Court Opinion

ID: 6956955
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:39:11.556911+00
Date Added: 2024-06-11T16:08:18.298170
License: Public Domain

GILLMOR, District Court Judge,
concurring in part and dissenting in part:
I join in the majority opinion affirming in part, reversing in part and remanding for further proceedings, with the exception of two modifications to the permanent injunction of the district court. Both modifications concern the applicability of the injunction to Kodak’s successors. The first is the deletion of the provision in paragraph 1(a) of the injunction specifying that the injunction applies to “Kodak’s successors and assigns.” The second modification with which I do not agree is the addition to paragraph 7 of the injunction of the following provision: “If Kodak completely exits the service market for either (1) high volume copiers or (2) micro-graphic equipment, the terms of this injunction shall no longer apply to Kodak parts for that equipment.” I believe that these modifications are unnecessary and significantly reduce the effectiveness of the injunction.
I
The appellate court reviews a district court’s decision to grant permanent injunctive relief and the scope of that relief for an abuse of discretion or application of erroneous legal principles. Viceroy Gold Corp. v. Aubry, 75 F.3d 482, 488 (9th Cir.1996); Dexter v. Kirschner, 984 F.2d 979, 982 (9th Cir.1992). Appellate courts may also modify the scope of an injunction when such action is “necessary to assure that the relief will be effective.” United States v. Glaxo Group, Ltd., 410 U.S. 52, 64, 93 S.Ct. 861, 868, 35 L.Ed.2d 104 (1973). Applying these standards, I do not believe the majority’s modifications are necessary or appropriate. The district court’s decision to provide for application of the injunction to Kodak’s successors and assigns was amply supported by law and by the facts of this case and was not an abuse of discretion. Moreover, I believe that the majority’s modifications decrease, rather than assure, the effectiveness of the injunction.
The injunction in this ease should apply to Kodak’s successors and assigns. The application of an injunction need not be strictly limited to parties before the Court and may extend to the successors and assigns of a party. Federal Rule of Civil Procedure 65(d) provides that an injunction is “binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise.” Fed.R.Civ.P. 65(d). Applying this Rule, both the Supreme Court and the Ninth Circuit have upheld injunctions that apply to the “successors and assigns” of named defendants. See Golden State Bottling Co., Inc. v. National Labor Relations Board, 414 U.S. 168, 177-80, 94 S.Ct. 414, 421-23, 38 L.Ed.2d 388 (1973); Regal Knitwear Co. v. National Labor Relations Board, 324 U.S. 9, 13-16, 65 S.Ct. 478, 481-82, 89 L.Ed. 661 (1945); E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1298 (9th Cir.1992). The Supreme Court has recog*1229nized that a successor of a party may be in privity with that party for purposes of Rule 65(d). Golden State Bottling, 414 U.S. at 179, 94 S.Ct. at 422-23. The district court had authority to enjoin Kodak’s successors and assigns from continuing Kodak’s violations of the antitrust laws.
A provision extending application of an injunction to the successors and assigns of a named party is often essential to the effectiveness of the injunction. As was noted in Gallo, without such a provision, “the injunction theoretically might be defeated by assignment; at the very least an avenue for further litigation would be left open.” Gallo, 967 F.2d at 1298. If an injunction does not apply to the defendant’s successors, the defendant could nullify the injunction by assigning a portion of its business operations to a third party, which would then be free to resume the enjoined activity. Even where assignment is not the product of intentional collaboration by the defendant and the assignee to avoid the impact of the injunction, assignment permits the assignee to resume the enjoined conduct and forces the plaintiff to return to court to seek a new injunction against the assignee.1
For these reasons, I believe that the district court’s decision to provide for application of the injunction to Kodak’s successors and assigns was appropriate and necessary to ensure the effectiveness of the injunction.
II
The majority’s modifications to paragraphs 1 and 7 of the injunction fundamentally alter the scope of the injunction. The removal of the provision applying the injunction to “Kodak’s successors and assigns” enables Kodak to deprive the ISOs of the relief embodied in the injunction by assigning a portion of its operations to a third party. If this were the only modification, it would still be theoretically possible for the ISOs to seek to hold a particular successor to the terms of the injunction. Because the injunction still applies to “all persons in active concert or participation with” Kodak, the ISOs could seek to bind a particular successor to the injunction by seeking to prove collaboration between Kodak and the successor.
The modification, to paragraph 7 of the injunction eliminates this possibility. This modification provides that, upon Kodak’s exit from the copier service market, all provisions of the injunction relating to copier parts will terminate. The provisions of the injunction pertaining to copier parts will be eliminated and will no longer apply to anyone: Kodak, Kodak’s successors, or those in “active concert or participation” with Kodak. Even assuming that it was necessary to narrow the class of persons bound by the injunction, I see no basis for eliminating key provisions of the injunction altogether.
I do not believe that such fundamental alterations to the injunction are necessary or appropriate. The application of the injunction to Kodak’s successors is supported by law and is not based on the application of erroneous legal principles. Binding Kodak’s successors to the injunction is necessary to ensure that the ISOs are not deprived of effective injunctive relief. The majority opinion does not state any reason for altering this aspect of the injunction. Moreover, the parties have not objected on appeal to the application of the injunction to Kodak’s successors. In these circumstances, I cannot conclude that the district court abused its discretion by framing the injunction as it did.
Although an appellate court may modify an injunction when such action is “necessary to assure that the relief will be effective,” see Glaxo, 410 U.S. at 64, 93 S.Ct. at 868, it appears that the majority’s modifications will drastically reduce the effectiveness of the injunction. The Supreme Court noted in Glaxo that the “purpose of relief in an antitrust case is ‘so far as practicable, [to] cure *1230the ill effects of the illegal conduct, and assure the public freedom from its continuance.’ ” Id. (quoting United States v. United States Gypsum Co., 340 U.S. 76, 88, 71 S.Ct. 160, 169, 95 L.Ed. 89 (1950)). The majority’s modifications contravene this purpose by eliminating crucial elements of the relief obtained by the ISOs and by eliminating the injunction’s prohibition on a continuation of anticompetitive conduct.
The district court attempted to fashion an injunction that would provide effective relief for the ISOs and prevent the continuation of Kodak’s anticompetitive policies. The two modifications addressed herein drastically reduce the effectiveness of the injunction. I would affirm the district court’s decision to apply the injunction to Kodak’s successors and assigns.

. The facts of the instant case illustrate this problem. On February 12, 1997, after oral argument in this case, the parties and Danka Office Imaging Company ("Danka”) filed in the district court a stipulation stating that Kodak has sold its copier sales and service division to Danka. Pursuant to the stipulation of the parties and of Danka, the district court entered an order stating that Danka agreed to be bound by the terms of the injunction. Because the majority eliminates the provisions applying the injunction to Kodak's successors, the sale to Danka will deprive the ISOs of an important portion of the relief they have obtained.