HCI Technologies v. Avaya, Incorporated

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-1924
HCI TECHNOLOGIES, INCORPORATED,
Plaintiff - Appellant,
versus
AVAYA, INCORPORATED,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. T. S. Ellis, III, District
Judge. (1:06-cv-00778-TSE)
Argued: May 22, 2007 Decided: July 12, 2007
Before WILLIAMS, Chief Judge, GREGORY, Circuit Judge, and Benson E.
LEGG, Chief United States District Judge for the District of
Maryland, sitting by designation.
Affirmed by unpublished per curiam opinion.
Thomas M. Brownell, HOLLAND & KNIGHT, L.L.P., McLean, Virginia, for
Appellant. Rodney F. Page, BRYAN & CAVE, L.L.P., Washington, D.C.,
for Appellee. ON BRIEF: Brandon H. Elledge, HOLLAND & KNIGHT,
L.L.P., McLean, Virginia; Matthew A. Clary, III, Fairfax, Virginia,
for Appellant.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
HCI Technologies, Inc. (“HCI”) appeals the district court’s
orders denying its motion for a temporary restraining order and
preliminary injunction and dismissing its claims against Avaya,
Inc. (“Avaya”) pursuant to the mandatory arbitration agreement in
the parties’ contract. HCI argues that the district court
misapplied the four-part test governing motions for injunctive
relief by failing to recognize that each of the relevant
considerations weighed in favor of HCI. HCI further contends that
the district court erred in dismissing its claims in their
entirety, because the contract did not require HCI to submit its
requests for permanent injunctive relief to arbitration. For the
reasons that follow, we affirm the district court’s orders.
I.
A.
Avaya is a world-wide manufacturer and supplier of
telecommunications systems, applications, and equipment, including
a line of “Private Branch Exchanges” (“PBX”s)1 and a line of IP
Telephony, or “Voice over IP Systems,” under a variety of names and
trademarks. Avaya sells equipment directly and also through over
300 authorized sellers, known as “Business Partners.” Measured by
1
A PBX is a computer that switches and connects telephone
calls within a facility.
2
revenue, Avaya and its Business Partners control approximately 20%
of the U.S. market for new PBX and related equipment.
Avaya’s telephony equipment requires service and periodic
maintenance over its useful life. In the United States, service
and maintenance of Avaya products is performed by Avaya itself, by
many of its Business Partners, by independent service organizations
(ISOs), and by customers themselves. Business Partners have the
choice of providing their own maintenance services or reselling
Avaya services in whole or in part to complement their
capabilities. Avaya competes with its Business Partners to provide
maintenance services to some PBX owners, and works in concert with
its Business Partners to supply maintenance to others.
Proprietary software embedded in Avaya PBXs facilitates
service and maintenance of the PBXs. Avaya, of course, has access
to its own propriety software. Avaya also licenses the software to
its Business Partners and to PBX owners. The software enables the
licensee to identify and diagnose, and, in some cases, resolve,
maintenance problems remotely. Licensees access Avaya’s
diagnostic/maintenance software through passwords called “login
codes” or “logins.” Business partners receive access to the
software through logins called “DADMINs.” PBX owners may purchase
logins called “Maintenance Software Permissions” (“MSPs”), by
entering into a “Maintenance Assist” contract. Diagnostic and
3
maintenance functions can be performed at the site of the equipment
without the use of Avaya’s proprietary software.
B.
HCI was an Avaya Business Partner until July 10, 2006, when
Avaya terminated its contract with HCI. It is undisputed that HCI
acted as Business Partner through a series of increasingly
restrictive Master Reseller Agreements, entered into in 1999, 2003,
and 2005. The parties dispute Avaya’s motivation in conditioning
its continued willingness to have HCI as a Business Partner on
HCI’s acceptance of more restrictive contractual terms. HCI
asserts that Avaya made a corporate business decision to take back
the service market from its Business Partners and used the new
restrictions to undermine the Business Partners. Avaya contends
that it insisted on additional protections after it came to believe
that HCI was working with Verizon, Inc. to disrupt Avaya’s
relationships with its customers.
It is undisputed that HCI’s contracts with Avaya allowed HCI
to resell Avaya services only to end users and prohibited HCI from
serving as a subcontractor by reselling Avaya services to other
resellers. Nevertheless, HCI did obtain authorization from Avaya
to sell Avaya products to AT&T solely for the benefit of a single
end user; this authorization was memorialized in an addendum to
HCI’s contract with Avaya. And in 2002, Avaya allowed HCI to enter
into a teaming relationship with Verizon.
