MUFFLER MAN SUPPLY COMPANY INC THE MUFFLER MAN INC JAMES CHRISTENSEN v. TSE AUTO SERVICE INC TIMOTHY ENGLISH (2024)

OPINION AND ORDER GRANTING IN PART PLAINTIFFS' EX PARTE MOTION FOR TEMPORARY RESTRAINING ORDER (ECF No. 5)

Before this Court is an ex parte Motion for a Temporary Restraining Order (TRO), filed by Plaintiffs Muffler Man Supply Company, Inc. (MMSC), The Muffler Man Inc. (MMI), and James Christensen (collectively “Muffler Man”) under the Lanham Act 15 U.S.C. § 1051 et seq., the Anticybersquatting Consumer Protection Act 15 U.S.C. § 1125(d), and Defendants' alleged breach of its contractual obligations set forth in its March 27, 2010, Dealer Agreement. As explained below, the TRO will be granted in part.

I. BACKGROUND

According to the verified Complaint, Muffler Man, through its various entities, contracts with dealers and franchisees to supply “Muffler Man®” automotive repair facilities. ECF No. 1 at PageID.2–3. There are approximately 20 “corporate” stores and 90 affiliated dealers and franchisees in Michigan, Ohio, and Florida. Id. Christensen owns MMSC, MMI, and the other entities under the “Muffler Man” umbrella. Id. Muffler Man provides “turnkey” businesses to franchisees, including a repair center, a phone number, a location, equipment, supplies, marketing collateral, and customer goodwill marketed under the Muffler Man name and logo, with various registered trademarks. See id. at PageID.3–4.

On March 27, 2010, MMSC entered into a Dealer Agreement with TSE. Id. at PageID.5. TSE was to be a reseller of product lines sold by MMSC and to operate a Muffler Man facility in Lake Orion, Michigan. Id. The Dealer Agreement included provisions that (1) TSE purchase products only from MMSC, (2) prohibited purchasing from third parties without approval, and (3) required discontinuation of Muffler Man's trademarks and phone numbers upon termination. Id. at PageID.5–6. Simultaneously, Muffler Man leased the property to TSE. Id. at PageID.6.

TSE operated an internet homepage at https://mufflermanservice.com/ and various social-media accounts under Muffler Man's name (i.e., mufflermanoflo on Facebook, @MufflerManofLO on X). Id. at PageID.8. The relationship soured after a rent increase. See id., leading TSE to label Muffler Man as a “monster” and to accuse it of “corporate greed,” ECF No. 1-8 at PageID.49, 51. Muffler Man “immediately terminat[ed]” the Dealer Agreement on June 17, 2024, and demanded that TSE stop using Muffler Man's trademark and phone numbers according to Section 14 of the Dealer Agreement. ECF No. 1-9 at PageID.63.

TSE plans to open a new business 2.3 miles from its prior Muffler Man location and continues to use Muffler Man's trademarks and social media to advertise. ECF No. 1 at PageID.8–10.

Muffler Man sued and moved for a TRO on July 1, 2024. ECF Nos. 1; 5. Defendants were served on July 3, 2024. ECF No. 7. Two attorneys who represented Defendants before this case was filed informed this Court that they had not yet been retained for litigation but expect to be retained early next week:

Tabular or graphical material not displayable at this time.

E-mail from Sherri L. Bono, Esq., to Chambers of Hon. Susan K. DeClercq, U.S. Dist. Judge (July 3, 2024, 11:58 EDT) (on file with author).

Because Defendants have not yet been heard in this matter, this Court will resolve the motion ex parte.

II. STANDARD OF REVIEW

A TRO “is an extraordinary remedy” granted only if the movant demonstrates the circumstances “clearly demand” by balancing four factors:

(1) the movant's likelihood of success on the merits,

(2) any irreparable injury to the movant without the injunction,

(3) whether the balance of hardships favors the movant, and

(4) whether the injunction would be adverse to the public interest.

Overstreet v. Lexington-Fayette Urb. Cnty. Gov't, 305 F.3d 566, 573 (6th Cir. 2002) (quoting Leary v. Daeschner, 228 F.3d 729, 736 (6th Cir. 2000)); accord Benisek v. Lamone, 138 S. Ct. 1942, 1943–44 (2018) (per curiam). Courts may grant a TRO ex parte if immediate and irreparable harm is shown and the movant's attorney certifies why notice is not required. FED. R. CIV. P. 65(b)(1). TROs “should ․ preserv[e] the status quo only [until] a hearing” can be held. Vector Rsch. v. Howard & Howard Att'ys, 76 F.3d 692, 696 (6th Cir. 1996) (quoting First Tech. Safety Sys. v. Depinet, 11 F.3d 641, 650 (6th Cir. 1993)).

