rights, does not approach the harm that would befall the plaintiff if the preliminary injunction is withheld. Rather, as Judge Posner observed in Sara Creek, the relative harms to the business entities involved in such circumstances can best be resolved and remedied by prudent business men and women in the commercial marketplace who are best able to value the costs of breaches of contracts and the like, and to establish the cost of doing business. 966 F.2d at 274-75.
E. THE PUBLIC INTEREST
19. In Pennsylvania, there is no public policy against enforcement of restrictive covenants in a shopping center lease. See Teodori, 415 A.2d at 34-35, n. 5 (parties are entitled to a degree of freedom in contracting to protect their economic interests, and controlled development of a shopping center may be desirable); Sun Drug Co. v. West Penn Realty Co., 439 Pa. 452, 268 A.2d 781, 782, 786 (1970) (such covenants are valid if reasonable, i.e., limited in scope, space and time to the extent required to protect the party benefitted by the exclusive.)
20. Congress has explicitly recognized the desirability of such clauses in the bankruptcy area, as the United States Court of Appeals for the Third Circuit has recognized:
Congress has suggested that the modification of a contracting party's rights is not to be taken lightly. Rather, a bankruptcy court in authorizing assumptions and assignment of unexpired leases must be sensitive to the rights of the non-debtor contracting party . . . and the policy requiring that the non-debtor receive the full benefit of his or her bargain. Congress' solicitous attitudes toward shopping centers is reflected in the legislative history regarding [U.S.C.] § 365(b)(3), which states:
A shopping center is often a carefully planned enterprise, and though it consists of numerous individual tenants, the center is planned as a single unit, often subject to a master lease or financing agreement. Under these agreements, the tenant mix in a shopping center may be as important to the lessor as the actual promised rental payments, because certain mixes will attract higher patronage of the stores in the center . . . Thus, in order to assure a landlord of his bargained for exchange, the court would have to consider such factors as . . . whether the business proposed to be conducted would result in a breach of other clauses in master agreements relating, for example to tenant mix and location.
H.R.Rep. No. 595, 95th Cong., 1st Session 348-49, reprinted in 1978 U.S. Code Cong. & Admin. News, 5963, 6305; see also S.R. Rep. No. 95-989, reprinted in id. at 5787, 5845.
In Re: Joshua Slocum Ltd., 922 F.2d 1081, 1091 (3d Cir. 1990).
21. There is a strong public interest in fair dealing between businesses and the solemnity of contracts; if commerce is to function smoothly, "entrepreneurs must play by the rules." K-Mart, 875 F.2d at 916.
22. The procompetitive effects of exclusives/restrictive covenants in shopping center leases have been viewed as outweighing any anticompetitive effects that may accompany such provisions. Walgreen, 966 F.2d at 274; Net Realty Holding Trust v. Franconia Properties, Inc., 544 F.Supp. 759 (E.D. Va. 1982).
23. While Giant Eagle asserts that J.C. Penney's restrictive covenant granting it exclusive pharmacy rights at Quaker Village is against the public interest, its claim is undercut by the fact that it seeks "food and grocery" exclusives in its own shopping center leases, and in fact, obtained one in its lease for premises at Quaker Village.
24. The public interest will not be disserved by enforcing plaintiff's exclusive pharmacy rights at Quaker Village.
25. Giant Eagle claims that J.C. Penney delayed unreasonably in asserting its rights and stood idly by while it remodeled its Quaker Village store to install a pharmacy department. This argument is with out merit. When a plaintiff brings suit within the statute of limitations, the burden is on defendant to establish the affirmative defense of laches by showing that plaintiff's delay in bringing suit was unreasonable and that defendant was prejudiced thereby. K-Mart, 875 F.2d at 911. Giant Eagle cannot meet this burden here because it knew before it ever began construction that J.C. Penney held the exclusive pharmacy rights and refused to give them up, and because J.C. Penney in fact notified Giant Eagle no later than July 10, 1992, that it held an exclusive and reserved its rights to enforce it. According to Giant Eagle, most of its costs of opening its pharmacy department occurred after July 26, 1992. Plaintiff did not unreasonably delay in asserting its exclusive rights and defendants suffered no prejudice by the timing of the assertion of those rights.
For all of the foregoing reasons, J.C. Penney's Motion for a Preliminary Injunction is granted and Giant Eagle is ordered and directed immediately to cease its operation of a pharmacy department or to otherwise compound or sell prescription drugs at its Quaker Village Shopping Center store. J.C. Penney is directed to post security as required by Fed.R.Civ.P. 65(c) in the amount of $ 50,000.
ORDER OF COURT
AND NOW, this 16th day of September, 1992, it is hereby
ORDERED that the Motion of J.C. Penney Company for Preliminary Injunction (Document No. 4) is GRANTED.
IT IS FURTHER ORDERED that defendants, Giant Eagle, Inc., and Giant Eagle Markets, Inc., shall immediately cease to operate a pharmacy department or to otherwise compound or sell prescription drugs at its Quaker Village Shopping Center store;
IT IS FURTHER ORDERED that defendant, Stanley R. Gumberg, shall refrain from leasing any space at the Quaker Village Shopping Center to tenants to use in violation of J.C. Penney's exclusive pharmacy rights, and is directed to take all reasonable steps to enforce those rights in the event any tenant attempts to operate a drugstore for the sale of prescription drugs or otherwise violate the exclusive pharmacy clause;
IT IS FURTHER ORDERED that plaintiff, J.C. Penney Company, Inc., shall post security as required by Fed.R.Civ.P. 65(c) in the amount of Fifty Thousand ($ 50,000) Dollars.
THIS ORDER shall be binding upon the parties to this action, their officers, agents, servants, employees, attorneys and any and all other persons acting in concert or participating with those who receive actual notice of this Order.
Donald J. Lee, United States District Judge