Dale's Restaurants Et. Al. v. Dales Restaurant Florence Et. Al.

-------
IN THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN QF ALABAMA
I 5I V"
corporation, DALE'S SAUCES, )
INC., a )
. .. :
)
Plaintiffs, )
) Case No.
v. )
CV-13-JEQ-1000-S
)
DALES RESTAURANT )
FLORENCE, LLC, a limited liability )
company, DALES PROPERTIES - )
FLORENCE, LLC, a limited liability )
company, )
)
Defendants. )
COMPLAINT
COME NOW Dale's Restaurants, Inc. and Dale's Sauces, Inc. and, for their
Complaint against Dales Restaurants - Florence, LLC and Dales Properties - Florence,
LLC, state as follows:
PARTIES
1. Dale's Restaurants, Inc. ("Dale's Restaurants") is a corporation organized
under the laws of the State of Delaware and registered to do business in the State of
Alabama. The address of Dale's Restaurants principal place of business is 2311
Highland Ave, Suite 343, Birmingham, Alabama 35205. Dale's Restaurants' principal
place of business is in Jefferson County, Alabama. Dale's Restaurants is wholly owned
by Dale's Sauces, Inc.
2091882 v3
FILED
2013 May-28 AM 10:06
U.S. DISTRICT COURT
N.D. OF ALABAMA
Case 2:13-cv-01000-JEO Document 1 Filed 05/24/13 Page 1 of 39
2. Dale's Sauces, Inc. ("Dale's Sauces" and, together with Dale's Restaurants,
"Plaintiffs") is a corporation organized under the laws of the State of Delaware and
registered to do business in the State of Alabama. The address of Dale's Sauces
principal place of business is 2311 Highland Ave, Suite 343, Birmingham, Alabama
35205. Dale's Sauces' principal place of business is in Jefferson County, Alabama.
3. Dales Restaurants - Florence, LLC ("DRF" or "Defendant") is a limited
liability company organized under the laws ofthe State of Tennessee.
4. The address of DRF's principal place of business is 1001 Mitchell
Boulevard, Florence, Alabama 35630. DRF's mailing address is 5109 Harding Pike,
Nashville, Tennessee 37205. DRF may be served with process in this action by
directing same to its registered agent, Al Thomas, at 5109 Harding Pike, Nashville,
Tennessee 37205.
5. Dales Properties - Florence, LLC ("DPF
I1
and, together with DRF,
I1Defendants") is a limited liability company organized under the laws of the State of
Tennessee.
6. The address ofDPF's principal place of business and its mailing address is
5109 Harding Pike, Nashville, Tennessee 37205. DPF may be served with process in
this action by directing same to its registered agent, Al Thomas, at 5109 Harding Pike,
Nashville, Tennessee 37205.
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7. On infonnation and belief, there are three members of DRF: Allison
("Al") M. Thomas ("Thomas"), Sam Sanchez ("Sanchez"), and Charles G. Tompkins,
Jr. ("Tompkins"). On infonnation and belief, Thomas and Sanchez are resident citizens
ofthe State ofTennessee and Tompkins is a resident citizen ofthe State of Alabama.
JURISDICTION AND VENUE
8. This Court has jurisdiction over the claims asserted by Plaintiffs under 28
U.S.C. 1331 and 1338(a) because Plaintiffs' claims and right to relief arise primarily
under the Lanham Act, 15 U.S.C. 1051-1127. This Court additionally has
supplemental jurisdiction over the Plaintiffs' state law claims under 28 U.S.C.
1367(a).
9. This Court has authority to declare the rights and legal relations of the
parties through declaratory judgments under 28 U.S.C. 2201(a).
10. This court has authority to issue injunctions and other equitable relief
under 28 U.S.C. 2202 and 15 U.S.C. 1116(a).
11. Venue is proper in this judicial district under 28 U.S.C. 1391(b)(I) &
(2). The Defendants reside within this district and a substantial part of the events or
omissions giving rise to the Plaintiffs' claims herein occurred within this district.
2091882 v3 3
NATURE OF THE ACTION
12. This is a civil action for Lanham Act violations, common-law trademark
infringement, trademark dilution arising under Alabama law, and other state-law
claims.
13. By this action, Plaintiffs seek declaratory and equitable relief for
Defendants' actual and threatened infringement of Plaintiffs' trademarks, service marks,
and other intellectual property, as well as for Defendants' breach of contract.
FACTUAL BACKGROUND
A. The Plaintiffs' Intellectual Property.
14. Dale's Restaurants is the owner of all right, title, and interest in and to
certain intellectual property relating to the operation of restaurants and restaurant
services, including but not limited to trademarks, service marks, tradenames, logos, and
other proprietary designations ("Dale's Restaurants' Marks"), as well as trade dress,
know how, trade secrets, recipes, proprietary processes, training manuals, and
confidential information (the "Trade Secrets" and, together with the Marks, the "Dale's
Restaurants' Intellectual Property"). Dale's Restaurants also owns several domain
names, consisting of www.dalesrestaurants.com, www.dalesrestaurants.net,
www.dalesrestaurants.org, and www.dalessteakhouse.com.
15. Dale's Restaurants' Marks include, inter alia, the word marks DALE'S,
DALE'S RESTAURANT, and other variations thereof, as well as design marks
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i
consisting of a bull or bulls, used separately and together with DALE'S and/or DALE'S
RESTAURANT, and the word DALE'S in a specialized font.
16. Dale's Restaurants is the owner of the following federal trademark
registrations and federal applications for trademark registrations for use in connection
with "restaurant, catering, and take-out restaurant services" in International Class 43:
Reg. or App. First Use In
Mark
Reg.! App. No. Trademark or Service
Date Commerce
DALE'S (standard 1111111 7112/53 Reg. No. 4,048,634
character mark)
Reg. No. 4,049,301 11/1111 7112/53
et ..
~ ~
.-
dale..
1118/11 12/1/1962 Reg. No. 4,052,379
RESTAURANT
Reg. No. 4,048.631 1111/11 12113/1962
J&l
Reg. No. 4,048,629 1111111 7/1211953
dales
DALE'S Serial No. 85880974 3/20/13 2/1/2013
STEAKHOUSE
(standard character
mark)
'----..