III. ANALYSIS

Muffler Man has sufficiently demonstrated entitlement to an ex parte TRO.

A. Likelihood of Success on the Merits

Trademark Claims. Muffler Man alleges that TSE continues to use Muffler Man's trademarks and domain names. ECF No. 5 at PageID.95. To state a claim for trademark infringement, Muffler Man must plausibly allege that “(1) it owns the registered trademark; (2) the defendant used the mark in commerce; and (3) the use was likely to cause confusion.” Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009). “[C]ontinued, unauthorized use of an original trademark [after] terminat[ion] is sufficient to establish ‘likelihood of confusion.’ ” Little Caesar Enters. v. Miramar Quick Serv. Rest. Corp., 2020 WL 4516289, at *3 (6th Cir. 2020) (quoting U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185, 1190 (6th Cir. 1997)). Muffler Man has demonstrated ownership and use of the marks by TSE, ECF No. 1 at PageID.3–4, 7–10, which is enough to establish a likelihood of confusion, Little Caesar, 2020 WL 4156289, at *3. Thus, Muffler Man is likely to succeed on their trademark infringement claims.

Cybersquatting under ACPA. “A trademark owner asserting a claim under the [ACPA] must demonstrate a valid trademark, distinctiveness, identical or confusingly similar domain name, use with bad faith intent to profit. DaimlerChrysler v. Net Inc., 388 F.3d 201, 204 (6th Cir. 2004). Muffler Man has demonstrated that it is likely to establish that its trademark is valid and distinct, see ECF No. 1 at PageID.2–3, see also Leelanau Wine Cellars v. Black & Red, 502 F.3d 504, 513 (6th Cir. 2007), that TSE's domain name is confusingly similar, Glob. Licensing v. Namefind LLC, 582 F. Supp. 3d 467, 476 (E.D. Mich. 2022), and that “bad faith” is likely present, see ECF No. 5 at PageID.99–100; see also 15 U.S.C. § 1125(d)(1)(B)(i). Thus Muffler Man is likely to succeed on its ACPA claims.

Contract Claims. Muffler Man alleges TSE is violating the noncompete agreement and withholding phone numbers and domain names. ECF No. 1 at PageID.100.

The noncompete clause, lasting five years, is reasonable and protects Muffler Man's business interests. See ECF No. 1-4 at PageID.30; see also Innovation Ventures v. Liquid Mfg., 885 N.W.2d 861, 872–73 (Mich. 2016); Certified Restoration Dry Cleaning Network v. Tenke Corp., 511 F.3d 535, 547 (6th Cir. 2007). See Midfield Concession Enters. v. Areas USA, Inc., 130 F. Supp. 3d 1122, 1140 (E.D. Mich. 2015) (collecting cases that have upheld noncompete agreements covering periods of six months to five years).

Muffler Man has also demonstrated a likelihood of success that TSE is wrongfully withholding the phone number and domain name. The Agreement states:

6. Advertising and Telephones:

(B). Company owns and shall forever own any advertised telephone numbers that are used in any connection with the Company [MMI], trademarks, trade names, and service marks. All telephone numbers shall be registered in the name of Company and Company shall be listed as the owner․

14. Term of Dealer Agreement:

․

Upon termination of this Agreement for any reason, Dealer shall discontinue the use of the trade name trademarks, labels, copyrights, and other advertising media of Company including, but not limited to: telephone and facsimile telephone numbers, and Company shall immediately remove all signs and displays related thereto.

ECF No. 1-4 at PageID.30, 32. Under Michigan law, “a contract must be interpreted according to its plain and ordinary meaning.” Holmes v. Holmes, 760 N.W.2d 300, 311 (Mich. Ct. App. 2008) (citing St. Paul Fire & Marine Ins. v. Ingall, 577 N.W.2d 188 (Mich. Ct. App. 1998)). Here, the plain language of the dealer agreement requires TSE to discontinue using Muffler Man's phone number, domain name, and other intellectual property upon termination of the Dealer Agreement. Thus, Muffler Man has demonstrated a likelihood of success on the merits for its claim that TSE is wrongfully withholding the phone number and domain name.

Accordingly, this factor weighs in favor of granting the TRO.

B. Irreparable Injury.

Next this Court must consider whether Muffler Man will suffer irreparable injury without the TRO. “A plaintiff's harm from the denial of a preliminary injunction [or TRO] is irreparable if it is not fully compensable by monetary damages.” Overstreet v. Lexington–Fayette Urban Cnty. Gov't, 305 F.3d 566, 578 (6th Cir. 2002). An injury will not be fully compensable by monetary damages “if the nature of the plaintiff's loss would make the damages difficult to calculate.” Basicomputer Corp. v. Scott, 973 F.2d 507, 511 (6th Cir. 1992) (citing Roland Mach. v. Dresser Indus., 749 F.2d 380, 386 (7th Cir. 1984)).

