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Orderup LLC v. Mizzmenus, LLC

United States District Court, D. Maryland

March 14, 2014

ORDERUP LLC, Plaintiff,
MIZZMENUS, LLC, et al., Defendants.


JAMES K. BREDAR, District Judge.

I. Background

Pending before the Court is Plaintiff's motion for temporary restraining order ("TRO") and preliminary injunction. (ECF No. 2.) The Court previously held a hearing and granted the motion in part as to a TRO. (ECF Nos. 8, 9.) After an additional hearing on March 13, 2014, with both parties and their respective counsel present, the Court now GRANTS the motion for preliminary injunction as to some of the requested relief and DENIES it as to other requested relief.

Incorporated into this Memorandum and Preliminary Injunction are the background and factual allegations from the Court's prior order. The Court will repeat here only those facts necessary to explain its ruling.

Plaintiff OrderUp LLC has sought injunctive relief against Defendants MizzMenus, LLC, Corey Rimmel, and Ryan T. Rich. The individual defendants are the members of MizzMenus, LLC. A portion of OrderUp's request was earlier conceded by Defendants and was the basis for the TRO enjoining Defendants from using or disclosing the Customer Data, which, by the parties' agreement, was and remains the property of OrderUp. That will be carried forward into the preliminary injunction.

Beyond that, OrderUp has also asked the Court to enforce a covenant not to compete in the licensure agreement. Briefly, OrderUp develops, markets, and provides a proprietary online food ordering platform to local entrepreneurs in cities across the United States. (Compl. ¶ 11, ECF No. 1.) Under the agreement, OrderUp provided MizzMenus, the licensee, with a technical platform supporting the licensee's web site in Columbia, Missouri, access to OrderUp's call center that handles questions from restaurants and customers, management of participating restaurants' menus, and processing for orders paid by credit card. ( Id. ¶ 16, 19-21.) OrderUp also provided MizzMenus with guidance and suggestions regarding sales and marketing best practices and techniques, pricing structures, and promotional deals. ( Id. ¶ 17.) The agreement was signed January 5, 2011, and by its terms and later agreement of the parties, the agreement was set to expire April 6, 2014. ( Id. ¶¶ 24, 36.) Instead, MizzMenus abruptly gave notice on February 26, 2014, that it was rescinding the agreement. (Compl. ¶ 38.) None of the preceding allegations were contested at the hearing by Defendants.

OrderUp premises its remaining request for injunctive relief upon the following provision:

During the Term of this Agreement and for a period of two (2) years (provided that if such period is determined by a court of competent jurisdiction to be unenforceable, then the longest enforceable period of time shall be deemed to replace such two (2) year period) thereafter, Licensee agrees not to manage, invest in, work for, consult with or otherwise provide services to any entity or business that offers any product or service that competes with the Service in the Territory.

(Section 11.4, Licensure Agreement, Compl. Ex. 1.)

At the hearing on March 13, OrderUp argued that Defendants have contracted with a competing business to provide the same service once provided by OrderUp. This, in OrderUp's view, constitutes either "working for" a competitor or "otherwise providing services to" a competitor.

The Court notes that the licensure agreement, as explained at the hearing, contemplated that MizzMenus was to be the public face of the local business and that OrderUp was to provide technical, marketing, and administrative support to MizzMenus. As OrderUp's chief executive officer, Chris Jeffrey, testified, the role of MizzMenus was customer acquisition and signing up restaurants to participate in the online ordering business. In Defendants' parlance, MizzMenus was running the "front end" operation and OrderUp was running the "back end" operation, at least in Columbia, Missouri. OrderUp has also developed its own public face through eponymous franchises in various localities across the country, and since the rupture between it and MizzMenus, OrderUp has started one such franchise in Columbia. The Court notes that OrderUp's Columbia franchise has exclusive access to the Customer Data generated during the term of the licensure agreement between the parties. At the hearing, Jeffrey testified that from January 2013 to January 2014, MizzMenus processed 56, 000 transactions in the Columbia territory using OrderUp's platform.

Corey Rimmel, one of the two members of MizzMenus, LLC, testified that, while MizzMenus was a licensee of OrderUp, MizzMenus had an agreement with a business called Mr. Delivery to perform the task of physical delivery of the food from a restaurant to a customer, where the restaurant did not have its own delivery service. Since February 26, 2014, Rimmel said that MizzMenus has used Mr. Delivery as a temporary, basic, order-taking and -processing operation, but that the technology was not much better than simply calling the restaurant on the telephone and directly placing the order. Jeffrey also testified that MizzMenus does not now have the same ability to provide online ordering as it had with the OrderUp platform before the parties went their separate ways. Rimmel acknowledged at the hearing that from February 26 to date, MizzMenus had processed less than a hundred transactions. At the hearing, OrderUp introduced some evidence indicating that Rimmel was an owner of (Mar. 13, 2014, Hrg. Ex. 15, 16)-presumably meaning the Columbia franchise but perhaps meaning the company as a whole-and that such a franchise

offers a turn key business with a full call and dispatch center which handles all the data entry, logistic routing, software, and telephone calls of the business allowing the entrepreneur to focus on marketing and sales instead of the headaches of logistics.

( Id. Ex. 13.) This same description is reflected on the portion of the web site pertaining to "franchise ...

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