Packaging Industries Group, Inc. (P.I. Group), and its subsidiary, Packaging Industries Engineering, Inc. (P.I. Engineering), commenced this action against P.I. Group's former vice president for engineering, Paul E. Cheney,
The Superior Court judge, after a hearing, denied the plaintiffs' request for a preliminary injunction, nationwide in scope, barring Cheney from competing with the plaintiffs, or engaging in any way in the business of designing, engineering, manufacturing or selling packaging machinery. Pursuant to G.L.c. 231, § 118, second par., the plaintiffs appeal from this interlocutory order, arguing that the judge abused his discretion (1) in denying their request for a preliminary injunction, and (2) in refusing to hear certain additional testimony offered at the hearing. The case is before this court on our own motion. We affirm.
Availability of Appellate Review. Prior to the enactment of G.L.c. 231, § 118, second par., as appearing in St. 1977, c. 405,
In enacting G.L.c. 231, § 118, second par., after our decision in Foreign Auto, the Legislature employed language which closely tracks that of 28 U.S.C. § 1292(a)(1) (1976).
The Federal statute, like our own, creates an exception to the normal rule that only final judgments may be subject to appeals. See Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 178 (1955); Pollack v. Kelly, 372 Mass. 469, 470-472 (1977). "The exception is a narrow one and is keyed to the `need to permit litigants to effectually challenge interlocutory orders of serious, perhaps irreparable consequence.'" Gardner v. Westinghouse Broadcasting Co., 437 U.S. 478, 480 (1978), quoting from Baltimore Contractors, Inc. v. Bodinger, supra at 181. The statute thus creates only a narrow exception to our more general policy that interlocutory rulings may not be presented piecemeal to the Appeals Court or to this court for appellate review. Pollack v. Kelly, supra. Giacobbe v. First Coolidge Corp., 367 Mass. 309, 312 (1975). "Ordinarily such appeal is possible only on the basis of a report by the judge who made the order. G.L.c. 231, § 111." National Ass'n of Gov't Employees, Inc. v. Central Broadcasting Corp., 379 Mass. 220, 222 n. 2 (1979). See G.L.c. 231, § 112; Mass. R. Civ. P. 64, 365 Mass. 831 (1975). See also G.L.c. 211, §§ 3 & 4A. Therefore, G.L.c. 231, § 118, second par., is limited to orders that "grant or protect at least part of the permanent
Furthermore, failure to raise a given issue on an interlocutory appeal made available as of right by G.L.c. 231, § 118, second par., in no way prejudices a party's ability to secure review of such an issue on appeal following final judgment. Victor Talking Mach. Co. v. George, 105 F.2d 697 (3d Cir.), cert. denied, 308 U.S. 611 (1939). In this sense appeals pursuant to both our statute and the Federal statute, although available as of right, are not mandatory but permissive. Demoulas Super Mkts., Inc. v. Peter's Mkt. Basket, Inc., supra at 752-753. 16 C.A. Wright & A.R. Miller, supra § 3921, at 11-13. Nor does the existence of an interlocutory appeal "divest the [trial court] of jurisdiction to proceed with the action on the merits." Demoulas Super Mkts., Inc. v. Peter's Mkt. Basket, Inc., supra at 753, and cases cited.
We also conclude, as a matter of Massachusetts practice, that appeals pursuant to G.L.c. 231, § 118, second par., properly lie to the Appeals Court, or, in an appropriate case, to this court, rather than to a single justice of either court. Such a procedure gives full effect to the legislative judgment that orders regarding preliminary injunctions are so important as to justify a mandatory exception to the normal rule that only final judgments may be subject to appeals.
Standard of Review. Federal appellate courts have consistently indicated that "[i]n reviewing the granting or denial of a preliminary injunction, the standard is whether the district court abused its discretion. An appellate court's role is to decide whether the [trial] court applied proper legal standards and whether there was reasonable support for its evaluation of factual questions." Hochstadt v. Worcester Foundation for Experimental Biology, 545 F.2d 222, 229 (1st Cir.1976).
While our standard of review is thus framed in terms of abuse of discretion, the Legislature would not have exempted orders granting or denying preliminary injunctions from the final judgment rule "if it intended appellate courts to be mere rubber-stamps save for the rare cases when a [trial] judge has misunderstood the law or transcended the bounds of reason." Omega Importing Corp. v. Petri-Kine Camera Co., 451 F.2d 1190, 1197 (2d Cir.1971). Therefore, in assessing whether a judge erred in granting or denying a request for preliminary injunctive relief, we must look to the
Standard for preliminary injunctions. By definition, a preliminary injunction must be granted or denied after an abbreviated presentation of the facts and the law. On the basis of this record, the moving party must show that, without the requested relief, it may suffer a loss of rights that cannot be vindicated should it prevail after a full hearing on the merits. Should the injunction issue, however, the enjoined party may suffer precisely the same type of irreparable harm. Leubsdorf, The Standard for Preliminary Injunctions, 91 Harv. L. Rev. 525, 541 (1978). Since the judge's assessment of the parties' lawful rights at the preliminary stage of the proceedings may not correspond to the final judgment, the judge should seek to minimize the "harm that final relief cannot redress," id., by creating or preserving, in so far as possible, a state of affairs such that after the full trial, a meaningful decision may be rendered for either party. Note, Developments in the Law, Injunctions, 78 Harv. L. Rev. 994, 1056 (1965).