4
After Avaya came to believe that a goal of the HCI/Verizon
relationship was to interfere with Avaya’s business, however, Avaya
began to reevaluate its relationship with HCI. In September 2003,
Avaya sent HCI a letter indicating that it did not intend to renew
its 2003 contract with HCI for another year.2 It is undisputed
that “Avaya . . . relent[ed] only when HCI entered into a New
Master Reseller Agreement of Business Partner Program . . . on
December 20, 2005,” which superseded the parties’ prior Agreement.
(J.A. at 8.)3 The December 2005 Agreement provided that either
party could terminate the contract “at any time without cause by
giving the other party twenty-four (24) hours written notice of the
termination.” (J.A. at 179.)
In February 2006, Avaya and Verizon each submitted a bid for
an equipment and services contract with Washington Mutual.
Verizon’s bid indicated that HCI would act as a subcontractor to
provide support services for Avaya communications products.
Ultimately, Washington Mutual accepted Verizon’s bid. Avaya
believed that HCI violated its Master Reseller Agreement by teaming
2
Avaya’s September 23, 2003 Agreement with HCI superseded the
first agreement between the parties. The September 23, 2003
Agreement had a term of one year and automatically renewed each
year unless either party provided notice of its intent not to renew
the Agreement 60 days prior to September 23 of that year. The
September 23, 2003 Agreement also provided that either party could
terminate the Agreement without cause by giving the other party 60
days written notice of termination.
3
Citations to the “J.A.” refer to the contents of the joint
appendix filed by the parties in this appeal.
5
with Verizon to win the Washington Mutual contract. Accordingly,
on May 16, 2006, Avaya sent HCI a notice of termination. The
notice of termination incorrectly relied on the 60 day notice
provision of the parties’ 2003 Agreement.
C.
Fifty-one days after receiving Avaya’s notice of termination,
on July 5, 2006, HCI filed a Verified Complaint to Enjoin
Threatened Termination of Business Partner/Dealer Contract in the
United States District Court for the Eastern District of Virginia.
The complaint alleged, among other things, that Avaya’s notice of
termination was defective because it relied upon and purported to
terminate the superseded 2003 Agreement. This prompted Avaya to
send, on July 10, 2006, a new, twenty-four hour notice of
termination in compliance with the December 2005 Agreement,
terminating HCI as of July 11, 2006.
HCI’s complaint named Avaya and Catalyst Telecom, Inc. (one of
two authorized dealers of Avaya hardware in the United States) as
defendants.4 The complaint stated nine causes of action: two
Sherman Act claims, a claim of race discrimination under 42 U.S.C.
§ 1981, and six pendant Virginia state law claims (which included
a claim for violations of the Virginia Equipment Dealers Protection
Act, two tortious interference with contract claims, and claims for
4
On August 3, 2006, HCI filed a Notice of Dismissal
voluntarily dismissing its claims against Catalyst Telecom.
Catalyst Telecom is not a party to this appeal.
6
breach of contract, conspiracy to injure in trade or business, and
promissory estoppel).
On July 6, 2006, HCI filed an Emergency Motion for Temporary
Restraining Order and for Preliminary Injunction. In its motion,
HCI alleged that it would be irreparably harmed if Avaya terminated
HCI’s Business Partner status and denied HCI access to logins,
spare parts, and the support necessary for HCI to service its
customers’ Avaya PBXs. HCI also alleged that sales of Avaya
equipment constituted 30% of its business, and maintenance and
support of Avaya equipment constituted another 40% of its business.
On July 12, 2006, the district court held a hearing addressing
the motion for a temporary restraining order (TRO), but instructed
HCI that, pursuant to Federal Rule of Civil Procedure 65, it could
not issue a preliminary injunction. See Fed. R. Civ. P. 65(a)(1)
(“No preliminary injunction shall be issued without notice to the
adverse party.”). The district court then entered an order denying
HCI’s motion for a TRO and preliminary injunction and dismissing
HCI’s § 1981 and state law claims pursuant to the parties’
arbitration agreement.5 The district court requested supplemental
briefing on the arbitrability of the antitrust claims. Upon
5
The parties’ December 2005 Agreement provides that “all
Disputes must be finally resolved by binding arbitration,” but also
contains a provision stating that “[e]ither party may, at its sole
discretion and at any time during the dispute resolution process,
seek injunctive relief in any court of competent jurisdiction
(including but not limited to preliminary injunctive relief).”
