596 F.2d 70 (2nd Cir. 1979), 554, Jackson Dairy, Inc. v. H. P. Hood & Sons, Inc.

Docket Nº:554, Docket 78-7587.
Citation:596 F.2d 70
Party Name:JACKSON DAIRY, INC., Appellee, v. H. P. HOOD & SONS, INC., Appellant.
Case Date:March 23, 1979
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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596 F.2d 70 (2nd Cir. 1979)



H. P. HOOD & SONS, INC., Appellant.

No. 554, Docket 78-7587.

United States Court of Appeals, Second Circuit

March 23, 1979

Argued Dec. 15, 1978.

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Allen S. Joslyn, Cahill Gordon & Reindel, New York City (P. Kevin Castel, Cahill Gordon & Reindel, New York City, and Alan B. George, Carroll, George, Hill & Anderson, Rutland, Vt., of counsel), for appellant.

Michael B. Clapp, Dinse, Allen & Erdmann, Burlington, Vt., for appellee.

Before WATERMAN, MANSFIELD and OAKES, Circuit Judges.


This appeal is from a preliminary injunction granted in a diversity action by the United States District Court for the District of Vermont, Albert W. Coffrin, Judge. Appellee, Jackson Dairy, Inc., is "the exclusive distributor" of appellant's "Schedule 3B" products under a contract dated March 7, 1967, in a certain Vermont-New Hampshire territory. 1 The injunction restrains appellant, H. P. Hood & Sons, Inc., 2 a northeastern dairy products manufacturer and processor, from selling certain products 3 that it markets directly to two large chain store customers, Grand Union Co. (Grand Union) and First National Stores, Inc. (Finast), "knowing that they are being purchased for transshipment to retail establishments within Jackson's exclusive sales territory." 4 Jackson Dairy, Inc. v. H. P. Hood & Sons, Inc., No. 78 Civ. 234 (D. Vt. Nov. 13, 1978), at 4. Appellant argues that appellee failed to satisfy any of the requisites for issuance of a preliminary injunction, including probable success on the merits and a "clear showing of irreparable harm," and that the injunction as framed may cause appellant "immediate irreparable harm," "serious hardship," and "irreparable loss" because it threatens the continuation of the more than $4 million of business that it does with Grand Union and Finast. We reverse and remand.

Briefly stated, the facts are as follows. Grand Union has eleven stores in the Jackson territory and Finast at least three. Since 1967, Jackson has distributed Hood products to these stores as well as other chains and a number of "Mom & Pop" stores in the territory. Jackson's total sales to Grand Union and Finast in 1977 were in excess of $223,000. In early October 1978 Hood began supplying Grand Union and Finast with the "Schedule 3B" products at their central warehouses Outside Jackson's

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territory, and the two chains then commenced to supply their retail outlets Within Jackson's territory directly from those warehouses. Although the parties disagree as to whether the two chains or Hood itself conceived this idea of operation, the facts are that the warehousing system bypasses Jackson and that both chains, which are independent of and often competing with each other, adopted that system more or less simultaneously. Pricing arrangements do not appear in the record below. The complaint alleges breach of the exclusive distributorship agreement.

The standard in the Second Circuit 5 for injunctive relief clearly calls for a showing of (a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief. See Caulfield v. Board of Education, 583 F.2d 605, 610 (2d Cir. 1978); See also New York v. Nuclear Regulatory Commission, 550 F.2d 745, 750, 755 (2d Cir. 1977); Triebwasser & Katz v. American Telephone & Telegraph Co., 535 F.2d 1356, 1358-59 (2d Cir. 1976). As to the kind of irreparable harm that the party seeking an injunction must show, the language of some past cases has suggested to some a spectrum ranging from...

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