Opinion ID: 773472
Heading Depth: 2
Heading Rank: 3

Heading: Case 99-4493: Motion for Permanent Injunction

Text: 72 In South Central Power Company v. International Brotherhood of Electrical Workers, Local Union 2359, this Court opined that [a] district court's decision to grant or deny a permanent injunction is reviewed under several distinct standards. Factual findings are reviewed under the clearly erroneous standard, legal conclusions are reviewed de novo, and the scope of injunctive relief is reviewed for an abuse of discretion. 186 F.3d 733, 737 (6th Cir. 1999) (citing Walters v. Reno, 145 F.3d 1032, 1047 (9th Cir. 1998)). 73 Upon Dana's motion, the district court enjoined the Trust from representing to any asbestos claimant against the Celotex Asbestos Settlement Trust that the Celotex Asbestos Settlement Trust has any right of action against the Dana Corporation to assign, transfer, or otherwise to convey [Dana rights], and from instituting or prosecuting, directly or indirectly, in any tribunal or court (federal, state, foreign, or otherwise) other than this court, any action or claim against the Dana Corporation . . . based on any right of action putatively assigned or otherwise derived or obtained from or through the Celotex Asbestos Settlement Trust. (J.A.II at 123-24.) In connection with this order, the district court also made it a requirement that claimants to the Trust sign an acknowledgment that they do not receive any rights against Dana. 74 The district court granted Dana's motion for permanent injunctive relief in part upon the premise that this Court may reverse the district court's grant of summary judgment to Dana thereby restoring the Trust's Dana rights, and because this Court may not uphold the findings of contempt against the Trust in Anderson, thereby rendering the 1987 injunction without force. However, the district court also found that even in the face of its summary judgment order in favor of Dana being affirmed, the threat of potential harm to Dana was significant and real enough for the injunction to issue. The Trust argues that these reasons may not serve to support the issuance of the injunction inasmuch as they are based upon speculation and not upon the immediate threat of injury required for an injunction to issue. The Trust also argues, as it did before the district court, that by issuing the injunction, the Trust is unable to comply with the plan of reorganization as confirmed by the bankruptcy court, such that the Trust is now faced with being held in contempt. We disagree with the Trust and hold that the district court properly issued the permanent injunction. 75 Perhaps the most significant single component in the judicial decision whether to exercise equity jurisdiction and grant permanent injunctive relief is the court's discretion. . . . [I]n most cases the determination whether to issue an injunction involves a balancing of the interests of the parties who might be affected by the court's decision - the hardship on plaintiff if relief is denied as compared to the hardship to defendant if it is granted . . . . [T]he main prerequisite to obtaining injunctive relief is a finding that plaintiff is being threatened by some injury for which he has no adequate legal remedy. . . . [P]laintiff must demonstrate that there is a real danger that the act complained of actually will take place. There must be more than a mere possibility or fear that the injury will occur. . . . Because injunctive relief looks to the future, and is designed to deter rather than punish, relief will be denied if the conduct has been discontinued on the ground that the dispute has become moot and does not require the court's intervention. But the court must be satisfied that there is no reasonable expectation of future injurious conduct. . . . Since a court must take into consideration the likelihood of a recurrence of the problem, plaintiff need not rely solely on defendant's assurances that it will not engage in the offensive conduct at some later date. 76 11A Charles A. Wright et al., Wright & Miller Federal Practice & Procedure § 2942 (2d ed. 1995). 77 In the matter at hand, the district court found that although Dana was not being threatened with litigation at the current time, and although the force of the summary judgment order was to deny the Trust any right to indemnification against Dana, it nonetheless remained that without enjoining the Trust from assigning Dana rights to claimants, Dana was being threatened with a risk of injury for which no adequate legal remedy remained by the potential for innumerable lawsuits against Dana. The Trust argued that in light of the district court's summary judgment order in favor of Dana, injunctive relief was not necessary to avoid the risk of multiple litigation; however, the district court was not persuaded by this argument. Specifically, the court opined: 78 The problem with the Trust's argument is that it ignores the utter inability to recreate the status quo (i.e., a single case in a single court) once the Dana rights are dispersed to thousands upon thousands of claimants. Even if there is no immediate or even presently perceptible risk that suit based on those right will be filed, much less filed elsewhere than here, I am persuaded that such dispersal, without more, creates significant potential for irreparable and irredeemable harm to Dana and potentially substantial disruption of the orderly administration of judicial business that injunctive relief is warranted. 