Opinion
1:03CV00535.
July 24, 2003.
MEMORANDUM OPINION AND ORDER
This matter came before the Court on Dalton Enterprises, Inc.'s ("Dalton Enterprises") Motion for Preliminary Injunction [Document #3], which sought to enjoin Avis Rent A Car System, Inc. ("Avis") from terminating the Agency Operator Agreement (the "Agreement") made between Marvin Dalton, as a representative of Dalton Enterprises, and Avis. At a hearing held on June 23, 2003, the Court orally announced that Dalton Enterprises' Motion for Preliminary Injunction was DENIED, and the parties were to proceed with the underlying cause of action based upon race discrimination.
Dalton Enterprises is a minority-owned corporation, headed by Marvin Dalton ("Dalton"), an African American. (Compl. ¶ 3.) In spring of 2000, Dalton responded to a newspaper ad seeking an Avis Operator location in Winston-Salem, North Carolina. (Compl. ¶ 6.) After reviewing Dalton's resume, Avis assigned Robert Haskell ("Haskell"), Manager of the Avis site at the Greensboro, North Carolina Airport, to interview Dalton for the position. (Compl. ¶ 7.) After Dalton interviewed with Haskell for the position, he did not have any further communication with Avis or Haskell. (Compl. ¶ 7.) In the spring of 2001, Dalton responded to a similar ad, which again sought an Avis Operator location in Winston-Salem, North Carolina. After re-submitting his resume, Dalton was interviewed by Scott Hendricks, Avis' District Manager in Raleigh, North Carolina. (Compl. ¶ 11.) Thereafter, Dalton was hired by Avis. On September 1, 2001, Dalton, as the representative for Dalton Enterprises, signed the Agreement for the Avis Operator location at the Smith-Reynolds Airport in Winston-Salem, North Carolina. (Compl. ¶ 12; Exh. A.)
Haskell, who had formerly interviewed Dalton in the spring of 2000, trained Dalton, and offered his assistance to help Dalton "get started." (Compl. ¶¶ 12-13.) However, Dalton alleges that he never received any such assistance from Haskell. (Compl. ¶ 13.) Because the Agreement required that the Avis Operator location at the Greensboro Airport provide some cars for Dalton Enterprises to rent out of the Winston-Salem location, Dalton also alleges that Haskell refused to send him cars, sent dirty cars, and changed rules and policies. (Compl. ¶ 16.) After Dalton reported his concerns regarding Haskell to Scott Hendricks, "[t]hings improved" between Dalton and Haskell. (Compl. ¶ 17.) However, after Scott Hendricks left Avis in May 2002, Dalton alleges that Haskell's "mistreatment started again and continued." (Compl. ¶ 17.) Dalton maintains that he has "established high standards, has competent employees, adequate financing, experience and demonstrated managerial ability." (Compl. ¶ 19.) Nevertheless, Avis gave Dalton a notice of termination effective at the close of business on June 17, 2003, which noted that:
[W]hile Avis need not establish any reason for its decision to terminate [Dalton's] Agreement, there have been numerous violations of Avis' policies and procedures [at Dalton's location]. Said violations include, but are not limited to, the failure to ensure that all rental vehicles and the Location are clean and present an image consistent with Avis' standards. . . . Avis has previously pointed out many of these problems to [Dalton] only to have its warnings unheeded.
(Compl. at Exh. 1.)
Dalton filed both his Complaint and Motion for Preliminary Injunction on June 11, 2003, alleging that Avis sought to cancel the Agreement because of his race. (Compl. ¶ 23.) Moreover, Dalton asserts that Avis "has created and maintained and continues to maintain policies and practices of race discrimination which prohibit African-American agencies from exercising their right to contract and obtain equal treatment under the law." (Compl. ¶ 24.) Dalton specifically alleges that Avis violated 42 U.S.C. § 5 1981 when it "denied [Dalton] the same right to make and enforce contracts as is enjoyed by white citizens of the United States." (Compl. ¶ 31.) Dalton's Motion for Preliminary Injunction contends that he will prevail at trial on the merits of the action and will suffer irreparable harm if the preliminary injunction is not granted. On June 13, 2003, the Court granted a Temporary Restraining Order to preserve the status quo pending the outcome of the June 23, 2003 hearing. As already noted, after considering the documents submitted by the parties and hearing the arguments made by the parties at the hearing held on June 23, 2003, the Court denied Dalton Enterprises' Motion for Preliminary Injunction by relying upon the reasons contained herein.
