UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA
December 20, 2007
SINDICATO DE EMPLEADOS Y TRABAJADORES DELA INDUSTRIA EL CAMPOY EL OMERCIO DEL ESTADO 29 PLAINTIFFS' A C.R.O.M. ET. AL., PLAINTIFFS,
CREDIT MANAGERS ASSOCIATION OF CALIFORNIA, INC., DEFENDANT.
The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge
ORDER DENYING MOTION FOR TEMPORARY RESTRAINING
ORDER (Doc. Nos. 4, 5)
On December 18, 2007 Plaintiffs, two Mexican labor unions, commenced an action against Defendant Credit Managers Association of California ("CMA") alleging breach of contract and seeking accounting and equitable relief. (Doc. No. 1.) Pending before the Court is Plaintiffs' motion for a Temporary Restraining Order ("TRO") to restrain CMA from paying out $896,389.81 to certain creditors, to a temporary receiver appointed by a California Family Law Court, or to anyone else that may have a claim to the funds. The Court decides the matter on the papers submitted and without oral argument. See S.D. Cal. Civ. R. 7.1(d.1). For the following reasons, the Court DENIES Plaintiffs' motion for a TRO.
Plaintiffs are two Mexican labor unions whose constituent members are the employees of two Mexican companies, Alissimo S.A. de C.V. ("Alissimo") and Resinas Laguna, S.A. de C.V. ("Resinas"). (Mot. for TRO 2-4.) Both Alissimo and Resinas did substantial business with two American companies, FlexTrim California, Inc. and FlexTrim North Carolina, Inc. (collectively, "FlexTrim"). (Id.) Plaintiffs allege that FlexTrim owes Alissimo and Resinas $896,389.81 for their products and/or services. (Mot. for TRO 3.) According to Plaintiffs, FlexTrim is now insolvent.*fn1 (Mot. for TRO 2.)
Allen and Mary Kay Jones are two formerly married individuals currently involved in property dissolution proceedings in California Family Law Court ("California Court"). (Id. 3.) The California Court appointed Dennis Murphy ("Murphy") temporary receiver of certain entities and affiliates which were alleged to form part of the Jones' marital estate. Allen Jones is for purposes of this litigation the owner of FlexTrim. (Richman Decl. Ex. F 2-3.)
Defendant CMA is a non-profit corporation which appears to assist companies, like FlexTrim, in managing assets and satisfying creditors. (Richman Decl. Ex. A.) On or about May 21, 2007 FlexTrim assigned all its business assets to CMA for liquidation and payment of creditor claims. (Mot. for TRO 2.)
On May 22, 2007 Plaintiff alleges that Alissimo and Resinas were joined in the marital dissolution proceedings "without notice, opportunity to object, or any due process." (Mot. for TRO 3.) Apparently, Alissimo's and Resinas's bank accounts were frozen and their assets seized.*fn2 (Id.) It is unclear when Alissimo and Resinas learned about the asset freeze and seizure, but it appears to be shortly after the May, 22 2007 order. (Jose Corral Decl. ¶ 15; Francisco Elorza Decl. ¶ 15.) Although Plaintiffs' motion fails to connect the dots, Alissimo/Resinas both seem to insinuate that they are separately owned companies (i.e., not part of the marital estate) and the California court should not have been put them under the stewardship of receiver Murphy. (Jose Corral Decl. ¶ 11-14; Francisco Elorza Decl. ¶ 12-14.)
On July 6 and 13, 2007 Alissimo and Resinas made respective claims to CMA for the monies owed to them by FlexTrim. (Richman Decl. Ex. C.) Plaintiffs allege that these monies have not yet been paid. (Mot. for TRO 5.)
Plaintiffs, the two Mexican labor unions, are allegedly owed significant sums for unpaid wages and benefits by Alissimo and Resinas. On December 13, 2007 Plaintiffs (litigating in the state labor court of Baja California in Tijuana [hereinafter, "Mexican Court]) received an order temporarily freezing both companies' assets in order to satisfy the payment of wages. (Mot. for TRO 4.) According to Plaintiffs, under the Mexican Constitution and Labor Code employees have preferential rights over all other creditors. (Id.) However, it is unclear whether Alissimo and/or Resinas are actually insolvent. (See Quijano Decl. ¶ 6.) Presumably, Plaintiffs assume they have standing to pursue this suit because they should be able to "step into the shoes" of their creditor-employers and recoup assets from CMA.
