News Briefs

Prospective Franchisor Sues Patent Office

Needing a strong brand name in order to pursue ambitions of building a franchised restaurant chain, a Philadelphia deli has sued the U.S. Patent and Trademark Office (“PTO”) for denying a trademark for a cheesesteak sandwich. Campo's Deli at Market Inc. filed suit in U.S. District Court in Philadelphia on Oct. 4, after losing two appeals to the PTO Trademark Trial and Appeal Board.

Campo's applied in June 2009 to trademark the name “Philadelphia's Cheesesteak.” The PTO rejected the application on two grounds: similarity with other trademarks, and the use of a geographically descriptive name. The PTO Appeal Board noted in its Aug. 7 finding, which upheld the decision of the patent examiner, that three trademarks have been registered with similar names, and public confusion might occur if additional similar marks are granted. Those three marks are Philadelphia's Cheesesteak Co., Philadelphia Cheesesteak Co., and The Original Philadelphia Cheesesteak Co.. Campo's argued that the other marks are used in reference to company names (hence the “Co.” in the three marks), not individual sandwiches. The PTO rejected Campo's claim that “there is no likelihood of confusion between the requested trademark for a type of sandwich ' 'Philadelphia's Cheesesteak' ' and three marks for a company which produces wholesale sliced meat.”

On the issue of geographic descriptiveness, the patent board found that the word “Philadelphia's” is a reference to the city in which Campo's is located and, in fact, “underscores the geographic significance of the mark.” It rejected the idea advanced by Campo's that “Philadelphia's” indicates a mark of quality, rather than a mark of geography.

Panera Franchisee Settles Discrimination Lawsuit

A Panera Bread franchisee has agreed to settle a lawsuit filed by a black former employee who alleged that he was discriminated against when he worked in a Panera restaurant in Pittsburgh. Covelli Enterprises, based in Warren, OH, agreed to payments of $76,000 to former employee Guy Vines and his counsel, in a settlement approved by Chief Judge Gary Lancaster of the U.S. District Court for the Western District of Pennsylvania.

Under its settlement agreement, Covelli denied that discrimination occurred. The company did not respond to an inquiry from FBLA, but the settlement agreement includes the statement: “Covelli maintains that it is an equal opportunity employer that does not discriminate, nor has it ever discriminated, in its employment decisions.”

All current or former black employees who worked for Covelli for at least a year between Jan. 11, 2008 and Jan. 11, 2012 can seek compensation at a rate of $0.70/hour for each hour they worked above one year. Compensation was set at that amount to reflect the average raise a worker could earn after a promotion. According to Samuel Cordes, an attorney who represented Vines, as many as 300 other black workers are eligible to file for claims. Notices have been placed in newspapers in six states where Covelli Enterprises owns Panera franchises.

The allegation of racial discrimination came to light when a white manager of a Panera restaurant, Scott Donatelli, claimed he was fired in 2011 for fighting against discriminatory practices at the restaurant. Donatelli said he was fired for allowing Vines to work at the cash register, over the objections of a district manager who said that blacks could not work in jobs where they would be seen by patrons. The manager said that it was the policy of Sam Covelli, owner of the franchises, and other members of management. Donatelli's lawsuit was settled for an undisclosed amount, but while that lawsuit was active, Vines filed in January 2012 to claim that he was kept in lower-paying jobs in the kitchen.

Final settlement is scheduled for December. Vines will receive $10,000 for being the lead plaintiff, and Cordes will receive $66,000 in legal fees.

International Hooters Franchisee Sued for Securities Fraud

A new South Florida federal lawsuit alleges that an international franchisee and minority owner of the Hooters restaurant brand defrauded shareholders by incorrectly stating that its South African operations had been audited. A proposed securities class action lawsuit has been filed in Florida against Chanticleer Holdings (Nasdaq: HOTR), its officers and directors, the two underwriters of its securities, Dawson James Securities and Merriman Capital, and the company's independent public accounting firm, Creason & Associates. Chanticleer owns six Hooters franchised restaurants, four in South Africa and one each in Hungary and Brazil.

