Eastside Vend v. Pepsi

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Eastside Vend Distributors, Inc. v. The Pepsi Bottling Group, Inc. No. 33, September Term, 2006 Headnote: Preliminary injunctions are designed as a preventative and protective remedy for actions which may occur in the future. The purpose of interlocutory injunctions is to maintain the status quo between parties engaged in litigation pending the resolution of such litigation. If the granting of a preliminary injunction would fail to prevent a future act or maintain the status quo between the parties, then it should not be granted. If the granting of an interlocutory injunction satisfies the above criteria, then the court will examine four factors: (1) the likelihood that the plaintiff will succeed on the merits, (2) the balance of convenience, (3) whether the plaintiff will suffer irreparable injury unless the injunction is granted, and (4) the public interest. See Department of Transportation v. Armacost, 299 Md. 392, 404-05, 474 A.2d 191, 197 (1984). The party seeking the injunction has the burden of proving the facts necessary to support each factor and must prove all four factors in order to receive preliminary relief. Should the plaintiff fail to prove even one of the factors, an interlocutory injunction will not be granted. Furthermore, as a precursor to analyzing the four factors, courts must balance the likelihood of irreparable harm to the plaintiff against the likelihood of irreparable harm to the defendant. Blackwelder Furniture Co. v. Seilig Manufacturing Co., 550 F.2d 189, 195 (4th Cir. 1977); Lerner v. Lerner, 306 Md. 771, 783-84, 511 A.2d 501, 507 (1986). If this balance of hardships weighs in favor of the plaintiff, then the likelihood of success on the merits factor is replaced with a more lenient standard: whether the plaintiff has raised questions going to the merits so serious, substantial, difficult and doubtful, as to make them fair ground for litigation. Blackwelder, 550 F.2d at 195 (citations omitted) (quotations omitted). In the present case, the petitioner failed to estab lish its entitlement to a preliminary injunction. Circuit Co urt for Baltim ore City Case #24-C-04-003998 IN THE COURT OF APPEALS OF MARYLAND No. 33 September Term, 2006 Eastside Vend Distributors, Inc. v. The Pepsi Bottling Group, Inc. Bell, C. J. Raker Wilner Cathell Harrell Greene Eldridg e, John C. (Re tired, Specially assigned), JJ. Opinion by Cathell, J. Filed: December 19, 2006 This case arises f rom the de nial of a m otion for pr eliminary injunction. On May 7, 2004, Eastside Vend Distributors, Inc. ( Eastside ), petitioner, filed a complaint in the Circuit Court for Baltimore City against Coca Cola Enterprises, Inc. ( CCE ), The Pepsi Bottling Group, Inc. ( PBG ), and Mars Super Markets, Inc. ( Mars ). As relevant to this particular action before the Court, the complaint alleged violation of the Maryland Antitrust Act 1 ( the Act ) via price discrimination on the part of the two bottling companies, CCE and PBG. It also alleged that M ars, as a supe rmarket, w as comp licit by knowin gly receiving and inducing the alleged discrimina tory prices in viola tion of the A ct.2 On March 30, 2005, Eastside filed a motion for a preliminary injunction seeking to prohibit PBG , responde nt, from denying Eastside rebates on the Pepsi products that Eastside purchases from PBG.3 The Circuit Court held a hearing on May 19 and 20, 2005. The Circuit Court denied the motion and issued an order to that effect on May 23, 2005 . On M ay 26, 2005, E astside timely appealed to the Court of Special Appeals. On March 20, 2006, in an unreported opinion, the Court of Special Appeals affirmed the Circuit Court s denial of Eastside s motion for preliminary injunction. On May 3, 2006, Eastside filed a petition for writ of certio rari with this Court. We granted certiorari on June 14, 2006. Eastside Vend Distrib., Inc. v. The Pepsi 1 The Maryland Antitrust Act is codified in Maryland Code (1975, 2005 Repl. Vol.), §§ 11-201 et seq. of the Commercial Law Article. All statutory citations shall refer to that portion of the Maryland Code unless stated otherwise. 2 On September 30, 2004, CCE, joined by PBG and Mars, filed a motion to dismiss the complaint. On May 8, 2006, the Circuit Court issued an order and memorandum of decision dismissing all claims against Mars with prejudice. The motions to dismiss the claims for price discrimination against CCE and PBG were denied. 3 CCE is not a party to this appeal, though it did file an Amicus Curiae brief. Bottling Group, Inc., 393 M d. 245, 9 00 A.2 d 751 ( 2006) . Eastside presents in its brief two questions4 for our rev iew: 1. Does undisputed evidence that a manufacturer or distributor is selling its products to a purchaser at substantially higher prices than the seller charges the purchaser s competitors for the same products satisfy the likelihood of succes s on the m erits factor in a preliminary injun ction action und er the Ma ryland Antitrus t Act? 2. Can a plaintiff see king prelim inary injunctive re lief establish that it has suffered irreparable harm by showing that the defendant s actions have caused a loss of customers and goodwill, or must the plaintiff demonstrate that its business will be destroyed unless an in junction is issued? Our review o f this case is predicated upon our determination of whether the trial court abused its discretion in denying E astside s mo tion for a pre liminary injunctio n. As part o f this review, we analyze the standards f or granting interlocutory injunctions. As a p reliminary matter, we hold that generally injunctive relief is aimed at protecting a party, in a preventative manner, from future acts. In doing so, such injunctions are to maintain the status qu o betw een pa rties until the issue s in con tention a re fully litiga ted. The facts of the case sub judice, as discussed b elow, are n ot sufficien t, at this preliminary stage, to support the granting of a prelimin ary injunc tion. Therefore, we a ffirm the trial co urt s den ial of E astside s motio n for p relimina ry injunctio n. 4 In its petition for certiorari Eastside phrased its first question differently, stating: Does the Maryland Antitrust Act prohibit a manufacturer or distributor from selling its products to a purchaser at substantially higher prices than the seller charges the purchaser s competitors for the same product? -2- I. Facts Eastside operates a business in Baltimore City, Maryland, that sells beverages and snack food items to vending machine ow ners and operators 5 and other wholesale customers. Eastside has been in business for over 30 years. The company first started out as a vending machine owner and operator and then transitioned into a niche one-stop shop distributor to vending machine owners and operators.6 In recent years, however, Eastside has also begun to sell to other wholesale customers, known in the industry as cash and carry businesses. The cash and carry businesses that Eastside now sells to act as wholesalers to small mom and pop stores. As presently constituted, Eastside is essentially composed of a full-line distribution center, or warehouse. It offers its customers a comprehensive selection of items to stock their vending machines. This includes soft drinks, coffee, cocoa mixes, water, and snack foods, such as potato chips, pretzels, an d candy bars . Custome rs can pick u p their products directly from Eastside, or Eastside will deliver them. PBG is a licensed bottler of Pepsi-Cola ( Pepsi ) products, bottling and selling beverage products made under trademark licenses from PepsiCo, Inc. and other companies. The licenses govern how PBG m ay sell the products that it bottles and how it may license 5 Unless otherwise indicated from the context where used, the term vending machine operators refers to businesses that maintain their own vending machines in numerous locations or businesses that distribute only to vending machine operators. 