The Merits. Applying these principles to the present case, we turn first to the plaintiffs' claims of harm, and conclude that the judge could well have found that, on the record before him, the plaintiffs failed to demonstrate sufficient risk of irreparable harm to warrant injunctive relief, regardless of the effect such relief might have had on the defendant. Furthermore, if the risk of harm to the defendant is considered, we conclude that the balance of equities here cuts decisively in favor of the judge's denial of injunctive relief.
1. Plaintiffs' claims. In their principal argument, the plaintiffs assert that certain facts, which are not in dispute, establish that they purchased the defendant's former business, Cheney Design Engineering Co., Inc. (Cheney Design), or at least substantial assets of the business, including good will.
The facts on which the plaintiffs rely are as follows. As a result of several meetings with John Bambara, president of
While these facts are undisputed, at the hearing there was considerable conflicting evidence as to the intent of the parties at the time they negotiated their business relationship. Bambara maintained that after proposing an initial price of $50,000 to $60,000, Cheney agreed to accept $20,000 for substantially all the assets of his business, including customer accounts not already billed, and to dissolve Cheney Design.
On the other hand, Cheney testified that two quite different proposals were suggested: first, the sale of the entire business and its attendant good will for between $75,000 and $100,000, and second, the sale of only certain of the company's assets, such as the furniture and drafting equipment, for approximately $25,000. Cheney testified that Bambara chose the second proposed alternative after he (Bambara) pointed out that selling only certain assets was to Cheney's "advantage because if for any reason it [i.e., working for P.I. Group] didn't work out, I [Cheney] could always start up the engineering company again with my own customers and my own people." Significantly, although P.I. Group had a standard security and noncompetition agreement, Cheney did not sign any such agreement.
The judge specifically stated that he did not believe Bambara's testimony and indicated that, in his view, there had been no sale of anything other than furniture, drafting equipment and a truck. The record before us amply supports
The plaintiffs also contend that Cheney has appropriated their trade secrets. Regarding this claim, the judge properly could have concluded that there was insufficient evidence
The plaintiffs' final argument asserts that Cheney has usurped corporate opportunities belonging to them. See Barden Cream & Milk Co. v. Mooney, 305 Mass. 545 (1940). The plaintiffs allege that Cheney had done business, or is about to do business, with three accounts ("Tulox," "Swan Hose," and "Pharmasol") he developed while employed as their officer and director. However, two of these accounts, Tulox and Swan Hose, were former customers of Cheney Design. The judge could have concluded therefore that these accounts were subject to the express agreement testified to by Cheney under which he could reinstate his former business and service his previous customers at any time.
Cheney had had no contact with Pharmasol prior to working for the plaintiffs. However, the record reveals no reason why money damages would not adequately redress any harm the plaintiffs might suffer prior to a final judgment should they prevail on the merits regarding their Pharmasol claim. Damages were the exclusive remedy afforded in Barden Cream & Milk Co. v. Mooney, supra, and in other cases relied on by the plaintiffs, such as Universal Elec. Corp. v. Golden Shield Corp., 316 F.2d 568 (1st Cir.1963), injunctive relief was granted only after irreparable harm was specifically shown. The plaintiffs offered no evidence that Cheney would be unable to pay any damages which they might be awarded. Where the moving party has failed to demonstrate that denial of the injunction would create any substantial risk that it would suffer irreparable harm, the injunction must be denied, no matter how likely it may be that the moving party will prevail on the merits. See Sampson v. Murray, 415 U.S. 61, 88 (1974).
2. Balancing the risks of harm. Even if the judge found that the plaintiffs had demonstrated some risk of irreparable harm, the judge could easily have concluded that this risk was offset by the risk Cheney would have faced had the plaintiffs been granted their requested relief. In assessing
Conclusion. For the foregoing reasons, we conclude that the judge's denial of the plaintiffs' request for a preliminary injunction was based on the application of proper legal standards, and that the record amply supports the judge's resolution of the factual questions before him.
Order denying preliminary injunction affirmed.
"A party aggrieved by an interlocutory order of a justice of the superior court or the judge of the housing court of the city of Boston or the judge of the housing court of the county of Hampden, may file a petition in the appropriate appellate court seeking relief from such an order. The appellate court may, in its discretion, grant the same relief as an appellate court is authorized to grant pending an appeal under section one hundred and seventeen.
"A party aggrieved by an interlocutory order of a justice of the superior court or the judge of the housing court in the city of Boston or the judge of the housing court of the county of Hampden granting, continuing, modifying, refusing or dissolving a preliminary injunction, or refusing to dissolve a preliminary injunction may appeal therefrom to the appeals court or, subject to the provisions of section ten of chapter two hundred and eleven, to the supreme judicial court, which shall affirm, modify, vacate, set aside, reverse the order or remand the cause and direct the entry of such appropriate order as may be just under the circumstances. Pursuant to action taken by the appeals court the cause shall be remanded to the trial court for further proceedings.
"The filing of a petition hereunder shall not suspend the execution of the order which is the subject of the petition, except as otherwise ordered by the appellate court."