SCRANTON – A Newfoundland, Pa., magazine has filed litigation against the proprietors of a rival publication, claiming they infringed on the stipulations of a non-compete contract they signed as a part of a former franchisee agreement.
On Dec. 16, plaintiff Our Town Magazine filed suit against spousal defendants Michael and Jennifer Rousseau, New Jersey residents. According to Our Town’s complaint, the Rousseaus have violated a non-compete agreement in a tortious and deliberate manner by creating and running a similar publication called Home Town Magazine, within the same coverage area as Our Town Magazine.
Our Town believes it will “suffer immediate irreparable harm” if the defendants are not prohibited from continuing to operate this rival publication.
Our Town is a bi-monthly print publication owned and operated by Bob and Dorothy Beierle, and headquartered in Newfoundland. Each edition of Our Town contains “original stories, advertising, town and community news and job postings within each of its local publication areas, and the publication is distributed by direct delivery and at various retail establishments.”
Starting in January 2006, Our Town offered franchisee opportunities to qualified applicants, in which a franchisee could own and operate an Our Town establishment for a franchise fee of $6,500. Per the agreement and upon approval of an application, the franchisee would give the franchisor advertising material and other local information, the franchisor would then make a print-ready publication (adding their own cover story and other material), print and collate the magazine, then provide the complete publication to the franchisee for delivery within the geographical location of their designated Our Town franchise.
In December 2006, the Rousseaus introduced the idea of owning and operating an Our Town franchise in certain New Jersey counties. On Feb. 19, 2007, Our Town and the Rousseaus entered into a five year-long franchise agreement for the exclusive territory of Morris County, N.J.
This agreement featured a non-compete clause which reads upon the sale, expiration, transfer or assignment of the franchise by the franchisee or upon the termination of the franchise agreement for any reason, “The franchisee shall refrain from engaging directly or indirectly in any business similar to that which is created by this agreement for a period of three years, at the franchise location and within 50 miles from any Our Town company-owned or franchised operation.”
The suit says when the Rousseaus entered into the contract with Our Town, they agreed to receiving confidential and proprietary information vital to the running of Our Town’s business (such as marketing and publishing plans), agreed to maintain the confidentiality of said information and would not compete with Our Town as stated in the non-compete contract.
On Nov. 7, the Rousseaus contacted Our Town and informed it they were ending their contract with Our Town – who learned the very same day, through phone calls its Morris County, N.J. distributors, the Rousseaus were operating a similar publication named Home Town. This publication appeared in the same exact geographic territory defined in the contract, and used the same advertisers and distributors.
Our Town maintains the Home Town publication features the same distinctive qualities as its own publication, uses the same vendors and distributors, and targets the very same customer demographic.
For charges breach of tortious interference with contractual and/or prospective business relations and misappropriation of confidential information, trade secrets and vendor relationships/inevitable disclosure, the plaintiff is seeking equitable remedy, compensatory, special and punitive damages, attorney’s fees and costs.
The plaintiff also seeks equitable relief, in the form of: Enjoining the defendants preliminarily and permanently from operating Home Town within a 50-mile radius of the Morris County, N.J. franchise territory outlined in the contract and non-compete agreement; misappropriating or disclosing Our Town’s confidential and proprietary business information; ordering the defendants to return any and all of Our Town’s confidential information or materials they have come to possess from operating Our Town and Home Town; awarding resultant, consequential, compensatory and punitive damages, attorney’s fees and other relief, including both pre-judgment and post-judgment interest.
The plaintiff is represented by James J. Scanlon of Ridley Chuff Kosierowski & Scanlon, in Milford.
The defendants are represented by Heather J. Darling of Darling Law Offices, in Succasunna, N.J.
U.S. District Court for the Middle District of Pennsylvania case 3:16-cv-02484
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at firstname.lastname@example.org