Mayflower Transit, Inc. v. ANN ARBOR WAREHOUSE

• Decision Date: 11 July 1995
• Docket Number: No. IP 94-1930 C B/G.,IP 94-1930 C B/G.
• Citation: 892 F. Supp. 1134
• Parties: MAYFLOWER TRANSIT, INC., Transport Service of Indiana, Inc. and Gentry Insurance Agency, Inc., Plaintiffs, v. ANN ARBOR WAREHOUSE CO., INC. d/b/a Godfrey Moving & Storage, Phoenix Moving Systems, Inc. and American Red Ball Worldwide Movers, Inc., Defendants.
• Court: U.S. District Court — Southern District of Indiana

892 F. Supp. 1134

MAYFLOWER TRANSIT, INC., Transport Service of Indiana, Inc. and Gentry Insurance Agency, Inc., Plaintiffs, v. ANN ARBOR WAREHOUSE CO., INC. d/b/a Godfrey Moving & Storage, Phoenix Moving Systems, Inc. and American Red Ball Worldwide Movers, Inc., Defendants.

No. IP 94-1930 C B/G.

United States District Court, S.D. Indiana, Indianapolis Division.

July 11, 1995.

COPYRIGHT MATERIAL OMITTED

Ronald J. Waicukauski, A. Kristine Lindley, White & Raub, Indianapolis, IN, for plaintiffs.

Timothy A. Fusco, Keith A. Schofner, Kramer Mellen, Southfield, MI, Thomas E. Daniels, Pear Sperling Eggan & Muskovitz, P.C., Ypsilanti, MI, Virgil L. Beeler, Baker & Daniels, Indianapolis, IN, for defendants.

ENTRY

BARKER, Chief Judge.

This matter is before the Court on the motion of Mayflower Transit, Inc., Transportation Service of Indiana, Inc., and Gentry Insurance Agency, Inc. (collectively "Mayflower"), for preliminary injunctive relief. For the reasons set forth below, the motion is granted.

I. FACTUAL BACKGROUND.

The plaintiffs in this action, Mayflower Transit, Inc., Transport Service of Indiana, Inc. and Gentry Insurance Agency, Inc., are all Indiana corporations with their principal places of business in Carmel, Indiana. Mayflower is an interstate transporter of household goods whose gross revenues for "line haul," i.e. the transport of such goods across state lines, totaled over $280 million in 1994. Defendants Ann Arbor Warehouse Company, Inc., d/b/a Godfrey Moving & Storage ("Godfrey") and Phoenix Moving Systems, Inc., ("Phoenix") are Michigan corporations with their principal places of business in Ann Arbor, Michigan. Phoenix is a recently-formed intrastate moving company with gross receipts totaling $285,000 for the first six months of 1995. Godfrey is currently in the final phase of liquidating its assets, having filed a Chapter 11 Petition on November 29, 1994.

From January 10, 1986, until October 10, 1994, Godfrey operated as a local booking agent for Mayflower. Under the terms of the agency agreement entered into between the two companies, Godfrey assisted Mayflower in certain local activities required in the moving and storage business, such as accepting, packing and arranging for the transportation by motor carrier of personal goods in the name of Mayflower.

In response to nagging financial troubles, Godfrey began liquidating its assets in the Fall of 1994. On October 3, 1994, several high-level employees left Godfrey to form Phoenix,¹ a newly-formed moving and storage company which is currently acting as a local booking agent for American Red Ball Worldwide Movers, Inc. ("Red Ball"). On October 10, 1994, Godfrey terminated its agency agreement with Mayflower and subsequently "sold" the use of its phone numbers to Phoenix for a sum of $271,600.² Kari Ludka, the president of Phoenix and former marketing director at Godfrey, testified that the $271,600 sum was chosen because it reflected the total debt that Godfrey owed Thomas Lopinski, the president of Godfrey and Ms. Ludka's father, not because that number represented the purported value of the phone lines. Mr. Lopinski agreed to release Godfrey from that debt in exchange for a promise from Ludka, his daughter, that Phoenix will hire him if and when it becomes financially able to do so. To underscore the lack of arms-length bargaining that characterized this transaction, no money has been paid for the numbers to date, and according to Ludka, no money is ever expected to be paid for these numbers.

According to both parties, telephone directory listings in the yellow pages are an important source, perhaps the most important source, of business and potential customers in the moving business. Godfrey currently has telephone listings in eleven 1994-95 directories throughout the Ann Arbor area. These listings appear generally in the "Movers" section of the yellow pages under the "Mayflower" name. As a result, when potential customers in the Ann Arbor area consult the yellow pages and attempt to dial the number of their local Mayflower agent, they reach Phoenix, a Red Ball agent.

