTSM ultimately fled — and refused ~ to fully cure many ofthe defects dented in the Notices of Default, Among other problems, it continued to refuse to sll its food to Joan’ SOMA 6 at naa ROSS COMPLAINT oh En Dwr muoeys onan rein 1 | 13} 14) 1 18) 15) 20] 2i| 3 a 25 26 n| 28 ¢ ¢ representatives, continued to sell stale and out-of-date products, refused to fix its typo-idd ‘menus, refused to correct its trade dress, and continued to sell many products that did not ha Joan's prior approval. Accordingly, on September 15, 2015, Joun’s Licensing terminated th License Agreement, providing JOTSM with 30 days to de-idenify. Attached hereto as Exhibit is a true and correct copy ofthe Notice of Termination. 27, Nobwithstanding the termination of the License Agreoment, JOTSM has continued ‘and continues to use and display the Joan’s Mark in connection with its restmurant and to hold ise ‘out to the world as an suthorized Joan's On Third operation. JOTSM openly uses the name and) ‘mark on its storefront, menus, website, and private label goods even though it sno right to do so. FIRST CLAIM FOR RELIEF ‘TRADE DRESS AND TRADEMARK INFRINGEMENT (By Joan’s Licensing against JOTSM) 28, Plant repet nd eles al of the allegations et forth in paragraphs | tough ‘and including 27 above as if fully set foth herein, 29. JOTSM’s ongoing unauthorized use of the Intellectual Property, including the ‘Toan's Mark and trade dress owed by Joan’s Licensing has caused and is likely to cause confusion| deception, and mistake by creating the false and misleading impression that JOTSM is associated conneeted with Joan's Licensing, in violation of Joan's Licensing’s trade dzess and trademar rights under the common law of the State of California. 30, JOTSM’s continued use of the Joan's on Thitd Mark, all without correting defects identified by Joan’s and while refusing to permit Joan's to adequately police JOTSM's ws is harmful tothe great goodwill that Joan's has developed in its marks, 31. Indeed, there exists an overlap between the trade areas of JOTSM and Joan's Licensing’s legitimate and authorized licensee Food & Co.; indeed, many patrons who have ‘complained ofthe poor operations at JOTSM have noted that customers are better off continuing patronize the Third Street location. As a result, poor operations at JOTSM damage the brand ‘reputation of all of Joan's operations. Se 7 Pant ramon, ‘CROSS COMPLAINT ole EE Te DWE zTssees anna ren ( ( 32, As aresult of JOTSM’s acts, Plaintiffs have been dameged in an amount not as yed determined or ascertsinable, Ata minimum, however, Plaintiffs are entitled to injunctive elie, va weg of OTS ete age et ae ot a malicious use of confusingly similar imitations ofthe Intellectual Property, including the Joan’ Mark and trade dress owned by Joan's Licensing, and the need to deter JOTSM ffom simile conduct in the futur, Plaintiffs are ditionally entitled to punitive damages. SECOND CLAIM FOR RELIEF DILUTION OF FAMOUS MARK (Joan's Licensing against JOTSM) 33, Plaintiffs repeat and reallege all of the allegations set forth in paragraphs 1 trout snd incading 32 sbove as if filly set forth herein, 34. Since 1999, Plaintiff's Joan's on Third Mark hes been used continuously by Joan’ Lioensing or its predecessor, Food & Co, o denote goods and services sold under the auspices ‘watchful eye of Joan McNamara. For atleast the last decade, the marks been widely reco by the consuming public in Los Angeles, California, and beyond as designation of the soure o plaints serves. 35. The association arising between JOTSM's unsanctioned continued use ofthe famous ‘Toan’s on Thind's mark is likely to impair the distinctiveness ofthe mark and to arm the reputation) of PlainttPs mar ‘THIRD CLAIM FOR RELIEF BREACH OF OPERATING AGREEMENT (By Joan's Management against JOTSM and RC 1860) 36, Plaintiffs repeat and roalege all ofthe allegations set forth in paregrapbs 1 througl{ and including 35 above as if fly set forth hercin 37. The Operating Agreement imposes upon JOTSM the obligation to pay a Consult Fee to Joan's Management (at Section 2.9(¢)). However, RC 1860 and JOTSM have repudiate that obligation and refused to pay the Consulting Fee, =o b Page havea ganas ‘ROSSCOMPLANT AREER u rr 13 ul n| 1g a al 2 2) a | a 28} ( ¢ 38, The Operating Agreement also provides that Joan's Mangement retains reasons sestetic and food quality control with respect to JOTSM’s Joan's on Thind-branded Cafe ang Marketplace, JOTSM and RC 1860, however, breached this agreement by, inter alia: + Opening without the price approval of Josn’s Mauagetsent and, indeed, deliberate scheduling the opening fora time when RC 1860 wes aware that Joan McNamara ‘would be out ofthe county and unable to observe its operations; + Implementing trade dress, menus, fixtures and fumishings without seeking obtaining Joan's Management's prior approval and refusing to comeot def items after Joan's brought the dafets tothe attention of JOTSM and RC 1860; + Selling menu and marketplace items without seeking or obi Management's prior approval, and continuing to sell such items after Joan's brough the issue to the attention of JOTSM and RC 1860; ‘+ Refusing to sell food to Joan's representatives; + Refusing to timely inform Joan’s Management ofits opening and marketing plang and generally keeping Joan's Mafagement in the dark on all operational issues; ‘+ Purporting to bar Joan's representatives ftom JOTSM’s Café and Matketpace, id -atchen Such conduct has rendered it impossible for Joan's Management to exercise the aesthetic and f ee a ‘material tem of the Operating Agreement. 