Lawsuit: Izzo's, Rouses problems started in Lafayette

The escalating legal troubles between Izzo's Illegal Burrito and Rouses Market started in Lafayette back in 2011, according to court records.

The most recent complaint in the long-running lawsuit includes serious accusations of federal violations under the RICO — Racketeer Influenced and Corrupt Organizations — Act.

Izzo's is seeking more than $10 million in damages.

Background: Fight between Rouses, Izzo's continues | Izzo's files suit against Rouses

Racketeering, an organized crime in which a business repeatedly obtains money illegally, is just one of the allegations Izzo's has made against Rouses.

The owners of the Baton Rouge-based restaurant chain also allege that the owners of the Thibodaux-based supermarket chain broke federal and state laws that govern fair business practices by committing conspiracy, bribery, defamation and trademark violation.

Rouses recently filed a motion to dismiss all of the claims.

As the legal battle continues, there is one thing the Louisiana businesses can agree on — that the dispute started with a burrito recipe book years ago in Lafayette.

The Lafayette connection

The RICO case builds on a foundation established in a 2012 lawsuit Izzo's filed against Rouses in the 15th Judicial District Court in Lafayette Parish.

Izzo's said in the 2012 lawsuit that a former employee of the restaurant on Johnston Street stole a copy of Izzo's recipe book and used the recipes to make burritos for the Rouses location on Bertrand Drive, where he worked as a manager.

A court order in the 2012 lawsuit allowed Izzo's to retrieve the recipe book from Rouses.

Stealing Izzo's secret recipes was the first in a series of retaliation moves launched by Rouses after a business partnership with Izzo's didn't pan out as planned, according to court records.

The narrative, according to the amended RICO complaint filed by Izzo's Oct. 26, is as follows:

Izzo's rejected a Rouses proposal to open franchises of the burrito restaurant in their grocery stores in 2011.

Donald Rouse Jr., who manages the company, formed a scheme to steal Izzo's burrito recipes so his stores could offer similar burritos in the deli section of Rouses stores.

He then directed his Lafayette store managers to offer a Lafayette Izzo's manager to bring the restaurant's recipes with him to a job with Rouses.

The Izzo's manager accepted the offer, which the lawsuit calls a bribe, to steal Izzo's recipes and bring them to Rouses.

Rouses began using, and continues to use, Izzo's recipes in their build-your-own-burrito bars.

Rouses has denied the claims, saying via court documents that the "false and ludicrous allegations" were made in response to a judge throwing out all but one claim in a 2016 complaint Izzo's filed against Rouses.

This is the reality, according to a Nov. 22 motion filed by Rouses to remove claims from the record:

Donald Rouse Jr. hired managers for the grocery store at 601 Bertrand Drive in Lafayette but had no further involvement hiring or staffing decisions for the store.

He did not offer the Izzo's manager or any other Izzo's employee a job at Rouses in exchange for Izzo's recipes.

He wasn't involved in any scheme or conspiracy involving his employees to obtain or use Izzo's recipes.

He never possessed or used Izzo's trade secrets or recipes.

How it escalated

Rouses didn't just steal secret recipes, according to Izzo's complaint.

Rouses also allegedly conspired with retail developers as early as 2011 to form a monopoly in the food market by excluding Izzo's from opening in shopping centers across the South.

Rouses called these allegations "absurd" in its Nov. 22 motion.

According to the lawsuit, Rouses told developers to boycott and exclude Izzo's from their shopping centers because the restaurant chain is "litigious" and sells "substandard" products.

Lease agreements filed with the lawsuit include provisions that forbid developers from leasing to Izzo's.

Other provisions in the lease agreements between Rouses and developers forbid landlords from leasing to general types of businesses — such as secondhand stores, pawn shops and bowling alleys — instead of specific names like Izzo's.

What's happening now

Rouses filed a motion Friday to dismiss all claims in Izzo's amended RICO complaint.

Izzo's argument "amounts to little more than a series of labels wholly disconnected from any underlying substance," Rouses said in the motion to dismiss.

The RICO complaint is similar to the restaurant's complaint filed last year in the 19th Judicial District Court in East Baton Rouge Parish.

The 2016 case was transferred to a federal court, where the judge threw out all but one claim — that Rouses had infringed on Izzo's trademark "roll your own" slogan when it used the phrase "build your own" in the grocery stores' deli burrito bars.

Izzo's appealed the judge's decision and has since filed two amended complaints against Rouses, the most recent of which alleges the RICO violations.

Rouses asked the court on Friday to put an end to the long-running lawsuit.

"This case has been pending for 18 months," the memo filed by Rouses said. "Plaintiffs have pled and replied. They have established beyond any doubt that they have no action against the Rouses defendants; they have no plausible claim. It is time for the case to be dismissed without prejudice."