Dataphase Systems, Inc. v. C L Systems, Inc., No. 80-1111

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtBefore LAY, Chief Judge, HEANEY, BRIGHT, ROSS, STEPHENSON, HENLEY, McMILLIAN and ARNOLD; HENLEY; ROSS
Citation640 F.2d 109
Parties1980-2 Trade Cases 63,496, 1980-81 Trade Cases 63,700, 6 Media L. Rep. 2163 DATAPHASE SYSTEMS, INC., Appellee, v. C L SYSTEMS, INC., Appellant.
Docket NumberNo. 80-1111
Decision Date07 January 1981

Page 109

640 F.2d 109
1980-2 Trade Cases 63,496, 1980-81 Trade Cases 63,700,
6 Media L. Rep. 2163
DATAPHASE SYSTEMS, INC., Appellee,
v.
C L SYSTEMS, INC., Appellant.
No. 80-1111.
United States Court of Appeals,
Eighth Circuit.
Submitted Oct. 24, 1980.
Decided Jan. 7, 1981.

Page 111

Edmund C. Case, Testa, Hurwitz & Thibeault, Boston, Mass., for appellant.

Gordon D. Gee, Rich, Granoff, Levy & Gee, Kansas City, Mo., argued, Gregory L. Vranicar, Kansas City, Mo., for appellee.

Before LAY, Chief Judge, HEANEY, BRIGHT, ROSS, STEPHENSON, HENLEY, McMILLIAN and ARNOLD, Circuit Judges, en banc.

HENLEY, Circuit Judge.

C L Systems, Inc. (CLSI) appeals from the district court's order of January 23, 1980, granting a preliminary injunction restraining CLSI from making "any false or misleading statement which disparages, directly or indirectly, plaintiff (Dataphase Systems, Inc.), its product, its financial condition or its ability to furnish goods and services." For reasons to be stated we vacate the preliminary injunction.

Dataphase, a Missouri corporation, and CLSI, a Massachusetts corporation, compete for contracts for the installation of computerized, automated library circulation systems. Dataphase is a relative newcomer to the field. It started business and incorporated in December, 1975. By its own admission, CLSI is the established leader in the field of library automation.

On June 1, 1978 Dataphase filed its complaint in this suit against CLSI. Dataphase alleged that CLSI engaged in a course of conduct intended to restrain competition and deny market access to Dataphase, thereby eliminating and destroying Dataphase as a competitor. The course of anti-competitive conduct allegedly included deliberately bidding below cost in order to prevent Dataphase from receiving contracts; interfering with Dataphase's present and potential contractual obligations; making false statements to potential customers regarding Dataphase's reliability, solvency, and ability to furnish the goods and services bid upon; and, in general, falsely and maliciously disparaging Dataphase to its customers and potential customers, both orally and in writing.

The complaint alleged that this course of conduct constituted a violation of the antitrust laws, in particular section 2 of the Sherman Act, 15 U.S.C. § 2 (1976), and section 3 of the Robinson-Patman Act, 15 U.S.C. § 13a (1976), and that CLSI's false and malicious accusations unlawfully interfered with Dataphase's reasonable business expectancies. Dataphase sought treble damages and equitable relief enjoining CLSI from continuing the allegedly unlawful course of conduct. Federal jurisdiction exists under 28 U.S.C. §§ 1331, 1332, 1337 (1976).

CLSI denied the essential allegations of the complaint, and raised various defenses, inter alia, that all statements and representations made by CLSI to Dataphase's customers were true and not misleading. The parties proceeded with discovery, and in February and March, 1979 the district court held evidentiary hearings on Dataphase's request for a preliminary injunction. On January 23, 1980 the district court entered its order granting the preliminary injunction.

CLSI filed notice of appeal, and on March 20, 1980 this court entered an order remanding the matter "to the district court for the limited purpose of permitting that court to set forth in detailed findings those representations and statements of the appellant that it believes 'raise questions serious enough to require litigation.' "

On April 18, 1980 the district court certified limited findings. It found that "whether there is a dangerous probability of monopolization of a specific product market in a particular geographic market" constituted a "serious litigable issue." The district court paraphrased twelve statements which it observed that Dataphase claims are completely false, while CLSI contends they

Page 112

are true. The district court stated that these statements "raise questions of fact which are serious enough to require litigation."

Without prejudice to the entry of a permanent injunction, we vacate the preliminary injunction and remand the case to the district court. We agree with the panel that justice would be served by proceeding to trial with all due haste in order to secure a ruling on the merits of the claims raised.

