The opinion of the court was delivered by: Ralph R. Beistline United States District Judge
ORDER GRANTING PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION
Before the Court are Plaintiffs Gregory Johnson, William Rodwell, Edward Rangel, and Kelly Morrell ("Plaintiffs") with a Motion for a Temporary Restraining Order, Preliminary Injunctive and Other Equitable Relief at Docket 321. The Court has already granted Plaintiffs' motion for a ten-day temporary restraining order pending the issuance of a decision on the request for a preliminary injunction.*fn1 Plaintiffs seek to enjoin Defendant The Employee Ownership Holding Company, Inc. ("TEOHC") "from advancing, prior to the final disposition of this proceeding, any litigation or other expenses of Defendants Clair R. Couturier Jr., David Johanson, and Robert Eddy incurred in defending this action or any action instituted against them by the United States Department of Labor (the "DOL") alleging the same or similar conduct."*fn2 Nominal Defendant The Employee Ownership Holding Company, Inc. Employee Stock Ownership Plan and Trust ("ESOP") has joined the Plaintiffs' motion at Docket 374, and the Department of Labor ("DOL") submitted an amicus brief at Docket 389.
The Plaintiffs also sought to enjoin the Defendants and the American Arbitration Association ("AAA") from conducting arbitration with regard to the validity of any indemnification agreements between TEOHC and the individual Defendants, and with regard to the advancement of legal expenses under such indemnification agreements.*fn3 But, because the AAA has already issued a decision in the arbitration between TEOHC and Defendants Johanson and Eddy concerning advancement of legal fees,*fn4 that aspect of the motion is moot. The Court has, however, permitted Plaintiffs to amend their motion such that the proposed injunction would prohibit any of the Defendants from seeking to enforce the AAA's decision in any state court proceeding or in any other manner.*fn5
Defendants Johanson and Eddy have opposed at Docket 346 and Docket 347, respectively, arguing that Plaintiffs have failed to meet the burden for issuing a preliminary injunction, and that the District Court has no jurisdiction over this issue because of the arbitration clause in the indemnification agreements. Defendant Claire Couturier, who was not a party to the arbitration, opposes at 351 and argues that Plaintiffs have failed to meet the burden for issuance of a preliminary injunction.
The Court has also considered all of the other briefing filed in this matter.
The facts of this case, extensive as they are, will be discussed only insofar as they are relevant to the Court's decision. Inasmuch as the parties have submitted memoranda thoroughly discussing the law and evidence in support of their positions, the Court has determined that oral argument is neither necessary nor warranted.
Federal Rule of Civil Procedure 65 authorizes injunctive relief under certain specified conditions. As this court has previously noted, "[p]reliminary injunctive relief is appropriate when a plaintiff establishes (1) probable success on the merits and irreparable harm if relief is denied, or (2) that there are serious questions on the merits and the balance of hardship tips sharply in favor of plaintiff."*fn6 The test represents "a single continuum of concern which evaluates two factors that must always be considered: 'The likelihood of the plaintiff's success on the merits; and the relative balance of potential hardships to the plaintiff, defendant, and public."*fn7 Analysis is affected by the relative probability of success and potential hardship: "[t]he higher a plaintiff's probability of success, the less the balance of hardship need tip in plaintiff's favor to support issuance of an injunction."*fn8
Because of the recently completed arbitration of Defendants Eddy and Johanson's claim for advancement of legal fees, the proposed injunction as to those two Defendants concerns some distinct legal issues that do not apply to Defendant Couturier. The Court will first determine whether the Plaintiffs have met the burden for issuance of a preliminary injunction against advancement of fees to all defendants, and will then separately analyze the legal arguments pertaining to each individual defendant.
A. Plaintiffs Have Met the Burden for a Preliminary Injunction Against Advancement of Fees
The Court finds that Plaintiffs have carried their burden of showing probable success on the merits of their ERISA claims against Defendants Couturier, Eddy and Johanson. The Plaintiffs have alleged in their amended complaint numerous violations of ERISA by each of the ...