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I Serial No. 85881060 .3/20/13 2/1/13
True and correct copies of Dale's Restaurants' certificates of registration and
applications are attached hereto as Exhibit" 1."
17. The Trade Secrets include: 1) recipes for Dale's Sauce and any and all
variations of such recipes and its applications for meat, salads, soups and other uses; 2)
recipes for cooking food sold in the business of Dale's Restaurant; 3) business records
useful for understanding the business and operations of Dale's Restaurant; 4) lists for all
sources of food and other products used in the business of Dale's Restaurant; and 5) all
ofthe trade secret and know-how rights related to the foregoing.
18. Dale's Restaurants' Intellectual Property has been used by Dale's
Restaurants, its predecessors and/or licensees in connection with the operation of
restaurants in the State of Alabama since at least 1953, and in connection with the
operation of a restaurant in Florence, Alabama since 1962. Dale's Restaurant is well
known in Florence and throughout the region ofnorthern Alabama.
19. Dale's Sauces, the parent company ofDale's Restaurants since 2009, is the
owner of all right, title, and interest in and to certain intellectual property relating to
sauces, including but not limited to trademarks, service marks, tradenames, logos, and
2091882 v3 6
other proprietary designations ("Dale's Sauces' Marks"). Dale's Sauces also owns
domain names relating to its sauces, such as www.dalesseasoning.com.
20. Dale's Sauces' Marks include, inter alia, the word marks DALE'S and
DALE'S STEAK SEASONING, used both separately and together with a stylized bull
Image.
21. Dale's Sauces' Marks have been used by Dale's Sauces and its
predecessors since at least the 1950s. Dale's Sauces' products are well known
throughout the United States and are especially popular in the Southeast.
B. The License Agreement Between Dale's Restaurants, Inc. And
Tompkins & Campbell, LLC.
22. On or about September 7, 2007, Dale's Restaurants, as licensor (prior to
Dale's Sauces' ownership of Dale's Restaurants), entered into a non-exclusive license
agreement (the "License Agreement") with Tompkins & Campbell, LLC ("T&C"),
Tompkins, and Thomas G. Campbell ("Campbell"). At that time, Tompkins and
Campbell were the sole members of T &C. A true and correct copy of the License
Agreement is attached hereto as Exhibit "2."
23. In the License Agreement, Dale's Restaurants granted to T&C the non-
exclusive right to use Dale's Restaurants' Intellectual Property solely in conjunction
with T&C's operation of the Dale's Restaurant located at 1001 Mitchell Boulevard in
Florence, Alabama, and in one future restaurant operation in either Lauderdale, Colbert,
Franklin or Madison County, Alabama. (See Ex. 2, License Agreement, at 1.)
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24. Dale's Restaurants' Intellectual Property included not only the property in
existence at the time the parties entered into the License Agreement, but also "[a]ny
permutations of the Marks and any secondary marks adopted and used by the Licensee
in coqjunction with the Licensee's restaurant operation(s)" and "[a]ny variations or
improvements of the Trade Secrets in conjunction with the Licensee's restaurant
operation(s)...." (Id at 9(b) & (c).) The License Agreement specifically provided that
any permutations ofthe Marks and any variations or improvements ofthe Trade Secrets
would belong to Dale's Restaurants and that any goodwill associated with such Marks
or Trade Secrets would inure to the benefit of Dale's Restaurants. (Id)
25. T&C's right to use permutations of the Marks and secondary marks was
subject to the prior written consent of Dale's Restaurants in Dale's Restaurants' sole
discretion. (Id at 9(b ).)
26. In the License Agreement, T&C acknowledged the "substantial value of
the publicity, reputation, and goodwill associated with the Intellectual Property." (Id at
~ 2.) T&C also acknowledged that the goodwill associated with Dale's Restaurants'
Intellectual Property, and any future goodwill generated based upon T &C's use,
belonged to Dale's Restaurants. (Id) Dale's Restaurants reserved sole ownership of the
Intellectual Property and associated goodwill. (Id)
27. T&C agreed not to directly or indirectly "create, license, use, sell, register
or attempt to register, or offer for sale any product or service bearing a mark or design
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confusingly similar to the Marks anywhere in the world ...." (Ex. 2, License Agreement,
at,9(d).)
28. The License Agreement's term was five years, but the agreement was to
renew automatically for five (5) subsequent periods of five (5) years, unless either party
terminated the agreement in accordance with its provisions. (Id. at, 3.)
29. The License Agreement provided that Dale's Restaurants had the right to
terminate the agreement in the event of a material breach by providing written notice
and an opportunity to cure to T&C. (Id at, 4.) T&C had the right to terminate upon
thirty (30) days written notice. (Id)
30. If T&C elected to terminate the License Agreement, it was required to
transfer to Dale's Restaurants "any and all rights of the Licensee to the Intellectual
Property, including associated goodwill," and T&C's right to use Dale's Restaurants'
Intellectual Property would cease. (Id at, 5.)
31. The License Agreement contained certain restrictions on transfer or
assignment of the agreement or any of T &C's rights or duties thereunder. T &C and its
Members could not assign or transfer any rights in or to the License Agreement without
Dale's Restaurants' prior written consent. (Id. at, 7.)
32. Notwithstanding the transfer restrictions, T&C had the right to transfer the
License Agreement and its rights under the agreement to "any purchaser of the
Licensee's restaurant operation(s) provided the Licensee grave] prior notice to the
2091882 v3 9
Licensor of such proposed transfer" and provided the Licensee gave the Plaintiffs the
opportunity to exercise a right of fIrst refusal, the tenus and conditions of which are set
forth in the License Agreement. (Id.)
33. IfT&C transferred the License Agreement to a third party, the agreement
provided that any transferee would be subject to Dale's Restaurants' then current license
fee, "not to exceed 3% ofgross sales ...." (Id at,-r 7.)
34. In 2009, Dale's Sauces purchased one hundred percent of the stock of
Dale's Restaurants and assumed the License Agreement without alteration.