79 (J.A.II at 118.) The district court balanced this potential harm that Dana may incur if the injunction did not issue, against that the Trust would incur if the injunction issued, and found the harm to the Trust less palpable. The district court opined that [n]o one's interests are served by distribution of worthless rights, and no one is harmed if something of no value is not disseminated. (J.A.II at 119.) 80 The court was not persuaded by the Trust's argument that if it was enjoined from issuing Dana rights to its claimants, it could not comply with the confirmed plan of reorganization and therefore faced being held in contempt by the bankruptcy court. The court first noted that if the injunction issued, it would be impossible for the Trust to comply with the provision of the plan, and that impossibility is a well-settled defense to a charge of contempt. (J.A.II at 116.) The court also found that in light of its order granting summary judgment to Dana, as a practical matter, any Dana rights that the Trust attempted to transfer were worthless. Specifically, the court opined, [w]hen the plan was drafted, the Dana rights may have had some potential value; since entry of summary judgment in Dana's favor, they have none. Moreover, the court found that the confirmed plan's provision requiring the Trust to distribute Dana rights to putative claimants went against the purpose of Judge Potter's injunction. The court found that [the] plan provision disregards basic principles of judicial administration, and offends fundamental policy considerations regarding consistency, certainty, and finality. It was designed to do that which Judge Potter's injunction declares cannot be done - namely, facilitate suits in a limitless number of courts by countless plaintiffs asserting the same claim, but raising a likelihood of inconsistent judgments. 81 (J.A.II at 117.) 82 Based upon its finding of potential irreparable and irredeemable harm to Dana and that this threat of irreparable harm greatly outweighed any potential harm to the Trust, the district court held as follows: 83 Having found for Dana on the merits, I conclude that I properly and lawfully can and should enjoin the Trust from transferring Dana rights. Doing so does not, under the present circumstances, create a conflict between this court and the plan or reorganization. Or, if such conflict exists, it arises as a result of an improper attempt to impair the efficacy of this court's preexisting injunction by a scheme designed and intended to foster multiple litigation in violation of the injunction and contrary to sound and fundamental principles and policies of judicial administration. 84 (J.A.II at 119-20.) In response to Dana's concern about notifying claimants about the summary judgment order as well as the injunctive relief should Dana's motion be granted, the district court fashioned a notice to be sent to all claimants informing them, in part, that notwithstanding any provisions of the Celotex plan of reorganization to the contrary, no claimant under the plan is or will be receiving, pursuant to orders entered in the United States District Court for the Northern District of Ohio, any so-called 'Dana rights' or 'Dana liabilities.' (J.A.II at 120.) 85 We agree with the district court's reasoning and conclusion. First, like the district court, we believe that without the injunction, Dana faces the potential of having to defend countless number of lawsuits, albeit meritless, inasmuch as the issuance of Dana rights may spawn litigation by the innumerable potential claimants. This threat far outweighs any potential harm to the Trust. Again, like the district court, we are not persuaded by the Trust's argument that it faces the possibility of being held in contempt by the bankruptcy court because the injunction prevents the Trust from issuing Dana rights. The confirmed plan of reorganization did not adjudicate the issue of whether the Trust was entitled to indemnification such that Dana rights were available. That matter was properly adjudicated by the district court and has now been affirmed on appeal. The confirmed plan only provided for the distribution of the Dana rights to the extent those rights existed. It has been determined that they do not exist; thus, if the Trust found itself faced with a contempt citation, it would have a viable defense of impossibility thereby rendering its claim of potential harm without merit. Rolex Watch U.S.A., Inc. v. Crowley, 74 F.3d 716, 720 (6th Cir. 1996) (finding that a party seeking to defend a contempt citation may do so by showing a present inability to comply with the court's order).