Ross-Simons of Warwick, Inc. v. Baccarat, Inc.

United States Court of Appeals
For the First Circuit

No. 99-2223

ROSS-SIMONS OF WARWICK, INC., ET AL.,

Plaintiffs, Appellees,

v.

BACCARAT, INC.,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Ronald R. Lagueux, U.S. District Judge]

Before

Selya, Circuit Judge,

Cyr, Senior Circuit Judge,

and Stahl, Circuit Judge.

Jeffrey A. Oppenheim, with whom Kane Kessler, P.C., Joseph
V. Cavanagh, Jr. and Blish & Cavanagh were on brief, for
appellant.
Steven E. Snow, with whom Brian C. Newberry and Partridge,
Snow & Hahn LLP were on brief, for appellees.

June 22, 2000
 SELYA, Circuit Judge. A few years ago, we ventured

into the high-end retail market for fine crystal and upheld a

preliminary injunction issued in favor of a group of affiliated

retailers (collectively, "Ross-Simons") against Baccarat, Inc.

See Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12

(1st Cir. 1996) ( Ross-Simons I). This appeal, in which Baccarat

asks us to dissolve a permanent injunction compelling it to

continue dealing with Ross-Simons, requires us to revisit those

purlieus. As before, Baccarat fails to make the sale.

I. BACKGROUND

Because we previously rehearsed the pertinent facts,

see id. at 14-15, we provide here only a simple sketch,

embellished with the new developments relevant to this appeal.

Baccarat distributes a prestigious line of French lead

crystal. For its part, Ross-Simons sells a variety of items,

including crystal and tableware, at widely dispersed retail

stores and through an enormously successful direct-mail catalog.

In the fullness of time, Baccarat, apparently disturbed by Ross-

Simons's aggressive pricing policies, took steps to block the

latter's access to Baccarat's wares. Ross-Simons responded by

filing an antitrust suit.

That declaration of war yielded an uneasy peace: the

parties settled out of court, executing a written agreement on

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November 24, 1992 (the "1992 Agreement"). Pursuant to that

agreement, Ross-Simons dismissed its action without prejudice.

In return, Baccarat appointed Ross-Simons as an authorized

dealer "entitled to purchase and resell [Baccarat crystal] at

such prices and upon such terms as are available to other

authorized dealers." Baccarat also agreed "not [to] terminate

Ross-Simons' status as an authorized dealer, nor otherwise

discriminate against Ross-Simons in any manner, as a result of

any failure or refusal by Ross-Simons to adhere to suggested

resale prices or due to Ross-Simons' marketing through direct-

mail catalogs." Although the 1992 Agreement contained no

durational term, it specifically provided that changed

circumstances, in and of themselves, would not suffice as a

basis for extinguishment of its covenants and conditions.

In late 1994, shortly after new management assumed

control of Baccarat, this fragile relationship shattered.

Concerned about maintaining the luster of its name, Baccarat

instituted a new authorized dealer program, which, among other

things, precluded dealers from advertising Baccarat products in

any printed medium that — like the Ross-Simons catalog —

promoted a sizeable proportion (more than 25%) of "off-price"

items. When Ross-Simons balked, Baccarat refused to fill its

orders.

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 The hostilities resumed: Ross-Simons again filed suit,

this time alleging a breach of the 1992 Agreement. Citing

diversity of citizenship and the existence of a controversy in

the requisite amount, Baccarat removed the case to Rhode

Island's federal district court. See 28 U.S.C. §§ 1332(a),

1441. The court, acting through Judge Boyle, issued a

preliminary injunction directing Baccarat to supply Ross-Simons

pendente lite. We upheld this order. See Ross-Simons I, 102

F.3d at 12.

The battle raged on, and the lower court, this time

acting through Judge Lagueux, subsequently rejected Baccarat's

motion for summary judgment. See Ross-Simons of Warwick, Inc.

v. Baccarat, Inc., 182 F.R.D. 386 (D.R.I. 1998) (Ross-Simons

II). Then, following a three-day bench trial, Judge Lagueux

entered a permanent injunction in favor of Ross-Simons. See

Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 66 F. Supp. 2d

317 (D.R.I. 1999) (Ross-Simons III). Baccarat again appeals.

II. ANALYSIS

We take up each tine of Baccarat's three-pronged attack

on the lower court's disposition. In doing so, we apply the

substantive law of Rhode Island. See, e.g., Fithian v. Reed,

204 F.3d 306, 308 (1st Cir. 2000); Daigle v. Maine Med. Ctr., 14

F.3d 684, 689-90 (1st Cir. 1994).

