ARBORJET, INC., Plаintiff, Appellee, v. RAINBOW TREECARE SCIENTIFIC ADVANCEMENTS, INC., Defendant, Appellant.
No. 14-2324
United States Court of Appeals, First Circuit.
July 16, 2015.
794 F.3d 168
Before SELYA, Circuit Judge, SOUTER, Associate Justice, LIPEZ, Circuit Judge.
Scott P. Lopez, with whom Joshua M.D. Segal and Lawson & Weitzen, LLP were on brief, for appellant. Kristen S. Scammon, with whom Michael S. Day and Torres, Scammon & Day, LLP were on brief, for appellee.
Kristen S. Scammon, with whom Michael S. Day and Torres, Scammon & Day, LLP were on brief, for appellee.
Before SELYA, Circuit Judge, SOUTER,* Associate Justice, LIPEZ, Circuit Judge.
SOUTER, Associate Justice.
This appeаl challenges a preliminary injunction meant to enforce a contractual
I.
Plaintiff-Appellee Arborjet, Inc. manufactures and sells TREE-age, an emamectin benzoаte solution used to protect trees from various pests. Through the period from August 2008 to February 2013, Arborjet granted Defendant-Appellant Rainbow Treecare Scientific Advancements, Inc. an exclusive right to distribute TREE-age. Their sales agency contract included this provision:
[Rainbow] agrees, in view of the confidential information regarding Arborjet‘s business affairs, plans, and necessities, that [Rainbow] will not engage in affairs intended to replicate [A]rborjet‘s products or processes.
After the termination of this agreement, Rainbow bеgan marketing and distributing ArborMectin, another emamectin benzoate combination meant to compete directly with TREE-age. Arborjet sued Rainbow in Massachusetts trial court, seeking to enjoin Rainbow‘s sales of ArborMectin and claiming breach of contract, breаch of implied covenant of good faith and fair dealing, false advertising under the Lanham Act and Massachusetts law,
In the preliminary injunction proceedings from which this appeal comes, the district court did not find for Arborjet on the prospects of its Lanham Act or state law tort and statutory claims, but it did find likely success on those for breach of contract and implied covenant of good faith and fair dealing. The court said that Arborjet had “demonstrated a likelihood that it will be able to prove that [Rainbow] engaged in research and development to create a product very similar to TREE-age,” in violation of the sales agency agreement. In summarizing the support it found for this conclusion, the court described ArborMectin as the “defendant‘s own product” and stated that “Rainbow‘s website describes partnering with several institutions and companies to conduct research studies regarding ArborMectin‘s effectiveness,” at least one of which “took рlace while Rainbow was subject to the terms of the [sales agency a]greement.” The district court accordingly granted Arborjet an injunction to run during the litigation, with a principal order that “[Rainbow] and those acting in concert with it ... immediately cease and desist selling, distributing and/or marketing ArborMectin.”
II.
We start with the state law contract claims and a word about the deferential standard of review: whether the district court abused its discretion in issuing the preliminary injunction addressing breach of those obligations. See TEC Eng‘g Corp. v. Budget Molders Supply, Inc., 82 F.3d 542, 544-45 (1st Cir. 1996). Thus, we may “set aside [the district court‘s] ruling only if ... persuaded that [it] mistook the law, clearly erred in its factual assessments, or otherwise abused its discretion in granting the interim relief.” McGuire v. Reilly, 260 F.3d 36, 42 (1st Cir. 2001). Our review recognizes “the preliminary nature of the proceeding; in the context of a preliminary injunction motion, the district court‘s findings nеed not be overly detailed, and they do not bind the court in subsequent proceedings.” TEC Eng‘g Corp., 82 F.3d at 545; see also Narragansett Indian Tribe v. Guilbert, 934 F.2d 4, 6 (1st Cir. 1991) (“[A] party losing the battle on likelihood of success may nonetheless win the war at a succeeding trial on the merits.“).
