## Facts

- General Leaseways, Inc. provided full-service truck leasing, including over-the-road leases requiring nationwide maintenance and repair support.
- National Truck Leasing Association (operating as “NationaLease”) was a group of independent truck-lessors that enabled members to offer nationwide service through reciprocal repair and maintenance performed by other members outside a member’s home territory.
- The association imposed rules limiting competition among members, including: (1) territorial exclusivity preventing members from operating an association “franchise” in another member’s territory; (2) limits on using the association name/mark for business in another member’s territory; and (3) a policy denying reciprocal service for trucks leased to customers located outside the member’s assigned territory.
- General Leaseways, a member since 1972, acted contrary to the location and affiliation restrictions, including conduct that encroached on other members’ territories.
- The association indefinitely suspended General Leaseways, effectively expelling it.
- Expulsion would end General Leaseways’ access to reciprocal service and bar use of the association name, impairing its ability to compete in over-the-road, full-service leasing.
- General Leaseways sued under § 1 of the Sherman Act and sought a preliminary injunction to prevent expulsion during litigation; the district court granted the injunction, and the association appealed.

## Issues

1. Whether General Leaseways showed a sufficient likelihood of success that the association’s territorial/customer restrictions, enforced through expulsion, were an unreasonable restraint of trade under Sherman Act § 1.
2. Whether expulsion would cause irreparable harm not adequately compensable by damages, and whether the balance of harms and the public interest supported preliminary injunctive relief.
3. Whether the district court abused its discretion in granting the preliminary injunction.

## Decision

- The Seventh Circuit affirmed the preliminary injunction preventing the association from expelling General Leaseways pending trial.
- The court held the district court reasonably found a likelihood of success on the § 1 claim because the challenged restraints resembled horizontal limits on territories/customers among competitors and were not shown necessary to the reciprocal-service function.
- The court held expulsion threatened irreparable harm by effectively eliminating General Leaseways’ ability to offer competitive over-the-road, full-service leasing, a loss not readily remedied by money damages.
- The court concluded the association’s harm from continued membership during litigation was limited relative to the threatened competitive harm to General Leaseways, and that maintaining competition favored injunctive relief.
- Applying abuse-of-discretion review, the court found the district court’s assessment of merits and equitable factors supported by the record.

## Legal Principles

- Horizontal agreements among competitors allocating territories or customers raise serious Sherman Act § 1 concerns, particularly when they suppress competition among members.
- Joint ventures or trade associations may impose restraints only to the extent they are reasonably related to, and needed for, the venture’s legitimate cooperative function; restraints serving primarily to reduce member-to-member competition are suspect.
- Expulsion (or indefinite suspension) used to enforce allegedly anticompetitive association rules can constitute actionable conduct under § 1 when it excludes a firm from a network necessary to compete effectively.
- Preliminary injunctive relief may be warranted where exclusion from an association’s reciprocal-service network would likely destroy a firm’s ability to compete in a significant line of business and cannot be adequately repaired through damages.
- Appellate review of a preliminary injunction is for abuse of discretion, focusing on likelihood of success, irreparable harm, balance of harms, and the public interest.

## Conclusion

The court upheld preliminary relief because the association’s territorial and customer-based restrictions, enforced through expulsion, were likely unlawful horizontal restraints not shown necessary to the reciprocal-service arrangement, and immediate expulsion threatened irreparable, market-excluding harm to General Leaseways that outweighed any interim burden on the association.


General Leaseways, Inc. v. National Truck Leasing Ass’n, 744 F.2d 588 (7th Cir. 1984)