35. At the end of 2012, the License Agreement between Dale's Restaurants
and T&C was still in full force and effect (subject to an amendment discussed below).
c. The kreement Between Tompkins And the Defendants.
36. On or about November 14, 2012, Tompkins, as an individual, DRF and
DPF entered into a Lease Sale Contract. On information and belief, a true and correct
copy ofthe Lease Sale Contract is attached hereto as Exhibit "3."
37. Pursuant to the contract, Tompkins purported to sell to DPF the real
property located at 1001 Mitchell Boulevard, Florence, Alabama 35630 and purported
to sell to DRF the furniture, fixtures, equipment, and other personal property located at
1001 Mitchell Boulevard, including Dale's Restaurants' Intellectual Property. (Id)
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38. Also pursuant to the Lease Sale Contract, DPF and DRF allowed
Tompkins to take a 20% ownershlp interest in those entities in lieu of a portion of the
down payment. (Id.)
39. The restaurant was to continue operating under T&C's management
through November and December 2012. The parties agreed that, on January 1, 2013,
the restaurant would close for "major remodeling," whlch was to last no longer than
sixty days. (Id)
40. Prior to reopening, Tompkins agreed to dissolve T&C. Upon reopening,
Tompkins agreed to dissolve T &C and DRF and DPF were to assume full control and
responsibility of the building and restaurant operations "under the new joint 80/20
partnership." (Id)
D. The A2reement Between Dale's Restaurants, Inc., Tompkins &
Campbell, Tompkins, And DRF and DPF.
41. Upon learning of the purported sale, Dale's Restaurants intervened and
asserted its rights in the Dale's Restaurants' Intellectual Property and the License
Agreement, requiring DRF, DPF, T&C, Tompkins, and the members ofDRF and DPF
to enter into agreements to clarify ownershlp and the scope ofthe sale.
42. On or about November 28, 2012, Dale's Restaurants entered into an
Agreement (hereinafter the "Master Agreement") with T &C, Tompkins, DRF, and
DPF. Tills Master Agreement, whlch largely superseded the prior agreements between
2091882 v3 11
T&C and Dale's Restaurants, contemplated the execution of several other agreements.
A true and correct copy ofthe Master Agreement is attached hereto as Exhibit "4."
43. In the Master Agreement, Tompkins, DPF, and DRF agreed to execute an
amendment to the Lease Sale Contract. (Ex. 4, Master Agreement, at
~ 1.) The First Amendment to the Lease Sale Agreement, executed by Tompkins and by
Thomas on behalf ofDPF and DRF on November 28,2012, amended the Lease Sale
Contract to exclude Dale's Restaurants' Intellectual Property from the sale of assets
contemplated by the Lease Sale Agreement. An executed copy ofthe First Amendment
to the Lease Sale Agreement is attached to the Master Agreement as Exhibit "A."
44. The Master Agreement also contained provisions for an amendment to the
License Agreement and for substitution of DRF as a licensee in place of T &C. (Ex. 4,
Master Agreement, at ~ 6-7.) Pursuant to those provisions, Dale's Restaurants, as
Licensor, and T&C, Tompkins, DRF, and DRF's other members, Thomas and Sanchez,
executed the First Amendment to License Agreement ("First Amendment"). A true and
correct copy of the First Amendment is attached to the Master Agreement as Exhibit
"D."
45. The First Amendment acknowledged that, pursuant to other agreements
between the parties, DRF would be substituted for T &C as "Licensee" under the
License Agreement, and that Thomas, Sanchez, and Tompkins would be substituted as
"Members" ofDRF. (Ex 4 at Ex. D, First Amendment, at 1 (a).) The First Amendment
2091882v3 12
amended certain prOVISIons of the License Agreement relating to transfer and
assignment, payment ofroyalties, and termination. (Id at 1 (a)(b ) & (c).)
46. The First Amendment states that, upon termination or expiration of the
agreement, DRF shall "promptly cease displaying or using any Marks or other
Intellectual Property of Licensor, and shall offer to sell any signage or other materials
using the same to Licensor. Any such signage or other materials not sold to Licensor for
a price and upon such additional terms as may be mutually agreeable to both Licensor
and Licensee shall be promptly destroyed and disposed ofby Licensee." (Id at l(b).)
47. DRF was subject to other, "additional requirements." DRF agreed to
prominently display in the restaurant a plaque or notice to the effect that the restaurant
was "independently owned and operated by [DRF] and uses the trademark and name
"DALE'S" and stylized bull logo pursuant to a license from Dale's Restaurants, Inc.,
which is not affiliated with [DRF.]" (Id. at 1 (e).)
48. DRF also agreed not to sell Dale's Sauces' product in bottles from the
restaurant premises, or otherwise. (Id.)
49. In addition to amending the License Agreement and Lease Sale Contract,
the Master Agreement contained a provision for the execution of a confidentiality
agreement and a domain name lease agreement. lbe Confidentiality Agreement, an
executed copy of which is attached to the Master Agreement as Exhibit "B," was
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entered into on November 28, 2012 by Dale's Restaurants, T&C, Tompkins, DRF,
Thomas, and Sanchez.
50. In the Confidentiality Agreement, T&C, DRF, Tompkins, Thomas, and
Sanchez acknowledged that, as Licensees (or Members of Licensees), they would be
receiving confidential, trade secret information relating to the operations of Dale's
Restaurant. The trade secrets included, without limitation, "all recipes for, and
variations of recipes for, that product commonly known as 'Dale's Seasoning.'" For
years, the trade secret recipe for Dale's Steak Seasoning, or a close variation thereof,
had been used in the Dale's Restaurant in Florence, Alabama.
51. The Licensees further acknowledged that such information constituted
valuable property of Dale's Restaurants and was being provided to them pursuant to the
License Agreement. These parties, as Licensees, agreed not to use the trade secrets
owned by Dale's Restaurants for any purpose except as permitted by the License
Agreement. They also agreed not to use those trade secrets to compete with Dale's
Restaurants business or the business of Dale's Sauces (the parent company of Dale's
Restaurants).
