Gerber Radio v. Philips

Opinion

USCA1 Opinion

                                [NOT FOR PUBLICATION]
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                  

                                 ____________________


No. 95-1737


GERBER RADIO SUPPLY CO., INC.,

                              d/b/a GERBER ELECTRONICS,



                                Plaintiff, Appellant,



                                          v.



                        PHILIPS SEMICONDUCTORS, INC., ET AL.,



                                Defendants, Appellees.


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                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                   [Hon. Edward F. Harrington, U.S. District Judge]
                                               ___________________



                                 ____________________



                                        Before



                                Selya, Cyr and Boudin,

                                   Circuit Judges.
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                                 ____________________



            Stephen Schultz  and McGowan, Engel,  Tucker, Garrett & Schultz on
            _______________      __________________________________________

        Memorandum of Law for appellant.

            E. Jeffrey Banchero, Banchero & Lasater,  Sabin Willett, Peter  J.
            ___________________  __________________   _____________  _________

        Mancusi, and Bingham, Dana & Gould on Memorandum of Law for appellee
        _______      _____________________

        Philips Semiconductors, Inc.

            Raymond R. Randall  and Ryan, Boudreau, Randall and Kirkpatrick on
            __________________      _______________________________________

        Memorandum of Law for appellee Wyle Electronics.



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                                    August 3, 1995

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Per  Curiam.   Before  us  is  a  motion to  restore  a
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            preliminary injunction pending appeal.  For almost six years,



            appellant Gerber Radio Supply Co. (Gerber),  a Massachusetts-



            based  distributor  of  electronic  components,  was  a  non-



            exclusive distributor  in the  northeast  region for  Philips



            Semiconductors,    Inc.    (Philips),    a   California-based



            manufacturer  of integrated circuits.  In March 1995, Philips



            exercised   its   contractual   option   to   terminate   the



            distributorship agreement, effective the following month.  It



            thereafter sent  to  most  or  all  of  its  remaining  local



            distributors  a computerized  printout  identifying some  520



            customers that  had bought  Philips products  from Gerber  in



            1994,  along  with  their  respective  volume  of  purchases.



            Gerber proceeded to file suit against Philips and  various of



            the distributors in Massachusetts state court, claiming inter
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            alia that the disclosure of  its customer list (1) breached a
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            confidentiality obligation  contained in  the distributorship



            agreement and (2) was a misappropriation of trade secrets. 



                 A superior court  justice denied Gerber's request  for a



            preliminary injunction, finding no  likelihood of success  on



            the merits.  A single  justice of the appeals court, however,



            agreed to enter  a narrow injunction requiring  defendants to



            return all  copies of the  customer list and  precluding them



            from  disclosing  the  contents  thereof  to  third  parties.



Gerber's further  request to  bar defendants  from soliciting



            the listed customers was denied.  



                 Shortly thereafter,  the  case was  removed  to  federal



            court.    In  response  to  Gerber's  motion  to  extend  the



            preliminary injunction  to several defendants  recently added



            to the case,  Philips moved for its dissolution, arguing that



            it  was defective on both substantive and procedural grounds.



            Gerber replied  that the  district court  was constrained  to



            adhere  to  the single  justice's  ruling, but  that,  if any



            modification  were to be undertaken, the injunction should be



            extended  to preclude  solicitation of  its  customers.   The



            district court agreed to dissolve the injunction on the basis



            that irreparable harm  had not been established.   Gerber has



            appealed from  this order, and  now asks that we  restore the



            preliminary injunction  issued by the single  justice pending



            such appeal.   For the following reasons, we  deny the motion



            to  restore and  summarily affirm  the order of  the district



            court.



                 Gerber  acknowledges that a district court is authorized



            under 28 U.S.C.    1450 to  modify or dissolve a  state court



            injunction following removal.  See, e.g., Hyde Park Partners,
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            L.P. v. Connolly,  839 F.2d  837, 842  (1st Cir.  1988).   It
            ____    ________



            contends, however, that this power does not extend to a state



            appellate  court  order.   In  its view,  such  an injunction



            becomes "federalized" once the case is removed and is thereby


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converted into a federal appellate court order binding on the
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            district  court.  We note that such  a view diverges from the



            approach  adopted in  recent  removal  cases  arising  in  an



            analogous context.  See, e.g.,  RTC v. Bayside Developers, 43
                                ___  ____   ___    __________________



            F.3d 1230,  1238 (9th  Cir. 1994); LeMaire  v. FDIC,  20 F.3d
                                               _______     ____



            654, 655 & n.3 (5th Cir. 1994),  cert. denied, 115 S. Ct. 723
                                             ____________



            (1995); In re 5300 Memorial  Investors, Ltd., 973 F.2d  1160,
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            1162-63  (5th Cir.  1992).    Yet we  need  not resolve  this



            question since Gerber's argument fails for a separate reason.


