## Facts

- Walgreen operated a pharmacy in Southgate Mall in Milwaukee, Wisconsin, as a long-term tenant.
- Walgreen’s 1971 lease (running through 2001) included an exclusivity clause restricting the landlord from leasing mall space to a competing pharmacy (with limited exceptions).
- Around 1990, the mall’s anchor tenant faced severe financial distress, and the landlord sought a replacement.
- Sara Creek planned to lease anchor space to Phar-Mor, a discount retailer that would include a pharmacy.
- Walgreen asserted that allowing Phar-Mor to operate a pharmacy in the mall would breach the exclusivity clause.
- Walgreen sought permanent injunctive relief, arguing that damages would be difficult to calculate over the remaining lease term.
- Sara Creek argued, among other things, that Walgreen had waived the exclusivity protection, that the clause was contrary to public policy, and that damages would fully compensate any breach.

## Issues

1. Whether the district court abused its discretion by granting a permanent injunction, rather than limiting Walgreen to money damages, for breach of the lease’s exclusivity clause.
2. Whether damages were an adequate remedy given the difficulty and expense of estimating Walgreen’s future losses from competition over the remaining lease term.
3. Whether the comparative costs of administering an injunction versus litigating and enforcing a damages award supported equitable relief.

## Decision

- The Seventh Circuit affirmed the permanent injunction.
- The court held that the district court acted within its discretion in concluding damages would be highly speculative and expensive to determine.
- The court emphasized that the injunction was a simple negative order (preventing leasing to a competing pharmacy) and would be relatively low-cost to enforce.
- The court reasoned that, if the landlord’s gains from leasing to Phar-Mor exceeded Walgreen’s losses, the parties could bargain for a modification or buyout, avoiding judicial valuation errors.

## Legal Principles

- Damages are the usual remedy for breach of contract, but equitable relief is proper when damages are inadequate due to high measurement uncertainty and litigation expense.
- Selection of a permanent injunction is reviewed for abuse of discretion; an appellate court does not reweigh the remedy choice if the trial court’s judgment is reasonable.
- When judicial estimation of damages would be uncertain and costly, a clear injunction may reduce error and information costs by leaving valuation to private negotiation.
- A simple prohibitory injunction with minimal supervision needs can be preferable to a complex damages determination, particularly where future competitive effects are hard to predict.

## Conclusion

The Seventh Circuit upheld a permanent injunction enforcing a shopping-mall lease exclusivity clause because the district court reasonably found that calculating future competitive harm in damages would be speculative and expensive, while a simple prohibitory injunction was easier to administer and allowed the parties to negotiate any efficient reallocation.


Walgreen Co. v. Sara Creek Prop. Co., 966 F.2d 273 (7th Cir. 1992)