The Sixth Circuit has noted that “[t]he likely interference with customer relationships resulting from the breach of a non-compete agreement is the kind of injury for which monetary damages are difficult to calculate,” and thus is an irreparable injury, and that the loss of customer goodwill often amounts to irreparable injury for the same reason. Certified Restoration, 511 F.3d at 550. These are the exact injuries that Muffler Man will suffer if TSE is allowed to breach its noncompete agreement and open its doors on Monday, July 8, and if TSE is allowed to continue to use the Muffler Man trademarks. Accordingly, this factor weighs in favor of granting the TRO.

C. Substantial Harm to Others

Considering whether granting the TRO would cause substantial harm to others is a fact-based inquiry. Curtis 1000, Inc. v. Martin, 197 F. App'x 412, 426 (6th Cir. 2006) (citing Parker v. USDA, 879 F.2d 1362, 1367 (6th Cir. 1989)). “Others” includes “defendants.” See id.; see also Kelly Servs. v. Eidnes, 530 F. Supp. 2d 940, 952 (E.D. Mich. 2008). There is no indication that the general public would be harmed by issuing the TRO. Also, while it is true that TSE would be harmed by issuing the TRO, TSE ran the risk that Muffler Man would seek to enforce the Dealer Agreement against them upon any alleged breach. See Kelly Servs., 530 F. Supp. At 952 (finding that the defendant “brought this harm upon herself” by breaking noncompete agreement, and “willfully incurred the risk that Plaintiff might enforce the terms of the non-competition agreement”). Thus, this factor favors a TRO.

D. Public Interest

The Sixth Circuit has noted that “enforcement of contractual duties is in the public interest.” Certified Restoration, 511 F.3d at 551. It has also recognized a public interest in “preventing consumer confusion and deception in the marketplace and protecting the trademark holder's property interest in the mark.” Lorillard Tobacco Co. v. Amouri's Grand Foods, Inc., 453 F.3d 377, 383 (6th Cir. 2006). Thus, this factor also weighs in Muffler Man's favor.

E. Bond

Civil Rule 65(c) states: “The court may issue a preliminary injunction or a temporary restraining order only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained.” While this language appears mandatory, “the rule in [the Sixth Circuit] has long been that the district court possesses discretion over whether to require the posting of security.” Appalachian Reg'l Healthcare, Inc. v. Coventry Health & Life Ins., 714 F.3d 424, 431 (6th Cir. 2013) (quoting Moltan Co. v. Eagle–Picher Indus., 55 F.3d 1171, 1176 (6th Cir. 1995)). Without TSE's appearance, this Court lacks the benefit of its arguments on what amount would be proper to compensate for any potential wrongful restraint. Accordingly, while this Court may revisit the issue at the preliminary-injunction stage, a bond will not be required at this time.

IV. CONCLUSION

IT IS HEREBY ORDERED, this 3rd day of July, 2024, at 4:00 PM ET, that Muffler Man's ex parte application for issuance of a Temporary Restraining Order is GRANTED IN PART. Accordingly:

1. Defendants are immediately enjoined from opening or operating an automotive repair facility at 275 S. Glaspie St., Oxford, Michigan.

2. Defendants must cease using the phone number “(248) 814-9292” on or before July 8, at 5:00 PM ET.

3. Defendants must cease operating the internet homepage at https://mufflermanservice.com/ on or before July 8, at 5:00 PM ET.

4. Defendants must immediately cease the use and distribution of all material including marketing material such as business cards that has any Muffler Man trademark.

5. Defendants must cease operation of their Facebook and X.com pages that contain Muffler Man trademarks in the usernames (including Facebook (mufflermanoflo) and X (formerly Twitter) (@MufflerManofLO)) on or before July 8 at 5:00 PM ET.

6. Defendants shall further remove Muffler Man trademarks from any other internet or social media page that they control, on or before July 8 at 5:00 PM ET.

IT IS FURTHER ORDERED:

1. That the parties shall appear before this Court for a Preliminary Injunction hearing on July 12, 2024, at 10:00 AM ET;

2. That Defendant shall file and serve any response papers in advance of the Preliminary Injunction Hearing on or before July 10, 2024;

3. That Plaintiff shall file and serve any reply papers in advance of the preliminary injunction hearing on or before July 11, 2024;

4. That prior to the Preliminary Injunction hearing, Defendant may move to vacate or modify the temporary restraining order on two business days' notice to Plaintiff;

5. That no security or bond shall be required under Civil Rule 65(c);

6. That Plaintiff shall effectuate service of this Order upon Defendant on or before July 5, 2024; and

7. That Plaintiff shall file proof of service with this Court by July 5, 2024.

Dated: July 3, 2024, at 4:30 pm.

Susan K. DeClercq United States District Judge