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USCA1 Opinion
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
_________________________
No. 96-1619
ROSS-SIMONS OF WARWICK, INC., ET AL.,
Plaintiffs, Appellees,
v.
BACCARAT, INC.,
Defendant, Appellant.
_________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Francis J. Boyle, Senior U.S. District Judge] __________________________
_________________________
Before
Selya, Cyr and Lynch,
Circuit Judges. ______________
_________________________
Jeffrey A. Oppenheim, with whom Kane Kessler, P.C., John H. _____________________ __________________ _______
Blish, Joseph V. Cavanagh, Jr., Michael W. Carroll and Blish & _____ _______________________ __________________ _______
Cavanagh were on brief, for appellant. ________
Steven E. Snow, with whom Thomas R. Noel and Partridge, Snow ______________ ______________ _______________
& Hahn were on brief, for appellees. ______
_________________________
December 13, 1996
_________________________
SELYA, Circuit Judge. Defendant-appellant Baccarat, SELYA, Circuit Judge. ______________
Inc. (Baccarat) implores us to dismantle a preliminary injunction
that compels it to continue selling its wares to the plaintiffs.1
Discerning neither error of law nor abuse of discretion, we
affirm.
I. BACKGROUND I. BACKGROUND
We divide our account of the relevant background
material into four segments.
A. The Commercial Climate. A. The Commercial Climate. ______________________
Baccarat is a subsidiary of Compagnie des Cristalleries
de Baccarat, a prestigious French lead crystal manufacturer. It
is the exclusive distributor in the United States of this
aristocratic product line.
Ross-Simons sells jewelry, tableware, crystal, and
sundry other merchandise from retail stores located in several
states. Roughly eighty-five percent of its business, however, is
generated through catalog and telemarketing sales. It
distributes 45,000,000 catalogs annually and maintains a bustling
distribution center in Cranston, Rhode Island. A bridal gift
registry comprises an integral part of Ross-Simons' business.2
____________________
1Ross-Simons, Inc., Ross-Simons of Warwick, Inc., Ross-
Simons of Barrington, Inc., Ross-Simons of Atlanta, L.L.C. and
Ross-Simons of North Carolina, L.L.C. are all named plaintiffs
herein. For simplicity's sake we refer to them collectively as
"Ross-Simons."
2The mechanics of a bridal gift registry are uncomplicated.
In its simplest iteration, betrothed couples select items that
they would like to possess and "register" with a merchant who
carries those items. Persons who wish to give wedding presents
or gifts for other occasions can then contact the merchant,
2
The firm acquires approximately 15,000 new registrants annually
and has about 30,000 active registrations at any given time. In
1995 Ross-Simons grossed $150,000,000 from all its operations,
including $1,000,000 attributable to Baccarat crystal (mostly
from catalog sales).
Ross-Simons carved its niche as a discount or "off-
price" retailer, frequently advertising prices as much as fifty
percent below suggested retail prices. Baccarat comes from a
different school, having steadfastly resisted discounting and
discounters. For many years Baccarat refused to sell its crystal
to Ross-Simons. Moreover, when Baccarat became the exclusive
American distributor of Haviland Limoges porcelain dinnerware
(not a product that Baccarat manufactured), it terminated Ross-
Simons as an authorized dealer for that line.
Rather than turning the other cheek, Ross-Simons
responded by filing an antitrust suit. Its complaint alleged
inter alia that Baccarat refused to deal with Ross-Simons due to _____ ____
the latter's proclivity for discount pricing. In November of
1992, the parties entered into a written accord (the 1992
Agreement) that settled their differences.3 Pursuant to that
agreement, the federal district court dismissed the antitrust
suit without prejudice.
____________________
choose an item from the list, and have it delivered to the
registrant(s).
3In addition to Baccarat, other named defendants were
parties to both the lawsuit and the settlement. Their
involvement does not affect this appeal.
