CRAVEN, Circuit Judge.
This is an appeal by Blackwelder Furniture Company of Statesville, Inc., from the refusal of the district court to issue a preliminary
Blackwelder contends that Seilig has violated Section 1 of the Sherman Act by combining to fix prices, rig retail territories, and oust a discounter from the competitive market. 15 U.S.C. § 1. From affidavits and certain agreed facts, it seems fair to say Blackwelder will be able to offer competent evidence at trial tending to show the following:
Blackwelder was a successful distributor of Seilig furniture for over a decade; its purchases of Seilig furniture accounted for about 35% of its total purchases of "contemporary upholstered furniture"; Seilig was one of its top three lines of contemporary upholstered furniture; from January to June 1976, it ordered more than $52,000 worth of furniture from Seilig. Part of Blackwelder's sales were to mail-order customers in the Washington, D. C. area, who took advantage of Blackwelder's discount prices, ranging up to 30% below Seilig's suggested retail prices. Such potential customers often visit the showrooms of a local D. C. retailer, select a piece of furniture, and then place their order with Blackwelder—to the great displeasure of the local retailer. Blackwelder alleges that as a result Seymour Woodnick of W. J. Sloane's, a large D. C. retailer of Seilig furniture, threatened to see to it that Blackwelder lose its Seilig line unless it quit the D. C. market. While Woodnick denies the threat, he admits his sales personnel were greatly aggravated over time wasted on Blackwelder customers.
In April of 1974 Seilig's regional sales director, Jim Robinson, on the authority of Jerrold Wexler, Executive Vice President of Seilig, warned Blackwelder that because of pressure from D. C. dealers like Sloane's it would be forced to terminate Blackwelder's dealership unless it stopped sales in the D. C. area. Robinson denies the threat, but he admitted to having asked Blackwelder to reduce the customary number of its salesmen at the Seilig space at the upcoming High Point Furniture market lest they "irritate" Seilig salesmen from D. C. The threats are said to have been repeated.
On May 4, 1976, Seilig wrote Blackwelder that it would be terminated on June 1 because "it occasionally becomes necessary to make certain changes in a company's distribution policy in order to better develop a particular area." No other or more concrete reason was given. Despite Seilig's contention that it acted unilaterally and that some 300 other dealers were terminated at the same time, the names of those dealers and a comparison of their respective sales records with Blackwelder's were not furnished the court.
The district court, in denying Blackwelder's motion for interlocutory relief, relied
296 F.2d at 96 (emphasis added). Accord, First-Citizens Bank & Trust Co. v. Camp, 432 F.2d 481, 483 (4th Cir. 1970). It reasoned that a single adverse determination on any of the four questions would be fatal to the movant. The court found first that "neither side" had made a "strong showing" that Seilig's actions were either collaborative or unilateral for purposes of the Section 1 requirement of a contract, combination or conspiracy. 15 U.S.C. § 1. For this reason alone the court reasoned that relief should be denied; nonetheless, it also found that denial of interlocutory relief would occasion no irreparable harm to Blackwelder—since its damages, if any, would be readily calculable and collectible. The court felt unable to decide the remaining two factors, viz., the public interest and the potential harm to the defendant, but did note that "it is hard to conceive" how Seilig could be economically damaged by continuing its business relationship with Blackwelder.
When the grant or denial of interim injunctive relief is reviewed, it is simplistic to say or imply, as we sometimes do, that it will be set aside only if an abuse of discretion can be shown. Singleton v. Anson Co. Bd. of Education, 387 F.2d 349, 351 (4th Cir. 1967); Meiselman v. Paramount Film Distributing Corp., 180 F.2d 94, 97 (4th Cir. 1950). For there is, of course, the possibility that the court below has either failed to exercise its discretion in some respect, compare Paine v. St. Paul Union Stockyards Co., 35 F.2d 624 (8th Cir. 1929), with Mattox v. United States, 146 U.S. 140, 13 S.Ct. 50, 36 L.Ed. 917 (1892), or else exercised it counter to established equitable principles. Prendergast v. N.Y. Tel. Co., 262 U.S. 43, 50-51, 43 S.Ct. 466, 67 L.Ed. 853 (1923); Security Metal Products Co. v. Kawneer Co., 14 F.2d 569, 572-573 (8th Cir. 1926). A judge's discretion is not boundless and must be exercised within the applicable rules of law or equity. Petersen v. John Hancock Mutual Life Insurance Co., 116 F.2d 148, 151 (8th Cir. 1971). And our review of the lower court's application of the law is not limited by the same "clearly erroneous" rule which restricts our review of its findings of fact under Rule 52(a). Fed.R.Civ.P. 52(a). Delaware & Hudson Ry. Co. v. United Transp. Union, 146 U.S.App.D.C. 142, 450 F.2d 603, 620 (1971).
