American Brands, Inc. v. Playgirl, Inc.

Brief Fact Summary. A dispute arose between a magazine publisher and an advertiser.  The advertiser alleged that the publisher breached their contract by not allowing them to advertise on every back cover of the publisher's magazine into perpetuity.

Synopsis of Rule of Law. Equitable relief is only available when a party demonstrates legal remedies are insufficient, there is a probability of success on the merits and the potential of irreparable harm.

Facts. The Plaintiff, American Brands, Inc. (the "Plaintiff"), entered into a contract on January 26, 1973 with the Defendant, Playgirl, Inc. (the "Defendant"), to advertise on the back cover of the Defendant's Magazine for a period of 12 months.  Certain language in the contract seemed to say that the Plaintiff had the right to advertise on the back cover of the Defendant's magazine for as long as they wanted or into perpetuity, and could cancel the contract whenever they wanted without penalty.  The Defendant informed the Plaintiff in two letters dated September 25, 1973 and December 3, 1973, it was against their policy to "afford and advertiser 'a position of protection in perpetuity' " and that it wished to diversify its back cover.  The Plaintiff sought injunctory relief from the district court.  The district court denied the relief saying that a damage remedy is appropriate and that the Plaintiff could advertise on the back cover of another periodical and calculate damages accordingly.

Issue. Was the district court's denial of a preliminary injunction appropriate?

Held. Yes.  First, there is nothing in the record demonstrating that the harm cannot be remedied via damages, i.e. there is a remedy at law.  Further, the Plaintiff is obligated to mitigate its damages.  There is no indication in the record why the Plaintiff did not attempt to advertise in another magazine.  Additionally, nothing in the record shows that the Plaintiff prepared its advertisements specifically for the Defendant's audience.  Moreover, the court observes "[i]f it had been shown that such advertising space is not readily available because of commitments to other national advertisers, American might well have established a case for equitable intervention, but the record before us is barren of any such proof."  Since they did not make the requisite showing, equitable relief is not appropriate.  Second, as the trial court recognized, the Plaintiff has not demonstrated that they will succeed on the merits.  Finally, there is not indication that the Plaintiff will suffer irreparable injury to its commercial good will. 

Discussion. Equitable relief is only available when legal relief will not resolve a dispute.  A preliminary injunction is one of many kinds of equitable relief.