Shakopee Mdewakanton Sioux Community v. Templeton Gaming Corporation et al.,

Filing 119

ORDER Denying 92 Motion to Stay Pending Appeal. Signed by Judge James C. Mahan on 10/14/11. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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SHAKOPEE MDEWAKANTON
SIOUX COMMUNITY,

2:10-CV-10 JCM (RJJ)

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Plaintiff,

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v.

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FBCV, LLC, et al.,

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Defendants.

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ORDER

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Presently before the court is defendants FBCV, LLC, et. al.’s emergency motion to stay

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pending appeal. (Doc. #92). Plaintiff Shakopee Mdewakanton Sioux Community (“SMSC”) filed

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an opposition. (Doc. #93). Defendants then filed a reply. (Doc. #107). SMSC objected to the reply

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and the attached declaration and moved to strike. (Doc. #110). After the parties had fully briefed

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this motion to strike, the court ordered the declaration and accompanying language in defendants’

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reply stricken. (Doc. #118). Therefore, the court will not consider the stricken evidence and

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argument in the instant motion to stay pending appeal.

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SMSC filed a trademark infringement suit against defendants in January 2010. (Doc. #1).

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This court granted SMSC’s summary judgment motion on June 29, 2011. (Doc. #86).1 The court

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issued a permanent injunction on July 25, 2011. (Doc. #89). On July 26, 2011, defendants filed a

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James C. Mahan
U.S. District Judge

Pursuant to an unopposed motion by SMSC asserting clerical errors in the court’s order, the
court subsequently vacated this order. (Doc. #116). The court refiled the order with the requested
clerical changes on September 26, 2011. (Doc. #117).

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notice of appeal. (Doc. #90). This appeal is pending at the Ninth Circuit. Shortly after filing the

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notice of appeal, defendants filed the instant emergency motion to stay the court ordered permanent

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injunction pending the appeal. (Doc. #92).

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The emergency motion to stay pending appeal was originally assigned to Magistrate Judge

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Johnston. The motion should have been assigned to this court. This court only recently became

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aware of the emergency motion. Additionally, the protracted litigation over the admissibility of the

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Kevin Close declaration (docs. #110, #114, #115, and #118) delayed the court’s ruling on the

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underlying emergency motion.

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Legal Standard

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Pursuant to Federal Rule of Civil Procedure 62©, this court has the power to stay the

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permanent injunction pending appeal “while an appeal is pending from a[] . . . final judgment that

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grants, dissolves, or denies an injunction, the court may suspend, modify, restore, or grant an

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injunction on terms for bond or other terms that secure the opposing party’s rights.” FED. R. CIV.

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P. 62©.

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In the Ninth Circuit, the court examines four factors when deciding a stay pending appeal
motion:

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(1) whether the stay applicant has made a strong showing that he is likely to succeed

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on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3)

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whether issuance of the stay will substantially injure the other parties interested in the

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proceeding; and (4) where the public interest lies.

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Golden Gate Restaurant Ass’n v. City and County of San Francisco, 512 F.3d 112, 1115 (9th Cir.

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2008) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)); see also Lopez v. Heckler, 713 F.2d

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1432, 1435-36 (9th Cir. 1983).

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The Ninth Circuit recently upheld its “sliding scale” approach to staying orders pending

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appeal in Leiva-Perez v. Holder, 640 F.3d 962, 966 (9th Cir. 2011) (citing Alliance for the Wild

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Rockies v. Cottrell, 632 F.3d 1127, 1134 (9th Cir. 2011)). Thus, a stay is appropriate when a

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petitioner demonstrates that serious legal questions are raised and the balance of hardships tips

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James C. Mahan
U.S. District Judge

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sharply in petitioner’s favor. See Leiva-Perez, 640 F.3d at 966; Abbassi v. I.N.S., 143 F.3d 513, 514

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(9th Cir. 1998), abrogated on other grounds by Nken v. Holder, 129 S.Ct. 1749 (2009); see also

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Cottrell, 632 F.3d at 1134.

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I.

Strong Showing of Likelihood of Success on the Merits

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Defendants argue that they have “some” likelihood of success on the merits. (Doc. #92).

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Defendants are thus relying on the Ninth Circuit’s “flexible” or “sliding scale” approach. They argue

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that they do not need to establish a “strong” likelihood of success on the merits because they face

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a “substantial and irreparable injury” if the stay is not issued. (Doc. #92).

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According to defendants, they have some likelihood of success on the merits of their appeal

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because likelihood of confusion in trademark infringement cases is a question of fact in the Ninth

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Circuit. (Doc. #92) (citing Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1355-56 (9th cir.

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1985)). Therefore, defendants only need to convince the Ninth Circuit that a genuine issue of fact

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remains within the likelihood of confusion issue to prevail in their appeal. (Doc. #92).

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SMSC responds that defendants have not made the requisite showing under the irreparable
injury factor to invoke the sliding scale approach. The court addresses this contention below.

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Defendants have not established a “strong” likelihood of success on the merits. At best,

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defendants have established the lower threshold of “some” likelihood of success on the merits.

