National Produce Consultants LLC v. Dining Alliance, et al

Filing 55

MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE for 33 Report and Recommendations, Order. Signed by Judge Amos L. Mazzant, III on 4/20/15. (cm, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

NATIONAL PRODUCE
CONSULTANTS, LLC,

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Plaintiff,
VS.

DINING ALLIANCE, INC. and
CONSOLIDATED CONCEPTS, INC.,
Defendants.

Case No. 4:14cv505
(consolidated with 4:14cv755)
Judge Mazzant/Judge Bush

MEMORANDUM ADOPTING REPORT AND
RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Came on for consideration the report of the United States Magistrate Judge in this action, this
matter having been heretofore referred to the United States Magistrate Judge pursuant to 28 U.S.C.
§ 636. On January 13, 2015, the report of the Magistrate Judge was entered containing proposed
findings of fact and recommendations that Defendants’ Motion for Entry of Preliminary Injunction
(Dkt. #28) be GRANTED.
On January 28, 2105, Plaintiff National Produce Consultants, LLC filed objections to the
Magistrate Judge’s report (see Dkt. #39). Plaintiff argues that the Magistrate Judge’s recommended
injunction is improper because it includes the payment of disputed administrative fees for which
there is an adequate remedy at law in the form of monetary damages after a trial on the merits.
Plaintiff also argues that the payment terms in the recommended injunction alter the status quo rather
than preserve it and would essentially cause Plaintiff to work for free. Plaintiff argues and that the

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injunctive relief is not supported or is insufficiently supported by proper evidence; that there is
insufficient evidence to show that Defendants are likely to succeed on their breach of contract
counterclaim; that there is no, or insufficient, evidence of irreparable harm; that the report fails to
balance the hardships on Plaintiff; and that there is insufficient evidence to show that the public
interest is served by the issuance of injunctive relief. Plaintiff further argues that the report
recommends an order that does not comply with the specificity requirement in Federal Rule of Civil
Procedure 65(d), that the report recommends injunctive relief in the absence of a surety bond
sufficient to meet Rule 65(c)’s requirements, and that the report incorrectly suggests that injunctive
relief is properly before the Court.
On February 10, 2015, Defendants Dining Alliance, Inc. and Consolidated Concepts, Inc.
filed their response to Plaintiff’s objections (see Dkt. #41). Defendants argue that Plaintiff’s
objections contradict the terms of injunctive relief it agreed to at oral argument, at the parties’
telephonic hearing, and in Plaintiff’s own proposed order. Defendants further argue that Plaintiff’s
conduct has caused and continues to threaten irreparable harm to them for which money damages
are inadequate because, in the absence of an injunction, Defendants are at risk of losing customers
and good will with customers and prospective customers. Defendants argue that the Magistrate
Judge’s report preserves that status quo by requiring Plaintiff to comply with the terms of the parties’
Strategic Marketing Agreement. Defendants further argue that, having agreed to the grant of
injunctive relief at the hearing before the Magistrate Judge, Plaintiff cannot now complain about the
adequacy of the evidence presented and that, in any event, the evidence submitted by Defendants is
competent and admissible and was more than sufficient to support the Magistrate Judge’s findings

