Ares Collective Group LLC et al v. National Labor Relations Board et al

Filing 14

ORDER denying #2 Plaintiffs' MOTION for Temporary Restraining Order, MOTION for Preliminary Injunction. Signed by Judge Scott H Rash on 10/25/2024. (See attached PDF for complete details.) (DPS)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

Ares Collective Group LLC, et al.,
Plaintiffs,

10
11

v.

12

National Labor Relations Board, et al.,

13

Defendants.

No. CV-24-00517-TUC-SHR
Order Denying TRO

14
15
16

Pending before the Court is Plaintiffs’ “Application for Temporary Restraining

17

Order and Preliminary Injunction” (“TRO Motion”) filed pursuant to Federal Rule of Civil

18

Procedure 65. (Doc. 2.) For the reasons stated below, the Court denies Plaintiffs’ TRO

19

Motion.

20

I.

21

Plaintiffs are two Arizona limited liability companies and one organization that

22

operate eateries and a grocery facility in Tucson. (Doc. 1 at 7.) On September 2, 2021,

23

one of Plaintiffs’ former employees filed an unfair labor practice charge with the National

24

Labor Relations Board (NLRB) against Plaintiff Flora’s Market Run. (Doc. 1 at 7.) On

25

October 23, 2024, the Regional Director of Region 28 of the NLRB filed a Consolidated

26

Complaint against Plaintiffs as well as a Notice of Hearing. (Doc. 1 at 8.) On September

27

24, 2024, the Regional Director issued a Second Amended Consolidated Complaint with

28

notice that a hearing on the former employee’s claims would be held before an

BACKGROUND

1

Administrative Law Judge (ALJ) on October 28, 2024. (Doc. 1-2 at 3, 24.) The NLRB’s

2

amended complaint seeks “payment for consequential economic harm” Plaintiffs’ former

3

employee incurred as a result of Plaintiffs’ alleged illegal conduct. (Doc. 1-2 at 22.)

4

Plaintiffs answered the second amended complaint, asserting, among other things,

5

affirmative defenses challenging the constitutionality of the scheduled hearing and

6

NLRB’s structure. (Doc. 1-2 at 30.)

7

On October 23, 2024, Plaintiffs filed a Complaint for Declaratory and Injunctive

8

Relief, asking this Court to enjoin Defendants from subjecting them to “unconstitutionally

9

structured administrative proceedings pending the final resolution of this action” and to

10

“[p]ermanently enjoin[] Defendants

from implementing or

carrying

out

the

11

unconstitutional removal-protection provisions” insulating NLRB ALJs and Board

12

Members. (Doc. 1 at 17.) Also on October 23, Plaintiffs filed the instant TRO Motion

13

seeking an order “enjoin[ing] unconstitutional administrative proceedings” against them.

14

(Doc. 2 at 2.) Plaintiffs argue: (1) “the NLRB’s quest for compensatory monetary damages

15

in an administrative proceeding violates Plaintiffs’ Seventh Amendment right to trial by

16

jury”; 2) “the ALJ assigned to conduct the hearing will unconstitutionally exercise

17

substantial executive power while being insulated from Presidential control through two

18

layers of for-cause removal protection in violation of Article II of the United States

19

Constitution”; and (3) “the NLRB Board Members are likewise unconstitutionally

20

protected from the President’s removal power and, more generally, Presidential control.”

21

(Doc. 2 at 2.)

22

II.

23

A TRO is “an extraordinary remedy that may only be awarded upon a clear showing

24

that the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S.

25

7, 22 (2008); see also Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839

26

n.7 (9th Cir. 2001) (TROs are analyzed in substantially the same way as preliminary

27

injunctions). A plaintiff seeking a TRO must establish: (1) he is likely to succeed on the

28

merits; (2) he is likely to suffer irreparable harm in the absence of preliminary relief; (3)

LEGAL STANDARD

-2-

1

the balance of equities tips in his favor; and (4) an injunction is in the public interest.

2

Winter, 555 U.S. at 20. When the government is a party, the last two of the four factors—

3

the balance of the equities and the public interest—merge. Drakes Bay Oyster Co. v.

