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Trial Victory in Long-Running Pat and Oscar's Litigation

News Release Fitzgerald Knaier Llp Secures Trial Victory In Long-Running Pat & Oscar's Litigation
The hon'ble 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.

A representative of the O's American Kitchen owners stated: "We are very pleased with the result, which ends years of litigation over our right to sell breadsticks, lemon and barbecue chicken, ribs, and other popular menu offerings.  Following the bankruptcy of Pat & Oscar's and the loss of our franchises, we worked very hard to improve our recipes, change our décor, add new menu items, and forge a new identity as O's American Kitchen.  With the judge's decision, we are again able to focus on providing high quality hand-crafted menu items in a fast-casual format."

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.

Lead attorney for Defendants, Ken Fitzgerald, stated: "This was a hard fought case in which the Plaintiff was represented by very skilled trial lawyers.  The Sarkisians were claiming that assets they had paid $370,000 to acquire out of bankruptcy were essentially worth about $23 million, and they supported that claim with the opinion of a well-credentialed damages expert witness.  We are grateful that the court rejected this claim, and we are pleased that our clients are now free from the burden of this overreaching litigation effort.

About the Kosnar Group
Carl Kosnar provided franchise litigation support in this case, appeared at pre-trial depositions, and testified as a franchise expert witness during the trial.
 
The Kosnar Group litigation support team has provided attorneys and their clients with franchise expert witness and litigation support services for years, with some of our professionals having over 35 years of franchise experience. Our opinions are valued by attorneys, clients, and triers of fact because we are professionals who work exclusively in the franchise industry. We communicate and present our positions in a fashion that attorneys, clients, judges, and juries, can understand.

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