(J.A. at 179.)
7
completion of the supplemental briefing, the district court entered
an order dismissing the two Sherman Act claims as well.
HCI timely appealed the district court’s orders. We have
jurisdiction pursuant to 28 U.S.C.A. § 1292(a)(1) (West 2006)
(providing for appellate jurisdiction to review the district
courts’ denial of injunctions) and 28 U.S.C.A. § 1291 (West 2006)
(providing for appellate jurisdiction over final decisions of the
district courts).
II.
We review the grant or denial of a preliminary injunction for
abuse of discretion. Safety-Kleen, Inc. (Pinewood) v. Wyche, 274
F.3d 846, 859 (4th Cir. 2001). We review the district court’s
findings of fact for clear error, and we review its legal
conclusions de novo. Id.
Before turning to the merits of HCI’s appeal, we must
determine whether there remains a “live” controversy before us.
“‘[A] case is moot when the issues presented are no longer “live”
or the parties lack a legally cognizable interest in the outcome.’”
Kennedy v. Block, 784 F.2d 1220, 1222 (4th Cir. 1986) (quoting
Powell v. McCormack, 395 U.S. 486, 496 (1969)).6 And, “when a case
has become moot after the entry of the district court’s judgment,
6
The district court did not address the issue of mootness,
although Avaya terminated the Agreement the day before the motions
hearing.
8
an appellate court no longer has jurisdiction to entertain the
appeal.” Mellen v. Bunting, 327 F.3d 355, 363 (4th Cir. 2003).
Avaya argues that HCI’s appeal is moot, because the action
sought to be prevented, the termination of the parties’ December
2005 Agreement, has already occurred. It is well established that
“[a]n appeal of the denial of an injunction to prohibit an act is
rendered moot by the happening of the act.” Ry. Labor Executives
Ass’n v. Chesapeake W. Ry., 915 F.2d 116, 118 (4th Cir. 1990).
Accordingly, at oral argument, HCI conceded that its appeal is
“probably moot” to the extent that it challenges the termination of
the parties’ December 2005 Agreement. Nevertheless, HCI contends
that its entire appeal is not moot because the relief it requested
from the district court is far broader than an injunction against
the termination of its reseller agreement with Avaya -- HCI also
sought continued access to spare parts, logins, and Avaya technical
support. Because HCI continues to service Avaya equipment and
Avaya has not yet terminated HCI’s access to parts and logins, not
all of the actions sought to be enjoined have already occurred.
We agree with HCI that this appeal is not entirely moot. In
its motion for a TRO and preliminary injunction, HCI alleged that
it would suffer irreparable harm if “Avaya is not enjoined from
Terminating HCI’s Master Reseller Agreement and if Avaya and
Catalyst Telecom are not barred from denying HCI access to Avaya
equipment and needed passwords, logins, and replacement part[s] to
9
service equipment for HCI customers.” (J.A. at 56.) Thus, HCI
sought to prohibit Avaya from taking other actions in addition to
terminating its contractual relationship with HCI. HCI asserts
that it continues to service Avaya equipment despite the
termination of the December 2005 Agreement, but it would be unable
to do so if Avaya terminated its access to parts and logins.
Moreover, Avaya concedes that although the contractual relationship
is at an end, as a practical matter, its relationship with HCI
cannot be dismantled overnight. Avaya disclaims any intent “to
have this be an abrupt termination of service” to HCI’s customers.
(J.A. at 300.)
Thus, not all of the actions HCI sought to enjoin have already
occurred, and, as a result, the appeal is not entirely moot. It
is, however, moot to the extent that HCI challenges the termination
of the December 2005 Agreement. See Ry. Labor Executives Ass’n,
915 F.2d at 118 (holding that a union’s appeal from the denial of
an injunction against a defendant’s “entire policy” of transferring
railway lines without bargaining was not entirely moot, but was
moot with regard to any transaction that had already been completed
by the time of the appeal).
III.
We now turn to the merits of HCI’s appeal. HCI contends that
the district court erred by (1) denying its motion for a TRO and
10
preliminary injunction, and (2) dismissing its claims in their
entirety rather than severing HCI’s request for permanent
injunctive relief from its otherwise arbitrable claims and
retaining jurisdiction over the resulting “injunction case.” We
address each argument in turn.
