Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

STATE OF MICHIGAN v. UNITED STATES ARMY CORPS OF ENGINEERS (August 24, 2011)

The Chicago Area Waterway System is a system of canals and channels with locks and dams in northeastern Illinois. The System links Lake Michigan with the Mississippi River. Although it has been a boon to commerce, tourism, transportation, and public health, it has created some problems. Two particular species of carp that could wreak monumental ecological damage to the Great Lakes have migrated up the Mississippi River and have entered the System. The Army Corps of Engineers and the Metropolitan Water Reclamation District of Greater Chicago have taken and are taking many steps to prevent the carp from reaching the Great Lakes. But the States of Michigan, Minnesota, Ohio, Pennsylvania, and Wisconsin filed suit under the federal common law of nuisance and § 702 of the Administrative Procedure Act, alleging that the Corps and the District are not taking sufficient steps to avert the potential crisis. Judge Dow (N.D. Ill.) denied the plaintiffs' motion for a preliminary injunction. The States appeal.

In their opinion, Seventh Circuit Judges Manion, Wood, and Williams affirmed. The Court first stated the familiar elements needed for a preliminary injunction: likely to succeed on the merits, likely to suffer irreparable harm, the harm without an injunction is greater than the harm an injunction would impose on the defendants, and the injunction is in the public interest. The Court first addressed likelihood of success and expressed its disagreement with the district court's assessment of that as "modest." The Court concluded that the federal common law of nuisance applied to the State's allegations, rejecting defendants' arguments that it did not apply because either the defendants were not physically moving the fish themselves or that the allegations did not involve a traditional pollutant. The Court briefly addressed, without deciding, the underdeveloped argument that a federal common law of nuisance claim it does not stand against the United States. Although it found that excluding such claims would be consistent with the origins of the tort, it also questioned why the claim could not lie against the United States as an owner of a dam or other facility that might create a nuisance. In any event, given its ultimate conclusion, the Court proceeded on the assumption that the claim was appropriate. Next, the Court addressed the Corps' claim of sovereign immunity and concluded that APA § 702 waives sovereign immunity for these declaratory and injunctive claims. The Court moved to the defendants’ displacement doctrine argument. That doctrine addresses the relationship between the courts and Congress and provides that the exercise of federal common law by the courts in an area is no longer necessary once Congress addresses the question. The question presented here is whether Congress has done enough to displace the common law. In Milwaukee I, Supreme Court said that Congress had not displace the federal common law even though it had enacted several laws touching upon the subject matter. In Milwaukee II and American Electric Power, however, the Supreme Court held that more comprehensive legislation in the areas did displace the federal common law. Here, although the Court recognized some Congressional activity (for example, the National Invasive Species Act) in the area, it concluded that it fell far short of the comprehensive schemes in Milwaukee II and American Electric Power and did not displace the federal common law. The Court turned to the actual evidence presented by the plaintiffs on their claim and considered whether the identified activity was a nuisance and whether it was sufficiently threatening to require equitable relief. Although the Court found little error in the district court's factual findings that the potential for harm was significant, it disagreed with its conclusion that the risk of that harm occurring was not sufficient to warrant injunctive relief. The Court noted that the magnitude of the potential harm was tremendous, that it was increasing, and that it probably could not be undone if once it occurred. It therefore gave the benefit of the doubt to the plaintiffs that the risk was imminent and concluded that they satisfied the likelihood of success element needed for a preliminary injunction. With respect to plaintiffs' likelihood of success on its APA claim, the Court concluded that that claim was co-extensive with the federal common law claim and need not be addressed separately. The second element required for a preliminary injunction is irreparable harm. The Court concluded that plaintiffs met their burden of showing irreparable harm, relying on much the same evidence relevant to the likelihood of success element. Again, it concluded (as, apparently, did the parties) that the harm, if it occurred, would be genuinely irreparable. And again, given the severity of that harm, it gave the States the benefit of the doubt on the degree of risk that the harm would actually occur. The Court turned to the balancing of harms -- comparing the harm that would occur in the absence of an injunction with the harm an injunction would impose on the defendants. It concluded that the harm to the defendants in the event the injunction issued substantially outweighed any benefit to the plaintiffs for two reasons. First, it evaluated the specific requests for relief individually and found substantial problems inherent in the requests. Some of the requests provided little benefit at significant cost. At least one of the request was already under study by the Corps. Simply put, the record did not establish that the requested relief would do much to address the problem and, to the extent it would, it created other risks. It compared that "benefit" with the harm an injunction would impose on the defendants. It concluded that it would impose significant cost, it would increase the risk of flooding, it would negatively impact commercial and recreational boating, and it would interfere with police and fire protection services on the Chicago River. Second, the Court concluded that an injunction would interfere with the ongoing efforts of the federal and local agencies already addressing the problem. Federal courts, it said, should tread carefully when federal and state agencies, expert in the area, are already addressing a problem. In concluding that the district court did not abuse its discretion in denying injunctive relief, the Court emphasized that the landscape could change at any time. New evidence is being developed on an almost daily basis and the agency response is subject to political pressures and budgets. Any significant change in that landscape could be grounds for the district court's re-examination of the issue.

