Opinion ID: 699542
Heading Depth: 2
Heading Rank: 3

Heading: Loss of Prospective Goodwill

Text: 47 Saban contends that, as a matter of law, a loss of future goodwill cannot constitute irreparable harm justifying injunctive relief. 48 Irreparable harm is an injury that is not remote or speculative but actual and imminent, and for which a monetary award cannot be adequate compensation. Jackson Dairy, 596 F.2d at 72. We have found irreparable harm where a party is threatened with the loss of a business. In Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197 (2d Cir.1970), a father-and-son car dealership was threatened with termination of its franchise by the manufacturer. We affirmed a finding of irreparable injury on the grounds that termination of the franchise would obliterate the dealership and that the right to continue a business is not measurable entirely in monetary terms. Id. at 1205; see also Roso-Lino Beverage Distribs., Inc. v. Coca-Cola Bottling Co., 749 F.2d 124, 125-26 (2d Cir.1984) (per curiam) (finding irreparable harm from loss of ongoing business representing many years of effort and the livelihood of its husband and wife owners). We have also found irreparable harm in the loss of a relatively unique product. In Reuters Ltd. v. United Press Int'l, Inc., 903 F.2d 904, 908-09 (2d Cir.1990), a supplier of foreign news pictures threatened to stop providing those pictures to a wire service. We overturned a finding of no irreparable injury because the wire service had demonstrated that some customers would cease dealing with it for news from any source if it was unable to continue supplying those particular foreign news pictures. Id.; see also Jacobson & Co. v. Armstrong Cork Co., 548 F.2d 438, 445 (2d Cir.1977) (affirming finding of irreparable harm because plaintiff presented ample evidence to show a threatened loss of good will and customers, both present and potential, neither of which could be rectified by monetary damages); Interphoto Corp. v. Minolta Corp., 417 F.2d 621, 622 (2d Cir.1969) (per curiam) (affirming finding of irreparable harm because plaintiff would be unable to calculate its damages since it would suffer not merely loss of profits with respect to [defendant's] goods but loss of good will from the lack of a 'full line' ). 49 On the other hand, we have reversed a finding of irreparable harm where the facts demonstrate no loss of goodwill, but only provable monetary damages from the loss of a profitable line of business. See Jack Kahn Music Co. v. Baldwin Piano & Organ Co., 604 F.2d 755, 763 (2d Cir.1979) (no irreparable harm where piano manufacturer attempted to terminate its dealership contract with a retail seller that sold many brands of musical instruments). 50 These cases stand for the general proposition that irreparable harm exists only where there is a threatened imminent loss that will be very difficult to quantify at trial. Generally, where we have found no irreparable harm, the alleged loss of goodwill was doubtful, and lost profits stemming from the inability to sell the terminated product could be compensated with money damages determined on the basis of past sales of that product and of current and expected future market conditions. See, e.g., Jack Kahn Music, 604 F.2d at 763; Marisa Christina, Inc. v. Freis, 646 F.Supp. 252, 254 (S.D.N.Y.1986) (finding no irreparable harm where plaintiff conceded that any injuries stemming from the termination of the licensing agreement could be readily quantified in terms of money damages). In contrast, where we have found irreparable harm, the very viability of the plaintiff's business, see Semmes, 429 F.2d at 1205, or substantial losses of sales beyond those of the terminated product, see Interphoto, 417 F.2d at 622, have been threatened. 51 We believe that the governing principle is as follows. Where the availability of a product is essential to the life of the business or increases business of the plaintiff beyond sales of that product--for example, by attracting customers who make purchases of other goods while buying the product in question--the damages caused by loss of the product will be far more difficult to quantify than where sales of one of many products is the sole loss. In such cases, injunctive relief is appropriate. This rule is necessary to avoid the unfairness of denying an injunction to a plaintiff on the ground that money damages are available, only to confront the plaintiff at a trial on the merits with the rule that damages must be based on more than speculation. Where the loss of a product with a sales record will not affect other aspects of a business, a plaintiff can generally prove damages on a basis other than speculation. Where the loss of a product will cause the destruction of a business itself or indeterminate losses in other business, the availability of money damages may be a hollow promise and a preliminary injunction appropriate. 52 It is true that TOR does not fit the usual factual scenario. TOR will not suffer any loss of existing sales and its existence will not be endangered if it is unable to publish a book based on the Power Rangers. However, the instant case is analytically the same. If preliminary relief is not available, TOR will lose an opportunity to become a major publisher of children's books--that is to say, it will lose an opportunity to become a sufficiently well-known publisher of children's books to attract additional authors and owners of characters. Our cases to date involve the loss of existing business rather than adding a unique product line that will allow the overall business to expand. Although we have never held that a loss of prospective goodwill that is both imminent and non-quantifiable can constitute irreparable injury, nothing in our cases precludes such a conclusion and their logic supports it. Here, the value of a Power Rangers book to TOR's fortunes as a children's publisher is beyond ready calculation. It is a wholly unique opportunity, and the amount of damages--in particular, the loss of prospective business from additional children's authors or owners of characters--will be largely indeterminate if the opportunity is denied. 53 Although we hold that a loss of prospective goodwill can constitute irreparable harm, we also hold that there must be a clear showing that a product that a plaintiff has not yet marketed is a truly unique opportunity for a company. New products as yet unmarketed by anyone would simply not qualify. Nor would products that are successful but have reasonable substitutes. A clear showing standard incorporates the primary requirements of irreparable injury because it assures that the harm--although not quantifiable--is not speculative. 54 We expect the clear showing standard to be infrequently met but conclude that TOR has made such a showing in the present case. The Power Rangers are a unique product with an established exceptional appeal to children. There are other popular children's characters, but we believe that they are not reasonably substitutable. Moreover, TOR bargained for the right to piggyback on Saban's ability to create popular children's characters. In this respect, TOR differs from the television network in Metromedia Broadcasting Corp. v. MGM/UA Entertainment Co., 611 F.Supp. 415 (C.D.Cal.1985), which was denied the opportunity to broadcast a television program popular with urban youth. In Metromedia, the court found that the network was already a major broadcaster, that damages from lost advertising revenue were readily measurable, and that it was unlikely that the loss of the program would affect the network's momentum. Id. at 427. Here, the district court found that the Power Rangers are likely to transform TOR's fortunes in the children's book publishing field.