3
B. The 1992 Agreement. B. The 1992 Agreement. __________________
An understanding of the 1992 Agreement is critical to
reasoned consideration of the issues on appeal. Baccarat and
Ross-Simons styled the pact as an "Agreement of Compromise and
Settlement" and stipulated that it would be governed by Rhode
Island law. They memorialized it "as a compromise between the
parties for the settlement of their claims, differences and
causes of action." However, they did not ask the district court
either to approve the settlement terms or to enter a decree
embodying those terms.
By virtue of the 1992 Agreement, Baccarat appointed
Ross-Simons as an authorized dealer "entitled to purchase and
resell [Baccarat crystal] products at such prices and upon such
terms as are available to other authorized dealers." In addition
Baccarat agreed "not [to] terminate Ross-Simons' status as an
authorized dealer, nor otherwise discriminate against Ross-Simons
in any manner, [for its refusal] to adhere to suggested resale
prices or due to Ross-Simons' marketing through direct-mail
catalogs." The 1992 Agreement contains no durational term, but
it specifically provides that its covenants and conditions are
not terminable on the basis of changed facts.
C. The Proposed Agreement. C. The Proposed Agreement. ______________________
Ross-Simons sold Baccarat products for three years,
without incident, until a series of events shattered the
increasingly fragile business relationship. A new management
regime took control of Baccarat in 1994 and Jean-Luc Negre became
4
the firm's chief executive officer. Early on, Negre made known
his view that it was inappropriate for retailers to discount
luxury items. He then reshaped Baccarat's marketing strategy in
an attempt, as he put it, to improve the "overall image and
prestige . . . of [Baccarat's] world-renowned name." Under the
revised plan, Baccarat limited the number of retailers to whom it
would sell its products and simultaneously introduced a new
"Authorized Dealer Program." To retain authorized dealership
status in 1996 and beyond, a retailer had to sign a particular
form of dealer agreement (the Proposed Agreement) no later than
December 15, 1995.
Although Baccarat invited Ross-Simons (along with 379
other retailers) to participate in this neoteric program, there
was a rub; by its terms the Proposed Agreement prohibits the
advertising of Baccarat products in any catalog or other printed
medium that promotes at off-prices more than twenty-five percent
of the items advertised. In addition, Baccarat reserved the
right to determine in its sole discretion "whether an advertising
or promotional practice is damaging to the image, prestige and
goodwill" of its products. If Baccarat found any such practice
offensive, it could terminate the dealership forthwith. Because
Ross-Simons (alone among Baccarat's invitees) devotes most of its
catalog to discounted items, and because Negre previously had
proclaimed that off-pricing was inconsistent with prestige, Ross-
Simons viewed the proposal as a "suicide note," asserted that it
violated the terms of the 1992 Agreement, and refused to sign.
5
Presumably in anticipation that Baccarat would follow through on
its threat of termination, Ross-Simons stockpiled Baccarat
products in late 1995. The precaution proved justified, as
Baccarat refused to fill Ross-Simons' orders (including 1995
orders previously received but theretofore unfilled) from and
after January 1, 1996.
D. The Proceedings Below. D. The Proceedings Below. _____________________
Ross-Simons sued Baccarat in a Rhode Island state
court, claiming breach of contract, breach of an implied covenant
of good faith and fair dealing, and tortious interference with
advantageous business relationships. Baccarat removed the case
to the federal district court. See 28 U.S.C. 1332(a) ___
(diversity jurisdiction), 1441 (permitting removal of cases in
which diversity jurisdiction exists). In short order, the
district court conducted an evidentiary hearing and granted Ross-
Simons' motion to compel Baccarat, pendente lite, to continue to ________ ____
sell products in pursuance of the 1992 Agreement. In its ruling
the court predicted that Ross-Simons probably would prevail on
the theory that the Proposed Agreement constituted an
impermissible attempt by Baccarat to subvert the 1992 Agreement.
Relatedly, the court concluded that Ross-Simons would suffer
irreparable harm in the absence of mandatory injunctive relief,
and conversely, that Baccarat would undergo scant hardship should
6
a preliminary injunction issue. This appeal ensued.4
II. ANALYSIS II. ANALYSIS
In the sections that follow, we peruse the checklist
applicable to preliminary injunction determinations and then
assess how well the district court's order withstands Baccarat's
multi-pronged attack.