6 From the record, it is apparent that Eastside is somewhat of a unique entity. Its original business structure as a distributor only to vending machine owners and operators sets it apart from many of PBG s other customers. -3- others to sell the products. For example, PBG is authorized to sell only for ultim ate resale to end users (i.e ., the public reta il customer) w hen those end users a re within a s pecific geograp hic boundary that composes PBG s territory. The trademark licenses that PBG operates under pro hibit PBG from selling to custome rs that cause its p roducts to b e resold to customers outside of PBG s territory. When p roduct fro m a bottler is sh ipped and sold to a wholesaler, there is a risk that product may be transhipped by that wholesaler into another bottler s territory, thereby causing a bottler to be in breach of its exclusive licensing agreements.7 Eastside, under various agreements, has purchased Pepsi products from PBG for almost 30 years. Eastside s CEO, Theodore DeWald, Jr., testified that the sale of Pepsi products accounts for appro ximately 40 percent of Ea stside s revenues. Acco rding to his testim ony, in all probab ility, these sales are also attributable to an even greater net portion of revenue because customers who purchase Pepsi products also end up purchasing other non-Pepsi products. Eastside and PBG s business relationship has traditionally been 7 According to PBG, transhipping additionally threatens the business of a bottler for several reasons. Namely, the bottler is unable to control the quality of the transhipped products by ensuring that the product is fresh and meets Best if Used By guidelines. And, the returnable plastic trays in which the product is delivered are costly and are often not returned when product is transhipped. There are possible inferences that may be drawn by a fact-finder from some evidence in the record that some of the Pepsi products wholesaled by Eastside to its purchasers may then have been resold by those purchasers to retail outlets on the Eastern Shore of Maryland an area outside of the area licensed to PBG by PepsiCo, Inc. and in fact, licensed to another distributor. If so, that might constitute a breach of PBG s contract with PepsiCo, Inc. -4- governed by annual rebate contracts. Depending u pon the terms of a p articular year s contract, Eastside would receive various rebates based upon the volume of Pepsi product purchased in relation to the volume it had purchased the previous year. PBG asserts that these contracts and the resulting rebate programs associated with them, how ever, are designed for and offered to PBG s vending customers only. Initially, this did not cause any conflict because from the early 1980 s through late 2003, Ea stside s custo mers we re only vending machine operators.8 Begin ning in Octob er 2003 , howe ver, Eastside also began selling to cash and carry wholesale customers in addition to vending machine operators. On May 7, 2004, as discussed above, Eastside filed a complaint in the Circu it Court for Baltimore City against several parties, including PBG, alleging, in part, that PBG was violating the Maryland Antitrust Act by engaging in unlawful price discrimination. In particular, Eastside alleged that PBG charged Eastside higher prices for Pepsi products than PBG charged other customers such as club stores (Sam s Club)9 and supe rmarkets (Giant and Mars). During M ay 2004, Eastside was re ceiving rebates under a 2004 vending operator 8 The record is not entirely clear as to the composition of Eastside s customers. Vending machine operators are essentially businesses that own one or more vending machines or businesses that resell to other vending machine operators. They purchase the products needed to stock the machines from Eastside. End users then buy the products from the vending machines. Cash and carry businesses operate as wholesalers. They purchase products from Eastside for resale. Mom and pop stores, then, in turn, purchase the products from the cash and carry businesses. In that case, the end user is the customer that purchases products from the mom and pop store. The manner in which the product reaches the end user differs between vending machine operators and cash and carry businesses. 9 Sam s Club was never a party to these proceedings. -5- agreeme nt. Eastside contended that, notwithstanding the rebates it was receiving, PBG was providing Pepsi products to Eastside s competitors at lower cost than Eastside could purchase the pro ducts f rom PB G. The 2004 vending operator agreement provided several different base rebates, all of which were based upon Eastside meeting or exceeding the volume of product that it had purchased for the correspon ding 200 3 Term. E astside wo uld receive quarterly base rebates of $0.95 for each case of 12-ounce cans and $2.30 for each case of 20-ounce bottles that it purchased. In addition to the base rebates, the 2004 agreement provided for two tiered growth rebate schedules, one for carbonated soft drinks ( CSD ) and one for non-carbonated soft drinks ( non-CS D ). For e xample, the CSD g rowth rebate schedule provided that a 1 to 5 percent increase in volume of CSD purchased would generate a $0.50 rebate for each case purchased that exceeded the 2003 volume. From 5 to 10 percent provided a $1.00 per case rebate and above 10 percent was a $1.50 rebate. The record indicates that 2004 was a banner year in sales for Ea stside. Mr. DeW ald testified that total sales for the compan y were a little over $16 million and volume almost doubled from 2003. Therefore, Eastside was paying, with the base rebates, $6.05 per case of cans (base price of $7.00 per case minus $0.95 base rebate) and $11.50 per case of 20-ounce bottles (base price of $13.80 per case minus $2.30 base rebate). Additionally, for all cases purchased above its 2003 volume, Eastside was rece iving from $0.50 to $1 .50 per case in additional growth rebates. PBG honored the agreement throughout the course of 2004, paying E astside all of th e rebates it -6- qualified for. The price rebates for 2 004 am ount[ed] to well in excess of $1 million for the year. The 2004 vending operator agreement terminated per