Appeal from the United States District Court for the Southern District of Indiana. No. IP83-1656-C -- S. Hugh Dillin, Chief Judge.
Eschbach and Flaum, Circuit Judges, and Jameson, Senior District Judge.*fn*
This appeal involves a constitutional challenge to a state statutory scheme under which the State of Indiana raises revenue through the sale of personalized license plates and distributes a portion of that revenue to qualifying political parties. The plaintiffs claim that the Indiana scheme violates their rights under the first and fourteenth amendments, and they sought a preliminary injunction to restrain its implementation. The district court denied the motion for a preliminary injunction and the plaintiffs appealed. We affirm.
In 1977, the Indiana General Assembly enacted the Personalized License Plate Act (codified at Ind. Code §§ 9-7-5.5-1 to 9-7-5.5-11 (1982)). This law authorizes the registered owner or lessee of a motor vehicle to apply to the Bureau of Motor Vehicles for a personalized license plate. A personalized license plate contains a combination of letters or numerals chosen by the owner or lessee of the vehicle rather than a state-imposed letter-numeral combination. In addition to the standard excise tax and registration fees assessed for the purchase of a license plate, a purchaser of a personalized license plate must pay a special fee totaling $40.
Sections 7 and 8 of the Personalized License Plate Act prescribe that upon receipt of the $40 fee, $7.00 shall be deposited in the state's Motor Vehicle Highway Account, $3 shall be distributed to the local license branches, and the remaining $30 shall be deposited with the state treasurer in a special fund for distribution to qualifying political parties. According to the Act, the monies from the special fund are distributed to "any political party that cast at least five percent (5%) but less than thirty-three percent (33%) of the total vote of the state of all political parties at the last preceding general election for the office of governor . . . [in an amount] equal to the fractional amount of the vote cast. . . ." The balance of this special fund remaining after such distribution is distributed in equal amounts to the two political parties that cast the largest and next largest number of votes at the most recent election for governor.
On October 13, 1983, plaintiffs Janet Lawson and Sherry Lynn Evans purchased personalized license plates from the Indiana Bureau of Motor Vehicles, paying the $30 political contribution "not willingly and voluntarily, but because it was the only means whereby [they] could obtain a personalized license plate." Appellees' Brief at 7. Shortly thereafter, the plaintiffs brought suit against the Indiana Bureau of Motor Vehicles and various Indiana officials in federal district court.*fn1 The individual plaintiffs and the Libertarian Party, on behalf of its members, alleged that the Indiana scheme violated their rights under the first and fourteenth amendments by conditioning the availability of a government benefit on the surrender of their first amendment rights of free association and free expression. The Libertarian Party also made an equal protection argument, complaining that the Indiana scheme unconstitutionally discriminated in favor of the Democratic and Republican parties, the only two parties that ever have qualified for state funding, at the expense of minor parties such as the Libertarians.*fn2 In their original complaint the plaintiffs sought to have sections 7 and 8 of the Personalized License Plate Act declared unconstitutional, to have the implementation of sections 7 and 8 enjoined, and to have state officials return money that had been collected pursuant to those sections. They also sought to have the case certified as a class action, with the class consisting of "all other persons who have been or will be forced to make political 'contributions' to the Democratic and Republican parties as a condition precedent to their obtaining personalized license plates." After the defendants successfully moved to join the Indiana Republican State Central Committee and the Indiana Democrat State Central Committee as indispensable parties, the plaintiffs amended their complaint to include a claim for damages against these two new defendants.
On November 11, 1983, the district court held a hearing on the plaintiffs' motion for a preliminary injunction to prevent the disbursement to the Democrats and Republicans of money that had been collected through the sale of personalized license plates. After hearing evidence and the parties' arguments, the district court issued a ruling denying the plaintiffs' motion for a preliminary injunction. This appeal followed.
It is well established that in deciding whether to issue a preliminary injunction, a district court should consider four factors: (1) whether the plaintiff will have an adequate remedy at law or will be irreparably harmed if the injunction does not issue; (2) whether the threatened injury to the plaintiff outweighs the threatened harm the injunction may inflict on the defendant; (3) whether the plaintiff has a reasonable likelihood of success on the merits; and (4) whether the issuance of the injunction will serve the public interest. Martin v. Helstad, 699 F.2d 387, 389 (7th Cir. 1983). The decision is one within the discretion of the district court and should be reversed only if the district court is found to have abused its discretion or has applied an improper legal standard. Charles v. Carey, 627 F.2d 772, 776 (7th Cir. 1980).
The court below acknowledged the four factors that should be considered in deciding whether to issue a preliminary injunction. However, it based its ruling only on consideration of the first two factors. The court stated:
There was ample evidence presently at the November 11, 1983 hearing that the Republican and Democratic Parties of the State of Indiana would be greatly harmed by the granting of a preliminary injunction in this case. Activities would have to be curtailed and employees laid off. Denial of plaintiffs' motion, on the other hand, represents a maximum harm to the three plaintiffs of $90.00, their total "contribution" under Ind. Code 9-7-5.5-7. Furthermore, the individual plaintiffs admittedly bought their plates for the sole purpose of enabling themselves to bring this action, and thus invited whatever miniscule harm they sustain while waiting for this case to be tried on the merits.
Plaintiffs did not offer to post an injunction bond equal to the harm to defendants that would be caused by issuance of a preliminary injunction. The balance of harms that the Court must consider therefore requires denial of plaintiffs' motion.
If plaintiffs succeed on the merits, and thus recover their $90.00, it is obvious that they had an adequate remedy at law, and that their harm was not irreparable. If they lose on the merits, they were not entitled to preliminary injunctive relief in the first place.
Memorandum of Decision, No. IP83-1656-C at 3 (S.D. Ind. Nov. 21, 1983).
The plaintiffs argue that the district court erred in its ruling because it failed to recognize that the plaintiffs were alleging more than monetary injury. According to the plaintiffs, the court should have considered the merits of the case, since their claim of serious and irreparable harm was based largely upon their allegation that the implementation of sections 7 and 8 of the Personalized License Plate Act constituted an ongoing first amendment violation. The defendants concede that the district court should have considered the merits of the plaintiffs' constitutional claims, but, of course, contend that the plaintiffs' claims are not meritorious.
We agree with the parties that the district court should have considered the merits of the plaintiffs' claims. As many courts have recognized, the merits of a dispute often are intertwined with the other three factors to be considered in the decision to ...