Procedural Posture

Petitioner franchisor sought mandate relief from an order of respondent Superior Court of Los Angeles County (California), which ruled that Washington state law applied to real party in interest franchisee's suit alleging wrongful termination of its franchise.

Overview

The franchisor, which had its headquarters in Vancouver, granted a franchise for territories in the Los Angeles area. The Termination violation CCP 1005 Washington . The parties' franchise agreement specified the application of Washington state law and obligated the franchisee to pay a percentage of its gross revenue to the franchisor. Upon discovering that some revenue had not been reported, the franchisor terminated the agreement without an opportunity to cure. The franchisee alleged that the termination was in violation of Washington state law. Its attorney filed a declaration explaining that franchise agreements typically contained choice of law provisions to ensure consistent rules. The court held that a reasonable basis existed for the choice of law provision because of the franchisor's proximity to Washington and the benefits of franchise uniformity. Because Wash. Rev. Code § 19.100.180(2)(j) provided greater protection from summary termination than Bus. & Prof. Code, §§ 20020, 20021, subds. (a)-(k), the choice of law provision did not diminish the franchisee's rights under the California Franchise Relations Act, Bus. & Prof. Code, § 20000 et seq. Thus, Bus. & Prof. Code, § 20010, did not bar its enforcement.

Outcome

The court denied the franchisor's petition for writ of mandate.

Procedural Posture

Defendants, plaintiff's former owner and employees, appealed from an order of the Superior Court of Riverside County (California), which issued a preliminary injunction restraining defendants from soliciting any former customers of plaintiff business in an action by plaintiff alleging misappropriation of trade secrets and other theories.

Overview

Plaintiff business filed a complaint against defendants, plaintiff's former owner and employees, alleging trade secret misappropriation and other theories. The trial court issued the injunction prohibiting defendants from a number of activities. On appeal, the court held that injunctions could not remain in effect without posting of an adequate undertaking. An undertaking was an indispensable prerequisite to the issuance of a preliminary injunction, and the restrained party did not waive its right to that statutorily mandated protection by failing to affirmatively request it. In calculating the amount of the undertaking, considerations included (1) profits to be lost by defendants from the elimination of the majority of existing customers, and (2) attorney fees and expenses incurred in either prosecuting an appeal of the injunction or defending at trial. The court also found that the injunction was vague.

Outcome

The injunction granted in favor of plaintiff business was reversed because an undertaking was an indispensable prerequisite to the issuance of a preliminary injunction and injunctions could not remain in effect without posting of an adequate undertaking.