In determining whether to grant or deny a preliminary injunction, the Court must consider four factors: (1) the plaintiff's likelihood of success on the merits of the underlying dispute; (2) the likelihood of irreparable harm to the plaintiff if the injunction is denied; (3) the likelihood of harm to the defendant if the injunction is issued; and (4) the public interest. Quince Orchard Valley Citizens Ass'n, Inc., v. Hodel, 872 F.2d 75, 78-79 (4th Cir. 1989) (citing Blackwelder Furniture Co. v. Seilig Mfg. Co., 550 F.2d 189, 196 (4th Cir. 1977)). The plaintiff has the burden of proving "by a clear showing" that these factors support a decision to issue a preliminary injunction against the defendant.Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S.Ct. 1865, 1867, 138 L.Ed.2d 162 (1997) (citations omitted); Direx Israel. Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 812 (4th Cir. 1992).
The most important factors are the potential harm to the plaintiff and the potential harm to the defendant. Hughes Network Sys., Inc. v. InterDigital Communications Corp., 17 F.3d 691,693 (4th Cir. 1994). The required irreparable harm "must be neither remote nor speculative, but actual and imminent." Direx, 952 F.2d at 812. If the plaintiff succeeds in making a clear showing that irreparable harm will result without injunctive relief, the Court must then balance the likelihood of that harm against the likelihood of harm to the defendant if the injunction is granted. Id. If the balance "tips decidedly in favor of the plaintiff," a preliminary injunction will be granted if the plaintiff raises substantial questions as to the merits of the underlying case. Id.
Hence, there is a correlation between the likelihood of the plaintiff's success on the merits and the probability of irreparable harm to the plaintiff. "If the likelihood of success is great, the need for showing the probability of irreparable harm is less. Conversely, if the likelihood of success is remote, there must be a strong showing of the probability of irreparable injury to justify issuance of the injunction."North Carolina State Ports Authority v. Dart Containerline Co., Ltd., 592 F.2d 749, 750 (4th Cir. 1979).
As it noted at the June 23, 2003 hearing on the Motion for Preliminary Injunction, the Court focused its examination on the likelihood of success on the merits of Dalton's claim and the irreparable harm that Dalton would suffer if the preliminary injunction were denied. Specifically, Dalton contended that the irreparable harm he would suffer because of the closing of his Avis operation at Smith-Reynolds Airport would "destroy [his] good will, business reputation and eliminate [his] potential market." (Pl.'s Mem. in Supp. of Mot. for a Prelim. Inj. at 3.) He also alleged that Avis would suffer "no financial losses nor damage to its business reputation." (Pl.'s Mem. in Supp. of Mot. for a Prelim. Inj. at 3.) At the hearing, Dalton, through his counsel, maintained that he had a high probability of success on the merits of his underlying lawsuit based upon circumstantial evidence including the lack of response by Avis following Dalton's initial interview with Haskell and the difficulty that Dalton had with Haskell throughout his training and thereafter. In response, Avis contended that Dalton could not establish that irreparable injury would result from the termination of the Agreement. Specifically, Avis asserted that neither injury to Dalton's business reputation nor to the "good will he has established in the surrounding area" or monetary damages are irreparable harm for purposes of injunctive relief. (Pl.'s Decl. ¶ 6.) Avis also asserted that it would suffer substantial harm if Dalton were permitted to continue his Avis operation because Dalton's actions "harm Avis' reputation, and its efforts to operate a system in which the same policies and procedures apply to all of its locations." (Br. in Opp. to Pl.'s Mot. for Prelim. Inj. at 10.) Avis further maintained that Dalton has little likelihood of success on the merits of his underlying claim because of the extensive evidence it offered to support the reason it terminated the Agreement, that is, evidence that Dalton repeatedly violated Avis' policies and procedures even after numerous warnings.
