Appeal Court Reverses Decision, Sends Mail Boxes Etc. to Trial

Blue MauMau:

“We reverse the judgment,” was the decision handed down Friday in California’s Court of Appeal, in a lawsuit filed by three MBE franchisees against United Parcel Services and Mail Boxes Etc. in Superior Court. As in similar litigation, franchisees claimed that UPS withheld crucial information and made misrepresentations in persuading them to convert to its new concept, The UPS Store, following its acquisition of Mail Boxes Etc. in 2001.

The franchisees’ appeal was filed in January 2007 after the California Superior Court Judge Wendell H. Mortimer, Jr., now retired, granted UPS and Mail Boxes Etc. summary judgment—a decision based on the merits of the case without a trial—as to all their allegations. But the Appellate Court not only determined that the franchisees were successful in showing that all allegations stated in their case were suited for trial, he also awarded them costs related to their appeal, including attorney fees. The judge addressed three of the causes of action in his decision, but stated in light of the court’s finding it saw no need to deal with the remaining thirty causes of action.

The Appeal court ruling gave a factual history of the franchisees’ lawsuit. All three are members of the Platinum Shield Association, one of three organizations litigating against UPS. Through their attorneys, Gordon & Rees, they claimed that after its conversion program UPS and Mail Boxes Etc. began to abandon and undermine the existing MBE franchisees in order to violate its obligations of its franchise agreements. They also allege that in acquiring MBE Inc. and its trademark, trade name, and related intellectual property, UPS conspired to destroy the MBE franchised business and distribution system, and established in its place “The UPS Store,” a network of UPS-favored businesses. By permitting its affiliate UPS to enter into agreements with other competitive retail outlets, it also alleges that its MBE company implemented anti-competitive practices.