its terms on December 25, 2004. Early in 2005, Joe Kreft, a Senior Key Account Manager with PBG, met with Mr. DeW ald to discuss a p roposed 2 005 ven ding oper ator agreem ent. This ag reement, like the previous years agreements, was uniform for that segment of PBG s client base. In other words, this was the same a greement offered to all vending operators 10 and wa s the only 10 It appears that PBG s vending operator agreements were designed only to provide rebates to vending machine operators, as defined supra. Eastside had been receiving rebates from PBG throughout the years. However, as time passed, Eastside s business developed and transmogrified from being itself a vending machine operator, to becoming a distributor only to vending machine operators, to its present business composition, in which it also began to sell to cash and carry wholesale customers. This apparently is the source of the conflict. It is not entirely clear from the record in this case that the upper level management at PBG was aware that the growth rebates were being paid on the growth of the cash and carry business as well as the vending operator business or that upper level management was even aware that Eastside had built up a cash and carry business that moved products it had been licensed to sell to vending machine operators. While Eastside was itself a vending machine operator, its rebate agreements with PBG were in line with the purpose of the agreement, i.e., to encourage and promote vending sales of Pepsi products. Once Eastside transitioned its business to that of a distributor only to vending machine operators PBG continued to enter into rebate agreements, because Eastside s business still was limited to vending machine operators. While Eastside was no longer technically functioning as a vending machine operator itself, it was still furthering that segment of PBG s sales of Pepsi products. Once Eastside began selling to cash and carry wholesale customers in October of 2003 the impact of which may not have been readily apparent until the end of 2004, or at least may not have been entirely apparent prior to the parties entering into the 2004 agreement Eastside s relationship as a customer changed with PBG. Eastside was no longer a vending machine operator, or in the business of selling only to vending machine operators. Therefore, the structure of the rebate agreements which it had always operated under was no longer directly applicable to its (continued...) -7- rebate program in existence f or 2005 for that segme nt of customers. It offered rebates of $0.95 per case of cans and $2.40 per case of 20-ounce bottles. The growth rebate was pared down to a flat $0.50 per case rebate for any case purchased in ex cess of the prior year s purchases. The agreement also provided specifically that [t]he Customer agrees that it shall not resell the Products to other resellers/distributors, 11 [empha sis added] and included new provisions requiring that the customer purchase Gatorade from PBG rather than from other sources, and requiring that at least 25 percent of the total products purchased from PBG must be non-carbonated beverages in order for the customer to receive an additional $0.25 per case rebate on all products. Following this meeting, negotiations ensued concerning the 2005 agreement. On February 9, 2005, Eastside reje cted the pro posed ag reement, co unter-prop osing with several changes. In particular, Eastside crossed out the language which prohibited resale of pro ducts 10 (...continued) business relationship with PBG. 11 It is apparent from the record that the language resellers/distributors, emphasized above, was meant to pertain to Eastside s cash and carry wholesale customers only. Eastside argues, as discussed infra, that this provision would prevent it from receiving rebates for Pepsi products sold to its vending machine operator customers. PBG, however, contends that sales to those vending operator customers would still qualify for rebates. This is supported by the business relationship of the parties over the years. Prior to 2005, PBG had always paid Eastside rebates on its sales of Pepsi products to vending machine operators. It was not until Eastside began also selling to cash and carry wholesalers and, as a result, in 2004, Eastside s overall sales increased significantly, that PBG added the reseller/distributors limiting language to the 2005 agreement. Additionally, this is consistent with PBG s argument that Eastside s sales to the cash and carry wholesalers created a threat of possible transhipping of Pepsi product, which could thereby violate PBG s exclusive licensing agreements with PepsiCo, Inc. -8- purchased from PBG to other resellers /distribu tors, i.e., c ash and carry cust omers . Add ition ally, Eastside cro ssed out the provision requiring that it purchase Gatorade from PBG and mod ified the perc entage of non-carb onated be verages tha t must be pu rchased to receive the $0.25 rebate from 25 percent to 12 pe rcent. According to M r. DeWald s testim ony, Eastside based these changes on several factors. In regard to the provision relating to the prohib ition of resale to other resellers/distributors, Mr. De Wald state d that all of Eastside s cu stom ers vending mac hine operators o stensibly c ould be considered resellers. They purchase Pepsi products from Eastside and then resell the products to endusers via ven ding m achine s. If he were to sign the agr eement, E astside wo uld be in immedia te breach. Additionally, Eastside supposedly had a separate contract with a subsidiary of PepsiC o, Inc. to purc hase Ga torade and thus, could n ot comm it to purchase that particular product only from PBG. As for the percentage of non-carbonated b everages, Mr. DeW ald testified that non-carbonated beverages were essentially Pepsi s bottled water, Aquafina, and such products had only comprised eight percent of Eastside s purchases for the prior year 2004. Therefore, he thought that it was no t reasonable to increase Ea stside s purchases (and con sequent sa les) of that pro duct to 25 percent of Eastside s total purchases, but that 12 percent would be attainable. In mid-February, Mr. Kreft and another representative from PBG, Doug Aitken, visited Eastside again. The parties went through the agreement line-by-line and Mr. DeWald explained his reasoning for objecting to the terms discussed supra. The me eting -9- conclu ded w ith no ag reeme nt. On Marc h 9, 200 5, repre sentativ es from PBG , name ly, Mr. K reft, M r. Aitke n, and Michael Schwartz, then-Vice President for Food Serv ices, again visited Eastside. Mr. DeWald testified as to his account of the meeting: Q [P]lease tell the Court what happened at this meeting. A The beginning of the meeting, this was the first time I had ever met M r. Schwa rtz and I wanted him to understand a brief history of what Eastside was, how Eastside ca me to be, w here the bu siness had le d through the years, and where it was right now. I explained to him as to how the business operates and how we do our day to day business. We talked on several