v No Oakland Circuit Court PALACE SPORTS & ENTERTAINMENT, LLC, LC No CB and DETROIT PISTONS BASKETBALL COMPANY,

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1 S T A T E O F M I C H I G A N C O U R T O F A P P E A L S MICHIGAN FIRST CREDIT UNION, Plaintiff-Appellee, UNPUBLISHED February 27, 2018 v No Oakland Circuit Court PALACE SPORTS & ENTERTAINMENT, LLC, LC No CB and DETROIT PISTONS BASKETBALL COMPANY, Defendants-Appellants. Before: TALBOT, C.J., and METER and TUKEL, JJ. PER CURIAM. Defendants, Palace Sports & Entertainment, LLC (PSE), and Detroit Pistons Basketball Corporation (the Pistons) (referred to collectively as defendants), appeal by leave granted 1 an order granting the request of plaintiff, Michigan First Credit Union (MFCU), for a preliminary injunction in this breach of contract action concerning MFCU s sponsorship of the Pistons. We reverse the issuance of the injunction and remand for further proceedings consistent with this opinion. I. BACKGROUND This case arises out of defendants purported breach of a November 9, 2016 sponsorship agreement with MFCU ( the agreement or the sponsorship agreement ). The 2016 sponsorship agreement provided for MFCU to remain a sponsor of the Pistons until October 13, PSE is an express agent of the Pistons which entered into the 2016 sponsorship agreement with MFCU. On November 22, 2016, shortly after the parties entered into the 2016 sponsorship agreement, it was publicly announced that, beginning with the basketball season, the Pistons were moving from the Palace of Auburn Hills (the Palace) to a new arena, ultimately named Little Caesars Arena, which was under construction for the Detroit Red Wings in Detroit. 1 Mich First Credit Union v Palace Sports & Entertainment, LLC, unpublished order of the Court of Appeals, entered October 18, 2017 (Docket No ). We also ordered all proceedings by the trial court stayed pending this appeal. Id. -1-

2 The move by the Pistons was not unanticipated, and in fact the 2016 sponsorship agreement expressly contemplated such a possibility and provided for it. The agreement stated in relevant part: In the event that (i) the Pistons cease to play home games at the Palace, or (ii) PSE ceases to operate the Palace as a sports and entertainment venue, PSE shall have the right to terminate this Agreement by giving written notice to Sponsor, without payment or penalty and effective on the date of the final sports or entertainment event that occurs at the Palace. In the event that PSE exercises this termination right, PSE and Sponsor shall negotiate in good faith regarding a new agreement that would provide Sponsor with sponsorship opportunities that are comparable to those provided hereunder. On August 27, 2017, PSE formally terminated the 2016 sponsorship agreement. MFCU commenced this action alleging breach of contract and other claims. At MFCU s request, and following an evidentiary hearing, the trial court issued a preliminary injunction requiring defendants to negotiate in good faith. The injunction also required PSE to continue providing MFCU with the identical sponsorship assets provided by the abrogated 2016 agreement, even though the agreement s terms required only that PSE, following the agreement s termination, negotiate in good faith toward the provision of comparable opportunities. In entering the preliminary injunction, the trial court recited the familiar four-part test governing issuance of injunctions. 2 The trial court held With respect to the first factor, it is likely that Plaintiff will prevail on the merits. The Court makes the preliminary finding that Defendants actions constituted a breach of the Master Agreement because Defendants could not possibly negotiate in good faith with Plaintiff for comparable sponsorship opportunities when it had already signed a competing, exclusive agreement with Flagstar. Defendants actions in signing an exclusive sponsorship agreement with Flagstar before negotiating in good faith with Plaintiff for comparable sponsorship opportunities constitutes a material breach of the Master Agreement. The trial court also found that it was likewise convinced that Plaintiff will suffer an irreparable injury if the Injunction is not granted. It is apparent that neither party could say with any reasonable degree of certainty how to monetize the damages suffered by Plaintiff as a result of Defendants breach of the Agreement. This issue, in fact, will likely result in a battle of experts at a later date. This appeal ensued. 2 The standard for issuance of an injunction is discussed more fully infra. The four factors are: the likelihood of success on the merits; whether there likely would be irreparable injury in the absence of an injunction; whether there was risk that the party seeking the injunction would be harmed more by the absence of an injunction than that the opposing party would be by issuance of one; and harm to the public interest if the injunction issued. -2-

