Datatech Enterprises, LLC v. FF Magnat Limited et al

Filing 58

ORDER by Judge Charles R. Breyer denying 52 Motion for partial relief; denying as moot 53 Motion to shorten time. (crblc2, COURT STAFF) (Filed on 11/19/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

United States District Court
For the Northern District of California

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DATATECH ENTERPRISES LLC,

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Plaintiff,

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No. C 12-4500 CRB
ORDER DENYING MOTION FOR
PARTIAL RELIEF FROM
PRELIMINARY INJUNCTION

v.
FF MAGNAT LIMITED ET AL.,

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Defendants.

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INTRODUCTION

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Defendant FF Magnat Limited (“Magnat”) moves for partial relief from this Court’s

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asset-freeze preliminary injunction, see dkts. 34-35, seeking an additional $300,000 to pay

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for ongoing and anticipated litigation costs. Mot. Partial Relief (dkt. 52). The Court finds

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this matter suitable for resolution without oral argument under Local Rule 7-1(b).

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I.

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BACKGROUND
This Court already released $125,000 to Magnat to pay for litigation expenses. Dkt.

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23. Magnat now says it has already spent more than that to date, Gurvits Decl. (dkt. 52-1)

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¶ 2, and that in Magnat’s counsel’s “professional judgment, . . . [Magnat] will incur at least

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$300,000 in additional attorneys’ fees and costs arising from the defense of and counter-

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claims in this action and pursuing the interlocutory appeal file[d].” Id. ¶ 3. Magnat provides

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no detail–only a bottom-line number and vague references to the kinds of litigation activities
undertaken and anticipated.

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II.

LEGAL STANDARDS
A district court “may, within its discretion, forbid or limit payment of attorney fees

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out of frozen assets.” Commodity Futures Trading Comm’n v. Noble Metals Int’l, Inc., 67

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F.3d 766, 775 (citing FTC v. World Wide Factors, Ltd., 882 F.2d 344, 347 (9th Cir. 1989)).

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In Noble Metals the Ninth Circuit held that “where the frozen assets fell far short of the

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amount needed to compensate” the people with an equitable interest in the frozen assets, the

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district court was within its discretion to deny access to the assets–though the court also

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noted that an asset shortfall was not necessarily always a sufficient reason to deny a request,

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and that “[d]iscretion must be exercised by the district court in light of the fact that

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United States District Court
For the Northern District of California

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wrongdoing is not yet proved when the application for attorney fees is made.” Id.
III.

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DISCUSSION

Magnat has not made a showing that justifies the relief sought. It has made no effort

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to establish that the money potentially subject to an equitable disgorgement remedy is less

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than the amount currently frozen. Indeed, Magnat has never provided any documentation or

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firm detail regarding the extent of the assets frozen by the Court’s order. This Court will not

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exercise its discretion to release a particular sum absent knowledge of whether and how

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depletion of those funds could impact Plaintiff’s ultimate potential recovery. In the case of

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an asset shortfall, such a showing would have to be made before the Court would then

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consider whether the other circumstances of the case warranted release of funds for

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attorneys’ fees–an issue the Court does not reach in this Order.

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IV.

CONCLUSION

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The Court DENIES Magnat’s motion for partial relief from the preliminary injunction.

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IT IS SO ORDERED.

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Dated: November 19, 2012
CHARLES R. BREYER
UNITED STATES DISTRICT JUDGE

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G:\CRBALL\2012\4500\order re partial relief.wpd

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