We reverse the district court because it failed to apply the settled principles which govern consideration of a Rule 65(a) motion in this circuit, as set forth in Sinclair Refining Co. v. Midland Oil Co., 55 F.2d 42 (4th Cir. 1932):
55 F.2d at 45 (emphasis added). Accord, West Virginia Conservancy v. Island Creek Coal Co., 441 F.2d 232, 235 (4th Cir. 1971). The district court's reliance on the different standards of Airport Comm'n of Forsyth Co. and Camp, see p. 192 supra, was misplaced—though understandably so. Even the treatise writers have mistakenly equated the stringent standards of those cases with the more flexible rule of Sinclair Refining, supra. See, e. g., 7 Moore's Federal Practice, ¶ 65.04 at 65-39 n.7 (1975). But there is a difference. The cases relied upon by the district court deal with the question of the issuance vel non of an appellate stay
In cases like Airport and Camp a judicial or quasi-judicial body has already passed upon the merits of a question and typically has also denied a discretionary stay of its decision; only then is the motion made for an appellate stay. For a stay to issue under such circumstances, we adopted in Airport Comm'n of Forsyth, supra, 296 F.2d at 96, the requirement of Virginia Petroleum Jobbers Ass'n v. Federal Power Comm'n, 104 U.S.App.D.C. 106, 259 F.2d 921 (1958), that a "strong showing" of probable success on appeal be made, for otherwise there is "no justification for the [appellate] court's intrusion into the ordinary processes of administrative and judicial review." 259 F.2d at 925.
Likewise, Long v. Robinson, 432 F.2d 977 (4 Cir. 1970), another "strong showing" case from this circuit, involved a stay-pending-appeal situation, in which the district court had fully considered the merits of the controversy, rendered its final decree, and refused the request for an interim stay. Judge Winter explained in Long that the petitioner's burden in seeking injunctive relief is substantially greater on appeal. 432 F.2d at 979. See, e. g., Railway Express Agency, Inc. v. United States, 82 S.Ct. 466, 7 L.Ed.2d 432, 434 (1962) (Harlan, J.) (a "strong showing . . . must be made to justify reversal of the District Court's discretionary action"); Breswick & Co. v. United States, 75 S.Ct. 912, 100 L.Ed. 1510, 1513 & n.1 (1955); Magnum Import Co. v. Coty, 262 U.S. 159, 164, 43 S.Ct. 531, 67 L.Ed. 922 (1923). And this is especially so where the lower court has adversely determined the merits of the controversy.
Therefore, the district court erred in guiding itself by an appellate standard inappropriate at the trial level.
The correct trial court standard in this circuit, as declared in Sinclair Refining, supra, was doubtless derived from Ohio Oil Co. v. Conway, 279 U.S. 813, 49 S.Ct. 256, 73 L.Ed. 972 (1929), where the Supreme Court laid down the rule "generally to be applied" by trial courts in the exercise of their discretion in Rule 65(a) situations. Alabama v. United States, 279 U.S. 229, 231, 49 S.Ct. 266, 73 L.Ed. 675 (1929). That rule is the balance-of-hardship test as it was then formulated by the Eighth Circuit, see, e. g., Love v. Atchison, T. & S. F. Ry. Co., 185 F. 321, 331-332 (1911):
Ohio Oil Co. v. Conway, supra, 279 U.S. at 815, 49 S.Ct. at 257 (emphasis added).