subjects of general competition in the business between Eastside and he was very interested in other competitors that we have outside the beverage world. ... Q Did you talk about Sam s Club? A Yes, we talked about the club stores and grocery stores, how they conduct business, as well as how the cash and carries and C store operators conduct their business. Q What are C stores? A Convenience stores, convenience and gas. Q Are they customers of yours? A They are customers of the cash and carries. Q And did he - was there any discussion about whether you should or shouldn t be selling to cash and carries in this meeting? A No, we had discu ssed wh o the cash a nd carries w ere in the area, how we dealt with them, how we sold them. PBG also sells them two liters and other products that we don t carry. We discussed different aspects as to how the general business worked with us selling to cash and carries and also the vendin g com panies . Q Okay. Did the subject of rebates come up? A Yes, we talked about - we again went through the contra ct and pretty much line by line again discussing different aspects of the items, such as Gatora de and stuff lik e that. . . . ... Q A Did the subject of transhipping come up? Yes, we talked thoroughly on the subject, [w]hat transhipping is and how -10- it effects the bottlers, ho w it effec ts their territories an d their relations hip with the pare nt co mpa ny. We w ent through pretty much a ll aspects of transhipping and what eff ects it has on p retty much on the consu mer right on all the way back to the bottler and w hat it has to do w ith the e conomics of the c omp any. Q Did Mr. Schwartz at this meeting make any suggestion or accusation that Eastside was in fact participating in transhipping? A No sir. Q At all? A No. ... Q Did the m eeting prod uce any resolu tion of the is sues that yo u were concerne d about? A No it d id not. Q Did there c ome a tim e when you discussed with M r. Schwa rtz what the consequences to your business would be if [PBG] persisted in the course that it had taken regarding rebates? A We had gone through the contract again line by line. When we got to the clause about the end user/consumer, I wanted Mr. Schwartz to understand that this did not apply to us. And the previous history that I had g iven him of the company it was pretty obvious that we did not sell to the end user. Mr. Schwa rtz was prett y definite that he was not paying us n o matter whether I signed the contract or I didn t sign the contract, Eastside wasn t getting paid for the first three months of the first period. Q What did that do in terms of the meeting? A The meeting then, it wa s kind of e nding on a sour note . Mr. Schw artz really wasn t there, he was only there to debate the (inaudible) information about the c omp any, he really didn t want to iron out any of our issues about the contract and/or the term at hand. Q Well what, if any, discussion was there about whether you might have alternative sources to purchase Pepsi products? A Mr. Schwartz, when we came to the end u ser/consum er clause, he said that wouldn t be paid. So Eastside would then operate off of our invoice price. He said that was correct, that was the prices that he was offering me. I said; well then I ju st won t buy it fro m you. H e asked where I wou ld purc hase, I said the club stores, specifically Sam s Club was offering a cheaper price than what I was paying on invoice. Q In other words, at that point Sam s Club was offering to the public Pepsi products at a lower price than you were able to buy them from PBG? A That s correct. -11- Q And you said that to Mr. Schwartz? A Yes. Q And what did h e say in respon se to that? A He said that he doubted whether Sam s Club or any club store or any legitima te custo mer of PBG would sell [to] E astside. It is evident that the parties again review ed the agreemen t and Mr. DeW ald again explained his reasons for disputing the particular provisions. Mr. Schwartz discussed the threat of transhipping with Mr. DeWald and the impact that it could have upon PBG s licensing agreements. The was no evidence in the record, however, that Mr. Schwartz actually accused Eastside of transhipping. It is apparent, how ever, that Mr. Schwartz and PBG believed that Eastside s business co mposition engende red the pos sibility and threat of transhipping PBG s product outside of its territory. In his sworn affidavit, Mr. Schwartz stated: Eastside s assertion that it is operating a business that sells beverages and snack food items to vending machine operators is m islea ding . In re ality, it operates a business that sells much of its volume to retail outlets and wholesalers [i.e., cash and carry customers] supplying retail stores, including stores outside PB G s territory. Alth ough E astside may still m aintain the ab ility to supply vending machine operators, that business has been eclipsed by the busine ss of su pplying re tail stores and w holesa lers. The meeting ended without any decisions being mad e one way or the other. T he record indicates that the parties concluded their discussio n on less tha n cordial term s, with the PBG represe ntatives being e scorted out of E astside s buildin g. Correspondence was exc hanged b etween th e parties cou nsel and, w ith no amic able resolution forthcoming, on M arch 30, 2005, Ea stside filed a motion for a pre liminary injunction prohibiting PBG from denying Eastside rebates on the Pepsi products that Eastside -12- purchases from PBG. On May 19 and 20, 2005, the Circuit Court held an evidentiary hearing on the motion. The court denied the motion, concluding: The Court has reviewed the DMF Leasing case [12] as well as other cases cited by both parties. And the Court is charged with balancing the four factors; likelihood that the Plaintiff will succeed on the merits, the balance of convenience, irreparable harm, and the public interest. The Court is charged with balancing these fou r factors to determin e the appro priateness o f which is to maintain the status quo. With respect to likelihood of success and irreparable harm, which are commo nly regarded as the most significant factors, the Court will say the most about. Howeve r, I assure you that I have balanced all of the factors in making my determination. The issue[] is whether the Plaintiff has shown likelihood of success on a claim of price discrimination and the ev idence is, at this preliminary stage, th in at bes t. The evid ence is that Eastside is now and has for several years been in a c ategory that can be charac terized as a h ybrid, it sells to vending machine operators and with great success in the past several years has mov ed into what s categorized as a cash and carry category. The Plaintiffs have argued that price discrimination is evidenced by PBGs sales of Pepsi products to Sam s Club at prices lower than sales to Eastside. The evidence of that is, I ve said, scan t. But even if true, under the circumstances of this case, the C ourt can no t say that PBG has enga ged in price discrimination. The Defendant s evidence of the price of 20 