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 EZELL v. CITY OF CHICAGO (July 6, 2011)

A few days after the Supreme Court found Chicago's handgun ban unconstitutional in McDonald, the Chicago City Council passed the Responsible Gun Owners Ordinance. Among other things, the ordinance required one hour of range training for gun ownership but prohibited firing ranges in the city. Several Chicago residents and three interested organizations brought suit, alleging that the range ban violates the Second Amendment. They sought a temporary restraining order, a preliminary injunction, and a permanent injunction. Judge Kendall (N.D. Ill.) denied the TRO and held a hearing on the preliminary injunction. After hearing testimony, the court denied injunctive relief on the grounds that plaintiffs were not irreparably harmed and were not likely to succeed on the merits. The court also found the balance of harm to favor the City of Chicago. Plaintiffs appeal.

In their opinion, Judges Kanne, Rovner (concurring in the judgment), and Sykes reversed and remanded with instructions to enter the preliminary injunction. The Court first addressed irreparable injury and adequate remedy at law. It took issue with the district court's focus on the incidental travel burdens that the ordinance imposed. First, constitutional harm cannot be measured by considering whether the right can be exercised in another jurisdiction. Second, the challenge here is a facial challenge, where harm is not measured by reference to particular persons. Third, the Court compared Second Amendment interests to First Amendment interests, where irreparable harm is sometimes presumed. The Court turned to likelihood of success on the merits. Relying principally on Heller and McDonald, the Court described a framework for resolving Second Amendment litigation. The first question, which requires an historical inquiry, is whether the activity in question is even protected by the Second Amendment. For example, Heller pointed out that some restrictions might survive a challenge because the right at issue was not understood to be a public right at the time the Second (or Fourteenth) Amendment was ratified. The second inquiry is into the justification for the restriction -- the regulatory means and the public benefits end. The nature of the standard of review depends on how close the right is to the core of the Amendment and the severity of the burden imposed. The Court then applied the framework to Chicago's ordinance and first concluded that range training is not outside the protection of the Second Amendment. The "central component" of the Amendment -- the right to keep and bear arms -- would mean little without the right to train and practice. The court distinguished the eighteenth and nineteenth century statutes and regulations cited by Chicago as being merely regulatory or time, place, and manner restrictions. The Court proceeded to the second inquiry and used First Amendment jurisprudence to decide which form of heightened scrutiny was appropriate. It stated that a severe burden on a core right requires strong public interest justification and a close fit between means and the end. More modest burdens on less court rights need less justification. Here, the ordinance is a total ban on a right close to the core of the Second Amendment. The City must satisfy something more rigorous than intermediate scrutiny. The Court found that Chicago had failed to come close. All of its evidence with speculative or conclusory or could be countered with much less burdensome regulatory efforts. The Court concluded that the plaintiffs had a strong likelihood of success on the merits. For much the same reason, the Court concluded that the balance of harms favored the plaintiffs. It ordered that an appropriate injunction be entered on remand.

