Stuller, Inc. v. Steak N Shake Enterprises, Inc.
2012 U.S. App. LEXIS 17921
7th Cir.2012Background
- Stuller, Inc. owns and operates five Steak N Shake franchises in Illinois and has long operated them under the existing pricing authority of its franchise agreements.
- Steak N Shake, the franchisor, adopted a new policy in June 2010 requiring all franchisees to follow its menu pricing and promotions.
- Stuller refused to adopt the new pricing policy, intending to rely on its historical pricing autonomy.
- Steak N Shake threatened termination of Stuller’s franchises if the policy was not implemented, creating a dispute over irreparable harm.
- The district court granted a preliminary injunction barring Steak N Shake from taking adverse action during litigation; Steak N Shake appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether termination of franchises is irreparable harm. | Stuller argues harm is irreparable as it would destroy goodwill and business model. | Steak N Shake contends harm is self-inflicted if Stuller could avoid by complying. | Irreparable harm shown; not purely self-inflicted under record. |
| Whether a self-inflicted injury defeats irreparable harm analyses. | Stuller notes Second City does not bar irreparable harm in all self-inflicted cases. | Steak N Shake argues self-inflicted injuries cannot support irreparable harm. | No categorical rule; depends on case specifics; here harm is irreparable. |
| Whether the district court properly applied the balancing/ sliding-scale test. | Record supports substantial irreparable harm and public interest favors Stuller. | Steak N Shake contends harms to Shaker outweigh. | District court's balancing within discretion and affirmed. |
Key Cases Cited
- Ezell v. City of Chicago, 651 F.3d 684 (7th Cir. 2011) (threshold requirements for preliminary injunction; likelihood of success and irreparable harm)
- Ty, Inc. v. Jones Group, Inc., 237 F.3d 891 (7th Cir. 2001) (sliding scale balancing of harms and public interest)
- Christian Legal Soc’y v. Walker, 453 F.3d 853 (7th Cir. 2006) (sliding scale framework for injunctions)
- Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380 (7th Cir. 1984) (irreparable harm cannot be fully rectified by final judgment)
- Second City Music, Inc. v. City of Chicago, 333 F.3d 846 (7th Cir. 2003) (self-inflicted injury concept; not a categorical rule)
- Watchtower Bible & Tract Soc’y v. Village of Stratton, 536 U.S. 150 (2002) (context for exceptions to licensing/self-inflicted injury analysis)