will not harm the public interest. Kiel v. City of Kenosha, 236 F.3d 814, 815-16 (7th Cir. 2000).

As to the Plaintiffs’ likelihood of success, the Plaintiffs primarily rely on the doctrine of
collateral estoppel. Plaintiffs contend that a ruling in the case Dawson v. W. & H. Voortman,
Ltd., No. 92 C 8088 (Dawson), bars the Defendants from contesting the present Plaintiffs’ claims
of a violation of the Sherman Antitrust Act and illegal restraint on alienation. Plaintiffs contend
that the Dawson Memorandum Opinion and Order, which denied Voortman’s Motion to
Dismiss, made relevant rulings that are binding on this Court in the instant case.

In Dawson, that court denied Voortman’s Motion to Dismiss as to Dawson’s Sherman
Antitrust Act and illegal restraint on alienation claims that were based on the Policy Manual in
effect at that time. See Dawson v. W. & H. Voortman, Ltd., 864 F. Supp. 77 (N.D. IIL. 1994).
Plaintiffs contend that collateral estoppel bars the defendants from relitigating whether Voortman
violated the Sherman Antitrust Act and imposed illegal restraints on the present Plaintiffs.

The doctrine of collateral estoppel bars the relitigation of issues. An issue may not be
relitigated if: (1) the issue to be precluded is the same issue that was involved in a prior action;
(2) the issue was actually litigated; (3) the determination of the issue was essential to the final
judgment; and (4) the party against whom preclusion is invoked was represented in the prior
action. See Adair v. Sherman, 230 F.3d 890, 894 (7th Cir. 2000).

The issue decided in Dawson was whether Dawson sufficiently pled a cause of action for
a violation of the Sherman Antitrust Act and illegal restraint on alienation. This is highlighted by
the Order itself, which states, in pertinent part, “this states a claim under the extremely relaxed
federal pleading standards” and “[a]ll other arguments defendant makes go to the factual strength

of the count, which are not properly brought on a Rule 12(b)(6) motion”.



_ Assuming argumendo, that the claims set forth in the second application were properly
before the Court, Plaintiffs’ second application would still fail. Plaintiffs have failed to
demonstrate no adequate legal remedy exists for the alleged anticipatory breach of contract and
that they would suffer irreparable harm if injunctive relief is not granted.

In the third application for injunctive relief, identified as “Tab C”, Plaintiffs seek to
enjoin the Defendants from violating the Policy Manual and to prevent Bill Voortman, an
individual who is not a party to the present action, from selling Voortman produced cookies to
customers in Plaintiffs’ territories. In this application, Plaintiffs allege that Bill Voortman,
Defendant’s brother, in an independent cookie operation, sells Voortman cookies to a third party
who then resells the cookies in the Plaintiffs’ territories.

As in the second application, the allegations in the third application are not set forth in the
Second Amended Complaint before the Court. This is highlighted by the relief sought by the
Plaintiffs, which includes enjoining a non-party to this action. Plaintiffs cannot seek injunctive
relief on a claim that is not properly before the court.

Furthermore, other than making conclusory statements, Plaintiffs have not demonstrated

that no legal remedy exists for the alleged sale of cookies in their territories or that they will

suffer irreparable harm if injunctive relief is not granted.

denied.

Dated: Coles 7, 2003

For the foregoing reasons, the Plaintiffs’ Fifth Application 7 Preliminary Injunction is

JOHN W)
oun) dues * District Judge



. Teasonable selling price.

The value of a route is to be determined by the average weekly

purchase during the past twelve months. Allow $1.00 for every

weekly dollar purchased (at the net distributors cost price) to

establish a reasonable selling price for either all or part of the

territory. This formula applies to both regular and special

merchandise. As one of the conditions, W. & H. Voortman

Limited can only approve of the sale if the value of the territory

does not exceed the amount based on the above method of

determining the route value.

The only other factors to consider, in addition to the value of the

sales territory are: (1) the value of other real assets owned by the

distributor and of use to the purchaser at the time of sale;

(2) allowance for returns from retailers.
Through amendments and modifications to the Policy Manual, the formula has increased to allow
a distributor to sell his territory for a price not to exceed five times the weekly purchases of a
particular distributor. For example, a $5,000 average weekly order of consigned products and
purchases has a value of $25,000.

Plaintiffs allege that the above formula prevented them from selling their territories at the
market price and from seeking buyers who would pay that price. The restraints also inhibited the
Plaintiffs from securing buyers of their territories because such buyers would object to the sale
restraints because such restraints would interfere with the resale of the territories.

