NW Controls, Inc. v. Outboard Marine Corporation

• Decision Date: 06 October 1970
• Docket Number: Civ. A. No. 3730.
• Citation: 317 F. Supp. 698
• Parties: N. W. CONTROLS, INC., a Pennsylvania corporation, Plaintiff, v. OUTBOARD MARINE CORPORATION, a Delaware corporation, Defendant.
• Court: U.S. District Court — District of Delaware

317 F. Supp. 698

N. W. CONTROLS, INC., a Pennsylvania corporation, Plaintiff, v. OUTBOARD MARINE CORPORATION, a Delaware corporation, Defendant.

Civ. A. No. 3730.

United States District Court, D. Delaware.

October 6, 1970.

Brereton Sturtevant, of Connolly, Bove & Lodge, Wilmington, Del., and Thomas L. Cantrell and John T. Synnestvedt, of Synnestvedt & Lechner, Philadelphia, Pa., of counsel, for plaintiff.

James M. Tunnell, Jr., and William O. LaMotte, III, of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., and Butzel, Levin, Winston & Quint, Detroit, Mich., of counsel, for defendant.

OPINION

LATCHUM, District Judge.

Plaintiff in this case has moved for a preliminary injunction enjoining the defendant from requiring certificates, issued to the purchasers of the defendant's outboard motors, to be redeemed exclusively for remote control throttle cables. In addition the plaintiff seeks to enjoin the defendant from disparaging the plaintiff's products in violation of the anti-trust laws. The plaintiff also moved, in a subsequent oral modification of its application, to require the defendant to cease issuing certificates to purchasers of at least one of the horsepower sizes of its 1971 model outboard engines now under the certificate program.

This action is a civil antitrust action brought by N. W. Controls, Inc. ("N. W.") against Outboard Marine Corporation ("O.M.C."). N.W. is a manufacturer of remote control cables and end fittings for outboard and stern drive boat engines and snowmobiles. O.M.C. is a diversified corporation which manufactures and distributes lawn mowers, golf carts, industrial vehicles, chain saws, snowmobiles, and camping trailers in addition to outboard and stern drive boat motors and accessories, including remote control cables.

The plaintiff, N.W., has alleged violations of Section 1 of the Sherman Anti-Trust Act, 15 U.S.C. § 1, Section 3 of the Robinson-Patman Act, 15 U.S.C. § 13a, and Section 3 of the Clayton Act, 15 U.S.C. § 14. Suit has been brought pursuant to section 4 of the Clayton Act, 15 U.S.C. § 15, requesting treble damages for the violations. Both temporary and permanent injunctive relief have been requested pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26. This Court has jurisdiction under 28 U.S.C. § 1337. The defendant, O.M.C., is a Delaware corporation. Venue is thus properly laid in this district under 28 U.S.C. § 1391, 15 U.S.C. § 15 and 15 U.S.C. § 22.

Plaintiff alleges that O.M.C. has been violating Section 3 of the Clayton Act, 15 U.S.C. § 14, and Section 1 of the Sherman Anti-Trust Act, 15 U.S.C. § 1, by "tying" the sale of its brand of outboard motor remote control throttle cables to the sale of its electric gear shift equipped outboard motors by means of a "certificate program."¹

Outboard motors, such as those manufactured by the defendant, are mounted on a transom at the rear of small boats. The gear shift and throttle controls may be located on the engine itself and the operator may control the boat and motor seated at the rear of the boat next to the motor. Frequently, especially when outboard motors of higher horsepower are used, control operations, steering, gear shifting, and throttling, are performed from a position further forward in the boat using control cables. These control cables are elongated flexible conduits containing freely moving core wires and have specially configured end fittings which are attached to the appropriate fittings at the engine and at the control station.

In terms of the engine operation two control functions may be performed by means of remote control cables, gear shifting and throttle operation. Traditionally this was accomplished by running two control cables, one for the shift and one for the throttle, to a control box containing two levers, one for operating the gear shift and one for operating the throttle.

However, in the 1962 model year, which began in the fall of 1961, O.M.C. introduced the first outboard engine with electrically operated gear shift. For these engines the remote control operation of the shift is accomplished by means of an electric clutch and harness connected to electric push buttons or other controls. The throttle, however, is still operated by means of a remote control cable connected to a single lever on the control box. It is these models which are under the "certificate program" complained about in the present case. None of the defendant's models equipped with mechanical gear shifts are under the "certificate program."

