United States District Court, D. Utah, Central Division
MRS. FIELDS FRANCHISING, LLC, a Delaware limited liability company; and MRS. FIELDS FAMOUS BRANDS, LLC, a Delaware limited liability company, dba Famous Brands International, Plaintiffs,
MFGPC, INC., a California corporation, Defendant. MFGPC, INC., a California corporation, Counterclaimant,
MRS. FIELDS FRANCHISING, LLC, a Delaware limited liability company; and MRS. FIELDS FAMOUS BRANDS, LLC, a Delaware limited liability company, dba Famous Brands International, Counterclaim Defendants.
B. PEAD MAGISTRATE JUDGE.
MEMORANDUM DECISION AND ORDER GRANTING PRELIMINARY
N. PARRISH, Judge United States District Court
matter is before the court on the Motion for Preliminary
Injunction (ECF No. 147) filed by Defendant and
Counterclaim Plaintiff MFGPC, Inc. (“MFGPC”)
seeking relief against Plaintiffs and Counterclaim Defendants
Mrs. Fields Franchising, LLC and Mrs. Fields Famous Brands
International (collectively “Mrs.
Fields”) on October 13, 2018. The court conducted a
full evidentiary hearing on the motion on January 14, 2019
Hearing, MFGPC was represented by Brian M. Rothschild and
Cedar Cosner of Parsons Behle & Latimer. Mrs. Fields was
represented by Rod N. Andreason of Kirton McConkie. At the
hearing the court received MFGPC's Exhibits A-H, M-Q, and
S-JJ, and Mrs. Fields' Exhibits 1-33 and 35-45. The court
heard from the following witnesses: Christopher Lindley,
Cameron Broadbent, Bradford Kullberg, Betsy Schmandt, Dustin
Lyman, and Joshua Kirschbaum.
court has reviewed and considered the pleadings and orders on
file, the testimony of the witnesses, exhibits received into
evidence, and the parties' proposed findings of facts and
conclusions of law. The court concludes that MFGPC has
established each of the required elements for the court to
grant temporary injunctive relief: 1) likelihood of success
on the merits; 2) irreparable harm; 3) the potential harm to
MFGPC outweighs any potential harm to Mrs. Fields; and 4) the
requested injunction is not adverse to the public interest.
MFGPC's Motion for Preliminary Injunction is hereby
granted, and MFGPC is hereby restored to all of its rights
under the Trademark License Agreement dated April 30, 2003
between the parties.
OF FACT 
Fields is the owner of the “Mrs. Fields”
trademark (“Trademark”), a highly recognizable
and established brand of snack food cookie products. Prelim.
Inj. Hr'g Tr. at 21:23- 22:6, Jan 14, 2019.
MFGPC is an operating company that was founded by Christopher
Lindley to manufacture and produce prepackaged popcorn
products bearing the Mrs. Fields Trademark. Hr'g Tr.
MFGPC and Mrs. Fields are parties to the Trademark License
Agreement, dated April 30, 2003, a binding and enforceable
written contract between MFGPC and Mrs. Fields comprising 21
single-spaced pages, under which the parties performed for
more than 10 years. Ex. O (the “Trademark License
Agreement”); Memorandum Decision and Order Granting
MFGCP's Motion for Summary Judgment (“Order Mot.
S.J.”) at 2, ECF No. 132; Memorandum Decision and Order
Granting in Part MGFPC's Motion to Amend (“Order
Mot. Amend”) at 3, ECF No. 171; Hr'g Tr. 6:25-7:7,
Under the Trademark License Agreement, Mrs. Fields granted
MFGPC the exclusive, worldwide right to manufacture, market,
and sell prepackaged, popcorn products bearing the Trademark.