ounce Pepsi bottles indicates that Sam s Club pays more than Eastside, the invoices presented by Eastside of sales to third parties by Sam s Club suggests that the price must be less than the D efendan ts indicate. H oweve r, Mr. De Wald testif ied that Eastside is the major d istributor of P epsi produ cts in the Baltimore area. He s also testified that Sam s Club has targeted his business. He has testified that he sells his products below cost to keep his client base and under the fact presented it is just as reasonable for this Co urt to conclud e that Sam s Club is selling below cost as is Eastside in an effort to syphon off Eastside s business. Ac cord ingly, this Court does not conclude on the scant evidence 12 DMF Leasing, Inc. v. Budget Rent-A-Car of Maryland, Inc., 161 Md. App. 640, 871 A.2d 639 (2005). -13- presented at this hearing that PBG is engaged in price discrimination because of the price at which Sam s Club sells Pepsi 20 o unce bottle s. With resp ect to the 11.5 ounce cans, there s no evidence that Eastside purchased the same product as Sam s Club and therefore no finding of price discrimination can be gleaned from tha t evidence either. Mars and Giant are in a business so different fro m Eastside as to present no valid basis for comparison of PBG s pric ing s ched ules. In su mmary, the Plaintiff has failed to carry its burden to show a likelihood of success at this very preliminary stage. With respect to irreparable harm, the testimony is that Pepsi prod ucts are imp ortant to Ea stside, both d irectly, that is for the revenue produced from resale, and indirectly, that is as a m agnet that attra cts custom ers wh o then p urchas e other p roducts offer ed by Ea stside. Testim ony is that without rebates Eastside will be forced to raise its prices. A rise in prices will cause customers to look to other distributors who can offer a lower p rice. And eventually Eastside will be adversely impacted. Mr. DeW ald testified ho wever th at custome rs are attracted to Eastside n ot only for Pepsi prod ucts at attractiv e prices, but also because Eastside offers the convenience of offering multiple vending machine products in one location. There has been no quantification or even an attempt at a quantification of the effect of a highe r price for P epsi produ cts on ove rall sales. And this Court can not speculate that the harm would be substantial or irreparable, there are simply too many va riables n ot addr essed. Moreove r, in light of the fact that the uncontroverted evidence is that Eastside s business has significantly changed in the past few years and that PBGs pricing hasn t kept pace with that change, that is that PBG sold Eastside as a distributor to vending machine operators when in fact they added cash and carry stores to their custom er base for the p ast years. It s added to its customer base for its best years it has ever had for the past several years. In light of these facts PB G is now in early 2005 just catching up with its pricing practices. It s catching those pricing packages up to the reality of Eastside s business. And g iven tha t fact the Court c an t say th at Easts ide is ha rmed a t all. With respect to the balance of convenience measured by whether there s greater harm would be inflicted upon the Defendant by granting the injunction then would result from a refusal, this factor weighs in Eastside s favor although there was no evidence of PBGs revenues. There was evidence of the scale of its operations and th is Court ha s no doub t that PBG could absorb the cost of paying Eastside rebates during the course of this litigation. With respect to the public interest, it is in this case closely tied to the likelihood of success. If there is in fact price discrimination, then the public has an interest in preventing it. If not, the public has an interest in seeing that -14- the parties reach their own contractua l agreements and [not] have those imposed upon them by the C ourt. As I ve said, the Court has balanced all of these factors and conclude s that the Plaintiff has not met its burden for issuanc e of a p relimina ry injunctio n and th e motio n is den ied. On May 23, 20 05, pursua nt to this ruling, the court issued an order denying Eastside s motion for a preliminary injunction. On May 26, 2005, Eastside appealed to the Court of Special Appeals. On July 6, 2005, the Circuit Court denied Eastside s motion for an injunction pending appeal to the Court of Special Appeals. And, on July 7, 2005, the Court of Special Appeals entered an order d enying E astside s additio nal mo tion for an injun ction pe nding a ppeal. On March 20, 2006, the Court of Special Appeals, in an unreported opinion, affirmed the decision of the Circuit Court. The Court of Special Appeals, however, disagreed with some of the Circuit Co urt s applicatio n of the law . In particular, the intermediate appellate court found that the balance of convenience factor weighed in favor of PBG: We cannot agree with the circuit court that the balance of convenience, or balancing of harms, depending upon the granting or denial of the injunction, favored Eastsid e. There is no doub t that Eastside will suffer lo sses as a resu lt of the withholding of the rebates, and we are confident, as was the court, that [PBG], based upon the scale of its operations, could easily absorb the cost of paying Eastside rebates. The fac t remains, howeve r, that currently, these parties are not bound by any contractual agreement, and if this injunction were to issue, [PBG] would have to 1) revive a rebate system it discontinued for one, specific customer, and 2) be obligated on a contract to which it would not enter on its ow n terms . As such, we hold th e balance o f conven ience in this case fa vors [P BG]. After finding that the balance of convenience factor weighed in fav or of PBG , the court focused its attention on Eastside s likelihood of success on the merits. The Court of Special -15- Appea ls agreed with the Circuit Cou rt that, at this stage and, under this standard, Ea stside s evidence did not show a likelihood of success on the merits of its claim against [PBG]. The court then conducted an extensive review of law pertaining to the issuanc e of preliminary injunctions. In sum, the court stated: First, we review the issuance of a preliminary injunction on an abuse of discretion standa rd. As n oted, . . . failure of the party seeking the preliminary injunction to establish the existence of even one of the four factors will preclude the grant of preliminary relief. With respect to injunctions sought to prevent termination of a contractual relationship, courts disfavor granting injunctive relief in the absence of an issue regarding the legality of the termination of an agreement or a statutory basis. Further, no relief will be granted where the harm claimed is not caused by the wrong alleged in the underlying action, even though there is a substantial show of likelihood of success at a trial on the m erits, particularly wh ere there ex ists an adeq uate remedy at law. Fina lly, in an appropriate