3 II. ANALYSIS A trial court s decision whether to grant a preliminary injunction is reviewed for an abuse of discretion. Oshtemo Twp v Kalamazoo Co Rd Comm, 288 Mich App 296, 302; 792 NW2d 401 (2010). An abuse of discretion occurs when the trial court s decision falls outside the range of reasonable and principled outcomes. Hammel v Speaker of House of Representatives, 297 Mich App 641, 647; 825 NW2d 616 (2012). Injunctive relief is an extraordinary remedy that issues only when justice requires, there is no adequate remedy at law, and there is a real and imminent danger of irreparable injury. Janet Travis, Inc v Preka Holdings, LLC, 306 Mich App 266, 274; 856 NW2d 206 (2014). The injunction should not be issued if the party seeking it fails to show that it will suffer irreparable injury in the absence of an injunction. Niedzialek v Barbers Union, 331 Mich 296, 300; 49 NW2d 273 (1951); Van Buren Pub Sch Dist v Wayne Circuit Court Judge, 61 Mich.App 6, 16; 232 NW2d 278 (1975). To obtain a preliminary injunction, the moving party bears the burden of proving that the traditional four elements favor the issuance of a preliminary injunction. Hammel, 297 Mich App at 648 (quotation marks and citation omitted). Under this four-part test, the trial court is to consider: (1) the likelihood that the party seeking the injunction will prevail on the merits, (2) the danger that the party seeking the injunction will suffer irreparable harm if the injunction is not issued, (3) the risk that the party seeking the injunction would be harmed more by the absence of an injunction than the opposing party would be by the granting of the relief, and (4) the harm to the public interest if the injunction is issued. [Id. (citation omitted).] [A] particularized showing of irreparable harm is an indispensable requirement to obtain a preliminary injunction. The mere apprehension of future injury or damage cannot be the basis for injunctive relief. Equally important is that a preliminary injunction should not issue where an adequate legal remedy is available. Pontiac Fire Fighters Union Local 376 v City of Pontiac, 482 Mich 1, 9; 753 NW2d 595 (2008) (quotation marks, ellipses, and citations omitted). Generally, irreparable injury is not established by showing economic injury because such an injury can be remedied by damages at law. Alliance for Mentally Ill of Mich v Dep t of Community Health, 231 Mich App 647, 664; 588 NW2d 133 (1998); see also Pontiac Fire Fighters, 482 Mich at 10 (holding that the grant of a preliminary injunction to remedy the plaintiff s economic injuries was inappropriate because the economic injuries could be remedied by damages at law). A. ADEQUATE REMEDY AT LAW In the present case, the trial court found that MFCU did not have an adequate remedy at law and thus was entitled to an injunction. The trial court reached this conclusion for two reasons. First, the trial court found that the parties could not state what the methodology would be for determining damages. The trial court held, It is apparent that neither party could say with any reasonable degree of certainty how to monetize the damages suffered by Plaintiff as a result -3-

4 of Defendants breach of the Agreement. This issue, in fact, will likely result in a battle of experts at a later date. The trial court also reached that conclusion because the parties could not, at the evidentiary hearing, establish what MFCU s damages were. The trial court said, [T]he problem in this case is that nobody can tell me what the damages are. Defendant says well there s companies out there that... quantify damages and quantify the value of... the sponsorship but again there s nothing here that quantifies the damages to be suffered.... [P]art of... being a partner or a sponsor of the Pistons is that you have um visibility in the in the community. That you have access to the community. You take that away and I m not sure you can quantify that monetarily. The trial court abused its discretion. In determining whether injunctive relief was available, the trial court was required to determine whether, in the event MFCU prevails on the merits, a damages remedy will adequately compensate it, that is, whether it has an adequate remedy at law for any breach of contract by PSE. In order to answer that question at this preliminary stage, the trial court was not called on to determine exactly what those damages were, or even methodologically how one might go about calculating them. Rather, it was necessary only for the trial court to determine whether, at a trial on the merits, all of MFCU s potential injuries were capable of being remedied by an award of damages. On the record created below, not only was the answer to that question that any injuries in fact could be fully compensated by an award of damages, but the testimony in that regard was undisputed. Thus, it was more than sufficient for these purposes that Charles Metzger, the chief marketing officer for the Pistons who has 25 years of experience in marketing, brand management, advertising, promotion, and sports sponsorships, when asked how difficult it is to value sponsorship deals, responded, It s very, very simple. It s a math problem and there are agencies that that s all they do. Metzger explained that buyers and sellers of sports team sponsorships regularly quantify sponsorship deals. There are metrics that buyers and sellers of sports team sponsorships use having to do with awareness, opinion, consideration, and [social media engagements]. Community benefit and brand association are factored into quantifiable results; when you put a deal together, whether you re buying, selling or evaluating, you look at these in totality. Companies exist whose business is valuing sponsorship relationships. When asked how difficult it would be to place a monetary value on the 2016 sponsorship agreement in this case, Metzger responded, Very very low degree of difficulty. I mean again this is done every single day in the world of sports marketing and business. Metzger indicated that there are outside consultants throughout the country who could readily provide such information to MFCU. Two other witnesses testified at the evidentiary hearing as to the valuation issue, but neither s testimony contradicted Metzger s. Sue Postemski, MFCU s chief marketing officer, acknowledged that there are companies and consultants which measure the value of sponsorship assets for buyers and sellers. Postemski admitted that MFCU wanted an economic return on its sponsorship investment with the Pistons and would not act against its own self-interest. Postemski contended that MFCU s relationship with the Pistons was more than economic because MFCU was attempting to develop awareness of its brand by associating with the Pistons. As previously discussed, however, Metzger testified that brand association and -4-

