Regarding the dispute between Benihana and BOT, did BOT challenge the permanent injunction issued by the arbitration panel?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
el issued a split decision. Although the majority declined to terminate the Hawaii License Agreement, the entire panel found that BI was the "prevailing party," awarded BI more than $1.1 million in attorneys' fees, and ordered that a Southern District of New York preliminary injunction should be permanent. BOT paid the attorneys' fees and did not challenge the permanent injunction. BI challenged the denial of termination in the Southern District of New York, as discussed below.
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- Benihana, Inc. v. Benihana of Tokyo, LLC, Case No. 15-cv-07428-PAE (United States District Court, Southern District of New York). In 2015, BI filed a petition to partially confirm and partially vacate the arbitration award. BI moved to confirm the award of $1.1 million in attorney's fees and the permanent injunction, which BOT did not oppose. BI also moved to vacate the arbitrators' decision to not terminate the Hawaii License Agreement.
Source: Item 3 — LITIGATION (FDD pages 14–16)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a dispute occurred between Benihana, Inc. (BI) and Benihana of Tokyo, LLC (BOT) regarding the Hawaii License Agreement. An arbitration panel was formed to resolve the dispute. The arbitration panel issued a split decision, but found that BI was the prevailing party and ordered that a Southern District of New York preliminary injunction should be permanent. The panel also awarded BI more than $1.1 million in attorneys' fees.
The document states that BOT did not challenge the permanent injunction and paid the attorneys' fees. However, BI challenged the denial of termination in the Southern District of New York. BI moved to confirm the award of $1.1 million in attorney's fees and the permanent injunction, which BOT did not oppose. The federal court entered an order on July 15, 2016, confirming the award to BI of $1.1 million in attorney's fees. The court also entered a permanent injunction prohibiting BOT from selling unauthorized food items or using unauthorized advertisements in connection with the Hawaii restaurant that was the subject of the Hawaii License Agreement.
Subsequently, on January 9, 2017, BI filed a motion seeking to hold BOT in civil contempt for multiple violations of the permanent injunction. After a two-day evidentiary hearing, the Court granted BI's motion, and, on June 14, 2017, the court issued an opinion from the bench that found BOT in contempt. The court imposed a regime of sanctions against BOT, including awarding BI $634,680 in attorney's fees and costs.