Schnitzer Steel Industries, Inc. v. Sessler et al

Filing 79

ORDER DENYING PLAINTIFF'S MOTION FOR A TEMPORARY RESTRAINING ORDER, denying 3 Motion for TRO. Signed by Judge Rosanna Malouf Peterson. (LR, Case Administrator)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF WASHINGTON

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SCHNITZER STEEL INDUSTRIES,
INC.,

NO: 4:17-CV-5040-RMP

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Plaintiff,
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v.

ORDER DENYING PLAINTIFF’S
MOTION FOR A TEMPORARY
RESTRAINING ORDER

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MILTON SESSLER; PACIFIC HIDE
& FUR DEPOT, a Montana
corporation doing business as Pacific
Steel & Recycling; PACIFIC HIDE &
FUR DEPORT, doing business as
Pacific Hide & Fur Depot, a Montana
corporation; PACIFIC HIDE & FUR
DEPOT, INC., a Washington
corporation,
Defendants.

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BEFORE THE COURT is Plaintiff’s Motion for a Temporary Restraining

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Order, ECF No. 3. The Court has reviewed the motion and the record and is fully

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informed.

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Plaintiff filed this suit on March 27, 2017, then filed a Motion for a

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Temporary Restraining Order (“TRO”) on April 7, 2017, ECF No. 3. The Court
ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY
RESTRAINING ORDER ~ 1

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denied Plaintiff’s request to expedite hearing of that motion, ECF No. 9, and

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provided the parties sufficient time to fully brief Plaintiff’s request for preliminary

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relief. See ECF No. 41. An evidentiary hearing was held on May 24, 2017, and

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the Court heard oral argument regarding Plaintiff’s requests. Plaintiff was

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represented by attorneys of record, Richard Hunt and Kevin Curtis. James King

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and Samuel Thilo appeared on behalf of Defendant Sessler; and Kimberly Kamel

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and Timothy Lawlor appeared on behalf of the Pacific Defendants.

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DISCUSSION

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The Court may enter a temporary restraining order pursuant to FED. R.

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CIV. P. 65, which states in relevant part:

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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.

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Although Plaintiff sought a temporary restraining order on an expedited

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basis, see ECF No. 3 at 4, Plaintiff clarified its intent to allow Defendants to

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respond to the motion for a TRO. See ECF No. 9. In any case, the Court found an

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insufficient basis to grant a TRO without full briefing by the parties regarding

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Plaintiff’s request for the TRO. See ECF No. 41.

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“The standard for issuing a temporary restraining order is the same as that
for the issuance of preliminary injunction.” Dahlstrom v. Sauk-Suiattle Indian
ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY
RESTRAINING ORDER ~ 2

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Tribe of Washington, No. C16-0052JLR, 2017 WL 413201, at *2 (W.D. Wash.

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Jan. 31, 2017) (citing New Motor Vehicle Bd. of Cal. v. Orrin W. Fox Co., 434

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U.S. 1345, 1347 n.2 (1977)). A preliminary injunction is “an extraordinary and

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drastic remedy, one that should not be granted unless the movant, by a clear

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showing, carries the burden of persuasion.” (emphasis in original). Lopez v.

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Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012) (quoting Mazurek v. Armstrong, 520

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U.S. 968, 972 (1997) (per curiam)). Ordinarily, to obtain a preliminary injunction,

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the moving party must “demonstrate that (1) he is likely to succeed on the merits of

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such a claim; (2) he is likely to suffer irreparable harm in the absence of

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preliminary relief; (3) the balance of equities tips in his favor; and (4) that an

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injunction is in the public interest.” Lopez, 680 F.3d at 1072 (citing Winter v.

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Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)).

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In conjunction with the four-part post-Winter test, the Ninth Circuit Court of

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Appeals has stated that “serious questions going to the merits and a balance of

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hardships that tips sharply towards the plaintiff can support issuance of a

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preliminary injunction, so long as the plaintiff also shows that there is a likelihood

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of irreparable injury and that the injunction is in the public interest.” League of

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Wilderness Defs./Blue Mountains Biodiversity Project v. Connaughton, 752 F.3d

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755, 759 n.1 (9th Cir. 2014) (quoting Alliance for the Wild Rockies v. Cottrell, 632

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F.3d 1127, 1135 (9th Cir. 2011)).

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ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY
RESTRAINING ORDER ~ 3

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(1) Likelihood of success on the merits

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Plaintiff alleges that Defendant Sessler signed an employment agreement

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with Plaintiff and that Mr. Sessler violated the terms of the agreement following

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his transfer to Defendant Pacific. See ECF No. 3 at 4. However, Defendants have

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submitted evidence and raised serious questions about the enforceability of the

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alleged employment agreement and the terms that underlie a number of Plaintiff’s

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claims. See e.g., ECF No. 25 at 4-5. At this juncture, the Court finds that Plaintiff

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has failed to demonstrate that Plaintiff is likely to succeed on the merits of its

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claims that are based on the relevant contract that may not be enforceable.

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Two of Plaintiff’s employees testified at the hearing that Plaintiff will suffer

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irreparable injury without the TRO because of the “trade secrets” and

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“confidential” and “proprietary information” that they allege were taken and used

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by Mr. Sessler when he left Plaintiff’s company to work for Pacific. However, the

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Court finds that Plaintiff’s allegations are not supported by persuasive evidence,

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but rather are based on Plaintiff’s assumptions and speculations.