In 2011, Chanticleer was one of a group of private investors that acquired Hooters of America from a private equity fund. At the time, Chanticleer stated that it had been audited in South Africa, where it operated four franchised Hooters. In June 2012, it sold 2.4 million shares for a little more than $10 million to the public. On Sept. 10, 2012, Chanticleer announced that it was not audited in South Africa, and Nasdaq suspended trading in the company; trading was still suspended as of late October, when FBLA went to press.

“Common stock and warrants cannot contain material misrepresentations of fact, and our lawsuit alleges that those of Chanticleer Holdings did,” said Phillip Kim, attorney for The Rosen Law Firm (New York, NY), which filed the class action lawsuit. “A majority of the company's revenues was in its South Africa operations, and they were not audited.”

Chanticleer has hired a new auditing firm in South Africa and replaced its CFO, said Shannon DiGennaro, vice president of investor and media relations. But she could not discuss any developments in the litigation with FBLA.

The deadline for joining the proposed class action is Dec. 12, 2012.

Texas Wendy's Franchisee Settles EEOC Complaint

CTW L.L.C., a Wendy's franchisee in Texas, settled a complaint filed by the Equal Employment Opportunity Commission (“EEOC”) on behalf of a cook who was denied a job because he is hearing-impaired. The settlement includes a payment of $41,500 by CTW to Michael Harrison, Jr., who interviewed for a job at a Wendy's in Killeen, TX, and was allegedly told by a manager that he would not be hired because of his disability.

“Michael Harrison said that after successfully interviewing with the Wendy's shift manager, he attempted to complete the interview process by interviewing with the general manager via Texas Relay, a telephonic system utilized by people with hearing impairments,” according to a statement released by the EEOC. “Harrison told the EEOC that during the Texas Relay call he was told by the general manager that 'there is really no place for someone we cannot communicate with.'” Harrison had worked at a fast-food restaurant for two years previously.

Under the consent decree, CTW also will expand its employee training program about compliance with the Americans with Disabilities Act.

The EEOC's lawsuit was Case No. 6-12-CV-091 in U.S. District Court for the Western District of Texas, Waco Division.

Prospective Franchisor Sues Patent Office

Needing a strong brand name in order to pursue ambitions of building a franchised restaurant chain, a Philadelphia deli has sued the U.S. Patent and Trademark Office (“PTO”) for denying a trademark for a cheesesteak sandwich. Campo's Deli at Market Inc. filed suit in U.S. District Court in Philadelphia on Oct. 4, after losing two appeals to the PTO Trademark Trial and Appeal Board.

Campo's applied in June 2009 to trademark the name “Philadelphia's Cheesesteak.” The PTO rejected the application on two grounds: similarity with other trademarks, and the use of a geographically descriptive name. The PTO Appeal Board noted in its Aug. 7 finding, which upheld the decision of the patent examiner, that three trademarks have been registered with similar names, and public confusion might occur if additional similar marks are granted. Those three marks are Philadelphia's Cheesesteak Co., Philadelphia Cheesesteak Co., and The Original Philadelphia Cheesesteak Co.. Campo's argued that the other marks are used in reference to company names (hence the “Co.” in the three marks), not individual sandwiches. The PTO rejected Campo's claim that “there is no likelihood of confusion between the requested trademark for a type of sandwich ' 'Philadelphia's Cheesesteak' ' and three marks for a company which produces wholesale sliced meat.”

On the issue of geographic descriptiveness, the patent board found that the word “Philadelphia's” is a reference to the city in which Campo's is located and, in fact, “underscores the geographic significance of the mark.” It rejected the idea advanced by Campo's that “Philadelphia's” indicates a mark of quality, rather than a mark of geography.

Panera Franchisee Settles Discrimination Lawsuit

A Panera Bread franchisee has agreed to settle a lawsuit filed by a black former employee who alleged that he was discriminated against when he worked in a Panera restaurant in Pittsburgh. Covelli Enterprises, based in Warren, OH, agreed to payments of $76,000 to former employee Guy Vines and his counsel, in a settlement approved by Chief Judge Gary Lancaster of the U.S. District Court for the Western District of Pennsylvania.

