Seawater Seafoods Company et al v. Dulcich et al

Filing 48

OPINION AND ORDER: Denying Motion for a Temporary Restraining Order 38 . Signed on 8/18/2017 by Judge Michael J. McShane. (cp)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

SEAWATER SEAFOODS COMPANY,
et al,
Plaintiffs,

Case No. 6:16-cv-01607-MC

v.
FRANK DULCICH, et al,

OPINION & ORDER

Defendants.
_____________________________
MCSHANE, Judge:
Plaintiffs Seawater Seafoods Co., Front Street Marine LLC, and Bret Hamrick move for
an emergency temporary restraining order stating:
Defendants are prohibited from taking any action to enforce the Lincoln County
Circuit Court judgment entered in the case of Pacific Choice Seafood Company v.
Seawater Seafoods Company, Lincoln County Case No. 16cv25418, or taking any
steps to block commercial fishermen from discharging their catch at tax lot 1800
unless there is a commercially reasonable need for Pacific Seafood Group to
utilize space along its dock that is in close proximity to plaintiffs’ tax lot 1800.
Pl.’s Mot. Temp. Rest. Order, 4.

1 – ORDER

A party seeking a preliminary injunction “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 of equities tips in his favor, and that an injunction is in the public interest.” Winter v.
Natural Resources Defense Council, Inc., 129 S. Ct. 365, 374 (2008). The mere possibility of
irreparable harm is not enough. Rather, the plaintiff must establish such harm is likely. Alliance
for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). The standards for issuing a
temporary restraining order are similar to those required for a preliminary injunction. Lockheed
Missile & Space Co., Inc. v. Hughes Aircraft Co., 887 F.Supp. 1320, 1323 (N.D. Ca. 1995). The
court’s decision on a motion for a preliminary injunction is not a ruling on the merits. See Sierra
On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984).
Plaintiffs filed the motion three days ago. The Court heard oral arguments at 3:00 p.m.
the following day, roughly three hours after receiving defendants’ response. Yesterday afternoon,
plaintiffs submitted supplemental briefing. As the parties are familiar with the facts, and due to
the time sensitive nature of this matter, the Court omits much background information.
At issue are several tax lots on which the parties conduct commercial fishing business.
For several years, defendants leased a dock on tax lots 1400, 1401, and 1700 (lot “A”) from the
City of Newport. Lot A is approximately 300 feet long. Adjacent to Lot A is tax lot 1800, the lot
at issue here. After defendants informed the City they wished to purchase lot 1800, the City put it
and another lot up for auction. An appraiser with 40 years of experience concluded the lots for
sale had little value for anyone other than defendants (who already operated a commercial
business on Lot A) because the lots, being only 30 feet wide, were too small to service
commercial fishing vessels.

2 – ORDER

Despite that warning from the appraisal, plaintiff Front St. purchased lot 1800 in what
can only be described as a calculated business decision. After defendants declined to purchase
the lot from Front St., Front St. leased the lot to plaintiff Seawater Seafoods. Seawater Seafoods
planned to use the lots to offload crab and other fish from commercial fishing vessels. As the
smallest commercial fishing vessel is longer than lot 1800, disputes quickly arose between the
parties as vessels offloading to Seawater Seafoods protruded onto defendants’ Lot A. Much
litigation, including the antitrust action here, ensued. Another action, an action some might say is
related to this action, proceeded in state court. The question in the state court action was whether
plaintiffs here had the right, under Oregon’s public trust doctrine, to protrude into Lot A when
offloading vessels. The state court concluded plaintiffs here had no legal right to infringe on
defendants’ property rights to Lot A. Plaintiffs moved to stay that order. The day the Oregon
Court of Appeals denied the stay, plaintiffs moved for the emergency TRO here.
The TRO sought here, couched in antitrust language, is simply an end run around the
state court judgment. Indeed, the very first sentence of the proposed TRO states, “Defendants are
prohibited from taking any action to enforce the Lincoln County Circuit Court judgment entered
in [the state court action] . . . .” Pl.’s Mot. Temp. Rest. Order, 4. Plaintiffs’ motion is
conspicuously devoid of any substantive antitrust arguments. Instead, the motion simply claims
the state court judgment will put plaintiffs out of business. See id. at 3 (“The Lincoln County
Circuit Court judgment will force Seawater Seafoods Company completely out of business at tax
lot 1800.”; (“Plaintiffs move for an immediate temporary restraining order prohibiting
[defendants] from aggressive use of its state law property rights to force a competitor out of
business.”); at 4 (“because Pacific Seafood now has the opportunity to enforce its state law
property rights pursuant to the recently issued Lincoln County Circuit Court judgment and force
3 – ORDER

