United States District Court, D. Utah
MEMORANDUM DECISION AND ORDER DENYING DEFENDANT'S
MOTION TO DISMISS
N. Parrish, United States District Court Judge.
the court is defendant Apex Energy Group LLC's motion to
dismiss the lawsuit filed by plaintiff Ionracas, LLC as moot.
[Docket 20.] The court DENIES the motion.
notified Ionracas of its intent to terminate a franchise
agreement between them unless Ionracas paid overdue royalty
fees and signed a modification that would make it easier to
terminate the franchise agreement if Ionracas were late on
any future royalty payments. Ionracas paid the overdue
royalty fee but refused to sign the modification. Apex
continued to threaten to terminate the franchise agreement
unless Ionracas signed the modification.
filed a suit and motion for a temporary restraining order
(TRO) and a preliminary injunction enjoining Apex from
terminating the franchise agreement. The court granted
Ionracas's request for a TRO and scheduled a hearing on
the motion for a preliminary injunction. Apex subsequently
filed a motion to dismiss Ionracas's action. Apex
represents that it has withdrawn its termination notice and
argues that Ionracas's claims are therefore moot.
opposes the motion to dismiss. It represents that Apex has
refused to provide any assurances that it will not renew its
attempts to terminate the franchise agreement once this
action is dismissed. Ionracas argues, therefore, that the
voluntary cessation doctrine prevents this case from being
moot. Under this doctrine, “[t]he voluntary cessation
of challenged conduct does not ordinarily render a case moot
because a dismissal for mootness would permit a resumption of
the challenged conduct as soon as the case is
dismissed.” Knox v. Serv. Employees Int'l
Union, Local 1000, 567 U.S. 298, 307 (2012).
Accordingly, the standard “for determining whether a
case has been mooted by the defendant's voluntary conduct
is stringent: ‘A case might become moot if subsequent
events made it absolutely clear that the allegedly wrongful
behavior could not reasonably be expected to
recur.'” Friends of the Earth, Inc. v. Laidlaw
Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000).
reply brief, Apex does not provide any assurances that it
will not simply reissue a termination notice. Nor does it
otherwise attempt to carry its heavy burden of showing that
the conduct challenged by Ionracas “could not
reasonably be expected to recur.” Id. Instead,
Apex argues that the voluntary cessation doctrine does not
apply to this case. Apex notes that some courts have stated
that the voluntary cessation rule generally applies when a
defendant halts “unlawful conduct.” See
Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013)
(“[A] defendant cannot automatically moot a case simply
by ending its unlawful conduct once sued.”). Apex
contends that because breach of a contract is not illegal or
unlawful, the voluntary cessation rule cannot prevent a
defendant from mooting an injunctive relief action by
stopping the breaching conduct. See IMG Fragrance Brands,
LLC v. Houbigant, Inc., 679 F.Supp.2d 395, 407 (S.D.N.Y.
2009) (“As for the License Agreement, any alleged
inducements by the Zohar Funds or Patriarch are also only
breach of contract claims, not illegal activity.”). In
other words, Apex argues that a party breaching a contract is
free to avoid injunctions by briefly ceasing the conduct,
only to reinitiate the conduct once the case has been
the cases cited by Apex support this proposition. Although
some courts have used the term “unlawful conduct”
or “illegal practice” when describing the
voluntary cessation doctrine in cases where the enjoined
party's conduct was contrary to law, these courts have
not limited the application of the doctrine to cases
involving unlawful conduct. See Already, 568 U.S. at
91; Brown v. Buhman, 822 F.3d 1151, 1166 (10th Cir.
2016); Chihuahuan Grasslands All. v. Kempthorne, 545
F.3d 884, 892 (10th Cir. 2008). Moreover, courts have also
used broader terms when discussing the voluntary cessation
doctrine. The U.S. Supreme Court and the Tenth Circuit have
held that this doctrine applies when a party ceases the
“challenged conduct, ” “allegedly wrongful
behavior, ” or “offensive conduct.”
Knox, 567 U.S. at 307; Friends of the
Earth, 528 U.S. at 189; Rio Grande Silvery Minnow v.
Bureau of Reclamation, 601 F.3d 1096, 1115 (10th Cir.
2010). Indeed, courts have specifically applied the voluntary
cessation doctrine in cases where the enjoined conduct was a
breach of contract. CW Gov't Travel, Inc. v. United
States, 61 Fed.Cl. 559, 580-81 (2004); Emery
Worldwide Airlines, Inc. v. United States, 47 Fed.Cl.
461, 469 (2000) (“A defendant's voluntary cessation
of a challenged practice or conduct-in this case contract
breaches-does not necessarily deprive a federal court of its
power to determine the legality of the practice.”).
the court concludes that the voluntary cessation doctrine
applies where the enjoined conduct is a breach of contract or
threatened breach of contract. Given that Apex has made no
attempt to carry its burden of showing that the challenged
conduct in this case- threatening to terminate the franchise
agreement-“could not reasonably be expected to reoccur,
” Friends of the Earth, 528 U.S. at 189, its