Sindicato De Empleados Y Trabajadores De La Industria et al v. Credit Managers Association of California Inc

Filing 10

ORDER denying Plaintiffs' Emergency Motion for a Temporary Restraining Order, documents 4 and 5. Signed by Judge Jeffrey T. Miller on 12/20/07. (aje)

Sindicato De Empleados Y Trabajadores De La Industria et al v. Credit Man...iation of California Inc

Doc. 10

Case 3:07-cv-02365-W-LSP

Document 10

Filed 12/20/2007

Page 1 of 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 On December 18, 2007 Plaintiffs, two Mexican labor unions, commenced an 21 action against Defendant Credit Managers Association of California ("CMA") alleging 22 breach of contract and seeking accounting and equitable relief. (Doc. No. 1.) Pending 23 before the Court is Plaintiffs' motion for a Temporary Restraining Order ("TRO") to 24 restrain CMA from paying out $896,389.81 to certain creditors, to a temporary receiver 25 appointed by a California Family Law Court, or to anyone else that may have a claim 26 to the funds. The Court decides the matter on the papers submitted and without oral 27 argument. See S.D. Cal. Civ. R. 7.1(d.1). For the following reasons, the Court 28 DENIES Plaintiffs' motion for a TRO.
-107cv2365W

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA SINDICATO DE EMPLEADOS Y TRABAJADORES DE LA INDUSTRIA EL CAMPO Y EL COMERCIO DEL ESTADO 29 C.R.O.M. et. al., vs. Plaintiffs, CASE NO. 07-CV-2365 W (LSP) ORDER DENYING PLAINTIFFS' MOTION FOR A TEMPORARY RESTRAINING ORDER (Doc. Nos. 4, 5)

CREDIT MANAGERS ASSOCIATION OF CALIFORNIA, INC., Defendant.

Dockets.Justia.com

Case 3:07-cv-02365-W-LSP

Document 10

Filed 12/20/2007

Page 2 of 8

1 I. 2

BACKGROUND Plaintiffs are two Mexican labor unions whose constituent members are the

3 employees of two Mexican companies, Alissimo S.A. de C.V. ("Alissimo") and Resinas 4 Laguna, S.A. de C.V. ("Resinas"). (Mot. for TRO 2-4.) Both Alissimo and Resinas did 5 substantial business with two American companies, FlexTrim California, Inc. and 6 FlexTrim North Carolina, Inc. (collectively, "FlexTrim"). (Id.) Plaintiffs allege that 7 FlexTrim owes Alissimo and Resinas $896,389.81 for their products and/or services. 8 (Mot. for TRO 3.) According to Plaintiffs, FlexTrim is now insolvent.1 (Mot. for TRO 9 2.) 10 Allen and Mary Kay Jones are two formerly married individuals currently involved 11 in property dissolution proceedings in California Family Law Court ("California Court"). 12 (Id. 3.) The California Court appointed Dennis Murphy ("Murphy") temporary receiver 13 of certain entities and affiliates which were alleged to form part of the Jones' marital 14 estate. Allen Jones is for purposes of this litigation the owner of FlexTrim. (Richman 15 Decl. Ex. F 2-3.) 16 Defendant CMA is a non-profit corporation which appears to assist companies, 17 like FlexTrim, in managing assets and satisfying creditors. (Richman Decl. Ex. A.) On 18 or about May 21, 2007 FlexTrim assigned all its business assets to CMA for liquidation 19 and payment of creditor claims. (Mot. for TRO 2.) 20 On May 22, 2007 Plaintiff alleges that Alissimo and Resinas were joined in the 21 marital dissolution proceedings "without notice, opportunity to object, or any due 22 process." (Mot. for TRO 3.) Apparently, Alissimo's and Resinas's bank accounts were 23 frozen and their assets seized.2 (Id.) It is unclear when Alissimo and Resinas learned 24 about the asset freeze and seizure, but it appears to be shortly after the May, 22 2007 25 order. (Jose Corral Decl. ¶ 15; Francisco Elorza Decl. ¶ 15.) Although Plaintiffs' motion 26 28
1

27 an unusual description.
2

Plaintiff describes FlexTrim as commencing a "common law bankruptcy proceeding,"

