Opinion
Case No. C2-04-CV-1205.
August 14, 2006
OPINION ORDER
The Court conducted a final telephone status conference with counsel for both sides participating on August 11, 2006. During that conference, it was decided that this matter would be bifurcated in order to prevent jury confusion and to promote judicial economy. Accordingly, the Court informed the parties it would conduct a hearing on Plaintiff Budget Rent A Car System, Inc.'s ("Budget") request for permanent injunctive relief on August 14, 2006. The parties were further instructed that the jury trial would then begin on August 15, 2006 on any and all remaining claims.
As noted above, Budget's Complaint requests permanent injunctive relief against Defendant Kevin Miles ("Miles"). Namely, Budget seeks an injunction "enjoining and restraining Defendant Miles from initiating any communications with any Budget employee or franchisee which in any way interferes with Budget's business relations." (Doc. # 1 ¶ a). Miles opposes Budget's request. The Court sides with Budget and therefore issues the following Order.
BACKGROUND
The Court previously set forth the facts in this case in its April 25, 2006 Opinion Order granting Budget's motion for partial summary judgment on its breach of contract claim. (Doc. # 44). Those facts are hereby incorporated herein, which eliminates the need for recitation at this point.
STANDARD
The Court applies a five-part test when deciding to issue a permanent injunction: (1) whether the movant demonstrates actual success on the merits; (2) whether there is a substantial risk of continuing irreparable injury to the movant without the injunction; (3) whether the injunction would cause substantial harm to others; (4) whether the injunction serves the public interest; and (5) whether the movant lacks an adequate remedy at law. Competitive Interiors, Inc. v. Laborers Int'l Union of N. Am., Inc., Local No. 1015, No. 5:06-cv-370, 2006 U.S. Dist. LEXIS 46978, at *4-5 (N.D. Ohio 2006) (citing United States v. Szoka, 260 F.3d 516, 523 (6th Cir. 2001)); see also Amoco Prod. Co. v. Vill. of Gambell, Alaska, 480 U.S. 531, 546 n. 12, (1987) ("The standard for a preliminary injunction is essentially the same as for a permanent injunction with the exception that the plaintiff must show a likelihood of success on the merits rather than actual success").
DISCUSSION
I. ACTUAL SUCCESS ON THE MERITS
This portion of the Court's analysis is truncated by the Court's April 24, 2006 Opinion Order holding that Miles breached the settlement agreement by creating the website kevinandgoliath.com and posting a copy of Robert Muhs' letter on that website. (Doc. # 44 at 10-12). In brief, the Court held that Miles breached the settlement agreement before the parties. (Doc. # 44). Specifically, the Court held:
Despite the agreement's clear prohibition against doing so, Miles created kevinandgoliath.com. (Miles Admissions ¶ 2). That website undoubtedly related to Budget, because Miles posted a copy of Cendant's August 20, 2004 letter to him on the website. (Miles Admissions ¶ 3). As set forth above, the letter specifically mentioned Budget, the prior lawsuit between the two parties, and was printed on Cendant letterhead. While the Court recognizes that the settlement agreement provides that the letter is not confidential, the letter is the result of the settlement agreement that Miles signed. The agreement forbids him from discussing the lawsuit as well as the terms of the settlement agreement and the letter is one aspect of the settlement agreement. (Doc. # 29 Ex. 2 at ¶ 2). Clearly, the website and the letter that appears on that web address violate the settlement agreement. Consequently, the Court concludes that Miles breached the settlement agreement by creating a website that related to Budget and Cendant. Budget is entitled to summary judgment only on the issue of liability for Budget's kevinandgoliath.com breach of contract claim. (Doc. # 38).
(Doc. # 44 at 10-12). Liability has therefore been established.
Budget also proved damages as a result of Miles' breach, including damage to reputation and loss of goodwill. Miles testified that he sent several e-mails to Cendant employees and Budget franchisees. Contained within those e-mails were statements to the effect that Cendant and Budget were not community friendly and that those corporations treat vendors and employees in a "shameful" manner. (Pl. Exs. 2, 11, 14). Robert Muhs ("Muhs"), an employee of Avis and Budget Car Rental System, Inc., testified that Budget had a strategic business plan to purchase Budget franchisees. To that end, Matthew McGinley ("McGinley"), a former director of franchise development for Cendant/Budget, testified that he was contacted by several Budget franchisees who received those e-mails from Miles. Those franchisees informed McGinley that they were worried that Budget would treat them in an unfavorable manner. As such, Muhs testified that the e-mails hurt Budget's ability to negotiate with the franchisees during its efforts to execute its business plan.
