injunction not issue at this stage of the proceedings.
In sharp contrast to the usual situation in which
preliminary injunctive relief is commonly sought, Ohio-Sealy
does not seek to freeze the status quo in San Diego pending
adjudication of its claims on the merits. Rather, it seeks a
mandatory order that would displace the current state of
affairs and place it in the position it would occupy should it
ultimately prevail on the merits of its antitrust and contract
claims. As the Seventh Circuit has stated, while there may be
situations that justify the issuance of a mandatory injunction
compelling a defendant to take affirmative action,
"[m]andatory preliminary writs are ordinarily cautiously
viewed and sparingly issued." Jordan v. Wolke, 593 F.2d 772,
774 (7th Cir. 1978). Thus, mandatory preliminary injunctions
have been held to be improper where the purpose of the relief
sought was to effect the very change in the parties'
relationship that was the objective of the lawsuit itself,
i.e., to "place one party in a new position which it is seeking
to make permanent through the litigation." Barbys Frosted
Foods, Inc. v. McDonald's Corporation, 1973-2 Trade Cases (CCH)
¶ 74,622 at 94,745 (D.N.J. 1973). See also SCM Corporation v.
Xerox Corporation, 507 F.2d 358, 361 (2d Cir. 1974); Warner
Brothers Pictures, Inc. v. Gittone, 110 F.2d 292, 293 (3d Cir.
1940); Royal Crown Bottling Co. v. Royal Crown Cola Co.,
358 F. Supp. 290, 294 and 297 (D.Colo. 1973).
Moreover, the potential availability of treble damages in an
antitrust case such as the one at bar has often been cited as
an important factor weighing against a finding of irreparable
injury and the inadequacy of legal remedies in the context of
a motion for a preliminary injunction, particularly where the
plaintiff has not shown an inability to finance the litigation
should an injunction not issue. Rittmiller v. Blex Oil, Inc.,
624 F.2d 857, 861 (8th Cir. 1980); Jack Kahn Music Co., Inc. v.
Baldwin Piano & Organ Company, 604 F.2d 755, 759 and 763 (2d
Cir. 1979); Fox Valley Harvestore, Inc. v. A.O. Smith
Harvestore Products, Inc., 545 F.2d 1096 (7th Cir. 1976);
Milsen Company v. Southland Corporation, 454 F.2d 363 (7th Cir.
1971). As amply reflected by the lengthy record in this and
other cases to which Ohio-Sealy is a party pending in this
Court and before the Seventh Circuit, the absence of injunctive
relief at this stage of the proceedings will not materially
hamper Ohio-Sealy's ability to continue this litigation.
Finally, although Ohio-Sealy contends that it would suffer
irreparable injury by the loss of good will and customers,
present and future, without the immediate grant of a
preliminary injunction, it actually would seem to be Sealy and
its subsidiaries, not Ohio-Sealy, that would suffer such
injury if an injunction issued at this time. Ohio-Sealy is
already selling some products in the San Diego/Southern
California areas, albeit not as efficiently as it might if it
had the capacity to manufacture Sealy bedding in San Diego,
and its good will and existing customers would not seem to be
affected in any negative way by our denial of injunctive
relief. By contrast, Sealy and its Southern California
subsidiaries would be adversely affected by the grant of the
injunctive relief sought by Ohio-Sealy.
Accordingly, Ohio-Sealy's motion for a preliminary
injunction requiring that Sealy allow it to manufacture
Sealy-label mattresses in San Diego is denied. It is so
Arbitration of Issues Set Forth in Ohio-Sealy's Second
Motion to Compel Arbitration
On October 21, 1980, Magistrate John W. Cooley, who was
previously assigned to this case, issued his report and
recommendation on Ohio-Sealy's second motion to compel
arbitration of certain issues regarding its desire to
manufacture Sealy mattresses outside its areas of primary
responsibility. Magistrate Cooley recommended that arbitration
of such issues be denied because the contractual disputes
raised by Ohio-Sealy were inextricably intertwined with its
non-arbitrable antitrust claims and because arbitration at
this stage would only serve to
further entangle this drawn-out litigation "possibly to the
degree of Gordian complexity." Magistrate's Report and
Recommendation at 7 (October 21, 1980). Ohio-Sealy's
objections to the Magistrate's report and recommendation were
filed in a timely manner and taken under advisement by this
Court. That aspect of the pending motion for a preliminary
injunction that seeks an order compelling arbitration is
properly viewed as a request for ruling on Ohio-Sealy's
previously filed objections.
The Court has reviewed the Magistrate's report and
recommendation on the arbitration issue as well as
Ohio-Sealy's position in favor of arbitration and developments
in this case since the Magistrate issued his report and
recommendation. In our view, the Magistrate's rationale for
denying Ohio-Sealy's motion to compel arbitration was correct
at the time he issued his report and recommendation and
remains correct at this stage in the proceedings for the
reasons set forth therein. The antitrust issues raised by
Ohio-Sealy with respect to the San Diego matter, which are the
subject of a pending motion for summary judgment, so permeate
discussion of the contractual issues as to render arbitration
inappropriate at this juncture. Applied Digital Technology,
Inc. v. Continental Casualty Co., 576 F.2d 116 (7th Cir. 1978).
Moreover, arbitration on these issues at this late date would
unnecessarily complicate an already complex case and divert the
parties' attentions from more pressing matters in this and the
earlier-filed 1976 case.
Accordingly, the Court adopts in full the Magistrate's
report and recommendation on Ohio-Sealy's second motion to
compel arbitration (dated October 21, 1980). The motion to
compel is denied. It is so ordered.
Sealy's Compliance with the Hold Separate Order
That portion of Ohio-Sealy's motion for a preliminary
injunction which seeks an order "preventing Sealy, Inc. from
exercising control over Sealy of the Northwest" and
Ohio-Sealy's previously filed motion for a rule to show cause
why Sealy should not be held in contempt of the hold separate
order raise some questions with respect to Sealy's compliance
with the hold separate order previously entered in this
matter, Ohio-Sealy Mattress Manufacturing Co. v. Duncan, supra,
486 F. Supp. at 1061, particularly with respect to whether that
order prohibits Sealy from exercising "control" over its former
Portland licensee and whether Sealy is in fact exercising such
control. Ohio-Sealy also urges that the Court "re-evaluate"
whether the hold separate order still remains a "realistic
option" designed, in part, to prevent any irreparable injury to
its interests. In the Court's view, an evidentiary hearing is
necessary to fully develop the facts and the parties' positions
in this regard.
Accordingly, this matter will be referred to a special
master to be appointed by the Court with approval by the
parties for a hearing and a report and recommendation on the
merits with respect to Ohio-Sealy's concerns over Sealy's
compliance with the hold separate order and its contention
that the order may no longer be a "realistic option" by which
its interests may be protected. In the event that the naming
of a special master for this specific purpose cannot be agreed
upon by the parties, Magistrate Sussman will be designated to
conduct this hearing. Counsel for Ohio-Sealy and Sealy shall
advise the Court as to their views on the foregoing within
seven days in order that a hearing officer may be designated
as soon as possible and in order that said hearing officer may
schedule a prompt hearing on this matter. It is so ordered.
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