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Indeed, defendants’ motion to stay pending appeal acknowledges that their appeal does not meet the

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higher standard articulated under the first prong of the Golden Gate Restaurant Association test. See

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Golden Gate Restaurant Ass’n, 512 F.3d at 1115. Therefore, the success of defendants’ motion

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necessarily rests on their ability to show: (1) a likelihood of irreparable injury, (2) the balance of

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hardships tilts sharply in defendants’ favor, (3) defendants have raised serious questions going to

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the merits; and (4) it is in the public’s interest to stay the permanent injunction. See Cottrell, 632

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F.3d at 1134-35; Leiva-Perez, 640 F.3d at 966.

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II.

Irreparable Injury Absent Stay

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Defendants assert that they have demonstrated irreparable injury. They state that enforcing

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the permanent injunction would effectively force the business into bankruptcy before defendants

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U.S. District Judge

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have the opportunity to exhaust their appellate rights. (Doc. #92). Thus, defendants allege that

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enforcing the injunction would be a “death knell” to their business because it would “deplete the

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already thin working capital of the business.” (Doc. #92).

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SMSC responds that defendants’ allegations do not constitute “irreparable injury.” (Doc.

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#99). SMSC asserts that even accepting defendants’ allegations at face value, defendants still have

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not established that compliance with the injunction will prevent defendants from meeting any

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financial obligations. According to SMSC, defendants have not adequately established facts

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supporting their assertion that compliance with the injunction will deplete working capital: (1) they

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have not alleged that compliance will prevent sales of their casino services; (2) they have not alleged

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that compliance will have an impact on their revenues or market share; and (3) they have not

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provided the court with any specific costs that would result from compliance with the injunction.2

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(Doc. #99).

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As the moving party, defendants have the burden of establishing irreparable injury. See

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Golden Gate Restaurant Ass’n, 512 F.3d at 1115. The court agrees with SMSC that the defendants

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have not met this burden here. Defendants’ vague and conclusory allegations of irreparable harm

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are not sufficient. Although defendants strenuously argue that their very existence as a business is

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threatened, their moving papers do not contain specific allegations of irreparable injury that

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compliance with the permanent injunction would cause. Defendants have not met their burden as

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the moving party of establishing irreparable injury.

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III.

Injury to Other Parties

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Defendants argue that SMSC can prove no monetary damages stemming from its alleged

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infringement. Thus, according to defendants, SMSC cannot establish “irreparable injury” if the stay

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is imposed. (Doc. #92). SMSC responds that the court has already held that defendants’ continued

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infringement irreparably harms SMSC. (Doc. #99). According to SMSC, the injury arises from

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James C. Mahan
U.S. District Judge

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Defendants attached a declaration to their reply attempting to address these alleged
deficiencies. The court has stricken the declaration and associated legal argument because they were
submitted in a procedurally improper manner. (See Doc. #118). Thus, the court does not consider
these arguments and evidence in this order.
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SMSC’s inability to control the exclusivity and valuable goodwill of its mark.

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Both of the parties recite an incorrect legal standard under this factor. The correct legal

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standard is whether the stay would cause “substantial[] injur[y]” to other interested parties, not

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“irreparable injury” to other interested parties. See Golden Gate Restaurant Ass’n, 512 F.3d at 1115.

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Applying this lower injury threshold, defendants’ assertions are not convincing. SMSC’s

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alleged lack of monetary damages is not enough to satisfy defendants’ burden under this factor.

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SMSC’s inability to control the use of its mark does impose a substantial injury, regardless of its

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inability to show monetary damages.

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Further, as discussed above, defendants are relying on the Ninth Circuit’s “sliding scale”

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approach to stays and injunctions. Under this approach, the moving party may prevail on a showing

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of “some” likelihood of success on the merits only if it can show that the “balance of hardships tips

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sharply in the [moving party’s] favor.” Cottrell, 632 F.3d at 1134-35.

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Defendants admit that their appeal only enjoys “some” likelihood of success. Thus, they are

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required to make a heightened showing under the balance of hardships factor. Id. Assuming,

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arguendo, that defendants’ conclusory statements about the impacts of compliance with the

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injunction are true, defendants still have not established that the balance of hardships tips “sharply”

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in its favor. See id. At best, defendants have shown that the balance of hardships weighs in their

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favor. However, this showing falls short of the heightened standard required under the Ninth

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Circuit’s “sliding scale” approach.

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Conclusion

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Defendants have not met their burden as the moving party. The court finds: (1)

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defendants have only demonstrated “some” likelihood of success on the merits; (2) defendants’

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vague and conclusory assertions of irreparable harm are not sufficient; (3) defendants have not

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established that other interested parties will not suffer substantial injury; and (4) the balance of

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hardships does not tip sharply in defendants favor.

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Accordingly,
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James C. Mahan
U.S. District Judge

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendants FBCV,

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LLC, et. al.’s emergency motion to stay pending appeal (doc. #92) be, and the same hereby is,

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DENIED.

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DATED October 14, 2011.

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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge

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