Argustoli H.C., LLC, et al v. Agsaver, LLC et al

Filing 8

ORDER that 7 Motion for Temporary Restraining Order is DENIED. Signed by Judge Jennifer A. Dorsey on 10/28/16. (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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Argustoli H.C., LLC, a Nevada limited liability
company; Redact, LLC, a Texas limited liability
company and as General Partner of Aldis
Manufacturing, Ltd., a Texas limited partnership
and as General Partner for Aldis Sales, Ltd., a
Texas limited partnership,

2:16-cv-02431-JAD-CWH
Order Denying Motion for Temporary
Restraining Order
[ECF No. 7]

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Plaintiffs
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v.
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AgSaver, LLC, a Mississippi Limited Liability
Company; Clarke Pugh, an individual; DOES I
through X, inclusive; and ROE CORPORATIONS I
through X, inclusive,

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Defendants

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Plaintiff Argustoli H.C., LLC makes herbicides. It wanted to use defendant AgSaver’s,

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LLC’s proprietary chemical, Glyphosate 41, in its products, so it purchased a license from AgSaver.

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The parties’ license agreement says that Argustoli can use AgSaver’s Glyphosate in its products, and

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in return, Argustoli pays AgSaver a royalty on each herbicide product that Argustoli sells its

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customers. AgSaver recently cancelled Argustoli’s license agreement, prompting Argustoli to

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request this temporary restraining order. Argustoli argues that it is likely to succeed on a breach-of-

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contract claim against AgSaver, that it will be irreparably harmed if it cannot continue to use

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Glyphosate, and that I should thus grant a TRO stopping AgSaver from interfering with Argusoli’s

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supply of the chemical.

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TROs are only for emergencies because “our entire jurisprudence runs counter to the notion

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of court action taken before reasonable notice and an opportunity to be heard . . . [has been given to]

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both sides of a dispute.”1 This is why Argustoli must meet a “high hurdle” to show both that it is

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likely to succeed on the merits of its contract claims, and that it will be irreparably harmed if it is not

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Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 439 (1974).
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given an injunction.2 Argustoli has shown neither.

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Argustoli appears unlikely to succeed on the merits of its breach of contract claims. Its main

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argument on the merits is that AgSaver could not cancel the parties’ license agreement because it

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failed to give Argustoli notice of the termination before June 30, 2016. But the only plausible

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reading of the agreement is that AgSaver had until September 30, 2016, to give Argustoli notice (a

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deadline it complied with). Argustoli’s other argument on the merits is that even if it validly

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terminated the agreement, AgSaver needed to give Argustoli more time to finish using the

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Glysophate. The parties’ agreement required that AgSaver give Argustoli a “reasonable” winding-up

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period to finish using the chemical—and AgSaver afforded three months. It is hard to imagine that

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this was not a reasonable period.

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But even if it were not, Argustoli has not explained how this relatively minor breach warrants

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a TRO. Once this case is distilled down to Argustoli’s only plausible claim—that AgSaver properly

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terminated the agreement but that AgSaver did not give Argustoli a “reasonable” period to finish

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using the Glysophate—Argustoli’s arguments that it will be irreparably harmed become untenable.

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Argustoli has not articulated why it needed more than three months to finish using the Glysophate,

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much less how it will be irreparably harmed if it isn’t given more time to use the chemical now. And

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Argustoli fails to explain why AgSaver’s alleged breach in not giving Argustoli longer to use the

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Glysophate cannot be remedied by damages. At best, Argustoli has shown that it might lose the

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money it invested in its current batch of herbicide. But I see no reason why AgSaver could not make

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Argustoli whole by paying Argustoli for the value of this product.3

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Background
The parties entered into their licensing agreement on October 1, 2013.4 AgSaver allows

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Argustoli to use Glysophate and, in return, Argustoli pays AgSaver a royalty on each product that

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Stanchart Sec. Int'l, Inc. v. Galvadon, 2012 WL 5286952, at *1 (S.D. Cal. Oct. 24, 2012).

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I find these motions suitable for disposition without oral argument. Nev. L.R. 78-1.

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ECF No. 7-1 at 2.
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Argustoli sells.5 Argustoli sources ingredients from various places around the world, including

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getting its Glysophate made in China.6 Argustoli alleges that its manufacturing process takes 90

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days from start to finish, and that it is currently in the process of making herbicides with

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Glysophate.7

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The parties’ licensing agreement states that it is in effect from October 1, 2013, “and shall

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terminate on September 30, 2016.”8 The agreement has a “term and termination” clause that says

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that the agreement will renew for an additional year (until September 30, 2017), but only “if notice

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of cancellation is not received within 90 days” of the contract’s end date of September 30, 2016.9

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The termination clause also says that, when the contract is terminated, Argustoli “shall cease . . . use

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of” Glyphosate “within a reasonable time to be agreed upon” by the parties.10

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On August 5, 2016, AgSaver sent a letter telling Argustoli (1) that AgSaver was terminating

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the agreement, and (2) that Argustoli had until November 3, 2016, to wrap up its use of Glysophate.11

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Argustoli alleges that it has herbicide in various stages of production and can’t finish it by November

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3, 2016.12

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Discussion

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Temporary restraining orders are governed by the preliminary-injunction factors: Argustoli

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bears the burden to show that (1) it is likely to succeed on its breach of contract claim; (2) it will

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likely be irreparably harmed if I do not give it preliminary relief; (3) the balance of equities tips in its

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Id. at 2–4.

