Green River Bottling Co. v. Green River Corp., A-BARR

• Decision Date: 23 September 1993
• Docket Number: No. 92-3577,A-BARR,92-3577
• Citation: 997 F.2d 359
• Parties: GREEN RIVER BOTTLING COMPANY, Plaintiff-Counterdefendant-Appellee, v. GREEN RIVER CORPORATION and Daniel J. Meyers, Defendants-Counterplaintiffs/Third-Party Plaintiffs-Appellants, v.SALES, INCORPORATED, Sethness-Greenleaf, Incorporated, Bernard Barc, et al., Third-Party Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 359

997 F.2d 359

27 U.S.P.Q.2d 1304

GREEN RIVER BOTTLING COMPANY, Plaintiff-Counterdefendant-Appellee, v. GREEN RIVER CORPORATION and Daniel J. Meyers, Defendants-Counterplaintiffs/Third-Party Plaintiffs-Appellants, v. A-BARR SALES, INCORPORATED, Sethness-Greenleaf,

Incorporated, Bernard Barc, et al., Third-Party

Defendants-Appellees.

No. 92-3577.

United States Court of Appeals, Seventh Circuit.

Argued April 2, 1993.

Decided July 1, 1993.

Rehearing and Suggestion for Rehearing En Banc Denied Sept.

23, 1993.

John C. Brezina (argued), Burton S. Ehrlich, Brezina & Buckingham, Oak Brook, IL, for Green River Bottling Co.

William B. Kohn, Chicago, IL (argued), John J. Erhart, Gregory P. Kaihoi, Fredrikson & Byron, Minneapolis, MN, for Green River Corp. and Daniel J. Meyers.

Walter J. O'Brien, II, Angela Imbierowicz, O'Brien & Associates, Oakbrook Terrace, IL, for A-Barr Sales, Inc., Sethness-Greenleaf, Inc., Bernard Barc, J. Barry McRaith and George Sundheim.

Before POSNER and EASTERBROOK, Circuit Judges, and TIMBERS, Senior Circuit Judge. ^*

POSNER, Circuit Judge.

This is an appeal under 28 U.S.C. § 1292(a)(1) from the denial of a preliminary injunction in a diversity case arising out of a contract dispute. The dispute is a simple one, involving small stakes, but it has been allowed to escalate. The case is three and a half years old, with no end in sight. As sometimes happens, the lawyers and the district judge have allowed the case to get out of hand. It must be placed on a steady course to an early resolution.

"Green River" is the trademark under which Sethness-Greenleaf, Inc. sold to bottlers a soft drink, and to restaurants a fountain syrup, manufactured according to a formula that was Sethness-Greenleaf's trade secret. In 1985 Sethness-Greenleaf sold the Green River business, including the trademark and the trade secret, for the modest sum of $75,000, to Green River Corporation. The purchase price was to be paid as follows: Green River Corporation agreed to buy its requirements of "Green River" products from Sethness-Greenleaf, and for each gallon sold Sethness-Greenleaf would apply $5 toward the payment of the purchase price of the business. When the price was paid in full, the secret formula for the manufacture of Green River beverage and syrup, till then held in escrow, would be released to Green River Corporation, which would then make its own arrangements for the manufacture of the products. In the event of a default, Sethness-Greenleaf would be entitled to repossess the formula.

Green River Corporation fell behind in its payments and Sethness-Greenleaf declared a default, stopped supplying Green River Corporation, and demanded the return of the formula from the escrow agent. Unwilling to stop doing business under the "Green River" name, Green River Corporation procured a green soft drink from another producer and sold it under the "Green River" name, precipitating this suit by Sethness-Greenleaf. Filed initially in state court but removed to federal court, the suit alleged a breach of contract and sought among other relief a permanent injunction against Green River Corporation's using the "Green River" trademark on a soft drink bought from another supplier. This suit was joined with a parallel suit by Green River Bottling Company against Green River Corporation. Green River Bottling Company was a distributor of "Green River" soft drink. When it discovered that Green River Corporation was supplying it with a soft drink that had been manufactured according to a different formula, it stopped buying from Green River Corporation and attempted to obtain the product from Sethness-Greenleaf but desisted when Green River Corporation threatened legal action against it. So it now sells no "Green River" soft drinks and claims to have lost profits as a result. Sethness-Greenleaf is not selling any "Green River" soft drinks but continues to supply "Green River" fountain syrup to the restaurant of the Chicago Bar Association across the street from this court. It is not clear from the record whether Green River Corporation has found another Chicago distributor, but "Green River" beverages were spotted recently at the Chicago restaurant "Heaven on Seven."

The plaintiffs, Sethness-Greenleaf and Green River Bottling Company, moved for summary judgment, which the district judge granted but then rescinded, persuaded by Green River Corporation that there was a genuine issue of material fact concerning the terms of payment under the contract and whether Green River Corporation had violated them by its delay in paying. All parties moved for preliminary injunctions. The judge has not acted on the plaintiffs' motions. He has, however, denied the defendant's motion. That motion sought to enjoin Sethness-Greenleaf from continuing to sell fountain syrup under the "Green River" name. Such sales, Green River Corporation contends, infringe the trademark that it acquired by the purchase of the "Green River" business from Sethness-Greenleaf; even if Green River Corporation is in default under the contract, Sethness-Greenleaf would not be entitled to prevent Green River Corporation from using the "Green River" trademark until a final judgment resolving the contract dispute in Sethness-Greenleaf's favor is entered. The district judge disagreed. He ruled that if there was a default on the contract, the trade secret, along with the right to use the "Green River" trademark, would revest in Sethness-Greenleaf as of the date of the default; he relied on a provision in the contract that in the event of a default the escrow agent is to redeliver the formula to Sethness-Greenleaf "as soon as practicable." He therefore denied the preliminary injunction, precipitating this appeal.

The district judge's order denying the preliminary injunction was terse. He did not discuss the balance of irreparable harms. He said only that Green River Corporation could not demonstrate a likelihood of success because he had ruled, in denying cross-motions for summary judgment, that there was a genuine issue of material fact concerning whether Green River Corporation had defaulted. Green River Corporation is right to be dissatisfied with the district judge's articulation of the grounds for denying the preliminary injunction. As long as the judge was satisfied that the corporation had more than a trivial chance of succeeding on the merits, he should have considered the irreparable harms to the parties of granting and of denying the request for a preliminary injunction, respectively. International Kennel Club v. Mighty Star, Inc., 846 F.2d 1079, 1084 (7th Cir.1988). Even if Green River Corporation had only a modest chance of prevailing on the merits, it would be entitled to a preliminary injunction if it could show that the denial of the injunction would inflict severe irreparable harm on it while the grant of the injunction would inflict little or no irreparable harm on the plaintiffs. Curtis v. Thompson, 840 F.2d 1291, 1296 (7th Cir.1988); see generally Roland Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380 (7th Cir.1984). The fact that the judge had not determined the merits of the parties' substantive claims on summary judgment did not disentitle any of the parties to a preliminary injunction. 11 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2948 at pp. 456-57 (1973). On the contrary, a party that has obtained summary judgment in its favor has won the case and doesn't need a preliminary injunction.

But we do not think the inadequacies in the judge's opinion warrant a reversal. If it is plain that the party seeking the preliminary injunction has no case on the merits, the injunction should be refused regardless of the balance of harms. Curtis v....