case, the status quo is the last, actual, peace able, no n-cont ested sta tus of th e parties . The Court of Special Appeals concluded: At the hearing on the motion and on appeal, [PBG s] position has been - and contin ues to be - that the central issue on the merits is not price discrimination, but rather failed contract negotiations. Whether this statement of [PBG s] position is accurate, for our purposes, we have before us on this appeal two parties, who were formerly bound by a contractual arrangement which no longer has any force or effect. . . . In calculating the potential loss, we look to the last actual, peaceable, non-contested status of the parties and freeze in time the obligation s and ben efits flowing from the relationship at that time. The date of the expiration of the original Agreement was December 25, 2004 and Eastside submitted to [PBG] a contract which the latter had proposed, with substantial revisions, constituting a counteroffe r on February 9, 2005. In their face-to-face meeting on March 9, 2005, all negotiations collapsed. Eastside filed its motion for preliminary injunction on March 30, 2005. Thus, the last peaceable, non-contested status of the parties occurred after the expiration of the Agreement at issue. Eastside therefore claims irreparable harm as a result of the termination of rebate payments provided -16- under an Agreement that had expired by its own terms. Mo reover, Eastside s claim of price discrimination has no nexus to the circumstances underlying the termination of the Agreement. The expiration date of the Agreement was established long before the anti-trust violations were alleged to have taken place and was in no w ay causally related. T he net result is th at, notwithstanding Eastside s claim that loss of the rebate revenue will result in destruction of its busine ss, [Eastside s] motion f or a prelimin ary injunction must fail by reason of the inability to demonstrate irreparable harm based on a necessity to maintain the status quo. Stated otherwise, the status quo, at best, relegates [Eastside] to the position o f an offe ree to a prop osed new Agreem ent, who made a counteroffer which was rejected. The benefit Eastside seeks to preserve in maintaining the status quo, i.e., the rebate program, lapsed when the original Ag reement e xpired by its ow n terms. Co ntinuing th e parties in their present circu mstance - in which the y continue in an ad hoc business relationship without the rebate p rogram - in effect, constitutes the status quo. Acc ordingly, we are satisfied that Eastside has an adequate remedy at law and its motio n for p relimina ry injunctio n, theref ore, sho uld be d enied. II. Standard of Review Our scope of review in th is case is limited to determining whether the Circu it Court abused its discretion in denying Ea stside s m otion fo r prelim inary injun ction. El Bey v. Moorish Science Temple of Am., Inc., 362 Md. 339, 354, 765 A.2d 132, 140 (2001); Colandrea v. Wilde Lake Community Ass n, Inc., 361 Md. 371, 394, 761 A.2d 899, 911 (2000). The Court recently described the abuse of discretion standard in Dehn v. Edgecombe, 384 Md. 60 6, 865 A.2d 60 3 (2005): Abuse of discretion is one of those very general, amorphous terms that appellate courts use and apply with great frequency but which they have defined in many diff erent ways. . . . [A] ruling reviewed under an abuse of discretion standard will not be rev ersed simply because the ap pellate court would not have made the same ruling. The decision under consideration has to be well removed from any center mark imagined by the reviewing court and beyond the fringe of what the court deems minimally acceptable. That kind of distance can arise in a number of ways, among which are that the ruling either -17- does not logically follow from the findings upon which it supposedly rests or has no rea sonable relationship to its announ ced objec tive. That, w e think, is included within the notion of untenable grounds, violative of fact and logic, and against the logic and effect of facts and inf erences before the co urt. 384 Md. at 628, 865 A.2d at 616 (some quotations omitted) (quoting North v. N orth, 102 Md. App. 1, 13-14, 648 A.2d 1025, 1031- 32 (19 94)). See also Gray v. State, 388 Md. 366, 38384, 879 A.2d 1 064, 10 73-74 (2005 ) (albeit in a crimin al case) . It is well established that the granting or denial of an interlocutory injunction is a matter resting in the sound discretion of the cou rt. State Dep t v. Baltimor e Coun ty, 281 Md. 548, 554, 383 A.2d 51, 55 (1977). In junc tive r elief is a prev enta tive a nd protective remedy, aimed at future acts, and is not inte nded to redress past w rongs. El Bey, 362 Md. at 353, 765 A.2d at 139 (quotations omitted) (citing Colandrea, 361 Md. at 394, 761 A.2d at 911 (quoting Carroll County Ethics Comm n v. Lennon, 119 Md. App. 49, 58, 703 A.2d 1338, 1342-43 (1998))). The Court set forth the standard for granting interlocutory injun ctions in Department of Transportation v. Armacost, 299 Md. 392 , 474 A.2d 191 (1984): As a general ru le, the appro priateness o f granting a n interlocuto ry injunction is determined by examining four factors: (1) the likelihood that the plaintiff will succeed on the merits; (2) the balance of convenience determined by whether greater injury would be done to the defendant by granting the injunction than would result from its refusal; (3) whether the plaintiff will suffer irreparable injury unless the injunction is granted; and (4) the public in terest. State Dep t v. Baltimor e Coun ty, 281 Md. 548, 554-57, 383 A.2d 51 (1977). [I]f the facts as stated in the bill of complaint or, when appropriate, as shown by the evidence, are not full and sufficiently definite and clear, in support of the right asserted, and that such right has been violated, the court will not order prelimin ary relief. -18- Id. at 554, 383 A.2d 51, quoting from Baltimore v. Warren Manuf. Co., 59 Md. 96, 105 (1882). It is well accepted that an in terlocutory injunction should not be granted unless the party seeking it demonstrates a likelihood of success on the merits. 1 High on Injunctions § 5 (3d ed. 1 905); 4 3 C.J.S . Injunctions §§ 17 and 20 (19 78). Armacost, 299 Md. at 404-05, 474 A.2d at 197 (footnote omitted). The burden of proving the facts necessary to satisfy these factors rests on the party seeking the interlocutory injuncti on. Fogle v. H & G Resta urant, Inc., 337 Md. 441, 456, 654 A.2d 449, 456 (1995). And, the party seeking the injunction must prove the existence of all four of the factors set forth in Armacost in order to be entitled to preliminary relief. The failure to prove the existence of even one of the four factors will pre clude th e grant o f prelim inary relief . Fogle, 337 Md. at 45 6, 654 A .2d at 456 (c itations omitted). Furthermore, in regard to the likelihood of succes s factor, a p arty seeking the interlocutory injun ction mu st establish that it has a real probability of prevailing on the merits, not merely a remote possibility of doing so. Id. at 456, 654 A.2d at 456-57. Preliminary injunctions are designed to maintain the status quo between parties during the course of litigati on. Ehrlich v. Perez, ___ Md. ____ (2005) (No. 137, September Term, 2005) (filed Oct. 1 2, 2006); State Dep t v. Baltimor e Coun ty, 281 Md. at 558-59, 383 A.2d at 57; Harford Co. Educ. Ass n v. Board, 281 Md. 574, 585, 380 A.2d 1041, 1048 (1977) ( [I]t is fundamental that a preliminary injunction does not issue as a matter of rig ht, but only where it is neces sary in order to preserve the status quo. ) (citations omitted) (quotations omitted); Maloof v. Dep t of Environment, 136 Md. App. 682, 693, 767 A.2d 372, 378 -19- (2001). The status quo to be preserved by a preliminary injunction has been described as the last, actual, peaceable, noncontested status which preceded the pending controversy. State Dep t v. B altimore C ounty, 281 Md. at 556 n.9, 383 A.2d at 56 n.9 (citing 43 C.J.S. Injunctions § 17, at 4 28 & n . 