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Semmes Motors, Inc. v. Ford Motor Co. - 429 F.2d 1197 (2d Cir. 1970)

Rule:

In light of the imbalance of hardship, affirmance of the temporary injunction does not depend on a holding that the moving party has demonstrated a likelihood of success; it is necessary only that the moving party has raised questions going to the merits so serious, substantial, difficult and doubtful, as to make them a fair ground for litigation and thus for more deliberate investigation.

Facts:

Plaintiff Semmes Motors, Inc. ("Semmes"), suing on behalf of itself and together with Ford Dealers Alliance, Inc., filed an action in New York federal district court against defendant Ford Motor Co. ("Ford") after filing an action against the latter in New Jersey. The complicated litigation involved disputes in the parties' franchise/dealership relationship in general and Ford's desire contact Semmes' customers regarding warranty claims. The United States District Court for the Southern District of New York denied Ford's motion to stay the New York proceeding pending the resolution of the prior New Jersey proceeding. Semmes was granted temporary injunctive relief against Ford's attempt to terminate Semmes' dealership Ford appealed.

Issue:

Did the district court err in its decision to deny Ford's motion to stay stay the New York proceeding pending the resolution of the prior New Jersey?

Answer:

Yes.

Conclusion:

The federal appeals court reversed in part holding that the district court abused its power in refusing to stay the second proceeding pending resolution of the first proceeding involving the same parties. According to the court, the general rule was that in the absence of sound reasons the second action should give way to the first. The appeals court, however, affirmed in part holding that Semmes met its burden of proof as to the injunction. The appeals court held that the temporary injunction did not depend on a likelihood of success. It was necessary only that Semmes raised questions going to the merits so serious, substantial, difficult and doubtful, as to make them a fair ground for litigation.

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