Elawyers Elawyers
Washington| Change

Management Registry, Inc. v. A.W. Companies, Inc., 17-3675 (2019)

Court: Court of Appeals for the Eighth Circuit Number: 17-3675 Visitors: 15
Filed: Apr. 11, 2019
Latest Update: Mar. 03, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 17-3675 _ Management Registry, Inc. Plaintiff - Appellant v. A.W. Companies, Inc.; Allan K. Brown; Wendy Brown Defendants - Appellees Eric Berg Defendant _ No. 18-1154 _ Management Registry, Inc. Plaintiff - Appellant v. A.W. Companies, Inc.; Allan K. Brown; Wendy Brown Defendants - Appellees Eric Berg Defendant _ Appeals from United States District Court for the District of Minnesota - Minneapolis _ Submitted: November 14, 2018 Filed
More
   United States Court of Appeals
             For the Eighth Circuit
         ___________________________

                 No. 17-3675
         ___________________________

            Management Registry, Inc.

                     Plaintiff - Appellant

                       v.

A.W. Companies, Inc.; Allan K. Brown; Wendy Brown

                    Defendants - Appellees

                    Eric Berg

                       Defendant
         ___________________________

                 No. 18-1154
         ___________________________

            Management Registry, Inc.

                     Plaintiff - Appellant

                       v.

A.W. Companies, Inc.; Allan K. Brown; Wendy Brown

                    Defendants - Appellees

                    Eric Berg

                        Defendant
                 ____________
                    Appeals from United States District Court
                   for the District of Minnesota - Minneapolis
                                  ____________

                         Submitted: November 14, 2018
                             Filed: April 11, 2019
                                ____________

Before COLLOTON, SHEPHERD, and STRAS, Circuit Judges.
                         ____________

STRAS, Circuit Judge.

       This appeal arises out of a contentious business deal. Management Registry,
Inc., a large Kentucky staffing company, acquired a family of smaller staffing
companies operating under the brand “AllStaff.” When negotiations grew sour
between some of the participants, two—Allan and Wendy Brown—formed a rival
company. Management Registry sought a preliminary injunction and an injunction
pending appeal to prevent this newly formed company from competing against it.
The district court1 declined to grant either, and we affirm.

                                        I.

      In an effort to expand its business, Management Registry entered into
discussions to acquire AllStaff companies. Following months of negotiations,
Management Registry agreed to purchase the whole family of businesses, with their
president, Allan, staying on to run them. There was also an understanding that
Allan’s wife, Wendy, would separately negotiate to purchase one of the AllStaff
companies back from Management Registry.




      1
        The Honorable John R. Tunheim, Chief Judge, United States District Court
for the District of Minnesota.
                                     -2-
       At first, the deal proceeded as planned. But the negotiations between
Management Registry and Wendy eventually fell apart, which led to Allan’s
departure and his decision to form a rival company with Wendy. The new company,
A.W. Companies, Inc., recruited Management Registry employees and allegedly
asked that they bring their computers, client files, and other proprietary information
with them.

       Management Registry sued A.W., Allan, and Wendy in federal district court,
seeking, among other things, a preliminary injunction. Following briefing and a
hearing, the district court denied the motion due to both the presence of material
factual disputes and the absence of evidence showing how Management Registry
would be irreparably harmed without an injunction. Management Registry appeals
the decision not to grant injunctive relief, arguing that it is likely to prevail on the
merits and that, if it does not receive an injunction, it will continue to suffer
irreparable harm. 2 See 28 U.S.C. § 1292(a)(1) (granting appellate jurisdiction over
the denial of an injunction).

                                          II.