90 (19 45)). Moreover, the United States Court of Appeals for the Fourth Circuit has stated that: the first step [in a trial court s determination as to whether to grant or deny a preliminary injunction] is for the court to balance the likelihood of irreparable harm to the plaintiff aga inst the likeliho od of ha rm to the defenda nt; and if a decided imbalance of hardship should appear in the plaintiff s favor, then the likelihood-of-success test is displaced by Judge Jerome Frank s famous formulation: [I]t will ordinarily be enough that the plaintiff has raised questions going to the merits so serious, substantial, difficult and doubtful, as to make them fair ground for litigation and thus for more deliberate investigation. Hamilton Watch Co. v. Benrus Watch Co., [206 F.2d 738, 740, 743 (2d C ir. 1953)]; Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1205 (2d Cir. 1970) . Blackwelder Furniture Co. v. Seilig Manufacturing Co., 550 F.2d 189, 195 (4th Cir. 1977); Lerner v. Lerner, 306 Md. 771, 783-84, 511 A.2d 501, 507 (1986). However, if there is no imbalance of hardship in favor of the plaintiff, then the probability of success beg ins to assume real significance, and interim relief is more likely to require a clear showing of a likelihood of success. Direx Israel, Ltd. v. Breakthrough Medical Corp., 952 F.2d 802, 808 (4th Cir. 1991) (quoting Blackwelder, 550 F.2d at 195 n.3). And even if the balance of hardship is found to weigh in favor of the plain tiff, it remains merely one strong factor to be weighed alongside both the likely harm to the def endan t and the public in terest. -20- Blackwelder, 550 F.2d at 195 (citing Dino DeLaurentiis Cinematografica, S.p.A. v. D-150, Inc., 366 F.2d 373, 37 5 (2d Cir. 1966)). III. Discussion Eastside argues that the Court of Special Appeals erred in its interpretation of two factors under Armacost, i.e., the likelihood of success on the merits and whether the plaintiff will suffer irreparable harm unless an injunction is granted. Thus, Eastside asserts that [p]reliminary injunctive relie f is warranted because [PBG] has violated the Maryland Antitrust Act by charging Eastside significa ntly higher prices than [PBG ] charges Eastside s competitors for the same products. In opposition, PBG argues that the Court of Special Appea ls was corre ct in its interpretation because granting the prelimin ary injunction w ould alter, rather than maintain, the status quo and, in addition, based upon the scant evidence presented, Eastside failed to carry its burden to establish all four factors required u nder Armacost. As a resu lt, PBG asserts that the Court of Special Appeals was correct in finding no abu se of d iscretion by the trial c ourt. Denial of the Motion for Preliminary Injunction Our review of the case sub judice is based upon w hether the C ircuit Court a bused its discretion in denying E astside s mo tion for a pre liminary injunctio n. While w e disagree w ith some of the Circ uit Court s a pplication of the law to its ruling, it did not commit an abuse of discretion. In this case, the ruling denial of the motion for preliminary injunction logically follows from the f inding s upon which it rests. -21- See Dehn, 384 Md. at 628, 865 A.2d at 616. First and forem ost, it must be re iterated that inju nctive relief is a preventa tive and protective remed y, aimed a t future acts, and is not inte nded to redress past w rongs. El Bey, 362 Md. at 353, 765 A.2d at 139 (citations omitted) (quotations o mitted). For this reason alone, the Circuit Co urt was co rrect in denying the motion. Eastside contends that it seeks through a pre limin ary injunction to ameliorate the effect of PBG s alleged price discrimination. The relief re quested b y Eastside s m otion, how ever, does n ot serve to alleviate the alleg ed price discrim ination a sserted b y Eastside in its com plaint. Eastside filed its com plaint on M ay 7, 2004, while it was still receiving rebates pursuant to its 2004 vending operator agreement. It continued to receive rebates throughout 2004 until Decem ber 25 of that year, when the agreement terminated of its own accord . It was only when negotiation s broke do wn con cerning the 2005 ag reement, in March 2005, that Eastside filed this motion for a preliminary injunction. In its memora ndum in support of its motion for a preliminary injunction Eastside specifically asked for relief in the form of a preliminary injunction prohibiting [PBG] from excluding Ea stside from any and all reb ate programs and requ iring [PB G] to pay Ea stside the sam e rebates tha t [PBG ] previously offered Eastside and is continuing to off er Eastside s competitors. In addition, Eastside s proposed order stated that [PBG] shall pay rebates to Eastside f or all reb ate perio ds . . . according to the same terms and conditions as Eastside receiv ed such rebates during the period of Sep tembe r 5, 200 4 throu gh De cemb er 25, 20 04. -22- Eastside contends that restoration of the rebates was no t the ultimate o r only objective of Eastside s request for injunctive relief. And that [r]einstating the rebates was simply one of several ways to accomplish an abatement of PBG s alleged unlawful price discrimination. This assertion, howev er, is contrary to the overall tenor of Eastside s argument. Eastside s entire argument is driven by the discussion of rebates.13 A contractual agreement pertaining to rebates ceased to exist on December 25, 2004. Requiring PBG to pay Eastside rebates when the y had neither been doing s o, nor were required to do so for almost three month s, is not a p reventa tive and protecti ve rem edy. This injunction, were it to be granted, would not be protecting Eastside from some future act of PBG. Rather, it would be forcing PBG to reinstate a contract that both pa rties agreed w ould terminate on Dec ember 25 , 2004. Th is goes to the balance of hardships equation, as well as to whether an injunctio n would serve to maintain the status quo. We shall later address each in turn. Add ition ally, PBG argues that E astside s mo tion for prelim inary injunction is entirely about rebate checks and the terminated contractual relationship under wh ich rebates were paid not about price discrimination.14 We agree. PBG stated that the loss of rebates as a 13 Eastside argues that the court could impose other relief to abate the alleged price discrimination, i.e., PBG could lower Eastside s invoice price or raise the price that it charges Eastside s competitors. 