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In rebuttal, Mr. Sessler testified that although he had forwarded some of

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Plaintiff’s documents to his personal email account with the idea that he could

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adapt the format to use in his new job, that he either deleted those documents or

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removed them from his computer and returned them to Plaintiff prior to the hearing

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in this matter. Mr. Sessler credibly testified that he never used the documents for

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the benefit of his new employer, Pacific, or for his own business interests.
ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY
RESTRAINING ORDER ~ 4

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In addition, the CEO of Pacific, Jeff Millhollin, also testified that he never

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saw or used any of the relevant documents from Plaintiff, and that he never asked

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Mr. Sessler to solicit employees from Plaintiff’s company. Mr. Millhollin also

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testified that he ordered Mr. Sessler to return all of Schnitzer’s documents to them.

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Further, Mr. Millhollin directed Mr. Sessler and his subordinate, who also had

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worked previously for Schnitzer, to only contact suppliers and customers in the

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Spokane area.

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Based on the testimony presented at the evidentiary hearing, the Court finds

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that Mr. Sessler returned or deleted all of the documents that Plaintiff alleges were

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improperly taken. The Court also finds that at this juncture, Plaintiff has failed to

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establish any wrongdoing by Pacific as there is no evidence that Pacific ever saw

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or used the relevant documents or any information that Mr. Sessler had taken from

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Plaintiff.1 Therefore, Plaintiff has failed to establish a sufficient likelihood of

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success on any claim that is before the Court. The first of the Court’s four

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considerations weighs heavily in Defendants’ favor.

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/ / /

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The Court is not making a finding regarding whether Pacific would have

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committed wrongdoing had they used the information to their benefit. Plaintiff has
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not yet proved the validity and enforceability of the alleged contract signed by Mr.
Sessler.

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ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY
RESTRAINING ORDER ~ 5

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(2) Irreparable harm

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Failure to show that irreparable harm will result in the absence of a

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preliminary injunction is fatal to a request for such relief. See All. for the Wild

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Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011) (“Winter tells us that

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plaintiffs may not obtain a preliminary injunction unless they can show that

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irreparable harm is likely to result in the absence of the injunction.”). Plaintiff

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argues that Defendants already have been taking customers and employees from

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Plaintiff and could continue to do so absent a TRO or preliminary injunction, and

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that “[i]ntangible injuries such as threatened loss of goodwill can result in

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irreparable harm.” ECF No. 3 at 8.
As the Court finds that all relevant information was returned without being

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used and that Plaintiff has not established that Defendants improperly solicited any

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of Plaintiff’s employees, the Court also finds that there is no impending harm.

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However, even if the Court were to accept the validity of Plaintiff’s arguments,

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Plaintiff fails to show how a preliminary injunction is necessary to show

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irreparable harm. Plaintiff does not allege any damage that could not be

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quantified as monetary damages in the event that Plaintiff were to succeed at trial.

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The Court finds that Plaintiff has failed to make an adequate showing of

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irreparable harm that would justify the “extraordinary and drastic remedy” of a

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preliminary injunction or a TRO.

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ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY
RESTRAINING ORDER ~ 6

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(3) The balance of equities

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Plaintiff argues that it may lose additional customers, employees, and “good

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will” without preliminary relief. See generally ECF No. 3. However, as

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previously stated, Plaintiff’s evidence fails to demonstrate how these alleged

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hardships could not be remedied by monetary damages if they are proven at trial.

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Furthermore, the only supplier that Plaintiff could reference as an example of lost

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business, Sutton, has since returned its business to Plaintiff.

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On the other hand, imposing restrictions on Defendants’ businesses absent

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good cause would be an unjust remedy. Given the Court’s findings at this

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preliminary stage of litigation, any damage that Plaintiff might suffer is far

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outweighed by the unreasonable restrictions that would be imposed upon

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Defendants by a TRO. In addition, Plaintiff already is forcing Pacific and Mr.

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Sessler to face significant litigation costs to respond to voluminous filings in this

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case. Considering the foregoing, the balance of the equities tips heavily in

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Defendants’ favor.

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(4) Public Interest

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Plaintiff argues that the public has an interest in the enforcement of valid

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contracts and the restraint of unfair competition.2 See ECF No. 3 at 10. As

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Plaintiff also references public interest in enforcing statutes and protecting business

investments; however, it has failed to demonstrate how a TRO would serve such purposes here.

ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY
RESTRAINING ORDER ~ 7

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previously discussed, the enforceability of the contract terms relied upon by

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Plaintiff is questionable, and Plaintiff’s allegations of unfair competition and theft

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of trade secrets are unfounded at this stage of litigation. The public interest is not

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served by Court orders that limit business activities absent just cause.

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CONCLUSION
In light of the foregoing considerations, the Court finds that entering a TRO

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or a preliminary injunction would not be appropriate in this matter. Accordingly,

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IT IS HEREBY ORDERED that Plaintiff’s Motion for a Temporary Restraining

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Order, ECF No. 3, is DENIED.

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The District Court Clerk is directed to enter this Order and provide copies to
counsel.
DATED May 26, 2017.
s/ Rosanna Malouf Peterson
ROSANNA MALOUF PETERSON
United States District Judge

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ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY
RESTRAINING ORDER ~ 8