Judge Rovner wrote separately, concurring in the judgment. She pointed out that the right at issue was not all firearms training but was limited to live training at a firing range. Other types of training, including simulated training, are not at issue and may be enough to make the core right meaningful. She therefore did not agree that the right was as close to the core as the rest of the panel and that, as result, required more than intermediate scrutiny. She also found support in the eighteenth and nineteenth century regulations distinguished by the majority.

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ROCHE DIAGNOSTICS CORP. v. MEDICAL AUTOMATION SYSTEMS (May 24, 2011)

Medical Automation Systems contracted with Roche Diagnostics to provide software for its glucose monitors and other products. The initial term of the contract was 2006-2010. Under the contract, Roche had the right to use the software for two years after the contract's expiration and had a right of first refusal to purchase MAS if MAS agreed to sell its stock to one of Roche's competitors "during the term of this Agreement." MAS notified Roche that it would not extend the agreement beyond 2010. Roche also discovered that MAS was in negotiations to sell its stock to a Roche competitor. Roche attempted to exercise its right of first refusal but MAS declined, relying on the fact that the transaction would not close until 2011, beyond the term of the Agreement. Although the contract required the parties to arbitrate any dispute regarding the right of first refusal, it allowed either party to seek an injunction pending arbitration. Roche did exactly that. Judge Barker (S.D. Ind.) found that allowing the sale would cause Roche irreparable harm by threatening both its ability to use the software for two additional years and its actual right of first refusal because of the difficulty in unwinding the transaction. She also found, however, that enjoining the sale would cause irreparable injury to MAS. She therefore issued an injunction allowing the sale’s completion but protecting Roche's ability to use the software for two more years. Roche appeals.

In their opinion, Chief Judge Easterbrook and Judges Wood and Williams affirmed, as modified. On Roche's request for an injunction pending appeal, the Court issued an order allowing the completion of the sale and protecting Roche's two-year use but added several conditions to ensure that MAS was maintained separately after the sale. Although appellate review of an order of this type is deferential, the Court identified an error in the district court. In balancing the harm, the court included on MAS's side of the ledger the injury caused by the delay in resolving the merits -- whether Roche has a valid right of first refusal. But the Court noted that the delay and resulting uncertainty is a function of the party's arbitration agreement. Allowing the sale would not avoid any uncertainty. Without that uncertainty on the MAS side of the ledger, the balance of harm favors Roche. The Court therefore affirmed the district court's injunction by including the hold-separate conditions, which will protect Roche in the event it prevails on the merits.

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ANNEX BOOKS, INC. v. CITY OF INDIANAPOLIS (October 1, 2010)

The City of Indianapolis passed an ordinance that restricted adult bookstores’ hours of operation. After the district court rejected a challenge to the ordinance, the Seventh Circuit reversed and remanded (the opinion and intheiropinion). The Court concluded that the evidentiary record did not satisfy intermediate scrutiny. The record evidence it related to the dispersal of adult businesses offering live entertainment -- instead of relating to hours restrictions on businesses not offering live entertainment. On remand, the City offered one additional piece of evidence at a preliminary injunction hearing. It was a study that concluded that Sioux City, Iowa saw a reduction in crime after it dispersed adult businesses. Judge Barker (S.D. Ind.) denied the injunction. The City appeals.

In their opinion, Chief Judge Easterbrook and Judges Flaum and Rovner affirmed. The Court found several flaws in the City's position. First, the study, like the earlier evidence, related to a dispersal ordinance, not a restricted-hours ordinance. Second, the study did not control for any other variables (like bars opening or closing, for example). Third, more police protection for adult business patrons is preferable to closing them. Given the state of the record, the Court concluded that the district court did not abuse its discretion in denying the injunction.

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HABITAT EDUCATION CENTER v. UNITED STATES FOREST SERVICE (May 27, 2010)

The United States Forest Service decided to allow logging on thousands of acres of national forest in Wisconsin. The winning bidder for the logging permit bid $55,000. Habitat Education Center, a nonprofit corporation whose mission is to promote environmental quality, sued to prevent the issuance of the permit. Judge Goodstein (E.D. Wis.) granted a preliminary injunction but required Habitat to post a $10,000 bond. The court rejected Habitat's argument that a non-profit should not have to post a bond. The judge later dissolved the injunction and granted summary judgment to the Forest Service. Habitat appeals -- but only from the order setting the bond.