As an initial matter, the Court notes that the Agreement permits that "[e]ither party may terminate this Agreement at any time based upon its own business reasons and objectives, notwithstanding that the other party is not then in default of its obligations hereunder, by giving the other party written notice of termination at least thirty (30) days in advance." (Agency Operator Agreement § 5.b.) However, Avis, in its notice of termination dated May 19, 2003, offered that the reason it terminated the Agreement with Dalton was because of his repeated violations, which still continued after repeated warnings, of Avis' policies and procedures. To support its position, Avis submitted affidavits from Haskell and Raymond Bradley, City Manager for the Raleigh, Greensboro, and Fayetteville Avis locations, attesting that the Agreement was not terminated because of Dalton's race but rather because of his inability to operate his Avis location in compliance with the uniform standards promulgated by Avis. (Haskell Aff. ¶ 21; Bradley Aff. ¶¶ 5, 10.) To that extent, Avis submitted extensive documentation to the Court, including inspection reports and customer service logs, detailing instances where Dalton Enterprises rented dirty cars, accepted credit cards that had been rejected, and delayed the check-in of cars and altered rental rates in violation of Avis' procedures. (Bradley Aff. ¶ 7, Exh. A; Haskell Aff. ¶¶ 3-15, Exhs. A-Q.)
The Court first examined the irreparable harm Dalton would suffer if injunctive relief were denied. As noted, Dalton claimed that the irreparable harm he would suffer was damage to his reputation, good will, and market potential. In order to demonstrate that the issuance of a preliminary injunction is appropriate, the plaintiff must make a clear showing that the harm he will suffer without injunctive relief is irreparable. Blackwelder, 550 F.2d at 196. Monetary loss, however, does not constitute irreparable harm unless the loss cannot be "`ascertain[ed] with any accuracy.'" Id. at 197 (quoting Foundry Servs., Inc. v. Beneflux Corp., 206 F.2d 214,216 (2d Cir. 1952)). Because elimination of Dalton Enterprises' potential market and any other financial losses are quantifiable based upon past earnings as an Avis Operator, such damages can be adequately addressed with an award of monetary damages should it prevail on the merits of Dalton's race discrimination claims. Hughes Network Sys., Inc. v. Interdigital Communications Corp., 17 F.3d 691, 694 (4th Cir. 1994).
Moreover, the irreparable harm must not be speculative, but rather actual and imminent. Direx, 952 F.2d at 812. Specifically, the Supreme Court has plainly found that damage to reputation does not provide a basis for injunctive relief. Sampson v. Murray, 415 U.S. 61, 89, 94 S.Ct. 937, 952, 39 L.Ed.2d 166 (1974). The Court stated that generalized injury to reputation "falls far short of the type of irreparable injury which is a necessary predicate to the issuance of a temporary injunction." Id. at 91-92, 94 S.Ct. at 953. Similarly, the Fourth Circuit has noted that "any reputational injury to the [plaintiff] is too speculative to merit injunctive relief." Strauss v. Regional Med. Ctr., 1996 WL 265928, at *2 (4th Cir. May 20, 1996). While such findings were fact specific inquiries, in the instant matter, Dalton alleged no specific injury to his reputation. Accordingly, the Court found that Dalton Enterprises could not rely on damage to its reputation or loss of good will to make a clear showing that irreparable harm would occur without an injunction. As a result, Dalton Enterprises did not establish that without injunctive relief it would suffer irreparable harm. Dalton did not point to any factors which would indicate that he could not re-establish his reputation and good will if he prevails on the merits of his race discrimination claim. Maye v. City of Kannapolis, 872 F. supp. 246, 247 (M.D.N.C. 1994). Indeed, should Dalton prevail on his race discrimination claim, his injuries could be properly redressed through traditional legal remedies and reinstatement.
The Court also examined the irreparable harm Avis would suffer if injunctive relief were granted. As already stated, Avis alleged that it would suffer irreparable harm to its reputation by permitting Dalton Enterprises to continue renting cars, which do not meet Avis' standards, to customers. Avis, however, did not make any specific allegations to support its contention nor did it submit any suggestive case law to support its argument. Instead, Avis emphasized to the Court that Dalton Enterprises would not suffer irreparable harm and had only a minimal likelihood of success on the merits of its claim. Accordingly, the Court made no findings with regard to the irreparable harm that Avis would suffer if injunctive relief were granted.
