Sussex et al v. Turnberry/MGM Grand Towers, LLC et al

Filing 110

ORDER Denying 106 Motion for Leave to File Under Seal. Denying 107 Ex Parte Application for a Temporary Restraining Order. Denying 108 Motion for Preliminary Injunction. Signed by Judge Miranda M. Du on 5/1/2013. (Copies have been distributed pursuant to the NEF - SLR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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MARY ANN SUSSEX, et al.,

Case No. 2:08-cv-00773-MMD-PAL
Plaintiffs,

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ORDER
v.

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TURNBERRY/MGM GRAND TOWERS,
LLC, et al.,

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Defendants.
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I.

(Plfs.’ Motion for Leave to File
– dkt. no. 106;
Plfs.’ Application for Temporary
Restraining Order – dkt. no. 107;
Plfs.’ Motion for Preliminary Injunction
– dkt. no. 108)

SUMMARY

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Before the Court are Plaintiffs’ Motion for Leave to File Under Seal (dkt. no. 106),

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Plaintiffs’ Ex Parte Application for a Temporary Restraining Order (dkt. no. 107), and

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Plaintiffs’ Motion for Preliminary Injunction (dkt. no. 108).

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below, the Motions are denied.

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II.

For the reasons set forth

BACKGROUND

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This matter arises from a long-standing dispute brought by purchasers of

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condominium units developed and sold by Defendant Turnberry/MGM Grand Towers,

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LLC (“Turnberry/MGM”). The factual background giving rise to the motions before the

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Court is summarized in the Court’s March 2, 2010, Order. (See dkt. no. 63.) The case

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has proceeded in arbitration for over three years, and has grown to encompass not only

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Plaintiffs, but also other state court claimants who filed a similar suit against

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Turnberry/MGM. In recent months, a dispute has arisen between the parties to the

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arbitration as to the impartiality of the designated arbitrator, Brendan M. Hare.

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Turnberry/MGM sought to have Arbitrator Hale removed, alleging that his creation of a

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litigation finance firm during the course of the arbitration renders him partial and unfit to

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arbitrate the action. On March 6, 2013, the American Arbitration Association (“AAA”)

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denied Turnberry/MGM’s request to remove Arbitrator Hale from the arbitration, and

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reaffirmed him as the designated arbitrator. After another request to reconsider the

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arbitrator, the AAA’s Executive Administrative Review Committee again reaffirmed

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Arbitrator Hale as the arbitrator.

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On April 24, 2013, Turnberry/MGM filed a motion to disqualify Hale in the state

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court proceeding where the state court claimants initially filed suit. A hearing on the

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motion is scheduled for May 6, 2013. Fearing that the motion before the state court will

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interfere with this Court’s exclusive jurisdiction over their claim, Plaintiffs in this federal

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action filed an Application for an ex parte temporary restraining order (“TRO”) and a

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Motion for a Preliminary Injunction seeking to enjoin the state court from issuing a

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decision in Turnberry/MGM’s motion to disqualify.

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III.

LEGAL STANDARD

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Federal Rule of Civil Procedure 65 governs preliminary injunctions and temporary

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restraining orders, and requires that a motion for temporary restraining order include

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“specific facts in an affidavit or a verified complaint [that] clearly show that immediate

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and irreparable injury, loss, or damage will result to the movant before the adverse party

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can be heard in opposition,” as well as written certification from the movant’s attorney

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stating “any efforts made to give notice and the reasons why it should not be required.”

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Fed. R. Civ. P. 65(b). “If [a TRO] is issued without notice, the motion for a preliminary

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injunction must be set for hearing at the earliest possible time, . . . .” Fed. R. Civ. P.

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65(b)(3).

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Temporary restraining orders are governed by the same standard applicable to

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preliminary injunctions. See Cal. Indep. Sys. Operator Corp. v. Reliant Energy Servs.,

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Inc., 181 F.Supp.2d 1111, 1126 (E. D. Cal.2001). A temporary restraining order “should

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be restricted to serving [its] underlying purpose of preserving the status quo and
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preventing irreparable harm just so long as is necessary to hold a hearing, and no

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longer.” Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local No.

