Opinion ID: 3002544
Heading Depth: 3
Heading Rank: 1

Heading: The District Court’s Merits-Based Findings

Text: The district court concluded that any injuries suffered by Manitou were speculative because the National Board had not yet formally required Manitou to cede portions of its jurisdiction. On June 15, 2008, ten days after the district court entered its order, the National Board mandated that Manitou deliver, no later than September 15, 2008, 60% of its jurisdiction to the six councils with which it was to merge originally, which have since successfully merged into one large council. Thus, it is clear that any harm Manitou might suffer, the existence of which we discuss below, is no longer mere speculation. Next, the district court found that Manitou did not demonstrate that the changed jurisdiction would result in a loss of its assets, the termination of any of its employees, or an impairment on its ability to provide Girl Scouting. The facts in the record, however, tell a different story. By removing the majority of Manitou’s jurisdiction, GSUSA is reducing Manitou’s ability to generate revenues—revenues that Manitou needs to cover its annual budget, which is largely fixed and was established based on Manitou’s existing membership levels. 16 No. 08-2488 Manitou, like many nonprofit organizations, relies on the people comprising it to remain viable. With fewer people come fewer resources. As Schemenauer, Manitou’s CEO, stated in her affidavit, removing 60% of Manitou’s jurisdiction would result in a commensurate reduction in the number of current child and adult members, prospective members, volunteers, and current and potential donors. Because members’ annual participation fees accrue to GSUSA and not to Manitou, fewer participants will not directly impact Manitou’s bottom line. However, every source of Manitou’s revenue is derivative of the number of members active in its council. Cookie sales, from which Manitou nets more than $1 million in profits each year, would be reduced by 60%. With a smaller jurisdiction, there are fewer girls to do the selling and fewer community members to do the buying. Similarly, while the girls themselves are perhaps not soliciting donations, it is the relationships of these girls to interested community members that prompts donors to direct their charitable dollars toward Manitou. Fewer members means fewer relationships, which results in a reduced donor base. Manitou operates on an annual budget of approximately $2 million. GSUSA argues that smaller membership will allow Manitou to cut this budget and reduce its expenses in accordance with its reduced revenues, resulting in Manitou’s continued financial viability. While it is true that a smaller membership will reduce certain variable costs, many of Manitou’s largest expenses are fixed, meaning that they will remain unchanged regardless of Manitou’s membership level. Manitou’s two camps, for No. 08-2488 17 example, Camp Evelyn and Camp Manitou, feature over 360 acres of land, swimming pools, dining halls, and dozens of other buildings. The overhead to operate these two camps will vary little based on the size of Manitou’s jurisdiction. Manitou also owns and operates a corporate headquarters building; like the overhead at the campgrounds, expenses incurred in running the building are not contingent on the size of Manitou’s membership. Working inside the headquarters are seventeen full-time staff members. Again, Manitou must pay the salaries and benefits of its employees regardless of how many individuals are currently participating in Girl Scouting within Manitou’s jurisdiction. Faced with drastically reduced revenue streams and fixed expenses, it is clear that taking a large portion of Manitou’s jurisdiction would impose severe financial stress on Manitou that could ultimately force Manitou into insolvency. In addition, without ample resources to continue supporting its organizational infrastructure, Manitou may be forced to terminate portions of its professional staff or relinquish pieces of real property. Beyond these tangible concerns, Manitou makes clear that removing its jurisdiction also poses a serious risk to the organization’s significant goodwill, which we have recognized can constitute irreparable harm. See, e.g., Meridian Mut. Ins., 128 F.3d at 1220; Gateway E. Ry. Co. v. Terminal R.R. Ass’n of St. Louis, 35 F.3d 1134, 1140 (7th Cir. 1994); Reinders Bros., Inc. v. Rain Bird E. Sales Corp., 627 F.2d 44, 53 (7th Cir. 1980). Manitou, like all Girl Scout