Like the present case, Conway was an appeal from the denial of a preliminary injunction. And there, too, the original application was submitted upon ex parte affidavits which, by creating "a real dispute over material questions of fact," rendered impossible any accurate determination by the trial court of the merits of the controversy. 279 U.S. at 814, 49 S.Ct. at 256. Nonetheless, because a "grave" question was raised—and the balance of hardship decisively favored the movant—the Court concluded that the petition for interlocutory order should have been granted and reversed the lower court.
The balance-of-hardship test correctly emphasizes that, where serious issues are
Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738, 743 n.10 (2d Cir. 1953) (quoting Love v. Atchison, T. & S. F. Ry. Co., supra, 185 F. at 332).
The district court below erred in holding that plaintiff must first show "likelihood of success" in order to be entitled to preliminary relief. Instead, the first step in a Rule 65(a) situation is for the court to balance the "likelihood" of irreparable harm to the plaintiff against the "likelihood" of harm to the defendant; and if a decided imbalance of hardship should appear in plaintiff's favor, then the likelihood-of-success test is displaced by Judge Jerome Frank's famous formulation:
Hamilton Watch Co. v. Benrus Watch Co., supra, 206 F.2d at 740, 743; Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1205 (2d Cir. 1970). The importance of probability of success increases as the probability of irreparable injury diminishes, Delaware River Port Authority v. Transamerican Trailer Transport, Inc., 501 F.2d 917, 923 (3d Cir. 1974); Canal Authority of State of Florida v. Callaway, 489 F.2d 567, 576 (5th Cir. 1974); District 50, United Mine Workers v. United Mine Workers, 134 U.S.App.D.C. 34, 412 F.2d 165, 168 (1969); Packard Instrument Co. v. ANS, Inc., 416 F.2d 943 (2d Cir. 1969); and where the latter may be characterized as simply "possible," the former can be decisive. Even so, it remains merely one "strong factor" to be weighed alongside both the likely harm to the defendant and the public interest. Dino De Laurentiis Cinematografica, SpA. v. D-150, Inc., 366 F.2d 373, 375 (2d Cir. 1966) (quoting 3 Barron & Holtzoff, Federal Practice & Procedure, § 1433 at 493 (1958)).
We have expressly reaffirmed our Sinclair Refining rule in West Virginia Conservancy v. Island Creek Coal Co., 441 F.2d 232 (1971). See also Phillips v. Crown Petroleum Corp., 376 F.Supp. 1250, 1253 (D.Md.1973). Finding that the balance of hardship favored the plaintiff, the Island Creek court readily upheld a grant of interlocutory relief.
441 F.2d at 235 (emphasis added).
Thus in this circuit the trial court standard for interlocutory injunctive relief is the balance-of-hardship test. Whenever a district court has before it a Rule 65(a) motion, although it may properly consider the four general factors enumerated in Airport, see p. 192 supra, it should give them the relative emphasis required by the Sinclair rule: The two more important factors are those of probable irreparable injury to plaintiff without a decree and of likely harm to the defendant with a decree. If that balance is struck in favor of plaintiff, it is enough that grave or serious questions are presented; and plaintiff need not show a likelihood of success. Always, of course, the public interest should be considered.
Here the district court erroneously required a strong showing of success as a prerequisite to relief.
The district court also found that interlocutory relief was barred by plaintiff's failure to show that without it it would be irreparably injured. But that requirement was also taken from the list of essentially independent factors that an appellate court ought to consider before staying an order entered after consideration of the merits below. Its emphasis is that of deference to a decision involving discretion, as well as greater attention to the facts than is possible on appeal. Airport Comm'n of Forsyth Co. v. CAB, see p. 192 supra. Insofar as a trial court is concerned, the requirement of irreparable harm must also be evaluated within the basic context of the balance-of-hardship test.
Therefore, while "irreparability" may suggest some minimum of probable injury which is required to get the court's attention, the more important question is the relative quantum and quality of plaintiff's likely harm. The decision to grant preliminary relief cannot be intelligently made unless the trial court knows how much the precaution will cost the defendant. If it costs very little, the trial court should be more apt to decide that the threatened injury is "irreparable" for purposes of interlocutory relief. In addition, as we have noted above, even a "possible" irreparable injury has been held to suffice if there is strong probability of success on the merits.