Defendant's opposition disputes that the receiver has taken steps to shut down Alissimo or Resinas or seize their assets. (Def.'s Opp'n 4.)
-207cv2365W

Case 3:07-cv-02365-W-LSP

Document 10

Filed 12/20/2007

Page 3 of 8

1 fails to connect the dots, Alissimo/Resinas both seem to insinuate that they are 2 separately owned companies (i.e., not part of the marital estate) and the California 3 court should not have been put them under the stewardship of receiver Murphy. (Jose 4 Corral Decl. ¶ 11-14; Francisco Elorza Decl. ¶ 12-14.) 5 On July 6 and 13, 2007 Alissimo and Resinas made respective claims to CMA 6 for the monies owed to them by FlexTrim. (Richman Decl. Ex. C.) Plaintiffs allege that 7 these monies have not yet been paid. (Mot. for TRO 5.) 8 Plaintiffs, the two Mexican labor unions, are allegedly owed significant sums for 9 unpaid wages and benefits by Alissimo and Resinas. On December 13, 2007 Plaintiffs 10 (litigating in the state labor court of Baja California in Tijuana [hereinafter, "Mexican 11 Court]) received an order temporarily freezing both companies' assets in order to satisfy 12 the payment of wages. (Mot. for TRO 4.) According to Plaintiffs, under the Mexican 13 Constitution and Labor Code employees have preferential rights over all other 14 creditors. (Id.) However, it is unclear whether Alissimo and/or Resinas are actually 15 insolvent. (See Quijano Decl. ¶ 6.) Presumably, Plaintiffs assume they have standing 16 to pursue this suit because they should be able to "step into the shoes" of their creditor17 employers and recoup assets from CMA. 18 On December 19, 2007 Plaintiffs moved for a TRO because on December 21, 19 2007 the California Court is scheduled to hear receiver Murphy's motion to approve 20 a "letter agreement" between CMA and Murphy to distribute the marital estate.3 (Mot. 21 for TRO 5.) Plaintiffs fear that the letter agreement's terms do not satisfy Alissimo's 22 or Resinas's open claims and shifts the balance of FlexTrim's assets (assigned to CMA) 23 to Murphy. (Id.) Plaintiffs fear that if Alissimo/Resinas do not get paid by CMA, 24 Alissimo/Resinas will be unable to pay Plaintiffs. (Id.) Thus, Plaintiffs seek an order 25 restraining CMA from paying $896,389.81 to FlexTrim creditors, receiver Murphy, or 26 27
Because Alan Jones owns FlexTrim, dissolving the marital estate necessarily implicates dividing FlexTrim's assets and liabilities. Apparently, this requires coordination between 28 receiver Murphy (responsible for distributing marital assets) and CMA (responsible for distributing FlexTrim's assets). (Mot. for TRO 5.)
-307cv2365W
3

Case 3:07-cv-02365-W-LSP

Document 10

Filed 12/20/2007

Page 4 of 8

1 anyone else claiming an interest. On December 20, 2007--after Plaintiffs provided an 2 extremely brief notice period--Defendant CMA opposed the TRO. 3 4 II. 5 LEGAL STANDARD The Federal Rules of Civil Procedure outline the procedures a federal court must

6 follow when deciding whether to grant a temporary restraining order. See Fed. R. Civ. 7 P. 65. The standard for granting a temporary restraining order is the same as the 8 standard for entering a preliminary injunction. Bronco Wine Co. v. U.S. Dep't of 9 Treasury, 997 F. Supp. 1309, 1313 (E.D. Cal. 1996); Franklin v. Scribner, Civil No. 0710 0438 BTM (LSP), 2007 WL 1491100, at *3 (S.D. Cal. May 21, 2007). The Ninth 11 Circuit has prescribed the following equitable criteria for determining whether to grant 12 injunctive relief: 13 14 15 16 17 18 19 (1) the likelihood of the moving party's success on the merits; (2) the possibility of irreparable injury to the moving party if relief is not granted; (3) the extent to which the balance of hardships favors the respective parties; and (4) in certain cases, whether the public interest will be advanced by granting the preliminary relief. The moving party must show either (1) a combination of probable success on the merits and the possibility of irreparable harm, or (2) the existence of serious questions going to the merits, the balance of hardships tipping sharply in its favor, and at least a fair chance of success on the merits... [T]he required degree of irreparable harm increases as the probability of success decreases.