Complicating matters is the personal saga of Mr. Timothy Gendreau, who contracted with Mayflower — through Godfrey — in August, 1994, to store and later ship his household effects. On October 26, 1994, Mr. Gendreau appeared at Godfrey's warehouse, only to learn that Godfrey was in the process of going out of business. He demanded to see his belongings and, though the testimony received on this matter is highly contradictory, allowed his belongings to be transferred to Phoenix's new facility in another part of Ann Arbor later that same day for continued storage. Mr. Gendreau then wrote a single check to Phoenix to pay both for past storage fees owed to Godfrey and future fees owed to Phoenix.³ Over the next few months, however, Mr. Gendreau refused to pay anything further, arguing that pursuant to his agreement with Godfrey-Mayflower, he would not have to pay certain storage and packing charges. On April 10, 1995, Phoenix sent Mr. Gendreau a "Final Notice of Sale" stating that if Phoenix did not receive payment for past packing and loading, cartage into storage and accumulated storage charges, Phoenix would auction off his property.⁴

On November 22, 1994, Mayflower filed the present suit⁵ seeking both damages and injunctive relief under various breach of contract, state tort and federal Lanham Trademark Act theories. On May 8, 1995, Mayflower filed the instant motion seeking a preliminary injunction against the defendants. Specifically, Mayflower argues (1) that Godfrey, by transferring its phone numbers to Phoenix, breached portions of its agency agreement with Mayflower that required it to transfer its telephone numbers to Mayflower upon termination of the agreement, and (2) that Phoenix's use of Godfrey's previous numbers constitutes an infringement of Mayflower's federally registered trademark to the extent that customers consulting telephone directories seeking Mayflower's number receive the number for Phoenix, the local agent of a direct competitor. Mayflower thus asks the Court to "prohibit the defendants from refusing to execute appropriate documents to transfer to Mayflower telephone numbers listed under Mayflower's name." (Verified Motion for Second Preliminary Injunction, p. 1).

II. ANALYSIS.

A. Injunction Standards

To obtain a preliminary injunction, Mayflower must make a threshold showing of establishing (1) some likelihood of prevailing on the merits, and (2) that in the absence of the injunction, it will suffer irreparable harm for which there is no adequate remedy at law. Roth v. Lutheran General Hospital, 57 F.3d 1446, 1453 (7th Cir.1995); Storck USA, L.P. v. Farley Candy Co., 14 F.3d 311, 313-314 (7th Cir.1994); Abbott Laboratories v. Mead Johnson & Co., 971 F.2d 6, 11-12 (7th Cir.1992). If Mayflower meets these two conditions, then the Court must "balance the harm to the movant if the injunction is not issued against the harm to the defendant if it is issued improvidently. The balancing involves a `sliding scale' analysis: the greater the movant's chance of success on the merits, the less strong a showing must it make that the balance of harms is in its favor. In addition the court must consider the public interest in whether the injunction is to be granted or denied." Storck USA, 14 F.3d at 314; accord Abbott Laboratories, 971 F.2d at 12.

B. Likelihood of Success on the Merits

"Equity jurisdiction exists only to remedy legal wrongs; without some showing of a probable right there is no basis for invoking it." Roland Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380, 387 (7th Cir.1984). Thus, as a threshold matter, Mayflower must establish a likelihood of prevailing on the merits. To make such a showing, Plaintiff must demonstrate at a minimum that its chance of ultimately prevailing is "better than negligible." Kinney v. Int'l Union of Operating Engineers, 994 F.2d 1271, 1278 (7th Cir.1993) quoting Illinois Council on Long Term Care v. Bradley, 957 F.2d 305, 307 (7th Cir.1992).

(1). Mayflower Is Likely to Prevail on Its Breach of Contract Claim.

Paragraph 17(f) of the agency agreement between Godfrey and Mayflower states that "on termination of this agreement," Godfrey agrees it "will have no further right to use any telephone number listed under any name of which the term `Mayflower' or the term `Aero Mayflower' is a part, and Godfrey agrees, at the request of Mayflower, to execute all documents required by the telephone authorities to have calls for any such number ... transferred to Mayflower, or its nominee." (Agency Agreement, Plaintiff's Ex. 1, ¶ 17(f)). According to Mayflower, the intent embodied in this provision could hardly be more clear: upon termination of the agency relationship between Godfrey and Mayflower, Godfrey (1) forfeits its right to continue using any phone numbers appearing in local directories under Mayflower's name and/or service marks, and (2) agrees to execute the documents necessary to transfer control of the numbers back to Mayflower.

In response, Defendants advance numerous arguments, all of which the Court finds lacking. First, Defendants argue that Godfrey's phone numbers were never "listed" under Mayflower's name because the numbers appear only under Godfrey's name in the White Pages. In other words, Defendants attempt to distinguish between the White Pages, which they call "listings," and the Yellow Pages, which they call "advertising." Because the disputed numbers only appear under Mayflower's name in the Yellow Pages, Defendants argue that ¶ 17(f) is inapplicable.

Although we commend Counsel's creativity, we find that limiting ¶ 17(f) to numbers appearing in the White Pages would be nonsensical. What makes control of the numbers so important is that they appear in the Yellow Pages under the Mayflower name and logo, thus enabling lesser known local agents to associate themselves with...