A. The Preliminary Injunction Standard. A. The Preliminary Injunction Standard. ___________________________________
Over time, we have crafted a four-part framework for
use in determining whether the grant or denial of preliminary
injunctive relief is appropriate. Under this formulation, trial
courts must consider (1) the likelihood of success on the merits;
(2) the potential for irreparable harm if the injunction is
denied; (3) the balance of relevant impositions, i.e., the
hardship to the nonmovant if enjoined as contrasted with the
hardship to the movant if no injunction issues; and (4) the
effect (if any) of the court's ruling on the public interest.
See Weaver v. Henderson, 984 F.2d 11, 12 & n.3 (1st Cir. 1993); ___ ______ _________
Narragansett Indian Tribe v. Guilbert, 934 F.2d 4, 5 (1st Cir. __________________________ ________
1991).
An appellate court affords considerable deference to
the district court's evaluative judgment of these discrete
factors and of their interrelationship. See Anthony v. Sundlun, ___ _______ _______
952 F.2d 603, 605 n.2 (1st Cir. 1991). Thus, a party who appeals
____________________
4Baccarat's endeavors to secure a stay were unavailing, and
the preliminary injunction is in force.
7
from the issuance of a preliminary injunction bears the
considerable burden of demonstrating that the trial court
mishandled the four-part framework. See EEOC v. Astra USA, Inc., ___ ____ _______________
94 F.3d 738, 743 (1st Cir. 1996). In sum, unless the appellant
can show that the lower court misapprehended the law or committed
a palpable abuse of discretion, the court of appeals will not
intervene. See Narragansett Indian Tribe, 934 F.2d at 5; ___ ___________________________
Independent Oil & Chem. Workers of Quincy, Inc. v. Procter & ___________________________________________________ _________
Gamble Mfg. Co., 864 F.2d 927, 929 (1st Cir. 1988). Though ________________
mistake of law is a rubric that requires no elaboration, abuse of
discretion is a fuzzier concept. That inquiry is case-specific,
see Weaver, 984 F.2d at 13; Narragansett Indian Tribe, 934 F.2d ___ ______ _________________________
at 5-6, and a finding of abuse usually entails proof that the
nisi prius court, in making the challenged ruling, ignored
pertinent elements deserving significant weight, considered
improper criteria, or, though assessing all appropriate and no
inappropriate factors, plainly erred in balancing them, see ___
Procter & Gamble, 864 F.2d at 929. ________________
We proceed to scrutinize the district court's ruling
under this deferential glass. In so doing, we address only the
first two rungs of the four-part framework, as Baccarat does not
challenge the district court's analysis anent either the third or
fourth rung.
B. The Likelihood of Success. B. The Likelihood of Success. _________________________
Likelihood of success is the main bearing wall of the
four-factor framework. See Weaver, 984 F.2d at 12; Auburn News ___ ______ ___________
8
Co. v. Providence Journal Co., 659 F.2d 273, 277 (1st Cir. 1981), ___ ______________________
cert. denied, 455 U.S. 921 (1982). Here, Baccarat challenges the _____ ______
district court's assessment of this factor in two respects. We
examine each in turn. Before doing so, however, we deem it
prudent to remind the reader that, just as the trial court, at
the preliminary injunction stage, need not predict the eventual
outcome on the merits with absolute assurance, see Narragansett ___ ____________
Indian Tribe, 934 F.2d at 6 (cautioning that decisions on ____________
preliminary injunction "are to be understood as statements of
probable outcomes" only), an appellate court need not
conclusively determine the merits of the underlying claims to
execute abuse-of-discretion review.
