Goldberg et al v. Barreca et al

Filing 7

ORDER that 4 Emergency Motion for a Temporary Restraining Order is DENIED. Signed by Judge James C. Mahan on 8/9/17. (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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SHELDON F. GOLDBERG, et al.,

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Plaintiff(s),

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Case No. 2:17-CV-2106 JCM (VCF)
ORDER

v.
JACK BARRECA, et al.,

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Defendant(s).

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Presently before the court is an emergency motion for a temporary restraining order (TRO)

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and appointment of receiver or trustee filed by plaintiffs Sheldon F. Goldberg, Barbara A.

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Goldberg, and Beneficial Innovations, Inc. (ECF No. 4). Plaintiffs request this court to enjoin the

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defendants from their continued involvement in an alleged fraudulent business operation involving

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a margarita product. Id. Plaintiffs further request this court to appointment a receiver or trustee—

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namely, plaintiff Sheldon Goldberg himself—to take over control of the margarita product venture.

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Id. The motion is denied in its entirety.

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I.

Facts

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This is a civil fraud and breach-of-contract case about margaritas. (ECF Nos. 1, 4). On

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August 4, 2017, plaintiffs filed a complaint against defendants in this court alleging nineteen

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causes of action. (ECF No. 1). On August 7, 2017, plaintiffs filed the instant emergency motion

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for a TRO and for the appointment of a receiver or trustee. (ECF No. 4).1 On August 8, 2017, this

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court received defendants’ ex parte response to plaintiffs’ motion for a TRO. (ECF No. 6).

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James C. Mahan
U.S. District Judge

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On the same day, plaintiffs moved for a preliminary injunction. (ECF No. 5). This order
does not address that motion.

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In their motion, plaintiffs recite a detailed history of a business relationship between

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plaintiffs and defendants. In a nutshell, plaintiffs allege that they invested over $220,000 in a joint

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business venture with defendants for the purpose of manufacturing and selling a margarita product

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with plans of creating a company for this purpose going forward. (ECF No. 4).

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Plaintiffs allege that the defendants encouraged the plaintiffs to continue investing in the

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venture with assurances that the plaintiffs were considered partners and would reap a share in the

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profits from the sale of the product. However, plaintiffs allege that when the time to bottle the

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product drew near, defendants changed their position and indicated an intent to treat plaintiffs’

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investments as a simple loan and not share the profits. Plaintiffs allege that a distillery in Florida

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is ready to bottle the margarita product as soon as August 7, 2017, and that if this court allows the

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Florida distillery to release the bottled product to the defendants thereafter, the defendants will

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then sell the product and “take the money and run—perhaps even skip town ([defendant] Jack has

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no family in Las Vegas).” (ECF No. 4 at 2, 15–16). Plaintiffs allege that their investment is “tied

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up” in the margarita product and if this court “does not intervene, all will be lost,” and “. . . the

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only major asset of the Partnership (the margarita product) would be gone.” Id. at 15. Further,

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plaintiffs allege that the defendants intend to “traffic liquor” in violation of Nevada liquor law.

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(ECF No. 4 at 16). Furthermore, plaintiffs allege that allowing the defendants to receive the

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margarita product after bottling would mean that third parties “would likely get access to the

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margarita product and related intellectual property and trade secrets rightfully owned by the

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Partnership” of which the plaintiffs purport to be a part. (ECF No. 4 at 15).

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Accordingly, in the present emergency motion, the plaintiffs request that this court enter a

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twelve-paragraph order detailing the required and proscribed conduct of the defendants going

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forward in relation to this margarita product venture, including among other things, that the

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defendants “shall not in any manner sell, grant, transfer . . . or otherwise encumber . . . any product

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or other property attributable with any interest to . . . any or all of the Defendants, any or all of the

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Plaintiffs, the Partnership Agreement, and/or a partnership between [the parties] currently located

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at Florida Distillers’ facilities”; that “Defendants shall allow product to be bottled by Caribbean

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Distillers . . . (‘Florida Distillers’) . . . but any and all [of this product] . . . must remain and be

James C. Mahan
U.S. District Judge

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stored at the Florida Distillers’ facilities pending further order of the Court”; that defendants

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deposit into a trust account or with the court any proceeds from the sale of the margarita product;

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and that defendants shall somehow “allow” plaintiffs to enter the premises and facilities of the

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Florida Distillers—a non-party to this action. (ECF No. 4 at 13–14). Further, plaintiffs request

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that this court appoint one of the plaintiffs, Sheldon Goldberg, as either a receiver or trustee of the

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business venture. Id. at 24–26.

