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Steak ’n Shake loses appeal over franchisee’s independent pricing

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A longtime Steak ’n Shake franchisee who sued the chain after it insisted on setting prices for menu items prevailed again Friday as the 7th Circuit Court of Appeals affirmed an Illinois federal court’s ruling in the franchisee’s favor.

The U.S. District Court for the Central District of Illinois granted franchisee Stuller Inc. a preliminary injunction to stop implementation of a policy Steak ’n Shake announced in 2010 in which the company set prices for all menu items at its company-owned and franchise stores.

“The record contains sufficient evidence to find, as a threshold matter, that Stuller would suffer irreparable harm if it was forced to implement Steak N Shake’s pricing policy. Specifically, Stuller has presented evidence that the policy would be a significant change to its business model and that it would negatively affect its revenue, possibly even to a considerable extent,” 7th Circuit Judge Daniel Manion wrote for the unanimous panel.

Springfield, Ill.-based Stuller operate five Illinois Steak ’n Shake restaurants under franchise agreements with predecessors that date back to 1939, making it the oldest franchise in the country, according to Manion’s opinion. “In all that time, Stuller has had the ability to set menu prices,” he wrote.

Stuller sued when Steak ’n Shake said it would terminate the franchises if Stuller refused to adopt a new policy of uniform prices and promotions. It won the injunction while the court considers Stuller’s request for a declaratory judgment that it wasn’t required to comply with the policy. Stuller also accused Steak ’n Shake of breach of contract and violation of the Illinois Franchise Disclosure Act.  

In its interlocutory appeal, Indianapolis-based Steak ’n Shake argued that the injunction should not have been granted, citing the court’s ruling in Second City Music, Inc. v. City of Chicago, 333 F.3d 846, 850 (7th Cir. 2003) that stated “Injury caused by failure to secure a readily available license is self-inflicted, and self-inflicted wounds are not irreparable injury.”

“Steak N Shake misreads our decision in Second City,” Manion wrote.

“We acknowledge that Steak N Shake contests the validity and strength of the evidence presented by Stuller, but that argument goes to the ‘sliding scale analysis’ conducted by a court in deciding to grant or deny a preliminary injunction, and not to Stuller’s threshold requirements. In addition, if Stuller implemented Steak N Shake’s policy and subsequently prevailed on the merits of its case, it would be difficult to reestablish its previous business model without a loss of goodwill and reputation. Because this is harm that cannot be ‘fully rectified by the final judgment after trial,’ it is irreparable,” the court ruled.

In a footnote, the court said, “We also note that a review of the district court’s docket sheet indicates that the district court issued an opinion on July 12, 2012 denying Steak N Shake’s motion for summary judgment on all the claims, granting Stuller’s motion for summary judgment (for a declaratory judgment), and denying Stuller’s motion for summary judgment on (breach claims) and setting a trial date in September on the issue of damages. Because Stuller’s case now has a greater likelihood of success, the balance of harms when granting an injunction weighs even more in Stuller’s favor.”


 

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  1. Being on this journey from the beginning has convinced me the justice system really doesn't care about the welfare of the child. The trial court judge knew the child belonged with the mother. The father having total disregard for the rules of the court. Not only did this cost the mother and child valuable time together but thousands in legal fees. When the child was with the father the mother paid her child support. When the child was finally with the right parent somehow the father got away without having to pay one penny of child support. He had to be in control. Since he withheld all information regarding the child's welfare he put her in harms way. Mother took the child to the doctor when she got sick and was totally embarrassed she knew nothing regarding the medical information especially the allergies, The mother texted the father (from the doctors office) and he replied call his attorney. To me this doesn't seem like a concerned father. Seeing the child upset when she had to go back to the father. What upset me the most was finding out the child sleeps with him. Sometimes in the nude. Maybe I don't understand all the rules of the law but I thought this was also morally wrong. A concerned parent would allow the child to finish the school year. Say goodbye to her friends. It saddens me to know the child will not have contact with the sisters, aunts, uncles and the 87 year old grandfather. He didn't allow it before. Only the mother is allowed to talk to the child. I don't think now will be any different. I hope the decision the courts made would've been the same one if this was a member of their family. Someday this child will end up in therapy if allowed to remain with the father.

  2. Ok attorney Straw ... if that be a good idea ... And I am not saying it is ... but if it were ... would that be ripe prior to her suffering an embarrassing remand from the Seventh? Seems more than a tad premature here soldier. One putting on the armor should not boast liked one taking it off.

  3. The judge thinks that she is so cute to deny jurisdiction, but without jurisdiction, she loses her immunity. She did not give me any due process hearing or any discovery, like the Middlesex case provided for that lawyer. Because she has refused to protect me and she has no immunity because she rejected jurisdiction, I am now suing her in her district.

  4. Sam Bradbury was never a resident of Lafayette he lived in rural Tippecanoe County, Thats an error.

  5. Sam Bradbury was never a resident of Lafayette he lived in rural Tippecanoe County, Thats an error.

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