Opinion ID: 363137
Heading Depth: 1
Heading Rank: 3

Heading: Lower Court's Refusal to Grant Injunction Against Hunts

Text: 28 Pursuant to section 6c of the Commodity Exchange Act, 7 U.S.C. § 13a-1, the Commodity Futures Trading Commission is authorized to institute an action seeking injunctive relief whenever it appears that any person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision of this Act or any rule, regulation, or order thereunder. Section 6c further provides that upon a proper showing, a permanent or temporary injunction or restraining order shall be granted by the district court without bond. The discretion afforded the district court in deciding whether to issue such relief, while broad, See United States v. W. T. Grant, 345 U.S. 629, 633-34, 73 S.Ct. 894, 97 L.Ed. 1303 (1953), is not completely unfettered. This court has noted that when Congress has integrated traditional modes of equitable relief into a statutory enforcement scheme, the court's equitable power should be exercised in harmony with the overall objectives of the legislation. SEC v. Advance Growth Capital Corp., 470 F.2d 40, 53 (7th Cir. 1972). In that case we cautioned that 29 . . . while trial courts should properly be accorded wide latitude in fashioning equitable remedies in cases of this type, it is the inescapable function of the appellate court to make sure that the fashioned remedy meets that criterion in accordance with the regulatory scheme and adequately serves the particularized needs of the case before the court. Although injunctive relief is never automatic upon the showing of a violation of the Act or regulations (See Hecht Co. v. Bowles (321 U.S. 321, 64 S.Ct. 587, 88 L.Ed. 754), Supra ), we should not hesitate to reverse an order denying such relief when it is evident that the trial court's discretion has not been exercised to effectuate the manifest objectives of the specific legislation involved. 30 Id. 31 Actions for statutory injunctions need not meet the requirements for an injunction imposed by traditional equity jurisprudence. Once a violation is demonstrated, the moving party need show only that there is some reasonable likelihood of future violations. SEC v. Advance Growth Capital Corp., supra, at 54; Commodity Futures Trading Comm. v. British American Commodity Options Corp., 560 F.2d 135, 142 (2d Cir. 1977); SEC v. Management Dynamics, Inc., 515 F.2d 801, 807 (2d Cir. 1975). While past misconduct does not lead necessarily to the conclusion that there is a likelihood of future misconduct, it is highly suggestive of the likelihood of future violations. SEC v. Management Dynamics, Inc., supra, at 807. See also Commodity Futures Trading Comm. v. British American Commodity Options Corp., supra, at 142; SEC v. Advance Growth Capital Corp., supra, at 53. In drawing the inference from past violations that future violations may occur, the court should look at the totality of circumstances, and factors suggesting that the infraction might not have been an isolated occurrence are always relevant. SEC v. Management Dynamics, Inc., supra, at 807; SEC v. Bausch & Lomb, Inc., 565 F.2d 8 (2d Cir. 1977). 32 Other circuit decisions analyzing the problem whether or not to grant statutory injunctive relief after a violation has been proven have looked to a variety of factors to determine whether there is a reasonable likelihood of future misconduct. The fact that a violator has continued to maintain that his conduct was blameless has prompted several courts to look favorably on injunctive relief. See SEC v. Shapiro, 494 F.2d 1301, 1308 (2d Cir. 1974); SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1101 (2d Cir. 1972). Similarly, when a defendant persists in its illegal activities right up to the day of the hearing in the district court . . . the likelihood of futures violations, if not restrained, is clear. Commodity Futures Trading Comm. v. British American Commodity Options Corp., supra, at 142 (citations omitted). More importantly, courts have analyzed the nature of the past misconduct and the violator's occupation or customary business activities to determine whether an injunction should be granted. When the violation has been founded on systematic wrongdoing, rather than an isolated occurrence, a court should be more willing to enjoin future misconduct. SEC v. Manor Nursing Centers Inc., supra, at 1100. And when a defendant, because of his professional occupation or career interest, will be in a position in which future violations could be possible, relief is appropriate. SEC v. Commonwealth Chemical Securities, Inc., 574 F.2d 90 (2d Cir. 1978). 33 In light of these standards, we conclude that the district court was incorrect in denying the injunctive relief sought by the Commission. It would be anomalous to conclude, as did the district court, that the carefully organized, large scale, and long term soybean trading activities of the Hunts constituted a violation of Section 4a(1) of the Commodity Exchange Act, but that relief under section 6c of the Act was inappropriate. Their misconduct was systematic and carefully preconceived. Their soybean positions which were challenged by the Commission were maintained throughout the enforcement proceedings until the futures contracts came to their natural conclusion. Further, the Hunts consistently maintained that their conduct was blameless. And finally, the prominent place of the Hunt family in the commodity markets generally, suggests that it is not unlikely that they will be regular participants in the soybean markets in the future. 4 Thus, they will be in a position in which they are capable of committing future violations. Given the presence of all these factors, injunctive relief should have been granted. 34