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 A. Duration of the 1992 Agreement.

The centerpiece of Baccarat's appeal is its contention

that the district court erred by not placing a finite temporal

limit on the decree. This contention springs from the concept

that the 1992 Agreement, if it has not already expired, will

become terminable after the passage of a commercially reasonable

period of time. The district court rejected this contention,

ostensibly relying on the plain language and purpose of the

contract. See Ross-Simons III, 66 F. Supp. 2d at 325-26.

Importantly, however, the court also found as a fact that when

the parties entered into the 1992 Agreement, they intended to

establish a long-term relationship. See id. at 320.

We generally review the grant or denial of injunctive

relief for abuse of discretion. See Ross-Simons I, 102 F.3d at

16. Withal, the standard of review is multi-dimensional and may

vary depending on the specific issue under consideration. See

Langlois v. Abington Housing Auth., 207 F.3d 43, 47 (1st Cir.

2000). Here, we review the lower court's interpretation of the

language and purpose of the contract de novo and its findings of

fact for clear error. See United States Liab. Ins. Co. v.

Selman, 70 F.3d 684, 687 (1st Cir. 1995). Moreover, we do not

consider ourselves bound by the trial court's rationale, but may

affirm its judgment for any valid reason that finds support in

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the record. See Phillips Exeter Academy v. Howard Phillips

Fund, Inc., 196 F.3d 284, 288 (1st Cir. 1999); Garside v. Osco

Drug, Inc., 895 F.2d 46, 48-49 (1st Cir. 1990).

The district court's reasoning spans its two most

recent published opinions. At the summary judgment stage, the

court rejected Baccarat's argument that the 1992 Agreement was

too indefinite to be enforceable, holding instead that the

agreement fell into the category of contracts terminable upon

the happening of a specific event. See Ross-Simons II, 182

F.R.D. at 395-97. In reaching this conclusion, the court relied

heavily on Payroll Express Corp. v. Aetna Cas. & Sur. Co., 659

F.2d 285 (2d Cir. 1981). The relevant insurance contract in

that case did not specify a duration but stated only that it was

terminable by the insurer for nonpayment of premiums. See id.

at 288-89. New York's policy against perpetual commitments

notwithstanding, the Second Circuit held that the insurer could

not cancel the policy as long as the insured continued to pay

the premium. See id. at 292. Embracing the logic of Payroll

Express, the court below determined that the 1992 Agreement, by

committing Baccarat to sell to Ross-Simons "at such prices and

upon such terms as are available to other authorized dealers,"

implicitly provided for termination upon the occurrence of a

particular event, i.e., Ross-Simons's breach of these standard

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terms. See Ross-Simons II, 182 F.R.D. at 396. Thus, the 1992

Agreement was sufficiently definite to be enforceable. See id.

at 396-97.

The difficulty with this reasoning is that every

enforceable contract involves a bargained-for exchange of

obligations, the material breach of which by one party gives the

other party a right to terminate. See, e.g., Ahearn v. Scholz,

85 F.3d 774, 783 (1st Cir. 1996); Pelletier v. Masse, 143 A.

609, 610 (R.I. 1928); see also Restatement (Second) of Contracts

§ 237 (1981). If the existence of an affirmative commitment,

without more, automatically converts a contract of indefinite

duration into a contract terminable upon the happening of a

specific event, then the presumption against perpetuity becomes

illusory. Broadly postured, this would conflict with Rhode

Island law, as that state's courts are quite clear that, in the

employment context at least, a contract silent as to duration is

terminable at will. See Salisbury v. Stone, 518 A.2d 1355, 1360

(R.I. 1986); Booth v. National India-Rubber Co., 36 A. 714, 715

(R.I. 1897).

Of course, the 1992 Agreement was an agreement for the

settlement of a lawsuit, not an employment agreement — a

distinction upon which the district court expressly relied. See

Ross-Simons III, 66 F. Supp. 2d at 324-26; Ross-Simons II, 182

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F.R.D. at 395-97. The central goal of a settlement agreement is

to fashion a final and permanent resolution of a dispute, see

City of Homestead v. Beard, 600 So. 2d 450, 454 (Fla. 1992); cf.

