United States District Court, D. Minnesota
ORDER DENYING PLAINTIFF'S MOTION FOR A TEMPORARY
RESTRAINING ORDER AND PRELIMINARY INJUNCTION
WILHELMINA M. WRIGHT, UNITED STATES DISTRICT JUDGE
In this
contract dispute involving a hotel franchise, Plaintiff
Izabella HMC-MF, LLC (Izabella) moves for a temporary
restraining order and preliminary injunction to prevent
Defendant Radisson Hotels International, Inc. (Radisson),
from terminating its license agreement with Izabella. (Dkt.
6.) For the reasons addressed below, Izabella's motion is
denied.
BACKGROUND
Izabella
is an Illinois limited liability company that owns and
operates the Radisson Menomonee Falls hotel (the Hotel)
located in Menomonee Falls, Wisconsin. Radisson is a Delaware
corporation with its principal place of business in
Minneapolis, Minnesota. Izabella has operated the Hotel as a
Radisson-branded hotel since October 2014 pursuant to a
license agreement between Izabella and Radisson (the License
Agreement). The License Agreement provides that, for a
20-year term, Izabella must pay Radisson an initial fee and
ongoing royalty, marketing, and reservation fees in exchange
for the rights to operate a Radisson-branded hotel and use
Radisson's reservation system. As relevant here, Article
5.4 of the License Agreement provides that Izabella
“may not perform any Construction or Renovation without
[Radisson's] approval, except for routine maintenance and
repair.”[1] And under Article 18.3 of the License
Agreement, Radisson may suspend the services of its
reservation system after notice to Izabella of a material
default until the default is cured.
Radisson
sent Izabella a letter on January 29, 2019, alleging that
Izabella was “in breach and default of the License
Agreement for performing renovations at the Hotel without
approval from Radisson.” The letter states that, to
cure the alleged default, Izabella “must cease all
Renovations and make any necessary changes to the Renovations
already performed so that the Renovations comply with the
Radisson System.” The letter also warns that, if
Izabella fails to cure the alleged default by April 1, 2019,
Radisson will exercise its right to terminate the License
Agreement on May 1, 2019. According to Izabella, the only
actions Izabella took before January 29, 2019, that might be
characterized as “renovations” were the
replacement of carpet, drapes, and lamps in two of the
Hotel's guest rooms in October and November 2018.
Radisson contends that these modifications were unapproved
“renovations” as defined in the License
Agreement. Moreover, Radisson maintains that Izabella
renovated these two guest rooms as prototype “show
rooms” in preparation to convert the Hotel to a
non-Radisson brand in June 2019.
Izabella
commenced this lawsuit on April 30, 2019, alleging that
Radisson's threatened termination of the License
Agreement is a violation of the Wisconsin Fair Dealership Law
(WFDL), Wis.Stat. §§ 135.01 et seq. (Count
1) and an anticipatory breach of the License Agreement (Count
2). Izabella also filed the pending motion for a temporary
restraining order and preliminary injunction on April 30,
2019, seeking a court order preventing Radisson from
terminating the License Agreement. Radisson terminated the
License Agreement on May 1, 2019.
ANALYSIS
When
determining whether a temporary restraining order or
preliminary injunction is warranted, four factors are
considered: the probability that the movant will succeed on
the merits, the threat of irreparable harm to the movant, the
balance between this harm and the injury that the injunction
will inflict on other parties, and the public interest.
Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d
109, 114 (8th Cir. 1981).[2] The burden to establish that injunctive
relief should be granted rests with the movant. Watkins
Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003). A
preliminary injunction is an extraordinary remedy that is
never awarded as of right. Winter v. Nat. Res. Def.
Council, Inc., 555 U.S. 7, 24 (2008). Because the
“failure to show irreparable harm is an independently
sufficient ground upon which to deny a preliminary
injunction, ” Novus Franchising, Inc. v.
Dawson, 725 F.3d 885, 893 (8th Cir. 2013) (internal
quotation marks omitted), the Court begins its analysis with
this Dataphase factor.
To
obtain preliminary injunctive relief, a plaintiff must
establish the threat of irreparable harm. See
Dataphase, 640 F.2d at 114. “Irreparable harm
occurs when a party has no adequate remedy at law, typically
because its injuries cannot be fully compensated through an
award of damages.” Gen. Motors Corp. v. Harry
Brown's, LLC, 563 F.3d 312, 319 (8th Cir. 2009). To
demonstrate a threat of irreparable harm, the harm must be
“certain and great and of such imminence that there is
a clear and present need for equitable relief.”
Roudachevski v. All-American Care Ctrs., Inc., 648
F.3d 701, 706 (8th Cir. 2011) (internal quotation marks
omitted). A mere “possibility of harm” is
insufficient. Id.; accord S.J.W. ex rel. Wilson
v. Lee's Summit R-7 Sch. Dist., 696 F.3d 771, 779
(8th Cir. 2012) (“Speculative harm does not support a
preliminary injunction.”).
Izabella
contends that violation of the WFDL, alleged in Count 1 of
its complaint, entitles Izabella to a statutory presumption
of irreparable harm. The WFDL provides, in relevant part,
that “any violation of this chapter . . . is deemed an
irreparable injury . . . for determining if a temporary
injunction should be issued.” Wis.Stat. § 135.065.