In their opinion, Judges Posner, Ripple, and Kanne affirmed. The Court first addressed mootness and standing. The order had not become moot since Habitat can be liable to the Forest Service up to the amount of the bond. Also, it has incurred a loss, and therefore has standing, because it has lost the time value of its $10,000. On the merits, the Court agreed with the district court. Rule 65 (c) states that a court may issue an injunction "only if" the moving party posts security in an amount sufficient to cover any costs sustained by the other party if the injunction was wrongly issued. The rule does not contain an exemption for non-profits. Notwithstanding the unambiguous language of the rule, the Court noted that other courts have created at least two exceptions -- where there is simply no threat of damage to the non-moving party and where an appropriate bond would exceed the movent's ability to pay. Neither of those situations exists here. The Court also rejected Habitat's argument that the amount of the bond was excessive, given the risk of loss to the Forest Service. The loss was the delay of one year. The evidence is that the rebidding process itself will cost $2350. Although the winning bid may equal or exceed $55,000, it also may not. Given the uncertainty of the costs to be incurred by the Forest Service, the amount of the bond was appropriate.

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RUSSIAN MEDIA GROUP v. CABLE AMERICA (March 10, 2010)

Russian Media Group (RMG) sells Russian language television programming to residential customers. It charges a monthly fee to its subscribers and, in return, obtains programming and maintains transmission hardware. RMG filed suit against Cable America, alleging that Cable America unfairly competed with it by obtaining similar programming by fraud. The district court found that Cable America distributed programming at twenty different multi-family residential properties by pirating an individual subscriber's satellite signal and distributing the signal to other residents of the properties for a fee. RMG moved for a preliminary injunction on its claim under the Illinois Cable Piracy Act. The district court granted the injunction and ordered Cable America to stop distributing the Russian language programming at the twenty properties and to disconnect any of its receivers. Cable America appealed that order but did not comply with the injunction. It was held in contempt for its conduct. Months later, Cable America filed an "emergency motion” to modify the injunction. The motion was denied on the grounds that it was not timely, it was not a real emergency, and that the district court lacked jurisdiction to modify an injunction that was on appeal. Cable America appeals.

In their opinion, Judges Flaum, Rovner and Hamilton affirmed. The Court first rejected Cable America's challenge to the breadth of the injunction. A district court has wide discretion in defining the parameters of an injunction, particularly where there is a record of unlawful conduct. The injunction may even prohibit otherwise lawful conduct when that is necessary to ensure appropriate relief to the plaintiff. The Court noted a pattern of deception and misconduct on the part of Cable America in the district court in concluding that the court did not abuse its discretion. The Court then refused to even consider the argument that the injunction was invalid because the Illinois Cable Piracy Act was preempted by federal copyright law. Defendants never raised that argument at the district court level. Finally, the Court rejected Cable America’s res judicata defense. Although the parties did settle a prior lawsuit that arose from a set of similar facts, the facts alleged and proved in the case before the Court occurred after the prior settlement and the injunction was based on a violation of a law that did not even exist at the time of the prior settlement.

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PRO'S SPORTS BAR & GRILL v. CITY OF COUNTRY CLUB HILLS (December 16, 2009)

Pro's Sports Bar & Grill is located in Country Club Hills, Illinois. Pro's submitted an application for a liquor license. Pursuant to local procedure, the City Council considered an ordinance on November 26, 2007 for the granting of that license. There is significant dispute about what happened at the council meeting. At a minimum, there is confusion about the formalities undertaken. There certainly was discussion about granting a license with limited hours. In any event, at the end of the meeting, an ordinance granting the license was approved. A Class A license with regular hours was issued. Shortly thereafter, however, the license was reissued as a Class A-1 license (a category of license not even defined in the municipal code). The local police began enforcing the license as if it had the limited hours which were discussed in the earlier council meeting. In 2008, when Pro's applied for a reissuance of the license, it was issued with limited hours, even though the normal practice is to be issued a license on its original terms and conditions. Pro's filed suit pursuant to § 1983, alleging a violation of its procedural due process rights. The court granted a preliminary injunction prohibiting the enforcement of the limited hours. The City of Country Club Hills appeals.