14 PBG argues that the motion for preliminary injunction is not based on price discrimination, but rather on rebates in particular, those rebates provided for in the 2004 agreement. This argument lends itself to the underlying situation extant in the case sub (continued...) -23- result of the collapse of contractual negotiations cannot be remedied under a theory of price discrimination, and accordingly there is no likelihood that Eastside will prevail on its claim, citing two ca ses in su pport. See Omeg a World Travel, Inc. v. Trans World Airlines, 111 F.3d 14, 16 (4th Cir. 1997) ( [A] preliminary injunction may never issue to prevent an injury or harm which not even the moving party contends was caused by the wrong claimed in the underlying ac tion. ); Devose v. Herrington, 42 F.3 d 470, 4 71 (8th Cir. 199 4). The first step in dete rmining w hether to gra nt or deny a m otion for pr eliminary injunction is to balance the likelihood of irreparable harm to the plaintiff against the likelihood of harm to the defen dant, i.e ., the bala nce of hardsh ips. Blackwelder, 550 F.2d at 195. We agree with the Court of Special Appeals that the balance of hardships did not favor Eastside, it favored PBG: 14 (...continued) judice. The rebates Eastside received through 2004 were premised on Eastside being a vending operator, as defined supra, or selling only to vending owners and operators, as discussed supra. The facts show that Eastside changed its business model in October of 2003. At that time, a large portion of its business began to encompass cash and carry wholesale businesses. Throughout 2004, Eastside was receiving vending rebates on its sales to these non-vending customers. This apparently operated greatly to Eastside s benefit as 2004 was its best sales year ever. PBG has the right to decide with whom it transacts business. To that effect, once the 2004 agreement terminated, PBG could have made the decision not to sell any Pepsi products to Eastside. PBG, however, offered Eastside a 2005 agreement which provided for rebates, subject to certain criteria. Eastside had the ability to negotiate that contract, but negotiations fell through. Eastside does not now have the right to force PBG to pay rebates based upon the terminated 2004 agreement, an agreement Eastside may have violated by selling to cash and carry customers and receiving rebates intended to apply only to its business of distributing to vending machine operators. -24- The fact remains, however, that currently, these parties are not bound by any contractual agreeme nt, and if this injunction were to issue, [PBG] would have to 1) revive a rebate system it discontinued for one, specific customer, and 2) be obligated on a contra ct to which it would not enter on its own terms. As such, w e hold th e balan ce of c onven ience in this case favors [PBG ]. Eastside s inability to receive rebates during the period subsequent to the termination of the 2004 agreement may have been detrimental to its business, but any such detriment does not outweigh the hardship that would be imposed on PBG if it was forced to pay rebates for which it was not contractually obligated. Therefore, under our finding that the balance of hardships weighs in favor of PBG, interim relief is more likely to require a clear showing of a likelihood of success. Direx Israel, Ltd., 952 F.2d at 808. Additionally, it is important to discuss whethe r the granting of a preliminary injunction would m aintain the statu s quo in the case sub judice. As stated supra, it is fundamental that a preliminary injunction does not issue as a matter of right, but only where it is necessary in order to preserve the status quo. Harford Co . Educ. Ass n, 281 Md. at 585, 380 A.2d at 1048. In order to resolve this, we must first establish what the status quo was in this case. Ord inarily, the status qu o is the last, actual, peaceable, non-contested status which prec eded the p ending c ontroversy. State Dep t v. Baltimore County , 281 Md. at 556 n.9, 383 A.2d at 56 n.9. The Court of Special Appeals found that the last peaceable, noncontested status of the parties occurred after the expiration of the [2004 vending operator agreem ent]. In the present posture of the case, the pending controversy is the denial by the trial cou rt of Ea stside s r equest for a pr elimina ry injunctio n. -25- Even if th e pending controvers y in this case is the underlying complaint concerning price discrimination, which was filed on May 7, 2004, Eastside entered into the 2004 vending operator agreement with PBG, effective, March 21, 2004 prior to filing the complaint and initiating the pending controv ersy. Therefore, the 2004 agreement was freely negotiated before the complaint was filed, at which time the status of the parties was pea ceable and noncontested. It is uncontro verted that the 2004 ag reement, and any rebates received thereunder, would termina te by its ow n freely n egotiate d terms on De cemb er 25, 20 04. The facts indicate that PBG fully complied with all of the terms of the 2004 agreeme nt, througho ut the cours e of the pe nding price discrimination controversy. At the time it was exec uted, there w as no gua rantee or req uirement th at PBG would c ontinue to offer Eastside rebates following the termination of the 2004 agreeme nt or that it would even agree to any further contracts. As such, the Court of Special Appeals correctly determined that Eastside s claim of price discrimination has no nexus to the circumstances underlying the termination of the Agreement. The expiration date of the Agreement was established long before the anti-trust violation s were alleged to have taken place and was in no way causally related. The agreement was not terminated as a result of Eastside s price discrimination allegations and claims, but by the agreement s own predetermined date. We agree with the court s finding that the benefit Eastside seeks to preserve in maintaining the status quo, i.e., the rebate program, lapsed when the original Agreement expired by its own terms. Continuin g the parties in their present circu mstance - in which they continue in an ad -26- hoc business relationship without the rebate program - in effect, constitutes the status quo. The status quo was that the 2004 a greemen t, which provided for rebates, would terminate on December 25, 2004. Forcing PBG to pay Eastside rebates via a preliminary injun ction wou ld have the effect of altering the status quo of the parties, which would be contrary to the purpose of preliminary injunctions. Therefore, the motion was properly denied. JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. COST S IN THIS COURT AND IN THE COURT OF SPECIAL APPEALS TO BE PAID BY THE PETITIONER. -27-

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