1. The Nondiscrimination Clause. As previously 1. The Nondiscrimination Clause. ______________________________
mentioned, see supra Part I(B), Baccarat agreed in 1992 not to ___ _____
"discriminate against Ross-Simons in any manner" because of its
predilection for off-pricing. The district court relied on this
clause in holding that Ross-Simons likely would prevail on its
breach of contract claim. However, Baccarat maintains that it
terminated Ross-Simons for failing to sign the Proposed Agreement
and, in doing so, treated Ross-Simons the same as any other
dealer who refused to honor this uniform set of terms. Since the
lower court's order requires Baccarat to treat Ross-Simons
differently than other dealers that is, more favorably, by
allowing Ross-Simons to buy Baccarat crystal without abiding by
the Proposed Agreement's uniform terms it is the court's order,
not Baccarat's conduct, this thesis holds, which contradicts the
9
nondiscrimination clause contained in the 1992 Agreement. This
resupinate reasoning stands the nondiscrimination clause on its
head and ignores the district court's factual findings.
Judge Boyle found that of the 380 retailers whom
Baccarat invited to become authorized dealers, only one of them
Ross-Simons engaged in systematic off-pricing. Thus, while the
proscription against widespread discounting was part and parcel
of a uniform contract (i.e., the Proposed Agreement), only Ross-
Simons would feel its sting. Building on this foundation the
judge drew the eminently reasonable inference that Baccarat
(which had not previously attempted to impose a monolithic set of
dealer agreements) wrote these particular provisions in a
deliberate effort to circumvent the 1992 Agreement. On this
basis, he concluded that Ross-Simons probably would succeed on
the merits inasmuch as the proscription violated the
nondiscrimination clause.5
To be sure, these findings are not inevitable, but they
reflect a plausible rendition of the evidence then before the
court. The findings, in turn, support the court's chain of
reasoning and give meaningful effect to the 1992 Agreement's
nondiscrimination clause. That ends the matter: at this
preliminary stage, it is both the trial court's prerogative and
its duty "to assess the facts, draw whatever reasonable
____________________
5Among other things, Baccarat's former president (who signed
the 1992 Agreement on its behalf) executed an affidavit
supporting Ross-Simons' view of the nondiscrimination clause.
This testimony buttresses the district court's application of the
clause.
10
inferences it might favor, and decide the likely ramifications."
Procter & Gamble, 864 F.2d at 933. ________________
2. The Uniform Commercial Code. In its next foray 2. The Uniform Commercial Code. _____________________________
Baccarat attempts to characterize the 1992 Agreement as a
contract for the sale of goods, thus bringing into play Article
Two of the Uniform Commercial Code (UCC), R.I. Gen. Laws 6A-2-
101 to 6A-2-725 (1992), and, in particular, R.I. Gen. Laws 6A-
2-309(2) ("Where the contract provides for successive
performances but is indefinite in duration it is valid for a
reasonable time, but unless otherwise agreed may be terminated at
any time by either party."). In Baccarat's view, this statute
renders the 1992 Agreement terminable at will and thus undermines
Ross-Simons' contract claims. This argument, though burnished
with considerable care, builds on a false premise.
We begin with bedrock. Courts look to the apparent
intentions of the contracting parties when interpreting
contracts. See United States v. Seckinger, 397 U.S. 203, 212 ___ _____________ _________
n.17 (1970); McCarthy v. Azure, 22 F.3d 351, 355 (1st Cir. 1994); ________ _____
Fashion House, Inc. v. K mart Corp., 892 F.2d 1076, 1084 (1st ____________________ _____________
Cir. 1989); Johnson v. Western Nat'l Life Ins. Co., 641 A.2d 47, _______ ___________________________
48 (R.I. 1994). A valid settlement agreement is an enforceable
contract subject to this basic principle of construction. See ___
ITT Corp. v. LTX Corp., 926 F.2d 1258, 1266-67 (1st Cir. 1991); _________ _________
Mathewson Corp. v. Allied Marine Indus., Inc., 827 F.2d 850, 856 ________________ __________________________
(1st Cir. 1987); T & T Mfg. Co. v. A.T. Cross Co., 587 F.2d 533, ______________ ______________
537 (1st Cir. 1978), cert. denied, 441 U.S. 908 (1979); cf. _____ ______ ___
11
Langton v. Johnston, 928 F.2d 1206, 1221 (1st Cir. 1991) (stating _______ ________
that consent decrees between private parties in a commercial
setting are treated as contracts). Thus, whether Article Two
applies to the 1992 Agreement hinges primarily on the parties'
intentions.