Ex. O; Order Mot. S.J. at 2; Hearing Tr. 12:5-14, 12:21-24,
Under the Trademark License Agreement, if Mrs. Fields sells
Mrs. Fields Branded Popcorn, it must source that popcorn
through MFGPC. Additionally, under the Trademark License
Agreement, MFGPC is permitted to sell Mrs. Fields Branded
Popcorn to Mrs. Fields at a profit, based on a most favored
nations pricing structure, which is the lowest price for
which MFGPC sells the product in the marketplace. Ex. O;
Hr'g Tr. 14:9-15:2.
Under the Trademark License Agreement, Mrs. Fields is
prohibited from competing with MFGPC by making Mrs. Fields
branded popcorn or licensing the right to use the Mrs. Fields
Trademark for use on popcorn. Ex. O.; Hr'g Tr. 15:5-8.
The Trademark License Agreement does not prohibit MFGPC from
selling its business or its stock nor does it terminate the
Agreement upon a change in control. Hr'g Tr. 15:12-20.
Fields has additional obligations relating to approval of
packaging and ingredients, which are set forth in the
Trademark License Agreement. Ex. O; Hr'g Tr. 36:24-38:7.
MFGPC acquired the Trademark License Agreement by paying
$450, 000 in licensing fees and guaranteed royalties during
the initial term of the Trademark License Agreement. Hr'g
Trademark License Agreement provided for an “Initial
Term” of five years, beginning on April 30, 2003. At
the end of the Initial Term, the Agreement automatically
renewed for successive five-years terms (“Option
Periods”) as long as MFGPC was not in material breach
and “until such time as either party terminates the
Agreement upon no more [sic] than twenty (20) days prior
written notice.” To be effective, any attempted
termination had to comport with the termination provisions
set out in section 16(b) of the Agreement. See Trademark
License Agreement § 16; Order Mot. S.J. at 4; Hr'g
Tr. 16:3-11, 17:6-18.
MFGPC and Mrs. Fields performed under the Agreement for over
a decade. MFGPC produced gourmet cookie popcorn that it
distributed throughout the United States and internationally
in Canada and Asia. Hr'g Tr. 13:10-22, 20:24-21:19.
MFGPC established relationships with co-packers,
manufacturers, and retailers. Contracts with co-packers,
manufacturers and retailers are established months before
distribution can begin. Hr'g Tr. 151:4-13. MFGPC has
maintained its relationship with co-packers and
manufacturers. Hr'g Tr. 24:2-14. But MFGPC lost its
relationships with retailers when Mrs. Fields wrongfully
terminated its relationship with MFGPC. Hr'g Tr.
December 22, 2014, counsel for Mrs. Fields, Avery Samet, sent
a letter to MFGPC in which Mrs. Fields purported to terminate
the Agreement due to MFGPC's alleged failure to pay
royalties. Order Mot. S.J. at 4. Mrs. Fields then filed the
complaint in this case, seeking a declaration that it had
properly terminated the Trademark License Agreement. In
response, MFGPC filed a counterclaim for breach of contract
and sought a preliminary injunction to prevent the
termination. The district court denied MFGPC's request
for a preliminary injunction and later dismissed MFGPC's
counterclaim for failure to state a claim. Mrs. Fields then
voluntarily dismissed its claim for declaratory relief on
July 18, 2016. MFGPC appealed on August 10, 2016.
Neither Mrs. Fields' current senior director of licensing
and franchising, Besty Schmandt, nor current CEO, Johshua
Kirschbaum, were involved in Mrs. Fields' attempted
termination of MFGPC. Betsy Schmandt has been with Mrs.
Fields for three years (since February 2016). Hr'g Tr.
119:12-120:20. Joshua Kirschbaum first started working with
Famous Brands in September 2017 and became CEO in November of
2018. Hr'g Tr. 194:3-22. Both witnesses joined Mrs.
Fields during the pendency of this litigation.
