The Honorable Judge Kevin Enright of the San Diego Superior Court yesterday issued a final Statement of Decision in the case of Pat & Oscar’s Concepts, Inc. v. Casual Food Group, et al., a lawsuit brought by the owner of the Pat & Oscar’s restaurant brand against a group of former Pat & Oscar’s franchisees, who converted their restaurants to O’s American Kitchen following the bankruptcy of Pat & Oscar’s. Although the plaintiff sought nearly $23 million in damages against the former franchisees, the court declined to award any actual damages to the plaintiff, and instead awarded a total of $100 in nominal damages.The decision is a significant victory for the defendants, the owners of O’s American Kitchen restaurants, represented by Fitzgerald Knaier LLP. After a trial lasting over a month, the jury refused to find the defendants liable, and awarded no damages to either side on any of the claims or counterclaims. The jury deadlocked on the plaintiff’s claim for breach of contract, and the parties chose to have Judge Enright decide this remaining claim, rather than going through a second trial. In his final decision, the judge rejected the plaintiff’s contention that it had suffered nearly $23 million in lost profits, and he ruled in favor of the O’s American Kitchen owners on the plaintiff’s claim that they violated California’s Unfair Competition Law.
Pat & Oscar’s was originally founded as “Oscar’s” in San Diego, by Pat & Oscar Sarkisian and their children John Sarkisian and Tammy Moore. Known for its popular breadsticks, the restaurant chain was sold by the Sarkisians to Sizzler in 2000, for roughly $22 million. Shortly after the sale, the chain was renamed from “Oscar’s” to “Pat & Oscar’s,” due to another restaurant’s ownership of the trademark “Oscar’s.” The chain then suffered an E. coli outbreak, followed by a failed expansion and franchising effort by Sizzler and subsequent owners. In 2011, the chain went into Chapter 7 bankruptcy, and the Sarkisian family repurchased the brand from the company’s largest creditor for $370,000. The Sarkisians also took over the lone non-franchised Pat & Oscar’s restaurant still operating, on Sarkisian-owned land in Temecula. After the existing Pat & Oscar’s franchise owners failed to come to terms with the Sarkisians over how to revitalize the brand, the franchisees converted their restaurants to become O’s American Kitchens. The Sarkisian family then sued the franchisees, contending that they breached their Pat & Oscar’s franchise agreements by continuing to use the Pat & Oscar’s recipes and restaurant system, along with a similar looking logo. In the trial, the Sarkisian family claimed lost profits damages of $22,958,757. After the jury rejected most of the claims, the judge in the case awarded a total of $100, and declined the Sarkisians’ request to enjoin the defendants from using their current name, logo, recipes, and restaurant system.
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