Mathewson Corp. v. Allied Marine Indus., 827 F.2d 850, 857 (1st

Cir. 1987) ("There is an institutional interest in the solemnity

of [settlement] agreements, in bringing certainty to the

process, and in minimizing the opportunities for lawyers and

litigants alike to act as Monday morning quarterbacks."), so

applying the presumption against perpetual obligations to

settlement agreements would be an extremely awkward fit.

Limited to this one small corner of contract law, the district

court's "implied termination clause" rationale might well be

appropriate.

We need not resolve this question here. After all, it

is common ground that where the presumption against perpetuity

applies, it can be rebutted by evidence that the parties

intended a permanent arrangement. See 1 Samuel Williston &

Walter H.E. Jaeger, A Treatise on the Law of Contracts § 38, at

113 (3d ed. 1957) (stating that "unless the circumstances show

a contrary intention, [courts will] interpret a promise which

does not . . . state the time of performance as intending

performance in a reasonable time") (emphasis supplied); see also

School Comm. v. Board of Regents for Educ., 308 A.2d 788, 790

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(R.I. 1973) (explaining that the parties' intentions — as

gleaned from the course of prior dealings or other surrounding

circumstances — can rebut the presumption that an employment

contract without a durational term is terminable at will). In

this instance, such evidence abounds.

The 1992 Agreement was designed, first and foremost,

to settle an antitrust suit in which Ross-Simons claimed that

Baccarat had refused to deal with it due to its practice of

undercutting suggested retail prices. This is evident from the

title of the agreement ("Agreement of Compromise and

Settlement"), the pact's delineation of its purpose, and the

pact's description of the underlying dispute. In exchange for

dismissal of that action, Baccarat installed Ross-Simons as an

authorized dealer and pledged not to discriminate against it on

the basis of its pricing or marketing policies. These facts

support the conclusion that the parties intended the 1992

Agreement to last for an indefinite period of time. Cf.

Rossmassler v. Spielberger, 112 A. 876, 880 (Pa. 1921)

(inferring an absolute and indefinite obligation from the

subject matter of a contract with no period of duration). As

Judge Lagueux astutely noted, the arrangement was akin to an

antitrust consent decree — a device that often mandates

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compliance for an indefinite duration. See Ross-Simons III, 66

F. Supp. 2d at 325.

Several other provisions of the 1992 Agreement favor

this reading. For one thing, as we observed before, both

Baccarat and Ross-Simons "must have understood that the 1992

Agreement would operate at some length because they specifically

provided . . . that each party assumed the risk of changes in

the operative facts and relinquished any right to terminate the

agreement on the basis of such factual shifts." Ross-Simons I,

102 F.3d at 18. For another thing, Baccarat promised that "in

the future" it would consider Ross-Simons's applications for

additional store locations under the same standards generally

applied to other dealers — and it did not place any restriction

on how far into the future this obligation would extend.

Finally, the 1992 Agreement provided that its benefits would

inure to the parties' "successors and assigns." Viewed in the

ensemble, these forward-looking provisions suggest that the

parties envisioned a lasting relationship.

The attendant circumstances also are relevant to a

determination of the parties' mutual intent. See Johnson v.

Western Nat'l Life Ins. Co., 641 A.2d 47, 48 (R.I. 1994) (per

curiam). Here, those circumstances push in the same direction

as the provisions of the 1992 Agreement. Indeed, the former

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president of Baccarat, who negotiated the 1992 Agreement on its

behalf, testified that he had discussed with his opposite number

at Ross-Simons Baccarat's history of doing business with its

dealers on a long-term basis (although Baccarat began selling

its product in the United States in 1949, it had never

terminated an American dealer for any reason other than

nonpayment) and had described this praxis as consistent with

Baccarat's philosophy. In short, the district court's finding

that the parties intended a long-term relationship was not

clearly erroneous, and this finding buttresses the court's

conclusion that the 1992 Agreement was built to last.

In endeavoring to convince us to the contrary, Baccarat

relies heavily on our decision in Puretest Ice Cream, Inc. v.

Kraft, Inc., 806 F.2d 323 (1st Cir. 1986). Its reliance is

mislaid. In that case, we applied Indiana law and ruled that a

distributorship contract of indefinite duration was terminable

at will. See id. at 324. Passing the point that Rhode Island

law is not so clear, see Wayne Distributing Co. v. Schweppes

U.S.A. Ltd., 352 A.2d 625, 626-27 & n.1 (R.I. 1976) (reserving

determination of the rule to be applied to open-ended

distributorship agreements), the fact remains that the

presumption against perpetual commitments is rebuttable, see

School Comm., 308 A.2d at 790. Moreover, we are confronted here

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not with a distributorship contract, but with an agreement

intended to inter an antitrust dispute. The promise to forbear

from allegedly illegal activity in exchange for dismissal of a

lawsuit is more plausibly intended to be permanent than is a

naked promise to sell goods for money.