52. The Licensees agreed that they did not own any of Dale's Restaurants'
trade secrets and they agreed to keep those trade secrets secure and confidential.
53. Finally, the Master Agreement contemplated execution of the Domain
Name Lease Agreement. An executed copy of the Domain Name Lease Agreement,
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entered into on November 28, 2012, is attached to the Master Agreement as Exhibit
"D." This agreement was entered into by Dale's Restaurants and DRF.
54. The Domain Name Lease Agreement acknowledged that Dale's
Restaurants owned several domain names related to the Marks, including, but not
limited to, www.dalesrestaurants.com (the "Domain Name"). Dale's Restaurants agreed
to lease the Domain Name to DRF under the terms and conditions set forth in the
agreement.
55. DRF acknowledged that Dale's Restaurants was the exclusive registrant of
the Domain Name and that DRF had no right to use the Domain Name except for the
purposes and under the conditions set forth in the lease agreement.
56. DRF was required to use the Domain Name for appropriate purposes,
including advertising and marketing its restaurant, and Dale's Restaurants had the right
to approve the content ofDRF's website.
57. The Master Agreement and the various agreements entered into by the
parties clearly and carefully delineated the rights and obligations of the parties and were
intended to protect the valuable intellectual property that Dale's Restaurants has
developed over the years. DRF and its members freely and voluntarily entered into
those agreements, acknowledging the value of the Plaintiffs' intellectual property and
their obligations with respect to same.
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E. The Defendants' Wrongful Actions.
58. As contemplated in the Lease Sale Agreement, T&C and/or DRF closed
DALE'S RESTAURANT for renovations in January 2013.
59. In February 2013, Dale's Restaurants became aware that DRF had created
a new website, http://dalesflorence.com. The website advertised a restaurant by the
name of DALE'S STEAKHOUSE. The name DALE'S STEAKHOUSE was
accompanied by a stylized bull identical to the bull included in Dale's Restaurants'
Intellectual Property. In fact, the marks being used by DRF on dalesflorence.com were
identical to Dale's Restaurants' Marks in all respects except that DRF replaced the word
RESTAURANT with STEAKHOUSE.
60. Although the License Agreement required DRF to obtain permission from
Dale's Restaurants prior to using any permutation of Dale's Restaurants' Marks, DRF
did not seek or obtain permission to use DALE'S STEAKHOUSE prior to "going live"
with the new website.
61. Accordingly, on March 22, 2013, Dale's Restaurants sent a letter to DRF,
reminding DRF of its obligations under the parties' agreements, granting DRF
permission to use DALE'S STEAKHOUSE and dalesflorence.com, and seeking
transfer of ownership of dalesflorence.com from DRF to Dale's Restaurants per the
Domain Name Lease Agreement. (See March 22, 2013 Letter from M. Levine to A.
Thomas, attached hereto as Exhibit "5.")
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62. DRF requested various other concessions from Dale's Restaurants. First,
although the First Amendment required DRF to re-open Dale's Restaurant by March 15,
2013, DRF informed Dale's Restaurants that the restaurant would not be in a position to
reopen until May and, later, June. (See, e.g., March 11, 2013 Letter from A. Thomas to
P. Levine, attached hereto as Exhibit "6.") Dale's Restaurants verbally agreed to allow
DRF to extend the re-open date until June.
63. DRF also sought permission to use dalessteakhouse.com in addition to the
other domain names to which it had access and requested the right to sell Dale's Steak
Seasoning and other promotional items in the restaurant upon its reopening. Those
items included consumer goods, such as t-shirts and hats, bearing the Dale's Marks.
64. In an effort to accommodate DRF's requests, the Plaintiffs prepared and
provided to DRF an amendment to the License Agreement (the "Proposed
Amendment") and an agreement relating to DRF's purchase and use of Dale's Steak
Seasoning. (See March 22, 2013 E-mail from M. Levine to A. Thomas, attached hereto
as Exhibit "7.")
65. On April 3, 2013, Thomas, on behalf ofDRF, e-mailed one of Plaintiffs'
employees, informing her that he and his partners "decided that we cannot sign the
agreements and/or amendments that [Dale's Restaurants] sent. We are taking the
necessary steps to make sure that we do not impede or infringe on the Dales logo or
2091882v3 17
registered trademark in the future." (See April 3, 2013 E-mail from A. Thomas to K.
Maye, attached hereto as Exhibit "S.")
66. Thereafter, Michael Levine, Secretary of Dale's Restaurants, sought to
contact Mr. Thomas to discuss the proposed agreements, their purpose, and the parties'
relationship, and to obtain clarification of Mr. Thomas' April 3 e-mail. On April 12,
2013, Mr. Levine e-mailed Mr. Thomas, requesting a phone conference regarding these
topics. (See April 12, 2013 E-mail from M. Levine to A. Thomas, attached hereto as
Exhibit "9. ")
67. Mr. Thomas responded on April 13, 2013, stating: "We have decided to
discontinue use of the Dales mark." (See April 13, 2013 E-mail from A. Thomas to M.
Levine, attached hereto as Exhibit" 1 O. ")
6S. Believing that Mr. Thomas and DRF had expressed their intent to
terminate the agreements between them and Dale's Restaurants, Dale's Restaurants,
through its counsel, sent Mr. Thomas a letter outlining DRF's obligations in conjunction
with the termination, including DRF's obligation to immediately cease use of Dale's
Restaurants' Intellectual Property. (See April 29, 2013 Letter from 1. Vincent to A.
Thomas, attached hereto as Exhibit "11.") Specifically, Dale's Restaurants wrote:
DRF must immediately cease all use of the Marks in any form, including,
but not limited to:

removing any signs, plaques, tiles, stained glass, or other indicia bearing
the Marks from the property and building ...
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ceasing all use of any menus bearing the Marks and/or featuring menu
items produced using the Trade Secrets or Intellectual Property;
ceasing all advertising ...using the Marks or Intellectual Property; and
disabling all websites featuring Dale's Restaurant, Dale's Steakhouse, or
any ofthe other Marks or Intellectual Property.