20 Owner Operator Indep. Drivers Ass'n, Inc. v. Swift Transp. Co., 367 F.3d 1108, 1111 21 (9th Cir. 2004) (quoting Miller ex. rel. N.L.R.B. v. Cal. Pac. Med. Ctr., 19 F.3d 449, 22 456 (9th Cir. 1994)). The temporary restraining order "should be restricted to serving 23 [its] underlying purpose of preserving the status quo and preventing irreparable harm 24 just so long as is necessary to hold a hearing, and no longer." Granny Goose Foods, Inc. 25 v. Bhd. of Teamsters & Auto Truck Drivers Local No. 70, 415 U.S. 423, 439 (1974); 26 accord L.A. Mem'l Coliseum Comm'n v. Nat'l Football League, 634 F.2d 1197, 1200 27 (9th Cir. 1980); Del Toro-Chacon v. Chertoff, 431 F. Supp. 2d 1135, 1139-40 (W.D. 28 Wash. 2006).
-407cv2365W

Case 3:07-cv-02365-W-LSP

Document 10

Filed 12/20/2007

Page 5 of 8

1 III. 2 3

D ISCUSSION A. Threshold Issues There are several threshold issues which make granting Plaintiffs' TRO motion

4 particularly difficult. First, Plaintiffs filed the TRO on mid-day Wednesday and wished 5 to obtain a hearing and order by Thursday afternoon. This provided Defendant--and 6 the Court--with very little time to respond to Plaintiffs' request, especially in the week 7 prior to Christmas. Although providing such short notice is not unheard of, 8 circumstances are more forgiving when the defendant knows a TRO application may 9 be forthcoming. See Squillacote v. Meat & Allied Food Workers, 534 F.2d 735, 743 10 (7th Cir. 1976) (holding sufficient notice where opposing counsel was given TRO 11 documents 24 hours before the order was entered, but had several days warning that 12 TRO may be filed).4 Here, this does not appear to be the case. 13 Additionally, Plaintiffs' Motion for TRO is devoid of any legal analysis. 14 Although TROs necessarily turn on their underlying facts, Plaintiffs do nothing to 15 assure the Court that, given the complicated factual, standing, comity, and conflict of 16 laws issues, the Court has jurisdiction to grant or deny this motion. See Fowler v. 17 United States, 258 F. Supp. 638, 644 (C.D. Cal. 1966) (stating that a TRO will not 18 ordinarily be granted if any debate or doubts are created by the record as to the merits 19 of the claimed relief or power of the court to act). 20 For instance, Plaintiffs have sued CMA, and only CMA, and have moved to 21 restrain the company from releasing funds to the receiver or other creditors. (Mot. for 22 TRO 2.) This request necessarily implicates the rights of the receiver and third party 23 creditors not before the Court. See, e.g., Doe v. Mathews, 420 F. Supp. 865, 870 24 (D.N.J. 1976) (holding that no temporary restraining order can be granted if plaintiff 25 fails to join an indispensable party). Moreover, any TRO issued could be in direct 26
4

27 the Mexican Court's Order on December 13, 2007, which purportedly allows Plaintiffs to step 28 Order any sooner. Nor have Plaintiffs attached a copy of the Order, translated or otherwise,
to their moving papers.
-5-

The Court does not excuse Plaintiffs' hastiness on the fact that Plaintiffs only received

into the shoes of Alissimo/Resinas. Plaintiffs have not shown that they were unable to get this

07cv2365W

Case 3:07-cv-02365-W-LSP

Document 10

Filed 12/20/2007

Page 6 of 8

1 contrivance to the forthcoming California Court ruling, and may violate the Anti2 Injunction Act. 28 U.S.C. § 2283; see also Hawaii Housing Authority v. Midkiff, 463 3 U.S. 1323, 1325 (1983) (holding that where vital state interests are involved, a federal 4 court should refrain from enjoining an ongoing state judicial proceeding unless 5 extraordinary circumstances exist requiring equitable relief). Simply, in light of all the 6 circumstances surrounding the motion, Plaintiffs' cursory analysis does not satisfy the 7 Court that TRO relief is warranted. 8 9 10 B. Plaintiffs Do Not Show a Likelihood of Success on the Merits Plaintiffs argue that it is undisputed that CMA owes Alissimo and Resinas, as However, Plaintiffs are two Mexican labor unions whose