We will not paint the lily. We hold, without serious

question, that the district court did not err by refusing to

engraft a finite temporal limit onto the injunction that it

issued.

B. Irreparable Harm.

Irreparable harm is an essential prerequisite for a

grant of injunctive relief. See EEOC v. Astra USA, Inc., 94

F.3d 738, 743 (1st Cir. 1996). Seizing upon this hoary

principle, Baccarat assails the district court's conclusion that

Ross-Simons would suffer irreparable harm were injunctive relief

denied. Because "[d]istrict courts have broad discretion to

evaluate the irreparability of alleged harm and to make

determinations regarding the propriety of injunctive relief," K-

Mart Corp. v. Oriental Plaza, Inc., 875 F.2d 907, 915 (1st Cir.

1989) (internal quotation marks omitted), this argument faces an

uphill climb.

In the end, that steep slope proves insurmountable.

It is settled beyond peradventure that irreparable harm can

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consist of "a substantial injury that is not accurately

measurable or adequately compensable by money damages." Ross-

Simons I, 102 F.3d at 19; see also K-Mart, 875 F.2d at 914 ("The

necessary concomitant of irreparable harm is the inadequacy of

traditional legal remedies."). Here, the district court found

after a bench trial that Ross-Simons would suffer an

"incalculable loss of reputation and prestige" if Baccarat were

allowed to go its own way. Ross-Simons III, 66 F. Supp. 2d at

330. Contrary to Baccarat's importunings, this finding was not

plucked out of thin air.

Mary Morris, a Ross-Simons vice-president, explained

the importance of Baccarat to the retailer's marketing plan in

general and to its bridal registry in particular. According to

Morris, losing Baccarat would cause fewer couples to register

with Ross-Simons, would disappoint former registrants who would

like to augment their holdings of Baccarat products, and would

hurt Ross-Simons's image in the broader market. The "uniqueness

and prestige" that Morris attributed to Baccarat's line was

echoed in the testimony of Ross-Simons's president and two

senior Baccarat officials.

To be sure, this testimony consists largely of

opinions. But opinion evidence, particularly when given by

informed witnesses, can be highly probative. See United States

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v. Hoffman, 832 F.2d 1299, 1310 (1st Cir. 1987) (emphasizing the

value of experience as "likely the best teacher" anent a

witness's qualifications to offer opinion testimony in certain

fields). We cannot say that the district court abused its

discretion in crediting such testimony here.

Baccarat's parallel claim that injunctive relief is

virtually unprecedented in situations of this sort does not

withstand scrutiny. In fact, "injunctions against contract

breach are common where there is some reasonable doubt about

whether damages can be sufficient." Almond v. Capital Props.,

Inc., ___ F.3d ___, ___ (1st Cir. 2000) [No. 99-2249, slip op.

at 12]. Because injuries to goodwill and reputation are not

easily quantifiable, courts often find this type of harm

irreparable. See, e.g., K-Mart, 875 F.2d at 915; Camel Hair &

Cashmere Inst. v. Associated Dry Goods Corp., 799 F.2d 6, 14-15

(1st Cir. 1986). Of particular relevance here, "several courts

have recognized that the loss of a prestigious brand or product

line may create a threat of irreparable injury if it is likely

that customers (or prospective customers) will turn to

competitors who do not labor under the same handicap." Ross-

Simons I, 102 F.3d at 20 (collecting cases); see also Reuters

Ltd. v. United Press Int'l, Inc., 903 F.2d 904, 907-08 (2d Cir.

1990) (explaining that stopping "the delivery of a unique

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product . . . almost inevitably creates irreparable damage to .

. . good will").

C. Scope of the Injunction.

Baccarat's fallback position is that, even if some form

of injunctive relief was appropriate, the injunction entered by

the lower court was overly broad and ambiguous to boot. We test

the scope of an injunction for abuse of discretion. See

Signtech USA, Ltd. v. Vutek, Inc., 174 F.3d 1352, 1356 (Fed.

