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Free Green Can, LLC and Fgc Franchises, LLC v. Green Recycling Enterprises

October 27, 2011

FREE GREEN CAN, LLC AND FGC FRANCHISES, LLC, PLAINTIFFS,
v.
GREEN RECYCLING ENTERPRISES, LLC (A/KA GREEN RECYCLING ENTERPRISES, INC., ASLAN ) FINANCIAL GROUP, INC., EDWARD JARZOBSKI, DEDRIC GILL, AND ROBB JORGENSEN, DEFENDANTS.



The opinion of the court was delivered by: Judge Sharon Johnson Coleman

Magistrate Judge Arlander Keys

MEMORANDUM OPINION AND ORDER

This matter is before the Court on motion by Defendants Dedric Gill, Robb Jorgensen, Edward Jarzobski and Brian Gubbels (collectively "Moving Defendants" or "Individual Defendants") to dismiss the Plaintiffs', Free Green Can, LLC and FGC Franchises, LLC (collectively "Plaintiffs"), Second Amended Complaint for its failure to state a claim. Individual Defendant Gubbels also seeks to dismiss the complaint for lack of personal jurisdiction. (Dkt. No. 102.) In the second amended complaint, Plaintiffs assert trademark infringement (count I), unfair competition (count II), breach of franchise agreement (count IV) and specific performance of the franchise agreement (counts V and VI) against Defendants Green Recycling Enterprises, LLC, ("GRE"), Edward Jarzobski, Dedric Gill, Robb Jorgensen, and Brian Gubbels (collectively the "GRE Defendants"). Plaintiffs also seek a declaratory judgment finding the franchise agreement valid and enforceable (count III) and to enjoin the GRE Defendants from using Plaintiffs' trademarks and copyrighted material (count VII). Lastly, plaintiffs assert a violation of the Illinois Trade Secret Act (count VIII) against the GRE Defendants.*fn1 For the following reasons, the Court grants the Moving Defendants' motion.

FACTS

The relevant factual allegations in the second amended complaint, which the Court must accept as true for present purposes, are as follows: Plaintiff Free Green Can LLC ("Free Green Can") developed the business concept of providing dual purpose recycle and trash bins to public and private institutions and selling advertising rights on those bins to third-parties. (Sec. Am. Compl. ¶ 6.) Free Green Can envisioned the placement of the bins in heavily-trafficked "host site" locations. (Id. at ¶ 19.) Host sites would receive a cost-free trash and recycling solution and earn a share of the advertising revenue. (Id.) Free Green Can is the owner of registered trademarks licensed and used in connection with the Free Green Can operation. (Id. at ¶ 6.) Free Green Can licenses its registered trademarks to Plaintiff FGC Franchises, LLC ("FGC Franchises"), who in turn sub-licenses the trademarks to Free Green Can franchises. (Id.)

Defendant Green Recycling Enterprises, LLC ("GRE") is a Nebraska limited liability company with its principal place of business in Omaha, Nebraska. (Id. at ¶ 7.) Defendants Edward Jarzobski, Dedric Gill, Robb Jorgensen, and Brian Gubbels are all members of GRE and Gill is its president. (Id. at ¶¶ 9-12.) They are also citizens and residents of Nebraska.*fn2 (Id. at ¶ 7.) Defendants Gill, Jarzobski and/or Jorgensen approached Free Green Can and proposed to acquire franchise rights to the Free Green Can business in Nebraska. (Id. at ¶ 31.) In October 2009, Free Green Can and GRE and Defendants Gill, Jarzobski, and Jorgensen executed a franchise agreement that contained a forum selection clause providing that:

"[a]ny legal action or proceeding with respect to this Agreement shall be brought exclusively in state or federal court in Chicago, Illinois and each Party consents to the jurisdiction of said court as the proper and convenient forum for all matters that arise under this Agreement." (Dkt. No. 100, Ex. A.)

The preamble to the franchise agreement states that the agreement was entered into by and between Free Green Can Products, LLC and "the individual or business entity identified in the signature block of this Agreement ("Franchisee")." (Id.) Green Recycling Enterprises, Inc. was listed in the signature block as the Franchisee. (Id.) Defendants Gill, Jorgensen, and Jarzobski signed the franchise agreement without indicating their corporate affiliation. (Id.) Steve Holland executed the franchise agreement on behalf of Green Can Products, LLC in his capacity as its president. (Id.)

After the franchise agreement was executed, Free Green Can received the initial $125,000 initial fee owed under the agreement. (Sec. Am. Compl ¶ 38.) The initial fee included the cost for 100 of the Free Green Can proprietary dual purpose recycle and trash containers. (Id.) Free Green Can was also paid $40,000 for an additional 100 dual purpose containers. (Id.) Defendant Jorgensen allegedly funded these initial payments to Free Green Can. (Id. at ¶ 39.)

After purchasing the dual purpose containers, GRE allegedly placed these bins in several venues and secured advertising commitments from major organizations. (Id. at ¶ 41.) However, the GRE Defendants allegedly violated the franchise agreement by failing to pay Free Green Can the advertising fees due under the franchise agreement. (Id.) Additionally, the GRE Defendants failed to report on the placement and solicitation of the dual purpose bins, submit financial statements to Free Green Can and permit Free Green Can to inspect their financial books and records. (Id. at ¶ 42.) Nevertheless, plaintiffs allege that GRE Defendants have used the Free Green Can trademarks, have represented themselves as having the right to sell franchises and have provided the proprietary dual purpose bins to a third-party outside of Nebraska. (Id. at ¶ 45.) In July 2010, Free Green Can advised Gill, Jarzobski and Jorgensen that these actions constituted an Event of Default and were grounds for terminating the franchise agreement. (Id. at ¶ 44.) In response, GRE Defendants informed Free Green Can that the franchise agreement was null and void because Free Green Can did not register its franchise with the Nebraska Department of Banking. (Id. at ¶ 45.) Also around this time, Defendant Gubbels became a director and member of GRE. (Id. at 43). By written notice, Free Green Can denied the franchise agreement was a nullity and demanded the GRE Defendants comply with the agreement. (Id. at ¶ 46.) Plaintiffs also provided the GRE Defendants with notice that their acts infringed Free Green Can's trademarks. (Id.) In response, GRE Defendants again claimed that the franchise agreement was null and void. (Id. at ¶ 47.)

Additionally, Plaintiffs further allege that the Individual Defendants are now doing business under a new name, Second Nature Public Recycling, ("Second Nature"), and continue to use Free Green Can copyrighted information to operate their business. (Id. at ¶¶ 50-57.)

On September 10, 2010, Plaintiffs filed their original Complaint after the GRE Defendants allegedly refused to comply with the franchise agreement and continued to infringe Plaintiffs' trademarks. (Dkt. No. 1.) Plaintiffs filed their First Amended Complaint one month later on October 14, 2010. (Dkt. No. 23.) Aslan and the GRE Defendants sought and obtained dismissal of that complaint because this Court found that: (1) the Plaintiffs failed to allege sufficient facts to establish subject matter jurisdiction over both the claims against Defendant Aslan and over the contract claims against the Individual Defendants and (2) the Plaintiffs' allegations of trademark infringement and unfair competition were insufficient to state a claim against the Individual Defendants. (Dkt. No. 31.)

In response, the Plaintiffs filed the second amended complaint in an effort to repair the deficiencies contained in the first amended complaint. (Dkt. No. 79.) The Moving Defendants, however, seek dismissal of counts I-VIII of the second amended complaint alleging that, it, again, fails to state a claim upon which the Court can grant relief. (Dkt. No. 92.) Additionally, ...


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