11 FlexTrim creditors, a substantial amount of money for goods and services rendered. 12 (Mot. for TRO 7.) 13 constituents merely work for the two Mexican companies, in Mexico. Besides a 14 Mexican Labor Court ruling giving Plaintiffs preferential rights over Alissimo/Resinas 15 assets, it is unclear under California law whether Plaintiffs may "leapfrog" their 16 employer and assert claims against CMA directly. See Fed. R. Civ. P. 17(a); Allstate 17 Ins. Co. v. Hughes, 358 F.3d 1089, 1093-94 (9th Cir. 2004) (holding that, in a diversity 18 suit, the court must apply substantive state law to determine the real party in interest). 19 Nor do Plaintiffs provide a copy of the Mexican Court's Order, or even cite 20 authority showing that the Mexican Court's Order applies outside the borders of 21 Mexico. In short, Plaintiffs leave many open questions5 and provide no legal authority 22 for the relief in which they seek. Thus, they cannot show that they are likely to 23 succeed on the merits. 24 /// 25 /// 26 /// 27
5

28 Jones did in fact have control over Alissimo and Resinas, and whether those companies were
represented in the California Court proceeding. (Def.'s Opp'n 4.)
-607cv2365W

For example, Defendant's opposition raises significant questions over whether Allen

Case 3:07-cv-02365-W-LSP

Document 10

Filed 12/20/2007

Page 7 of 8

1 2

C.

Plaintiffs Do Not Show Irreparable Injury

Plaintiffs argue that irreparable injury will result if the California Court orders

3 CMA to pay the bulk of FlexTrim's assets to receiver Murphy, thus denying 4 Alissimo/Resinas's claims. (Mot. for TRO 7.) Plaintiff does not provide any legal 5 authority for this claim. 6 Irreparable harm generally turns upon a substantial injury that is neither 7 accurately measurable or adequately compensable by money damages. See, e.g., Willms 8 v. Sanderson Cmtys., Inc., No. 07-CV-2366-LKK-GGH, 2007 U.S. Dist. LEXIS 85137, 9 at *4 (E.D. Cal. November 7, 2007) (citing Ross-Simons of Warwick, Inc. v. Baccarat, 10 Inc., 102 F.3d 12, 18 (1st Cir. 1996)). In this case, Plaintiffs' harm is accurately 11 measurable. Plaintiffs continuously reference the precise figure of $896,389.81 and 12 their proposed order requests that CMA be restrained from paying out that exact 13 amount, not a penny more or less. Additionally, it is tough to imagine how Plaintiffs' 14 alleged harm, not being paid, would not be adequately compensated by money 15 damages. Cf. Phleger v. Countrywide Home Loans, Inc., No. 07-1686 SBA, 2007 U.S. 16 Dist. LEXIS 86413 (N.D. Cal. November 16, 2007) (finding irreparable injury where 17 plaintiff would lose her home to foreclosure auction if court did not grant TRO). 18 Because Plaintiffs do not show a likelihood of success on the merits, do not show 19 irreparable injury, and provide the Court with incomplete facts and law, the Court finds 20 it unnecessary to balance hardships at this time. From the information before the 21 Court, no public interest factors appear to favor Plaintiffs. Accordingly, Plaintiffs' ex 22 parte motion for a temporary restraining order is DENIED. 23 24 IV. 25 CONCLUSION From the information currently before the Court, Plaintiffs have not alleged facts

26 and circumstances sufficient to satisfy the requirements needed for a temporary 27 restraining order. Accordingly, the Court DENIES Plaintiffs' Emergency Motion for 28 Temporary Restraining Order. (Doc. Nos. 4, 5.) Nothing in this Order shall preclude
-707cv2365W

Case 3:07-cv-02365-W-LSP

Document 10

Filed 12/20/2007

Page 8 of 8

1 Plaintiffs or Defendant from moving for or opposing a temporary restraining order, 2 preliminary injunction, or permanent injunction at some future date if circumstances 3 so warrant. 4 5 6 7 DATED: December 20, 2007 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
-807cv2365W

IT IS SO ORDERED.

Hon. Jeffrey T. Miller United States District Judge for Hon. THOMAS J. WHELAN United States District Judge