U.S. Legal Support, Inc. v. Hofioni, et al.

Filing 98

MEMORANDUM AND ORDER signed by Chief Judge Morrison C. England, Jr on 1/6/15 DENYING #89 Motion for Preliminary Injunction. (Meuleman, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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U.S. LEGAL SUPPORT, INC., a Texas
corporation,
Plaintiff,

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v.

Defendants.
AMEEN HOFIONI,

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MEMORANDUM AND ORDER

AMEEN HOFIONI, an individual;
MORGAN ALBANESE, an individual;
THE LIT GROUP, a Nevada
Corporation; HUTCHINGS COURT
REPORTERS, LLC, a California
corporation; and LITIGATION
SERVICES, a Nevada corporation,

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No. 2:13-cv-01770-MCE-AC

Cross-Claimant,
v.
THE LIT GROUP, a Nevada
corporation; HUTCHINGS COURT
REPORTERS, LLC, a California
corporation; and LITIGATION
SERVICES, a Nevada corporation,
Cross-Defendants.

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THE LIT GROUP, a Nevada
corporation; HUTCHINGS COURT
REPORTERS, LLC, a California
corporation; and LITIGATION
SERVICES, a Nevada corporation,

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Counter-Claimants,

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v.

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AMEEN HOFIONI,

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Counter-Defendant.

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On October 17, 2014, Cross-Claimant Ameen Hofioni (“Hofioni”) filed a Motion for

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a Preliminary Injunction, ECF No. 89, against Cross-Defendants The Lit Group,

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Hutchings Court Reporters, LLC, and Litigation Services (collectively “Lit Group”).

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Hofioni asks the Court to force Lit Group, his former employer, to pay his attorney’s fees

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in connection with the original, ongoing lawsuit, U.S. Legal Support, Inc. v. Hofioni, et al.

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For the following reasons, Hofioni’s Motion is DENIED. 1

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BACKGROUND

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Hofioni previously worked for U.S. Legal Support, Inc. (“U.S. Legal”) as a high-

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paid executive involved in business development and sales. On or about July 16, 2013,

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he made a lateral transfer to U.S Legal’s competitor, Lit Group, once again as a high-

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paid executive with a salary of over $350,000 per year. One month after he began his

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employment with Lit Group, U.S. Legal sued Hofioni for misappropriating trade secrets

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(for emailing sensitive documents to his personal email address) and for various other

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claims relating to Hofioni’s alleged submission of false expense reports and use of

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company gift cards for personal purchases.

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Because oral argument would not be of material assistance, the Court ordered this matter
submitted on the briefs. E.D. Cal. Local R. 230(g); ECF No. 95.

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U.S. Legal also sued Lit Group, which initially provided and paid for its

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employment attorney, Squire Patton Boggs, to represent Hofioni. However, after

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discovery had been conducted and Lit Group determined the allegations against Hofioni

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were likely true (and that he had engaged in similar conduct against Lit Group), Lit

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Group terminated Hofioni’s employment. Soon after, Lit Group notified Hofioni that he

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would have to find a new attorney and that although Lit Group would pay $25,000 to

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assist with Hofioni’s transition to a new attorney, Lit Group would no longer be paying for

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Hofioni’s legal costs.

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On July 22, 2014, Hofioni filed a crossclaim against Lit Group, ECF No. 75,

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claiming Lit Group had promised to pay his attorney’s fees through the pendency of the

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underlying litigation and to indemnify him against any civil damages. Lit Group denies

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there was any binding agreement to this effect and has since filed a counterclaim

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against Hofioni for breach of contract, express contractual indemnity, conversion, fraud,

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and declaratory relief, ECF No. 92.

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STANDARD

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“A preliminary injunction is an extraordinary and drastic remedy.” Munaf v. Geren,

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553 U.S. 674, 690 (2008). “[T]he purpose of a preliminary injunction is to preserve the

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status quo between the parties pending a resolution of a case on the merits.”

