Hyrad’s declaratory judgment action. (Def.’s Ex. A at 11, Attached to Def.’s Reply to Pl.’s
Mem. in Opp’n Mot. Dismiss.) Judge Crab, in her opinion dismissing Hyrad’s Rule 60(b)
motion stated that she dismissed Hyrad’s original declaratory judgment action “on the mistaken
belief that defendants’ [Tenneco] actually had filed a formal demand for arbitration,” and that
“Defendants’ current protestations to the contrary are cynical and disingenuous.” (/d. (emphasis
added.) Judge Crab went on to add that

Defendants [Tenneco] never had any intention of seeking arbitration

and they deduced early on that plaintiff was equally averse to arbitration,

It is now quite clear that defendants have engaged in a game of intentional

delay and avoidance, hoping to keep their business relationship with plaintiff

in limbo as long as possible. (/d.) . . .[D]efendants had no intention of actually

invoking the arbitration clause.
(id. at 12.)

Tenneco waited fifteen months after the Wisconsin court’s dismissal of Hyrad’s action
before filing this action on January 29, 2002. If Tenneco had an immediate concern for the
irreparable harm it would suffer, it would not have waited a year and a half to ask for relief.
Similarly, Tenneco represented to this court that the day it filed this action for a preliminary
injunction, it also filed a Demand for Arbitration with the AAA. (PI.’s Mem. in Opp’n to Mot.
Dismiss at 4.) However, the Demand for Arbitration was not actually filed until February 11,
2002. (Def.’s Ex. A at 12, Attached to Def.’s Reply to Pl.’s Mem. in Opp’n Mot. Dismiss.)
Judge Crab noted that “what finally forced defendants’ [Tenneco’s] hand was plaintiffs motion
to this court for relief from judgment: on the same day that they filed their response, defendants

filed a formal demand for arbitration, apparently to hedge their bets. (Jd. (emphasis added).)

The case of Suner-Getriebe KG v. White Hydraulics, Inc., 715 F.2d 348 (7 Cir. 1983) is


Discussion

Because the parties are now before the arbitrator, we find that the arguments raised in
Hyrad’s motion to dismiss are moot. In determining whether to a grant a preliminary injunction,
four factors must be established. Zy, Inc. v. The Jones Group, 237 F.3d 891, 895 (7" Cir. 2001);
see also Meridian Mutual Ins. Co. v. Meridan Ins. Group, 128 F.3d 1111, 1114 (7" Cir. 1997).
First, the moving party must establish two factors: 1) that the case has a likelihood of success on
the merits; and 2) that the party will suffer irreparable harm if the injunction is not granted, that
no adequate remedy at law exists. /d. Third, if the party establishes these first two criteria, the
court must conduct a balancing test. Jd. The court must balance the harm that the non-moving
party will suffer if the injunction is granted against the harm the moving party will suffer if the
injunction is denied. /d. Finally, the court must balance the effect of the injunction on non-
parties, the public interest factor. /d. These factors exist on a sliding scale, the more likely the
moving party’s likelihood of success, “the less the balance of irreparable harms need favor the
plaintiff's position.” Jd.

Because of the unique facts of this case, we address the alleged irreparable harm element
being suffered by Tenneco. Because of it’s repeated, inconsistent representations to different
district courts, and because of its unreasonable delay in seeking injunctive relief, Tenneco fails to
set forth sufficient facts to support its alleged irreparable harm requirement.

Tenneco has stated to this court that it had “never represented to the Wisconsin Court that
it had already filed for arbitration” and that “Tenneco did not represent that it had filed a formal
demand with AAA, nor did the Wisconsin Court’s Order assume a demand had been filed.” (PI.’s

Mem. in Opp’n Mot. Dismiss at 7.) On October 30, 2000, the Wisconsin Court dismissed


distinguishable from the instant case. In Sauer-Getriebe, White Hydraulics (“White”) granted
Sauer-Getriebe (“Sauer”) the exclusive license to sell motors manufactured by White. Jd. at 349.
The contract contained an arbitration provision. Jd. A contractual dispute developed between
the parties, and Sauer sought preliminary and permanent injunctions in the district court, while
the contractual rights of the parties were being determined in arbitration. Jd. In reversing the
district court’s denial of the injunctions, the Court applied four factors justifying a preliminary
injunction to the case, /d. at 351. The Court found that all the requirements for a preliminary
injunction were met, and held that a grant of a preliminary injunction was proper,
notwithstanding an agreement to arbitrate. Jd. at 350.

Unlike ihe instant case, Sauer did not make attempts to delay or avoid adjudication of the
dispute, nor did Sauer take inconsistent positions. /d. In this case, Tenneco has done both.
When seeking equity, the plaintiff can not come into court with unclean hands. In this case,
Tenneco’s unreasonable delay and inconsistent positions do not merit the grant of a preliminary
injunction.!

Furthermore, Tenneco is not without an adequate remedy. An arbitrator, under the AAA
rules, may grant injunctive relief. The AAA Rule 36 of the Commercial Dispute Resolution
Procedures provides in relevant part:

(a) The arbitrator may take whatever interim measures he or she deems

necessary, including injunctive relief and measures for the protection
or conservation of property and disposition of perishable goods.

‘Because Tenneco can not establish the irreparable harm requirement for a
preliminary injunction, it is not necessary to consider the remaining three factors needed
for a preliminary injunction. Similarly, since the parties are now engaged in the
arbitration process, see Def.’s Reply to Pl.’s Mem. in Opp’n Mot. Dismiss at 1, it is no
longer necessary to address Hyrad’s waiver argument.

