United States District Court, N.D. California, San Jose Division
ORDER GRANTING EX PARTE APPLICATION FOR TEMPORARY
RESTRAINING ORDER; ORDER TO SHOW CAUSE RE PRELIMINARY
INJUNCTION RE: DKT. NO. 2
J. DAVILA UNITED STATES DISTRICT JUDGE
Introduction and Background
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.
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.
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.
§ 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
Id. § 4.11. Lockheed has executed neither the
Adoption Agreement nor the Shareholders Agreement.
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.
Ex Parte Proceedings
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.