4

Jewell, 747 F.3d 1073, 1092 (9th Cir. 2014). The first factor, likelihood of success on the

5

merits, is “the most important Winter factor.” Disney Enters., Inc. v. VidAngel, Inc., 869

6

F.3d 848, 856 (9th Cir. 2017) (“[I]f a movant fails to meet this threshold inquiry, the court

7

need not consider the other factors.”). However, in the Ninth Circuit, a temporary

8

restraining order is warranted where “serious questions going to the merits” exist and a

9

“hardship balance . . . tips sharply toward the plaintiff”—provided the other two elements

10

of the Winter test are also met. All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1132

11

(9th Cir. 2011); see also Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291 (9th

12

Cir. 2013) (describing serious questions going to the merits as “a lesser showing than

13

likelihood of success on the merits”). Regardless of which standard applies, the movant

14

“carries the burden of proof on each element of either test.” Env’t. Council of Sacramento

15

v. Slater, 184 F. Supp. 2d 1016, 1027 (E.D. Cal. 2000).

16

III.

17

Plaintiffs contend (1) the scheduled proceeding before an NLRB ALJ will violate

18

their Seventh Amendment right to a jury trial (Doc. 2 at 6–8), and (2) the NLRB ALJs and

19

Board Members are unconstitutionally insulated from removal by the President by two

20

layers of “for cause” employment protection. (Doc. 2 at 3, 10.) Even assuming Plaintiffs

21

are likely to succeed on the merits of these claims, the Court finds they fail to show

22

irreparable harm and are therefore not entitled to a TRO enjoining the NLRB proceeding.

23

See Winter, 555 U.S. at 20.

DISCUSSION

24

Plaintiffs claim they will suffer irreparable harm without the Court’s intervention

25

because they “will be forced to undergo an unconstitutional proceeding before an

26

insufficiently accountable ALJ and NLRB, without the jury trial to which [they are]

27

entitled.” (Doc. 2 at 12.) Further, Plaintiffs argue, the “economic burdens” associated with

28

preparing for and participating in the hearing “separately constitute irreparable harm.” (Id.

-3-

1

at 13.) These arguments fail to meet the standard that the Supreme Court has established

2

and the Ninth Circuit has reiterated: “[t]he key . . . is demonstrating that the

3

unconstitutional provision actually caused the plaintiff harm.”

4

Pehringer, 8 F.4th 1123, 1137 (9th Cir. 2021); see Collins v. Yellen, 594 U.S. 220, 260

5

(2021) (shareholders needed to show the unconstitutional removal restriction—not simply

6

the agency’s actions—“cause[d] harm” to be entitled to retrospective relief); see also YAPP

7

USA Auto. Sys., Inc. v. NLRB, 2024 WL 4489598, *2–3 (6th Cir. 2024) (plaintiff not

8

entitled to preliminary injunction where it failed to show the removal protections for NLRB

9

officials would cause harm).

Decker Coal Co. v.

10

Here, even assuming the alleged constitutional infirmities exist, Plaintiffs fail to

11

show how this Court’s failure to grant temporary relief will cause irreparable harm. First,

12

nothing about the NLRB proceedings will permanently deprive Plaintiffs of their Seventh

13

Amendment right. Rather, as detailed in the NLRA, Plaintiffs can seek review of the

14

NLRB’s decision in the court of appeals. Second, merely highlighting the fact there is a

15

two-layer removal system in place does not establish the causal link between the removal

16

restrictions and their impact on the upcoming proceeding. Even assuming the two-layer

17

removal system could cause a per se harm to Plaintiffs, this harm can be completely

18

extinguished by the court of appeals vacating an ALJ’s decision. Lastly, the timing of this

19

TRO Motion undermines Plaintiffs’ irreparable harm argument.

20

Plaintiffs were on notice of the nature of the remedy sought and the fact that the NLRB

21

ALJ would hold a hearing. As Plaintiffs admitted at today’s hearing, it was a strategic

22

decision to wait until two business days before the NLRB’s scheduled hearing to file this

23

Motion. The Court finds this delay weighs against granting the TRO Motion.

For nearly a year,

24

IV.

25

IT IS ORDERED Plaintiffs' TRO Motion (Doc. 2) is DENIED.

26

Dated this 25th day of October, 2024.

CONCLUSION

27
28

-4-