Los Angeles Office Secures Victory and Attorneys’ Fees in Unusual Franchise Dispute

Los Angeles, Calif. (December 11, 2019) - Los Angeles Partner Daniel C. DeCarlo and Associate Esther Y. Shin recently obtained a victory at trial, including sanctions in the form of all of our clients' attorneys' fees. The decision came after a 3-day bench trial before Federal Judge David O Carter. The case arose from unusual claims regarding trademark infringement and violations of various franchise and license agreements between our clients and the franchisor of martial arts studios. In the middle of the litigation, the plaintiff amended its claims to include claims that one of our clients had engaged in statutory rape which provided the plaintiff with grounds to terminate the operative agreements and seek various forms of monetary relief. 

We aggressively pursued the claims and ultimately proved that the claims were fabricated and that the president of the plaintiff's company was complicit in using the false allegations to leverage a settlement. In the course of the litigation, it was also determined by the court that the plaintiff's president repeatedly lied under oath and suborned the perjury of another witness. 

During trial, the court took the unusual step of piercing the attorney-client privilege and forced both the plaintiff and its counsel to reveal attorney-client communications about exculpatory evidence that had been withheld from our clients. The court's ruling (which can be found here) expressly found that the plaintiff had committed a fraud on the court, that the plaintiff's president had lied under oath, and had engaged in other wrongdoing that could not "go unpunished given the many people who have suffered from his actions including [the defendants] and the various family members, friends and loved ones who have been impacted by this litigation." 

The court found our client to be the prevailing party on all counts brought by the plaintiff, and further found that the plaintiff had engaged in conduct worthy of sanctions and thus awarded our client its full attorneys' fees. The case was covered extensively by the Los Angeles Daily Journal. The Daily Journal's December 6, 2019 article can be found here and other articles are included here and here (a subscription is required to access this content).