5 community recognition are factored into quantifiable results when valuing sponsorship agreements. The evidence thus reflects that brand awareness and community recognition are subject to monetary valuation. Indeed, Postemski testified that MFCU itself had engaged a dataanalytics company to evaluate public awareness of MFCU s sponsorship of the Pistons and had used this survey in part to determine whether MFCU was getting bang for [its] buck in sponsoring the Pistons and whether to renew MFCU s sponsorship deal with the Pistons in Finally, Michael Poulos, the president and chief executive officer of MFCU, testified that he did not know how to measure MFCU s damages because he did not know how to put a value on brand alignment, community support, and name recognition. However, Poulos acknowledged that he was not an expert on sponsorships, and he assumed that there are companies with such expertise and knowledge. Thus, neither of MFCU s witnesses who testified contravened Metzger s testimony that such sponsorships are subject to economic valuation. It was not incumbent at this stage of litigation, prior to discovery, for the trial court to determine what MFCU s damages might have been, or even exactly how they might be calculated. Rather, to justify the extraordinary remedy of an injunction, MFCU had the burden of showing that its injuries were not fully capable of being calculated in damages. Uncontroverted testimony demonstrated that there are firms which undertake such analysis with regularity and which, at trial, could offer a reliable expert opinion as to value and damages. See MRE 702. Thus, the testimony at the hearing established clearly that if PSE breached the sponsorship agreement, the harm inflicted by such breach could be measured and thus compensated at law by an award of damages. Such evidence was sufficient to foreclose injunctive relief. Indeed, the trial court recognized that there were methodologies to evaluate MFCU s injuries in purely economic terms when it noted that absent injunctive relief, a trial would likely result in a battle of experts as to damages. The critical point here is that such a battle would in fact revolve around damages, meaning that there was no other, non-economically quantifiable harm which could justify an injunction. Moreover, certain types of cases routinely involve what may be characterized as a battle of experts. The fact that such battles take place is unexceptional in an appropriate case. See, e.g., Wilson v Stilwill, 411 Mich 587, 599; 309 NW2d 898 (1981). Simply put, that a case may involve a battle of experts does not in any way establish that a plaintiff has an inadequate remedy at law. B. LOSS OF GOODWILL MFCU argued below, and again on appeal, that it suffered a loss of goodwill as a result of PSE s actions. MFCU asserts that a loss of goodwill is difficult to value and thus an injunction may be justified to remedy its loss. 3 It is true that the loss of customer goodwill often 3 Simply stated, goodwill is an asset of recognized value beyond the tangible assets of a business. Brusach v Brusach, unpublished per curiam opinion of the Court of Appeals, issued October 17, 2017 (Docket No ), p 3 (brackets and citations omitted). Goodwill is based upon the prospective profits to result from voluntarily continued patronage of the public. It indicates that value which inheres in the fixed and favorable consideration of customers arising from an established and well-conducted business. Colton v Duvall, 254 Mich 346, 349; 237 NW 48 (1931). -5-

