MANHATTAN (CN) – Benihana of Tokyo must leave burgers off their Hawaiian menus unless an arbitral tribunal finds against its U.S. sister company, the 2nd Circuit ruled Tuesday.
Founded in 1963, the famed Japanese hibachi restaurant has seen family feuding before and after the death of its late founder, former Olympic wrestler Rocky Aoki.
Aoki’s death in 2008 left the restaurant under sole control of his third wife Keiko, who had icy relations with his children.
Two years before his death, Aoki told New York Magazine that some of his seven children thought Keiko was a “gold digger,” and that he had “three kids from three different women at exactly the same time.”
Casting their late father as mentally incompetent, four of the children failed to convince New York state and appellate courts to repudiate the will.
In the “BeniBurger” case, the federal appeals court sorted out a much more mundane and contractual squabble.
Under a 1994 agreement, Benihana America had the right to operate in the United States, Latin America and the Caribbean, and Benihana of Tokyo had the right to all other territories.
“The one exception to this clean split was Hawaii: the [plan] provided that Benihana America would grant Benihana of Tokyo a license to continue operating an existing Benihana restaurant in Honolulu,” U.S. Circuit Judge Gerard Lynch noted in a 36-page opinion.
This agreement got tweaked further a year later with an agreement forcing the Tokyo franchise to only offer menu items specifically approved for sale, in a contract subject to arbitration provisions.
“Things proceeded amicably enough under the agreement for over 15 years,” Lynch said.
Then, a “more hands-on licensor” named Angelo Gordon & Co. bought out the U.S. franchise in 2012, according to the opinion. The company is not a party in the case.
The next year, the new owner soon demanded that the Tokyo sister company stop selling “BeniBurgers” in Honolulu. The litigation that soon followed first landed in Manhattan state court before being removed to federal jurisdiction.
Finding in favor of Benihana America, U.S. District Judge Paul Engelmeyer ordered the Tokyo franchise not to fling any more burgers or use any unauthorized trademarks in the Aloha State. He also limited the arguments the company could raise in its defense before an arbitral panel.
A unanimous three-judge appellate panel upheld Engelmeyer’s injunctions while striking his dictates regarding the arbitration.
Lawyer Joseph Manson, who represents the Tokyo franchise, said in a phone interview that the circuit’s decision to untie his client’s hands before the arbitral tribunal would be “very significant” in the long term.
A four-day arbitral hearing is expected to begin on June 2, he said.
The U.S.-based franchise did not respond to a request for comment.