The district court eschewed any reference to the
statute, apparently convinced that it did not govern the 1992
Agreement. We believe that this action is supportable. Article
Two does not purport to regulate nonsale transactions. See R.I. ___
Gen. Laws 6A-2-102. Furthermore, if a contract contains a
blend of sale and nonsale elements, Article Two applies only if
the dominant purpose behind the contract reflects a sales
transaction. See ITT, 926 F.2d at 1266; Cianbro Corp. v. Curran- ___ ___ _____________ _______
Lavoie, Inc., 814 F.2d 7, 13-14 (1st Cir. 1987); Bonebrake v. ____________ _________
Cox, 499 F.2d 951, 960 (8th Cir. 1974); see generally 1 J. White ___ ___ _________
& R. Summers, Uniform Commercial Code 1-1 (4th ed. 1995). ________________________
Consequently, Article Two is not in play if the dominant purpose
of an agreement is to settle litigation. See, e.g., ITT, 926 ___ ____ ___
F.2d at 1266; New Eng. Power Co. v. Riley Stoker Corp., 477 ___________________ ___________________
N.E.2d 1054, 1060-61 (Mass. App. Ct.), review denied, 481 N.E.2d ______ ______
197 (Mass. 1985).
While it is not necessary definitively to decide the
issue of predominant purpose at this stage in the proceedings,
the record strongly suggests that the parties to the 1992
Agreement intended first and foremost to settle the antitrust
litigation. For one thing, the title of the pact "Agreement of
12
Compromise and Settlement" is a good barometer of the parties'
intentions. Though the label that contracting parties affix to
an agreement is not necessarily determinative of the agreement's
predominant purpose, it can constitute potent evidence of that
purpose. See, e.g., Triangle Underwriters, Inc. v. Honeywell, ___ ____ ___________________________ __________
Inc., 604 F.2d 737, 742-43 (2d Cir. 1979) (holding a hybrid ____
contract entitled "Agreement for the Sale of [Goods]" to be
precisely that); Riley Stoker, 477 N.E.2d at 1060-61 (declining ____________
to characterize a document labelled "Settlement Agreement" as a
contract for the sale of goods).
For another thing, the body of the 1992 Agreement
contains language that is more consistent with the purpose
suggested by its title than with any other purpose. The
agreement opens with a declaration that it represents "a
compromise between the parties for the settlement of their
claims, differences and causes of action with respect to the
dispute." A later section reiterates that the parties executed
the document "for the sole purpose of compromising and settling ____
the matters involved in [the antitrust] dispute." (Emphasis
supplied). These excerpts comprise powerful evidence that the
primary impetus for the agreement was to abate the pending
litigation.
Baccarat tries to throw cold water on this proposition.
Since the antitrust suit was dismissed without prejudice,
Baccarat suggests that Ross-Simons could have revived the claims
at any time, and, thus, the predominant purpose of the 1992
13
Agreement must have been the sale of goods. We think that this
is a classic non sequitur. Dismissing a lawsuit, even without
prejudice, is not an idle matter; it has consequences in terms of
costs, legal expenses, time bars, and the like. Because the
parties' intentions (and, therefore, the contract's meaning) must
be gleaned from all the surrounding circumstances, see, e.g., ___ ____
Seckinger, 397 U.S. at 212 n.17, the dismissal without prejudice, _________
by itself, cannot support Baccarat's characterization.
There is a second problem with Baccarat's attempt to
invoke Article Two: even this scant record indicates that the
parties never intended the 1992 Agreement to be terminable at
will. Indeed, the parties must have understood that the 1992
Agreement would operate at some length because they specifically
provided in section four that each party assumed the risk of
changes in the operative facts and relinquished any right to
terminate the agreement on the basis of such factual shifts.
This proviso would be nonsensical if either party had the right
to terminate the agreement at will.
