Management Registry, Inc. Plaintiff- Appellant
A.W. Companies, Inc.; Allan K. Brown; Wendy Brown Defendants - Appellees Eric Berg Defendant Management Registry, Inc. Plaintiff- Appellant
A.W. Companies, Inc.; Allan K. Brown; Wendy Brown Defendants - Appellees Eric Berg Defendant
Submitted: November 14, 2018
Appeals from United States District Court for the District of
Minnesota - Minneapolis
COLLOTON, SHEPHERD, and STRAS, Circuit Judges.
appeal arises out of a contentious business deal. Management
Registry, Inc., a large Kentucky staffing company, acquired a
family of smaller staffing companies operating under the
brand "AllStaff." When negotiations grew sour
between some of the participants, two-Allan and Wendy
Brown-formed a rival company. Management Registry sought a
preliminary injunction and an injunction pending appeal to
prevent this newly formed company from competing against it.
The district court declined to grant either, and we affirm.
effort to expand its business, Management Registry entered
into discussions to acquire AllStaff companies. Following
months of negotiations, Management Registry agreed to
purchase the whole family of businesses, with their
president, Allan, staying on to run them. There was also an
understanding that Allan's wife, Wendy, would separately
negotiate to purchase one of the AllStaff companies back from
first, the deal proceeded as planned. But the negotiations
between Management Registry and Wendy eventually fell apart,
which led to Allan's departure and his decision to form a
rival company with Wendy. The new company, A.W. Companies,
Inc., recruited Management Registry employees and allegedly
asked that they bring their computers, client files, and
other proprietary information with them.
Registry sued A.W., Allan, and Wendy in federal district
court, seeking, among other things, a preliminary injunction.
Following briefing and a hearing, the district court denied
the motion due to both the presence of material factual
disputes and the absence of evidence showing how Management
Registry would be irreparably harmed without an injunction.
Management Registry appeals the decision not to grant
injunctive relief, arguing that it is likely to prevail on
the merits and that, if it does not receive an injunction, it
will continue to suffer irreparable harm. See 28
U.S.C. § 1292(a)(1) (granting appellate jurisdiction
over the denial of an injunction).
determining whether to grant a preliminary injunction,
district courts must weigh four factors: "(1) the threat
of irreparable harm to the movant; (2) the state of the
balance between this harm and the injury that granting the
injunction will inflict on [the nonmovant]; (3) the
probability that [the] movant will succeed on the merits; and
(4) the public interest." Dataphase Sys., Inc. v. CL
Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc).
As we have explained, "[a] preliminary injunction is an
extraordinary remedy," and "[t]he party seeking
injunctive relief bears the burden of proving" that
these factors weigh in its favor. Watkins Inc. v.
Lewis, 346 F.3d 841, 844 (8th Cir. 2003). We will
reverse a decision to deny a preliminary injunction only if
the district court has abused its discretion, which happens
if the decision rests "on clearly erroneous factual
findings or erroneous legal conclusions." Home
Instead, Inc. v. Florance, 721 F.3d 494, 497 (8th Cir.
2013) (citation omitted).
district court determined that Management Registry had not
met its burden of showing irreparable harm. Gen. Motors
Corp. v. Harry Brown's, LLC, 563 F.3d 312, 318-19
(8th Cir. 2009) (clarifying that the "burden [is] on
[the movant] to establish the threat of irreparable
injury"). To receive a preliminary injunction,
Management Registry had to establish that it had "no
adequate remedy at law" because "its injuries
[could not] be fully compensated through an award of
damages." Id. at 319. It had a potentially
viable theory-it was continuing to lose goodwill with its
employees and customers-but not enough evidence or analysis
to support it. See Iowa Utils. Bd. v. FCC, 109 F.3d
418, 426 (8th Cir. 1996) (explaining that a loss of goodwill
can be an irreparable harm).
fact, Management Registry presented evidence suggesting the
opposite: that an award of money damages would fully
compensate it because its losses are quantifiable. For
example, Management Registry claimed that A.W.'s actions
led to the loss of three major accounts, which cut its
revenues by $65, 000 per week. To be sure, Management
Registry claims to have lost other things too, such as
customer files and other intellectual property. But beyond
just asking the district court to trust its assessment that
these harms are unquantifiable, it never persuasively
explained why money damages could not compensate it for these
losses as well. With the burden on Management Registry, it
was not "error for the district court to require [more]
evidence" than just a discussion of "general
business principles" and a series of assurances that its
business would be irreparably harmed if it did not receive an
injunction. Gen. Motors, 563 F.3d at 319-20.
the failure to show irreparable harm was a sufficient reason
to deny a preliminary injunction, see Gelco Corp. v.
Coniston Partners, 811 F.2d 414, 418 (8th Cir. 1987),
Management Registry also failed to establish that it was
likely to succeed on the merits, see Dataphase, 640
F.2d at 113 (suggesting that if a movant cannot make a strong
showing of harm, it "faces a heavy burden" of
showing it will ultimately prevail). It alleged ten claims in
its complaint, running the gamut from equitable to contract-
and tort-based claims. Yet rather than explaining why it was
likely to prevail on the merits of those claims, it devoted
most of its memorandum accompanying its
preliminary-injunction motion to chronicling the Browns'
alleged misdeeds, regardless of their relevance to the
motion. It was not up to the district court to try to then
connect the dots between Management Registry's
allegations and its ...