Nutrition & Fitness, Inc. v. Progressive Emu, Inc. et al
Filing
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ORDER denying 11 Motion for Temporary Restraining Order and granting in part and denying in part 11 Motion to Expedite Discovery. The court sets a motion hearing for 5/29/12 at 10:00 am, in Wilmington for the Motion for Preliminary Injunction 11 . The court will determine whether preliminary injunctive relief is warranted in this case at that time. Signed by Senior Judge James C. Fox on 4/27/2012. (Foell, S.)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No.5:I2-CV-I92-F
NUTRITION & FITNESS, INC.,
Plaintiff,
v.
PROGRESSIVE EMU, INC. and
CHRIS BINKLEY,
Defendants.
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ORDER
This matter is before the court on the Motion for Temporary Restraining Order, Preliminary
Injunction, or in the Alternative, Motion for Expedited Discovery [DE-II] filed by PlaintiffNutrition
& Fitness, Inc. ("NFl") against Defendants Progressive Emu, Inc. ("Pro Emu") and Chris Binkley
("Binkley").
I. DISCUSSION
A. Motion for Temporary Restraining Order
On April 11 ,2012, NFl brought suit against Pro Emu and Binkley alleging, inter alia, breach
ofcontract stemming from the Sales, Marketing, and Operating Agreement ("Agreement") in which
Pro Emu agreed to supply NFl with emu oil for production of various emu-based products. NFl
moves, pursuant to Rule 65(b) of the Federal Rules of Civil Procedure, for a temporary restraining
order seeking to enforce the terms as set forth in the Agreement.
Rule 65 of the Federal Rules of Civil Procedure govern the issuances of injunctions and
restraining orders. Specifically, Rule 65(b)(I) states:
The court may issue a temporary restraining order without written or oral notice to
the adverse party or its attorney only if:
(A) specific facts in an affidavit or a verified complaint clearly show that immediate
and irreparable injury, loss, or damage will result to the movant before the adverse
party can be heard in opposition; and
(B) the movant's attorney certifies in writing any efforts made to give notice and the
reasons why it should not be required.
Fed.R.Civ.P.65(b )(1). The substantive standards for granting a request for a temporary restraining
order and entering a preliminary injunction are the same. See, e.g., Commonwealth oJ Virginia v.
Kelly, 29 F.3d 145, 147 (4th Cir. 1994) (applying preliminary injunction standard to a request for
temporary restraining order). In order for such injunctive relief to be granted, the movant must
establish that "he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the
absence of preliminary relief, that the balance ofthe equities tips in his favor, and that an injunction
is in the public interest." Winter v. Natural Res. De! Council, Inc., 555 U.S. 7,20 (2008). All four
requirements must be satisfied. Real Truth About Obama, Inc., v. Federal Election Com 'n, 575 F.3d
342,346 (4th Cir. 2009), vacated on other grounds 130 S.Ct. 2371 (2010), reinstated in relevant
part on remand 607 F.3d 355 (4th Cir. 2010) (per curiam).
Nfl, in support of its claims that it will suffer irreparable harm without injunctive relief,
submits a declaration from Larry Chriscoe ("Chriscoe"), President/CEO of NFL In the affidavit,
Chriscoe claims that Pro Emu is able to supply the requested amount of emu oil to NFl, in light of
its increased inventory oflive emu birds, but has declined to do so. See [DE-12-l], Chriscoe Decl.,
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9, 11-13,27. Chriscoe alleges that Pro Emu may be preparing to or is already selling emu oil to
unknown third parties and promoting its own emu-based products to NFl's clients in violation ofthe
Agreement entered into by both parties. [DE-12-1], Chriscoe Decl.,
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~13.
Furthermore, Chriscoe
contends that there is a growing shortage of emu oil in the market and that there is a very high
probability that NFl will not be able to secure enough oil to fill future orders. See [DE-12-1],
Chriscoe Dec!., ~16-18. Chriscoe claims that it will lose key clients which it may never be able to
reestablish and will suffer severe damage to its reputation in the emu-based products market. See
[DE-12-1], Chriscoe Decl., ~22-23. Chriscoe also states that, even if NFl is able to purchase emu
oil from another outside source, the price it may have to pay is significantly higher than the price set
forth in the Agreement. [DE-12-1], Chriscoe Decl., ~24. According to the declaration, Chriscoe
questions Pro Emu's ability to satisfy any monetary judgment in light of its current financial
difficulties. See [DE-12-l], Chriscoe Decl., ~25.
In its motion, NFl echoes Chriscoe's declaration and reiterates two main forms of damage
that it deems irreparable. First, NFl contends that it will lose its market share and reputation in the
emu-based products business as a result ofnot being supplied the requested emu oil from Pro Emu.
