On Appeal from the United States District Court
for the Eastern District of Pennsylvania (D.C. Civ. No. 97-01057)
BEFORE: MANSMANN, GREENBERG, and ALARCON,* Circuit Judges
HalRob, Inc. and RobHal Management, Inc. appeal from an order for a preliminary injunction the district court entered in this matter on April 15, 1997, in accordance with its opinion reported as Specialty Bakeries, Inc. v. RobHal, Inc., 961 F. Supp. 822 (E.D. Pa. 1997). On July 31, 1997, we stayed the preliminary injunction pending this appeal.
After a careful review, we have determined that there is no basis to disturb the preliminary injunction except in one respect. In particular, we conclude that the Anti-Injunction Act, 28 U.S.C. Section(s) 2283, did not preclude the district court from granting the preliminary injunction and that the district court did not abuse its discretion in entering an injunction against HalRob, Inc. and RobHal Management, Inc. barring them from seeking damages and other relief in the New Jersey proceeding.
We conclude, however, that the injunction sweeps too broadly. The court limited the scope of the injunction by providing that it would not prevent the
parties to the New Jersey action from seeking preliminary injunctive relief only, pending a decision by the above-referenced arbitrator, against Specialty Bakeries, Inc., Rocco Fiorentino, Frank J. Guglielmo, John E. Gerber, Jr. or Manhattan Bagel Company, Inc. to prevent them or any of them from making any impending material change in the status quo as it existed as of February 7, 1997. An impending material change is one that would eviscerate the arbitration process.
Specialty Bakeries, Inc., 961 F. Supp. at 831. The district court used the February 7, 1997 date as HalRob filed the New Jersey action on that day.
The district court fashioned its limitation on the injunction in an attempt to comply with our opinion in Ortho Pharm. Corp. v. Amgen, Inc., 882 F.2d 806, 814 (3d Cir. 1989), in which we said the following with respect to a court granting preliminary injunctive relief pending arbitration:
In sum, courts invoke the phrase `preservation of the status quo' as a summary explanation of the need to protect the integrity of the applicable dispute resolution process. Thus, the court granting an injunction has the power -- and indeed is required -- to make all factual findings necessary to `set forth the reason for. . . issuance [of injunctive relief].' Fed. R. Civ. P. 65(d). Moreover, because the district court must focus on preservation of the integrity of the arbitration process, the relief granted need not be limited to restoring the parties precisely to their pre-litigation position without regard to the irreparable injury that movant faces. If the existing `status quo' is ...