Court Opinion

ID: 2963537
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:11:38.614142+00
Date Added: 2024-06-11T11:42:42.831904
License: Public Domain

USCA1 Opinion

	

                                [NOT FOR PUBLICATION]
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                  
                                 ____________________

        No. 95-1737

                            GERBER RADIO SUPPLY CO., INC.,
                              d/b/a GERBER ELECTRONICS,

                                Plaintiff, Appellant,

                                          v.

                        PHILIPS SEMICONDUCTORS, INC., ET AL.,

                                Defendants, Appellees.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Edward F. Harrington, U.S. District Judge]
                                               ___________________

                                 ____________________

                                        Before

                                Selya, Cyr and Boudin,
                                   Circuit Judges.
                                   ______________

                                 ____________________

            Stephen Schultz  and McGowan, Engel,  Tucker, Garrett & Schultz on
            _______________      __________________________________________
        Memorandum of Law for appellant.
            E. Jeffrey Banchero, Banchero & Lasater,  Sabin Willett, Peter  J.
            ___________________  __________________   _____________  _________
        Mancusi, and Bingham, Dana & Gould on Memorandum of Law for appellee
        _______      _____________________
        Philips Semiconductors, Inc.
            Raymond R. Randall  and Ryan, Boudreau, Randall and Kirkpatrick on
            __________________      _______________________________________
        Memorandum of Law for appellee Wyle Electronics.

                                 ____________________

                                    August 3, 1995
                                 ____________________

                  Per  Curiam.   Before  us  is  a  motion to  restore  a
                  ___________

            preliminary injunction pending appeal.  For almost six years,

            appellant Gerber Radio Supply Co. (Gerber),  a Massachusetts-

            based  distributor  of  electronic  components,  was  a  non-

            exclusive distributor  in the  northeast  region for  Philips

            Semiconductors,    Inc.    (Philips),    a   California-based

            manufacturer  of integrated circuits.  In March 1995, Philips

            exercised   its   contractual   option   to   terminate   the

            distributorship agreement, effective the following month.  It

            thereafter sent  to  most  or  all  of  its  remaining  local

            distributors  a computerized  printout  identifying some  520

            customers that  had bought  Philips products  from Gerber  in

            1994,  along  with  their  respective  volume  of  purchases.

            Gerber proceeded to file suit against Philips and  various of

            the distributors in Massachusetts state court, claiming inter
                                                                    _____

            alia that the disclosure of  its customer list (1) breached a
            ____

            confidentiality obligation  contained in  the distributorship

            agreement and (2) was a misappropriation of trade secrets. 

                 A superior court  justice denied Gerber's request  for a

            preliminary injunction, finding no  likelihood of success  on

            the merits.  A single  justice of the appeals court, however,

            agreed to enter  a narrow injunction requiring  defendants to

            return all  copies of the  customer list and  precluding them

            from  disclosing  the  contents  thereof  to  third  parties.

            Gerber's further  request to  bar defendants  from soliciting

            the listed customers was denied.  

                 Shortly thereafter,  the  case was  removed  to  federal

            court.    In  response  to  Gerber's  motion  to  extend  the

            preliminary injunction  to several defendants  recently added

            to the case,  Philips moved for its dissolution, arguing that

            it  was defective on both substantive and procedural grounds.

            Gerber replied  that the  district court  was constrained  to

            adhere  to  the single  justice's  ruling, but  that,  if any

            modification  were to be undertaken, the injunction should be

            extended  to preclude  solicitation of  its  customers.   The

            district court agreed to dissolve the injunction on the basis

            that irreparable harm  had not been established.   Gerber has

            appealed from  this order, and  now asks that we  restore the

            preliminary injunction  issued by the single  justice pending

            such appeal.   For the following reasons, we  deny the motion

            to  restore and  summarily affirm  the order of  the district

            court.

                 Gerber  acknowledges that a district court is authorized

            under 28 U.S.C.    1450 to  modify or dissolve a  state court

            injunction following removal.  See, e.g., Hyde Park Partners,
                                           ___  ____  ___________________

            L.P. v. Connolly,  839 F.2d  837, 842  (1st Cir.  1988).   It
            ____    ________

            contends, however, that this power does not extend to a state

            appellate  court  order.   In  its view,  such  an injunction

            becomes "federalized" once the case is removed and is thereby

                                         -3-

            converted into a federal appellate court order binding on the
                                     _________

            district  court.  We note that such  a view diverges from the

            approach  adopted in  recent  removal  cases  arising  in  an

            analogous context.  See, e.g.,  RTC v. Bayside Developers, 43
                                ___  ____   ___    __________________

            F.3d 1230,  1238 (9th  Cir. 1994); LeMaire  v. FDIC,  20 F.3d
                                               _______     ____

            654, 655 & n.3 (5th Cir. 1994),  cert. denied, 115 S. Ct. 723
                                             ____________

            (1995); In re 5300 Memorial  Investors, Ltd., 973 F.2d  1160,
                    ____________________________________

            1162-63  (5th Cir.  1992).    Yet we  need  not resolve  this

            question since Gerber's argument fails for a separate reason.

