Benesys, Inc. v. Cowles et al

Filing 8

ORDER Denying 5 MOTION for Temporary Restraining Order and scheduling hearing on Motion for Preliminary Injunction Against Defendants: Response due by 7/6/2017 Reply due by 7/11/2017 Motion Hearing set for 7/17/2017 11:00 AM before District Judge Gershwin A. Drain Signed by District Judge Gershwin A. Drain. (MBea) (Entered: 06/23/2017) (MBea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
BENESYS, INC.,
Plaintiff,
v.
JAN E. (LIZ) COWLES AND
ZENITH AMERICAN SOLUTIONS,
INC.,

Case No. 17-cv-11882
UNITED STATES DISTRICT COURT JUDGE
GERSHWIN A. DRAIN
UNITED STATES MAGISTRATE JUDGE
R. STEVEN WHALEN

Defendant.
__________________________/
ORDER DENYING MOTION FOR TEMPORARY RESTRAINING ORDER AND
SCHEDULING HEARING ON MOTION FOR PRELIMINARY INJUNCTION
This is breach of contract case based on an alleged violation of a noncompete provision. Pending before the Court is Plaintiff’s Motion for Temporary
Restraining Order and Preliminary Injunction [5].
Plaintiff, BeneSys, Inc. (hereinafter “Plaintiff” or “BeneSys”), is a Michigan
corporation and an administrator of Taft-Hartley benefits. Dkt. No. 1, pp. 1–2 (Pg.
ID 1–2). On June 13, 2017, Plaintiff filed a complaint against former employee,
Jan E. (Liz) Cowles (hereinafter “Ms. Cowles”), and Zenith American Solutions,
Inc. (hereinafter “Zenith”).
According to the Complaint, Ms. Cowles accepted employment with
BeneSys on July 28, 2015 as a Privacy Officer and Director of Compliance. Id., pp.

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2–3 (Pg. ID 2–3). Pursuant to the employment agreement between Ms. Cowles and
BeneSys, Ms. Cowles agreed to several non-compete provisions. Dkt. No. 1-2, pp.
2–3 (Pg. ID 16–17).
Ms. Cowles resigned from BeneSys on May 2, 2017. Dkt. No. 1, p. 5 (Pg.
ID 5). BeneSys recently discovered that Ms. Cowles is now the Director of
Northwest Operations at Zenith, a third-party administrator of Taft-Hartley
benefits. Id. Plaintiff contends that Ms. Cowles is violating the terms of her
employment agreement, yet neither Defendant has complied with BeneSys’
demand to enforce the non-compete provisions and discontinue Ms. Cowles’
employment. According to BeneSys, “[a]s a direct consequence of Cowles’ and
Zenith’s action, BeneSys stands to lose its employees, clients and customer, the
goodwill and referral business of its clients and customers, and revenues in an
amount that cannot be readily ascertained.” Dkt. No. 5, p. 16 (Pg. ID 58).
On June 20, 2017, BeneSys filed a Motion for Temporary Restraining Order
and Preliminary Injunction against both Ms. Cowles and Zenith. Dkt. No. 5. As
best as the Court can tell neither Defendant has been served with the Complaint or
the Motion for Temporary Restraining Order and Preliminary Injunction.
Temporary restraining orders and preliminary injunctions are extraordinary
remedies designed to protect the status quo pending final resolution of a lawsuit.
See University of Texas v. Camenisch, 451 U.S. 390, 101 S.Ct. 1830, 68 L.Ed.2d

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175 (1981); Bonnell v. Lorenzo, 241 F.3d 800, 808 (6th Cir.2001) (finding that
preliminary injunctive relief “is an extraordinary measure that has been
characterized as ‘one of the most drastic tools in the arsenal of judicial
remedies.’ ”). Whether to grant such relief is a matter within the discretion of the
district court. Certified Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp.,
511 F.3d 535, 540 (6th Cir. 2007).
The court may issue a temporary restraining order without written or
oral notice to the adverse party or its attorney only if:
(A) specific facts in an affidavit or a verified complaint clearly show
that immediate and irreparable injury, loss, or damage will result to
the movant before the adverse party can be heard in opposition; and
(B) the movant’s attorney certifies in writing any efforts made to give
notice and the reasons why it should not be required.
FED. R. CIV. P. 65(b) (emphasis added).
The “stringent restrictions” imposed by Rule 65 “reflect the fact that our
entire jurisprudence runs counter to the notion of court action taken before
reasonable notice and an opportunity to be heard has been granted both sides of a
dispute.” Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers
Local No. 70 of Alameda Cty., 415 U.S. 423, 439 (1974).
In this case, the Plaintiff fails to meet either requirement set forth in Rule
65(b). Plaintiff failed to explain why its motion for a temporary restraining order
should be considered on an ex parte basis or why it has not served the Defendants
with the Complaint or motion.

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Under these circumstances, the Court finds that the drastic remedy of
granting a temporary restraining order without notice is not justified.
IT IS ORDERED that Plaintiff’s Motion for a Temporary Restraining Order
and Preliminary Injunction [5] is DENIED IN PART.
A hearing on Plaintiff’s Motion for a Preliminary Injunction is scheduled for
Monday July 17, 2017 at 11:00 a.m.
It is further ORDERED that Plaintiff MUST serve Defendants with process
and a copy of this order on or before June 28, 2017. Proof of service MUST be
filed via CM/ECF forthwith. Defendants MUST file a response with the Court no
later than July 6, 2017. Plaintiff may file a reply no later than July 11, 2017.

SO ORDERED.
Dated: June 23, 2017

/s/Gershwin A. Drain
GERSHWIN A. DRAIN
United States District Judge

CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
June 23, 2017, by electronic and/or ordinary mail.
/s/ Marcia Beauchemin forTanya Bankston
Case Manager

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