Before a preliminary injunction will issue, the party seeking the injunction must
demonstrate: (1) no adequate remedy at law exists, (2) he will suffer irreparable harm if the
injunction is not granted, (3) he has a reasonable likelihood of success on the merits of the

underlying claim, (4) the irreparable harm the party will suffer without injunctive relief is greater

than the harm the opposing party will suffer if the injunction is granted, and (5) the injunction


Ir the instant case, Plaintiffs seek to have this previous ruling that Dawson adequately
pled a claim for a violation of the Sherman Antitrust Act and illegal restraint on alienation result
in a finding by this Court that the Policy Manual violates the Sherman Antitrust Act and imposes
illegal restraints on alienation. The Dawson court did not litigate this issue; it merely litigated
whether a claim was stated based on the “extremely relaxed federal pleading standards”.
Whether Voortman actually violated the Sherman Antitrust Act and illegally restrained alienation
was not actually litigated. Accordingly, collateral estoppel does not bar the Defendants from
litigating whether the Policy Manual is a violation of the Sherman Antitrust Act or an illegal
restraint on alienation.

Plaintiffs also provide two affidavits in support of their application for a preliminary
injunction. Scott C. Strange avers that he acquired his exclusive territory in December 1999 and
that he could not secure Voortman’s approval to sell his exclusive territory unless he sold it for
the applicable formula in the Policy Manual. Strange could not sell his territory for more than
that prescribed by the formula in the Policy Manual. Prospective purchasers of his territory have
indicated their concern of re-selling the territories based on the formula in the Policy Manual.

Plaintiffs also provide the affidavit of Paul D. McKee. McKee avers the same limitation
as Strange. However, also attached is a document purporting to show the sale of McKee’s
territory in March 2002, on the same date that he signed his affidavit. This document, on its face,
apparently contradicts McKee’s averment that he owns a sales territory. McKee also “repeats
and realleges Part II, E. 1-4" of the application. However, there is no Part I, E. 1-4 in the
application, Accordingly, McKee’s affidavit is afforded little, if any, weight.

The vague averments included in the affidavits fail to demonstrate a likelihood of success



‘Minute Order Form (06/97)

United States District Court, Northern District of Minois

qa)

nana Magistrate Dude John W. Darrah “than Aeioed ude
CASE NUMBER 02 C 681 DATE 10/7/2003
CASE Rowell vs. Voortman Cookies Ltd
TITLE
[in the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
qd) o Filed motion of [ use listing in “Motion” box above.]
(2) Qa Brief in support of motion due
@) ia] Answer brief to motion due__. Reply to answer briefdue____.
(4) a Ruling/Hearingon____sesetfor_ at
(5) a Status hearing{held/continued to] [set for/re-set for]on__—_—setfor___—_—at.
(6) Oo Pretrial conference(held/continued to] [set for/re-setfor]on__—setfor__—sat__—S.
(7) oO Trial[set for/re-set for]on____at
(8) Qo [Bench/Jury trial] [Hearing] held/continuedto__—_at
(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) CLocal Rule 41.1 OFRCP41(a)(1) OO FRCP41(a)(2).
(0) +x [Other docket entry] Status hearing held. For the reasons stated in the attached memorandum

opinion and order, plaintiff's first amended application for preliminary injunction [43-1] is denied. Enter

Memorandum Opinion and Order.

| [For further detail see order attached to the original minute order.]

4

No notices required, advised in open court.
No notices required.

Notices mailed by judge's staff.

Notified counsel by telephone.

Docketing to mail notices.

Mail AO 450 form.

YNOD LIYLSIO SN
waa

ity initials:
Copy to judge/magistrate judge.
r2ch Wd L- 19060 a
courtroom date mailed notice
MF depuy’s PNii sHIUU BU4 USS
_ © “Dute/time received in
central Clerk's Office mailing deputy initials



on the merits, Furthermore, Plaintiffs have not demonstrated an inadequate legal remedy, i.e. the
harm claimed by the Plaintiffs, a reduced sales price for exclusive sales territories, is not
adequately compensable by an award of money damages.

Plaintiffs have also failed to demonstrate any irreparable harm they will suffer absent the
issuance of a preliminary injunction. Other than a conclusory statement that they will suffer
irreparable harm if injunctive relief is not granted, Plaintiffs offer no other support which
demonstrates irreparable harm. The affiants do not allege that they are presently seeking to sell
their territories and that the Policy Manual is preventing such sale or affecting the price of such a
sale. In fact, as stated above, McKee sold his territory over a year ago.

