ORDER GRANTING TEMPORARY RESTRAINING ORDER AND TO SHOW CAUSE WHY PRELIMINARY INJUNCTION SHOULD NOT ISSUE
CHRISTINA A. SNYDER, District Judge.
Plaintiff Colonial Life and Accident Insurance Company filed this action on December 16, 2013, against defendants Stentorians - L.A. County Black Firefighters ("Stentorians"), Humana, Inc. ("Humana"), Swett & Crawford ("Swett"), and Transamerica Life Insurance Company ("Transamerica"). Dkt. #1. Plaintiff asserts claims for breach of contract, intentional interference with contractual relations, intentional interference with prospective economic advantage, fraud, conversion, conspiracy, invasion of privacy, specific performance, violation of Cal. Bus. & Prof. Code § 17200, et seq., and injunctive relief. Id . Plaintiff filed an application for a temporary restraining order on that same date. Dkt. #3.
Plaintiff alleges that it is a South Carolina corporation with its principal place of business in South Carolina. Compl. ¶ 3. Plaintiff further alleges that Stentorians and Swett are California corporations, Humana is a Delaware corporation, and Transamerica is an Iowa corporation. Id . ¶¶ 4-7. Because plaintiff contends that Stentorians is wrongfully withholding approximately $2, 500, 000 in insurance premiums that belong to plaintiff, this Court has jurisdiction over this action based on diversity of citizenship under 28 U.S.C. § 1332.
Plaintiff alleges that it provides insurance policies to approximately 15, 000 employees of Los Angeles County (the "County") and their families, and that premiums for these policies are deducted from the payroll of these employees by the County, and remitted to plaintiff as a vendor. Id . ¶¶ 9-10. Plaintiff asserts that it entered into a contract with Stentorians on or about May 27, 2011, in which Stentorians agreed to perform the administrative service of collecting insurance premiums for plaintiff through the payroll deduction slot granted to Stentorians by the County, in exchange for an administrative fee. Id . ¶ 11 (citing the alleged contract, attached to the Complaint as Exhibit A); Summerford Decl. ¶¶ 4-5, Ex. A.
The contract provides that Stentorians will collect insurance premiums deducted from employee paychecks and remit the premiums to plaintiff on a monthly basis, along with an accounting of premiums collected. Summerford Decl. Ex. A at 1. In the contract, Stentorians agreed to refrain from negotiating, soliciting or selling insurance, or "in any other manner act[ing] as an insurance producer in connection with the sale of Colonial Life insurance products." Id . The contract further provides that it may be terminated by either plaintiff or Stentorians at any time upon 30 days' written notice. Summerford Decl. ¶ 8; Ex. A at 1-2. Plaintiff asserts that, to date, it has not received any notice of termination of the contract from Stentorians. Compl. ¶ 21.
Additionally, Stentorians agreed in the "procedures" governing the contract (the "Stentorians Procedures") to notify plaintiff of any written or oral communication with the County. Id . ¶ 18; Summerford Decl. ¶ 11, Ex. B ¶ 5. Plaintiff contends that the Stentorians Procedures are incorporated into the contract. Summerford Decl. ¶ 10.
Plaintiff alleges that, in or about March 2012, Stentorians informed plaintiff that its third party administrator, MB Ellison, requested that plaintiff provide its policyholder and premium data to facilitate the employee payroll deductions. Summerford Decl. ¶ 12. Plaintiff asserts that it agreed to provide the data on or about March 22, 2012, subject to customer privacy regulations and a "privacy provision" that would be appended to the Stentorians' Procedures, which would require Stentorians to abide by all privacy, confidentiality, and information security policies established by plaintiff. Summerford Decl. ¶ 13, Exs. C and D. The privacy provision of the Stentorians' Procedures requires Stentorians to notify plaintiff of any security incident involving the unauthorized access, use, or disclosure of policyholder information. Summerford Decl. Ex. D.
Plaintiff provides evidence that, on or about December 5, 2013, approximately 15, 000 of plaintiff's individual policyholders received letters with the logos of "Los Angeles County, Deduction Agency: SFA, " Humana, and Swett, in which these entities stated to plaintiff's policyholders that their accident, disability, critical illness, and supplemental health plans with plaintiff would now be covered by Humana. Compl. ¶ 24; Summerford Decl. ¶¶ 17-18, Ex. E. Plaintiff contends that it did not authorize the transactions described in the December 5, 2013 letter, and that the transactions were made without plaintiff's knowledge, or the knowledge of plaintiff's individual policyholders. Id . ¶ 18.
Additionally, plaintiff contends that Stentorians is wrongfully withholding approximately $2, 500, 000 in premiums that were deducted from plaintiff's policyholders' payroll on or about November 30, 2013, and December 13, 2013. Id . ¶ 22. According to plaintiff, these entities intentionally misrepresented to plaintiff's policyholders that there is "nothing they need to do to continue their coverage and no action is required on their part, " Summerford Decl. ¶ 17, Ex. E, even though the withholding of these policyholders' premiums from plaintiff creates the "imminent danger" that these policyholders' policies will lapse, id. ¶ 22.
On or about December 13, 2013, plaintiff demanded that Stentorians, Humana, and Swett cease using the private information of plaintiff's policyholders and return it to plaintiff, along with the premiums covering the individual policyholders. Compl. ¶ 31; Summerford Decl. ¶ 23, Ex. F. Plaintiff alleges that these defendants have not taken corrective action to date. Compl. ¶ 32. According to plaintiff, this conduct constitutes a breach of contract by Stentorians. Summerford Decl. ¶ 25.
III. LEGAL STANDARD
The standards for issuing a temporary restraining order and a preliminary injunction are "substantially identical." Stuhlbarg Int'l Sales Co. v. John D. Brushy & Co. , 240 F.3d 832, 839 & fn.7 (9th Cir. 2001). A preliminary injunction is an "extraordinary remedy." Winter v. Natural Res. Def. Council, Inc. , 555 U.S. 7, 9 (2008). The Ninth Circuit summarized the Supreme Court's recent clarification of the standard for granting preliminary injunctions in Winter as follows: "[a] plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Am. Trucking Ass'n, Inc. v. City of Los Angeles , 559 F.3d 1046, 1052 (9th Cir. 2009); see also Cal. Pharms. Ass'n v. Maxwell-Jolly , 563 F.3d 847, 849 (9th Cir. 2009) ("Cal. Pharms. I"). Alternatively, "serious questions going to the merits' and a hardship balance that tips sharply towards the plaintiff can support issuance of an injunction, so long as the plaintiff also shows a likelihood of irreparable injury and that the injunction is in the public interest." Alliance for the Wild Rockies v. Cottrell , 632 ...