Muhs also testified that Miles' actions harmed Budget's stature in the community. Namely, Muhs testified that it was important that Budget be seen as a community leader. Contained within one of the e-mails Miles sent to countless individuals was a statement to the effect that Budget was terminating agreements with non-profit organizations without notice to those groups. (Pl. Ex. 11). In particular, the e-mail stated:
As many of you know as of May 25 Cendant which owns Avis and now owns Budget in Columbus Ohio. Its been my observation that Cendant is not community friendly. . . . I was shock when they told me to pull cars frm Central Ohio Crime Stoppers, The Gathering, and The Ohio State University with out wanting to give any notice on cars that were donated to those groups for many years. . . . I will also be talking with our elected official that when The Big Ugly Take over they must be more accountable to the people and the community they come into . . .Id. (Spelling and grammatical errors in original). Both McGinley and Miles testified that having Budget looked upon negatively by the community hurt both Budget and its franchisees. Miles himself admitted that Budget's reputation and relationship with the community were of key importance to Budget's success. Muhs testified that Budget had no way of knowing what individuals and organizations received the e-mail that characterized Budget in a negative manner. Consequently, the Court concludes that Miles' breach of the settlement agreement caused Budget to suffer damages, and that the damages to Budget's reputation in the community as well as Budget's loss of goodwill are not readily ascertainable. Budget has therefore demonstrated actual success on the merits.
II. CONTINUING IRREPARABLE HARM TO BUDGET
Miles' actions after Budget filed the instant Complaint indicate that a permanent injunction is needed. For example, Miles sent an e-mail on October 5, 2005 that stated as follows:
Recently Goliath came to town. The mighty Cendant Corporation purchased [the franchise where Miles worked]. . . . I played a major role in the Cendant sale. But, since the buy out of budget, the situation has turned into one of Kevin versus Goliath. For more info or just plain curiosity please visit my website at www.kevnandgoliath.com. To date, Cendant has taken me to court twice alleging that . . . I am communicating with and influencing their franchises. Given my known personal character, Cendant dropped the [first] suite for want of evidence. The second suite continues. Why? Because they can. . . . I personally feel that Cendant is not the kind of company that we want in Central Ohio. . . . I need a legal defense fund to when this battle for my personal reputation and to affirm to Cendant Corporation that central Ohio is not the place to be a corporate bully and mean spirited. I am in the process of creating another website that will share many of the details regarding this on-going community challenge. The site should be completed soon.
(Pl. Ex. 7). This e-mail, which clearly stated Miles intended to create another website in violation of the settlement agreement, prompted Budget to move for a temporary restraining order. The Court granted Budget's motion, and ordered Miles to:
1. Adhere to the terms of the settlement agreement;
2. Refrain from sending any e-mails to or initiating any other types of correspondence with any employee or franchisee of Budget and/or its affiliates at their business address or business e-mail address;
3. Dismantle http://www.KevinandGoliath.com and any other website relating to Budget and its affiliates as outlined in the settlement agreement; and
4. Cease working on the website that he is in the process of creating that is referenced in his October 5, 2005 e-mail, preserve all work completed on that site in its current state as of the date of this Order and to make the same available to the Court for inspection and copying under the supervision of Magistrate Judge Abel.(Doc. # 31 at 10). The parties agreed to extend that Order until the completion of the instant matter. (Doc. # 32).
Miles' own testimony establishes that without the permanent injunction, Miles will continue to engage in actions that breach his settlement agreement with Budget. To illustrate, Miles testified that had the Court not entered the a temporary restraining order, he would have created more websites and sent more e-mails that addressed Budget's lawsuit(s) with Miles. Of course, those actions would constitute additional breaches of the settlement agreement.
