CMG Mortgage, Inc. d/b/a CMG Financial v. Kaim ( 2023 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CMG MORTGAGE, INC. D/B/A CMG Case No. 23-cv-01101-HSG FINANCIAL, 8 ORDER DENYING MOTION FOR Plaintiff, TEMPORARY RESTRAINING ORDER 9 AND ORDER TO SHOW CAUSE v. 10 Re: Dkt. No. 11 AMIT KAIM, et al., 11 Defendants. 12 13 Pending before the Court is Plaintiff’s motion for a temporary restraining order and order 14 to show cause. Dkt. No. 11 (“TRO Mot.”). After the Court ordered Plaintiff to provide notice, 15 Defendants timely filed an opposition, Dkt. Nos. 20, 33. The Court finds this matter appropriate 16 for disposition without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). 17 The Court DENIES Plaintiff’s motion. 18 I. LEGAL STANDARD 19 Under Federal Rule of Civil Procedure 65, a temporary restraining order may enjoin 20 conduct pending a hearing on a preliminary injunction. See Fed. R. Civ. P. 65(b). The standard for 21 issuing a temporary restraining order and issuing a preliminary injunction are substantially 22 identical. See Stuhlbarg Int'l Sales Co., Inc. v. John D. Brush & Co., 240 F.3d 832, 839, n.7 (9th 23 Cir. 2001). A plaintiff seeking preliminary relief must establish: (1) that she is likely to succeed 24 on the merits; (2) that she is likely to suffer irreparable harm in the absence of preliminary relief; 25 (3) that the balance of equities tips in her favor; and (4) that an injunction is in the public interest. 26 See Winter v. Nat. Res. Def. Council, 555 U.S. 7, 20 (2008). Preliminary relief is “an extraordinary 27 remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such 1 required elements. Leiva-Perez v. Holder, 640 F.3d 962, 966 (9th Cir. 2011). Under the Ninth 2 Circuit's sliding scale approach, a preliminary injunction may issue if there are “serious questions 3 going to the merits” if “a hardship balance [also] tips sharply towards the [movant],” and “so long 4 as the [movant] also shows that there is a likelihood of irreparable injury and that the injunction is 5 in the public interest.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011). 6 II. DISCUSSION 7 A. Plaintiff Fails to Show a Likelihood of Success on the Merits 8 Plaintiff’s complaint raises a single claim for breach of contract. Dkt. No. 1 (“Compl.”) 9 ¶¶ 35-37. Plaintiff is a mortgage lender. Id. ¶ 12. The complaint alleges that defendants Kim and 10 Kaim, former employees of Plaintiff, breached confidentiality agreements by retaining, using, 11 misappropriating, or disclosing Plaintiff’s confidential information. Id. ¶¶ 35-37. In the TRO 12 Motion, Plaintiff argues that the defendants “breached the Confidentiality Agreement by using 13 CMG’s confidential information to solicit CMG customers to divert at least five presently known 14 loans to First Heritage,” their new employer. TRO Mot. at 2 (emphasis in original). But the 15 factual support for this key proposition is weak. Plaintiff’s attorney baldly asserts, with no 16 supporting facts, that “[u]ndoubtedly, the [defendants] maintained, misappropriated, and utilized 17 CMG’s Confidential Information in order to solicit the Diverted Customers away from CMG and 18 to close the loans at First Heritage.” Dkt. No. 12 (Declaration of “W Mason,” one of Plaintiff’s 19 attorneys) at ¶ 7. And Plaintiff’s Executive Vice President of Sales asserts that the company 20 “became alerted to the Defendants’ theft and misappropriation of confidential information when it 21 received information showing that the [defendants] had diverted and closed loans for CMG 22 customers at First Heritage.” Dkt. No. 13 (Rogers Declaration) at ¶ 19. 23 In response, Defendants submit declarations attesting that as to the four (not five) loans 24 actually at issue, they informed the borrowers of their move to First Heritage (in several instances 25 in response to an inquiry from the borrower) and told them that it was up to them whether to bring 26 their business to First Heritage. Dkt. Nos. 33-1 (Kaim Declaration), 33-2 (Kim Declaration). 27 As Defendants note, nothing about these facts supplies a likelihood of succeeding on the 1 explains (rather than asserts) that the loan transactions alleged could only have been executed by 2 || misusing confidential information. See Rogers Decl. at § 24 (asserting, with no supporting facts, 3 || that “[w]ithout CMG’s Confidential Information, the Former Employees would not have been able 4 || to move the Diverted Customers’ loans to First Heritage”). Nor do any of Plaintiff's filings 5 explain what confidential information Defendants supposedly have that they were obligated to 6 || return, but didn’t. Instead, the factual record supports the inference that Defendants informed the 7 borrowers of their change of employment, which is legal, and the borrowers decided to move their 8 || business. See MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 521 (9th Cir. 1993) (“Merely 9 || informing a former employer’s customers of a change of employment, without more, is not 10 || solicitation.”). Plaintiff thus fails to establish a likelihood of success on the merits so as to warrant 11 the extraordinary remedy of a temporary restraining order, and the Court thus need not reach any a 12 of the other factors. See Garcia v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 2015) (explaining that 13 “Tb]lecause it is a threshold inquiry, when a plaintiff has failed to show the likelihood of success on 14 || the merits, we need not consider the remaining three Winter elements” (quotations omitted and 15 || alterations adopted)).! a 16 || I. CONCLUSION = 17 Plaintiff's motion for a temporary restraining order is DENIED. 18 IT IS SO ORDERED. 19 |} Dated: 3/28/2023 HAYWOOD S. GILLIAM, JR. 21 United States District Judge 22 23 24 25 26 ' The Court notes that Plaintiff also fails to show irreparable harm or that the balance of equities tips in its favor. It appears that the parties have been involved for months in a dispute about 07 whether the Defendants are required to return their signing bonuses, which tends to suggest there is no new urgency here. And given the prospect that Defendants may well be engaged in 28 legitimate competition with their former employer, the Court cannot say that either the balance of the equities or the public interest decisively favors Plaintiff at this stage.