Global Commodities Trading Group, Inc. v. Beneficio De Arroz Choloma, S.A.

          ORDER DENYING MOTION FOR TEMPORARY RESTRAINING ORDER

          Troy L. Nunley United States District Judge.

         Plaintiffs Global Commodities Trading Group, Inc., a California company, and The Insurance Company of the State of Pennsylvania, Philadelphia (collectively “Plaintiffs”) have moved for a temporary restraining order, an order to show cause regarding the preliminary injunction, and issuance of letters rogatory to the Honduran government. (ECF No. 21.) The Court has considered the evidence presented on behalf of Plaintiffs in support of the motion and has concluded that Plaintiffs have failed to meet the standard supporting the issuance of a temporary restraining order.

         I. Factual Background

         Plaintiffs allege that Defendants Beneficio de Arroz Choloma, S.A., a Honduran company, Sady Farid Andonie-Reyes, and Joyce Mary Jarufe-Dox (collectively “Defendants”) entered into a contract for the purchase of corn, rice, and other grains from Plaintiffs. (ECF No. 25 at 6.) Plaintiffs assert that they performed the obligations under the contract by delivering the agreed upon commodities to Defendants in Honduras, but that Defendants failed to perform their obligations under the contract. (ECF No. 25 at 6-9.)

         Plaintiffs therefore filed a complaint in Placer County Superior Court against Defendants on September 25, 2014, seeking monetary damages based on California state law counts of breach of contract, common counts, and subrogation. (ECF No. 25 at 10.) On May 17, 2016, Defendants removed the case to the Eastern District of California based on diversity jurisdiction. (ECF No. 25 at 10.) On June 22, 2016, Plaintiffs were served with notice that Defendants brought a lawsuit against Plaintiffs in the Civil Court of San Pedro Sula, Cortes, Honduras. (ECF No. 25 at 10.) On July 1, 2016, Defendants filed two motions to dismiss, one based on lack of personal jurisdiction and one based on the doctrine of forum non conveniens. (ECF Nos. 11 and 12.) These motions are set for hearing before this Court on September 22, 2016.

         Plaintiffs state that they have asked Defendants to stay the litigation in Honduras pending the resolution of the instant law suit, but that Defendants have not responded to the request. (ECF No. 25 at 13.) Plaintiffs state they are currently seeking to hire Honduran counsel to represent them in the Honduran complaint. (ECF No. 25 at 13.) However, as of July 26, 2016, Plaintiffs state that they have been unable to retain Honduran counsel to represent it in defense of the Honduran complaint. (ECF No. 25 at 13.) Plaintiffs assert that they do not believe they were served in the Honduran action in a manner that requires a responsive pleading, but, if a response is due, it would be due on August 17, 2016. (ECF No. 25 at 13.) On these grounds, Plaintiffs seek a temporary restraining order and preliminary injunction preventing Defendants from proceeding with the Honduran action.

         II. Legal Standard

         A temporary restraining order is an extraordinary and temporary “fix” that the court may issue without notice to the adverse party if, in an affidavit or verified complaint, the movant “clearly show[s] that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition.” Fed.R.Civ.P. 65(b)(1)(A). The purpose of a temporary restraining order is to preserve the status quo pending a fuller hearing. See Fed. R. Civ. P. 65. It is the practice of this district to construe a motion for temporary restraining order as a motion for preliminary injunction. Local Rule 231(a); see also Aiello v. One West Bank, No. 2:10-cv-0227- GEB-EFB, 2010 WL 406092 at *1 (E.D. Cal. Jan. 29, 2010) (“Temporary restraining orders are governed by the same standard applicable to preliminary injunctions.”) (internal quotation and citations omitted).

         Injunctive relief is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22 (2008) (citing Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam)). “The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held.” University of Texas v. Camenisch, 451 U.S. 390, 395 (1981) (emphasis added); see also Costa Mesa City Employee’s Assn. v. City of Costa Mesa, 209 Cal.App.4th 298, 305 (2012) (“The purpose of such an order is to preserve the status quo until a final determination following a trial.”) (internal quotation marks omitted); GoTo.com, Inc. v. Walt Disney, Co., 202 F.3d 1199, 1210 (9th Cir. 2000) (“The status quo ante litem refers not simply to any situation before the filing of a lawsuit, but instead to the last uncontested status which preceded the pending controversy.”) (internal quotation marks omitted). In cases where the movant seeks to alter the status quo, preliminary injunction is disfavored and a higher level of scrutiny must apply. Schrier v. University of Co., 427 F.3d 1253, 1259 (10th Cir. 2005). Preliminary injunction is not automatically denied simply because the movant seeks to alter the status quo, but instead the movant must meet heightened scrutiny. Tom Doherty Associates, Inc. v. Saban Entertainment, Inc., 60 F.3d 27, 33-34 (2d Cir. 1995).

         In most instances, “[a] plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” Winter, 555 U.S. at 20. A plaintiff must “make a showing on all four prongs” of the Winter test to obtain a preliminary injunction. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011). In evaluating a plaintiff’s motion for preliminary injunction, a district court may weigh the plaintiff’s showings on the Winter elements using a sliding-scale approach. Id. A stronger showing on the balance of the hardships may support issuing a preliminary injunction even where the plaintiff shows that there are “serious questions on the merits . . . so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Id. Simply put, Plaintiff must demonstrate, “that [if] serious questions going to the merits were raised [then] the balance of hardships [must] tip[] sharply in the plaintiff’s favor, ” in order to succeed in a request for preliminary injunction. Id. at 1134-35 (emphasis added).

         Here, Plaintiffs are seeking an injunction against a foreign lawsuit, which requires a unique three part inquiry by the Court. “First, we determine whether or not the parties and the issues are the same in both the domestic and foreign actions, and whether or not the first action is dispositive of the action to be enjoined. Second, we determine whether at least one of the so-called ‘Unterweser factors’ applies. Finally, we assess whether the injunction’s impact on comity is tolerable.” Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 881 (9th Cir. 2012) (internal citations omitted). The Unterweser are as follows: “whether the” foreign litigation ... would (1) frustrate a policy of the forum issuing the injunction; (2) be vexatious or oppressive; (3) threaten the issuing court’s in rem or quasi in rem jurisdiction; or (4) where the proceedings prejudice other equitable considerations.” Id. (internal citations omitted).

         “The law in the Ninth Circuit is unclear whether a movant seeking an anti-suit injunction must only establish the presence of the three anti-suit injunction factors addressed above, or whether the movant must also establish the remaining traditional factors for a preliminary injunction.” Interdigital Tech. Corp. v. Pegatron Corp., No. 15-CV-02584-LHK, 2015 WL 3958257, at *8 (N.D. Cal. June 29, 2015). See also, Zynga, Inc. v. Vostu USA, Inc., 816 F.Supp.2d 824, 828 (N.D. Cal. 2011) (“It is arguably unclear from the Ninth Circuit case law whether the three anti-suit injunction factors replace all four Winter preliminary injunction factors, or whether they replace only the requirement that the movant show a likelihood of success on the merits of the underlying claim.”) Indeed, Plaintiffs make reference to both sets of standards in their briefing. (ECF No. 25 at 14.) Given this lack of clarity, the Court will apply both standards in its analysis.

         III. Analysis

         A. Foreign Anti-Suit ...