The court has considered this case en banc in an effort to clarify the standard to be applied by the district courts of this circuit in considering requests for preliminary injunctive relief. We apprehend that in recent years there has developed some misunderstanding of the standard has developed. We recognize that language in some of our recent opinions may have contributed to uncertainty as to the appropriate test or tests. Thus, we take this opportunity to reaffirm that there is a single "test" or list of considerations to be used in every case and to suggest its proper application. 1

In Minnesota Bearing Co. v. White Motor Corp., 470 F.2d 1323 (8th Cir. 1973), we enumerated four factors to be weighed by the district court in deciding whether to grant or deny preliminary injunctive relief: (1) whether there is a substantial probability movant will succeed at trial; (2) whether the moving party will suffer irreparable injury absent the injunction; (3) the harm to other interested parties if the relief is granted; and (4) the effect on the public interest. Id. at 1326. This statement of the standard, in particular the requirements of "substantial probability" and "irreparable injury," has become known as the "traditional test." See, e. g., Young v. Harris, 599 F.2d 870, 875-76 (8th Cir.), cert. denied sub nom. Young v. Landrieau, 444 U.S. 993, 100 S.Ct. 526, 62 L.Ed.2d 423 (1979); Fennell v. Butler, 570 F.2d 263, 264 (8th Cir.), cert. denied, 437 U.S. 906, 98 S.Ct. 3093, 57 L.Ed.2d 1136 (1978). 2

Perhaps due to dissatisfaction with restrictive practical application of the language of the traditional test, this court offered a restated version in Fennell v. Butler, 570 F.2d 263. In that case we suggested that a preliminary injunction should issue:

upon a clear showing of either (1) probable success on the merits and possible irreparable injury, 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 preliminary relief.

Id. at 264. 3

Some confusion apparently has been spawned by our characterization of the

Page 113

Fennell standard as an "alternative test." 4 Despite this label, we find no contradiction between Fennell and Minnesota Bearing. Whatever the verbal formulation, the relevant factors remain the same. Whether a preliminary injunction should issue involves consideration of (1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest.

The major difficulty with application of the traditional test has arisen from the phrase "probability of success on the merits." Some have read this element of the test to require in every case that the party seeking preliminary relief prove a greater than fifty per cent likelihood that he will prevail on the merits. Under this view, even if the balance of the other three factors strongly favored the moving party, preliminary relief would be denied if the movant could not prove a mathematical probability of success at trial. Although this...

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2024 practice notes
  • Jihad v. Comm'r Joan Fabian, Civil No. 09-1604 (DSD/RLE).
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • January 21, 2010
    ...the likelihood of the movant's ultimate success on the merits and (4) the public interest. See Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109, 114 (8th Cir.1981) (en banc). II. RLUIPA and First Amendment Claims The RLUIPA and the First Amendment protect the right of prison inmates to......
  • Dakota, Minn. & Eastern R.R. Corp. v. South Dakota, No. CIV. 02-4083.
    • United States
    • United States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
    • December 6, 2002
    ...party if the injunction is granted, the public interest, and the merits of the case. See Dataphase Systems, Inc. v. C.L. Systems, Inc., 640 F.2d 109, 113 (8th Cir.1981). The Eighth Circuit has held, however, in cases such as this where the plaintiff is alleging that certain provisions of st......
  • Karsjens v. Jesson, Civil No. 11–3659 (DWF/JJK).
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • February 20, 2014
    ...harm that granting the injunction would inflict on the other party; and (4) the public interest. Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109, 113 (8th Cir.1981). This analysis was designed to determine whether the court should intervene to preserve the status quo until it decides th......
  • Pavek v. Simon, Case No. 19-cv-3000 (SRN/DTS)
    • United States
    • U.S. District Court — District of Minnesota
    • June 15, 2020
    ...Corp. v. Rabern , No. 20-cv-0445, 2020 WL 1061465, at *1 (D. Minn. Mar. 5, 2020) (citing Dataphase Sys., Inc. v. C L Sys., Inc. , 640 F.2d 109, 114 (8th Cir. 1981) ). Because " ‘[a] preliminary injunction is an extraordinary remedy,’ " the party seeking injunctive relief " ‘bears the burden......
  • Request a trial to view additional results
2034 cases
  • Jihad v. Comm'r Joan Fabian, Civil No. 09-1604 (DSD/RLE).
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • January 21, 2010
    ...the likelihood of the movant's ultimate success on the merits and (4) the public interest. See Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109, 114 (8th Cir.1981) (en banc). II. RLUIPA and First Amendment Claims The RLUIPA and the First Amendment protect the right of prison inmates to......
  • Dakota, Minn. & Eastern R.R. Corp. v. South Dakota, No. CIV. 02-4083.
    • United States
    • United States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
    • December 6, 2002
    ...party if the injunction is granted, the public interest, and the merits of the case. See Dataphase Systems, Inc. v. C.L. Systems, Inc., 640 F.2d 109, 113 (8th Cir.1981). The Eighth Circuit has held, however, in cases such as this where the plaintiff is alleging that certain provisions of st......
  • Karsjens v. Jesson, Civil No. 11–3659 (DWF/JJK).
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • February 20, 2014
    ...harm that granting the injunction would inflict on the other party; and (4) the public interest. Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109, 113 (8th Cir.1981). This analysis was designed to determine whether the court should intervene to preserve the status quo until it decides th......
  • Pavek v. Simon, Case No. 19-cv-3000 (SRN/DTS)
    • United States
    • U.S. District Court — District of Minnesota
    • June 15, 2020
    ...Corp. v. Rabern , No. 20-cv-0445, 2020 WL 1061465, at *1 (D. Minn. Mar. 5, 2020) (citing Dataphase Sys., Inc. v. C L Sys., Inc. , 640 F.2d 109, 114 (8th Cir. 1981) ). Because " ‘[a] preliminary injunction is an extraordinary remedy,’ " the party seeking injunctive relief " ‘bears the burden......
  • Request a trial to view additional results

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