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Kramon & Graham delivers major victory in franchise case

Louis MalickGeoff GenthJohn BourgeoisKramon & Graham obtained a substantial victory after six days of trial before Judge J. Frederick Motz in the United States District Court for the District of Maryland. The case -- between a franchisor and a franchisee -- concerned two contracts for the creation and sale of intellectual property rights for domestic and international training programs. The plaintiff sued Kramon & Graham’s client, the franchisor, for breach of contract and fraud, seeking compensatory damages in excess of $85 million, punitive damages, injunctive relief, and attorneys’ fees.

During eight years of litigation -- which began in 2009 and lasted through four district judges and two magistrate judges -- the defense demonstrated that the plaintiff had waived its right to a trial by jury, was not entitled to punitive damages, and could not sustain its claims under one of the two contracts. Moreover, the defense uncovered facts that resulted in the Court permitting the defendant to present counterclaims on the virtual eve of trial. After defeating plaintiff’s attempt to take an interlocutory appeal, the case finally went to trial in 2017.

After six days of trial, the plaintiff agreed to a settlement in a sum representing less than ½ of the attorneys’ fees plaintiff contended it was due under contractual fee-shifting provisions, and less than 1% of the compensatory damages plaintiff’s expert opined were due. The settlement also achieved the client’s principal goal -- a complete termination of the relationship and all contracts between the parties, which was not likely to be achieved by litigation.

Kramon & Graham principals John A. Bourgeois and Geoffrey H. Genth tried the case, with support from firm associate Louis P. Malick and assistance from Russell D. Karpook of the law firm Bouland & Brush LLC.