November 19, 2025|Franchise Frontlines
November 19, 2025 | U.S. District Court for the Western District of Virginia | Unpublished Opinion
Executive Summary
In an unpublished memorandum opinion, U.S. Magistrate Judge Joel Hoppe granted in part and denied in part motions to consolidate two related lawsuits brought by 360 Painting, LLC against former franchisees. According to the opinion, 360 Painting alleged that two franchisees launched and supported a competing painting business, diverted customers, and used confidential information in violation of their Franchise Agreements. The defendants argued that both cases involved the same competing entity, the same alleged breaches, and the same franchise system materials. The Court found substantial overlap in factual and legal issues and ordered consolidation for pretrial purposes to streamline discovery, but it declined to consolidate the cases for trial at this stage. The Court emphasized that consolidation does not merge the suits, alter the rights of the parties, or resolve any substantive issues in the underlying disputes.
Relevant Background
According to the opinion, 360 Painting sued two different franchisees in separate actions alleging breaches of nearly identical Franchise Agreements. The franchisor alleged that Andrey Chshelokovskiy and James Gilliam each signed ten-year Franchise Agreements in late 2021 and subsequently became involved with a competing entity, Nomad Contractors LLC. In both cases, 360 Painting alleged violations of contractual provisions relating to non-competition, customer solicitation, and confidentiality. The franchisor also alleged misappropriation of proprietary information and diversion of customers to the competing business.
The Court explained that the two franchisees were represented by the same counsel and asserted nearly identical affirmative defenses. Both defendants denied liability and alleged that 360 Painting misrepresented aspects of the franchise system, breached its own contractual obligations, and acted in bad faith. Chshelokovskiy also filed counterclaims alleging fraud and breach of contract. The Court noted that both cases involved overlapping communications between 360 Painting and franchisees, similar marketing materials, similar Franchise Disclosure Documents, and comparable allegations relating to the defendants’ conduct.
The defendants moved to consolidate the actions under Federal Rule of Civil Procedure 42(a), which allows consolidation when cases share common questions of law or fact. 360 Painting opposed consolidation for trial, arguing that certain claims—such as its fraudulent inducement claim against Gilliam and Chshelokovskiy’s counterclaims—were unique and could lead to prejudice or juror confusion.
Decision
The Court granted the motions to consolidate for pretrial purposes. The Court found that both cases involved common questions regarding interpretation of the Franchise Agreements, the enforceability of non-compete and confidentiality provisions, and the nature of the alleged competitive conduct. The Court also determined that pretrial consolidation would reduce duplicative discovery, avoid repetitive depositions, and conserve judicial resources. The Court emphasized that consolidation at the pretrial stage is particularly appropriate when cases rely on similar documents, similar testimony, and similar timelines, as appeared to be the case here.
The Court denied without prejudice the request to consolidate the cases for trial. The opinion noted that the current record was not sufficiently developed to assess whether a joint trial would cause prejudice, create confusion, or improperly mix distinct counterclaims and affirmative defenses. The Court also observed that the parties disputed whether jury-trial waivers in the Franchise Agreements applied, which could affect whether a bench or jury trial would occur. Because those questions remained unresolved, the Court determined that consolidation for trial would be premature.
Looking Forward
This decision highlights several practical considerations for franchisors who face parallel lawsuits involving similar allegations from different franchisees. Although the Court emphasized that its ruling was limited to administrative efficiency and did not resolve any substantive issues, the opinion reflects how courts may consolidate pretrial proceedings when claims arise from similar contractual language, similar alleged conduct, or similar use of franchise-system materials. Under different facts or in different procedural postures, courts may evaluate consolidation differently, but this decision underscores that early discovery strategy and consistency in franchise system communications may influence how courts manage parallel actions.
The opinion also illustrates that consolidation for trial involves a separate and more stringent analysis. Franchisors confronted with multiple actions involving different franchisees may remain able to preserve individualized trials, particularly when certain claims or counterclaims involve unique factual questions. At the same time, pretrial consolidation may assist franchisors and franchise systems by reducing duplicative costs while allowing the parties and the Court to avoid inconsistent discovery rulings.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