On December 19, 2007 Plaintiffs moved for a TRO because on December 21, 2007 the California Court is scheduled to hear receiver Murphy's motion to approve a "letter agreement" between CMA and Murphy to distribute the marital estate.*fn3 (Mot. for TRO 5.) Plaintiffs fear that the letter agreement's terms do not satisfy Alissimo's or Resinas's open claims and shifts the balance of FlexTrim's assets (assigned to CMA) to Murphy. (Id.) Plaintiffs fear that if Alissimo/Resinas do not get paid by CMA, Alissimo/Resinas will be unable to pay Plaintiffs. (Id.) Thus, Plaintiffs seek an order restraining CMA from paying $896,389.81 to FlexTrim creditors, receiver Murphy, or anyone else claiming an interest. On December 20, 2007-after Plaintiffs provided an extremely brief notice period-Defendant CMA opposed the TRO.
II. LEGAL STANDARD
The Federal Rules of Civil Procedure outline the procedures a federal court must follow when deciding whether to grant a temporary restraining order. See Fed. R. Civ. P. 65. The standard for granting a temporary restraining order is the same as the standard for entering a preliminary injunction. Bronco Wine Co. v. U.S. Dep't of Treasury, 997 F. Supp. 1309, 1313 (E.D. Cal. 1996); Franklin v. Scribner, Civil No. 07-0438 BTM (LSP), 2007 WL 1491100, at *3 (S.D. Cal. May 21, 2007). The Ninth Circuit has prescribed the following equitable criteria for determining whether to grant injunctive relief:
(1) the likelihood of the moving party's success on the merits;
(2) the possibility of irreparable injury to the moving party if relief is not granted;
(3) the extent to which the balance of hardships favors the respective parties; and (4) in certain cases, whether the public interest will be advanced by granting the preliminary relief. The moving party must show either (1) a combination of probable success on the merits and the possibility of irreparable harm, or (2) the existence of serious questions going to the merits, the balance of hardships tipping sharply in its favor, and at least a fair chance of success on the merits... [T]he required degree of irreparable harm increases as the probability of success decreases.
Owner Operator Indep. Drivers Ass'n, Inc. v. Swift Transp. Co., 367 F.3d 1108, 1111 (9th Cir. 2004) (quoting Miller ex. rel. N.L.R.B. v. Cal. Pac. Med. Ctr., 19 F.3d 449, 456 (9th Cir. 1994)). The temporary restraining order "should be restricted to serving [its] underlying purpose of preserving the status quo and preventing irreparable harm just so long as is necessary to hold a hearing, and no longer." Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local No. 70, 415 U.S. 423, 439 (1974); accord L.A. Mem'l Coliseum Comm'n v. Nat'l Football League, 634 F.2d 1197, 1200 (9th Cir. 1980); Del Toro-Chacon v. Chertoff, 431 F. Supp. 2d 1135, 1139-40 (W.D. Wash. 2006).
A. Threshold Issues
There are several threshold issues which make granting Plaintiffs' TRO motion particularly difficult. First, Plaintiffs filed the TRO on mid-day Wednesday and wished to obtain a hearing and order by Thursday afternoon. This provided Defendant-and the Court-with very little time to respond to Plaintiffs' request, especially in the week prior to Christmas. Although providing such short notice is not unheard of, circumstances are more forgiving when the defendant knows a TRO application may be forthcoming. See Squillacote v. Meat & Allied Food Workers, 534 F.2d 735, 743 (7th Cir. 1976) (holding sufficient notice where opposing counsel was given TRO documents 24 hours before the order was entered, but had several days warning that TRO may be filed).*fn4 Here, this does not appear to be the case.
Additionally, Plaintiffs' Motion for TRO is devoid of any legal analysis. Although TROs necessarily turn on their underlying facts, Plaintiffs do nothing to assure the Court that, given the complicated factual, standing, comity, and conflict of laws issues, the Court has jurisdiction to grant or deny this motion. See Fowler v. United States, 258 F. Supp. 638, 644 (C.D. Cal. 1966) (stating that a TRO will not ordinarily be granted if any debate or doubts are created by the record as to the merits of the claimed relief or power of the court to act).