Although the Wisconsin Supreme Court has not addressed this
provision of the WFDL, federal courts have concluded that the
WFDL provides only a rebuttable presumption of
irreparable harm. See, e.g., S&S Sales Corp.
v. Marvin Lumber & Cedar Co., 435 F.Supp.2d 879, 885
(E.D. Wis. 2006) (denying motion for temporary restraining
order, concluding that Section 135.065 of the WFDL
“should be construed as creating a rebuttable
presumption of irreparable harm and that the Wisconsin
Supreme Court would so construe it, ” and collecting
cases reaching same conclusion); accord Fleet Wholesale
Supply Co. v. Remington Arms Co., 846 F.2d 1095, 1098
(7th Cir. 1988) (affirming denial of preliminary injunction
under the WFDL based in part on lack of irreparable injury
and stating that a “district court need not treat [the
statutory] presumption as conclusive”). Izabella does
not appear to dispute that the WFDL's presumption of
irreparable harm is rebuttable, and this Court agrees with
the persuasive reasoning of those federal courts that have
reached the same conclusion. Accordingly, if Radisson
“presents evidence of the absence of irreparable
injury, the presumption is no longer relevant, and [Izabella]
must come forward with evidence negating [Radisson's]
evidence.” S&S Sales Corp., 435 F.Supp.2d
at 886.
Here,
Izabella argues that Radisson's termination of the
License Agreement will cause irreparable harm by reducing the
number of bookings for the Hotel and impairing Izabella's
ability to attract customers, which will result in “a
substantial loss of . . . revenue.” But lost revenue is
compensable in damages and does not support Izabella's
entitlement to injunctive relief. See, e.g.,
Hinz v. Neuroscience, Inc., 538 F.3d 979, 986-87
(8th Cir. 2008) (affirming district court's denial of
injunctive relief when the “only injury [plaintiff] has
identified in this action is lost profits, which are
obviously compensable with money damages” (internal
quotation marks omitted)); Wave Form Sys., Inc. v. AMS
Sales Corp., 73 F.Supp.3d 1052, 1058 (D. Minn. 2014)
(concluding that “any harm resulting from lost or
diverted profits caused by customers leaving”
franchisee if franchisor terminates relationship “is
not irreparable”). If Izabella prevails on the merits
of its lawsuit, any financial harm it incurs can be
compensated with an award of money damages. Indeed, Izabella
“estimates that the Hotel would lose approximately
$175, 000 per month in revenue if
Radisson terminates the License Agreement, ” which
belies Izabella's argument that its damages will be
“impossible to ascertain.” Despite its conclusory
assertions, Izabella has not demonstrated why its potential
lost revenue would be unreasonably difficult to calculate,
let alone impossible. As such, Izabella has not established
that the anticipated reduction in its revenue is an
irreparable harm.
The
only other harm that Izabella alleges is the anticipated harm
to its reputation and goodwill if it loses its Radisson
branding. “Loss of intangible assets such as reputation
and goodwill can constitute irreparable injury.”
United Healthcare Ins. Co. v. AdvancePCS, 316 F.3d
737, 741 (8th Cir. 2002). But the goodwill arising from a
licensed brand belongs to the licensor, not the licensee.
See, e.g., Twentieth Century Fox Film Corp. v.
Marvel Enters., Inc., 277 F.3d 253, 259 (2d Cir. 2002)
(recognizing that “the source of the goodwill inhering
in [licensed] trademarks” belongs to the licensor, not
the licensee). Here, the License Agreement expressly provides
that Radisson “own[s] the [Radisson] Marks and all
goodwill associated with the [Radisson] Marks.”
(Emphasis added.) Izabella has not demonstrated that its loss
of the Radisson branding will irreparably harm any goodwill
that belongs to Izabella, as opposed to Radisson.
Moreover, to the extent that Izabella suffers harm to its own
reputation or goodwill, that harm is compensable by monetary
damages for lost revenue. For these reasons, any alleged harm
to Izabella's reputation and goodwill is insufficient to
support Izabella's entitlement to injunctive relief.
Radisson
further contends that any harm that Izabella might suffer is
not irreparable and will be minor, temporary, and
self-inflicted. This is because, Radisson argues,
Izabella's alleged default of the License Agreement
arises from its ongoing efforts to convert the Hotel to a
non-Radisson brand in June 2019. Radisson's evidence
presented in support of these assertions includes employee
declarations, photographs, emails, letters, and other
documents showing that Izabella sought to terminate the
License Agreement in 2018 and intends to complete its
conversion of the Hotel to a competing brand in June
2019.[3] Based on this evidence, and the reasons
addressed above, Radisson maintains that it has rebutted any
statutory presumption of irreparable harm under the WFDL.
Izabella disagrees, relying on Romper Room Inc. v.
Winmark Corp., in which the United States District Court
for the Eastern District of Wisconsin granted a preliminary
injunction and concluded that the presumption of irreparable
harm under the WFDL had not been rebutted. 60 F.Supp.3d 993,
997 (E.D. Wis. 2014). But the district court in Romper
Room found that, absent a preliminary injunction, the
individual plaintiffs would be forced to close their
business-their only source of income and livelihood-in light
of the noncompete provisions in their franchise agreement.
Id. at 996-97. Because no such facts exist here,
Romper Room is inapposite.
In
summary, Radisson has rebutted the statutory presumption of
irreparable harm under the WFDL. The absence of irreparable
harm is, by itself, a sufficient reason to deny
Izabella's motion for injunctive relief. Gelco Corp.
v. Coniston Partners, 811 F.2d 414, 418 (8th Cir. 1987).
Because Izabella has failed to demonstrate irreparable harm
and Radisson has rebutted any statutory presumption of
irreparable harm under the WFDL, the Court need not address
the remaining Dataphase factors. See, e.g.,
Medtronic, Inc. v. Ernst, 182 F.Supp.3d 925, 934-35
(D. Minn. 2016) (denying temporary ...