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that Defendants are at a substantial risk of losing their business as a result of Plaintiff’s actions.
Specifically, Defendants counter that sufficient evidence was before the Magistrate Judge to show
a likelihood of success on the merits of their claim that Plaintiff breached the parties’ Strategic
Marketing Agreement by soliciting and entering into direct agreements with the customers
Defendants referred to Plaintiff to manage their produce purchases. Defendants further respond that
the Magistrate Judge correctly balanced the harms here and that public interest weighs in favor of
the injunction.
As to Plaintiff’s objections that the proposed injunction order that does not comply with
Federal Rule of Civil Procedure 65, Defendants respond that the proposed injunction is specific and
describes the acts to be restrained, that Plaintiff did not present any evidence or argument to the
Magistrate Judge regarding a security bond, and that a court may properly elect to require no security
at all under Rule 65. For these reasons, Defendants argue, the Court should accept the Magistrate
Judge’s report in full and order the injunctive relief recommended therein.1
On February 19, 2015, Plaintiff filed its reply to Defendants’ response, arguing that it never
agreed that Defendants were entitled to a preliminary injunction, that Defendants failed to present
competent evidence establishing their entitlement to a preliminary injunction, and that Defendants
wrongly claim that the Magistrate Judge’s recommendations preserve the status quo (see Dkt. #47).
Plaintiff further argues that it did not waive its objections to certain materials presented to the
Magistrate Judge and that it need not introduce evidence of damages to secure a bond.
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The Court notes that Defendants also argue that Plaintiff’s objections fail to comply with
the Court’s local rules because they exceed the page limits. Since the filing of the objections,
Plaintiff sought leave to file an over-length document, and such leave was granted by the
Magistrate Judge on February 20, 2015. (See Dkt. #48).
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The Court has made a de novo review of the objections raised by Plaintiff, as well as
Defendants’ response and Plaintiff’s reply, and is of the opinion that the findings and conclusions
of the Magistrate Judge are correct and the objections are without merit as to the ultimate findings
of the Magistrate Judge. The Court finds that, contrary to Plaintiff’s arguments, the record before
the Court indicates that an agreement was reached by the parties regarding the issuance of injunctive
relief but there was some dispute as to some of the terms of such relief.
Specifically, the record indicates that on December 17, 2014, the Magistrate Judge held a
hearing on the parties’ motion to consolidate Case Numbers 4:14cv505 and 4:14cv755 and on a
motion for injunctive relief filed in 4:14cv755. (See Dkt. #23 & 36). According to the transcript of
that hearing, the Magistrate Judge reviewed with the parties the grounds for injunctive relief, the
materials attached to the motion, and the proposed terms of the relief. The Magistrate Judge then
recessed the hearing to allow counsel to work out terms of an injunction, stating that if the parties
could not resolve it he would allow them to put on any witnesses or evidence as to the matters to
which they could not agree. (Dkt. #36 at PageID #283-84). When the hearing resumed, counsel for
Plaintiff stated that the parties were close to reaching an agreement, and the Magistrate Judge
continued to work with the parties on possible terms of an agreed injunction. The Magistrate Judge
stated that he would recommend injunctive relief as discussed because it was in the Strategic
Marketing Agreement and directed the parties to submit the agreed terms of the injunction to the
Court by December 22, 2014. (Dkt. #36 at PageID#308). On December 18, 2014, the Magistrate
Judge issued a written order reflecting the findings at the December 17, 2014 hearing, granting the
motion to consolidate and directing the parties to file their proposal regarding injunctive relief as a

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Motion for Entry of Agreed Preliminary Injunction in the lead case to ensure clarity in the record.
(Dkt. #24).
Defendants filed their proposal on December 24, 2014, Plaintiffs responded on January 5,
2015, indicating the parties were did not submit a joint proposal because “the parties were unable
to agree to the form and substance of the proposed order.” (See Dkts. #28 & 30). The Magistrate
Judge held a telephonic hearing on the parties’ proposals on January 12, 2015, after which the
Magistrate Judge recommended that Defendants’ proposed injunction be entered. (See Dkts. #31, 33,
& 37). The Court is not convinced by Plaintiff’s objections to the report and recommendation on this
grounds.
The Court notes that the Magistrate Judge based his initial findings regarding injunctive relief
on a consideration of the materials attached to the motion filed prior to the consolidation of two
cases between the parties. According to the Magistrate Judge’s order of consolidation, the motion
was rendered moot to ensure clarity in the record in light of the parties’ agreement and the
consolidation of the cases; it did not invalidate the request for injunctive relief or the Magistrate
Judge’s deliberations at the December 17, 2014 hearing. (See Dkt. #24).
The Court further finds that the recommended injunction preserves that status quo by
requiring Plaintiff to comply with the terms of the parties’ Strategic Marketing Agreement and is
sufficiently specific to comply with Rule 65. The recommended injunction clearly states, in specific
terms, the reasons why it is issued and describes in reasonable detail the acts to be restrained. FED.
R. CIV. P. 65(d)(1). Further, because there is nothing in the record that would show that Plaintiff
requested the issuance of any security in conjunction with the injunctive relief, it cannot form the

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basis of an objection here. The amount, if any, of security is a matter within the Court’s discretion,
and it was within the Magistrate Judge’s discretion to not require any security here, especially when
no argument about a bond was made by Plaintiff. See Corrigan Dispatch Co. v. Casa Guzman, S.
A., 569 F.2d 300, 303 (5th Cir. 1978).
As to Plaintiff’s other objections, the Court further finds that there is sufficient evidence in
the record to support the Magistrate Judge’s findings that Defendants face irreparable harm and do
not have an adequate remedy at law; that Defendants have demonstrated a likelihood of success on
the merits of their claims under the Strategic Marketing Agreement; that Defendants will suffer
irreparable harm in the form of loss of goodwill, harm to reputation, and disruption of their business
occasioned by the loss of business from their customers and members without the issuance of
injunctive relief; that greater injury will be inflicted upon Defendants by denial of injunctive relief
than would be inflicted upon Plaintiff by the granting of such relief; and that the issuance of
injunctive relief will not disserve the public interest.
The Court hereby adopts the findings and conclusions of the Magistrate Judge as the findings

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and conclusions of this Court.
Therefore, Defendants’ Motion for Entry of Preliminary Injunction (Dkt. #28) is GRANTED
and a preliminary injunction will be entered as recommended.
It is SO ORDERED.
SIGNED this 20th day of April, 2015.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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