For instance, Plaintiffs have sued CMA, and only CMA, and have moved to restrain the company from releasing funds to the receiver or other creditors. (Mot. for TRO 2.) This request necessarily implicates the rights of the receiver and third party creditors not before the Court. See, e.g., Doe v. Mathews, 420 F. Supp. 865, 870 (D.N.J. 1976) (holding that no temporary restraining order can be granted if plaintiff fails to join an indispensable party). Moreover, any TRO issued could be in direct contrivance to the forthcoming California Court ruling, and may violate the Anti-Injunction Act. 28 U.S.C. § 2283; see also Hawaii Housing Authority v. Midkiff, 463 U.S. 1323, 1325 (1983) (holding that where vital state interests are involved, a federal court should refrain from enjoining an ongoing state judicial proceeding unless extraordinary circumstances exist requiring equitable relief). Simply, in light of all the circumstances surrounding the motion, Plaintiffs' cursory analysis does not satisfy the Court that TRO relief is warranted.
B. Plaintiffs Do Not Show a Likelihood of Success on the Merits
Plaintiffs argue that it is undisputed that CMA owes Alissimo and Resinas, as FlexTrim creditors, a substantial amount of money for goods and services rendered. (Mot. for TRO 7.) However, Plaintiffs are two Mexican labor unions whose constituents merely work for the two Mexican companies, in Mexico. Besides a Mexican Labor Court ruling giving Plaintiffs preferential rights over Alissimo/Resinas assets, it is unclear under California law whether Plaintiffs may "leapfrog" their employer and assert claims against CMA directly. See Fed. R. Civ. P. 17(a); Allstate Ins. Co. v. Hughes, 358 F.3d 1089, 1093-94 (9th Cir. 2004) (holding that, in a diversity suit, the court must apply substantive state law to determine the real party in interest).
Nor do Plaintiffs provide a copy of the Mexican Court's Order, or even cite authority showing that the Mexican Court's Order applies outside the borders of Mexico. In short, Plaintiffs leave many open questions*fn5 and provide no legal authority for the relief in which they seek. Thus, they cannot show that they are likely to succeed on the merits.
C. Plaintiffs Do Not Show Irreparable Injury
Plaintiffs argue that irreparable injury will result if the California Court orders CMA to pay the bulk of FlexTrim's assets to receiver Murphy, thus denying Alissimo/Resinas's claims. (Mot. for TRO 7.) Plaintiff does not provide any legal authority for this claim.
Irreparable harm generally turns upon a substantial injury that is neither accurately measurable or adequately compensable by money damages. See, e.g., Willms v. Sanderson Cmtys., Inc., No. 07-CV-2366-LKK-GGH, 2007 U.S. Dist. LEXIS 85137, at *4 (E.D. Cal. November 7, 2007) (citing Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 18 (1st Cir. 1996)). In this case, Plaintiffs' harm is accurately measurable. Plaintiffs continuously reference the precise figure of $896,389.81 and their proposed order requests that CMA be restrained from paying out that exact amount, not a penny more or less. Additionally, it is tough to imagine how Plaintiffs' alleged harm, not being paid, would not be adequately compensated by money damages. Cf. Phleger v. Countrywide Home Loans, Inc., No. 07-1686 SBA, 2007 U.S. Dist. LEXIS 86413 (N.D. Cal. November 16, 2007) (finding irreparable injury where plaintiff would lose her home to foreclosure auction if court did not grant TRO).
Because Plaintiffs do not show a likelihood of success on the merits, do not show irreparable injury, and provide the Court with incomplete facts and law, the Court finds it unnecessary to balance hardships at this time. From the information before the Court, no public interest factors appear to favor Plaintiffs. Accordingly, Plaintiffs' ex parte motion for a temporary restraining order is DENIED.
From the information currently before the Court, Plaintiffs have not alleged facts and circumstances sufficient to satisfy the requirements needed for a temporary restraining order. Accordingly, the Court DENIES Plaintiffs' Emergency Motion for Temporary Restraining Order. (Doc. Nos. 4, 5.) Nothing in this Order shall preclude Plaintiffs or Defendant from moving for or opposing a temporary restraining order, preliminary injunction, or permanent injunction at some future date if circumstances so warrant.
IT IS SO ORDERED.
Hon. THOMAS J. WHELAN United States District Judge