South Bend Consumers Club, Inc. v. United Consumers Club, Inc.

• Citation: 742 F.2d 392
• Decision Date: 30 August 1984
• Docket Number: No. 83-2976,83-2976
• Parties: 1984-2 Trade Cases 66,178 SOUTH BEND CONSUMERS CLUB, INC., Plaintiff-Counterdefendant-Appellee, v. UNITED CONSUMERS CLUB, INC., and United Consumers Club Franchising Corporation, Defendants-Counterclaimants-Cross- Claimants-Appellants, v. Andrew SPITE, Cross-Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 392

742 F.2d 392

1984-2 Trade Cases 66,178

SOUTH BEND CONSUMERS CLUB, INC., Plaintiff-Counterdefendant-Appellee, v. UNITED CONSUMERS CLUB, INC., and United Consumers Club

Franchising Corporation, Defendants-Counterclaimants-Cross- Claimants-Appellants, v. Andrew SPITE, Cross-Defendant-Appellee.

No. 83-2976.

United States Court of Appeals,

Seventh Circuit.

Argued April 16, 1984.

Decided Aug. 30, 1984.

Kenneth R. Petrini, Barnes & Thornburg, South Bend, Ind., for plaintiff-counterdefendant-appellee.

Howard C. Emmerman, Rudnick & Wolfe, Northbrook, Ill., for defendants-counterclaimants-cross-claimants-appellants.

Before WOOD, CUDAHY, and COFFEY, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge.

United Consumers Club, Inc. and its wholly owned subsidiary United Consumers Club Franchising Corporation appeal a district court order, 572 F.Supp. 209, granting South Bend Consumers Club, Inc.'s motion for partial summary judgment. We dismiss for lack of jurisdiction.

I

United Consumers Club and United Consumers Club Franchising Corporation (referred to collectively as "UCC") are franchisors of a buying club system. UCC purchases consumer goods at wholesale prices and resells these goods at its cost to its franchisees. The franchisees then sell the goods at discounts from retail to members of the public who have purchased memberships from the franchisees. Each franchisee pays UCC a franchise fee and a percentage of each membership that the franchisee sells.

South Bend Consumers Club ("SBCC") is a former Franchisee of UCC. Its franchise agreement contained a provision requiring SBCC to purchase all merchandise through UCC under the procedures and conditions set by UCC, and a post-term restrictive covenant not to compete with UCC or its other franchisees for a two-year period in a defined territory.

On July 23, 1982, UCC terminated SBCC's franchise. SBCC then commenced an antitrust action against UCC under section 1 of the Sherman Act, 15 U.S.C. Sec. 1 (1982), alleging that termination of its franchise was the result of a wrongful attempt to enforce an illegal tying arrangement in restraint of trade. On November 29, 1982, UCC filed a counterclaim setting forth an antitrust charge against SBCC and seeking an injunction prohibiting SBCC from competing in violation of the restrictive covenant. UCC took no other action on its request for injunctive relief until July 27, 1983, when it filed a motion for partial summary judgment which reiterated UCC's belief that it was entitled to injunctive relief as a matter of law. SBCC responded with a countermotion for partial summary judgment seeking an order that the franchise agreement's restrictive covenant not to compete was unreasonable and therefore unenforceable as a matter of law. At a September 9, 1983, hearing on the summary judgment motions, UCC withdrew its motion for partial summary judgment, and filed its first formal motion requesting a preliminary injunction to enjoin SBCC from violating the covenant not to compete. The district court subsequently granted SBCC's motion for partial summary judgment, holding that the restrictive covenant was unreasonable as written and therefore unenforceable as a matter of law. It is from this order that UCC attempts to appeal. The remaining issues in the underlying dispute have not yet been disposed of by the district court.

II

The only issue we need address is a jurisdictional one. The district court did not certify its summary judgment order pursuant to Rule 54(b), Fed.R.Civ.P. UCC argues, however, that the order should be appealable under 28 U.S.C. Sec. 1292(a)(1) (1982) as the equivalent of an interlocutory order denying injunctive relief. 28 U.S.C. Sec. 1292(a)(1) is an exception to the general rule that a party can appeal only a final judgment and as such must be narrowly construed. Whyte v. THinc Consulting Group International, 659 F.2d 817, 819 (7th Cir.1981). Therefore, even when a district court order has the practical effect of denying injunctive relief, that fact alone is insufficient to qualify the ruling as an appealable interlocutory decree. In order to effectuate the congressional policy against piecemeal review, the appellant must also show that the order might have "serious, perhaps irreparable, consequence" and can be "effectually challenged" only by immediate appeal. Carson v. American Brands, Inc., 450 U.S. 79, 84, 101 S.Ct. 993, 996, 67 L.Ed.2d 59 (1981); see also Matterhorn Inc. v. NCR Corp., 727 F.2d 629, 630 (7th Cir.1984); Ohio-Sealy Mattress Manufacturing Co. v. Duncan, 714 F.2d 740, 743 (7th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 712, 79 L.Ed.2d 176 (1984).

UCC did not even attempt to meet this burden until questioned about it during oral argument. UCC completely ignored Carson in its briefs, arguing that under Data...