To grant a preliminary injunction, a district court must find the following four elements satisfied: (1) a likelihood of success on the merits, (2) a likelihood of irreparable harm absent interim relief, (3) a balance of equities in the plaintiff‘s favor, and (4) service of the public interest. See Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26, 32 (1st Cir. 2011) (citing Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). The second through fourth considerations are not disputed, so wе focus solely on likelihood of success, and find no abuse of discretion in the conclusion that Arborjet was likely to succeed on its contract claims.1
Rainbow argues first that it was clear error to find a likely showing that it contributed to the creation of ArborMectin, contending that the record undisputedly shows that a different company, Rotam, created ArborMectin on its own. The evidence before the district court, however, was not nearly as one-sided as Rainbow says. To be sure, the Environmental Protection Agency (EPA) lists Rotam аs the approved creator of ArborMectin, but the question is whether Rainbow contributed to its creation. And, on that point, the district court was presented with two emails from a Rainbow sales representative describing ArborMectin as Rainbow‘s own product, and truly undisputed evidence that Rainbow conducted at least ten studies across the United States on the effectiveness of ArborMectin, some of them years before Rotam submitted its formula to EPA for approval. It was certainly plausible, then, for the court to infer that Rainbow played a role in the product‘s creation. Although Rainbow counters that the statements were false and that its studies were merely the practices of a sensible distributor, these arguments at best show only that, if the court had accepted them, it could reasоnably have reached the opposite conclusion. But “where the facts can support two plausible but conflicting interpretations of a body of evidence, the factfinder‘s choice between them cannot be clearly erroneous.” deBenedictis v. Brady-Zell (In re Brady-Zell), 756 F.3d 69, 72 (1st Cir. 2014).
Next, Rainbow argues that the district court fell into legal error when it interpreted the contractual language quoted earlier. Rainbow cites a dictionary definition of “replicate” to contend that “affairs intended to replicate” applies only to efforts to produce a compound that would be an exact copy of TREE-age. Thus, Rainbow concludes, the contractual prohibition does not apply to the development of ArborMectin, which both parties understand to differ from TREE-age in toxicity and othеr details.
The district court considered and rejected this argument, in faithfully applying Massachusetts contract law that “[t]he words of a contract must be considered in the context of the entire contract rather than in isolation.” Brigade Leveraged Capital Struсtures Fund Ltd. v. PIMCO Income Strategy Fund, 466 Mass. 368, 374, 995 N.E.2d 64, 69 (2013) (internal quotation marks omitted). The phrase at issue here (“will not engage in affairs intended to replicate [A]rborjet‘s products“) is pref-
III.
Rainbow challenges a second term of the injunction, not yet discussed:
[Rainbow] and those acting in concert with it shall properly attribute Arborjet‘s trademarks “Arborjet” and “TREE-age” by appending the ® symbol to those marks and a footnote stating “Registered Trademark of Arborjet, Inc.”
Rainbow objects that ordering proper attribution of “Arborjet” and “TREE-age” was improper given the district court‘s rulings on the Lanham Act claims.
Here we agree with Rainbow. This provision apparently responded to Arborjet‘s сlaim of “false designation of origin” under the Lanham Act.
The problem, however, is that the district court concluded that Arborjet was not likely to succeed on this claim. In-
In its effort to defend this portion of the preliminary injunction, Arborjet contends that the district court did not grant such relief under the Lanham Act claim but rather to give effect to a binding stipulation made by Rainbow in the course of the proceedings. The record is otherwise, however.
As mentioned earlier, Arborjet‘s complaint contained many claims. To support its false advertising claims, it alleged that Rainbow‘s representations of ArborMectin as “improved TREE-age” may mislead customers into thinking that ArborMectin was produced by Arborjet. At the November 2014 preliminary injunction hearing, the district court appeared to share that concern, and it ended the hearing by strongly encouraging the parties to “cоme to some mutual middle ground.” Shortly after, Rainbow submitted a letter indicating that it had “made an offer to Arborjet that [it] will not make future advertising or marketing statements that ArborMectin is ‘improved TREE-age‘” and that, even though the case had not settled, Rainbow “agree[d] to voluntarily comply with its proposal.” The district court treated that submission as a “binding stipulation.”
As this procedural recounting demonstrates, the stipulation does not support the preliminary injunction. The stipulation appears to relate to the false advertising claim, and it was in the false advertising portion of its findings that the district court mentioned the agreement and spoke of it as a binding stipulation. The preliminary injunction, however, probably relates to the false designation of origin claim, for the reasons explained earlier. Yet, еven as to the false advertising claim, the court made no finding of likelihood of success, stipulation or no stipulation. What is more, even if we were to look to the stipulation as authority for this provision of the injunction, the support would come up short, for the stipulation is limited to the use of a two-word phrase in marketing materials, whereas the preliminary injunction mandates Rainbow‘s attribution of Arborjet trademarks across the board. Hence, we do not believe this term of the preliminary injunction merely effectuates Rainbow‘s stipulation. The upshot is that this portion of the order must be vacated, being unsupported by a finding of likely success on a relevant claim. New Comm Wireless Servs., Inc., 287 F.3d at 9.
IV.
The order comprising the preliminary injunction is affirmed in part, and reversed in part. Each party shall bear its own costs.