39. In addition, the Operating Agreement provides that, as Manages, RC 1860 may no enter into any transaction with any Member, any Affiliate of any Member, ot any Affiliate of thd Company, except in the ordinary course of business or transactions approved in writing. However, Joan's Management is informed and believe that JOTSM and RC 1860, of is atites, have 1g oan’ ‘omsite kitchen, and its off entered into multiple transactions, including without limitation transactions involving RC 1860" affiliate Ruprecht Company. 40. Finally, the Operating Agreement provides that JOTSM is to operate a Joan's ‘Third branded Café and Marketplace. However, by JOTSM’s refusal to comply with the terns of a 9 mea a mr ROSS COMPLARNT wolbeRa Dwr aati neat i | 8 | 15 1 | 18| ail x| Fe) al 25 ad a ai ¢ ¢ the License Agreement, JOTSM and RC 1860 have wilflly destroyed a valuable asct of the Company, depriving the Company of ts core asset and depriving Joan's Management ofthe benef of the Operating Agreement, 41, As aresult of JOTSM’s ats, Joan's Management has been damaged in an amount nota yet determined or ascertainable, Ata minimum, however, Joan's Mangement i ented injunctive relief, to an accounting, to damages, to unpaid Consulting Fees, and to atomeys feo ad oss, FORTH CLAIM FOR RELIEF RESCISSION OF LETTER AGREEMENT (By Joan's Licensing against RC 1860) 42, Plans repeat and realloge all ofthe allegstions set forth in pargraphs 1 thouglt and inching 41 above asf uly st forth hi 43, The Letter Agreement was based upon the premise that RC 1860 was capable o ‘managing a Joan’s On Thitd-branded Café and Marketplace consistent with Joan’s Licensing’ ‘rand standards 44, As discussed in greater detail above, RC 1860 bas proven unwilling or unable tf operate a Joan’s on Third-branded Café and Marketplace consistent with Joan's Livensing' standards, To the contrary, it has sought to interfere with Joan's Licensing’s efforts to ensurg compliance with brand standards, has bared Josn's Licensing from the JOTSM operation that i ‘manages, and has directed JOTSM personnel o refuse to sel items to Joan’ personnel 45. As a result, there has been a material fare of consideration of the Lette Agreement, 46. Joan's Licensing therfore secks rescission ofthe Leer Agreement ‘FIFTH CLAIM FOR RELIEF DECLARATORY RELIEF ‘By Joan's Licensing against RC 1860) 47. Plaintiffs repeat and reallege all ofthe allegations set forth in paragraphs I througl ‘and including 41 above as if fly set forth herein. 10 CROSS COMPLAINT wr zszeostsotaan cence, ¢ C 48. The Leter Agreement was based upon the premise at RC 1860 was capable ‘managing & Joan's On Third-branded Café and Markeplace consistent with Joan's Licensing’ ‘rand standards 49. As discussed in greater detail above, under RC 1860's management, JOTSM hi repeatedly and deliberately breached the License Agreement, breaching the covenant of good fit ‘and fair dealing and depriving Joan’s Licensing of the sole and only benefit of the Lette ‘Agreement. By filing fo ensure JOTSM’s compliance with Jon's Licensing Standards, RC 186 ‘ns deprived Joan's Licensing ofthe benefit of the Agreement and undermined the very purpose that Agreement, in reach ofthe covenant of good faith and fic dealing, 50, RC 1860 also unreasonably and in bad fuith refused permission to Yoan’s Liven to pursue licensed operation at LAX, thereby further breaching the covenant of good faith an fi eating implied inthe Leter Agreement. Sl. Joan's Licensing therefore seeks a declaration that the Letter Agrecment is ‘ueaforceable by RC 1860 due to RC 1860"s prior breach PRAYER FOR RELIEF WHEREFORE, Paints respectfilly request entry of judgment in ther favor and agains} Defendants as follows: 1. For an order requiring defendant JOTSM to show cause why it should not by joined as hereinatr set forth during the pendency ofthis aeton; 2. For & temporary restraining order, a preliminary injunction, and a permanen| injunction, ll enjoining defendant JOTSM and its agents, and all persons acting under, in concer] ‘with, o in paticiption with it, fom using or displaying the mark or the name “Jan's on Third” 0 any vation thereof, 3. Foran order requiring defendant JOTSM to deliver up and destoy all tems bearing the Joan's on Third mark, or any various thereo 4. For actual and consequential damages according to proof 5. For thee times the amount of defendants’ profits derived ftom infringement of 's mark; a a Ee, CROSECOMPLANT te 19) ul nl 8 r 1 16 0) 29} a a ad 25 2 ¢ 6, For three times the amount of plaintif’s actuel damages suffered by reason of €

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