69. Dale's Restaurants also notified DRF of its intent to purchase certain
signage, plaques, tiles, menus and other items bearing Dale's Restaurants' Marks
pursuant to paragraph 4 of the Amended License Agreement. Dale's Restaurants
specifically noted its intent to purchase from DRF a stained glass sign bearing one of
the Marks, the menus bearing the Marks and/or the menu items produced using the
Trade Secret recipes, and any plaques or signage used in the restaurant that bore the
Marks.
70. Dale's Restaurants requested certification, in writing, that DRF has ceased
to offer, and will not offer in the future, any menu items produced using the Trade
Secret Recipes or identified using the Dale's Restaurants' Marks.
71. Dale's Restaurants also demanded that DRF transfer to Dale's Restaurants,
pursuant to the Domain Name Lease Agreement, full control of all websites for which
the domain name includes DALES or any ofthe Dale's Restaurants' Marks.
72. Finally, Dale's Restaurants reminded DRF that it is under a contractual
obligation not to adopt or use any trademarks that generate a likelihood of confusion
with the Dale's Restaurants' Marks, and that DRF can no longer produce, use or sell the
Dale's Seasoning, Dale's Steak Seasoning (including the variation produced in the
2091882v3 19
restaurant), Dale's salad dressing, Dale's apple turnovers, or any other items produced
from or based on the Trade Secret recipes.
73. Dale's Restaurants sought written confmnation that DRF intended to
comply with the requirements of the various agreements DRF and its members had
entered into with Dale's Restaurants.
74. Mr. Thomas responded to this letter, stating that the restaurant was now
"Dales Steakhouse named after my cousin Dale. We own Dalessteakhouse.net and
Dalesflorence.com and are allowed to own Dalesanythingwewant.com at any time as
long as we register the name first. .. [M]y cousin Dale said I could use his name for our
steakhouse." (See April 29, 2013 E-mail from A. Thomas to K. Williams, attached
hereto as Exhibit "12. ")
75. Mr. Thomas also stated that DRF intended to remove the DALE'S
RESTAURANT sign and replace it with "our new Dales logo." As far as the stained
glass which bears Dale's Restaurants' Marks and which Dale's Restaurants sought to
purchase from DRF, Mr. Thomas stated: liThe stained glass in the lobby has a different
Dales font that bears no resemblance to the Dales Seasoning Mark and will remain in
the lobby as a historical item." (ld)
76. Mr. Thomas also repeatedly indicated his intent to sell and/or use Dale's
Steak Seasoning in DRF's restaurant:
"We will offer Dales Seasoning as well as Heinz Ketchup, Kraft Mayo
and French's mustard at Dales ... "
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"[W]e will serve items made with Dales seasoning ... "
"[W]e will buy Dales Seasoning from a wholesale supplier and use as
needed... "
"We can sell Dales Seasoning at our restaurant just like Publix does next
door.:
"We can take the Dales Recipe and add one teaspoon of Lea and Perrins
to it and it becomes AI's Seasoning."
"We can tell our guests that we use Dales Seasoning ... "
(Id)
77. Finally, Mr. Thomas stated: "I can assure you that there will be no
calculable monetary damages as a result of us using my cousin's name Dale or serving
the Dales Seasoning at our restaurant." (Id)
78. Faced with conflicting information from DRF -- statements that implied
termination of the agreements and actions demonstrating continued use of the Dale's
Restaurants' Intellectual Property -- on May 10, 2013, Dale's Restaurants sent another
letter to DRF asking DRF to clarifY its position with respect to the License Agreement,
as amended, and the Domain Name Lease Agreement. (See May 10,2013 Letter from
1. Vincent to A. Thomas, attached hereto as Exhibit "13.")
79. Specifically, Dale's Restaurants sought confirmation from DRF that DRF
had terminated the License Agreement, as amended, and the Domain Name Lease
Agreement, or that DRF intended to remain a licensee and use its new variations of the
DALE'S Marks. (Id)
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80. On May 11,2013, Mr. Thomas responded, stating:
We have spoken with the owners of Dales Steakhouse in Dickson
Tennessee and they have agreed to let us use the name Dales Steakhouse.
So has my cousin Dale. We are not going to use the service mark from
Dales seasonings or the former Dales Restaurant that was located in
Florence. Our logo, may, however be somewhat similar to the Dales
Restaurant in Mississippi.
(See May 11, 2013 E-mail from A. Thomas to K. Williams, attached
hereto as Exhibit" 14.")
81. 1brough the parties' correspondence, it has become evident that DRF does
not intend to comply with the agreements entered into between the parties on
November 28, 2012. Although Dale's Restaurants believes it is reasonable to interpret
DRF's correspondence as notice of termination of the License Agreement, as amended,
DRF has refused to directly state an intention to terminate. Further, it has indicated clear
intent to continue use of the Marks and/or Trade Secrets, and is even moving forward
with its use of confusingly similar marks that will cause the consuming public to
associate DRF's new restaurant with the original Dale's Restaurant and with Dale's
Sauces' products.
82. In fact, as of May 15, 2013, DRF had modified the website located at
www.dalessteakhouse.net to reflect the DALE'S STEAKHOUSE name. (See
Screenshots of DRF's website, www.dalessteakhouse.net. attached hereto as Exhibit
"15.") However, the signage reflects a similar style to the original Dale's Restaurant
sign, with white letters on a black background -- the "new" logo even says "Established
2091882 v3 22
1962" (the year the original restaurant was established), despite the fact that DRF's
restaurant has never been open for operation. (Id)
83. Further, the webpage contains a photograph of the DALE'S
RESTAURANT signage, including two stylized bulls. (Id) And, the text on the
webpage references the history of the restaurant, which is the history of DALE'S
RESTAURANT, not Dale's Steakhouse. (Id)
84. On information and belief, AI Thomas and/or DRF also own the domain
name dalesflorence.com. This website redirects internet traffic to dalesteakhouse.net.
85. DRF's advertising choices are plainly designed to benefit from the
goodwill associated with Dale's Restaurants' valuable trademarks and service marks and
to cause consumers to believe there is a connection between the two restaurants.