While MFGPC's appeal was pending, on September 22, 2017,
Mrs. Fields entered into a new license agreement with Perfect
Snax Prime, LLC (“Perfect Snax”), granting
Perfect Snax a license to market and sell popcorn using the
Mrs. Fields Trademark. Hr'g Tr. at 120:24- 121:17; see
also Ex. HH, the “Perfect Snax Agreement.” 15. On
January 30, 2018, the Court of Appeals for the Tenth Circuit
reversed the district court's dismissal of MFGPC's
counterclaim, holding that MFGPC had stated a claim for
breach of contract and reinstating MFGPC's counterclaim
for breach of the Trademark License Agreement. On remand,
MFGPC seeks both specific performance of the Trademark
License Agreement and damages for Mrs. Fields' breach of
the Agreement. Mrs. Fields has no active claim, having
voluntarily dismissed its claim for declaratory relief prior
to the appeal.
After remand, the parties filed cross-motions for summary
judgment. Mrs. Fields filed on February 14, 2018 and MFGPC
filed on May 16, 2018. While the summary motions were
pending, Mrs. Fields continued to license to Perfect Snax the
Trademark to produce and sell popcorn. But Perfect Snax
failed to make required payments and, on July 3, 2018, Mrs.
Fields sent Perfect Snax a notice of default. Mrs. Fields
terminated the Perfect Snax Agreement on August 7, 2018. Ex.
DD; Hr'g Tr. 124:2-6.
little over two weeks later, on August 20, 2018, this court
issued its ruling on the cross-motions for summary judgment.
The court held that under the plain language of the
Agreement, MFGPC had no obligation to pay minimum Guaranteed
Royalties after the initial five-year option period. As a
result, Mrs. Fields' attempted termination of the
Agreement constituted an improper repudiation and total
breach of the Trademark License Agreement by Mrs. Fields.
Order Mot. S.J. at 21. Thus, the court entered summary
judgment in favor of MFGPC on the first three elements of its
counterclaim holding that: 1) the parties' relationship
was governed by a valid contract, 2) MFGPC had substantially
performed, and 3) Mrs. Fields committed an actionable breach
by improperly repudiating the contract. Because MFGPC had not
moved for summary judgment as to the remedy, the court left
the remedy issue to another time. Order Mot. S.J. at 28- 29.
the time the court entered partial summary judgment in favor
of MFGPC, Mrs. Fields was not licensing the Trademark to
Perfect Snax, having terminated its licensing agreement with
Perfect Snax on August 7, 2018, nor had Mrs. Fields licensed
the Trademark to anyone else. Then, seven days after this
court had entered summary judgment against Mrs. Fields, on
August 27, 2018, Mrs. Fields entered into a Reinstatement
Agreement with Perfect Snax, reinstating Perfect Snax's
license under slightly more onerous terms than were contained
in the parties' original agreement. Ex. DD; Hr'g Tr.
124:2-6, 125:10-19, 126:2-4.
Perfect Snax has plans to distribute a competing cookie
popcorn product, Cookie Pop, using the Trademark in mass
retail. Id. at 101:4-103:5, 104:11-105:6, 113:16-25;
Ex. EE, Emails; Ex. 43.
After the reinstatement of the Perfect Snax Agreement,
Perfect Snax again breached the agreement by failing to
submit the required royalty reports. At the hearing on
MFGPC's motion for preliminary injunction, Mrs. Fields
represented that it has the right to terminate the Perfect
Snax Agreement. Hr'g. Tr. 125:20-22, 126:2-4, 16-18.
MFGPC's exclusive right to market Mrs. Fields Branded
Popcorn is being wrongfully denied by Mrs. Fields' grant
of a competing license to Perfect Snax. Id. at
101:4-103:5, 104:11-105:6, 113:16-25; Ex. EE; Ex. 43.
exclusive right to market the Trademark is valuable because
the Mrs. Fields Trademark enjoys extremely high international
brand recognition, high favorability, and stands for premium
quality, indulgence, and deliciousness in the baked goods