See [DE-12], Mot. for TRO, PI, and Exp. Disc., p. 12. NFl claims that retailers rarely carry more
than one emu-based product. See [DE-12], Mot. forTRO, PI, and Exp. Disc., p. 12. Therefore, NFl
argues that, if it cannot obtain adequate emu oil from Pro Emu, then it will not be able to produce
enough products to fill orders requested by retailers. See [DE-12], Mot. for TRO, PI, and Exp. Disc.,
p. 12. As a result, NFl claims that its emu-based products will be replaced by ones from competitors,
and it will be difficult or impossible for NFl to recapture the lost share of the market. See [DE-12],
Mot. for TRO, PI, and Exp. Disc., p. 12-13. NFl also argues that its reputation will be irreparably
damaged as its clients and potential consumers learn that NFl cannot supply its emu-based products.
See [DE-12], Mot. for TRO, PI, and Exp. Disc., p. 13. Second, NFl argues that Pro Emu will likely
be unable to pay damages that will adequately compensate for NFl's loss should it recover a
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monetary judgment against Pro Emu due to its financial difficulties. See [DE-12], Mot. for TRO,
PI, and Exp. Disc., p. 13.
Based on the record at this time, the court finds that NFl has not clearly shown that it will
suffer irreparable harm without the issuance ofa temporary restraining order. The court recognizes
that NFl may suffer a loss in sales as a result of Pro Emu's purported refusal to supply the needed
emu oil to manufacture its products. However, any such damage may be redressed through a
monetary judgment and therefore cannot be characterized as irreparable. See Hughes Network Sys.,
Inc. v. Interdigitai Communications Corp., 17 F.3d 691, 694 (4th Cir. 1994) (harm not irreparable
if it can be compensated by money damages during the normal course of litigation).
In regards to market share, although NFl claims that it will lose its market share in the emuÂ
based products business as a result ofnot being supplied adequate amounts ofemu oil from Pro Emu
for production, the court finds that such loss is speculative, at best, and NFl fails to provide any
evidence to support such a proposition. See Mike's Train House, Inc. v. Broadway Ltd. Imports,
LLC, 708 F.Supp.2d 527,532 (D.Md. 2010) (stating that "mere speculation about possible market
share losses is insufficient evidence of irreparable harm."); see Southtech Orthopedics, Inc. v.
Dingus, 428 F.Supp.2d 410,418 (E.D.N.C. 2006) (purely economic injury, such as that resulting
from lost sales, profits, or market share does not equate to irreparable harm sufficient garner the need
for injunctive relief); see, e.g., Z-Man Fishing Products, Inc. v. Renosky, 790 F.Supp.2d 418, 423
(D.S.C. 2011) (no proof of irreparable harm where party failed to establish "any evidence of lost
goodwill, loss of market share, or price erosion."). Therefore, the court is unpersuaded by NFl's
claim that its potential loss in market share warrants the need for injunctive relief.
Moreover, NFl argues that its reputation in the emu-based products business will be severely
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damaged as a result of not being able to produce the quantity that is demanded by its retail clients
and customers. The court finds such contention speculative and not supported by evidence.
Suppliers, manufacturers, and businesses are often unable to meet the demands of the market. In
other words, this is a common occurrence. Hence, whatever perceived injury to reputation that NFl
contends will result based on its inability to fully meet the demands of emu-based products market
does not constitute irreparable harm warranting injunctive relief. Finally, NFl claims that Pro Emu
may be facing financial difficulties which would prevent it from fulfilling any monetary judgments.
However, no evidence has been provided to support such a claim and therefore, this contention, at
this time, is too speculative, to constitute irreparable harm. See Direx Israel, Ltd. v. Breakthrough
Med. Corp., 952 F .2d 802, 812 (4th Cir. 1992) (irreparable harm must not be speCUlative, but rather
actual and imminent).
The court also notes that Rule 65(b)(1 )(B) requires that NFl's counsel certify in writing what
efforts were made to give notice of the request for a temporary restraining order to Pro Emu and
Binkley, as well as to show why such notice should not be required. Even if the court assumes that
sufficient facts have been alleged showing that immediate and irreparable injury will result without
injunctive relief, NFl has not certified in writing any efforts made to put Pro Emu and Binkley on
notice of the motion, nor has it offered any reason as to why such notice should not be required in
satisfaction of the "stringent restrictions" of Rule 65(b)(1). See Granny Goose Foods, Inc. v. Bhd.
o/Teamsters & Auto Truck Drivers Local No. 700/Alameda County, 415 U.S. 423, 438-39 (1974)
(citation omitted). The requirements of Rule 65(b)(1) are not mere technical niceties that a court
may disregard, but rather crucial safeguards of due process. Tchienkou v. Net Trust Mortg., No.
3:10-CV-00023, 2010 WL 2375882, at *1, (W.D.Va. June 09, 2010) (citation omitted). Nothing in
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NFl's motion satisfies this requirement.