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II.

Legal Standard

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Under Federal Rule of Civil Procedure 65, a court may issue a temporary

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restraining order when the moving party provides specific facts showing that immediate and

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irreparable injury, loss, or damage will result before the adverse party’s opposition to a motion for

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preliminary injunction can be heard. Fed. R. Civ. P. 65. “Injunctive relief is an extraordinary

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remedy and it will not be granted absent a showing of probable success on the merits and the

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possibility of irreparable injury should it not be granted.” Shelton v. Nat’l Collegiate Athletic

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Assoc., 539 F.2d 1197, 1199 (9th Cir. 1976).

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“The purpose of a temporary restraining order is to preserve the status quo before a

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preliminary injunction hearing may be held; its provisional remedial nature is designed merely to

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prevent irreparable loss of rights prior to judgment.” Estes v. Gaston, No. 2:12-cv-1853-JCM-

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VCF, 2012 WL 5839490, at *2 (D. Nev. Nov. 16, 2012); see also Sierra On-Line, Inc. v. Phoenix

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Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984). This court must consider the following

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elements in determining whether to issue a temporary restraining order and preliminary injunction:

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(1) a likelihood of success on the merits; (2) likelihood of irreparable injury if preliminary relief

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is not granted; (3) balance of hardships; and (4) advancement of the public interest. Winter v.

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N.R.D.C., 555 U.S. 7, 20 (2008); Stanley v. Univ. of S. California, 13 F.3d 1313, 1319 (9th Cir.

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1994); Fed. R. Civ. P. 65 (governing both temporary restraining orders and preliminary

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injunctions). The party seeking the injunction must satisfy each element.

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Additionally, post-Winter, the Ninth Circuit has maintained its serious-question and

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sliding-scale test. See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011).

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“Under this approach, the elements of the preliminary injunction test are balanced, so that a

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U.S. District Judge

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stronger showing of one element may offset a weaker showing of another.” Id. at 1131. “Serious

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questions going to the merits and a balance of hardships that tips sharply towards the plaintiff can

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support issuance of a preliminary injunction, so long as the plaintiff also shows that there is a

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likelihood of irreparable injury and that the injunction is in the public interest.” Id. at 1135

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(internal quotations marks omitted).

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Finally, to obtain injunctive relief, plaintiffs must show themselves to be “under threat of

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suffering ‘injury in fact’ that is concrete and particularized; the threat must be actual and imminent,

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not conjectural or hypothetical; it must be fairly traceable to the challenged action of the defendant;

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and it must be likely that a favorable judicial decision will prevent or redress the injury.” Ctr. for

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Food Safety v. Vilsack, 636 F.3d 1166, 1171 (9th Cir. 2011) (quoting Summers v. Earth Island

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Inst., 555 U.S. 488 (2009)).

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III.

Discussion

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A. Irreparable injury

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Plaintiffs have not convinced this court that the injunctive relief requested would prevent

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immediate and irreparable injury.

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Plaintiffs complain that failure to issue the requested TRO will result in the plaintiffs failing

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to realize a return on their investment as soon as they deserve. They argue that waiting for a money

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judgment would be an inadequate remedy because defendants are insolvent: “Upon information

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and belief, Defendants have nothing and what few assets they have are liquid.” (ECF No. 4 at 16).

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But they admit that if the business venture is allowed to continue and “they sell the margarita

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product, they will have much more by way of liquid assets—i.e. cash.” Id. Thus, given that the

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plaintiffs admit that the defendant will have “much more . . . cash” if the margarita business is

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allowed to continue uninterrupted, plaintiffs have failed to demonstrate that defendants will be

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insolvent and unable to satisfy a money judgment. Therefore, the financial hardship plaintiffs cite

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is not irreparable.