A.
The grant of a preliminary injunction rests in the discretion
of the district court, which is exercised through the balancing of
factors set out in the four-part test in Blackwelder Furniture Co.
v. Seilig Mfg. Co., 550 F.2d 189 (4th Cir. 1977), and its progeny.
Under this test, a court should consider (1) the likelihood of
irreparable harm to the plaintiff if a preliminary injunction is
denied, (2) the likelihood of harm to the defendant if a
preliminary injunction is granted, (3) the likelihood that the
plaintiff will succeed on the merits; and (4) the public interest.
In re Microsoft Corp. Antitrust Litig., 333 F.3d 517, 526 (4th Cir.
2003); see also Blackwelder, 550 F.2d at 196. “[T]he plaintiff
bears the burden of establishing that each of these factors
supports granting the injunction.” Direx Israel, Ltd. v.
Breakthrough Med. Corp., 952 F.2d 802, 812 (4th Cir. 1991)
(internal quotation marks and alteration omitted).
In applying the Blackwelder test, “[t]he irreparable harm to
the plaintiff and the harm to the defendant are the two most
important factors.” Rum Creek Coal Sales, Inc. v. Caperton, 926
11
F.2d 353 (4th Cir. 1991). If the balance of those two factors
“tips decidedly in favor of the plaintiff, . . . a preliminary
injunction will be granted if the plaintiff has raised questions
going to the merits so serious, substantial, difficult, and
doubtful, as to make them fair ground for litigation and thus for
more deliberate investigation.” Id. (internal quotation marks and
citation omitted). As the balance tips away from the plaintiff,
however, “a stronger showing on the merits is required.” Id.
With regard to the potential for irreparable harm to HCI, the
district court found that HCI remained free to sell and service
Avaya products, albeit on less favorable terms than it enjoyed as
a Business Partner, and could also pursue strategic alternatives
such as expanding its sales and service of PBXs made by
manufacturers other than Avaya. As a result, HCI’s allegations
that it would be driven out of business were not persuasive to the
district court, which concluded that HCI had failed to show that it
would suffer irreparable harm in the absence of a TRO or
preliminary injunction. The district court also noted that even if
HCI were driven out of business, “it [would] not necessarily follow
that this would constitute irreparable harm,” because the record
suggested that HCI’s damages could be quantified with precision.
(J.A. at 327.)
On appeal, HCI challenges the district court’s conclusion that
HCI is unlikely to be driven out of business by reasserting that it
12
will “suffer, directly or indirectly, the loss of 95% of its
business” and will “possibly be unable to continue in business.”
(Appellant’s Br. at 16.) HCI does not, however, offer any evidence
to support this allegation. HCI offers no basis on which we could
conclude that the district court’s finding -- that because HCI
remains free to sell and service PBXs made by Avaya and other
manufacturers, it is unlikely to suffer the devastating loss of
income it alleges -- is clearly erroneous. To the contrary, HCI,
in arguing that its appeal is not moot, admits that it has retained
its customer base and continues to serve customers that own Avaya
equipment. And Avaya, for its part, has claimed to have no
interest in abruptly terminating HCI’s service to its existing
customers. Nothing in the record indicates that Avaya’s position
in this respect has changed. We therefore conclude that the
district court did not err in finding that HCI failed to show
irreparable harm.7
The district court was required to “consider each
[Blackwelder] factor in ruling on [HCI’s] motion for preliminary
injunction.” Berry v. Bean, 796 F.2d 713, 716 (4th Cir. 1986).
Accordingly, it proceeded to analyze whether, despite HCI’s failure
to demonstrate a probability that it would suffer irreparable harm,
7
HCI also contests the district court’s alternative conclusion
that, in HCI’s case, being put out of business would not
necessarily constitute irreparable harm. We need not address this
issue, however, because HCI’s failure to show that it would be put
out of business renders the question academic.
13
the balance of the factors might nevertheless weigh in favor of
issuing an injunction. See Dan River, Inc. v. Icahn, 701 F.2d 278,
283 (4th Cir. 1983) (stating that “[i]f the likelihood of success
is great, the need for showing the probability of irreparable harm
is less” (internal quotation marks omitted)).
