Non-Compete Earns a Preliminary Injunction in Case Involving a Community Publication

I started reading this case because the first party’s name was “Our Town” and I have fondness for that play…but it turned out to be a really interesting dispute over a non-compete provision that resulted in a preliminary injunction.

The plaintiff in the case out of Pennsylvania, Our Town v. Rousseau, No. 3:16-CV-2484 (behind paywall), operates a community publication called “Our Town.” The defendants in the case entered into a contract to franchise the “Our Town” brand in a county in New Jersey. The franchise contract contained a non-compete provision prohibiting the defendants from operating any similar business within fifty miles of the franchise location or other “Our Town” publications for a period of three years. 

After a series of political editorials, the defendants decided to terminate the franchise relationship, alleging that “Our Town” was no longer viable in the franchise location and they wished to launch a more “family friendly publication.” On the day that defendants notified the plaintiff they were terminating the agreement, the plaintiff learned that the defendants were operating a similar publication called “Home Town” in the franchise location. The plaintiff, alleging that this was a violation of the non-compete, sought a preliminary injunction. 

The court granted the injunction. The court found that the plaintiff was likely to succeed on the merits of the case. The parties behaved as if they were bound by the franchise agreement, and the non-compete in the agreement was enforceable. The court found it was supported by valid consideration, that fifty miles has been found to be a reasonable geographic restriction, and that three years have been found to be a reasonable time period. Plus, the court found that the non-compete protected the plaintiff’s legitimate business interests and so the plaintiff would be irreparably harmed without the injunction. 

The defendants tried to argue that the injunction would harm them because they would be unable to make a living if the non-compete was enforced. The court noted, however, that this harm was of the defendants’ own making.