Court Opinion

ID: 9474785
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:08:35.053046+00
Date Added: 2024-06-11T17:44:19.811924
License: Public Domain

CUDAHY, Circuit Judge,
dissenting:
As the majority notes, in order to sustain the preliminary injunction, we need only determine that the plaintiff’s chance of prevailing on the merits is “better than negligible.” And I certainly agree with the majority that a consent decree is to be interpreted strictly in accordance with its own terms. See, e.g., United States v. Huebner, 752 F.2d 1235, 1244 (7th Cir.), *588cert. denied, — U.S.-, 106 S.Ct. 62, 88 L.Ed.2d 50 (1985). I am compelled to dissent because I believe that the majority has misinterpreted the language of the decree and considered the purposes of the decree in a way which defeats its plain terms.
The majority reads the language of the decree to require concert of action “between defendant or its Canadian subsidiary and Sealy licensees.” (Emphasis supplied.) Apparently the majority believes that an agreement between Sealy and “any other manufacturer of Sealy products” does not fall within the terms of the consent decree unless there is also agreement between Sealy and its licensees. Perhaps the language of the decree is not crystal clear; but it does purport to prohibit Sealy from enforcing certain agreements between itself and any other manufacturer of Sealy products. Thus in the language of the decree, “Defendant ... [is] enjoined ... from ... claiming any rights under any ... contract ... between [itself and] any other manufacturer of Sealy products, to limit or restrict any manufacturer in any substantial way to sales of Sealy products within [the territory outside Canada].”
The essential error of the majority is to inappropriately consider the “purposes” of the decree in an effort to buttress its very questionable contention that only horizontal agreements can violate the decree.1 Of course, the majority characterizes the agreement at issue here as something other than horizontal. Because the focus of the law underlying the decree is on horizontal restraints and because the Supreme Court found the agreements of Sealy with its licensees to be horizontal, the majority argues that the consent decree prohibits only horizontal arrangements. But there is no such limitation in the language of the consent decree or reasonably inferable from its terms. Whatever purposes may be discerned somewhere in the evolution of the decree, there is certainly no present reason to restrict it only to arrangements that may easily be characterized as horizontal.
The majority also argues that the consent decree, under the terms of its paragraphs 11(B) and III, is limited to interstate commerce (apparently as contrasted with foreign commerce). But paragraph 11(B) imposes no limitation on the consent decree; this provision merely states that the defendant had engaged in a combination or conspiracy in “unreasonable restraint of interstate trade and commerce.” Paragraph III (the other provision on which the majority relies) merely defines the conditions under which Sealy must require a licensee to file a consent to be bound by the consent decree. It is paragraph IV that defines the prohibited acts and paragraph IV makes no references to interstate commerce nor does it contain any language that could be construed as a geographical limitation. Here again the majority inappropriately relies upon what it discerns as the purposes of the decree. Thus the majority argues that the decree was designed to limit licensees to their respective present or future domestic geographic areas. There is simply no textual basis for such a narrowly domestic focus.
In addition, the majority believes it relevant that the district court did not find the arrangement at issue here to be a violation of the Sherman Act. All that need be said about that argument is that, if the parties were concerned only about actual violations of the antitrust laws, there would be no need for the consent decree. It is not necessary to forbid what is already illegal.
Further, the majority observes that “the restraints alleged here ostensibly included only Canadian trademarked articles and involved no price-fixing so that they appear to be perfectly valid as ancillary to a trademark licensing scheme.” But the district court in effect found as a fact that “Sealy Canada attempted to stop Michigan from selling in Canada for the sole purpose of eliminating intrabrand competition and sta*589bilizing or maintaining higher prices.” Although this statement was listed by the district court as a “Conclusion of Law,” it should be treated as a factual finding. The statement is not, nor does the majority assert that it is, clearly erroneous.
Most importantly, the majority does not explain why the plain language of the decree does not prohibit the activities at issue here. If Sealy wishes to limit the consent decree to horizontal arrangements, it should seek a modification under paragraph IV. We should not, however, grant a modification of the consent decree under the guise of construing it. See United States v. ITT Continental Baking Co., 420 U.S. 223, 236 n. 9, 95 S.Ct. 926, 934 n. 9, 43 L.Ed.2d 148 (1975); United States v. Armour, 402 U.S. 673, 681, 91 S.Ct. 1752, 1757, 29 L.Ed.2d 256 (1971). Surely the district court did not abuse its discretion in entering a preliminary injunction in these circumstances.
I therefore respectfully dissent.

. For example, on page six of the opinion, the majority concludes that “the decree was referring to a concert of action by Sealy and its licensees (which was the evil that existed prior to the consent decree)." (Emphasis supplied.) Two pages later the majority emphasizes that the “decree was written to prohibit horizontal agreements between defendant and its United States licensees.”