6 amounts to irreparable injury because the damages flowing from such losses are difficult to compute. Basicomputer Corp v Scott, 973 F2d 507, 512 (CA 6, 1992). 4 Whether the loss of customer goodwill amounts to irreparable harm often depends on the significance of the loss to the plaintiff s overall economic well-being. Apex Tool Group, LLC v Wessels, 119 F Supp 3d 599, 610 (ED Mich, 2015) (quotation marks and citation omitted). In Apex, the plaintiff failed to demonstrate any injury to its overall economic wellbeing; the plaintiff did not show that it had lost, or was likely to lose, any projects or customers. Id. The Apex court concluded: In sum, it appears to the court that plaintiff is a substantial company and would not be driven out of business in the absence of injunctive protection. Under these circumstances, plaintiff has failed to show irreparable harm in as much as a possible loss of customer goodwill does not threaten complete destruction of its business. [Id. (quotation marks, brackets, ellipsis, and citation omitted).] MFCU likewise failed to demonstrate any injury to its overall economic wellbeing. Postemski testified that she was unaware of any customers or potential customers that MFCU would lose as a result of the changes in MFCU s sponsorship relationship with the Pistons, nor was she aware of any specific concrete business that MFCU had lost due to the sponsorship issue. Poulos acknowledged that MFCU would not be destroyed because of the loss of the Pistons sponsorship and that there is no serious and immediate threat to MFCU s economic existence if MFCU were unable to obtain a comparable sponsorship deal. Accordingly, in the circumstances of this case, MFCU has failed to establish that it is likely to suffer irreparable harm as a result of an alleged loss of customer goodwill. See Pontiac Fire Fighters Union Local 376, 482 Mich at 9. MFCU cites Mich Bell Tel Co v Engler, 257 F3d 587 (CA 6, 2001), in support of its argument that the loss of goodwill may constitute irreparable harm even if the plaintiff s business is not destroyed. The plaintiffs in Mich Bell claimed they would lose customer goodwill if certain statutory provisions remained in effect during the pendency of the case because they would be forced to recoup losses by substantially raising rates and fees. Id. at 599. The federal appellate court found sufficient evidence in the record to support a finding that the plaintiffs will be irreparably harmed if they are compelled to recoup their substantial projected losses through increased rates and fees. Id. No such basis for finding irreparable harm exists in this case. MFCU has presented no evidence that any changes in its sponsorship relationship with the Pistons will force MFCU to increase rates or fees or take any similar type of action that would detrimentally affect the goodwill of its current customers. Rather, MFCU tried to show that it would gain additional customers or business through goodwill it hoped to secure through the 4 The opinions of lower federal courts are not binding on this Court, but such opinions may be considered for their persuasive value. See Abela v Gen Motors Corp, 469 Mich 603, ; 677 NW2d 325 (2004). -6-

7 sponsorship with the Pistons. MFCU s proofs in this regard failed to establish the requisite inadequacy of a damages remedy. MFCU s reliance on AT&T Mobility, LLC v Nat l Ass n for Stock Car Auto Racing, Inc, 487 F Supp 2d 1370 (ND Ga, 2007), vacated and remanded on other grounds 494 F3d 1356 (CA 11, 2007), is similarly misplaced. In AT&T Mobility, the plaintiff had changed its name and logo but still had a valid sponsorship agreement. The plaintiff sought to amend the sponsorship agreement to make use of its new name and logo; the plaintiff claimed that if it was unable to place its current name and logo on the racing car, the plaintiff would in effect be forced to strand the goodwill it [had] built up among NASCAR fans in an increasingly obsolete brand. Id. That is, the plaintiff would be paying millions of dollars to sponsor a car that is racing under an outmoded brand[] that was of no value to the plaintiff in the marketplace. Id. at The court agreed that the threat of stranding the plaintiff s goodwill constituted irreparable harm. Id. In the unusual facts presented, there would be nothing the court could do at the conclusion of the case to return to the plaintiff the goodwill it would lose if it was unable to feature its current name and logo on the racing car, as it would be receiving the advertising it was promised, but for a name and logo which no longer would be of benefit to it. Id. No similar basis for finding a loss of goodwill exists in this case. MFCU s sponsorship agreement was validly terminated PSE exercised its unilateral right to terminate the 2016 agreement and PSE has made an alternative offer to MFCU. Although the parties dispute whether PSE s offer to MFCU contains sponsorship opportunities that are comparable to those contained in the 2016 agreement, MFCU is not being forced to pay money in order to use an outmoded brand in sponsoring the Pistons. Unlike the plaintiff in AT&T Mobility, MFCU has not demonstrated that it is being or will be forced to strand any goodwill through the use of an outmoded brand. Finally, MFCU is also mistaken in its reliance on MasterCard Int l, Inc v Federation Internationale De Football Ass n, 464 F Supp 2d 246 (SD NY, 2006), vacated and remanded on other grounds 239 Fed Appx 625 (CA 2, 2007). MasterCard concerned the sponsorship of the World Cup, which the court found was the most widely watched, fanatically followed sporting event in the world. Id. at 251. The defendant, the organizer of the World Cup, allegedly breached a contractual obligation to give the plaintiff the first right to acquire sponsorship of the World Cup, and instead granted the sponsorship to the plaintiff s primary competitor. Id. at 249, 298. The court found that the plaintiff would be irreparably harmed in the absence of an injunction; the irreparable harm included a loss of prospective goodwill that, according to testimony in that case, could not be quantified. Id. at 299, 301. The court emphasized that the irreparable harm arose from the loss of sponsorship rights to the greatest sports spectacle in the world after a sponsorship of sixteen years. Id. at 302. Absent an injunction, the plaintiff also would have lost its right of first refusal regarding the next World Cup sponsorship cycle. Id. The facts of the present case differ markedly. MFCU had no right of first refusal but merely a right to engage in good-faith negotiations with PSE. In contrast to the testimony about the inability to quantify the loss in MasterCard, the testimony in the present case establishes that MFCU s alleged injury can be quantified. Moreover, the injunction in MasterCard maintained the status quo, while, as discussed in more detail below, the injunction entered by the trial court in this case changed it. Mastercard does not alter the conclusion that MFCU has failed to show that it will suffer irreparable harm in the absence of an injunction. -7-