Under its settlement agreement, Covelli denied that discrimination occurred. The company did not respond to an inquiry from FBLA, but the settlement agreement includes the statement: “Covelli maintains that it is an equal opportunity employer that does not discriminate, nor has it ever discriminated, in its employment decisions.”

All current or former black employees who worked for Covelli for at least a year between Jan. 11, 2008 and Jan. 11, 2012 can seek compensation at a rate of $0.70/hour for each hour they worked above one year. Compensation was set at that amount to reflect the average raise a worker could earn after a promotion. According to Samuel Cordes, an attorney who represented Vines, as many as 300 other black workers are eligible to file for claims. Notices have been placed in newspapers in six states where Covelli Enterprises owns Panera franchises.

The allegation of racial discrimination came to light when a white manager of a Panera restaurant, Scott Donatelli, claimed he was fired in 2011 for fighting against discriminatory practices at the restaurant. Donatelli said he was fired for allowing Vines to work at the cash register, over the objections of a district manager who said that blacks could not work in jobs where they would be seen by patrons. The manager said that it was the policy of Sam Covelli, owner of the franchises, and other members of management. Donatelli's lawsuit was settled for an undisclosed amount, but while that lawsuit was active, Vines filed in January 2012 to claim that he was kept in lower-paying jobs in the kitchen.

Final settlement is scheduled for December. Vines will receive $10,000 for being the lead plaintiff, and Cordes will receive $66,000 in legal fees.

International Hooters Franchisee Sued for Securities Fraud

A new South Florida federal lawsuit alleges that an international franchisee and minority owner of the Hooters restaurant brand defrauded shareholders by incorrectly stating that its South African operations had been audited. A proposed securities class action lawsuit has been filed in Florida against Chanticleer Holdings (Nasdaq: HOTR), its officers and directors, the two underwriters of its securities, Dawson James Securities and Merriman Capital, and the company's independent public accounting firm, Creason & Associates. Chanticleer owns six Hooters franchised restaurants, four in South Africa and one each in Hungary and Brazil.

In 2011, Chanticleer was one of a group of private investors that acquired Hooters of America from a private equity fund. At the time, Chanticleer stated that it had been audited in South Africa, where it operated four franchised Hooters. In June 2012, it sold 2.4 million shares for a little more than $10 million to the public. On Sept. 10, 2012, Chanticleer announced that it was not audited in South Africa, and Nasdaq suspended trading in the company; trading was still suspended as of late October, when FBLA went to press.

“Common stock and warrants cannot contain material misrepresentations of fact, and our lawsuit alleges that those of Chanticleer Holdings did,” said Phillip Kim, attorney for The Rosen Law Firm (New York, NY), which filed the class action lawsuit. “A majority of the company's revenues was in its South Africa operations, and they were not audited.”

Chanticleer has hired a new auditing firm in South Africa and replaced its CFO, said Shannon DiGennaro, vice president of investor and media relations. But she could not discuss any developments in the litigation with FBLA.

The deadline for joining the proposed class action is Dec. 12, 2012.

Texas Wendy's Franchisee Settles EEOC Complaint

CTW L.L.C., a Wendy's franchisee in Texas, settled a complaint filed by the Equal Employment Opportunity Commission (“EEOC”) on behalf of a cook who was denied a job because he is hearing-impaired. The settlement includes a payment of $41,500 by CTW to Michael Harrison, Jr., who interviewed for a job at a Wendy's in Killeen, TX, and was allegedly told by a manager that he would not be hired because of his disability.

“Michael Harrison said that after successfully interviewing with the Wendy's shift manager, he attempted to complete the interview process by interviewing with the general manager via Texas Relay, a telephonic system utilized by people with hearing impairments,” according to a statement released by the EEOC. “Harrison told the EEOC that during the Texas Relay call he was told by the general manager that 'there is really no place for someone we cannot communicate with.'” Harrison had worked at a fast-food restaurant for two years previously.

Under the consent decree, CTW also will expand its employee training program about compliance with the Americans with Disabilities Act.

The EEOC's lawsuit was Case No. 6-12-CV-091 in U.S. District Court for the Western District of Texas, Waco Division.