Goldberg et al v. Barreca et al

Filing 8

ORDER that 5 Motion for Preliminary Injunction is DENIED. Signed by Judge James C. Mahan on 8/10/17. (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 a motion for a preliminary injunction and appointment of

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

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Innovations, Inc. (ECF No. 5). Plaintiffs request this court to enjoin the defendants from their

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continued involvement in an alleged fraudulent business operation involving a margarita product.

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Id. Plaintiffs further request this court to appoint a receiver or trustee—namely, plaintiff Sheldon

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Goldberg himself—to take over control of the margarita product venture. Id. The motion is denied

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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, 5). 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 motion for a

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preliminary injunction and for the appointment of a receiver or trustee. (ECF No. 5).1

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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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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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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. 5).

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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. 5 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. Id.

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at 16. Furthermore, plaintiffs allege that allowing the defendants to receive the margarita product

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

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related intellectual property and trade secrets rightfully owned by the Partnership” of which the

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plaintiffs purport to be a part. Id. at 15.

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

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paragraph order detailing the required and proscribed conduct of the defendants going forward in

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relation to this margarita product venture, including among other things, that the defendants “shall

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not in any manner sell, grant, transfer . . . or otherwise encumber . . . any product or other property

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

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

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

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

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Florida Distillers’ facilities pending further order of the Court”; that defendants deposit into a trust

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account or with the court any proceeds from the sale of the margarita product; and that defendants

James C. Mahan
U.S. District Judge

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shall somehow “allow” plaintiffs to enter the premises and facilities of the Florida Distillers—a

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non-party to this action. Id. at 13–14. Further, plaintiffs request that this court appoint one of the

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plaintiffs, Sheldon Goldberg, as either a receiver or trustee of the business venture. Id. at 24–26.

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II.

Legal Standard

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Federal Rule of Civil Procedure 65 allows a court to issue a preliminary injunction.

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The purpose of a preliminary injunction is to preserve a party’s rights pending resolution of the

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merits of the case by the trial. Big Country Foods, Inc. v. Board of Educ. of Anchorage School

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Dist., Anchorage, Alaska, 868 F.2d 1085, 1087 (9th Cir. 1989). The grant or denial of a motion

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for a preliminary injunction is a matter of the district court's discretion. United States v. Odessa

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Union Warehouse Co-op, 833 F.2d 172, 174 (9th Cir. 1987). However, “[a] preliminary injunction

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is an extraordinary remedy never awarded as of right,” Winter v. Nat. Res. Def. Council, Inc., 555

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U.S. 7, 24 (2008), and “will not be granted absent a showing of probable success on the merits and

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the 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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A plaintiff seeking a preliminary injunction must establish (1) that he is likely to succeed

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on the merits, (2) that he is likely to suffer irreparable harm in the absence of preliminary relief,

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(3) that the balance of equities tips in his favor, and (4) that an injunction is in the public interest.

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Winter, 555 U.S. at 20.

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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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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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U.S. District Judge

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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 preliminary injunction requested would

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prevent immediate and irreparable injury.

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Plaintiffs complain that failure to issue the requested preliminary injunction will result in

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the plaintiffs failing to realize a return on their investment as soon as they deserve. They argue

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that waiting for a money judgment would be an inadequate remedy because defendants are

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insolvent: “Upon information and belief, Defendants have nothing and what few assets they have

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are liquid.” (ECF No. 5 at 16). But they admit that if the business venture is allowed to continue

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and “they sell the margarita product, they will have much more by way of liquid assets—i.e. cash.”

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Id. Thus, given that the plaintiffs admit that the defendant will have “much more . . . cash” if the

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margarita business is allowed to continue uninterrupted, plaintiffs have failed to demonstrate that

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defendants will be insolvent and unable to satisfy a money judgment. Therefore, the financial

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hardship plaintiffs cite 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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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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James C. Mahan
U.S. District Judge

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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 preliminary injunction, and thus, plaintiffs have not established an

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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. 5 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 preliminary injunction.

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Furthermore, plaintiffs have not convinced this court that the lack of a preliminary

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injunction will cause them to suffer a greater hardship that a final judgment after trial cannot

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

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preliminary injunction is temporary economic loss. However, plaintiffs argue that they are likely

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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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James C. Mahan
U.S. District Judge

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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 preliminary

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injunction would advance the public interest. See id. The public interest is adequately served in

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

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

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

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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 preliminary injunction. Further, for the same

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reasons, this court declines to grant plaintiffs’ request for an appointment of a receiver or trustee.

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, and DECREED that plaintiffs’ motion for a

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preliminary injunction and appointment or receiver or trustee (ECF No. 5) be, and the same hereby

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is, DENIED.

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DATED August 10, 2017.
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UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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