In their opinion, Judges Flaum, Manion and Wood affirmed. The Court started with its two-part test for approaching a procedural due process claim. It first identifies whether there is a protected liberty or property interest and then asks whether a party was deprived of its interest without due process. The principal issue in dispute was whether the original license contained the limited hours. If it did, the renewal did not result in any deprivation. If it did not, the renewal restrictions would have resulted in a deprivation. The bare language of the original ordinance granted an unrestricted license. The Court found the language of the ordinance unambiguous and rejected the defendants' argument that it should be interpreted otherwise because of either the intent of the City Council or because it was a scrivener's error. Having found a deprivation of the property interest, there was little dispute about the City's failure to provide adequate process -- since it provided none. Finally, the Court found no error in the lower court's balancing of the preliminary injunction factors.
 

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RIVER OF LIFE KINGDOM MINISTRIES v. HAZEL CREST (October 27, 2009)

River of Life Kingdom Ministries ("Ministries") is a small religious organization that does not occupy its own facility. Instead, it shares space with two other religious organizations in a dirty warehouse. The Ministries decided to purchase a new facility where it could better promote its community goals. It purchased property in Hazel Crest, even though the village had zoned the area for economic redevelopment. The ordinances allowed general commercial and retail uses but did not allow religious services. After its application for a special-use exception was denied, the Ministries filed a complaint and motions for a temporary restraining order and preliminary injunction. The complaint alleged that the ordinance violated the Equal Terms provision of the Religious Land Use and Institutionalized Persons Act ("RLUIPA"). While the motion for a preliminary injunction was pending, the village amended the ordinance to exclude meeting halls, public schools, community centers and other uses in an effort to ensure the ordinance's compliance with RLUIPA. The court denied the preliminary injunction. The Ministries appeal.

In their opinion, Judges Cudahy, Manion and Williams affirmed. The Court first stated the burden for obtaining a preliminary injunction: a reasonable likelihood of success on the merits, irreparable harm and a balancing of the harms based on the likelihood of success. With respect to its likelihood of success on the merits, the Court concluded that the Ministries was unlikely to succeed. The Equal Terms provision of the Act prohibits land-use regulations that treat religious assemblies on "less than equal terms" with non-religious assemblies. The Court discussed and critiqued the approaches of the Eleventh and Third Circuits. The Court preferred the Third Circuit approach, which allows a court to compare the effects of the allowed and disallowed uses on the local government's goals. Here, Hazel Crest's goal was to create a tax-generating commercial district. All of the "assemblies" that were allowed by the ordinance were commercial ventures. The Court concluded that the village's exclusion of non-commercial uses, including religious assemblies, was not likely to violate the RLUIPA. Although the Court then concluded that the relocation was instrumental to the Ministries' mission and could be considered irreparable harm, it did not believe that that harm significantly outweighed the harm to Hazel Crest.

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HOOSIER ENERGY RURAL ELECTRIC COOPERATIVE v. JOHN HANCOCK LIFE INSURANCE COMPANY (September 17, 2009)

Hoosier Energy Rural Electric Cooperative and John Hancock Life Insurance Company entered into a lease-leaseback of a Power Plant in order to take advantage of excess depreciation deductions held by Hoosier. Because the transaction exposed John Hancock to substantial financial risks, Hoosier arranged with Ambac Assurance Corporation to pay to Hancock $120 million upon the occurrence of certain events. One of those events was a reduction in Ambac’s credit rating. If that occurred, Hoosier had 60 days to replace the surety. It did occur. Even with an extension, Hoosier did not replace the surety. John Hancock demanded performance. Ambac was ready and able to perform but Hoosier filed suit and obtained a temporary restraining order and a preliminary injunction. Ambac’s performance would require Hoosier to cover the payment, which would drive Hoosier into bankruptcy. John Hancock appeals.