The certificate program works rather simply. The purchaser of one of the defendant's Evinrude or Johnson outboard motors² equipped with an electric gear shift receives, with the motor itself, a control box, an electric shift wiring harness, and a certificate which the purchaser may redeem for the proper length throttle control cable, the length being dependent upon the size of the boat. Upon presentation of the certificate the purchaser obtains a control cable without additional charge. The cost of the throttle control cable is thus included in the cost of the motor. Exhibits filed in this case indicate that over ninety percent of the certificates are redeemed for the "free" cables.³

These certificates are turned in by the dealer to O.M.C.'s Gale Products division for credit toward the purchase of cables to replenish the dealer's inventory. The dealer may not redeem these certificates for cash or for credit on any O.M.C. product except control cables.

On August 4, 1970 the plaintiff moved for a preliminary injunction to restrain the defendant from expanding the proportion of its models under the certificate program beyond the proportion covered in the 1970 model year. At a hearing held on September 10, 1970, the plaintiff learned for the first time that the defendant's 1971 models had already been released for sale. As a result of the elimination of the 33 horsepower size,⁴ one not under the certificate program, the plaintiff alleged that the proportion of illegal interference had increased in the potential market for remote control cables.⁵ Thus at a second hearing held on September 18, 1970, the plaintiff modified its requested relief to ask that the defendant be required to cease the use of the certificate program with respect to one horsepower size of its 1971 engines in order to maintain the status quo.

Plaintiff's modified motion for a preliminary injunction also requested that the defendant be ordered to accept any certificates tendered by its dealers for cash or for credit to the dealer toward the purchase of any O.M.C. accessory or product and not just for throttle control cables. In addition the plaintiff requested the Court to order the defendant to refrain from issuing or publishing any statement or report critical of the quality or performance of the plaintiff's products.

Plaintiff contends that the changes made by the defendant in its product line for the 1971 model year constitutes an extension of its illegal practices and a change in the status quo calling for injunctive relief. The plaintiff argues that the continuation of the certificate program into the 1971 model year will cause it irreparable injury because the opening of the model year establishes the sales trend for the entire year.⁶ In addition the plaintiff asserts that damages could not be accurately measured for the monetary loss sustained from its foreclosure from this substantial market.

The defendant contends that the plaintiff has failed to show that it will suffer irreparable harm if the preliminary relief is not granted and that, if the plaintiff prevails at the trial on the merits, an award of money damages will be adequate to compensate the plaintiff for any injury which it might have suffered. The defendant further contends that the damage to it which would result from the granting of a preliminary injunction would vastly outweigh the harm to the plaintiff which would be averted. The defendant contends that no evidence exists that it will attempt to disparage the plaintiff's products, so that any injunctive relief on this subject would be superfluous.

In order to justify the issuance of a preliminary injunction certain prerequisites must exist. The fact that violations of the antitrust laws have been alleged does not displace the normal rules of equity. Kay Instrument Sales Co. v. Haldex Aktiebolag, 296 F. Supp. 578 (S.D.N.Y.1968). The law of this circuit and district is well settled as to the showing which is required before a preliminary injunction will issue. A preliminary injunction will issue only "in a case clearly demanding it" and only "to preserve the status quo pendente lite." Warner Bros. Pictures, Inc. v. Gittone, 110 F.2d 292, 293 (C.A. 3, 1940).

In this district temporary injunctive relief must be denied unless the moving party can demonstrate (1) that there is no serious dispute between the parties as to the facts alleged or the law applicable, (2) that there is a reasonable probability of the moving party's success at final hearing, (3) that irreparable injury will result to the moving party, for which there is no adequate remedy at law, unless the relief is granted, (4) that the moving party will suffer more severe injury if the relief is denied than the other party will suffer if the relief is granted. Henis v. Compania Agricola De Guatemala, 116 F.Supp. 223 (D.Del.1953), aff'd 210 F.2d 950 (C.A. 3, 1954); American Smelting and Refining Co. v. Pennzoil United, Inc., 295 F. Supp. 149 (D.Del.1969); Wilmington City Ry. Co. v. Taylor, 198 F. 159 (D. Del.1912); see also 78 Harv.L.Rev. 994, 1056 (1965). The moving party, the plaintiff in this case, has the burden of showing that he is entitled to the injunctive relief requested. Garlock, Inc. v. United Seal, Inc., 404 F.2d 256 (C.A. 6, 1968). The issuance of preliminary injunctive relief rests in the sound discretion of the trial court. United States v. Ingersoll-Rand Co., 320 F.2d 509 (C. A. 3, 1963)...