Free Motion in Limine - District Court of Colorado - Colorado

Case 1:04-cv-01062-ZLW-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-1062-ZLW-BNB THE QUIZNO'S MASTER LLC and THE QUIZNO'S FRANCHISE COMPANY LLC, Plaintiffs, v. R&B MANAGEMENT GROUP, LLC, an Alabama limited liability company, ROYCE GWIN, an individual, and REBECCA GWIN, an individual Defendants.

PLAINTIFFS' MOTION IN LIMINE TO EXCLUDE EVIDENCE REGARDING OTHER UNRELATED AREA DIRECTORS Plaintiffs, The Quizno's Master LLC and The Quizno's Franchise Company LLC ("Quizno's"), by and through their counsel, hereby move to exclude any evidence offered by Defendants R&B Management Group, LLC, Royce Gwin, and Rebecca Gwinn (altogether "R&B Management") regarding Quizno's transactions and dealings with other unrelated Area Directors. RULE 7.1 CERTIFICATE Counsel for Quizno's conferred with counsel for R&B Management regarding the relief requested herein. Counsel for R&B Management objects to this Motion. I. INTRODUCTION This action arose from Quizno's termination of an Area Marketing Director Agreement ("ADMA"), which agreement had authorized R&B Management to act as an Area Director for

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Quizno's in the Birmingham, Alabama area. In the Final Pretrial Order, R&B Management indicates that it intends to introduce evidence about Quizno's interactions with other Area Directors who represented Quizno's in other areas of the country pursuant to separate contracts. Such "evidence" is completely irrelevant to the issues in this case, namely whether Quizno's termination of the ADMA was proper. Therefore this Court should rule pretrial that the evidence will not be admitted. II. BACKGROUND On May 25, 2004, Quizno's filed the complaint in this action, seeking a declaratory judgment that it had properly terminated the ADMA and damages for R&B Management's breach of the ADMA. R&B Management responded by asserting its own counterclaims for declaratory judgment and damages. The following claims or affirmative defenses remain pending: (1) both parties' competing claims for declaratory judgment regarding whether Quizno's termination of the ADMA was proper; and (2) R&B Management's counterclaims alleging that (a) Quizno's breached the ADMA; (b) Quizno's breached the implied covenant of good faith and fair dealing; (c) Quizno's fraudulently or negligently represented to R& B Management that they would not terminate the ADMA regardless of R&B Management's defaults; (d) Quizno's waived or should be estopped from terminating the ADMA; and (e) the terms of the ADMA were unconscionable.
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For instance, R&B Management lists Peter Tykra and Roger Grieco as possible witnesses who may "testify regarding their experience with Quizno's as area directors and statements and representations made by Quizno's officials," as well as exhibits relating to Quizno's termination of other Area Director contracts and related correspondence (Final Pretrial Order, at 14, 23-24.) (New Exhibit List, Exhibits AS and AT).

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The issue relating to Quizno's remaining claim is very straight forward. The ADMA required R&B Management to open a certain number of stores per quarter. The ADMA gave Quizno's the right to terminate the ADMA if R&B Management did not meet its opening quota and failed to cure that default after notice. ADMA §§ 4.1 and 17.2(c). R&B Management was significantly behind in the number of required openings and falling further behind. At the time of termination, in January 2004 R& B Management was required to have 28 stores open ­ there were only 10. Quizno's had provided notice and opportunity to cure, but R&B Management failed to cure and thereafter Quizno's exercised its right to terminate the contract.
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According to the final pretrial order, R&B Management's case relies on a handful of allegations. Specifically, R&B Management claims its territory did not fit Quizno's standards for demographics because it was a rural market; that Quizno's previously sent several notices of default without terminating the ADMA; and that Quizno's represented to R&B Management that Quizno's would not terminate the ADMA if R&B Management was working hard and "closing the gap." (Final Pretrial order, at 4-7.) See also Fed. R. Civ. P. 15(e) (the final pretrial order "shall control the subsequent course of the action unless modified by a subsequent order"). III. ARGUMENT Evidence that is not "logically relevant to a material issue in the case" should be excluded under Fed. R. Evid. 402. See United States v. Castillo, 140 F.3d 874, 882 (10th Cir. 1998). See

Quizno's maintains that it terminated the ADMA for additional reasons, as well. For example, Quizno's had also sent a notice of default for R & B Management's breach for not making the required advertising expenditures.