In their opinion, Chief Judge Easterbrook and Judges Kanne and Wood affirmed. The Court began with the requirements for equitable relief: irreparable injury, a plausible claim on the merits and the balance of equities. The Court accepted the district court’s finding of irreparable injury and proceeded to address the merits. The district court had found merit in two Hoosier arguments: that the transaction was illegal and must be unwound and that Hoosier is at least temporarily excused under the doctrine of "temporary commercial impracticability." The Court disagreed with respect to the first prong. Whether or not the IRS allows the parties to take advantage of the intended tax consequences, the Court believed that the parties were still bound by their contractual obligations. With respect to the second prong, the Court noted that New York courts do not recognize "temporary commercial impracticability." Although they do recognize the defense of impossibility, they take a dim view of it and do not excuse performance when the "impossibility" is the result of financial hardship. If, as Hancock claims, Hoosier had the option to replace the surety, the Court did not believe that an impossibility defense would stand. If, however, as Hoosier claims, it had a duty to replace the surety, an impossibility defense might prevail. The Court found enough uncertainty in the contract and the facts surrounding Hoosier's ability or inability to replace the surety that it concluded that the district court was correct with respect to Hoosier's prospect of prevailing. Finally, the Court required the district court to re-examine the amount of the injunction bonds to protect John Hancock and urged the district court to allow Hancock to realize its surety if Hoosier is not able to replace the surety within a few months.

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UNITED AIR LINES, INC. v. AIR LINE PILOTS ASSOCIATION (March 9, 2009)

United Air Lines, Inc. ("United") and the Air Line Pilots Association ("ALPA"), the collective bargaining representative for the pilots, have a long and contentious history of labor negotiations. The events of September 11, 2001 put additional pressure on that relationship. Their current collective bargaining agreement was negotiated in 2003 and amended in 2004 and 2005. In late 2006, ALPA attempted to reopen contract negotiations. According to United, ALPA took a number of coordinated measures in an attempt to pressure United. United sued ALPA in July of 2008 under Section 2, First of the Railway Labor Act (“RLA”). Shortly thereafter, ALPA agreed to direct its members not to engage in the disruptive activities. The district court, after an evidentiary hearing, granted United's request for a preliminary injunction. ALPA appeals.

In their opinion, Judges Rovner, Wood and Sykes affirmed. The Court addressed the four main issues on appeal: a) that the claim was barred by the six-month statute of limitations, b) that ALPA had made reasonable efforts under the RLA, c) that United failed to satisfy the requirements of Section 6 of the Norris-LaGuardia Act ("NLGA"), and d) that United failed to satisfy the requirements of Section 7 of the NLGA. With respect to the statute of limitations, the Court noted that the RLA borrows the six-month statute of limitations from the National Labor Relations Act. Although the court agreed that the conduct of ALPA began long before the suit was filed, it concluded that the action was not time-barred. ALPA engaged in unlawful action both before and during the six-month period and their actions created new injuries within the six-month period. The Court found no merit in ALPA'S argument that it made reasonable efforts to halt its members’ unlawful conduct. It relied on the district court's thorough findings of fact and accorded them substantial deference. With respect to the Section 6 requirement -- that United is required to prove that ALPA participated in or ratified the unlawful conduct -- the Court again relied heavily on the thorough findings of fact by the district court. It concluded that United’s statistical evidence, in combination with ALPA's coded communications, were sufficient to meet its burden. Finally, the Court rejected ALPA’s argument that the injunction was not necessary to prevent a violation of Section 2, First of the RLA. The Court conceded the general prohibition in the NLGA barring injunctions against labor unions, but noted an exception when there is a specific violation of a provision of the RLA. Even though ALPA had entered into an agreement to voluntarily cease its wrongful conduct, the district court found that it's conduct was inconsistent with its agreement. The Court concluded that the lower court was within its discretion to find that an injunction was the only way to ensure compliance with the RLA.