The decision to grant or deny a preliminary injunction depends upon a "flexible interplay" among all the factors considered. Cf. Packard Instrument Co. v. ANS, Inc., supra, 416 F.2d at 945. The district court erred in treating the four Airport factors as a defense in depth—to be overcome, each and every one, before entitlement to preliminary relief should be decreed. Its error was compounded by failure to decide the last two questions in the Airport test, for all four are intertwined and each affects in degree all the others. The failure to find that Seilig would not be harmed—although remarking that any such harm is hard to conceive—inevitably increased Blackwelder's burden of persuasion on the other questions—especially as to what degree it had to show irreparable injury. We agree with the district court's intimation, short of a finding, that the possible harm to Seilig, in light of the history of past, profitable dealings between the parties, is negligible. National Screen Serv. Corp. v. Poster Exchange, Inc., 305 F.2d 647, 650 (5th Cir. 1962). Moreover, what little risk might be posed to Seilig is easily indemnifiable by a bond. See Ohio Oil Co. v. Conway, supra, 279 U.S. at 81, 49 S.Ct. 256; cf. 15 U.S.C. § 26.
We view the trial court's finding that Blackwelder will suffer no irreparable harm (on the basis that any injury to it would be readily calculable and collectible) as clearly erroneous. Blackwelder's past profits on Seilig furniture afford a
Foundry Servs., Inc. v. Beneflux Corp., 206 F.2d 214, 216 (2d Cir. 1952) (Hand, J., concurring) (emphasis added).
The last of the Airport criteria is: "Wherein lies the public interest." One reason for the more lenient interlocutory relief standards, as opposed to those governing motions for stays pending appeal, is the "public interest" in preserving the status quo ante litem until the merits of a serious controversy can be fully considered by a trial court. The right to a stay after the merits have once been unfavorably determined is quite a different thing. That basic "public interest" is further enhanced where, as here, the private controversy may possibly vindicate public policy. Private actions are an important means of enforcing federal antitrust policies. Bergen Drug Co. v. Parke, Davis & Co., supra, 307 F.2d at 727-728.
The presence of a federal statute both prohibiting the alleged acts of the defendant and supplying the gravamen of the complaint aligns Blackwelder, if only provisionally, on the side of the public interest and constitutes added weight in favor of precautionary relief. West Virginia Conservancy v. Island Creek Coal Co., supra, 441 F.2d at 236; Vanadium Corp. of America v. Susquehanna, 203 F.Supp. 686, 696 (D.Del.1962); Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834 (1944). This is so especially where, as here, the statute expressly authorizes interlocutory injunctive relief. 15 U.S.C. § 26. See 11 Wright & Miller, Federal Practice & Procedure, § 2948 at 462 (1973); United States v. Nutrition Serv., Inc., 227 F.Supp. 375 (W.D.Pa.1964), aff'd per curiam, 347 F.2d 233 (3d Cir. 1965).
Since decision below was entered upon conflicting affidavits, and some agreed facts, our ordinary deference to the district judge's findings of fact is less appropriate. Aetna Cas. & Sur. Co. v. Hunt, 486 F.2d 81, 84 (10th Cir. 1973); Shumaker v. Groboski Industries, Inc., 352 F.2d 837, 840 (7th Cir. 1965).
We have already noted our agreement with the district judge's statement that "it is hard to conceive how the defendant can be economically damaged by a continued business relationship with the plaintiff." We also think that what we have said hereinbefore strongly suggests that Blackwelder has sufficiently shown that without preliminary relief it will likely be irreparably injured.
Blackwelder has pleaded a prima facie case. Cf. 11 Wright & Miller, Federal Practice & Procedure § 2948 at 452 (1973). Moreover, the references we have made hereinbefore to the admissions of Seilig tend at least to partially support the allegations of the complaint. And it is clear that the public interest lies, as we have already said, in vindication of the antitrust laws.
REVERSED AND REMANDED.