Gen. Motors LLC v. Kar Auto Grp. of Decorah, Inc.
| Decision Date | 24 August 2020 |
| Docket Number | No. 20-CV-2039-CJW-KEM,20-CV-2039-CJW-KEM |
| Parties | GENERAL MOTORS LLC, Plaintiff, v. KAR AUTO GROUP OF DECORAH, INC., d/b/a DECORAH CHEVROLET CADILLAC, Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
TABLE OF CONTENTS
This matter is before the Court on plaintiff's Motion for Preliminary Injunction. (Doc. 15). Defendant timely resisted (Doc. 18) and plaintiff timely replied to the resistance (Doc. 20). The Court held a telephonic oral argument on July 29, 2020. (Doc. 21). For the following reasons, plaintiff's Motion for Preliminary Injunction is denied.
The Court's factual findings are based on plaintiff's complaint and the parties' sworn declarations and exhibits submitted in support of their positions. The Court's factual findings here are provisional and not binding in future proceedings. See Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981) (); SEC v. Zahareas, 272 F.3d 1102, 1105 (8th Cir. 2001) (same). Affidavits submitted at the preliminary injunction phase need not meet the requirements of affidavits under Rule 56(c)(4), but the Court may consider the "competence, personal knowledge and credibility of the affiant" in determining the weight to give the evidence. Bracco v. Lackner, 462 F. Supp. 436, 442 n.3 (N.D. Cal. 1978) (citing 11A CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2949)). The Court will discuss additional facts as they become relevant to the Court's analysis.
Plaintiff General Motors, LLC, ("plaintiff") is a manufacturer and distributor of motor vehicles. (Doc. 14, at 2). Defendant KAR Auto Group of Decorah, Inc., d/b/a/ Decorah Chevrolet Cadillac ("defendant") is an automobile dealer in Decorah, Iowa. (Id., at 1-2). In 2003, defendant entered into two dealer sales and service agreements (the "Agreements") with plaintiff. (Docs. 15-3; 15-4; 18-1, at 2). Under the Agreements, defendant was authorized to sell and service two General Motors "line-makes" of vehicles, namely Chevrolet and Cadillac, from the premises identified in the Agreements (the "GM dealership"). (Docs. 15-1, at 3; 18-1, at 2). Defendant formerly operated a separate automobile dealership adjacent to their GM dealership. (Docs. 15-1, at 4; 18-1, at 2-3). The adjacent dealership (the "CDJR dealership") sold the Chrysler, Dodge, Jeep and Ram ("CDJR") line-makes, which are manufactured by Fiat Chrysler. (Id.). On February 1, 2020, the entity operating the CDJR dealership merged into defendant. (Doc. 18-1, at 2). On June 10, 2020, defendant merged its CDJR operations into the GM dealership operations. (Id., at 11; Doc. 15-14). The combination of line-makes from different manufacturers at a single dealership is called "dualing." (Docs. 14, at 8 n.2; 18-1, at 3).
Plaintiff filed its complaint on June 9, 2020, (Doc. 1) and amended its complaint on July 1, 2020 (Doc. 14). Plaintiff's amended complaint asserts two breach of contract claims seeking specific performance and money damages, respectively. (Id., at 16-20). Plaintiff alleges defendant breached the Agreements because defendant did not provide the required information or obtain plaintiff's permission before adding the CDJR line-makes to the GM dealership. (Id., at 3-4, 16-17). Plaintiff also asserts that the dualed operation results in defendant conducting GM operations at an unapproved location without the contractually required amount of space for GM sales and service. (Doc. 14 at 3-4, 16-17). Plaintiff also claims defendant's continued use of plaintiff's trademarks, such as the Chevrolet and Cadillac logos, infringes on plaintiff's trademarks under Title 15, United States Code, Section 1125(a). (Id., at 20-21).
After filing its amended complaint, plaintiff moved for a preliminary injunction. (Doc. 15). Plaintiff requests that the Court (1) enjoin defendant from operating the GM dealership away from the GM dealership premises and (2) enjoin defendant from conducting CDJR operations from the GM dealership premises. (Id., at 3-4). The removal of the CDJR line-makes from the GM dealership is referred to as "de-dualing." (Doc. 18-1, at 11).
The requirements for a preliminary injunction are well established:
When determining whether to issue a preliminary injunction, the district court should consider "(1) the threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on other party litigants; (3) the probability that movant will succeed on the merits; and (4) the public interest."
Jet Midwest Int'l Co., Ltd v. Jet Midwest Grp., LLC, 953 F.3d 1041, 1044 (8th Cir. 2020) (quoting Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc)). The movant bears the burden of establishing the propriety of a preliminary injunction. Goff v. Harper, 60 F.3d 518, 520 (8th Cir. 1995). "[A] preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion." Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (emphasis original) (quoting 11A CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2948 (2d ed. 1995)). "[T]he burden on the movant is heavy, in particular where . . . 'granting the preliminary injunction will give [the movant] substantially the relief it would obtain after a trial on the merits.'" United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1179 (8th Cir. 1998) () (quoting Sanborn Mfg. Co. v. Campbell Hausfeld/Scott Fetzer Co., 997 F.2d 484, 486 (8th Cir. 1993)).
Because the absence of irreparable harm is fatal to a motion for preliminary injunction, the Court will first address the threat of irreparable harm. The Court will then discuss the remaining Dataphase factors. See 640 F.2d at 114.
"[T]o warrant a preliminary injunction, the moving party must demonstrate a sufficient threat of irreparable harm." Wachovia Secs., L.L.C. v. Stanton, 571 F. Supp.2d 1014, 1044 (N.D. Iowa 2008) (citation omitted). The movant must show more than the mere possibility that irreparable harm will occur. Rather, the movant must show it is "likely to suffer irreparable harm in the absence of preliminary relief[.]" Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). Thus, "[s]peculative harm does not support a preliminary injunction." S.J.W. ex rel. Wilson v. Lee's Summit R-7 Sch. Dist., 696 F.3d 771, 779 (8th Cir. 2012); see also Novus Franchising, Inc. v. Dawson, 725 F.3d 885, 895 (8th Cir. 2013) . "The failure to show irreparable harm is, by itself, a sufficient ground upon which to deny a preliminary injunction[.]" Gelco Corp. v. Coniston Partners, 811 F.2d 414, 418 (8th Cir. 1987).
Plaintiff alleges defendant's addition of the CDJR line-makes to the GM dealership will damage plaintiff's "image and goodwill." (Doc. 15-2, at 17). The "loss of intangible assets, such as reputation and goodwill" can constitute a form of irreparable harm. TrueNorth Cos., L.C. v. TruNorth Warranty Plans of N. Am., LLC, 353 F. Supp. 3d 788, 800 (N.D. Iowa 2018) (citation omitted). Plaintiff alleges that by defendant adding the CDJR line-makes to the GM dealership, this will harm its goodwill or other intangible assets in three general ways. First, plaintiff argues that defendant's addition of the CDJR line-makes will cause various operational issues at the GM dealership that will harm plaintiff's customer goodwill or cause plaintiff's confidential information to be disclosed. (Doc. 15-2, at 17-19). Second, plaintiff asserts that defendant's addition of the CDJR line-makes to the GM dealership will commoditize plaintiff's products and dilute its trademarks. (Id., at 18). Third, at oral argument plaintiff asserted that without an injunction defendant's alleged breach of the Agreements threatens plaintiff's contractualrelationships with its other franchisees. The Court will address each of these arguments in turn.
Plaintiff argues that, after dualing the CDJR line-makes,...
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