It  is   undisputed  that  federal   rather  than  state



            procedural   requirements   govern  the   future   course  of



            proceedings  in a  removed  case.   See,  e.g., Granny  Goose
                                                ___   ____  _____________



            Foods,  Inc. v. Brotherhood of Teamsters,  Local 70, 415 U.S.
            ____________    ___________________________________



            423, 437  & n.10 (1974);  FDIC v. Bay  Street Dev. Corp.,  32
                                      ____    ______________________



            F.3d 636, 639 (1st Cir. 1994).   Here, there is no indication



            that  the  single  justice,  in  granting  equitable  relief,



            required the posting of a bond or at least considered whether



            a bond was  necessary--as mandated by Fed. R.  Civ. P. 65(c).



            See, e.g., In re Kingsley, 802 F.2d 571, 578 (1st Cir. 1986).
            ___  ____  ______________



            Given  this   omission,  and  considering  that   the  single



            justice's ruling was provisional in nature and lacked written



            findings,  we  think  the  district  court  was  entitled  to



            undertake a review of the state court injunction.


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We  likewise  conclude  that   the  district  court  was



            warranted in dissolving the injunction.  In so concluding, we



            express  no  view as  to  the merits  of  Gerber's underlying



            action.  Instead, we rely on three considerations.  First, we



            are  inclined to  agree  that irreparable  harm has  not been



            demonstrated  under  the  circumstances.    Gerber  does  not



            suggest that  its economic  viability is  threatened; indeed,



            sales of  Philips products accounted for only seven to eleven



            percent  of  its  business  in  recent years.    Instead,  it



            contends  that  it  faces  the  potential  loss  of  all  520



            customers  identified   on  the  list   (said  to   represent



            approximately  twenty-five  percent  of  its customer  base).



            Yet, having advanced  no challenge to the  termination of its



            Philips  distributorship,  Gerber  cannot  complain  of   the



            inevitable  loss of  those customers  who  retain loyalty  to



            Philips products.  The extent  to which such customers  might



            also take their non-Philips business elsewhere is speculative



            at  this   point,  but  presumably   subject  to   reasonable



            quantification in the future.  Most important, Gerber goes on



            to explain that it is concerned only with those customers who



            previously bought Philips products  exclusively from Gerber.1
                                                ___________



            And the number  of such customers--although not  specified in



            the record--appears  relatively small.   Gerber  acknowledges



                                
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            1.  Gerber has  not requested that the defendant distributors

            be enjoined from contacting those  customers on the list with

            whom they were already doing business.



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that  approximately two-thirds  of  its  customers were  also



            those of  another distributor  (defendant Wyle  Electronics).



            Nor  has  it disputed  that  other distributors,  as  well as



            Philips  itself,  have   also  dealt  with  various   of  its



            customers.   These considerations, we think, militate against



            any finding of irreparable harm.



                 Second, restoration of the  narrow injunction imposed by



            the single  justice would  accomplish little  at this  point.



            Defendants have now been  in possession of the  customer list



            for nearly five  months.  Indeed, partly because  of Gerber's



            failure to seek an appropriate protective order, the list has



            been  publicly available for most of that period--having been



            submitted (in unsealed format) as  part of the record in this



            case.  Under  these circumstances, we fail to  see how Gerber



            would  benefit from any  renewed order barring  disclosure of



            the customer list to third parties.  Cf. CMM Cable Rep., Inc.
                                                 ___ ____________________



            v. Ocean Coast Properties., Inc.,  48 F.3d 618, 621 (1st Cir.
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            1995) (noting  that an appeal from the denial of a motion for



            preliminary  injunction is moot if the appellate court can no



            longer preserve, or feasibly restore, the status quo).



                 Finally, the district court's decision not to extend the



            injunction to bar the solicitation of customers is one we are



            not prepared  to disturb.   As just mentioned, the  number of



            customers  to  whom   such  an  injunction  would   apply  is



            relatively small, and much of the activity that would thereby


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be enjoined has  already occurred.  Moreover, Gerber  has now



            been denied  such broader  relief by  three separate  judges.



            Having  reviewed the record  and the parties'  submissions in



            full, we  are not inclined  to reach a  different assessment,



            especially  given  the deferential  standard  of review  that



            governs this appeal.  See, e.g., Narragansett Indian Tribe v.
                                  ___  ____  _________________________



            Guilbert, 934 F.2d 4, 5 (1st Cir. 1991).
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                 The  motion  to  restore injunction  pending  appeal  is
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            denied,  and  the order  of the  district court  is summarily
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            affirmed.  See Loc. R. 27.1. 
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