8 C. SCOPE OF INJUNCTIVE RELIEF Even if an injunction had been justified in the present case, we nevertheless would have to vacate the injunction that the trial court entered because it was overly broad. That is so because the trial court entered an injunction which changed the status quo, even though [t]he purpose of a preliminary injunction is to preserve the status quo pending a final hearing regarding the parties rights. Hammel, 297 Mich App at 647 (quotation marks and citation omitted). The point of preserving the status quo is so that upon the final hearing, the rights of the parties may be determined without injury to either. Gates v Detroit & M R Co, 151 Mich 548, 551; 115 NW 420 (1908). The status quo which [is to] be preserved by a preliminary injunction is the last actual, peaceable, noncontested status which preceded the pending controversy. Psychological Servs of Bloomfield, Inc v Blue Cross & Blue Shield of Mich, 144 Mich App 182, 185; 375 NW2d 382 (1985) (citations omitted). In this case, the last actual, peaceable, noncontested status which preceded the pending controversy and the entry of the injunction was PSE s termination of the sponsorship agreement. Because the Pistons had finalized plans to cease playing home games at the Palace, the terms of the agreement permitted PSE to terminate it. PSE s abrogation of the agreement thus triggered an obligation on its part to negotiate in good faith regarding a new agreement that would provide MFCU with sponsorship opportunities that are comparable to those provided under the agreement. At most, then, the trial court would have been permitted to maintain the status quo as of the time that PSE terminated the agreement and to then require PSE to negotiate in good faith regarding a new agreement providing comparable sponsorship opportunities. 5 The injunction in fact required PSE to negotiate in good faith. However, the trial court went much further and ordered that PSE continue to provide identical sponsorship opportunities, notwithstanding the trial court s acknowledgement that PSE undisputedly had the right to terminate the agreement due to the Piston s move from the Palace to Little Caesars Arena. The entry of such an injunction was erroneous because it changed the status quo rather than preserving it during the pendency of litigation. Moreover, by requiring PSE to continue providing the identical sponsorship opportunities which it had previously granted, the trial court granted MFCU the entire scope of relief which it was seeking. However, a preliminary injunction will not be issued if it will grant one of the parties all the relief requested prior to a hearing on the merits. Bratton v DAIEE, 120 Mich App 73, 79; 327 NW2d 396 (1982), citing Epworth Assembly v Ludington & N R Co, 223 Mich 589, 596; 194 NW 562 (1923). Thus, even if injunctive relief was warranted, the present injunction could not stand. 6 5 The trial court made no findings, and we express no opinion, as to whether good-faith negotiations in fact would have yielded an agreement providing for comparable benefits. That is likely to be a question to be answered by the factfinder at trial. 6 Given our disposition of the other issues, we need not consider whether MFCU is likely to succeed on the merits. See Mich AFSCME Council 25 v Woodhaven-Brownstown Sch Dist,

9 III. CONCLUSION For the reasons stated, the order of the trial court granting the injunction is reversed, and the case is remanded for proceedings not inconsistent with this opinion. We do not retain jurisdiction. Defendants, as the prevailing parties, may tax costs. MCR /s/ Michael J. Talbot /s/ Patrick M. Meter /s/ Jonathan Tukel Mich App 143, ; 809 NW2d 444 (2011) (stating that a court may decline to consider a party s likelihood of success on the merits if the irreparable-harm factor has not been established). -9-