Specialty Bakeries v. HalRob Inc ( 1997 )

Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
11-19-1997
Specialty Bakeries v. HalRob Inc
Precedential or Non-Precedential:
Docket
97-1343
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Recommended Citation
"Specialty Bakeries v. HalRob Inc" (1997). 1997 Decisions. Paper 263.
http://digitalcommons.law.villanova.edu/thirdcircuit_1997/263
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Filed November 19, 1997
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-1343
SPECIALTY BAKERIES, INC.; ROCCO FIORENTINO;
FRANK J. GUGLIELMO; JOHN E. GERBER, JR.;
MANHATTAN BAGEL COMPANY, INC.
v.
HALROB, INC.; ROBHAL MANAGEMENT, INC.,
Appellants
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 97-01057)
Argued October 21, 1997
BEFORE: MANSMANN, GREENBERG, and ALARCON,*
Circuit Judges
(Filed: November 19, 1997)
Mark A. Lublin (argued)
Roger P. Cameron
Obermayer, Rebmann, Maxwell &
Hippel
1617 John F. Kennedy Boulevard
One Penn Center, 19th Floor
Philadelphia, PA 19103
Attorneys for Appellants
_________________________________________________________________
*Honorable Arthur L. Alarcon, Senior Judge of the United States Court
of Appeals for the Ninth Circuit, sitting by designation.
Arthur L. Pressman (argued)
Constantine T. Fournaris
Abraham, Pressman & Bauer
1818 Market Street
35th Floor
Philadelphia, PA 19103
Attorneys for Appellees
OPINION OF THE COURT
PER CURIAM.
HalRob, Inc. and RobHal Management, Inc. appeal from
an order for a preliminary injunction the district court
entered in this matter on April 15, 1997, in accordance
with its opinion reported as Specialty Bakeries, Inc. v.
RobHal, Inc., 961 F. Supp. 822 (E.D. Pa. 1997). On July 31,
1997, we stayed the preliminary injunction pending this
appeal.
After a careful review, we have determined that there is
no basis to disturb the preliminary injunction except in one
respect. In particular, we conclude that the Anti-Injunction
Act, 28 U.S.C. S 2283, did not preclude the district court
from granting the preliminary injunction and that the
district court did not abuse its discretion in entering an
injunction against HalRob, Inc. and RobHal Management,
Inc. barring them from seeking damages and other relief in
the New Jersey proceeding.
We conclude, however, that the injunction sweeps too
broadly. The court limited the scope of the injunction by
providing that it would not prevent the
parties to the New Jersey action from seeking
preliminary injunctive relief only, pending a decision by
the above-referenced arbitrator, against Specialty
Bakeries, Inc., Rocco Fiorentino, Frank J. Guglielmo,
John E. Gerber, Jr. or Manhattan Bagel Company, Inc.
to prevent them or any of them from making any
impending material change in the status quo as it
existed as of February 7, 1997. An impending material
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change is one that would eviscerate the arbitration
process.
Specialty Bakeries, Inc., 961 F. Supp. at 831. The district
court used the February 7, 1997 date as HalRob filed the
New Jersey action on that day.
The district court fashioned its limitation on the
injunction in an attempt to comply with our opinion in
Ortho Pharm. Corp. v. Amgen, Inc., 882 F.2d 806, 814 (3d
Cir. 1989), in which we said the following with respect to a
court granting preliminary injunctive relief pending
arbitration:
In sum, courts invoke the phrase `preservation of the
status quo' as a summary explanation of the need to
protect the integrity of the applicable dispute resolution
process. Thus, the court granting an injunction has the
power -- and indeed is required -- to make all factual
findings necessary to `set forth the reason for. . .
issuance [of injunctive relief].' Fed. R. Civ. P. 65(d).
Moreover, because the district court must focus on
preservation of the integrity of the arbitration process,
the relief granted need not be limited to restoring the
parties precisely to their pre-litigation position without
regard to the irreparable injury that movant faces. If
the existing `status quo' is currently causing one of the
parties irreparable injury and thereby threatens to
nullify the arbitration process, then it is necessary to
alter the situation to prevent the injury.
On further appeal in Ortho we reiterated that if necessary
to preserve the arbitration process, the district court may
alter the status quo. Ortho Pharm. Corp. v. Amgen, Inc., 887
F.2d 460, 464 (3d Cir. 1989).
The difficulty with the preliminary injunction in this case
is that it permits the New Jersey plaintiffs to seek only an
order barring the defendants there, who are the plaintiffs
here, from making a material change in the status quo. But
as Amgen recognizes, the status quo in itself may "caus[e]
one of the parties irreparable injury and thereby threaten[ ]
to nullify the arbitration process." Ortho Pharm. Corp., 882
F.2d at 814. In that circumstance, "it is necessary to alter
the situation to prevent the injury." Id. Accordingly, while
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the exception to the injunction barring the New Jersey
plaintiffs from seeking injunctive relief is acceptable as far
as it goes, it should be broadened so that the New Jersey
plaintiffs may seek a change in the status quo if necessary
to prevent a nullification of the arbitration process. Thus,
we will remand the case to the district court to modify the
preliminary injunction in accordance with this opinion.
Accordingly, in the circumstances we will affirm the order
for the preliminary injunction entered April 15, 1997, as
modified herein, and will remand the case to the district
court to enter an order modifying the preliminary
injunction in accordance with this opinion. Upon entry of
the modified preliminary injunction, the stay we entered on
July 31, 1997, will be deemed vacated without further
order. The parties will bear their own costs on this appeal.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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