The opinion of the court was delivered by: KOELTL
JOHN G. KOELTL, District Judge:
This is a motion brought by AVCO Financial Corp. ("AVCO") seeking a preliminary injunction pursuant to Fed. R. Civ. P. 65. AVCO seeks to enjoin the Commodity Futures Trading Commission ("the Commission" or "CFTC") from proceeding with its investigation of AVCO. In particular, AVCO seeks to enjoin certain discovery the Commission wishes to obtain from AVCO and its officers, and also to enjoin the Commission from contacting AVCO's customers or potential customers.
AVCO is a software developer and publisher that markets and sells a trade-signalling computer program under the name "Recurrence." The software is designed to chart data in the Swiss Franc futures market and to assist the user in analyzing that market. (See Vartuli Aff. PP 3, 6, and 7.) The Commission is conducting an investigation of AVCO pursuant to a properly authorized formal order of investigation issued by the Commission on January 23, 1996. (Compl. Ex. B.) The purpose of the investigation is:
to determine whether, in connection with the marketing and sale of certain software purporting to represent a system of technical analysis for use in the trading of futures contracts, AVCO Financial Corporation, Anthony R. Vartuli, Michael Gent, or any other person, firm or entity has engaged, or is engaging, in acts and practices in violation of Sections 4b(a), 4k(3), 4m(1) or 4o (1) of the Act, 7 U.S.C. §§ 6b(a), 6k(3), 6m(1) and o (1) (Supp. IV 1992), or in any other acts or practices in violation of any other provisions of the [Commodity Exchange] Act or the Regulations which may come to the attention of the Commission staff during the course of this investigation.
AVCO ultimately seeks declaratory relief in the nature of a judicial determination that it is not a commodity trading advisor as defined in the Commodity Exchange Act, 7 U.S.C. § 1 et seq., and therefore allegedly beyond the jurisdiction of the Commission in its enforcement capacity. This motion was brought by order to show cause which also sought a temporary restraining order. Following a conference held on April 19, 1996, the Commission agreed to hold its investigation in abeyance and adjourn the deposition of AVCO's President, Anthony R. Vartuli, originally scheduled for April 24, 1996. Consequently, AVCO withdrew its request for a temporary restraining order and the parties proceeded to brief the motion for a preliminary injunction on an accelerated schedule. The Court has reviewed the parties' submissions and has listened to argument by counsel at a hearing held on June 4, 1996. At the hearing, the Court afforded the parties the opportunity to present any other evidence in support of or in opposition to the motion. After considering the arguments of counsel, the submissions, and after reviewing the relevant authorities, the Court makes the following findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 65.
A party seeking a preliminary injunction must normally establish the familiar standard of (1) irreparable harm, and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground of litigation and a balance of hardships tipping decidedly in its favor. See, e.g., Waldman Publishing Corp. v. Landoll, Inc., 43 F.3d 775, 779-80 (2d Cir. 1994); Jackson Dairy, Inc. v. J.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979) (per curiam). When a plaintiff seeks to enjoin governmental action taken in the public interest pursuant to a statutory or regulatory scheme, however, the plaintiff must establish, in addition to irreparable injury, the more rigorous likelihood of success on the merits standard and not simply sufficiently serious questions going to the merits to make them a fair ground of litigation and a balance of hardships tipping decidedly in its favor. Plaza Health Labs., Inc. v. Perales, 878 F.2d 577, 580 (2d Cir. 1989).
AVCO must meet the Plaza Health standard in this case to justify a preliminary injunction. AVCO seeks to halt an ongoing investigation by the government agency charged with enforcement of a federal statute. AVCO does not dispute the Commission's authority to conduct investigations within its jurisdiction. Rather, AVCO argues that it need not satisfy the Plaza Health standard because it has challenged the jurisdiction of the Commission, thus raising a question about whether the Commission's actions are proper or authorized in AVCO's case. Therefore, AVCO argues, the Plaza Health standard should not apply. AVCO points to no support for such a proposition, and such an exception would be unreasonable because it would eviscerate the standard any time a plaintiff challenged the authority of a governmental agency concededly performing its ordinary functions.
Accordingly, AVCO's motion for a preliminary injunction is properly evaluated under the Plaza Health standard. As explained below, however, AVCO would not be entitled to a preliminary injunction even under the less rigorous standard.
The first element AVCO must demonstrate is that it will suffer irreparable injury unless a preliminary injunction is issued. The showing of irreparable injury is an "absolute prerequisite," Fireman's Fund Ins. Co. v. Leslie & Elliott Co., Inc., 867 F.2d 150, 151 (2d Cir. 1989), to issuing an injunction, and the required showing is "extremely high." Firemen's Ins. Co. of Newark v. Keating, 753 F. Supp. 1146, 1150 (S.D.N.Y. 1990). To establish irreparable injury, the plaintiff must demonstrate "an injury that is neither remote nor speculative, but actual and imminent. . . . It is not sufficient for a movant to demonstrate merely the possibility of irreparable harm. An applicant for a preliminary injunction must show that it is likely to suffer irreparable harm if equitable relief is denied." Id., 753 F. Supp. at 1150 (citations and quotations omitted).
AVCO attempts to establish irreparable injury by complaining that the Commission's investigation and the manner in which it has been conducted has caused AVCO customers to cancel their orders for the Recurrence software, has made existing users skittish, and has tarnished AVCO's business reputation perhaps resulting in further indeterminate lost sales. The exact amount of the alleged lost sales are not quantified, although AVCO alleges that three orders for software worth approximately $ 15,000 in total were cancelled by customers who purportedly expressed concern about the investigation. Demonstrated injury to business reputation and goodwill may be sufficient to establish irreparable injury, but such damages are not always irreparable. See, e.g., Penthouse Int'l, Ltd. v. Playboy Enter., Inc., 392 F. Supp. 257, 261 (S.D.N.Y. 1974). While AVCO's lost sales are classically economic injuries ordinarily compensable in money damages, AVCO asserts, and the Commission does not dispute, that such a recovery from the Commission would be precluded in this case by sovereign immunity. But "the mere suggestion by [a party] of possible damage to their business activities is not sufficient to block an authorized inquiry into relevant matters." SEC v. Brigadoon Scotch Dist. Co., 480 F.2d 1047, 1056 (2d Cir. 1973), cert. denied, 415 U.S. 915, 39 L. Ed. 2d 469, 94 S. Ct. 1410 (1974). As explained by the Court of Appeals for the Second Circuit:
Every person doing business and every investor knows that government agencies conduct investigations for a variety of reasons, and most of them feel the duty to respond to a proper inquiry. As for those whose practices are investigated, it is a necessary hazard of doing ...