Domino’s Pizza, the red, white and blue building on the left, has filed a lawsuit against Panago Pizza, seen across the street, for opening too close. (Crystal Schick/Yukon News)

Whitehorse Domino’s takes Panago to court over alleged business “conspiracy”

Domino’s claims the people behind Panago conspired to open a pizza shop within 500 ft of its location

The owner of the Domino’s Pizza in Whitehorse has taken his former business partners, landlord and previous landlord to court, accusing them of conspiring together to open the Panago’s Pizza across the street.

In a statement of claim filed to the Yukon Supreme Court June 26, Whitehorse APC Pie Inc., which operates as Domino’s Pizza and is owned solely by Albert Chan, alleges a “conspiracy” involving at least eight parties to open the Panago on the other side of Second Avenue.

At its core, the lawsuit appears to centre around a clause in Domino’s lease stating that no other pizza company is to be allowed to operate within 500 feet of the building, as well as non-compete obligations for Chan’s former business partners.

According to the lawsuit, two companies — Lizland Enterprises Ltd. and JLH Enterprises Ltd., whose principle shareholders, respectively, are Zhen Leo Li and Joe Che Yuan Hu — were shareholders of the Domino’s before Chan bought them out in 2017.

All shareholders had previously entered into an agreement in 2015, the lawsuit says, which stated that each party was not to “carry on or be engaged in any business similar to the business carried on” by Domino’s for at least two years after leaving the company.

The building that houses Domino’s was previously owned by Northern Vision Development Corp., who served as Domino’s landlord.

Domino’s lease with Northern Vision includes an exclusivity clause which prohibits “another pizza bakery, pizza delivery or carryout store or restaurant that sells pizza for delivery or carryout, or any adult bookstore, or adult theater (sic) to be operated within five hundred (500) feet of the Premises in any building owned, leased or controlled by the Landlord.”

In 2018, Northern Vision put the building up for sale. While Domino’s offered to buy it, Northern Vision ultimately sold it to 536223 Yukon Inc.

The principle shareholder of the numbered company, which took over Domino’s landlord, is Kit Bing Heung, Hu’s former spouse.

That sale was allegedly the first stage of the conspiracy.

In late 2017 or early 2018, the statement of claim alleges, Northern Vision, which owns the plaza across Second Avenue from the Domino’s, leased a space in the plaza to 536223, former Domino’s manager Wubin Liu, Li, Hu, Heung “or companies that any one of them control or have an interest in.”

The group then successfully applied to Panago Pizza for a franchise, the lawsuit says, noting that Panago “is a pizza delivery, carryout store and restaurant that sells pizza for delivery or carryout which is a business similar” to Domino’s. (Panago Pizza Inc. is also listed as a defendant, although not part of the “conspirators.”)

This, the lawsuit claims, was a violation of Domino’s rights on several levels.

While 536223 has taken over as Domino’s landlord, the lawsuit claims that Northern Vision “remains bound” by the exclusivity clause as 536223 doesn’t own the plaza on the other side of Second Avenue, and as such, has breached the terms of the lease by allowing, directly or indirectly, another pizza business to open within 500 feet of Domino’s.

Alternatively, if 536223 did assume the exclusivity clause, the lawsuit says, it too has breached the lease for the same reason.

The lawsuit alleges that all defendants except for Panago Pizza Inc. “all combined or conspired together to engage in Competitive Acts” that were “unlawful,” and for the “predominant purpose of causing injury to the Plaintiff.”

Domino’s former stakeholders and employees involved in the Panago also allegedly breached their fiduciary duties or the shareholder agreements, the lawsuit continues, and all nine defendants allegedly “unlawfully interfered” with Domino’s “economic interests … for the sole purpose of advancing their own economic and competitive interests and to the detriment of (Domino’s).”

The lawsuit is seeking, among other things, damages to cover the “loss of sales and profits” and the “loss of reputation and goodwill;” an injunction “restraining” the defendants from operating the Panago franchise; “a disgorgement of all revenue received, or in the alternative, the profit earned by the Defendants by reason of their unlawful conduct;” and legal costs.

The allegations have not been tested in court.

To date, none of the defendants have filed replies.

Contact Jackie Hong at jackie.hong@yukon-news.com

Yukon courts

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