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McCormack v. Hiedeman, 694 F.3d 1004, 1019 (9th Cir. 2012). A plaintiff seeking a

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preliminary injunction must establish that he is (1) “likely to succeed on the merits;”

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(2) “likely to suffer irreparable harm in the absence of preliminary relief;” (3) “the balance

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of equities tips in his favor”; and (4) “an injunction is in the public interest.” Winter v.

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Natural Res. Defense Council, 555 U.S. 7, 20 (2008). “If a plaintiff fails to meet its

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burden on any of the four requirements for injunctive relief, its request must be denied.”

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Sierra Forest Legacy v. Rey, 691 F. Supp. 2d 1204, 1207 (E.D. Cal. 2010) (citing Winter,

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555 U.S. at 22). “In each case, courts ‘must balance the competing claims of injury and
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must consider the effect on each party of the granting or withholding of the requested

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relief.’” Winter, 555 U.S. at 24 (quoting Amoco Prod. Co. v. Gambell, 480 U.S. 531, 542

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(1987)). A district court should enter a preliminary injunction only “upon a clear showing

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that the plaintiff is entitled to such relief.” Winter, 555 U.S. at 22 (citing Mazurek v.

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Armstrong, 520 U.S. 968, 972 (1997)).

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Alternatively, under the so-called sliding scale approach, as long as the plaintiff

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demonstrates the requisite likelihood of irreparable harm and shows that an injunction is

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in the public interest, a preliminary injunction can still issue so long as serious questions

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going to the merits are raised and the balance of hardships tips sharply in the plaintiffs’

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favor. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011)

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(concluding that the “serious questions” version of the sliding scale test for preliminary

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injunctions remains viable after Winter).

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ANALYSIS

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It is unnecessary for the Court to delve into whether Hofioni is likely to succeed on

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the merits because it is clear to the Court that he does not face a risk of irreparable

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harm. Indeed, even if Hofioni’s success on the merits was “virtually assured,” he would

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still need to demonstrate that “he will suffer imminent, irreparable harm absent injunctive

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relief.” Clouser v. Ion Beam Applications, Inc., No. C-03-5539, 2004 WL 540514, at *5

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(N.D. Cal. Mar. 18, 2004) (citing Los Angeles Mem’l Coliseum Comm. v. Nat’l Football

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League, 634 F.2d 1197, 1201 (9th Cir. 1980)).

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Hofioni claims that he faces irreparable harm because if Lit Group is not forced by

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the Court to pay his legal fees in connection with U.S. Legal’s complaint, he may not be

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able to pay his legal expenses, which in turn would result in Hofioni being unable to

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mount an adequate defense and U.S. Legal prevailing by default. First, it appears

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unlikely that Hofioni cannot afford to pay his legal fees, as he is still a well-paid

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executive2 and most of the initial, time-consuming work—including discovery--in the

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underlying matter has already been completed. Additionally, in the event U.S. Legal

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prevails against Hofioni, both his legal expenses incurred and any civil damages

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awarded will be easily quantifiable, purely economic losses. Economic loss does not, in

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and of itself, constitute irreparable harm. Sampson v. Murray, 415 U.S. 61, 90 (1974).

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Finally, any losses suffered by Hofioni may be recovered if he prevails on his

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counterclaim. Simply put, the potential harm alleged by Hofioni is not irreparable. Id.

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(“The key word in this consideration is irreparable. Mere injuries, however substantial, in

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terms of money, time and energy necessarily expended ... are not enough. The

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possibility that adequate compensatory or other corrective relief will be available at a

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later date, in the ordinary course of litigation, weighs heavily against a claim of

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irreparable harm.”).

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Since the losses that Hofioni claims are speculative and not irreparable, a
preliminary injunction is unnecessary and improper.

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CONCLUSION

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For the reasons just stated, Hofioni’s Motion for a Preliminary Injunction, ECF
No. 89, is DENIED.
IT IS SO ORDERED.
Dated: January 6, 2015

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He is now working for another competitor of U.S. Legal and Lit Group.

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