Menominee Rubber Co. v. Gould, Inc.

• Decision Date: 21 August 1981
• Docket Number: No. 80-2440,80-2440
• Citation: 657 F.2d 164
• Parties: 1981-2 Trade Cases 64,252 MENOMINEE RUBBER COMPANY, Plaintiff-Appellee, v. GOULD, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 164

657 F.2d 164

1981-2 Trade Cases 64,252

MENOMINEE RUBBER COMPANY, Plaintiff-Appellee, v. GOULD, INC., Defendant-Appellant.

No. 80-2440.

United States Court of Appeals Seventh Circuit.

Argued May 27, 1981.

Decided Aug. 21, 1981.

Daniel W. Weil, Winston & Strawn, Chicago, Ill., for defendant-appellant.

Bruce C. O'Neill, Milwaukee, Wis., for plaintiff-appellee.

Before CUMMINGS, Chief Judge, PELL, Circuit Judge, and MARKEY, Chief Judge. ^*

PELL, Circuit Judge.

Gould appeals from the district court's grant of a preliminary injunction prohibiting Gould from terminating Menominee Rubber Company (MRC) as a distributor of its patented hose-crimping machine. Gould manufactures the machine and its component couplings and sells them to its distributors along with special hose it purchases from outside suppliers. The distributors usually crimp the coupling on the hose with the machine, and sell the completed hose assemblies. The patent and manufacturing facilities for the machine and couplings were acquired by Gould in 1976 from the ITS Imperial Corporation which had, with its predecessors, maintained a non-exclusive oral distributorship agreement with MRC since the mid-1960's.

On March 20, 1980, Gould gave MRC 90 days' written notice of its intent to terminate the distributorship. Gould's action was allegedly based upon MRC's refusal to "aggressively promote" the complete line of Gould hose assembly products in that MRC refused to purchase and offer for sale any Gould-supplied hose but rather purchased the hose directly from Gould's suppliers. Gould also claimed that MRC entered into competition with Gould in the manufacture of couplings. This latter allegation was based upon MRC's manufacture for itself of certain high-demand couplings previously supplied by Gould. MRC claimed that this manufacturing was necessary because of Gould's failure to maintain an adequate supply of the couplings on a prior occasion.

On June 10, 1980, MRC brought this action in the Circuit Court of Wisconsin under the Wisconsin Fair-Dealership Act, Wis.Stat. § 135.01 et seq. MRC alleged that the threatened termination was without "good cause" in violation of § 135.03. The circuit court granted MRC's request for a temporary injunction and Gould removed the litigation to the United States District Court for the Eastern District of Wisconsin. After the removal, MRC added to its complaint claims under the Wisconsin Antitrust Act, Wis.Stat. § 133, the Sherman Antitrust Act, 15 U.S.C. § 1, and the Clayton Act, 15 U.S.C. § 14, and moved for a preliminary injunction against the termination. The district court granted the motion holding that the Wisconsin Fair-Dealership Act's prohibition of terminations without "good cause" applied either because it had retroactive application, see § 135.025 and Paul Reilly Co., Inc. v. Dynaforce Corp., 449 F.Supp. 1033, 1035 (E.D.Wis.1978), or because the agreement between the parties was entered into or at least was renewed when Gould acquired Imperial in 1976, after the effective date of the Act. The court went on to find that MRC had a reasonable likelihood of success on the merits because the threatened termination might violate the state and federal antitrust prohibitions against tying agreements and full-line forcing. See Pitchford v. Pepi, Inc., 531 F.2d 92 (3d Cir. 1976), cert. denied, 426 U.S. 935, 96 S.Ct. 2469, 49 L.Ed.2d 387. Gould has appealed from these determinations.

Our standard for review of grants of preliminary injunctions has been set forth many times and has recently been restated in Reinders Brothers, Inc. v. Rain Bird Eastern Sales Corp., 627 F.2d 44 (7th Cir. 1980):

As the district court rightly noted, the granting of a preliminary injunction requires that the district court consider each of the four factors set forth in Fox Valley Harvestore, Inc. v. A. O. Smith Harvestore Products, Inc., 545 F.2d 1096, 1097 (7th Cir. 1976). Those factors are: (1) whether the plaintiff will have an adequate remedy at law or will be irreparably harmed if the injunction does not issue; (2) whether the threatened injury to the plaintiff outweighs the threatened harm the injunction may inflict on the defendant; (3) whether the plaintiff has at least a reasonable likelihood of success on the merits; and (4) whether the granting of a preliminary injunction will disserve the public interest. Upon appeal, a district court decision that, as here, preserves the status quo may be overturned only upon a showing of a clear abuse of discretion. Jordan v. Wolke, 593 F.2d 772, 773 (7th Cir. 1978); Banks v. Trainor, 525 F.2d 837 (7th Cir. 1975), certiorari denied, 424 U.S. 978, 96 S.Ct. 1484, 47 L.Ed.2d 748. Reviewing the district court's decision requires a reexamination of his findings on each of the four considerations. Yet no one of the factors is decisive, even though the likelihood of success on the merits often serves as a threshold requirement for entitlement to preliminary relief. Kolz v. Board of Education of the City of Chicago, 576 F.2d 747, 748-749 (7th Cir. 1978). As a result, not only must the district court's findings be allowed to stand absent evidence that they are clearly erroneous or represent a certain mistake of law (Sangmeister v. Woodard, 565 F.2d 460, 464-465 (7th Cir. 1977), appeal dismissed sub nom. Illinois State Board of Education v. Sangmeister, 435 U.S. 939, 98 S.Ct. 1516, 55 L.Ed.2d 535), but its decision as a whole must not be upset unless the totality of the factors points to a clear departure from the proper exercise of its discretion.

Id. at 48-49. As Reinders Brothers clearly states, our review is very limited and reversal requires a showing from the totality of the factors that a clear abuse of the trial court's discretion has occurred or that the court's findings were clearly erroneous or represent a certain mistake of law.

Upon reviewing the record in this case, we cannot conclude that Gould has made the required showing. Although it is true that the Wisconsin Supreme Court has recently decided that the Wisconsin Fair-Dealership law cannot constitutionally be applied retroactively to dealership agreements entered into prior to the Act's 1974 effective date, Wipperfurth v. U-Haul Co. of Wisconsin, 304 N.W.2d 767 (Wis., 1981), Gould has failed to establish that the district court was clearly erroneous in concluding that the agreement between Gould and MRC was initiated or renewed at the time Gould acquired Imperial in 1976. Gould's reliance on H. Phillips Co., Inc. v. Brown-Forman Distillers Corp., 483 F.Supp. 1289 (W.D.Wis., 1980), for the proposition that Gould's merger with Imperial had no...