Raw logic bolsters this evidence. In exchange for the
covenants contained in the 1992 Agreement, Ross-Simons
surrendered the opportunity to pursue colorable antitrust claims
against Baccarat. A reasonable factfinder easily could conclude
that Ross-Simons would not have abandoned such an opportunity in
exchange for a settlement that, in Judge Boyle's phrase, Baccarat
could have ripped up the next morning. Based on the parties'
intent, made manifest by the language of the 1992 Agreement and
14
the circumstances of the settlement itself, it seems quite likely
that the Agreement was not meant to be terminable at will.
We have said enough on this score. For the reasons we
have enumerated, the lower court's four major actions in respect
to this issue namely, its refusal to apply Article Two, its
determination that the terms of the 1992 Agreement remain in
effect, its interpretation of those terms, and its conclusion
that Ross-Simons had demonstrated a significant likelihood of
success on the merits of its contract claims are impervious to
Baccarat's assault.
C. Irreparable Harm. C. Irreparable Harm. ________________
Civil Rule 65(a), as interpreted in this circuit,
places the burden of demonstrating that a denial of interim
injunctive relief would cause irreparable harm squarely upon the
movant. See Narragansett Indian Tribe, 934 F.2d at 6. Baccarat ___ _________________________
questions whether Ross-Simons carried this burden.
The burden is substantial, but it is possible to
overstate its dimensions. Baccarat falls into this trap by
insisting that, since Baccarat crystal comprises less than one
percent of Ross-Simons' total annual sales, there can be no
irreparable harm because withholding the line could not
jeopardize Ross-Simons' economic viability. To establish
irreparable harm, however, a plaintiff need not demonstrate that
the denial of injunctive relief will be fatal to its business.
See General Leaseways, Inc. v. National Truck Leasing Ass'n, 744 ___ _______________________ _____________________________
F.2d 588, 591 (7th Cir. 1984). It is usually enough if the
15
plaintiff shows that its legal remedies are inadequate. See ___
Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982) __________ ______________
(collecting cases); Lopez v. Garriga, 917 F.2d 63, 68 (1st Cir. _____ _______
1990). If the plaintiff suffers a substantial injury that is not
accurately measurable or adequately compensable by money damages,
irreparable harm is a natural sequel. See, e.g., Multi-Channel ___ ____ _____________
TV Cable Co. v. Charlottesville Quality Cable Operating Co., 22 ____________ ____________________________________________
F.3d 546, 551 (4th Cir. 1994); K-Mart Corp. v. Oriental Plaza, ____________ _______________
Inc., 875 F.2d 907, 915 (1st Cir. 1989); Danielson v. Local 275, ____ _________ __________
Laborers Int'l Union, 479 F.2d 1033, 1037 (2d Cir. 1973). Thus, ____________________
a cognizable threat of such harm can support a restraining order.
Even so, whether Ross-Simons made the requisite showing
in this case poses a close question. Although there is no
mechanical test that permits a court to make an exact calculation
of the quantum of hard-to-measure harm that will suffice to
justify interim injunctive relief, there are some relevant
guideposts. In the first place, the plaintiff's showing must
possess some substance; a preliminary injunction is not warranted
by a tenuous or overly speculative forecast of anticipated harm.
See Narragansett Indian Tribe, 934 F.2d at 6-7; Public Serv. Co. ___ _________________________ ________________
v. Town of W. Newbury, 835 F.2d 380, 383 (1st Cir. 1987). In the __________________
second place, an attempt to show irreparable harm cannot be
evaluated in a vacuum; the predicted harm and the likelihood of
success on the merits must be juxtaposed and weighed in tandem.
See Astra USA, 94 F.3d at 743 (explaining that the greater the ___ _________
likelihood of merits success, the less that is required in the
16
way of irreparable harm); Gately v. Commonwealth of Mass., 2 F.3d ______ _____________________
1221, 1232 (1st Cir. 1993) (noting the same phenomenon and
suggesting that irreparable harm is subject to a "sliding scale"
analysis), cert. denied, 114 S. Ct. 1832 (1994). Finally, it is _____ ______
clear that battles over the quality and quantity of the harm
alleged most often will be won or lost in the trial court. See ___
K-Mart, 875 F.2d at 915 ("District courts have broad discretion ______
to evaluate the irreparability of alleged harm and to make
determinations regarding the propriety of injunctive relief.")
