Opinion ID: 463524
Heading Depth: 2
Heading Rank: 2

Heading: The Likelihood of Emerson's Viability

Text: 51 While addressed in the Court's previous order and above, the Court is constrained to comment further on its view of the evidence regarding Emerson's viability in the post-transaction dishwasher market. The plaintiffs argue strenuously in their briefs on the motion to vacate that if Emerson's viability is significant, then the evidence either: (1) demonstrates that Emerson will not be viable, or (2) is inconclusive, and thus the preliminary injunction should stand until a trial on the merits. 52 The Court disagrees with both of plaintiffs' contentions. White's brief on the motion includes sections entitled there is no evidentiary basis in the record to support Emerson's likelihood of success in selling the KD-21 and the hearing record will not support a conclusion that Emerson will be able to become a substantial participant in the dishwasher market even with the three restrictions lifted. White's Brief, pp. 6 and 20. Magic Chef's brief contains similar sections, all arguing that Emerson will be unwilling and/or unable to meaningfully participate in the post-transaction market. 53 The defendants argue in their brief in opposition that: 54 Now, as a result of the amendments prompted by the Court's Opinion, Emerson--a proven successful private labeller--will be able to private label an even better product, the best dishwasher in the world. Defendants' Brief, pp. 6-7. 55 and that: 56 The record amply demonstrates that Emerson is an experienced and capable manufacturing company and that it has every intention of vigorously competing in the manufacture and sale of dishwashers and compactors. Defendants' Brief, p. 8. 57 On the evidence before the Court at this time, the Court adopts these allegations contained in the defendants' brief as its own findings. 58 The plaintiffs argue that the Court lacks evidence about how the Model 21 will be marketed, who it will be sold to, and a wide range of other matters, and that without this information, the injunction must stand. This argument seems to reverse the burdens of the parties. 59 The defendants have demonstrated that Emerson is ready to proceed full steam ahead to manufacture and market dishwashers. While Emerson maintained that it would be able to do just that under the original supply contract, the Court found that the supply contract restrictions made Emerson's independence, and thus its success, so suspect that an injunction was necessary. 60 Emerson has been freed of the restrictions under the amended supply contract. The Court has found, and maintains, that the evidence before it demonstrates that Emerson has historically been successful in situations similar to its proposed entrance into the dishwasher business, and that it is likely to be successful again. 61 The plaintiffs have offered little evidence which effectively refutes Emerson's contention that it intends to proceed vigorously. Nor have they produced convincing evidence that shows that an unhampered Emerson would be unable to do so. The Court concludes that the post-transaction Emerson is likely to be an even more important component of the dishwasher market than was KitchenAid in the pre-transaction market. 62 It is important to recognize that Emerson is not entering the market faced with traditional entry barriers. Along with its history of successful private labelling, Emerson will begin with a fully tooled plant, ready to produce a state-of-the-art machine. In addition, Emerson will have a guaranteed profits contract to supply dishwashers to Whirlpool for at least five years, which it can maintain or abandon depending upon its other successes. Emerson has a strong relationship with potential customers to which it already sells private label goods, and Emerson will be a new private labeller in the industry, replacing KitchenAid, a manufacturer unwilling to private label. 63 In addition, Emerson is free to expand, using its expertise, industry contacts, and other resources. If it chooses, it may develop new dishwashers to replace the Model 21 when it becomes obsolete. Emerson is also free to enter other product markets, using In-Sink-Erator, or whatever name it develops for its dishwashers. The fact is that the independent, viable Emerson created by this transaction may be able to become, if it chooses, a substantial player in more than just the dishwasher market; it may be able to take on a key role in other white goods markets, too. A KitchenAid with unenthusiastic ownership simply can not compare to the post-transaction Emerson. 64 The Court recognizes that its findings are substantially based upon the evidence provided by Emerson's witnesses at the hearing. The Court found Mr. Seals and Mr. Adorjan to be highly credible and gave substantial weight to their testimony. If it were to be determined later that these witnesses were either grossly misinformed or intentionally deceptive in their testimony, it is the Court which would have been deceived into accepting their positive projections. But the sworn testimony of these men convinced this Court that Emerson plans to do all that it can to compete successfully in the business, and convinced this Court that when left to its own devices, it will do just that. 65 Accordingly, the Court finds that the transaction, when taken as a whole, is not substantially likely to lessen competition. Given that finding, there is no likelihood that the plaintiffs will succeed on the merits and this Court must vacate its previous injunction.