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Plaintiffs further argue that they believe defendants will skip town with any proceeds from

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the venture only because Jack Barreca, one of the defendants, has no family in Las Vegas. Id. at

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15. Yet plaintiffs provide no additional, specific facts demonstrating a likelihood that Mr. Barreca

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U.S. District Judge

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intends to “skip town.”

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inadequate for injunctive relief. Ctr. for Food Safety, 636 F.3d at 1171.

This allegation is purely conjectural and hypothetical and is thus

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Plaintiffs also allege that allowing the defendants to continue operating the business might

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risk their intellectual property and trade secrets fallings into the wrong hands, but they provide no

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specific facts supporting this speculation of harm and therefore have not convinced this court that

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such injury is likely; this allegation is also overly conjectural and hypothetical. Moreover,

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plaintiffs have not convinced this court that a money judgment would not adequately redress this

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problem if it were to occur.

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Therefore, this court finds that an award of damages in the form of a money judgment

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would be an adequate remedy for any of the alleged injuries that the defendants might cause in the

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absence of the requested TRO, and thus, plaintiffs have not established an irreparable injury.

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B. Balance of hardships

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Plaintiffs have not convinced the court that the balance of hardships tips in their favor.

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Plaintiffs ask the court to halt a purportedly urgent and expensive business venture and to require

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a non-party to this action to keep an unknown quantity of margarita products on their property

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indefinitely. On one hand, such an extraordinary court intervention in private dealings would

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likely impose a heavy burden on the defendants, including financial loss, loss of goodwill, loss of

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property, and damage to the defendants’ relationships with its customers. Moreover, plaintiffs’

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requested order—requiring all margarita products to “remain and be stored at the Florida Distillers’

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facilities pending further order of the Court”—appears as though it would produce a hardship on

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the Florida Distillers, an out-of-state, non-party to this action. (ECF No. 4 at 13). Such an order

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would require the Florida company to keep an untold quantity of products within its property for

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an indefinite period of time. Id. In any event, the plaintiffs have not established that the court has

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personal jurisdiction over this Florida-based third party necessary to bind it to this court’s order

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and force it to comply with a TRO.

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Furthermore, plaintiffs have not convinced this court that the lack of this TRO will cause

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them to suffer a greater hardship that the regular course of civil litigation cannot adequately

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address. In a nutshell, the “hardship” plaintiffs allege that will result from a failure to issue this

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U.S. District Judge

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temporary restraining order is temporary economic loss. However, plaintiffs argue that they are

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likely to succeed on the merits of their causes of action and therefore are likely to obtain a money

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judgment in their favor, and they acknowledge that the defendants will not have insolvency

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problems if they are allowed to continue forward with the margarita product business. Therefore,

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this court finds that the balance of hardships tips heavily in favor of the defendants. Winter, 555

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U.S. at 20.

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C. The public interest

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For similar reasons, plaintiffs have not convinced this court that their requested temporary

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restraining order would advance the public interest. See id. The public interest is adequately

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served in this instance by the plaintiffs’ purported right to pursue its claims against the defendants

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in the regular course of civil litigation. In contrast, the public interest in this case would be

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breached by this court’s drastic intervention in private enterprise on the unsubstantiated allegations

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of the plaintiffs.

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D. Potential for success on the merits

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Finally, given the inability of plaintiffs to establish that they will suffer immediate,

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irreparable injury if this motion is denied, that the balance of hardships tips heavily in favor of the

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defendants, and that the public interest would not be served by the requested relief, this court finds

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that whatever merit plaintiffs may have in their ability to demonstrate a likelihood of success on

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the merits does not, without more, warrant this court’s intervention.

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IV.

Conclusion

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Plaintiffs have failed to demonstrate several required elements necessary for this court’s

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extraordinary equitable intervention in the form of a TRO. Further, for the same reasons, this court

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declines to grant plaintiffs’ request for an appointment of a receiver or trustee.

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James C. Mahan
U.S. District Judge

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, and DECREED that plaintiff’s emergency

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motion for a temporary restraining order and appointment or receiver or trustee (ECF No. 4) be,

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and the same hereby is, DENIED.

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DATED August 9, 2017.
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UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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