86. As set forth below, DRF's actions have resulted in an ambiguity regarding
whether the License Agreement, as amended, and the Domain Name Lease Agreement
remain in force and effect and Plaintiffs are therefore entitled to declaratory relief
regarding this ambiguity. Furthermore, whether or not the agreements are terminated,
DRF's actions constitute breach of contract and trademark infringement, and the
Plaintiffs are entitled to injunctive relief from DRF's actions and to damages.
COUNT ONE

87. Plaintiffs adopt and re-allege the paragraphs above as if set forth fully
herein.
2091882v3 23
88. DRF entered into valid, enforceable agreements with Dale's Restaurants,
including the Master Agreement, the License Agreement, as amended, the
Confidentiality Agreement, and the Domain Name Lease Agreement.
89. Dale's Restaurants performed its obligations under the agreements
between it and DRF.
90. DRF has violated the agreements by, inter alia, adopting or usmg
trademarks or service marks that are confusingly similar to Dale's Restaurants' Marks,
refusing to transfer domain names bearing Dale's Restaurants' Marks (or variations
thereof) to Dale's Restaurants, refusing to cease displaying or using Dale's Restaurants'
Marks and other Intellectual Property, refusing to sell the stained glass sign bearing the
DALE'S mark to Dale's Restaurants, and refusing to negotiate with Dale's Restaurants
regarding the purchase ofother items bearing Dale's Restaurants' Marks.
91. As a result of DRF's breaches of its agreements with Dale's Restaurants,
Dale's Restaurants has been harmed and has suffered damages.
COUNT TWO
(FEDERAL TRADEMARK INFRINGEMENT IN
VIOLATION OF 15 U.S.C. 1114(1
herein.
93. Dale's Restaurants is the owner of several federally registered trademarks.
(See ,-r 16, supra.) Continuously since 1953 and/or 1962, Dale's Restaurants, its
2091882v3 24
predecessors, and/or licensees have used these marks to identify its goods and
restaurant services and to distinguish them from those made and sold by others. (Id)
94. As licensees ofDale's Restaurants, DRF has, at all relevant times, been on
notice ofDale's Restaurants' rights in its Marks.
95. DRF has infringed Dale's Restaurants' Marks in interstate commerce by
various acts, such as adopting trademarks or service marks, including but not limited to
DALE'S, DALE'S STEAKHOUSE, and DALE'S STEAKHOUSE ESTABLISHED
1962, that are confusingly similar to Dale's Restaurants' Marks. DRF has also
advertised its restaurant services on its website at www.dalessteakhouse.net and
dalesflorence.com using Dale's Restaurants' Marks (or marks confusingly similar to
Dale's Restaurants' Marks).
96. DRF's actions are without permission or authority of Dale's Restaurants
and are likely to cause confusion, to cause mistake and to deceive the consuming public
as to the association between Dale's Restaurants and DRF's restaurant.
97. On information and belief, DRF's heretofore alleged acts of trademark
infringement have been committed with the intent to cause confusion, mistake and to
deceive.
98. By reason of DRF's actions, Dale's Restaurants has and will suffer
damage to its business, reputation, and goodwill.
2091882 v3 25
99. DRF threatens to continue to do the acts complained of herein, and, unless
restrained and enjoined, will continue to do so, all to Dale's Restaurants' irreparable
damage. Dale's Restaurants has no adequate remedy at law for the aforementioned
irreparable harm.
100. Dale's Restaurants is entitled to damages, an award for its reasonable
attorneys' fees, the costs ofthis action, interest, and such other relief as this Court deems
appropriate.
COUNTmREE
(COMMON LAW TRADEMARK INFRINGEMENT)
herein.
102. Dale's Restaurants is the owner of several trademarks and service marks
used in connection with restaurant services and the operation of restaurants. Dale's
Restaurants, its predecessors and/or licensees have used these trademarks and service
marks in commerce continuously and, as a result, consumers have come to associate
those marks with goods and services provided by Dale's Restaurants. As a result of this
association, Dale's Restaurants has engendered significant goodwill.
103. DRF has adopted trademarks or service marks, including but not limited
to DALE'S, DALE'S STEAKHOUSE, and DALE'S STEAKHOUSE ESTABLISHED
1962 that are confusingly similar to Dale's Restaurants' Marks.
2091882v3 26
104. DRF's use of these confusingly similar trademarks causes consumer
confusion as to the source of the goods and services being provided by DRF.
Accordingly, DRF's actions constitute common law trademark infringement of Dale's
Restaurants' Marks.
105. DRF's actions have been willful and deliberate, as evidenced by DRF's
refusal to cease use of the Dale's Restaurants' Marks and DRF's response to Dale's
Restaurants' legitimate requests for DRF to comply with its contractual obligations.
106. DRF's actions have harmed Dale's Restaurants valuable intellectual
property rights, have damaged Dale's Restaurants goodwill, and have caused Dale's
Restaurants to suffer damages that are not calculable in monetary terms.
107. IfDRF is not preliminarily and permanently enjoined by this Court, DRF
will continue its acts of trademark infringement set forth above, thereby deceiving the
public, trading on Dale's Restaurants' goodwill and causing Dales' Restaurants
immediate and irreparable harm, damage, and injury.
108. Dale's Restaurants has no adequate remedy at law for the aforementioned
irreparable harm.
appropriate.
2091882v3 27
COUNT FOUR
(TRADEMARK DILUTION PURSUANT TO
ALA. CODE 8-12-17)
herein.
111. Dale's Restaurants Marks are famous. They are widely recognized by the
general consuming public of the State of Alabama, or by the general consuming public
of a significant geographic area of the State of Alabama, as a designation of source of
the goods or services provided by Dale's Restaurants.
112. DRF's commercial use of confusingly similar trademarks and service
marks in conjunction with restaurant services is likely to cause dilution of Dale's
Restaurants famous marks through blurring and/or tarnishment, in violation ofAlabama
Code 8-12-17.
113. Upon information and belief, DRF willfully intended to cause dilution,
with the intent to blur and/or tarnish Dale's Restaurants' Marks.
114. Accordingly, Dale's Restaurants is entitled to injunctive relief throughout
the Alabama geographic area in which the Dale's Restaurants' Marks are famous.
