Nulife Ventures, Inc. v. Avacen, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 NULIFE VENTURES, INC., a Nevada Case No. 20-cv-2019-BAS-KSC Corporation, 12 ORDER DENYING EX PARTE Plaintiff, 13 MOTION FOR TEMPORARY v. RESTRAINING ORDER (ECF No. 4) 14 AVACEN, INC., a Wyoming Corporation 15 formerly known as Avacen Medical, Inc. 16 d/b/a Avacen Medical, et al., 17 Defendants. 18 19 Pending before the Court is the Ex Parte Application for Temporary Restraining 20 Order filed by Plaintiff Nulife Ventures, Inc., against Defendants AVACEN, Inc., and its 21 executives. (ECF No. 4.) The Court finds the motion suitable for determination on the 22 papers submitted and without oral argument. See Fed. R. Civ. P. 78(b); Civ. L.R. 7.1(d)(1). 23 For the reasons stated below, the Court denies the application. 24 I. BACKGROUND 25 NuLife is a multi-level marketing (MLM) company, which relies on “a network of 26 business owners,” entitled Independent Brand Partners (IBPs), through which NuLife 27 markets its products. (See Mot. TRO, Ex. 12 (“Adams Decl.”) ¶ 2, ECF No. 4-12; Ex. 3 28 (NuLife Ventures Policies and Procedures) § 1.1, ECF No. 4-3.) “NuLife’s compensation 1 plan incentivizes its IBPs to recruit and sponsor others in becoming part of the NuLife sales 2 network.” (Adams Decl. ¶ 2.) NuLife alleges that AVACEN became its IBP on March 5, 3 2019. (Id. ¶ 5.) NuLife alleges that under the Independent Brand Partner Application & 4 Agreement (“IBP Agreement”), AVACEN was contractually bound not to solicit other 5 IBPs to compete with NuLife’s business; recruit NuLife customers or IBPs for other MLM 6 businesses; use NuLife’s proprietary information to compete with NuLife; or maintain a 7 website related to NuLife’s business without first obtaining NuLife’s written approval. (Id. 8 ¶¶ 3–4; see Mot. TRO Ex. 2 (IBP Agreement), ECF No. 4-2.) 9 NuLife alleges that, in September 2020, AVACEN breached the IBP agreement by 10 launching its own MLM business and recruiting NuLife’s sales force to sell the same 11 medical devices sold by NuLife. (Adams Decl. ¶¶ 4–9, 11–15.) According to NuLife, 12 AVACEN invited NuLife’s IBPs to attend Zoom meetings, in which AVACEN’s 13 executives discussed AVACEN’s launch of a new MLM business selling the same medical 14 devices offered by NuLife. (Mot. TRO Ex. 11 (“Doran Decl.”) ¶¶ 2–8.) NuLife alleges 15 that they have confirmed that more than 60 NuLife IBPs are now registered as AVACEN’s 16 sales force. (Adams Decl. ¶ 14.) NuLife alleges that AVACEN continues to conduct the 17 weekly meetings designed to recruit NuLife IBPs. (Id. ¶ 9.) NuLife also alleges that 18 AVACEN maintains a sales website, https://shop.avacen.com/, which markets and accepts 19 customer orders for some of the same products sold by NuLife that constitute NuLife’s 20 primary source of revenue. (Adams Decl. ¶ 15.) 21 NuLife filed this suit on October 14, 2020, raising causes of action for breach of 22 contract, intentional interference with contractual relations, intentional interference with 23 prospective economic relations, and misappropriation of trade secrets. (Compl. ¶¶ 23–80, 24 ECF No. 1.) Claiming irreparable economic injury, NuLife filed the present application 25 for an ex parte temporary restraining order to enjoin AVACEN from (1) operating a 26 competing MLM company; (2) recruiting NuLife’s IBPs; (3) using NuLife’s customer 27 lists, IBP names, and IBP contact information; and (4) operating a website to sell the same 28 medical devices sold by NuLife. (Mot. TRO, ECF No. 4.) 1 II. ANALYSIS 2 Under Rule 65 of the Federal Rules of Civil Procedure, the court may issue a 3 temporary restraining order without notice to the nonmoving party only if: 4 (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 5 before the adverse party can be heard in opposition; and 6 (B) the movant’s attorney certifies in writing any efforts made to give notice 7 and the reasons why it should not be required. 8 9 Fed. R. Civ. P. 65(b)(1). “[T]he stringent requirements embodied in Rule 65(b) recognize 10 that ‘our entire jurisprudence runs counter to the notion of court action taken before 11 reasonable notice and an opportunity to be heard has been granted both sides of a dispute.’” 12 Adobe Sys., Inc. v. S. Sun Prod., Inc., 187 F.R.D. 636, 638–39 (S.D. Cal. 1999) (citing 13 Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 438–39 (1974)). 