5


Minute Order Farm (0697)

4, SS le . United States District Court, Northern District of Llinois
Name of Assigned Judge Ronald A. Guzman Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 02 C 728 DATE 7/19/2002
CASE TENNECO AUTOMOTIVE,ete. vs. HYRAD CORPORATION
TITLE
[in the following box (a) indicute the party Dling the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state bretly the natare
MOTION: of the motion being presented.

DOCKET ENTRY:

(1) Oo Filed motion of [ usc listing in “Motion” box above.]

(2) qo Brief in support of motion due

@ a Answer brief to motion due . Reply to answer brief due,

(4) C] Ruling/Hearingon___ eset for_ at

(5) Oo Status hearing[held/continued to] [set for/re-set for] on setfor sat

(6) o Pretriai conference[held/continued to] [set tor/re-set for] on set for at

{7) 0 Trial[set for/re-set for] on ___at

(8) a [Beneh/Jury trial] [Hearing] held/continued to___ at

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OOFRCP4(m) O General Rule 21 OO FRCP41(a)(1) © FRCP41(a)(2).

(0) «x4 [Other docket entry] ENTER MEMORANDUM OPINION AND ORDER: Plaintiff’s request for
a preliminary injunction is denied. Plaintiffs complaint is dismissed without prejudice, with leave to
reinstate after the arbitrator has issued his/her award.

(11) += [For further detail sce ordcr attached to the original minute order.]

No notices required, advised in open court.

No notices required.

Notices mailed by judge’s staff.

Notified counse! by telephone.

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The arbitrator is not bound by legal rules, and may grant any appropriate relief. Thus, Tenneco
may seek injunctive relief from the arbitrator.
Conclusion
Tenneco can not establish the requirement of irreparable harm in order to satisfy a grant
of a preliminary injunction because of Tenneco’s inconsistent representations to the different
district courts, and because of its unreasonable delay in seeking relief. For the reasons stated
above, Tenneco’s request for a preliminary injunction is denied. Tenneco’s complaint is

dismissed without prejudice, with leave to reinstate after the arbitrator has issued his/her award.

SO ORDERED wreReD: ly (9 2002

HON. RONALD A. GUZMAN
United States Judge


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

TENNECO AUTOMOTIVE

OPERATING COMPANY DOCKETED

)
)
INCORPORATED f/k/a MONROE ) JUL 2 3 2002
AUTO EQUIPMENT COMPANY, )

Plaintiff,
02 C 0728
v. Judge Ronald A. Guzman

HYRAD CORPORATION,

we eres ere

Defendant.

MEMORANDUM OPINION AND ORDER

Tenneco Automotive Operating Company Inc. (“Tenneco”) has brought this action
seeking a preliminary injunction to preserve the contractual status quo in its relationship with
Hyrad Corporation (“Hyrad”) while the parties arbitrate their dispute. Hyrad has moved pursuant
to Federal Rule of Civil Procedure 12(b)(6) to dismiss the action. Because the parties are now in
arbitration, Tenneco’s complaint for injunctive relief is dismissed without prejudice, with leave
to reinstate after the arbitrator issues his/her final award.

Factual Background

On May 16, 1991, Monroe Auto Equipment, now Tenneco, entered into a Licensing
Agreement with Hyrad. (P1.’s Mem. in Opp’n Mot. Dismiss at 2.) The agreement granted
Tenncco the exclusive license to use Hyrad’s technology and patents owned to manufacture and

sell adjustable shock absorbers for certain types of vehicles. (/d.) The agreement contains an


arbitration provision. (/d. at 3.)

Over the years, contractual disputes arose between the parties. (/d, at 3.) These
contractual disputes prompted Hyrad to file a declaratory judgment action on July 5, 2000 in the
United States District Court for the Western District of Wisconsin (“the Wisconsin Court”).
(Def.’s Mem. in Supp. Mot. Dismiss at 2.) Hyrad asked the Wisconsin Court to find that
Tenneco had breached the Licensing Agreement. (/d.) On October, 30, 2000, the Wisconsin
Court ordered the parties to arbitrate their dispute, and dismissed Hyrad’s action. (PI.’s Mem. in
Opp’n Mot. Dismiss at 4.)

On January 29, 2002, Tenneco filed this action for preliminary injunction. At the time
Tenneco filed its complaint, no arbitration proceedings had begun. (Def.’s Mem. in Supp. Mot.
Dismiss at 4.) On February 11, 2002, Hyrad filed a motion to reopen the judgment in the
Wisconsin court pursuant to Federal Rule of Civil Procedure 60(b) (“Rule 60(b)”), (Def.’s Ex. A
at 7, Attached to Def.’s Reply to Pl.’s Mem. in Opp’n Mot. Dismiss.) Hyrad’s Rule 60(b) motion
was denied. (/d. at 11.) Tenneco then filed a demand for arbitration against Hyrad with the
American Arbitration Association (AAA). (Def.’s Reply to Pl.’s Mem. in Opp’n Mot. Dismiss at
2.)

Jurisdiction

Jurisdiction in this court is proper pursuant to 28 U.S.C. § 1332. There is complete
diversity of citizenship between the parties. (Compl. § 2.) Tenneco is a corporation organized
under the laws of the State of Delaware, with its principal place of business in Lake Forest,
Illinois. (/d. at | 4.) Hyrad is a corporation organized under the laws of the State of Arizona,

with its principal place of business in Wisconsin Dells, Wisconsin. (dd. at § 5.)