Cir. 1999); Philip Morris, Inc. v. Harshbarger, 159 F.3d 670,

674 (1st Cir. 1998). We discern none in this instance.

Injunctions must be tailored to the specific harm to

be prevented. See Cok v. Family Court, 985 F.2d 32, 34 (1st

Cir. 1993) (per curiam); Hypertherm, Inc. v. Precision Prods.,

Inc., 832 F.2d 697, 700-02 (1st Cir. 1987). The district court

found that Baccarat violated the 1992 Agreement in two ways:

(1) by constructively terminating the dealer agreement when

Ross-Simons persisted in selling goods below suggested retail

prices and in advertising that fact; and (2) by denying Ross-

Simons the opportunity to purchase certain "exclusives" at least

in part for the same reasons. See Ross-Simons III, 66 F. Supp.

2d at 328-29. These actions were held to violate Baccarat's

contractual pledge to deal with Ross-Simons on the same terms as

other authorized dealers and not to discriminate against it

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based on its pricing or marketing practices. See id. The harms

to be prevented flowed from the danger of future breach, and the

injunction entered by the district court mirrored the operative

language of the 1992 Agreement.

Baccarat complains bitterly about the imprecision of

the language employed, but this complaint rings hollow. The

injunction simply prohibits contract breach or, put another way,

specifically enforces the contract. Perhaps more importantly,

Baccarat negotiated and executed the 1992 Agreement, so it

hardly can object to the court's ordering specific performance

in precisely the same terms. Cf. SEC v. Manor Nursing Ctrs.,

Inc., 458 F.2d 1082, 1103 (2d Cir. 1972) ("There can be no abuse

of discretion in framing an injunction in terms of the specific

statutory provision which the court concludes has been

violated.").

Baccarat also worries that the injunction might be

interpreted to prohibit it from offering "exclusives" to any

dealer without including Ross-Simons. In Baccarat's view, this

fear renders the injunction fatally ambiguous. We do not agree.

In the first place, the injunction simply reiterates the key

provisions of the 1992 Agreement; it does not mention

exclusives. In the second place, while the district court did

conclude that Baccarat breached the 1992 Agreement by barring

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Ross-Simons from one or more exclusive arrangements, Baccarat's

jeremiad here conveniently ignores the court's supportable

finding that Baccarat was motivated by its disdain for Ross-

Simons's pricing and advertising practices. See Ross-Simons

III, 66 F. Supp. 2d at 322. Given this finding, it would have

been well within the district court's discretion to prohibit

Baccarat from using exclusives as a means of disemboweling its

nondiscrimination commitments. See NLRB v. Express Publ'g Co.,

312 U.S. 426, 435 (1941) ("A federal court has broad power to

restrain acts which are of the same type or class as unlawful

acts which the court has found to have been committed or whose

commission in the future, unless enjoined, may fairly be

anticipated from the defendant's conduct in the past.").

Conversely, nothing in the injunction should be construed as

preventing Baccarat from engaging in legitimate test-marketing

of a new or unusual product at a small number of outlets

unaffiliated with Ross-Simons, so long as its reasons are

unrelated to Ross-Simons's pricing or marketing practices.

Finally, the injunction also includes a restatement of

the 1992 Agreement's requirement that Baccarat apply its

generally applicable standards in considering whether to sell to

additional Ross-Simons store locations. On appeal, Baccarat

does not specifically object to this inclusion. In all events,

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we are satisfied that discrimination against applications for

new Ross-Simons stores would be "of the same type or class" as

discrimination against preexisting Ross-Simons stores. Express

Publ'g, 312 U.S. at 435; accord Brown v. Trustees of Boston

Univ., 891 F.2d 337, 361 n.23 (1st Cir. 1989). The provision

is, therefore, appropriate.

III. CONCLUSION

We need go no further. We think it crystal clear that

the district court's entry of a permanent injunction

specifically enforcing the parties' earlier settlement agreement

is adequately supported by the record. In so holding, however,

we do not foreclose the possibility that, in the days to come,

Baccarat might justify ending its relationship with Ross-Simons

for legitimate reasons unrelated to Ross-Simons's pricing or

marketing practices. Of course, the unqualified language of the

injunction may require Baccarat (at least as a matter of

prudence) to seek permission from the district court before

attempting such a termination. Although we do not minimize the

weight of this burden, it does not seem unreasonable in view of

Baccarat's dogged attempts to evade contractual obligations.

Affirmed.

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