Therefore, this failure constitutes a separate and
independent basis for denying the request for this ex parte injunctive relief. Accordingly, NFl's
request for a temporary restraining order is DENIED.
B. Motion for Expedited Discovery and Preliminary Injunction
In the alternative, NFl seeks expedited discovery on the issues raised by NFl's request for
injunctive relief. Specifically, NFl requests:
(1) [N]o more than ten (10) interrogatories directed to whether: (l) Pro Emu has the
resources (e.g., birds, processing capabilities, etc.) to fill NFl's orders for emu oil;
(2) whether Pro Emu is selling emu oil to others without complying with the
Agreement's requirement that NFl must first approve such sales; (3) whether Pro
Emu has made unauthorized sales of emu oil or emu oil-based products to third
parties; and (4) Pro Emu's financial status;
(2) [Twenty] 20 documents requests directed to the same topics as the interrogatories
as set forth above;
(3) [N]o more than five (5) depositions, which shall include a Rule 30(b)(6)
deposition of Pro Emu. The remaining depositions will consist of, at the least,
Binkley; other principals and executives of Pro Emu; and possibly other Pro Emu
employees;
(4) [T]o the extent Nfl determines that third-party discovery is necessary, NFl
requests leave to serve such discovery under Rule 45. NFl does not request that the
Court shorten the length of time to respond otherwise available for third parties to
respond pursuant to Rule 45.
[DE-12], Mot. for TRO, PI, and Exp. Disc., p. 16. NFl states that the requested discovery may be
completed within six weeks. [DE-12], Mot. forTRO, PI, and Exp. Disc.,p. 16. NFl further requests
that response times be reduced to fourteen (14) days for discovery directed to Pro Emu.
A request for expedited discovery is examined "on the entirety of the record to date and the
reasonableness ofthe requests in light ofall the surrounding circumstances." Dimension Data North
America, Inc. v. NetStar-l, Inc., 226 F.R.D. 528, 531 (E.D.N.C. 2005) (stating the standard, but
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denying plaintiffs request because no motion for preliminary injunction was pending). Here, upon
consideration, the court finds that expedited discovery is appropriate under the circumstances.
However, the court will narrowly tailor the discovery to the following:
(1) No more than ten (10) interrogatories total directed to whether: (I) Pro Emu has the
resources (e.g., birds, processing capabilities, etc.) to fill NFl's orders or emu oil; (2) whether Pro
Emu is selling emu oil or emu-based products to other parties that would violate the terms as set
forth in the Agreement; and (3) Pro Emu's financial status. NFl shall have fourteen (14) days to
obtain responses to these interrogatories;
(2) Twenty (20) document requests directed to the same topics as the interrogatories as set
forth above. NFl shall have fourteen (14) days to obtain responses to these requests for production
of documents;
(3) No more than five (5) depositions, which shall include a Rule 30(b)(6) deposition of Pro
Emu. The remaining depositions will consist of Binkley and other principals and executives of Pro
Emu. The areas of inquiry shall be limited to topics as set forth above. Pro Emu and its principals
and executives, who are the subject of these depositions, shall have twenty-one (21) days in which
to appear.
A hearing on the Motion for Preliminary Injunction is set for Tuesday, May 29, 2012, at
10:00 am in Wilmington, North Carolina.
II. CONCLUSION
Based on the aforementioned rationale, it is ORDERED, ADJUDGED, AND DECREED
that:
(1) NFl's Motion for Temporary Restraining Order [DE-II] be DENIED;
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(2) NFl's Motion for Expedited Discovery [DE-II] be ALLOWED IN PART; discovery
shall be limited to the following:
(a) No more than ten (10) interrogatories total directed to whether: (1) Pro Emu has the
resources (e.g., birds, processing capabilities, etc.) to fill NFl's orders or emu oil; (2) whether Pro
Emu is selling emu oil or emu-based products to other parties that would violate the terms as set
forth in the Agreement; and (3) Pro Emu's financial status. NFl shall have fourteen (14) days to
obtain responses to these interrogatories;
(b) Twenty (20) document requests directed to the same topics as the interrogatories as set
forth above. NFl shall have fourteen (14) days to obtain responses to these requests for production
of documents;
(c) No more than five (5) depositions, which shall include a Rule 30(b)(6) deposition ofPro
Emu. The remaining depositions will consist of Binkley and other principals and executives ofPro
Emu. The areas of inquiry shall be limited to topics as set forth above. Pro Emu and its principals
and executives, who are the subject ofthese depositions, shall have twenty-one (21) days in which
to appear.
(3) NFl's Motion for Preliminary Injunction [DE-II] be HELD IN ABEYANCE. A hearing
is set for Tuesday, May 29, 2012, at 10:00 am, in Wilmington, North Carolina, to determine
whether preliminary injunctive relief is warranted in this case.
SO ORDERED.
This the 27th day of April, 2012.
Senior United States District Judge
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