Opinion ID: 371829
Heading Depth: 1
Heading Rank: 4

Heading: Propriety of the Review Provision in the Injunction.

Text: 44 The injunction entered by the district court provides: 45 IT IS HEREBY FURTHER ORDERED that the defendants may move for dissolution of this injunction at any time following eighteen (18) months from the date of entry of this order provided that in support of such a motion defendants demonstrate compliance with the terms of the injunction and, provided further, that, notwithstanding such a showing by the defendants, the injunction shall continue in full force and effect if the plaintiff Securities and Exchange Commission demonstrates that the public interest so requires. 46 The Commission argues that this provision in the injunction was beyond the power of the court to include and that it was an abuse of discretion to include it. We do not agree. 47 The district court has wide discretion in framing an injunction. Mr. Justice Douglas described that discretion in Hecht Co. v. Bowles, 1944, 321 U.S. 321, 64 S.Ct. 587, 88 L.Ed. 754, an action by the World War II Price Administrator to enforce compliance with the Emergency Price Control Act of 1942 (56 Stat. 23), in which the district court found violations, but declined to issue an injunction. 48 We are dealing here with the requirements of equity practice with a background of several hundred years of history. Only the other day we stated that An appeal to the equity jurisdiction conferred on federal district courts is an appeal to the sound discretion which guides the determinations of courts of equity. Meredith v. (City of) Winter Haven, 320 U.S. 228, 235, (64 S.Ct. 7, 11, 88 L.Ed. 9). . . . The essence of equity jurisdiction has been the power of the Chancellor to do equity and to mould each decree to the necessities of the particular case. Flexibility rather than rigidity has distinguished it. 321 U.S. at 329, 64 S.Ct. at 591-592. (emphasis added) 49 The Court held that the district court's discretion extended to denial of an injunction, even though violations were found. 50 We have repeatedly applied the principle of the Hecht Co. case in actions by the Commission for injunctions under the Securities and Securities Exchange Acts. See, e. g., SEC v. Arthur Young & Co., 9 Cir., 1979, 590 F.2d 785; SEC v. Koracorp Industries, Inc., 9 Cir., 1978, 575 F.2d 692, 701; SEC v. United Financial Group, Inc., 9 Cir., 1973, 474 F.2d 354, 358-359. See also, Rondeau v. Mosinee Paper Corp., 1975, 422 U.S. 49, 95 S.Ct. 2069, 45 L.Ed.2d 12. 51 Closely in point is our decision in Porter v. Lux, 9 Cir., 1946, 157 F.2d 756. That, too, was an action for an injunction under the Emergency Price Control Act of 1942. The district court in that case found violations and issued an injunction. Two paragraphs of the injunction read: 52 This judgment and decree shall be effective from the date hereof until the 30th day of June, 1946. This judgment and decree is without prejudice to the right of the plaintiff to move for the extension of this judgment and decree beyond the date above mentioned upon appropriate showing of facts justifying such extension. The defendant likewise may move under appropriate circumstances for modification of this judgment and decree prior to the expiration thereof. 53 Jurisdiction of the court is retained over the parties and subject matter of this action for these purposes. Id. at 757. 54 The Price Administrator appealed, and we affirmed. We said: 55 It is well settled that this court will not interfere with the action of a District Court in the exercise of its discretion unless there has been a plain abuse of that discretion. Id. at 757. (footnote omitted) 56 Viewing the record we get the impression that the District Court concluded from the facts then before it that during the time fixed in the injunction opportunity would be afforded to observe the action of appellees and determine whether or not it could reasonably be assumed that they would obey the law in the future. If it was thought that they would not, then the simple procedure of a motion to extend the time was left open. The District Court from the picture it received from the facts and circumstances before it determined the action taken to be the fairest course to follow in this situation. Id. at 757. 57 (W)e are unable to say that the District Court's action constitutes     a plain error, discretion exercised to an end not justified by the evidence, a judgment that is clearly against the logic and effect of the facts as are found. 58 No abuse of discretion appearing the judgment is affirmed. Id. at 758. 59 What we said there is equally applicable here. 60 We do not agree with the Commission's characterization of the injunction as a limited injunction. The provision criticized by the Commission does not automatically terminate the injunction after 18 months; it merely provides to the defendants a right to seek a review after 18 months. The court did not abuse its discretion. 61 The Commission correctly argues that the standards for modification of a permanent, unconditional injunction are strict. United States v. Swift & Co., 1932, 286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999. We do not now decide whether the review provision in the injunction was intended to change the otherwise strict standards for modification of an injunction or, if so, whether such action was within the discretion of the trial judge. Neither of these questions will be before us until the time, if ever, when the injunction is actually modified or dissolved. 62