115. DRF's trademark dilution has and will continue to cause immediate and
irreparable harm, damage, and injury to Dale's Restaurants.
irreparable harm.
2091882 v3 28
appropriate.
COUNT FIVE
(UNFAIR COMPETmON IN VIOLATION
OF 15 U.S.C. 1125(a)(1))
herein.
119. DRF's use ofDale's Restaurants' Marks (and marks confusingly similar to
Dale's Restaurants' Marks) to advertise DRF's good and services is a false designation
of origin which is likely to cause confusion, to cause mistake and to deceive as to the
affiliation, connection or association of DRF with Dale's Restaurants and as to the
origin, sponsorship, or approval of such goods or services by Dale's Restaurants.
120. The aforementioned acts are in violation of 15 V.S.C.A. 1125(a), in that
DRF has used in connection with goods and services a false designation of origin, a
false or misleading description and representation of fact which is likely to cause
confusion, and to cause mistake, and to deceive as to the affiliation, connection, or
association of defendant with Dale's Restaurants and as to the origin, sponsorship, and
approval ofDRF's goods, services and commercial activities by Dale's Restaurants.
2091882 v3 29
121. On information and belief, DRF's heretofore alleged acts of false
designation of origin have been committed with the intent to cause confusion, mistake
and to deceive.
122. By reason of DRF's actions, Dale's Restaurants has and will suffer
damage to its business, reputation, and goodwill.
restrained and enjoined, will continue to do so, all to Dale's Restaurants' irreparable
damage. Dale's Restaurants has no adequate remedy at law for the aforementioned
irreparable harm.
appropriate.
COUNT SIX
(COMMON LAW UNFAIR COMPETITION)
herein.
126. DRF has adopted and is using on its website trademarks or service marks
that are confusingly similar to Dale's Restaurants' Marks and material that is designed to
cause an association between Dale's Restaurants and DRF's goods and services,
including but not limited to "Established 1962," an image of signage bearing the
2091882v3 30
DALE'S RESTAURANT mark with a stylized bull, and a "history" section that tells the
story of DALE'S RESTAURANT, not DRF's restaurant.
127. DRF's actions constitute unfair competition by "palming off' under
Alabama law.
128. DRF seeks to "palm off' its restaurant services as being offered by,
approved by, affiliated with, or endorsed by Dale's Restaurants. Upon information and
belief, DRF acted intentionally or, at least, recklessly and without regard to the effect of
its actions.
129. DRF's actions have and will continue to cause immediate and irreparable
harm, damage, and injury to Dale's Restaurants.
irreparable harm.
appropriate.
COUNT SEVEN
(CYBERSQUATTING IN VIOLATION OF 15 U.S.C. 1125(D))
herein.
133. DRF and/or its agent Al Thomas owns or controls domain names
consisting of dalesflorence.com and dalessteakhouse.net and has expressed an intention
2091882 v3 31
to register dalesmarinade.com. These domain names are identical to or confusingly
similar to Dale's Restaurants' Marks and/or Dale's Sauces Marks.
134. DRF uses these domain names to advertise and otherwise attract
consumers to DRF's restaurant.
135. DRF, through its agent Al Thomas, has a bad faith intent to profit from the
Plaintiffs' Marks, as evidenced by DRF's knowledge of Dale's Restaurants and Dale's
Sauces' Marks and subsequent adoption of domain names confusingly similar to those
marks. Further, DRF promotes infringing goods and services on dalesflorence.com and
dalessteakhouse.net with the intent to derive an economic benefit from the goodwill
associated with the DALE'S name.
136. DRF did not and does not have reasonable grounds to believe that the use
of the domain names was a fair or otherwise lawful use. At all relevant times, DRF has
been on notice of the Plaintiffs' contention that its domain names were confusingly
similar to the Plaintiffs' Marks.
137. The Plaintiffs are entitled to forefeiture, cancellation, and/or transfer of all
domain names owned by DRF containing the name DALE'S.
138. By reason of DRF's actions, the Plaintiffs have and will suffer damage to
their business, reputation, and goodwill.
2091882 v3 32
restrained and enjoined, will continue to do so, all to the Plaintiffs' irreparable damage.
The Plaintiffs have no adequate remedy at law for the aforementioned irreparable harm.
140. The Plaintiffs are entitled to damages, an award for their reasonable
attorneys' fees, the costs of this action, interest, and such other relief as this Court deems
appropriate.
COUNT EIGHT
(DECLARATORY JUDGMENT REGARDING
STATUS OF AGREEMENTS)
herein.
142. A justiciable controversy has arisen between Dale's Restaurants and DRF,
and Dale's Restaurants seeks to obtain a declaration of the parties' rights, status or other
legal relations vis-a-vis one another.
143. DRF has taken inconsistent positions with regard to whether or not it has
or intends to terminate the License Agreement, as amended, and the Domain Name
Lease Agreement. While DRF's correspondence indicates that DRF no longer intends
to use Dale's Restaurants' Intellectual Property, DRF's actions indicate an intention to
associate itself with, and benefit from, the goodwill associated with Dale's Restaurants
and with Dale's Restaurants Intellectual Property. Therefore, an ambiguity has arisen as
to whether or not the agreements are terminated.
2091882 v3 33
144. If there are no agreements between Dale's Restaurants and the
Defendants, the parties' rights and obligations are significantly different than if the
agreements are still in place. Accordingly, Dale's Restaurants seeks a declaration from
the Court as to whether or not the License Agreement, as amended, and the Domain
Name Lease Agreement are still in full force and effect.
COUNT NINE
(DECLARATORY JUDGMENT REGARDING DALE'S
RESTAURANTS' INTELLECTUAL PROPERTy)
herein.
146. DRF contends that it is entitled to use the trademarks or service marks
DALE'S and DALE'S STEAKHOUSE, and that it is entitled to own domain names
containing variations ofthe DALE'S trademark owned by Dale's Restaurants.
