Guidance Endodontics, LLC v. Dentsply International, Inc.
2008 U.S. Dist. LEXIS 106780, 2008 WL 5978899, 633 F. Supp. 2d 1257 (2008)
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Rule of Law:
A temporary restraining order (TRO) that seeks to compel a party to perform a new or disputed action is a disfavored mandatory injunction requiring a heightened burden of proof, whereas a TRO seeking to compel continued performance of a previously established practice is a favored prohibitory injunction evaluated under a more lenient standard.
Facts:
- Guidance Endodontics, LLC (Guidance), a small endodontic equipment company, and Dentsply International, Inc. (Dentsply), a dominant market competitor, were parties to a Manufacturing and Supply Agreement that made Dentsply the exclusive manufacturer for Guidance.
- The agreement was part of a settlement resolving prior patent litigation initiated by Dentsply against Guidance.
- Shortly after the agreement was signed on July 29, 2008, Dentsply promptly filled an initial purchase order from Guidance for a product called OneFill Obturators.
- On July 30, 2008, Guidance submitted a second purchase order for OneFill Obturators (the "Obturator Order").
- On September 2, 2008, Guidance submitted a purchase order for a new product still in development, the V2 endodontic file (the "V2 Order").
- Dentsply refused to fill the Obturator Order, alleging that Guidance had breached the agreement's confidentiality provisions by telling customers that Dentsply manufactured its products.
- Guidance attempted to cure the alleged breach by revising its marketing materials, but Dentsply maintained its refusal, calling the breach incurable.
- Dentsply also refused to manufacture the V2 Order, demanding that Guidance provide detailed 'engineering drawings,' a requirement that Guidance argued was unprecedented in their prior course of dealing and not required for a product still in the prototype phase.
Procedural Posture:
- Guidance Endodontics, LLC filed a complaint against Dentsply International, Inc. and Tulsa Dental Products, LLC in the United States District Court for the District of New Mexico, alleging breach of contract and unfair trade practices.
- Contemporaneously with the complaint, Guidance filed an Application for a Temporary Restraining Order (TRO) to compel Dentsply to manufacture and ship products.
- The District Court held evidentiary hearings on the TRO application over five separate days.
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Issue:
Is a plaintiff entitled to a temporary restraining order compelling a defendant to manufacture and ship products under a supply agreement when one order is for an existing product previously supplied, and the other is for a new product still in a disputed development phase?
Opinions:
Majority - Browning, J.
Yes, in part, and No, in part. The Court grants the temporary restraining order for the Obturator Order but denies it for the V2 Order because the requests are subject to different legal standards. The portion of the TRO related to the Obturator Order is not a disfavored form of relief because it seeks to preserve the status quo—the 'last uncontested status between the parties'—where Dentsply was already supplying this existing product. This request is prohibitory, merely preventing Dentsply from breaching the contract by ceasing performance. Because the other factors (irreparable harm, balance of harms, and public interest) strongly favor Guidance, it only needed to meet the modified standard of showing that the merits present 'serious, substantial, difficult, and doubtful' questions for litigation, which it did. In contrast, the portion of the TRO related to the V2 Order is a disfavored mandatory injunction because it would alter the status quo by compelling the manufacture of a new, undeveloped product and would require the court to potentially supervise a complex manufacturing process. For this disfavored relief, Guidance was required to make a 'strong showing' of a 'substantial likelihood of success on the merits.' Guidance failed to meet this heightened burden because the Supply Agreement's text required 'engineering drawing(s)' and Dentsply presented credible evidence that the V2 was not ready for production, making its demand for drawings reasonable.
Analysis:
This opinion provides a clear framework for analyzing requests for preliminary injunctive relief, emphasizing the critical threshold inquiry of whether the injunction is 'disfavored.' The court's decision to sever a single TRO application and apply two different standards of review—a lenient one for preserving the status quo and a strict one for mandatory action—is a key takeaway. This bifurcated approach demonstrates that the nature of the specific relief sought, rather than the overall lawsuit, dictates the movant's burden of proof. The case serves as a practical guide for litigators on how to frame injunctive requests and what level of proof will be required depending on whether the relief maintains a prior course of dealing or compels a new and disputed action.