councils, relies heavily on goodwill to advance its mis18 No. 08-2488 sion. For fifty-eight years, Manitou has developed relationships within its community that are vital to its continued existence. These relationships manifest themselves in the form of memberships, which we have already discussed; volunteers; and cash and in-kind donations. In her affidavit, Schemenauer stated that Manitou has recruited and trained tens of thousands of adult volunteers. Under the proposed realignment, many of these volunteers will, without question, begin donating their time to the new council governing their location. Manitou’s investment in these people, in both time and money, will be lost, as will their accrued knowledge and work capacity. Perhaps the most significant area in which Manitou will feel a loss of goodwill is in its pursuit of charitable donations. Manitou has received tens of millions of dollars in donations, in both cash and in-kind gifts, to help Manitou provide experiences for its members. These gifts come from individuals, businesses, foundations, and other charitable organizations. By removing 60% of its jurisdiction, Manitou would undoubtedly lose or damage many of these relationships. Donors now located in the new jurisdiction will be inclined to donate to the local council administering to that jurisdiction, not Manitou. And donors within Manitou’s remaining jurisdiction may become disillusioned with Manitou’s shrinking territory or, worse still, believe that Manitou has done something wrong that warrants GSUSA’s reduction in its jurisdiction. In contrast with American Hospital Supply, in which we found similar harm to goodwill speculative, 780 F.2d at 595, here such damages have already become No. 08-2488 19 evident. Schemenauer provided figures in her affidavit demonstrating that donors have already withheld nearly $30,000 in contributions based on mere speculation within the community regarding Manitou’s forced merger or loss of territory. The situation promises only to worsen once that speculation becomes reality. The district court’s final merits-based conclusion was that any harm Manitou might suffer before final resolution of its claims would not be irreparable. A harm is “irreparable” if it “cannot be prevented or fully rectified by the final judgment after trial.” Roland Mach., 749 F.2d at 386. The district court found not only that Manitou had failed to demonstrate it would be injured absent a preliminary injunction, but also that any alleged injuries were not irreparable, i.e., that any injuries would be rectifiable following a final judgment on the merits by simply restoring the taken jurisdiction to Manitou. As we have shown, however, simply returning the territory to Manitou following trial will not account for the incalculable losses Manitou risks in the interim—namely, the potential loss of property, employees, or its entire business, as well as damage to its goodwill. These harms are both real and irreparable. See Pelfresne v. Vill. of Williams Bay, 865 F.2d 877, 883 (7th Cir. 1989) (“As a general rule, interference with the enjoyment or possession of land is considered ‘irreparable’ since land is viewed as a unique commodity . . . .”); Gateway E. Ry., 35 F.3d at 1140 (recognizing that although economic losses generally will not sustain a preliminary injunction, there are exceptions where, as here, a remedy may come “ ‘too 20 No. 08-2488 late to save plaintiff’s business’” (quoting Roland Mach., 749 F.2d at 386)); Meridian Mut. Ins., 128 F.3d at 1120 (“[T]he plaintiff has suffered injury to its goodwill . . . . Such damage can constitute irreparable harm . . . .”); cf. Kinney ex rel. NLRB v. Int’l Union of Operating Eng’rs, Local 150, 994 F.2d 1271, 1279 (7th Cir. 1993) (noting that, from an employee’s perspective, termination was an irreparable injury for which money damages were an inadequate remedy). Given these findings, we are “ ‘left with the definite and firm conviction that a mistake has been committed.’ ” Anderson, 470 U.S. at 573 (quoting U.S. Gypsum Co., 333 U.S. at 395); see also Roland Mach., 749 F.2d at 390 (questioning “whether the judge exceeded the bounds of permissible choice in the circumstances”). Manitou clearly risks irreparable harm if it is not granted the protection of a preliminary injunction. The district court’s finding to the contrary is clearly erroneous, and the court therefore abused its discretion by relying on that erroneous finding as the basis for its decision to deny the preliminary injunction.