        When determining whether to grant a preliminary injunction, district courts
must weigh four factors: “(1) the threat of irreparable harm to the movant; (2) the
state of the balance between this harm and the injury that granting the injunction will
inflict on [the nonmovant]; (3) the probability that [the] movant will succeed on the
merits; and (4) the public interest.” Dataphase Sys., Inc. v. C L Sys., Inc., 
640 F.2d 109
, 113 (8th Cir. 1981) (en banc). As we have explained, “[a] preliminary


      2
        Management Registry filed two notices of appeal, one right after the district
court denied the preliminary injunction and a second after the court refused to grant
an injunction pending appeal. These two appeals have been consolidated.
Management Registry treats the denial of a preliminary injunction and the denial of
an injunction pending appeal as raising the same underlying issues, and so will we.
Cf. Hilton v. Braunskill, 
481 U.S. 770
, 776 (1987); Walker v. Lockhart, 
678 F.2d 68
,
70 (8th Cir. 1982) (per curiam).
                                         -3-
injunction is an extraordinary remedy,” and “[t]he party seeking injunctive relief
bears the burden of proving” that these factors weigh in its favor. Watkins Inc. v.
Lewis, 
346 F.3d 841
, 844 (8th Cir. 2003). We will reverse a decision to deny a
preliminary injunction only if the district court has abused its discretion, which
happens if the decision rests “on clearly erroneous factual findings or erroneous legal
conclusions.” Home Instead, Inc. v. Florance, 
721 F.3d 494
, 497 (8th Cir. 2013)
(citation omitted).

       The district court determined that Management Registry had not met its
burden of showing irreparable harm. Gen. Motors Corp. v. Harry Brown’s, LLC,
563 F.3d 312
, 318–19 (8th Cir. 2009) (clarifying that the “burden [is] on [the
movant] to establish the threat of irreparable injury”). To receive a preliminary
injunction, Management Registry had to establish that it had “no adequate remedy
at law” because “its injuries [could not] be fully compensated through an award of
damages.” 
Id. at 319.
It had a potentially viable theory—it was continuing to lose
goodwill with its employees and customers—but not enough evidence or analysis to
support it. See Iowa Utils. Bd. v. FCC, 
109 F.3d 418
, 426 (8th Cir. 1996) (explaining
that a loss of goodwill can be an irreparable harm).

       In fact, Management Registry presented evidence suggesting the opposite:
that an award of money damages would fully compensate it because its losses are
quantifiable. For example, Management Registry claimed that A.W.’s actions led
to the loss of three major accounts, which cut its revenues by $65,000 per week. To
be sure, Management Registry claims to have lost other things too, such as customer
files and other intellectual property. But beyond just asking the district court to trust
its assessment that these harms are unquantifiable, it never persuasively explained
why money damages could not compensate it for these losses as well. With the
burden on Management Registry, it was not “error for the district court to require
[more] evidence” than just a discussion of “general business principles” and a series
of assurances that its business would be irreparably harmed if it did not receive an
injunction. Gen. 
Motors, 563 F.3d at 319
–20.


                                          -4-
       Although the failure to show irreparable harm was a sufficient reason to deny
a preliminary injunction, see Gelco Corp. v. Coniston Partners, 
811 F.2d 414
, 418
(8th Cir. 1987), Management Registry also failed to establish that it was likely to
succeed on the merits, see 
Dataphase, 640 F.2d at 113
(suggesting that if a movant
cannot make a strong showing of harm, it “faces a heavy burden” of showing it will
ultimately prevail). It alleged ten claims in its complaint, running the gamut from
equitable to contract- and tort-based claims. Yet rather than explaining why it was
likely to prevail on the merits of those claims, it devoted most of its memorandum
accompanying its preliminary-injunction motion to chronicling the Browns’ alleged
misdeeds, regardless of their relevance to the motion. It was not up to the district
court to try to then connect the dots between Management Registry’s allegations and
its legal theories. Cf. Rodgers v. City of Des Moines, 
435 F.3d 904
, 908 (8th Cir.
2006) (noting that a court need not “mine a summary judgment record searching for
nuggets of factual disputes to gild a party’s arguments”).

                                        III.

     Accordingly, we affirm the denial of preliminary injunctive relief to
Management Registry.
                     ______________________________




                                        -5-

Source:  CourtListener

Can't find what you're looking for?

Post a free question on our public forum.
Ask a Question
Search for lawyers by practice areas.
Find a Lawyer