                 It  is   undisputed  that  federal   rather  than  state

            procedural   requirements   govern  the   future   course  of

            proceedings  in a  removed  case.   See,  e.g., Granny  Goose
                                                ___   ____  _____________

            Foods,  Inc. v. Brotherhood of Teamsters,  Local 70, 415 U.S.
            ____________    ___________________________________

            423, 437  & n.10 (1974);  FDIC v. Bay  Street Dev. Corp.,  32
                                      ____    ______________________

            F.3d 636, 639 (1st Cir. 1994).   Here, there is no indication

            that  the  single  justice,  in  granting  equitable  relief,

            required the posting of a bond or at least considered whether

            a bond was  necessary--as mandated by Fed. R.  Civ. P. 65(c).

            See, e.g., In re Kingsley, 802 F.2d 571, 578 (1st Cir. 1986).
            ___  ____  ______________

            Given  this   omission,  and  considering  that   the  single

            justice's ruling was provisional in nature and lacked written

            findings,  we  think  the  district  court  was  entitled  to

            undertake a review of the state court injunction.

                                         -4-

                 We  likewise  conclude  that   the  district  court  was

            warranted in dissolving the injunction.  In so concluding, we

            express  no  view as  to  the merits  of  Gerber's underlying

            action.  Instead, we rely on three considerations.  First, we

            are  inclined to  agree  that irreparable  harm has  not been

            demonstrated  under  the  circumstances.    Gerber  does  not

            suggest that  its economic  viability is  threatened; indeed,

            sales of  Philips products accounted for only seven to eleven

            percent  of  its  business  in  recent years.    Instead,  it

            contends  that  it  faces  the  potential  loss  of  all  520

            customers  identified   on  the  list   (said  to   represent

            approximately  twenty-five  percent  of  its customer  base).

            Yet, having advanced  no challenge to the  termination of its

            Philips  distributorship,  Gerber  cannot  complain  of   the

            inevitable  loss of  those customers  who  retain loyalty  to

            Philips products.  The extent  to which such customers  might

            also take their non-Philips business elsewhere is speculative

            at  this   point,  but  presumably   subject  to   reasonable

            quantification in the future.  Most important, Gerber goes on

            to explain that it is concerned only with those customers who

            previously bought Philips products  exclusively from Gerber.1
                                                ___________

            And the number  of such customers--although not  specified in

            the record--appears  relatively small.   Gerber  acknowledges

                                
            ____________________

            1.  Gerber has  not requested that the defendant distributors
            be enjoined from contacting those  customers on the list with
            whom they were already doing business.

                                         -5-

            that  approximately two-thirds  of  its  customers were  also

            those of  another distributor  (defendant Wyle  Electronics).

            Nor  has  it disputed  that  other distributors,  as  well as

            Philips  itself,  have   also  dealt  with  various   of  its

            customers.   These considerations, we think, militate against

            any finding of irreparable harm.

                 Second, restoration of the  narrow injunction imposed by

            the single  justice would  accomplish little  at this  point.

            Defendants have now been  in possession of the  customer list

            for nearly five  months.  Indeed, partly because  of Gerber's

            failure to seek an appropriate protective order, the list has

            been  publicly available for most of that period--having been

            submitted (in unsealed format) as  part of the record in this

            case.  Under  these circumstances, we fail to  see how Gerber

            would  benefit from any  renewed order barring  disclosure of

            the customer list to third parties.  Cf. CMM Cable Rep., Inc.
                                                 ___ ____________________

            v. Ocean Coast Properties., Inc.,  48 F.3d 618, 621 (1st Cir.
               _____________________________

            1995) (noting  that an appeal from the denial of a motion for

            preliminary  injunction is moot if the appellate court can no

            longer preserve, or feasibly restore, the status quo).

                 Finally, the district court's decision not to extend the

            injunction to bar the solicitation of customers is one we are

            not prepared  to disturb.   As just mentioned, the  number of

            customers  to  whom   such  an  injunction  would   apply  is

            relatively small, and much of the activity that would thereby

                                         -6-

            be enjoined has  already occurred.  Moreover, Gerber  has now

            been denied  such broader  relief by  three separate  judges.

            Having  reviewed the record  and the parties'  submissions in

            full, we  are not inclined  to reach a  different assessment,

            especially  given  the deferential  standard  of review  that

            governs this appeal.  See, e.g., Narragansett Indian Tribe v.
                                  ___  ____  _________________________

            Guilbert, 934 F.2d 4, 5 (1st Cir. 1991).
            ________

                 The  motion  to  restore injunction  pending  appeal  is
                 ________________________________________________________

            denied,  and  the order  of the  district court  is summarily
            _____________________________________________________________

            affirmed.  See Loc. R. 27.1. 
            ____________________________

                                         -7-