14 “A temporary injunction can be an extremely powerful weapon, and when such an order is 15 issued ex parte, the dangers of abuse are great.” Id. at 639 (citing Am. Can Co. v. 16 Mansukhani, 742 F.2d 314, 324 (7th Cir. 1984)). 17 The foundation of injunctive relief under Rule 65 “is irreparable harm and 18 inadequacy of legal remedies.” Los Angeles Mem’l Coliseum Comm’n v. Nat’l Football 19 League, 634 F.2d 1197, 1202 (9th Cir. 1980). Ordinarily, “the temporary loss of income, 20 ultimately to be recovered, does not usually constitute irreparable injury.” Sampson v. 21 Murray, 415 U.S. 61, 90 (1974). 22 NuLife’s motion for a temporary restraining order is denied. An ex parte temporary 23 restraining order is usually limited to situations where “it is impossible to give notice to 24 the adverse party because the plaintiff does not know the party’s identity or location” or 25 where “proceeding ex parte is the ‘sole method of preserving a state of affairs in which the 26 court can provide effective final relief.’” Adobe Sys., 187 F.R.D. at 639 (citing Matter of 27 Vuitton et Fils S.A., 606 F.2d 1, 4 (2d Cir. 1979)). NuLife does not argue that its application 28 falls under those two limited situations. The motion does not say it is impossible to give 1 notice to Defendants. NuLife has not persuaded the Court that ex parte injunctive relief is 2 the only effective final relief available to preserve the status quo in this case. 3 Moreover, NuLife has not met the requirements set forth in Rule 65(b)(1). NuLife’s 4 counsel has not certified in writing “any efforts made to give notice and the reasons why it 5 should not be required.” Fed. R. Civ. P. 65(b)(1)(B). NuLife has not shown that it would 6 sustain an irreparable injury without the temporary restraining order. See Fed. R. Civ. P. 7 65(b)(1)(A). To the extent that NuLife argues that it will permanently lose its sales force 8 and revenue stream because of Defendants’ competition in violation of a contract, NuLife 9 does not support its argument with requisite proof. While “[t]he threat of being driven out 10 of business” may establish irreparable injury, declarations by the plaintiff-entity’s own 11 management, standing alone, are usually not enough to show that the plaintiff’s ongoing 12 business concern would be threatened without injunctive relief. See Am. Passage Media 13 Corp. v. Cass Commc’ns, Inc., 750 F.2d 1470, 1474 (9th Cir. 1985) (holding that the CEO 14 of the plaintiff company’s statement of actual revenue losses in the foregoing year and the 15 predicted revenue losses in the following year, standing alone, was not enough to show that 16 the plaintiff was threatened with extinction); see also Dimare Fresh, Inc. v. Sun Pac. Mktg. 17 Coop., Inc., No. CIVF 06 1265 AWI SMS, 2006 WL 2686969, at *3 (E.D. Cal. Sept. 19, 18 2006) (finding that the plaintiff did not show irreparable injury based on the theory that the 19 loss of revenue from the defendant’s conduct would be so great to threaten the existence 20 of the plaintiff’s ongoing business concern, where the plaintiff’s sole evidence was the 21 declaration of its own employee). 22 Here, NuLife relies on the declarations of NuLife’s executives, who allege that 23 AVACEN continues to host weekly online meetings to recruit NuLife’s IBPs; AVACEN 24 is “causing substantial harm to NuLife each day that it operates this competing company”; 25 and NuLife’s “ongoing loss of revenue and IBPs has been devastating to [NuLife] and 26 threatens the viability of NuLife if not promptly stopped.” (Doran Decl. ¶¶ 5–9; Adams 27 Decl. ¶ 16.) These allegations are not enough to show that the complained-of injury is 28 1 irreparable or that it cannot be addressed by monetary damages. See Am. Passage Media 2 || Corp., 750 F.2d at 1474; Dimare Fresh, Inc., 2006 WL 2686969, at *3. 3 Because Plaintiff's application for an ex parte temporary restraining order does not 4 || satisfy the requirements of Rule 65(b), the Court denies the application. 5 CONCLUSION 6 The Court denies Plaintiff's Ex Parte Application for Temporary Restraining Order. 7 || (ECF No. 4.) If Plaintiff wishes to seek injunctive relief, it may bring a noticed motion for 8 preliminary injunction under Rule 65(a), filed and served in accordance with Civil Local 9 || Rule 7.1. 10 IT IS SO ORDERED. 1] /) ) 12 || DATED: October 19, 2020 (Yin 4 (Lyohan. 6 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 □□□