on a particular product but on purchasing an inexpensive product. This factor also militates against a finding of irreparable injury. See Newport Tire & Rubber Co. v. Tire & Battery Corp., 504 F. Supp. 143 (E.D.N.Y. 1980).
Indeed, the very fact that the dealership analogy is strained argues against granting injunctive relief. In Loveridge v. Pendleton Woolen Mills, Inc., 788 F.2d 914 (2d Cir. 1986), plaintiff, a sales representative disputing his termination, sought to rely on terminated dealership cases to support his claim of irreparable harm. The Second Circuit, in reversing a grant of a preliminary injunction, found it significant that (1) plaintiff owned no inventory, the manufacturer shipped the merchandise directly to the accounts and the accounts paid the manufacturer (as in the instant action), (2) plaintiff did not have considerable investments in a showroom, factory, or warehouse (as in the instant action),
(3) plaintiff did not have numerous employees (GPA has 12 employees including a sales force of 5 individuals), and (4) defendant was not allowing plaintiff's territory and customers to languish but brought in replacement sales representatives. The Court noted that if plaintiff "should ultimately succeed on the merits of his underlying claim, he may regain his territory. Thus, during the pendency of this litigation [plaintiff's] territory is being continued and preserved for him" (as in the instant action). Id. at 917.
Moreover, the Court is not persuaded that the percentage that EAGLE and EPIC represented of GPA's business is so significant that the loss justifies a preliminary injunction. The law requires that the injury to a business necessary to support a grant of a preliminary injunction must be damage to the business as a whole (as opposed to a temporary or partial disruption) and that damage must be immediate. See Jack Kahn Music, 604 F.2d 755 (threat has to be imminent and rejecting loss of goodwill as a basis for injunctive relief where, among other things, entire business not destroyed); Truglia v. KFC Corp., 692 F. Supp. 271, 279 (S.D.N.Y. 1988), aff'd, 875 F.2d 308 (2d Cir. 1989) ("loss or destruction of an entire business has also widely been held to constitute irreparable harm, at least when the business has been in operation for some time") (citations omitted). Further, the Court is not persuaded that GPA cannot either find a replacement product for EAGLE and EPIC or, alternatively, make up for the loss in sales by focusing on SHIELD. Additionally, the Court is not persuaded that the loss of the EAGLE and EPIC product lines will put GPA at such a disadvantage as to justify a preliminary injunction where, the Court has determined, based on the evidence before it, that the products are not unique and price is the motivating factor in the sale of control label and private label cigarettes. These facts (along with other facts, such as Liggett's continuing to provide cigarettes to GPA's former customers) distinguish the instant case from the line of cases in which courts have held that "terminating the delivery of a unique product to a distributor whose customers expect and rely on the distributor for continuous supply of that product almost inevitably creates irreparable damage to the good will of the distributor." Reuters Ltd. v. United Press Int'l Inc., 903 F.2d 904, 907-08 (2d Cir. 1990) (citations omitted) (emphasis added).
GPA's allegations that Liggett is on the brink of bankruptcy are also not sufficient as a matter of fact or law to support its request for injunctive relief. See generally Firemen's Ins. Co. v. Keating, 753 F. Supp. 1146, 1153 (S.D.N.Y. 1990) ("It is familiar law that where a non-movant's assets may be dissipated before final relief can be granted . . . such that an award of monetary relief would be meaningless, injunctive relief is proper"). GPA's allegations with respect to Liggett's financial condition "fall well short of the clear requirement that 'to establish irreparable harm, plaintiffs must demonstrate an injury that is neither remote nor speculative, but actual and imminent.'" Id. (citations omitted) (internal quotations omitted).
Mr. Dunham also testified that the loss of EPIC and EAGLE will result in the "possible" insolvency of GPA. Hearing Transcript at 52. The possibility of insolvency was neither established at the Hearing nor would such possibility, in any event, have been found sufficient to support a finding of irreparable injury. See JSG Trading Corp., 917 F.2d at 79.
Finally, the affidavits, declarations and Hearing testimony demonstrate that money damages can be quantified here. See Loveridge v. Pendleton, 788 F.2d at 917.
The Court also observes that a preliminary injunction in the instant case that would require the parties to resume their ruptured relationship under the Agreement is analogous to a shotgun wedding. The Second Circuit, in reversing the grant of a preliminary injunction in Jack Kahn Music, an antitrust action, made the following observation which is instructive here:
In recent years there has been developing a substantial body of decisional law affecting a small but important segment of the law relating to the cancellation of retail dealerships by manufacturers . . . As the conclusion of the trial on the merits of the antitrust suit will in the normal course of events in all likelihood not take place for some years, if at all, the granting of such a preliminary mandatory injunction amounts as a practical matter, as here, to freezing plaintiff's revocable and hence temporary dealership into a dealership non-revocable for a substantial period.
Jack Kahn Music, 604 F.2d at 757. Additionally, and while not dispositive here, movants seeking a mandatory preliminary injunction, undoing the status quo (restoring the Agreement), are subject to a heightened standard of proof. See SEC v. Unifund SAL, 910 F.2d 1028, 1039 (2d Cir. 1990) ("plaintiffs have been put to a more rigorous burden in obtaining preliminary injunctions that order some form of mandatory relief"); Christian v. New York State Board of Law Examiners, 1994 U.S. Dist. LEXIS 1876 (S.D.N.Y. Feb. 18, 1994) (same).
Since the Court has found that GPA has not demonstrated irreparable injury, and although movant has submitted substantial and often compelling evidence on the question of likelihood of success on the merits that issue need not be addressed at this time. See Reuters Ltd., 903 F.2d at 907 ("Because a showing of probable irreparable harm is the single most important prerequisite for the issuance of a preliminary injunction . . . the moving party must first demonstrate that such injury is likely before the other requirements for the issuance of an injunction will be considered") (citations omitted) (internal quotations omitted).
For the reasons set forth above, GPA's request for preliminary injunctive relief is denied. The parties are directed to appear for a pre-trial conference on September 8, 1994 at 10:00 a.m. in Courtroom 2703. The parties shall be prepared to discuss, among other things, an expedited discovery schedule and an early trial date.
Dated: New York, New York
August 30, 1994
ALLEN G. SCHWARTZ, U.S.D.J.