February 4, 2019
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 18 C 4971-Manish
S. Shah, Judge.
Wood, Chief Judge, and Easterbrook and St. Eve, Circuit
litigation presents a clash between a franchisor and a
franchisee who may (or may not) have allowed their agreement
to expire. Auto Driveaway Franchise Systems, LLC ("Auto
Driveaway") is a franchisor for commercial vehicle
transportation services; Jeffrey Corbett was one of its
franchisees. Through his company, Auto Driveaway Richmond,
LLC ("AD Richmond"), Corbett ran Auto Driveaway
franchises in Richmond (Virginia), Nashville, and Cleveland.
The arrangement was satisfactory for some time, but it went
downhill after Auto Driveaway heard that Corbett was opening
businesses that competed with Auto Driveaway behind its back.
Adding insult to injury, Corbett was also allegedly using
Auto Driveaway's name to lend legitimacy to the new
ventures. Taking the position that Corbett's actions
breached the non-compete clauses of the franchise contracts
and misused Auto Driveaway's trademarks, Auto Driveaway
brought this suit. The case has come to us on Corbett's
appeal from a preliminary injunction the district court
entered. See 28 U.S.C. § 1292(a)(1).
considering that injunction directly, we must address several
procedural problems that relate to our appellate jurisdiction
and the form of the injunction. We conclude that our
jurisdiction is secure, but that the district court must
revisit both the form of the injunction and the amount of
security it required.
three business locations were governed by separate, but
substantively identical, franchise agreements with Auto
Driveaway. Corbett signed each one as the sole owner of AD
Richmond. Each agreement included the following: a
non-compete clause, a non-disclosure clause, and a five-year
term set to expire in 2016. Those expiration dates came and
went, but both parties initially continued dealing as though
the agreements were still in place. Not until November 2017
did Auto Driveaway mail a letter to Corbett offering formally
to renew the franchise contracts for another five years
beginning February 2018. Corbett never responded to the
letter; instead, he continued operating his franchises as
time after the November 2017 letter, Auto Driveaway learned
that Corbett had been taking actions in apparent violation of
the franchise agreements. Corbett, it learned, was building
an app to compete against the app it had hired Corbett to
build for itself. Auto Driveaway also suspected that Corbett
was using Auto Driveaway's proprietary work product as a
starting point. To make matters worse, Corbett was set to
launch his own app through a new company, Inn-ovAuto, that
also provided auto transportation services, in direct
competition with Auto Driveaway. Auto Driveaway quickly filed
this lawsuit seeking to stop Corbett, InnovAuto, and sales or
use of the app. One month later it formally terminated its
relationship with Corbett and AD Richmond.
initial answer to the complaint, Corbett admitted that the
franchise terms under his agreement with Auto Driveaway were
extended on a month-to-month basis after they expired in
2016. He attempted to walk back that admission later in an
amendment to his answer; the new version took the position
that the franchise agreements expired and that the November
2017 letter from Auto Driveaway was a unilateral offer that
Corbett never accepted.
months later, Auto Driveaway discovered that Corbett had
another competitive auto transport business, Tactical Fleet.
Though Tactical Fleet was not named in the original
complaint, Auto Driveaway asked the district court for a
preliminary injunction to stop Corbett from operating that
company as well as InnovAuto and the app. After a brief
hearing, the district court issued an order granting Auto
Driveaway's motion, based on evidence that Corbett was
harming consumer goodwill toward Auto Driveaway and was
taking Auto Driveaway customers through his competing
businesses. In broad strokes, the order states that Corbett
may not engage in any conduct that might violate the
non-compete clause of the franchise agreement. The court
required Auto Driveaway to post a $10, 000 bond as security
for the injunction; it did so.
we can address the propriety of the injunction, we must
ensure that it is properly before this court and free of
procedural defects. There are potentially three problems with
this injunction: its timeliness, its scope, and its
specificity. We review each d ...