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Lockheed Martin Corp. v. Aceworld Holdings PTY Ltd.

United States District Court, N.D. California, San Jose Division

July 18, 2019

ACEWORLD HOLDINGS PTY LTD, et al., Defendants.



         I. Introduction and Background

         Lockheed Martin Corporation (“Lockheed”) has filed a complaint and an ex parte application for a temporary restraining order against ten defendants who are a mix of Australian residents, Australian companies, one Delaware company operating in Australia, and one California citizen. Lockheed asks the Court to issue an anti-suit temporary restraining order to prohibit Defendants from bringing litigation concerning a nonparty company against Lockheed in Australia. For the reasons set forth below, the Court grants the temporary restraining order and orders Defendants to show cause why a preliminary injunction should not issue.

         The nonparty company at the center of this dispute is a Delaware corporation called Collinear Networks, Inc. (“Collinear”). Collinear's principal place of business is in Santa Clara, California, and it also has offices in Santa Cruz. Compl. ¶ 8. Collinear is a technology company aiming to develop products to quickly and reliably transmit data over far distances. Id. ¶ 22. In December 2014, Lockheed contracted with Collinear to assist in developing its technology. Id. ¶ 23. Defendants invested in Collinear from late 2014 through the first half of 2018. Id. ¶¶ 24-35. According to Lockheed's allegations, Defendants have asserted that Lockheed participated in the meetings and helped to prepare the materials that led Defendants to invest in Collinear. Id. ¶¶ 25-27. In or around November 2018, Defendants engaged Lockheed in negotiations for Lockheed to make a significant equity investment in Collinear. Id. ¶ 36. During these negotiations Defendants threatened Lockheed with litigation in Australia arising from purported misrepresentations about Collinear's products that Collinear made with Lockheed's assistance. Id. ¶¶ 3, 37-39; Pl.'s Mem. P. & A. in Supp. of Appl. for TRO (“Mem.”) at 2. These purported misrepresentations led Defendants to invest in Collinear. Mem. at 12. Defendants went so far as to cite three Australian statutes under which they could bring claims against Lockheed and to represent that they had already spent money on “the litigation side.” Compl. ¶¶ 38-39. On July 11, 2019, Defendants presented Lockheed with an ultimatum in the form of a final offer. Id. ¶ 39. Lockheed did not accept it. Id. Lockheed believes that Defendants will imminently bring litigation against it in Australia. Id. ¶¶ 39-40.

         Each Defendant executed Collinear's Adoption Agreement. Id. ¶¶ 12-21; Ex. B. The Adoption Agreement provides that it was executed by the Defendants “pursuant to the terms of that certain Shareholders Agreement dated as of September 27, 2013.” Ex. B. It further provides that that Defendants “acknowledge[] that [they are] acquiring certain equity securities of the Company (the ‘Equity Securities') subject to the terms and conditions of the [Shareholders] Agreement, ” that “the Equity Securities acquired by [Defendants] shall be bound by and subject to the terms of the [Shareholders] Agreement” and that Defendants adopted “the [Shareholders] Agreement with the same force and effect as if [Defendants] were originally [] Shareholder[s] thereto.” Id. §§ 1-2. The Shareholders Agreement contains clauses on forum selection and choice of law. On choice of law, it provides,

This Agreement and any claim, controversy or dispute arising under or related thereto . . . and/or the interpretation and enforcement of the rights and duties of the parties, whether arising in Law or in equity, in contract, tort or otherwise, shall be governed by, and construed and interpreted in accordance with, the Laws of the State of Delaware without regard to its rules regarding conflicts of Law to the extent that the application of the Laws of another jurisdiction would be required thereby.

         Ex. A § 4.9. On forum selection, it provides,

Each party (a) irrevocably and unconditionally submits to the personal jurisdiction of the federal and state courts of the United States in each and every jurisdiction where venue is proper with respect to such party . . . (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (c) agrees that any actions or proceedings arising in connection with this Agreement or the transactions contemplated by this Agreement shall be brought, tried and determined only in such courts . . . and (e) agrees that it will not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the aforesaid courts.

Id. § 4.11. Lockheed has executed neither the Adoption Agreement nor the Shareholders Agreement.

         II. Discussion

         This matter raises three questions: (1) Can Lockheed bring this application for a temporary restraining order ex parte? (2) Does the Shareholders Agreement prevent Defendants from bringing claims concerning their investments in Collinear against Lockheed in a foreign court? And (3) is Lockheed entitled to an anti-suit temporary restraining order? The Court addresses each in turn.

         a. Ex Parte Proceedings

         The Federal Rules provide that a court may grant an application for a temporary restraining order only if “specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and the movant's attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.” Fed.R.Civ.P. 65(b)(1). As an initial matter, the Court notes that Lockheed has filed the appropriate verified complaint and attorney certification. Dkt. No. 1, 2-4. Lockheed's complaint and the supporting exhibits sufficiently show that it faces immediate and irreparable harm if a temporary restraining order does not issue. Lockheed alleges that, without a temporary restraining order, Defendants are likely to file ex parte suit against it in Australia despite the forum selection clause. See Ex. A § 4.11; see infra § II.b (discussing why the forum selection clause applies to the threatened litigation against Lockheed). Such action by Defendants would render this proceeding “fruitless.” See Reno Air Racing Ass'n. v. McCord, 452 F.3d 1126, 1131 (9th Cir. 2006). The purpose of a temporary restraining order issued ex parte is to “preserv[e] the status quo and prevent[] irreparable harm just so long as is necessary to hold a hearing, and no longer.” Reno, 452 F.3d at 1131. Providing notice to Defendants would allow them to seek ex parte relief in Australia-disturbing the status quo and harming Lockheed-before this court can hear from all parties.

         b. The ...

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