Since neither party made a clear showing that it would suffer irreparable harm if injunctive relief were either granted or denied, the Court next examined the relationship between the likelihood of Dalton Enterprises' success on the merits and the probability of irreparable harm to it. Because of the correlation between the likelihood of the plaintiff's success on the merits and the probability of irreparable harm to the plaintiff, Dalton Enterprises must make a strong showing of probability of irreparable harm to justify the issuance of a preliminary injunction since the likelihood of success on the merits is remote. North Carolina State Ports Authority, 592 F.2d at 750. To assess the likelihood of success on the merits of Dalton's racial discrimination claim, the Court will apply the burden-shifting framework enunciated by the Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), because Dalton did not offer direct evidence of racial discrimination to support his underlying claim. Murrell v. Ocean Mecca Motel. Inc., 262 F.3d 253, 257 (4th Cir. 2001). The McDonnell Douglas scheme first requires that the plaintiff establish a prima facie case of discrimination. Id. (citations omitted). "Once the plaintiff establishes a prima facie case, the defendant must respond with evidence that it acted with a legitimate, nondiscriminatory reason. If the defendant makes this showing, the plaintiff must then present evidence to prove that the defendant's articulated reason was pretext for unlawful discrimination." Id. (citations omitted). Assuming that Dalton can establish a prima facie case for purposes of this analysis, Avis has presented extensive evidence of violations committed by Dalton Enterprises to support its position that it acted with a legitimate, nondiscriminatory reason for terminating the Agreement. Specifically, Avis proffered Dalton Enterprises' well-documented violations including unsatisfactory inspections, many of which had been initialed or signed by Dalton, numerous customer complaints, and letters notifying Dalton of the deficiencies occurring at his Avis Operator location. (Haskell Aff. at Exh. A-Q.) Because Avis articulated a legitimate, nondiscriminatory reason for its termination of the Agreement, the burden then shifts back to Dalton Enterprises to prove that Avis' articulated reason, that is, repeated violations of Avis' policies and operating procedures, is pretext for unlawful discrimination. However, Dalton Enterprises has not presented any evidence or even arguments to refute Avis' position. Moreover, Avis prospectively presented evidence at the hearing to refute Dalton's assertion that he was terminated because of his race in the form of an affidavit by Robert Muhs, Assistant Secretary for Avis. In his affidavit, Muhs stated that "[s]ince June 2002, Avis has completed the termination of forty-one agency operators . . . 24 of these terminations involved Caucasian agency operators. Only three (which does not include plaintiff) involved African-American agency operators." (Muhs Aff. ¶ 2.) Accordingly, based upon the evidence proffered by Avis that Dalton was not operating the Avis location in accordance with Avis' standard operating policies and procedures and Dalton Enterprises' lack of evidence to the contrary, the Court found that any likelihood of success that Dalton Enterprises would have on the merits of Dalton's racial discrimination claim is lessened, particularly in view of the legitimate nondiscriminatory reason for Dalton's termination proffered by Avis under the McDonnell Douglas scheme.
Finally, Dalton Enterprises did not represent to the Court that the circumstances surrounding the instant matter warranted the issuance of an injunction on the basis of public policy. Accordingly, the Court found that the public policy implications of the matter at hand do not merit the issuance of injunctive relief.
Because Dalton Enterprises could not satisfy the requirements of the standard for injunctive relief promulgated by the Fourth Circuit, the Court DENIED Dalton's Motion for Preliminary Injunction. Specifically, the Court found that Dalton Enterprises did not make a clear showing that it would suffer irreparable harm if injunctive relief were denied. Moreover, the Court found that without any more evidence than Dalton Enterprises presented at the hearing before this Court, Dalton Enterprises' likelihood of success on the merits of its race discrimination claim is slight at best. Accordingly, because of the correlation between these two elements, which requires that Dalton Enterprises make a strong showing on at least one of these two elements, the Court found that Dalton did not satisfy the standard required to support the issuance of a preliminary injunction.
IT IS THEREFORE ORDERED that Dalton Enterprises, Inc.'s Motion for Preliminary Injunction is DENIED.