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70, 415 U.S. 423, 439 (1974).

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Like a preliminary injunction, the Court may issue a temporary restraining order if

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a plaintiff establishes: (1) likelihood of success on the merits; (2) likelihood of irreparable

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harm in the absence of preliminary relief; (3) that the balance of equities tips in his favor;

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and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council,

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Inc., 555 U.S. 7, 20 (2008). “Injunctive relief [is] an extraordinary remedy that may only

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be awarded upon a clear showing that the plaintiff is entitled to such relief.” Id. at 22.

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IV.

DISCUSSION

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Before addressing the injunction motions, the Court finds Plaintiffs have not

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demonstrated compelling reasons to support sealing Exhibits 8 and 10-35 of the

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Blumenthal Declaration. “[A] party seeking to seal judicial records must show that

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compelling reasons supported by specific factual findings outweigh the general history of

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access and the public policies favoring disclosure.” Pintos v. Pac. Creditors Ass’n, 605

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F.3d 665, 678 (9th Cir. 2010) (internal quotations and ellipses omitted).

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“compelling reasons” standard, a district court must weigh “relevant factors,” base its

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decision “on a compelling reason,” and “articulate the factual basis for its ruling, without

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relying on hypothesis or conjecture.” Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9th

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Cir. 1995). Plaintiffs have only identified a contractual provision in the operative

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Purchase and Sale Agreement which requires that arbitration proceedings be kept

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confidential “except in the course of judicial, regulatory, or arbitration proceeding.” The

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carve-out for judicial proceedings appears to exempt the confidentiality clause’s

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applicability in this situation. Even if it does not, Plaintiffs fail to articulate a specific

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factual basis supported by the appropriate factors to overcome the public’s “general right

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to inspect and copy public records and documents, including judicial records and

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documents.” Kamkana v. City and Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir.

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Under the

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2006) (quoting Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 597 & n.7 (1978)).

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Plaintiffs’ Motion for Leave to File Under Seal is therefore denied without prejudice.

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Turning to the substantive motions, Plaintiffs’ Application for Temporary

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Restraining Order is improper. Rule 65(b)(1) and Local Rule 7-5(b) require that parties

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seeking ex parte relief must file a statement showing good cause why the matter was

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submitted to the Court without notice to all parties. Having failed to do so, Plaintiffs’

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request for emergency temporary relief must be denied.

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Aside from its procedural infirmities, Plaintiffs’ Application lacks merit. Plaintiffs

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have not demonstrated that a ruling in state court on the motion to disqualify will lead to

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any irreparable injury. The state court maintains jurisdiction over only the state

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claimants, regardless of the arbitration’s consolidation with the federal plaintiffs.

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Plaintiffs have not demonstrated that the state court can (or will) exercise jurisdiction to

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disqualify the arbitrator assigned to the federal claimants’ arbitration, or that this Court

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may interfere with the resolution of the state court claimant’s arbitration proceedings.

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Indeed, even if the state court could exercise this authority, whatever detrimental impact

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the state court’s ruling may have to Plaintiffs can be reversed upon a proper and timely

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motion before this Court, so long as such a motion complies with the appropriate rules

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governing federal jurisdiction over arbitration disputes. See 9 U.S.C. § 10(a)(2)

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(providing relief from “evident partiality or corruption in the arbitrators” after arbitration

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award is rendered); Smith v. Am. Arbitration Ass’n, Inc., 233 F.3d 502, 506 (7th Cir.

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2000) (“The time to challenge an arbitration, on whatever grounds, including bias, is

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when the arbitration is completed and an award rendered.”). Accordingly good cause

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does not exist to grant Plaintiffs’ Application for a Temporary Restraining Order or their

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Motion for Preliminary Injunction.

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V.

CONCLUSION
IT IS THEREFORE ORDERED that Plaintiffs’ Motion for Leave to File Under Seal

(dkt. no. 106) is DENIED.
IT IS FURTHER ORDERED that Plaintiffs’ Ex Parte Application for a Temporary
Restraining Order (dkt. no. 107) is DENIED.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Preliminary Injunction (dkt.
no. 108) is DENIED.
DATED THIS 1st day of May 2013.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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