(citation and internal quotation marks omitted).
In this instance the district court determined that
Ross-Simons made the requisite showing because, absent a
restraining order, it would lose incalculable revenues and
sustain harm to its goodwill. The court grounded this
determination on two factual findings. First, due to the
uniqueness of Baccarat crystal, Ross-Simons could not simply
replace the Baccarat line with some other brand, and, without the
availability of Baccarat, its bridal registry business would
suffer. The resultant damage, including lost sales of other
registry items, alienation of future registrants, and harm to its
reputation, would defy accurate quantification. Second, when
Baccarat ceased filling Ross-Simons' orders, Ross-Simons already
had printed and distributed millions of copies of its 1996
catalog,6 and that catalog held Ross-Simons out as an authorized
____________________
6Following its usual praxis, Ross-Simons prepared its 1996
catalog in the fall of 1995 and began mailing it later that year.
The catalog identifies Ross-Simons as an authorized Baccarat
17
purveyor of Baccarat crystal. The court found that the inability
to supply products as advertised would wreak substantial (but
immeasurable) damage to the goodwill that Ross-Simons
painstakingly had created over the years. The court dismissed
Baccarat's counter-argument that Ross-Simons' stockpiling of
Baccarat crystal safeguarded it from this type of harm, finding
that Ross-Simons would deplete its beefed-up inventory well
before the litigation ended.
Like the district court, we think that Ross-Simons'
bridal registry business is the focal point of irreparable harm
in this case. Similar to full-line distributors who hawk "one-
stop shopping" as a means of meeting all their customers' needs,
Ross-Simons promotes its bridal registry as offering a complete
line of giftware, including many choices of crystal. Although
not among Ross-Simons' best-selling lines, Baccarat crystal is a
prestigious item a unique, top-shelf line that boasts
considerable allure and that is capable of serving as a beacon to
attract potential customers. In the context of a bridal
registry, as in a variety of other commercial settings, the
availability of a product line is as important, if not more
important, than the amount of sales generated. See, e.g., ___ ____
Supermarket Servs., Inc. v. Hartz Mountain Corp., 382 F. Supp. ________________________ _____________________
1248, 1256 (S.D.N.Y. 1974) (noting the importance of offering a
particular brand lest customers go elsewhere). Potential
registrants, unable to include Baccarat crystal among their
____________________
dealer and contains a listing of available Baccarat products.
18
selections, may choose not to register at all with Ross-Simons,
enlisting instead with a competitor who offers the full spectrum
of desired products.
To be sure, the district court's findings anent the
bridal registry rest on a number of assumptions about Ross-
Simons' business, its customers' attitudes, and the way in which
the marketplace operates. But the assumptions are reasonable and
are consistent with the available evidence; thus, the court's
subsidiary findings are not unduly speculative. These subsidiary
findings, in turn, are enough to bottom the court's ultimate
finding of irreparable injury. After all, if the court's
subsidiary findings are correct, it could never be shown how many
brides opted not to associate themselves with Ross-Simons because
Baccarat products were unavailable, and it would follow
inexorably that neither the adverse impact on sales nor the
concomitant insult to goodwill could be measured accurately.7
See Interphoto Corp. v. Minolta Corp., 417 F.2d 621, 622 (2d Cir. ___ ________________ _____________
____________________
7While the district court's finding of irreparable harm is
sustainable on this basis alone, the fact that the 1996 catalogs
already were in circulation when the contretemps arose increases
the threat to Ross-Simons' goodwill. Absent an injunction,
catalog recipients might place orders for Baccarat products,
believing that Ross-Simons could supply advertised items, and
then be disappointed. The harm to Ross-Simons' general goodwill
stemming from its inability to fill such orders likewise would be
incalculable, and, thus, irreparable. See, e.g., Blackwelder ___ ____ ___________
Furniture Co. v. Seilig Mfg. Co., 550 F.2d 189, 196-97 (4th Cir. _____________ _______________
1977); Bascom Food Prods. Corp. v. Reese Finer Foods, Inc., 715 _________________________ ________________________
F. Supp. 616, 637-38 (D.N.J. 1989) (collecting cases); Robinson ________
v. United States Postal Serv., 573 F. Supp. 244, 245 (D. Mass. ___________________________
1983); see also Hypertherm, Inc. v. Precision Prods., Inc., 832 ___ ____ _________________ _______________________
F.2d 697, 700 (1st Cir. 1987) (holding that substantial damage to
business reputation is a sufficient showing of irreparable harm
to justify preliminary injunctive relief).