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GIRL SCOUTS OF MANITOU COUNCIL v. GIRL SCOUTS OF THE UNITED STATES OF AMERICA (December 15, 2008)

Juliette Low founded the Girl Scouts of the United States of America (“GSUSA”) in 1912. GSUSA is run by a national council and its board of directors. In its almost 100 years of existence, GSUSA has developed a large network of local girl scout councils. GSUSA first chartered Girl Scouts of Manitou (“Manitou”) as a council in 1950. As of 2005, there were over 300 local councils. Each council has a charter issued by GSUSA that defines the relationship between the two and grants the council the right to maintain scouting throughout its jurisdiction. In 2005, GSUSA announced a plan to consolidate councils. It planned to reduce the number of councils to just over one hundred. Each council would be larger and, GSUSA hoped, more efficient. The plan would have required Manitou to merge 60% of its territory with six other nearby councils and cede 40% of its territory to two other councils. Manitou decided not to go along. It filed suit in February 2008 against GSUSA. It alleged breach of contract, tortious interference and a violation of the Wisconsin Fair Dealership Law. It sought to permanently enjoin GSUSA from altering its territory. The district court denied Manitou’s request for a preliminary injunction without a hearing. The court held that Manitou had failed to demonstrate that it would suffer irreparable harm in the absence of the injunction. Manitou appeals.

In their opinion, Judges Posner, Kanne and Tinder reversed and entered the requested order enjoining GSUSA. The Court led off with the familiar two-phase test for a preliminary injunction. A movant must demonstrate: a) irreparable harm, b) inadequate legal remedy, and c) a likelihood of success. The movant who succeeds in that first phase enters a second phase in which the court balances the injury to the plaintiff, its likelihood of success, the possible injury to the defendant if the injunction issues, and the public interest. The court uses a balancing test in which the greater the plaintiff’s likelihood of success, the less the balance of harm needs to be in its favor. Applying that test, the Court first addressed irreparable harm, the only of the first-phase factors addressed by the district court. The Court disagreed with the court below. It found that Manitou’s loss of jurisdiction would severely affect its ability to generate revenue and harm its goodwill. That harm would not be rectified if a final judgment were entered in its favor and the loss of jurisdiction reversed. The Court also disagreed with the court below on the application of the Wisconsin Fair Dealership Law, under which a “dealer” in Manitou’s circumstances enjoys a statutory presumption of irreparable harm. The Court found that Manitou fit within the statutory definition of “dealer” in the act.

Having found that Manitou established irreparable harm and also noting that the record contained sufficient information to address the rest of the two-phase analysis without remand, the Court proceeded to do so. The Court found that the timing of and difficulty in calculating a damages award established that Manitou’s legal remedies were inadequate. On the likelihood of success factor, the Court noted that it only had to find a “better than negligible” chance of success to satisfy this prong. The Court evaluated only the Wisconsin Fair Dealership Law claim and found that Manitou satisfied that minimal standard.

In addressing the balancing portion of the test, the Court found a “drastic imbalance” in favor of Manitou. The Court noted that the national GSUSA program to consolidate regions was not even scheduled to be completed for a year. Any delay in the Wisconsin part of that plan would not lead to any harm to GSUSA. In addition, any harm to GSUSA could be rectified later. The Court did not feel the need to conduct a deeper analysis of Manitou’s likelihood to succeed given the imbalance of the harm.

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LINEBACK v. SPURLINO MATERIALS  (October 8, 2008)

Spurlino Materials (“Spurlino”) produces and sells concrete. In 2005, several employees began a union representation effort. Spurlino management allegedly campaigned heavily against the union. Notwithstanding those efforts, the company employees voted to be represented by the union. The NLRB certified the union and it began negotiating its first contract with Spurlino in early 2006. The parties continued to negotiate through early 2007, but were unable to agree on contract terms (and apparently still have not). Attendance at union meetings declined during this period, possibly because of fears of retaliation by Spurlino. Spurlino management allegedly continued an intense harassment campaign against the union.

