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MJ & PTNRS. RESTAURANT L.P. v. ZADIKOFF

May 6, 1998

MJ & PARTNERS RESTAURANT LIMITED PARTNERSHIP and 23 FOOD, INC., Plaintiffs,
v.
DAVID ZADIKOFF, JUMP, INC. and MICHAEL JORDAN, Defendants. MICHAEL JORDAN and JUMP, INC., Plaintiff-Intervenors. vs. MJ & PARTNERS RESTAURANT LIMITED PARTNERSHIP and 23 FOOD, INC., Defendants.



The opinion of the court was delivered by: MORAN

MEMORANDUM AND ORDER

 Plaintiffs MJ & Partners Restaurant Limited Partnership (MJ & Partners) and 23 Food, Inc. (23 Food) filed their original complaint against defendant David Zadikoff (Zadikoff) seeking injunctive and monetary relief for alleged acts of trademark infringement in violation of the Lanham Act, 15 U.S.C. § 1125(a) (Count I), unfair competition and misappropriation under Illinois common law (Counts II and III), deceptive business and trade practices under 815 ILCS § 505/1 & 510/1 et seq. (Count IV), breach of fiduciary duty (Count V), and misappropriation of trade secrets under the Illinois Trade Secrets Act, 765 ILCS 1065/2(d) (Count VI). At issue is Zadikoff's motion to dismiss the original complaint under Fed.R.Civ.P 12(b)(6). *fn1" For the reasons stated herein, Zadikoff's motion is granted in part and denied in part.

 BACKGROUND

 In considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, we accept all well-pled factual allegations in the complaint as true and draw all reasonable inferences from these facts in favor of the plaintiff. Travel All Over the World, Inc. v. The Kingdom of Saudi Arabia, 73 F.3d 1423, 1429 (7th Cir. 1996). Read in this light, the facts are as follows.

 Jordan is a resident of Illinois and president of plaintiff Jump, a District of Columbia corporation with its principal place of business in Illinois. 23 Food, Inc. (23 Food) is an Illinois corporation with its principal place of business in Illinois. MJ & Partners is an Illinois limited partnership with its principal place of business in Illinois. Zadikoff is an individual residing and conducting business in this judicial district.

 Jump and 23 Food are signatories to a restaurant license agreement dated September 12, 1990 (restaurant license agreement). The agreement grants 23 Food the right to use Jordan's name, likeness, voice, and persona (collectively, Name), providing in relevant part as follows:

 
Subject to the terms and conditions hereinafter set forth, Jump hereby grants to [23] Food, and Food hereby accepts from Jump, the exclusive right and license in the Chicago metropolitan area (herein defined as in the Cook, Lake, DuPage, Will, Kane and McHenry Counties, Illinois) to use the Name directly or through a partnership, joint venture or other entity of which Food is a partner, joint venturer, owner, or other equity holder (a "Restaurant Entity") to own and operate the Restaurant Business.

 (am.cplt.exh.A P1). The restaurant license agreement further stated that Jump "will not take any action or enter into any new agreements in the restaurant industry that in any manner violates or interferes with the rights granted to Food by Jump hereunder" (id. at P 2). MJ & Partners is a sublicensee under the agreement. Jump and 23 Food also entered into a side agreement dated September 12, 1990, that supplements the restaurant license agreement. This agreement states that

 
during the term of the Restaurant License Agreement neither Jump nor any of its affiliates shall grant, sell, assign or otherwise entitle any person, firm, corporation or other entity the right to open any restaurant based on the Name within Cook, Lake, DuPage, Will, Kane and McHenry Counties, Illinois.

 (am.cplt.exh.B).

 In April 1993, plaintiffs opened Michael Jordan's Restaurant at the corner of LaSalle and Illinois Streets in Chicago. The restaurant has become one of the most visited tourist attractions in Chicago and Jordan has personally received significant monetary benefits in the form of royalty payments, pursuant to the restaurant licensing agreement. Based on the success of the restaurant plaintiffs have been planning to open several additional restaurants and nightclubs based on the Name in the Chicago metropolitan area, which they believe could result in sales of approximately 60 to 80 million dollars per year.

 Since its opening, Zadikoff has performed the duties of chief executive for Michael Jordan's Restaurant. *fn2" Zadikoff's responsibilities include, but are not limited to, determining the hours of operation, selecting vendors and suppliers, determining the restaurant's menu, selecting prices for goods and services, setting labor policies (including wages, hiring, supervising, assigning, promoting, and discharging of employees), formulating marketing and advertising plans, establishing quarterly and annual budgets, handling on-site relations with private investors and relations with celebrities, and planning promotional events. Zadikoff also has the authority to sign corporate checks on the restaurant's bank accounts.