With regard to HCI’s antitrust claims, the district court
concluded that HCI had “not presented even a ‘serious question’ on
the merits, to say nothing of a likelihood of success.” (J.A. at
329.) The district court’s analysis and HCI’s arguments on appeal
focus primarily on HCI’s “tying” claim under Section 1 of the
Sherman Act. To establish this type of claim, a plaintiff must
show (1) the existence of two separate products, (2) an agreement
conditioning purchase of the tying product upon purchase of the
tied product (or at least upon an agreement not to purchase the
tied product from another party), (3) the seller’s possession of
sufficient economic power in the tying product market to restrain
competition in the tied product market, and (4) a not insubstantial
impact on interstate commerce. (J.A. at 328 (citing Service &
Training, Inc. v. Data Gen. Corp., 963 F.2d 680, 683 (4th Cir.
1992).) HCI’s tying claim alleged that Avaya conditioned the right
to buy the “equipment, parts and software” it produced upon the
purchase of service contracts from Avaya. (J.A. at 51, 15.) The
district court concluded that HCI’s tying claim was unlikely to
prevail because there was “no merit in HCI’s contention that Avaya
14
has market power because it has 100% of the market as defined by
sale of its own products,” and “a more correct relevant market
would be the market for all PBX products,” not just those produced
by Avaya. (J.A. at 328.) Because Avaya has only 20% of the
overall PBX market, the district court found it unlikely that HCI
could show Avaya had the requisite market power necessary to
sustain its claim. The district court also noted that the tying
claim was unlikely to succeed in light of evidence in the record
suggesting that companies other than Avaya provide 76% of
maintenance services on Avaya equipment in the United States.8
On appeal, HCI disputes the district court’s conclusions
concerning its likelihood of success on its antitrust claims, but
does not make any arguments regarding its § 1981 and state law
claims. HCI relies almost entirely on Eastman Kodak Co. v. Image
Technical Servs., Inc., 504 U.S. 451 (1992). Essentially, HCI
contends that Kodak stands for the proposition that there can exist
two separate markets, one for spare parts made by a single
8
The district court also found that HCI was unlikely to
prevail on its other claims. It noted that HCI had presented
virtually no evidence to support its § 1981 claim and that HCI had
based its state law claims on Virginia law despite a choice of law
provision in the parties’ contract specifying that New Jersey law
governs the parties’ disputes. Aside from suing under the law of
the wrong state, the district court reasoned that HCI would face
significant hurdles in asserting a claim under the Virginia
Equipment Dealer Protection Act, which only covers farm equipment,
and in pursuing contract/promissory estoppel claims based on
Avaya’s decision to exercise its contractual right to terminate the
December 2005 Agreement on 24-hours notice.
15
manufacturer, and another for the service of that manufacturer’s
equipment, and it is possible to assert antitrust claims alleging
that the manufacturer illegally tied those two markets together or
monopolized the service market.
Avaya argues that we need not address HCI’s likelihood of
success in establishing a relevant market, because HCI has not
suffered an antitrust injury and therefore lacks antitrust
standing. Congress “did not intend the antitrust laws to provide
a remedy in damages for all injuries that might conceivably be
traced to an antitrust violation.” Associated Gen. Contractors v.
California State Council of Carpenters, 459 U.S. 519, 534 (1983)
(internal quotation marks and citation omitted). For a plaintiff
to have standing to bring suit under the antitrust laws, a
plaintiff must, among other things, have suffered an “antitrust
injury,” that is, an “injury of the type the antitrust laws were
intended to prevent and that flows from that which makes the
defendants’ acts unlawful.” Brunswick Corp. v. Pueblo Bowl-O-Mat,
Inc., 429 U.S. 477, 489 (1977); see also Deiter v. Microsoft Corp.,
436 F.3d 461, 467 (4th Cir. 2006) (stating that an antitrust injury
is an element of an antitrust plaintiff’s prima facie case). As
the district court noted at the motions hearing, “antitrust
protects competition, not competitors.” (J.A. at 317); see also
Brunswick Corp., 429 U.S. at 488 (stating that “[t]he antitrust
16
laws . . . were enacted for the protection of competition not
competitors” (internal quotation marks omitted)).9
We agree that HCI will likely prove unable to establish
antitrust standing. HCI has offered no evidence to suggest that
competition for the provision of service and maintenance of Avaya
PBXs has decreased. Rather, HCI bases its claims on the
possibility that the market may soon have one less competitor: HCI.