Spurlino historically used a seniority-based dispatch procedure. Spurlino sent out each of its drivers in order of seniority until each had been given one assignment. The rest of the assignments for each day were dispatched in order of each driver’s return from his or her original assignment.  In December of 2005, Spurlino was awarded a large contract to provide concrete for the construction of a new football stadium for the Indianapolis Colts. A separate labor agreement covered the stadium project. Stadium contractors paid higher wages under the separate agreement than Spurlino normally paid its employees. Thus, Spurlino drivers preferred the stadium work over other Spurlino assignments. The union alleges that Spurlino used the opportunities provided by the stadium contract to retaliate and discriminate against the leaders of the union movement. It claims that Spurlino a) manipulated the seniority dispatch system to keep the union leaders from the preferred jobs at the stadium, b) changed the way work was assigned when it built a temporary, portable plant, and c) instituted a thirteen-factor performance review to discriminate against union leaders. In August of 2006, the union filed a series of unfair labor practice charges against Spurlino. They were consolidated into an NLRB complaint that alleged that Spurlino: a) discriminated against union leaders because of their activities, b) changed pre-existing work assignment policies without negotiation, and c) implemented an evaluation procedure without negotiation. The ALJ commenced a hearing. During a hearing recess, in May of 2007, the NLRB requested injunctive relief from the district court pending a final Board decision. In June, the court entered an order enjoining Spurlino from a) retaliating against union members, b) acting unilaterally to change the terms and conditions of employment, c) refusing to bargain in good faith, and d) interfering with employees’ exercise of their rights. Spurlino appeals. Shortly after Spurlino’s appeal, the ALJ issued its order. It concluded that Spurlino had discriminated against union leaders and had unilaterally changed the terms and conditions of employment. That order is on appeal before the NLRB.

In their opinion, Judges Bauer, Ripple, and Manion (concurring) affirmed. The Court noted that the National Labor Relations Act authorizes injunctive relief, pending resolution of an NLRB claim, in “just and proper” circumstances. The factors are the same as those that apply to injunctive relief in other contexts: a) no adequate remedy at law, b) irreparable harm that outweighs harm to the employer, c) the public interest, and d) likelihood of success on the merits. The Court addressed each in turn. NLRB proceedings are frequently slow, potentially allowing time for employers to “chill” union activities. Especially in the case of new union representation, there is a risk that no remedy at law will adequately address the harm. On the issue of irreparable harm, the lower court had clear evidence of Spurlino’s hostility toward the union and continued discrimination toward the union and its leaders. The public interest was served by an order prohibiting an unfair labor practice. The district court had found “strong showings” of likelihood of success on the discrimination and unilateral changes in the terms of employment charges and “at least a substantial showing” on the good faith bargaining charge. The Court concluded that the district court considered the right factors and it found no error in its evaluation of them. It did not abuse its discretion.

The Court next addressed the scope of the injunction entered by the district court. Spurlino argued that each of the four paragraphs of the injunction was overbroad. The Court addressed each paragraph in turn under the FRCP 65(d) requirement that injunctions be specific and “describe in reasonable detail” the acts enjoined. The Court also noted that a court may enjoin acts a) which are similar to acts it has found to be unlawful and b) whose commission, if not enjoined, can fairly be anticipated from the defendant’s past conduct. Spurlino argued that paragraphs 1 and 2 were overbroad. Paragraph 1 enjoins retaliation against “all” union members, even though the complaint alleges retaliation against a few named leaders. Paragraph 2 enjoins “all” unilateral actions to change terms and conditions of employment, though the complaint’s allegations were less broad. The Court relied on the district court’s finding of a “continuous and deliberate” effort by Spurlino to undermine the union in holding that these paragraphs were not overbroad. Paragraph 3 enjoins Spurlino from refusing to bargain in good faith. The complaint’s allegation of refusal to bargain was limited to the portable plant. The Court also upheld this paragraph, relying on the district court’s finding that Spurlino engaged in a pattern of refusals to bargain and that further refusals were likely to occur, if not enjoined. Paragraph 4 of the injunction broadly enjoined Spurlino from “in any like manner interfering with, restraining, or coercing employees’ exercise of their rights.” The Court observed that the provision was similar to a provision struck by the Supreme Court in NLRB v. Express Pub. Co.. However, it relied on the addition of the word “like,” not present in the Express injunction, to uphold the paragraph as within the power of the court to enjoin related unlawful acts.

Judge Manion concurred. He wrote separately to emphasize that the injunction against refusing to bargain in good faith does not enjoin “any” refusals to bargain. It only enjoins refusals that are similar to the refusals alleged by the NLRB and found by the district court.

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