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also Richardson v. Missouri Pacific R. Co., 186 F.3d 1273, 1277 (10th Cir. 1999) (citing Fed. R. Evid. 402.) ("[o]nly evidence relevant to a claim or defense is admissible"). Courts have consistently found that, in the context of a franchise dispute, a franchisor's transactions with third parties are irrelevant to its duties and obligations owed under an unrelated agreement. For instance, in Original Great American Chocolate Chip Cookie Company, Incorporated v. River Valley Cookies, Limited, 970 F.2d 273, 278 (7th Cir. 1992), a franchisor had terminated the plaintiff's franchise agreement for plaintiff's defaults under the agreement, including failures to make timely payments and failing restaurant inspections. The plaintiff argued that the termination was wrongful, in part because the defendant had treated other franchisees more leniently in the past. Id. at 278. The Seventh Circuit rejected this argument, noting that it was "no more a defense to [the plaintiff's] breach of contract than laxity in enforcing the speed limit is a defense to a speeding ticket." Id. See also McDonald's Corp. v. Roberston, 147 F.3d 1301, 1309 (11th Cir. 1998) (finding that, because the franchisee had materially breached the franchise agreement, "it does not matter whether [franchisor] also possessed an ulterior, improper motive for terminating the . . . franchise agreement"); In re Sizzler Rest. Int'l, Inc., 225 B.R. 466, 475 (Bankr. C.D. Cal. 1998) (evidence concerning the management assistance purportedly provided to other franchisees "is not relevant to whether [franchisor] breached its obligations to provide management assistance to [franchisee]"); Mr. Steak, Inc. v. Belleview Steak, Inc, 555 P.2d 179, 181-82 (Colo. Ct. App. 1976) (finding that franchisor's "actions with regard to other franchises cannot sustain a finding that it waived its rights under the specific terms of its agreement with these defendants").

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Indeed, in a very similar situation to that here, a federal district court rejected the attempt of an area distributor to rely on evidence regarding the franchisor's treatment of other area distributors. In that case, styled Bonanza International, Inc. v. Restaurant Management Consultants, Inc., 625 F. Supp. 1431, 1433, 1447 (E.D. La. 1986), an area distributor asserted a counterclaim against a franchisor for unjust termination of the area distributor agreement, claiming that the franchisor's treatment of other area directors demonstrated that the franchisor had acted in bad faith. The court rejected the area distributor's argument: By definition, compliance or non-compliance with this covenant [of good faith and fair dealing] can only be determined by reviewing the actions of the particular parties in relation to each other under the particular contract at issue. Whether or not [franchisor] treated defendants differently than other area distributors has no bearing on whether [franchisor] acted fairly and in good faith in their treatment of defendants under the Area Distributor's Agreement. Id. at 1447. As was the case in Bonanza International, whether Quizno's breached its obligations-- express or implied--must be determined by reviewing the actions of Quizno's and R&B Management in relation to each other under the ADMA. See id. at 1447. Contracts, dealings or transactions between Quizno's and other Area Directors have no relation to the actions taken by the parties under the ADMA, and has no tendency to demonstrate one way or the other whether Quizno's termination of the ADMA was proper or not. Indeed, as R&B Management's allegations in the Final Pretrial Order demonstrate, the relevant proof in this case will revolve entirely around what was said and done between Quizno's and R&B Management. (Final Pretrial order, at 4-7.)

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Furthermore, even if such evidence had some marginal value, it should be excluded under Fed. R. Evid. 403 (relevant evidence may be excluded if "its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence"). In particular, the admission of such evidence would cause undue delay and a waste of time, unnecessarily prolonging the trial without advancing review of any of the material issues in this case. See Aerotech Res., Inc. v. Dodson Aviation, Inc., 91 Fed. Appx. 37, 46 (10th Cir. Jan. 6. 2004) (the district court has broad discretion in determining whether to exclude evidence under Fed. R. Evid. 403) (unpublished table decision) (citing United States v. Youts, 229 F.3d 1312, 1319 (10th Cir. 2000)).
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IV. CONCLUSION WHEREFORE, Quizno's moves the Court to issue an order excluding any evidence relating to Quizno's contracts, correspondence, transactions and dealings with other Area Directors, because such evidence is irrelevant and would simply extend the length of the trial for no purpose.

Additionally, by inquiring into Quizno's transactions with other Area Directors, R&B Management may be seeking to introduce character evidence, which therefore should be excluded under Fed. R. Evid. 404(b). See Youts, 229 F.3d at 1317 (proponent of evidence must demonstrate that the proffered evidence is relevant to an issue other than character and must "articulate precisely the evidentiary hypothesis by which a fact of consequence may be inferred" from the other acts evidence).

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Dated this 4th day of January 2005 Respectfully submitted, s/ Leonard H. MacPhee _________________ Leonard H. MacPhee Attorney for Plaintiffs Perkins Coie LLP 1899 Wynkoop Street, Suite 700 Denver, CO 80202 Telephone: (303) 291-2300 Facsimile: (303) 291-2400 Email: [email protected] and Fredric A. Cohen DLA Piper Rudnick Gray Cary 203 North LaSalle Street, Suite 1800 Chicago, IL 60601 (312) 368-4000

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CERTIFICATE OF SERVICE I hereby certify that on January 4, 2006 I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email addresses:
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Gilbert R. Engle [email protected] [email protected]\ Eldon E. Silverman [email protected] [email protected]

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and hereby certify that I have mailed the foregoing to the following non EM/ECF participant via U.S. Mail, postage prepaid: J.E. Sawyer, Jr. Attorney at Law 203 South Edwards Street Enterprise, AL 36330

s/ Leonard H. MacPhee Leonard H. MacPhee Attorney for Plaintiffs Perkins Coie LLP 1899 Wynkoop Street, Suite 700 Denver, CO 80202 Telephone: (303) 291-2300 Facsimile: (303) 291-2400 Email: [email protected]

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