 As chief executive, Zadikoff received the following information: the price and cost to plaintiffs of products and goods purchased from suppliers for the restaurant, the sales and employee history of the restaurant and retail store, the terms and conditions offered by suppliers from which plaintiffs purchased products, the gross profit for every item sold in the restaurant, the restaurant's revenues and expenses, financing agreements, the list of investors in 23 Food and MJ & Partners, the restaurant's marketing plans, and special customer relationships.

 Plaintiffs allege that while continuing to work on behalf of Michael Jordan's Restaurant, Zadikoff has made plans with Jordan to open a new restaurant in Chicago using the Name. According to plaintiffs this restaurant is to be located at 160 North Loomis Street in Chicago (hereinafter referred to as the Loomis restaurant). The ownership of the Loomis restaurant is structured in the following way. Jordan and Jump own 100 percent of JCI, L.L.C. (JCI), a Delaware limited liability company. Jump and JCI own 100 percent of Treadwater, L.L.C. (Treadwater), a Delaware limited liability company which owns the land and the building where the Loomis restaurant is located. Treadwater leased the building where the Loomis restaurant is located to Emanon, L.L.C. (Emanon), a Delaware limited liability company. Emanon is owned 95 percent by Jump and JCI, and 5 percent by Cornerstone Management & Consulting, Inc. (Cornerstone). Zadikoff is the chairman of Cornerstone and has absolute discretion to act on behalf of Cornerstone in connection with its dealings with Jordan. Emanon entered into a management agreement with Cornerstone to provide and control the overall management of the Loomis restaurant.

 On or about January 31, 1997, Zadikoff caused an easement to be recorded concerning the property formerly known as the Pickle Factory at the intersection of Ogden Avenue, Lake and Randolph Streets in Chicago (easement). Paragraph 11 of the easement states as follows:

 
Parcel 1 Owner's [Treadwater's] right to obtain the exclusive use of any parking spaces located on [the western portion of the property] shall terminate effective on the date ... which is the earliest of: ... (y) the date Parcel One ceases to be owned by a Cornerstone Entity, and (z) the date Jordan and/or Jordan Affiliates cease to own in the aggregate at least ten percent (10%) of the Cornerstone Entity which owns Parcel 1. "Cornerstone Entity" means any partnership, corporation, limited liability company or other entity which one or more of Michael Jordan of the Chicago Bulls NBA team ("Jordan"), Jordan Affiliates, David Zadikoff and Jonathan Albert controls. "Control" means, with respect to any partnership, corporation or limited liability company, possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of, and to make all material business decisions (including without limitation decisions pertaining to sale, development, leasing and financing) affecting such partnership, corporation, limited liability company or other entity.

 (am.cplt.exh.C, P11).

 Plaintiffs allege that Zadikoff has taken the following actions with respect to the Loomis restaurant: he initiated a "whispering campaign" regarding the opening of the Loomis restaurant in Chicago; he released information to the media regarding the opening of the Loomis restaurant (id., exh.E); he and Jordan once intended to name the restaurant "Restaurant J" (id., exh.D); and he and Jordan strategically selected the Ogden Avenue location to benefit from its proximity to the United Center, home of the Chicago Bulls, the large number of sports fans that use that thoroughfare to the United Center from the north and northwest, the location's neighbor, Hoops, a highly regarded basketball facility used regularly by visiting NBA teams, and its proximity to the James Jordan Boys Club. Plaintiffs further allege that Zadikoff and Jordan plan to utilize the Name in the following ways: by serving "Carolina Style Food," to take advantage of the fact that Jordan is from North Carolina; by modeling the Loomis restaurant after other celebrity-owned restaurants such as "Georgia" in Los Angeles, which is owned by a retired NBA star; by having Jordan personally appear to promote the restaurant, and displaying Jordan's name on a publicly-displayed personal humidor inside the restaurant; and by making Jordan's vehicles, many of which bear vanity license plates, "clearly visible" outside the Loomis restaurant when Jordan is visiting.

 Plaintiffs have not consented to the use of the Name in connection with any restaurant other than Michael Jordan's Restaurant. Plaintiffs have demanded that Zadikoff cease his activities with respect to ...


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