19
1969) (per curiam); Supermarket Servs., 382 F. Supp. at 1256-57. __________________
This is far from an aberrational result. By its very
nature injury to goodwill and reputation is not easily measured
or fully compensable in damages. Accordingly, this kind of harm
is often held to be irreparable. See, e.g., K-Mart, 875 F.2d at ___ ____ ______
915; Camel Hair & Cashmere Inst. of Am., Inc. v. Associated Dry _________________________________________ ______________
Goods Corp., 799 F.2d 6, 14-15 (1st Cir. 1986). Of particular ___________
interest for purposes of this appeal, several courts have
recognized that the loss of a prestigious brand or product line
may create a threat of irreparable injury if it is likely that
customers (or prospective customers) will turn to competitors who
do not labor under the same handicap. See, e.g., Multi-Channel ___ ____ _____________
TV, 22 F.3d at 552; Jacobson & Co. v. Armstrong Cork Co., 548 __ _______________ __________________
F.2d 438, 444-45 (2d Cir. 1977); Bergen Drug Co. v. Parke, Davis ________________ ____________
& Co., 307 F.2d 725, 728 (3d Cir. 1962); Hendricks Music Co. v. _____ ___________________
Steinway, Inc., 689 F. Supp. 1501, 1512 (N.D. Ill. 1988); _______________
Supermarket Servs., 382 F. Supp. at 1256-57; see also Automatic __________________ ___ ____ _________
Radio Mfg. Co. v. Ford Motor Co., 390 F.2d 113, 116-17 (1st Cir.) ______________ ______________
(suggesting in dictum that irreparable harm to a retailer's
goodwill may result from an inability to supply a full line of
products), cert. denied, 391 U.S. 914 (1968); Leone v. Town of _____ ______ _____ _______
New Shoreham, 534 A.2d 871, 874 (R.I. 1987) (holding that loss of ____________
goodwill due to inability to serve returning customers
constitutes irreparable harm).
Baccarat's other arguments regarding the nature and
degree of the harm that Ross-Simons alleges do not require
20
comment.8 Mindful of the preliminary stage of the proceedings,
the strong likelihood that Ross-Simons will prevail on the
merits, and the trial court's broad discretion, we uphold the
finding that Ross-Simons faced irremediable harm if interim
injunctive relief were withheld.
III. CONCLUSION III. CONCLUSION
We need go no further. Here, the district court
applied the traditional four-part framework to the evidence
before it. In doing so, the court mulled all the appropriate
criteria, eschewed reliance on inappropriate criteria, weighed
the relevant factors with considerable care, and determined that
Ross-Simons made a sufficient showing to justify the issuance of
an injunction pendente lite. Given the case-specific factual ________ ____
findings that anchor this determination, we cannot say that the
court's action constituted an abuse of discretion.
Affirmed. Affirmed. ________
____________________
8For example, Baccarat suggests that Ross-Simons could and
still can avoid any harm simply by signing the Proposed
Agreement. This is sheer persiflage. The law much less a
court of equity should not compel a litigant to sign away the
farm in order to save the crops.
21
Document Info
Docket Number： 96-1619
Citation Numbers： 102 F.3d 12, 31 U.C.C. Rep. Serv. 2d (West) 327, 1996 U.S. App. LEXIS 32734, 1996 WL 708880
Judges： Selya, Cyr, Lynch
Filed Date： 12/13/1996
Precedential Status： Precedential
Modified Date： 11/4/2024