Triebwasser & Katz v. American Tel. & Tel. Co.

Decision Date17 May 1976
Docket NumberD,No. 987,987
Citation535 F.2d 1356
Parties1976-1 Trade Cases 60,888 TRIEBWASSER & KATZ, a partnership consisting of Jonah Triebwasser and William Katz, Plaintiffs-Appellees, v. AMERICAN TELEPHONE & TELEGRAPH COMPANY, et al., Defendants-Appellants. ocket 76-7095.
CourtU.S. Court of Appeals — Second Circuit

John W. Finley, Jr., New York City (Brashich, Finley & Postel, Michael Blinick, New York City, of counsel), for plaintiffs-appellees.

James W. Lamberton, New York City (Cleary, Gottlieb, Steen & Hamilton, Stephen L. Cohen, James B. McHugh, New York City, of counsel, George E. Ashley, New York City, Co-counsel for New York Tel. Co.), for defendants-appellants.

Before MULLIGAN and MESKILL, Circuit Judges, and PALMIERI, District Judge. *

MULLIGAN, Circuit Judge:

This is an appeal pursuant to 28 U.S.C. § 1292(a)(1) from an order of Hon. John M. Cannella, Judge of the United States District Court for the Southern District of New York, entered February 26, 1976, granting the motion of the plaintiffs Triebwasser and Katz ("Katz"), a licensed private investigative agency, for a preliminary mandatory injunction against the named defendants, American Telephone and Telegraph Company ("AT&T"), the New York Telephone Company ("Telco"), and the Reuben H. Donnelley Corporation ("Donnelley"). On the argument on appeal this court stayed the injunction pending disposition of this appeal and now reverses the order granting it.

On February 17, 1976 Katz filed a complaint seeking injunctive relief and one million dollars in damages against the defendants. Telco publishes the classified telephone directories, commonly known as the Yellow Pages, in the New York metropolitan area; its parent corporation is AT&T and Donnelley is an advertising sales representative for the Yellow Pages. Plaintiff by order to show cause moved for a temporary restraining order and a preliminary injunction enjoining the defendants from refusing to accept Katz's advertisement for publication in the Yellow Pages. A hearing was held on February 23, 1976 with William Katz the only witness for the plaintiffs. Defendants offered no witnesses.

The facts reveal that Katz is a detective agency which commenced business in New York City on December 4, 1975 and which attempted to insert an advertisement in the Queens County Yellow Pages with the following prominent legend: "We can detect and remove unwanted and illegal electronic listening devices from your telephone, home or office." The defendants Donnelley and Telco refused and rejected the advertisement, because it did not comply with their internal standards for such advertising. More specifically, Telco stated that it was concerned with the privacy of communication and that so-called "debugging" advertisements are consistently rejected since large segments of the public will assume that those who have the capability to "debug" can also furnish wire tapping and eavesdropping services and equipment. Telco said it would publish the Katz advertisement without the debugging legend. This action prompted the complaint below, which urged as a first cause of action that the refusal of the defendants to publish the Katz advertisement constituted a conspiracy to restrain competition in violation of the Sherman Act, 15 U.S.C. § 1 et seq. The second cause of action alleges the same facts to constitute a deprivation of the first, fifth and fourteenth amendments guaranteeing free speech, due process of law, and equal protection of law. The third cause of action alleged the same facts to constitute a violation of various sections of the Penal Law and General Business Law of the State of New York. Judge Cannella's opinion granting the preliminary injunction was addressed solely to the antitrust claim.

The opinion of the District Court granting the relief requested was based on the familiar test of this circuit that a preliminary injunction will issue "only upon a clear showing of either (1) probable success on the merits and possible irreparable injury, or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief." Sonesta Int'l Hotels Corp. v. Wellington Associates, 483 F.2d 247, 250 (2d Cir. 1973) (emphasis in original). It is equally familiar law that the granting of preliminary injunctive relief lies within the sound discretion of the District Court and will not be disturbed unless there is an abuse of that discretion. Doran v. Salem Inn, Inc., 422 U.S. 922, 931-32, 95 S.Ct. 2561, 2567-2568, 45 L.Ed.2d 648, 659-660 (1975), or unless there is a clear mistake of law, 414 Theater Corp. v. Murphy, 499 F.2d 1155, 1159 (2d Cir. 1974); Exxon Corp. v. City of New York, 480 F.2d 460, 464 (2d Cir. 1973).

Here we hold that the court below committed a clear mistake of law and has abused its discretion in granting the preliminary injunction.

While making no finding regarding probable success on the merits, the court did find sufficiently serious questions going to the merits to make them a fair ground for litigation (although noting it was "hampered by the somewhat barren factual record produced by the plaintiffs"), and also found that the balance of hardships tipped decidedly in favor of the plaintiffs.

Although we express no opinion at this juncture as to the merits of any substantive antitrust issues, we think the appraisal of the court below that there are sufficiently serious questions going to the merits to make them a fair ground for litigation, is a proper assessment of the issues presented by the pleadings. 1

Our difficulty, however, is with the finding that the balance of hardships tips decidedly in the plaintiff's favor. At the outset, we should note that this language of the second prong of the Sonesta test does not eliminate the basic obligation of the plaintiff to make a clear showing of the threat of irreparable harm. That is a fundamental and traditional requirement of all preliminary injunctive relief, see Doran v. Salem Inn, Inc., supra, 422 U.S. at 931, 95 S.Ct. at 2567, 45 L.Ed.2d at 659, since equity cannot intervene where there is an adequate remedy at law. E. g., Atlas Life Ins. Co. v. W. I. Southern, Inc., 306 U.S. 563, 569, 59 S.Ct. 657, 660, 83 L.Ed. 987, 992 (1939); Matthews v. Rodgers, 284 U.S. 521, 525, 52 S.Ct. 217, 219, 76 L.Ed. 447, 451 (1932) (case involved injunction on collection of a state tax); Oneida Indian Nation v. County of Oneida, 464 F.2d 916, 922 (2d Cir. 1972), rev'd on other grounds, 414 U.S. 661, 94 S.Ct. 772, 39 L.Ed.2d 73 (1974); Porto Rico Tel. Co. v. Puerto Rico Communications Auth., 189 F.2d 39, 41 (1st Cir.), cert. denied, 342 U.S. 830, 72 S.Ct. 54, 96 L.Ed. 628 (1951) ("It is settled that a federal court may not grant the extraordinary equitable remedy of an injunction if the complaining party has a plain, adequate and complete remedy at law."); 7 J. Moore, Federal Practice P 65.18(3), at 65-134, 65-136 & n. 18 (2d ed. 1975). Cf. Developments in the Law Injunctions, 78 Harv.L.Rev. 994, 996, 1001-04 (1965). If the element of irreparable damage is prerequisite for relief where the plaintiff must show probable success on the merits, then a fortiori where the plaintiff establishes something less than probable success as to the merits, need for proof of the threat of irreparable damage is even more pronounced. In sum, the balancing of hardships test of Sonesta necessarily includes the showing of irreparable harm.

In antitrust cases, the proposition requires no further elucidation since 15 U.S.C. § 26 explicitly requires for a preliminary injunction a showing "that the danger of irreparable loss or damage is immediate," and we have so held in...

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