MJ & Partners v. Zadikoff, 10 F.Supp.2d 922 (N.D. Ill. 1998)

MJ & Partners v. Zadikoff
10 F.Supp.2d 922 (N.D. Ill. 1998)

Facts: Jump 23 Food was a signatory to a restaurant license agreement. The agreement grants Jump 23 Food the right to use Michael Jordan’s name, likeness, voice, and persona; subject to terms and conditions. The restaurant license agreement further states that Jump will not take any action or enter into any new agreement in the restaurant industry that in any manner violates or interferes with the rights granted to Food by Jump 23 Food under the contract. MJ & Partners is a sublicensee under the agreement. Part of the agreement was that neither Jump 23 or any of its affiliates could grant, sell, assign otherwise entitle any person, firm, corporation or other entity the right to open any restaurant based on Jordan’s name. Plaintiffs opened Michael Jordan’s Restaurant and it became one of the most visited tourist attractions in Chicago. Zadikoff was chief executive for the restaurant and had access to many secrets. Plaintiffs allege that while continuing to work on behalf of MJ’s Restaurant, Zadikoff made plans with Jordan to open a new restaurant in Chicago using his name. Plaintiff didn’t consent to the use of the name at any restaurant other than the Michael Jordan’s Restaurant in LaSalle. Plaintiffs have demanded that Zadikoff cease his activities with respect to the new restaurant, but Zadikoff has not done so. Plaintiffs claim Zadikoff breached his fiduciary duty. Zadikoff claims plaintiffs can’t claim for breach of fiduciary duty because they cannot establish that he is plaintiff’s agent. He argues his is an independent contractor.

Issue: Is Zadikoff an agent of MJ & Partners such that he had a fiduciary duty to them?

Holding: Yes. The court looked at the degree of control of Zadikoff over the Plaintiff’s action to make their decision. There were several things that showed evidence of control: reports from Zadikoff to MJ and P, written agreements, MJ and P’s power over day-to-day decisions, and MJ and P’s control over Zadikoff’s employment.

There are two factors courts use to determine if an agency relationship exists:

  • Whether the principal has the right to control the manner and method in which the agent performs his services; and
  • Whether the agent has the power to subject the principal to personal liability.

Note: the suit was filed under The Lanham Act, which is a federal statute that provides a cause of action to plaintiffs who believe that another person’s use of the same mark will cause confusion as to the affiliation of that person with the plaintiff. The court concluded that the Lanham Act did not apply here.

Rule: A principal-agent relationship is a fiduciary relationship as a matter of law. You can establish an agency by the actual practices of the parties involved. That is, the existence of an agency relationship is determined based on the actual practices of the parties, and not merely by reference to a written agreement.

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