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ECF No. 7 at 4–7.

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Id.

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ECF No. 7-1 at 7.

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Id. at 4.

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Id.

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Id. at 6–7.

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Id.
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favor; and (4) an injunction is in the public interest.1 Additionally, Argustoli must meet the “high

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hurdle” of showing that “immediate relief is necessary.”2 I have wide discretion to decide whether to

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grant a TRO.3

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A.

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Likelihood of success on the merits
Argustoli’s primary claim is that AgSaver cannot cancel the parties’ license agreement

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because it did not notify Argustoli of the termination soon enough. Argustoli points to the license

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agreement’s termination clause, which states that the agreement will extend to September 2017 “if

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notice of cancellation is not received within 90 days” of September 30, 2016. Argustoli contends

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that this clause means that AgSaver was required to give notice 90 days before September 30,

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2016—which is June 30, 2016—and that, by waiting until August 5, 2016, AgSaver waived its right

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to terminate. Argustoli’s argument is untenable.

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The parties’ agreement allowed AgSaver to terminate the agreement if it notified Argustoli

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“within 90 days of” September 30, 2016—in other words, the period for termination was inside the

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90-day period before or after September 30th. Argustoli has not provided me with any authority to

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suggest that “within 90 days” means “at least 90 days before”—and that is what its argument would

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require. Nor has it provided any evidence or argument to suggest that this term is somehow

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ambiguous. The text of the agreement thus required AgSaver to tell Argustoli that it was cancelling

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its license during the 90-day period immediately preceding or following September 30, 2016.

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AgSaver complied with this term by notifying Argustoli of the termination in the beginning of

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August.

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Argustoli’s other argument on the merits is also unlikely to succeed. Argustoli contends that

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AgSaver breached by failing to negotiate with Argustoli to setup a reasonable winding-up period for

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Argustoli’s use of the Glysophate. The parties’ agreement says that AgSaver must give Argustoli a

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V’Guara Inc. v. Dec, 925 F. Supp. 2d 1120, 1123 (D. Nev. 2013); see also FRCP 65(b); Stuhlbarg
Int’l Sales Co., Inc. v. John D. Brush & Co., Inc., 240 F.3d 832, 839 n.7 (9th Cir. 2001).
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Stanchart Sec. Int'l, Inc. v. Galvadon, No. 12CV2522-LAB MDD, 2012 WL 5286952, at *1 (S.D.
Cal. Oct. 24, 2012).

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Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984).
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“reasonable” winding-up period, and that the parties should agree on this period. AgSaver gave

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Argustoli three months to finish using the Glysophate, which appears reasonable—particularly given

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that Argustoli itself says that it takes only 90 days to make its herbicide with Glysophate. That said,

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I cannot say, as a matter of law, that AgSaver gave Argustoli a “reasonable” winding-up period. So

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this claim is at least plausible, although it does not appear likely to succeed.

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B.

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Irreparable harm
Argustoli argues that, if AgSaver is allowed to interfere with Argustoli’s supply of

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Glysophate, Argustoli’s business will collapse because it won’t be able to continue making and

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selling its herbicides in the future. But as I explained above, Argustoli has not shown that it will

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have any likelihood of success arguing that AgSaver could not terminate the license.

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The only claim Argustoli has raised with any likelihood of success is that it should be given

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more “reasonable” time to wrap up using the Glysophate. But Argustoli has not provided any

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evidence or analysis to explain why this breach cannot be fully compensated by damages. Argustoli

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alleges that it currently has herbicide in production and cannot finish it all by the November

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termination date. But that does not explain how it will be irreparably harmed. If AgSaver is found

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to have breached by not giving Argustoli more time to finish its current batch of herbicides,

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presumably it can fully compensate Argustoli by paying for it.

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Any argument that Argustoli needs an emergency TRO is also belied by the fact that it waited

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months to bring this TRO once it knew that AgSaver was cancelling its license. On August 5th,

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AgSaver notified Argustoli that its license was terminated in November. That Argustoli did not

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move for relief sooner belies the notion that it is in such dire straits.

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C.

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The other TRO factors
The other TRO factors are not especially helpful here. As to balance of the hardships,

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Argustoli makes conclusory arguments that it will be more harmed than AgSaver if I do not grant a

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TRO. Argustoli says it will lose money—and it may. But AgSaver will possibly be harmed if I don’t

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allow it to cancel its license and control who gets to use its proprietary chemicals. And Argustoli

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concedes that this private contract action isn’t particularly relevant to public policy.1

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ECF No. 7 at 13.
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Conclusion
Accordingly, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that plaintiff
Argustoli H.C., LLC’s Motion for Temporary Restraining Order [ECF 7] is DENIED.
Dated this 28th day of October, 2016

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_________________________________
_______________________
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_______ __ _
__
Jennifer A. Dorsey
ennifer
if
if
United States District Judge
nited States
d tat
ct Judge
t dg

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