Bestway (USA), Inc. et al v. SGROMO et al

Filing 124

ORDER GRANTING 113 PRELIMINARY INJUNCTION. Signed by Judge Haywood S. Gilliam, Jr. on 9/27/2018. (ndrS, COURT STAFF) (Filed on 9/27/2018)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 BESTWAY (USA), INC., et al., Plaintiffs, 8 9 10 11 v. Case No. 17-cv-00205-HSG ORDER GRANTING PRELIMINARY INJUNCTION Re: Dkt. No. 113 PIETRO PASQUALE-ANTONI SGROMO, et al., United States District Court Northern District of California Defendants. 12 13 On September 12, 2018, Plaintiffs Bestway (USA) Inc., Bestway (Hong Kong) 14 International Ltd., and Bestway Inflatables and Material Corporation’s (collectively “Bestway”) 15 filed a motion for a temporary restraining order and preliminary injunction. See Dkt. No. 113. 16 Bestway asked this Court to enjoin Defendant Pietro Pasquale-Antoni Sgromo (“Sgromo”) from 17 continuing to pursue the arbitration before JAMS captioned Sgromo, et al. v. Bestway (USA), Inc., 18 et al., Reference No. 1210035345, contrary to this Court’s July 2 order. See id.; Dkt. No. 90. The 19 Court granted Bestway’s motion for a temporary restraining order on September 13, 2018. See 20 Dkt. No. 114. Sgromo has not responded. The Court held a show cause hearing on September 26, 21 at which Sgromo did not appear. 22 23 For the reasons articulated below, the Court GRANTS Bestway’s motion for a preliminary injunction. 24 A preliminary injunction is “an extraordinary remedy that may only be awarded upon a 25 clear showing that the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, 555 26 U.S. 7, 22 (2008). To receive a preliminary injunction prior to a full adjudication on the merits, a 27 plaintiff “must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer 28 irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his 1 favor, and [4] that an injunction is in the public interest.” Id. at 20. The Ninth Circuit has held 2 that “a ‘likelihood’ of success per se is not an absolute requirement.” Drakes Bay Oyster Co. v. 3 Jewell, 747 F.3d 1073, 1085 (9th Cir. 2014). “Rather, serious questions going to the merits and a 4 hardship balance that tips sharply toward the plaintiff can support issuance of an injunction, 5 assuming the other two elements of the Winter test are also met.” Id. (internal quotation marks 6 omitted). However, under either the Winter test or the “serious questions” test, the court may not 7 issue a preliminary injunction unless it finds that “a certain threshold showing is made” as to each 8 of the four elements. Leiva-Perez v. Holder, 640 F.3d 962, 966 (9th Cir. 2011). First, Bestway is likely to prevail on the merits of its claims that Sgromo’s motion to 10 compel arbitration was properly denied and that the status quo should be maintained pending 11 United States District Court Northern District of California 9 resolution of the appeal in the Ninth Circuit regarding that issue. This Court found that Sgromo 12 waived his right to arbitrate by his litigation conduct because “[i]n short, Sgromo has spent more 13 than 16 months litigating this case . . . and only now—on the eve of summary judgment—does he 14 seek to compel arbitration.” Dkt. No. 90 at 8. In his appeal to the Ninth Circuit, Sgromo advances 15 no new legal or factual arguments as to why he should not have been found to have waived his 16 right to arbitration. See Appellant’s Informal Brief at 12–13, Bestway (USA), Inc., et al. v. Pietro 17 Sgromo, et al., No. 18-16228 (9th Cir. Aug. 29, 2018), ECF No. 6. 18 Second, Bestway would be likely to suffer irreparable injury absent a preliminary 19 injunction, in the form of inconsistent or contradictory rulings from a JAMS arbitrator and the 20 expense of irrecoverable resources. See AT & T Mobility LLC v. Bernardi, No. C 11-03992 CRB, 21 2011 WL 5079549, at *10 (N.D. Cal. Oct. 26, 2011) (“being forced to defend an improper 22 arbitration demand requires expending human and monetary capital for which there is no adequate 23 remedy at law”). 24 Third, the balance of equities favors Bestway because the preliminary injunction simply 25 preserves the status quo by enforcing the Court’s prior orders that ruled in Bestway’s favor and 26 against Sgromo. See Morgan Stanley & Co. LLC v. Couch, 659 F. App’x 402, 406 (9th Cir. 2016) 27 (“If arbitration proceedings were not enjoined, [defendant’s] extended delay in asserting his 28 arbitration right would force [plaintiff] to re-litigate claims it likely has no duty to arbitrate at all” 2 1 and “no reason why preliminarily enjoining arbitration proceedings would impair [defendant’s] 2 claims”); Morgan Stanley & Co., LLC v. Couch, 134 F. Supp. 3d 1215, 1233 (E.D. Cal. 2015) 3 (“majority of federal appellate courts to address the issue have held explicitly” that a federal 4 district court “may enjoin arbitration if necessary to enforce its orders”); see also In re American 5 Exp. Fin. Advisors Securities Litig., 672 F.3d 113, 141 (2d Cir. 2011) (“If the parties to this appeal 6 have not consented to arbitrate a claim, the district court was not powerless to prevent one party 7 from foisting upon the other an arbitration process to which the first party had no contractual 8 right.”). 9 Finally, the requested relief is in the public interest because it conserves judicial and party resources, while enforcing this Court’s orders and preserving the Ninth Circuit’s jurisdiction to 11 United States District Court Northern District of California 10 hear Sgromo’s pending appeal. 12 TO DEFENDANT PIETRO PASQUALE-ANTONIO SGROMO (“SGROMO”): 13 You, your officers, agents, servants, employees, and attorneys, and any other persons or 14 corporate entities who are in active concert or participation with you ARE HEREBY 15 RESTRAINED AND ENJOINED from: 16 1. Prosecuting or continuing to prosecute the arbitration before JAMS captioned 17 Sgromo, et al. v. Bestway (USA), Inc., et al., Reference No. 1210035345, until 18 resolution of the appeal in the U.S. Court of Appeals for the Ninth Circuit 19 captioned Sgromo, et al. v. Bestway (USA), Inc., et al., Case No. 18-16228. 20 21 22 23 24 IT IS SO ORDERED. Dated: 9/27/2018 ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 25 26 27 28 3

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