Vedanti Systems Limited v. Max Sound Corporation

Filing 27

ORDER by Judge Edward M. Chen granting 8 Plaintiff's Motion for Preliminary Injunction. (emclc2S, COURT STAFF) (Filed on 6/10/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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VEDANTI SYSTEMS LIMITED,
Plaintiff,

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MAX SOUND CORPORATION,

Docket No. 8

Defendant.

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For the Northern District of California

United States District Court

ORDER GRANTING PLAINTIFF’S
MOTION FOR A PRELIMINARY
INJUNCTION

v.

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Case No. 16-cv-02179-EMC

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Plaintiff Vedanti Systems Limited initiated this lawsuit against Defendant Max Sound

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Corporation on April 22, 2016, “seeking equitable relief so that it does not have to participate in

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an arbitration . . . to which it never agreed.” Compl. ¶ 1. Two days later, Vedanti filed a motion

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for a preliminary injunction, asking that Max be enjoined “from pursuing claims in arbitration

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against Vedanti pending the resolution of this matter on the merits.” Docket No. 8 (Mot. at 1).

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Vedanti argued, inter alia, that it could not be compelled to arbitrate because it had not entered

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into any arbitration agreement with Max. Vedanti also argued that Max was precluded, under the

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doctrine of collateral estoppel, from arguing that the contract that it relied on to initiate the

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arbitration constituted the arbitration agreement. The matter was initially assigned to Judge

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Grewal.

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On May 3, 2016, the complaint and preliminary injunction motion were served on Max.

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See Docket No. 19 (summons). Three days later, the Court received a letter from Max’s Chairman

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and CFO, asking for thirty days to retain counsel and get counsel up to speed so that it could

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respond to the complaint and motion. See Docket No. 20 (letter).

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On May 27, 2016, Judge Grewal issued an order, noting that Max “has not opposed the
motion; nor has it appeared in this action at all.” Docket No. 24 (Order at 1). Judge Grewal,

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however, could not grant Vedanti any relief because Max had not consented to the jurisdiction of a

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magistrate judge. The matter was thus reassigned to the undersigned on June 9, 2016.

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At this point, it is past the thirty days requested by Max so that it could hire counsel and

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have counsel appear. Max still has not appeared in this lawsuit or otherwise opposed the

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preliminary injunction motion. Furthermore, based on Vedanti’s papers, it appears that there are

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at least serious questions going to the merits and the balance of hardships tips in Vedanti’s papers.

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Given these circumstances, the Court hereby GRANTS Vedanti’s motion for a preliminary

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injunction and orders as follows:

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Pending the resolution of this action on the merits, Max is enjoined from pursuing or
proceeding in the arbitration proceedings against Vedanti. Vedanti shall not be required to give

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security as a condition to issuance of this preliminary injunction.

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For the Northern District of California

United States District Court

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The Court notes that, although it is granting the motion, it is without prejudice to Max.

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That is, should Max make an appearance in this action, then it may ask the Court to reconsider its

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preliminary injunction order. Max is advised, however, that it must retain counsel to represent it

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in this lawsuit, see Civ. L.R. 3-(b) (providing that “[a] corporation, unincorporated association,

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partnership or other such entity may appear only through a member of the bar of this Court”), or it

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may be subject to a default and/or default judgment.

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Finally, because Max has made no formal appearance in this action, the Court orders

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Vedanti to immediately serve a courtesy copy of this order on Max and Greg Halpern (Max’s

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Chairman and CFO). A proof of service shall be filed to confirm such.

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This order disposes of Docket No. 8

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IT IS SO ORDERED.

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Dated: June 10, 2016
______________________________________
EDWARD M. CHEN
United States District Judge

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