In addition, the Court recognizes that a loss of customer goodwill and reputation can amount to irreparable injury because the damages flowing from such losses are difficult to compute. Basicomputer Corp. v. Scott, 973 F.2d 507, 512 (6th Cir. 1992). Indeed, Muhs testified that the harm is not able to be quantified because he does not know who received the e-mails and viewed the websites. It is undisputed that Budget franchisees received the e-mails. (Pl. Ex. 2, 14). Furthermore, Muhs testified, and Miles conceded, that Budget customers or possible customers could have received or viewed those materials. Those materials could have convinced any existing or potential customer to rent from a Budget competitor. Furthermore, Miles admitted that the e-mails could have caused Budget to encounter a loss of its prestige with the community. These possibilities merely reinforce the conclusion that the harm Budget has and will suffer as a result of Miles' actions is unable to be quantified. Accordingly, the Court holds that the second factor favors the issuance of a permanent injunction.
3. HARM TO OTHERS
In essence, Budget seeks a permanent injunction to enforce its settlement agreement with Miles. (Doc. # 29 at 11). Only Budget and Miles were parties to that agreement, and arguably they are the only parties that would be affected by an order requiring Miles to adhere to the agreement he entered into with Budget. In addition, Miles created the instant situation himself by breaching the settlement agreement. Therefore, Miles cannot now assert that a permanent injunction is improper because such an order would harm his ability to perform his duties with his current employer, Total Fleet Solutions, Incorporated. Indeed, because the permanent injunction would only prohibit Miles from communicating with Budget and its affiliates, Miles' ability to communicate with any and all of the car rental businesses in the world is not curtailed; thus, it is hard for the Court to fathom how such a limited restriction could prohibit Miles from performing his current job with Total Fleet Solutions, Inc. The third factor weighs in favor of granting a permanent injunction.
Miles testified that he does not think that Budget is a client of Total Fleet Solutions, Inc. Miles testified that some of Budget's franchisees are clients of Total Fleet Solutions, Inc. Muhs testified that Budget already has departments that perform the services Total Fleet Solutions, Inc. offers. Muhs further testified those departments provide services to all corporate owned agencies, leaving a total market share of only five (5) percent that Miles would be prohibited from contacting in this present position.
4. PUBLIC INTEREST
The public interest would be served by granting a permanent injunction requiring Miles to comport with the settlement agreement. The Sixth Circuit stated:
Agreements settling litigation are solemn undertakings, invoking a duty upon the involved lawyers, as officers of the court, to make every reasonable effort to see that the agreed terms are fully and timely carried out. Public policy strongly favors settlement of disputes without litigation . . . Settlement agreements should therefore be upheld whenever equitable and policy considerations so permit. By such agreements are the burdens of trial spared to the parties, to other litigants waiting their turn before over-burdened courts, and to the citizens whose taxes support the latter. An amicable compromise provides the more speedy and reasonable remedy for the dispute.Arco Corp. v. Allied Witan Co., 531 F.2d 1368, 1372 (6th Cir. 1976) (internal citations omitted). In reaching this conclusion, the Court is more than cognizant of Miles' First Amendment rights. However, Miles knowingly and voluntarily curtailed his rights by entering into the settlement agreement. Thus, the fourth factor suggests that permanent injunctive relief is warranted.
5. LACKING ADEQUATE REMEDY AT LAW
Lastly, the Court is unaware of any statute providing Budget with relief under the present circumstances. For sure, Budget seeks prevention of future harm; monetary damages will not prevent Miles from breaching the settlement agreement. The Court therefore holds that Budget lacks an adequate remedy at law.
In conclusion, the Court holds that Budget's request for permanent injunctive relief is well-taken and hereby ORDERS Miles to:
1. Adhere to the terms of the settlement agreement;
2. Refrain from sending any e-mails to or initiating any other types of correspondence with any employee or franchisee of Budget and/or its affiliates at their business address or business e-mail address;
3. Dismantle http://www.KevinandGoliath.com and any other website relating to Budget and its affiliates as outlined in the settlement agreement; and
4. Refrain from creating or maintaining any website that relates to Budget and its affiliates as outlined in the settlement agreement and/or that violates the settlement agreement.
The Court shall maintain jurisdiction over this matter for the limited purpose of ensuring compliance with this Order. If Miles fails to comply with this Order, the Court may find him to be in contempt, may impose monetary sanctions against him, or may impose any other sanction the Court may deem just given the circumstances.
IT IS SO ORDERED.