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Investor Can't Sue in Italian Restaurant v. Bagel Shop Fraud Dispute

By Mark Wilson, Esq. on October 01, 2014 | Last updated on March 21, 2019

Why is an Italian restaurant suing a bagel company in federal court? Sure, you can chalk it up to it being Florida, but it turns out the dispute is unrelated to the vortex of sanity that seems to exist down there.

The Original Brooklyn Water Bagel Co. advertises that its bagels are so awesome because it utilizes a "patented 14-stage water treatment process" designed to mimic the water in Brooklyn. As everyone knows, New York bagels are considered the best bagels because of the water in New York City.

I'll Have Mine With a Shmear of Deception

The Original Brooklyn Water Bagel Co. then claimed that Mamma Mia's Trattoria, a nearby pizzeria in Lake Worth, "stole" its fancy water technology. This, of course, was Brooklyn Water Bagel's undoing. Mamma Mia's countered that Brooklyn Water Bagel was falsely advertising its New York water filitration technology, so it initiated a qui tam lawsuit for violations of 35 USC § 292.

The statute in question prohibits a person from using the word "patent" in association with a product that isn't actually patented. The Original Brooklyn Water Bagel Co., it turns out, doesn't actually hold any patents. Mamma Mia's, the United States, and the bagel shop agreed to a consent judgment, which prohibited the bagel company from advertising any claim to a "patented" water filtration method. It also barred any future state or federal claims related to this set of facts.

A Hot Bowl of Civil Procedure, Just Like Grandma Used to Make

A year later, the Bersin Bagel Group -- an investor in a particular Original Brooklyn Water Bagel franchise -- sued Fassberg, the owner of The Original Brooklyn Water Bagel Co., on state law fraud grounds. Fassberg moved to enforce the consent judgment. A federal district court agreed, dismissing and "enjoining" the state law claims in a separate enforcement order.

The Eleventh Circuit also agreed, finding that the district court's enforcement order was not a final, appealable order because it didn't settle the matter by using its civil contempt power to enforce the order, schedule a hearing, and dole out sanctions (or not). Simply put, "[a]n order concerning the enforcement of a permanent injunction is not final unless it holds a party in contempt of court or imposes a sanction for violating the injunction." The Eleventh Circuit dismissed for lack of jurisdiction.

Dissent: That's a Load of Cannoli

Judge Orinda Evans dissented, claiming that the enforcement order "significantly changed the scope of the alleged injunction," which would allow the appellate court to step in to ascertain the rights of the parties. For one thing, the order didn't mention Bersin, and Bersin was never a party to the original qui tam action -- and thus wasn't bound by the final consent judgment.

This seems fair: Bersin has his own interests separate from Mamma Mia's, and while it could be argued that Bersin had the same opportunity as anyone else to intervene in the qui tam lawsuit but didn't, no one in the majority made that argument.

The final order effectively bars any member of the public from ever making a false advertising claim on these facts against The Original Brooklyn Water Bagel Co. ever again. In legal terms, that's a spicy meatball.

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