147. Dale's Restaurants contends that, if the agreements between Dale's
Restaurants and DRF are terminated, DRF is not entitled to use trademarks or service
marks bearing the DALE'S name or to own domain names containing the DALE'S
name because DRF's activities will result in consumer confusion and will cause
consumers to wrongfully associate DRF's goods and services with those of Dale's
Restaurants even though DRF and Dale's Restaurants are not, in fact, associated.
2091882 v3 34
148. Dale's Restaurants seeks a declaratory judgment that, ifthe agreements are
deemed to be tenninated, DRF is not entitled to use the name DALE'S, or any
pennutation or variation thereof, in connection with restaurant services.
149. DRF contends that it is entitled to serve products in its restaurant that are
made using only minor variations of Dale's Restaurants' trade secret recipes, including
but not limited to minor variations of the recipe for that product commonly known as
"Dale's Seasoning."
150. Da1e's Restaurants contends that, if the agreements between Da1e's
Restaurants and DRF are tenninated, DRF is precluded from using Da1e's Restaurants'
trade secret recipes, or any variations ofthose recipes, for any purpose whatsoever.
151. Dale's Restaurants therefore seeks a declaratory judgment that, if the
agreements are deemed to be terminated, DRF is not entitled to use Dale's Restaurants'
recipes, Dale's Sauces' recipes, or any pennutations or variations thereof, in connection
with DRF's restaurant business.
COUNT TEN
(DECLARATORY JUDGMENT AS TO
DALE'S STEAK SEASONING)
herein.
2091882 v3 35
153. A justiciable controversy has arisen between Dale's Sauces and DRF, and
Dale's Sauces seeks to obtain a declaration of the parties' rights, status or other legal
relations vis-a.-vis one another.
154. DRF contends that it is entitled to sell or use products in its restaurant
bearing Dale's Sauces' Marks, including but not limited to DALE'S STEAK
SEASONING.
155. Dale's Restaurants seeks a declaration that, if the agreements between the
parties are still in full force and effect, the License Agreement, as amended, prohibits
DRF from selling Dale's Steak Seasoning in DRF's restaurant and, as a result, DRF may
use or sell Dale's Steak Seasoning in DRF's restaurant subject only to the reasonable
restrictions and limitations set by Dale's Restaurants.
156. Dale's Sauces seeks a declaration that, if the agreements between Dale's
Restaurants and DRF are terminated, and ifthe Court determines that DRF is entitled to
use the DALE'S name, or any permutation or variation thereof, even though the
agreements are terminated, DRF may not sell or use Dale's Steak Seasoning in its
restaurant unless it takes affIrmative steps to ensure that consumers are aware that there
is no association between Dale's Restaurants and Dale's Sauces, on the one hand, and
DRF, on the other hand.
2091882 v3 36
PRAYER FOR RELIEF
Based on the foregoing, Plaintiffs respectfully request that the Court enter
judgment in favor of Plaintiffs and against Defendants on all counts and causes of
action and in that judgment grant Plaintiffs the following relief:
(a) Injunctive relief, under Alabama law and the Lanham Act, against
DRF, its members, agents, servants, employees, attorneys and all persons
in active concert or participation with it by temporary restraining order,
preliminary injunction, and permanent injunction from using the Plaintiffs'
marks, variations of Plaintiffs' marks, or any mark confusingly similar to
Plaintiffs' marks, including but not limited to DALE'S, DALE'S
RESTAURANT, DALE'S (in stylized font), DALE'S STEAKHOUSE, or
Dale's Restaurants' stylized bull design;
(b) Injunctive relief against DRF, its members, agents, servants,
employees, attorneys and all persons in active concert or participation
with it by temporary restraining order, preliminary injunction, and
permanent injunction from using the Plaintiffs' trade secret recipes or
variations ofthose recipes;
(c) Require DRF to file with the Court and to serve on the Plaintiffs,
within 30 days after the entry of any preliminary or permanent injunction,
a report in writing, under oath, setting forth in detail the manner and form
in which DRF has complied with the injunction;
(d) Declare that, if the agreements between DRF and Dale's
Restaurants are terminated, and ifDRF is entitled to and intends to use the
DALE'S name (or any variation thereof), DRF must take precautionary
measures to ensure that consumers are aware of the source of those
products and that DRF is not affiliated with Dale's Restaurants or Dale's
Sauces;
(e) Declare that DRF is not entitled to use the name DALE'S or any
variation thereof;
(f) Specific performance of DRF's contractual obligation to sell items
bearing the Dale's Restaurants' Marks to Dale's Restaurants, including but
2091882v3 37
not limited to the DALE'S stained glass, DALE'S menus, dishes, and
other historical items;
(g) Specific performance of DRF's contractual obligation to transfer
domain names bearing the name DALE'S or any variation thereof to
Dale's Restaurants;
(h) Damages for DRF's breach of its contractual obligations, trademark
infringement, and trademark dilution;
(i) Treble damages pursuant to 15 U.S.C. 1117(a);
G) Award Plaintiffs the costs of suit and their reasonable attorneys'
fees; and
(k) Award such other and further relief as the Court deems just and
proper.
This the 24th day of May, 2013.
Respectfully submitted,
sf Ellen T. Mathews
Joseph W. Letzer, ASB-4000-L41J
India Vincent, ASB-2984-T56I
Elizabeth B. Shirley, ASB-8958-E56B
Ellen T. Mathews, ASB-7624-L 70M
ArroRNEYs FOR PLAINTIFFS DALE'S
RESTAURANTS, INC. AND DALE'S
SAUCES, INC.
OF COUNSEL:
BURR & FORMAN LLP
3400 Wells Fargo Tower
420 North 20th Street
Birmingham, Alabama 35203
2091882 v3 38
Telephone: (205) 251-3000
Facsimile: (205) 458-5100
PLEASE SERVE THE DEFENDANTS VIA CERTIFIED MAIL
AT THE FOLLOWING ADDRESS:
Dale's Restaurants - Florence, LLC
c/o AI Thomas
5109 Harding Pike
Nashville, Tennessee 37205
Dale's Properties - Florence, LLC
c/o AI Thomas
5109 Harding Pike
Nashville, Tennessee 37205
2091882v3 39

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IN THE UNITED STATES DISTRICT COURT FOR THE

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