In Plaintiffs’ second application, identified as “Tab B”, Plaintiffs seek to enjoin
Voortman: from selling directly and delivering sugar-free products to Sam’s Club/Costco and
other purchasing outlets in any exclusive territory of the Plaintiffs; from prohibiting Plaintiffs
from selling and delivering sugar free products to Sam’s Club/Costco; and from paying Plaintiffs
commissions that are less than those shown on the distributor price lists.

The relief sought in the second application is based on an anticipatory breach of contract
by Defendants for selling and distributing directly to Sam’s Club and Costco. However, these
allegations are not included, or even implied, by the Second Amended Complaint and are not part
of the pending claims against the Defendants. This deficiency is highlighted in the second
application, in which Plaintiffs state these (new) factual allegations and cite, in support, the
affidavit of Robert Liebhart. However, Robert Liebhart is not presently a party in this litigation
and is not mentioned in the Second Amended Complaint. Plaintiffs cannot properly seek

injunctive relief on a claim that is not properly before the court. See Fed. R. Civ. P. 7.


. UNITED STATES DISTRICT COURT

‘ NORTHERN DISTRICT OF ILLINOIS POCkETEA
EASTERN DIVISION
OCT - 8 2003
CATHLEEN M. ROWELL, et al., )
)
Plaintiffs, )
) No. 02 C 0681
v. )
) Judge John W. Darrah
VOORTMAN COOKIES, LIMITED, a Canadian )
Corporation; and HARRY VOORTMAN, )
Individually, )
)
Defendants. )

MEMORANDUM OPINION AND ORDER

Plaintiffs, on behalf of themselves and a class of similarly situated individuals, filed a
fourteen-count complaint against Defendants, Voortman Cookies, Limited (“Voortman”) and
Harry Voortman (“H. Voortman”), alleging that the Defendants breached an exclusive
distributorship agreement. In August 2002, this Court dismissed Counts III, V, X, XI, and XIV
without prejudice and dismissed Count XII with prejudice. Plaintiffs filed a fourteen-count
Second Amended Complaint. In January 2003, this Court dismissed Counts III and X without
prejudice and dismissed the new Count XII with prejudice. Presently before the Court is
Plaintiffs’ Fifth Amended Application for a Preliminary Injunction (the “Application”).'

Plaintiffs’ Application actually consists of three applications for injunctive relief. In the
first application, identified as “Tab A”, Plaintiffs seek to enjoin the Defendants from enforcing

the agreement between Voortman and all of its consignee/distributors regarding the sales price of

‘A summary of all the operative facts are fully set forth in the Court’s previous
Memorandum Opinion and Orders and need not be repeated. A brief summary of the pertinent

allegations is provided herein. \



“exclusive sale territories”; to require Defendants to immediately notify all consignee/distributors
“that they are entitled to sell their exclusive territories for any price they desire”; and to direct
modifications of the Voortman “Policy Manual” to delete the references to “sales price” of a
territory. Plaintiffs contend that a hearing is not required because the pleadings and the doctrine
of collateral estoppel establish that Voortman violated the Sherman Act § 1 and imposed illegal
restraints on alienation.

The above injunctive relief sought is based on Plaintiffs’ claims of antitrust violations and
illegal restraints on alienation, Counts VIII and IX of the Second Amended Complaint. In these
counts, Plaintiffs allege that Defendants imposed illegal restraints on alienation on the
distributors by illegally restricting the amount of the sales price they were permitted to charge for
their distributorships by placing a top or cap on the sale of a distributorship irrespective of its
market value via a formula in the Policy Manual. The Policy Manual provides, in pertinent part:

SELLING THE TERRITORY

As an independent businessman the Voortman distributor has the
right to sell all or part of his business. In al] such cases approval of
the sale_and final approval of the intended purchaser must_be
obtained from W. & H. Voortman Limited,

The distributor should remember at all times, particularly at the
time of possible sale, that no franchise fee or charge was made by
W. & H. Voortman Limited, and therefore, the distributor does not
own the territory or the customer in that territory. The distributor
does, however, own the exclusive right to sell Voortman products
in a designated area. When a distributor sells to another party he
transfers this exclusive right.

eee

Following is the recommended method of determining the true
value of a sales territory for the purpose of arriving at a fair and