We have previously recognized that “the elimination of a single
competitor, standing alone, does not prove [the] anticompetitive
effect” necessary to establish antitrust injury. Military Servs.
Realty, Inc. v. Realty Consultants of Virginia, 823 F.2d 829, 832
(4th Cir. 1987). When pressed to identify other competitors who
were in danger of being forced out of business by Avaya’s allegedly
anticompetitive activity, HCI has been unable to do so. Instead,
HCI simply referenced the existence of United Asset Coverage, Inc.
v. Avaya, Inc., 409 F. Supp. 2d 1008 (N.D. Ill. 2006), a case Avaya
cited in its appellate brief. That case, however, does not aid HCI
in establishing an antitrust injury. The decision, which denied
9
Although the district court did not make HCI’s likely
inability to establish antitrust standing an express basis of its
ruling, it expressed skepticism at the motions hearing that HCI had
demonstrated the existence of “a practice . . . that is injurious
to competition.” (J.A. at 317.) In its written opinion, the
district court described HCI’s suit as essentially a breach of
contract dispute in which HCI, having chosen to “bite the
proverbial hand that fed it” by pursuing teaming arrangements to
Avaya’s detriment, was not entitled to enjoin Avaya from exercising
its contractual right to terminate its Agreement with HCI. (J.A.
at 331.)
17
United Asset Coverage (“UAC”)’s motion for a preliminary
injunction, stated that UAC “d[id] not itself provide maintenance
for Avaya PBXs,” and had offered “no evidence” that the number of
service providers competing with Avaya to provide maintenance
services had decreased. Id. at 1044.10
Moreover, the record evidence indicating that 76% percent of
maintenance services on Avaya equipment are not performed by Avaya
undermines HCI’s contention that Avaya has unlawfully inhibited
competition among service providers. In fact, HCI conceded in its
complaint that Avaya “lacks power in the market for installation,
maintenance and support services for its equipment,” and alleged
that Avaya frequently came in second to HCI and its teaming
partners in competition due to HCI’s superior reputation for
service, lower overhead, and status as a minority contractor.
(J.A. at 15.) HCI simply cannot turn Avaya’s termination of its
Reseller Agreement into an antitrust violation. Accordingly,
10
At oral argument, HCI’s counsel also claimed that there were
“other cases . . . pending around the country with several other
Business Partners who got into the bad graces of Avaya for reasons
similar to [HCI]’s” and claimed to have seen documents indicating
that the number of Avaya Business Partners has decreased from
approximately 1500 to roughly 300. HCI did not, however, provide
any supporting documentation to the court. And vague allusions to
other Business Partners falling into Avaya’s “bad graces” are not
probative of an injury to competition caused by an attempt to
restrain trade. To the contrary, they suggest, if anything, that
the Business Partners Avaya terminated did not fall victim to a
generalized scheme to eliminate competition, but rather took some
action that prompted Avaya to reconsider its relationship with
those particular resellers.
18
because HCI is unlikely to establish antitrust standing, we agree
that HCI has not raised a serious question, let alone demonstrated
a likelihood of success, on the merits of its antitrust claims.
HCI also contends that the district court gave too little
weight to two factors -- the public interest and the harm to Avaya
-- in concluding that HCI was not entitled to an injunction. HCI
argues that the public interest would be served by a grant of
temporary injunctive relief, because HCI provides services to
government customers, including the Department of Homeland Security
(DHS) and the White House, and the public has a strong interest in
ensuring that these customers’ phone service continues
uninterrupted. The district court did not explicitly address this
contention, but implicitly rejected HCI’s argument by finding that
HCI could continue to service its customers’ Avaya PBXs, albeit on
less favorable terms. As discussed above, HCI continues to provide
maintenance services to its existing customers, and Avaya has no
interest in causing an abrupt termination of service to these
customers. Thus, HCI has failed to establish that the public
interest would be served by an injunction.
According to HCI, an injunction is nevertheless warranted,
because it is clear that Avaya will suffer no harm at all if a TRO
or preliminary injunction is granted. This claim is also
unfounded. First, HCI cites no authority that would support the
conclusion that a district court abuses its discretion by denying
19
an injunction to a plaintiff that has not shown that it faces
irreparable harm, that it is likely to succeed on the merits, or
that the public interest would be served if the requested relief
were granted simply because the defendant faces little or no harm.