a small competitor in Newport out of business in violation of the antitrust laws, this Court should
issue a TRO to prevent that irreparable injury.”).
With the TRO, plaintiffs seek to block enforcement of the state court judgment that
plaintiffs may not violate defendants’ property rights by protruding into water space contained in
the Lot A lease. But that discrete issue, although glossed over in ¶ 45 of the antitrust complaint,
is nowhere near the focus of the allegedly anticompetitive actions at issue here. Instead, the
complaint focuses mainly on defendants’ placement of a hoist on the westernmost portion of Lot
A, essentially abutting lot 1800. While the water rights issue determined by the state court could
well place Seawater Seafoods out of business, it is essentially ancillary to the antitrust action.
I agree with defendants that the Anti-Injunction Act bars the requested TRO. “A court of
the United States may not grant an injunction to stay proceedings in a State court except as
expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to
protect or effectuate its judgments.” 28 U.S.C. § 2283. Plaintiffs argue they do “not ask this
Court enjoin any state court proceedings. Indeed, defendants’ state court action remains pending
and unimpeded before the Oregon Court of Appeals. Nothing in plaintiffs’ motion would
preclude or even delay the state court’s proceedings.” Reply, 2. The Anti-Injunction Act,
however, applies to orders “prohibiting utilization of the results of a completed state court
proceeding.” Atl. Coast Line. R. Co. v, B’Hood of Locomotive Engineers, 398 U.S. 281, 287
(1970). The state court judgment finding plaintiffs could not intrude on defendants water rights is
the outcome of a completed state court proceeding.
Plaintiffs’ argument that the proposed TRO would not preclude any state court
proceedings because the parties are free to continue their state court appeals is unconvincing.
That argument turns the purpose of the Anti-Injunction Act on its head. State and federal courts
4 – ORDER

operate in “two essentially separate legal systems.” Id. at 286. “Each system proceeds
independently of the other with ultimate review in this [United States Supreme Court] of the
federal questions raised in either system.” Id. The Act is meant to reduce “conflicts and frictions”
between the two systems. Id.
Plaintiffs’ requested TRO would nullify the outcome of the state court proceeding and is
therefore barred under the Act. Contrary to plaintiffs’ argument, nothing in the state court
judgment will limit this court from exercising its jurisdiction over the antitrust claims at issue. As
noted, the discrete water rights issue at the heart of the state court judgment is largely ancillary to
the antitrust issues here.
Although I conclude the Anti-Injunction Act bars entry of the proposed TRO, I also note
that under these facts, as related to the discrete issue of the waterway rights, it appears at first
glance that the balance of equities do not tip in plaintiffs’ favor. Front St. Marine LLC admits
reading the appraisal before purchasing Lot 1800. That appraisal specifically stated that because
the lots were narrower than any commercial fishing vessels, the lots had little commercial
processing or offloading value to anyone other than defendants. Despite knowing that, Front St.
Marine LLC went ahead and purchased the lots anyway, with the (perhaps erroneous) notion that
they held “value.” The equities on the waterway issue do not appear to lie with plaintiffs.
IT IS SO ORDERED.
DATED this 18th day of August, 2017.

________/s/ Michael McShane_________
Michael J. McShane
United States District Judge

5 – ORDER