told dealers that OEC's parts locator product will be
available during the first quarter of 2002. Id. Therefore, Plaintiff
contends that it is unlikely that it will be able to implement its parts
locator until 2003, at which time, Defendants' head start, vast resources
and ability to offer dealer incentives will preclude Plaintiff from
competing with OEC. Id.
(H) Plaintiff argues that the requested relief is within the Court's
authority. Pl.'s Reply at 13. For instance, mandatory injunctive relief
is a well-established remedy for anti-trust violations. Section 16 of the
Clayton Act gives courts broad authority to award injunctive relief to
private parties suing for antitrust violations. 15 U.S.C. § 26. See,
e.g., California v. Am. Stores Co., 495 U.S. 271, 283-85 (1990).
Moreover, the Seventh Circuit has also recognized that federal courts
have broad discretion to award mandatory injunctive relief in antitrust
cases. See, e.g., Trabert & Hoeffer, Inc. v. Piaget Watch Corp.,
633 F.2d 477, 486 (7th Cir. 1980). Therefore, Plaintiff asserts, that as
indicated by the referenced case law, the Court is empowered to grant the
relief requested, which cannot be viewed as being "extraordinary" for an
antitrust case like this involving an unlawful conspiracy. The Plaintiff
alleges, moreover, while some of the non-antitrust cases cited by
Defendants refer to a reluctance to grant mandatory injunctive relief,
none provide any meaningful analysis of the issue. Indeed, Plaintiff
claims the Seventh Circuit has never squarely addressed the question of
whether a heightened burden of proof applies to requests for mandatory
injunctive relief. In any event, the issue is immaterial here, Plaintiff
asserts, where ChoiceParts seeks relief pursuant to Section 16 of the
(I) Plaintiff argues that there is no factual basis for Defendants'
assertions that Plaintiff has "unclean hands." Pl.'s Reply at 14.
Plaintiff further asserts that, as a matter of law, "unclean hands" is
not a defense to a Sherman Act violation. See, e.g., Kiefer-Steward Co.
v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 214-24 (1951). Thus,
because federal courts have consistently "declined to permit the unclean
hands defense in antitrust suits where injunctive relief is sought,"
Plaintiff asserts that it should not apply herein. Chrysler Corp. v.
Gen. Motors Corp., 596 F. Supp. 416, 419 (D.C. Cir. 1984).
(J) Plaintiffs Supplemental Reply Letter.
Regarding certain of Defendants' adequate remedy at law contentions:
Plaintiff argues that Defendants' assertion that "[Plaintiffs]
management valued the entire company when it was necessary to do so for
income taxes" is without merit. Pl.'s Ltr. dated 12/18/01; Defs.' Resp.
at 11. In support of its position, Defendants rely on a document entitled
"Valuation of Segments . . ." (Defs.' Ex. DX180b). Plaintiff contends,
however, that the referenced document has no connection to any "income
tax purposes." Pl.'s Ltr. dated 12/18/01. Rather, the document was an
internal estimate of a range of potential valuations developed for the
purpose of negotiations for a potential business venture based only on
Plaintiffs first generation of expected products. Id. Plaintiff, further
asserts that business negotiations such as these reflect a variety of
factors that are typically irrelevant to a calculation of damages caused
by an antitrust violation. Id. In addition, the fact that the estimated
value of Plaintiffs company varies to such a large extent (valued at
between $105 million and $180 million) belies Defendants' argument that
Plaintiff can readily ascertain the full measure of its damages. Id.
Plaintiff also argues that Defendants' contention that "[Plaintiff]
the company was worth $25 million when it established a
stock option plan" is erroneous. Pl.'s Ltr. dated 12/18/01; Defs.' Resp.
at 15. Plaintiff argues that while it is true that it used $25 million as
the basis for setting a "strike price" for initial management equity
option purposes in Plaintiff's first quarter of operations, that this has
nothing to do with Plaintiffs ability to readily ascertain the full
measure of its damages caused by Defendants' violations. Pl.'s Ltr. dated
12/18/01 (emphasis added.). For instance, Plaintiff asserts that when a
newly formed Limited Liability Company (such as ChoiceParts) creates an
equity option plan, it is a common and legally permissible business
practice to use initial capital contributions (both actual and expected)
from the entity's founders as a proxy for the start-up value of the
business. Id. Plaintiff, thus, contends this is exactly what the
referenced document reflects, in that, it depicts Plaintiffs opening
position in the fall of 2000. Id. Moreover, Plaintiff argues that during
the initial start-up of a new entity, there is usually no market history
available and commercial activity may not have even begun. Id.
Furthermore, for purposes of its equity option plan, Plaintiff was not
required to estimate the value of its business in future years and it was
not required to estimate the value of its goodwill and/or other
intangible assets. Id.
Plaintiff further asserts that calculating the damages it has suffered
as a result of Defendants' conspiracy should involve a different type of
analysis. Pl.'s Ltr. dated 12/18/01. Cf. Heppenstall v. Commissioner, 8
T.C.M. 136 (1949) (book value is not an appropriate measure of a
company's value if it is a going concern). Plaintiff asserts that the
analysis used to prove damages, in this case, should entail estimates of
Plaintiffs earnings, expenses, and past and future profits.*fn7 Pl.'s
Ltr. dated 12/18/01. Thus, the fact that Plaintiff has determined that it
could use capital contributions as a proxy for the initial value of its
business for equity option purposes only, has nothing to do with whether
Plaintiff can readily prove the full amount of the legally-recoverable
damages. Id. Plaintiff further argues that when a company uses capital
contributions as a proxy for its initial value, that the company cannot
be viewed as having definitively established its value forever.
Furthermore, Plaintiff argues that if Defendants' assertions were true, a
newly formed company that chose to create a stock option plan could never
recover damages for lost appreciation in its business. Id. Therefore,
Plaintiff asserts that it has no adequate remedy at law, in that, it
cannot readily prove the full measure of its damages. Id.
V. Oral Argument.
At oral argument, the parties presented further evidence regarding the
subject motion issues and arguments, which was made part of the record.
As backdrop, it is clearly established in the Seventh Circuit that:
A preliminary injunction is an extraordinary remedy
that should not be granted unless the movant, by a
clear showing, carries the burden of persuasion.
Boucher v. School Bd. of the School District of Greenfield, 134 F.3d 821,
823 (7th Cir. 1998). Accordingly, as that court stated in an antitrust
"`(t)he granting of a preliminary injunction is an
exercise of a very far-reaching power, never to be
indulged in except in a case clearly demanding it.'"
(Citations omitted.) Roland Mach. Co. v. Dresser Indus., 749 F.3d 380,
389 (7th Cir. 1984).
Regarding mandatory preliminary injunctions, the Seventh Circuit has
Because a mandatory injunction requires the court to
command the defendant to take a particular action,
"mandatory preliminary writs are ordinarily cautiously
viewed and sparingly issued." Jordan v. Wolke,
593 F.2d 772, 774 (7th Cir. 1978); see also W.A.
Mack, Inc. v. General Motors Corp., 260 F.2d 886, 890
(7th Cir. 1958) (finding that "mandatory injunctions
are rarely issued and interlocutory mandatory
injunctions are even more rarely issued, and neither
except upon the clearest equitable grounds."
Graham v. Medical Mutual of Ohio, 130 F.3d 293, 295 (7th Cir. 1997).