Second, HCI has admittedly used its status as an Avaya Business
Partner to act as a subcontractor by reselling Avaya services to
other resellers, a practice that Avaya considers subversive to its
business model and that is therefore prohibited by the parties’
contract. Accordingly, Avaya faces harm from the imposition of an
injunction, as a grant of injunctive relief would effectively force
Avaya to continue to deal with a reseller that refuses to comply
with Avaya’s business model, but without the protections contained
in the terminated Reseller Agreement. Cf. Roland Machinery Co. v.
Dresser Indus., Inc., 749 F.2d 380, 392 (7th Cir. 1984) (concluding
that forcing a manufacturer who had entered into a contract that
was of short duration and subject to short cancellation notice as
a means of protecting its right to “use its own judgment with
respect to those whom it wishes to appoint as its dealers” would
endure a “great hardship” if forced to continue for an indefinite
number of years a relationship with a dealer with whom it no longer
wished to be associated).
B.
We now turn to HCI’s argument that the district court erred in
dismissing its claims in their entirety, because the parties’
20
December 2005 Agreement excludes claims for injunctive relief from
the Agreement’s mandatory arbitration clause. The Agreement
provides that “all Disputes must be finally resolved by binding
arbitration,” but also contains a provision stating that “[e]ither
party may, at its sole discretion and at any time during the
dispute resolution process, seek injunctive relief in any court of
competent jurisdiction (including but not limited to preliminary
injunctive relief).” (J.A. at 179.) HCI interprets this language
to allow its “injunction case” to remain before the district court.
HCI thus contends that the district court should have severed its
requests for permanent injunctive relief from the otherwise
arbitrable claims and either proceeded on the merits or stayed the
“injunction case” pending arbitration.11
Because HCI did not make this argument before the district
court, it is waived. See Muth v. United States, 1 F.3d 246, 250
(4th Cir. 1993) (stating that “issues raised for the first time on
appeal generally will not be considered” and “exceptions to this
general rule are made only in very limited circumstances, such as
where refusal to consider the newly raised issue would be plain
11
HCI uses the term “claim” in reference to the relief
requested on each cause of action, not the cause of action itself.
HCI included permanent injunctive relief among the remedies
requested on every count included in its complaint; it is not
arguing that the district court could properly dismiss some counts
but not others. Rather, HCI contends that the district court was
required to sever each cause of action according to the relief
requested and conduct a parallel proceeding on HCI’s “injunction
case” while the arbitrator determined HCI’s entitlement to damages.
21
error or would result in a fundamental miscarriage of justice”).
HCI had ample opportunity to raise this issue after the district
court dismissed seven of its claims and requested supplemental
briefing on the arbitrability of its antitrust claims. In inviting
the parties to file supplemental briefs, the district court made
clear that the issue to be addressed was “whether the parties’
obligation to go to arbitration . . . includes the federal
antitrust claims.” (J.A. at 319.) HCI argued only that the
antitrust claims were not arbitrable as a matter of law (a
contention it does not reassert on appeal). It never asserted that
its obligation to arbitrate the dispute did not apply to the extent
that HCI sought injunctive relief as a remedy to an otherwise
arbitrable claim. Accordingly, there is no reason to abandon the
general rule barring consideration of issues raised for the first
time on appeal.12
12
We note that HCI argues only that it is not required to
arbitrate its “injunction case,” not that injunctive relief would
be unavailable in arbitration. We have previously noted that
“[a]rbitrators enjoy broad equitable powers” and “may grant
whatever remedy is necessary to right the wrongs within their
jurisdiction.” Gilmer v. Interstate/Johnson Lane Corp., 895 F.2d
195, 199 (4th Cir. 1990), aff’d, 500 U.S. 20 (1991). Although the
December 2005 Agreement limits the arbitrator’s authority to award
damages, it does not restrict the arbitrator’s ability to grant
injunctive relief if necessary.
22
IV.
In sum, we conclude that the district court did not abuse its
discretion in denying HCI’s motion for a TRO and preliminary
injunction. We also conclude that HCI has waived its argument that
the district should have severed its request for permanent
injunctive relief from its otherwise arbitrable claims and allowed
the resulting “injunction case” to proceed before the court. We
therefore affirm the district court’s orders denying HCI’s motion
for a TRO and preliminary injunction and dismissing HCI’s claims
pursuant to the parties’ arbitration agreement.
AFFIRMED
23