Tk Services, Inc. v. Rwd Consulting, LLC , 263 F. Supp. 3d 64 ( 2017 )


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  •                        UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF COLUMBIA
    ____________________________________
    )
    TK SERVICES, INC.,                  )
    )
    Plaintiff,        )
    )
    v.                            )   Civil Action No. 17-1152 (ABJ)
    )
    RWD CONSULTING, LLC,                )
    )
    Defendant.         )
    ____________________________________)
    MEMORANDUM OPINION
    Plaintiff TK Services, Inc. (“TKS”) has brought this breach of contract action against
    defendant RWD Consulting, LLC (“RWD”). TKS alleges that RWD wrongfully breached an
    agreement between the parties by excluding it from working on a government contract, and that
    RWD converted TKS’s property by unlawfully removing contract funds belonging to TKS from a
    jointly controlled bank account. Compl. [Dkt. # 1]. After the complaint was filed, TKS filed a
    motion for a preliminary injunction. Pl.’s Mot. for Prelim. Inj. [Dkt. # 2] (“PI Mot.”); Mem. of P.
    & A. in Supp. of Mot. [Dkt. # 2] (“PI Mem.”). Defendant opposed the motion, Mem. of P. & A.
    in Opp. to PI Mot. [Dkt. # 10] (“PI Opp.”), and it also filed a motion to dismiss and to compel
    arbitration. Def.’s Mot. to Dismiss Pl.’s Compl. & Compel Arb. [Dkt. # 8] (“Def.’s Mot.”).
    Plaintiff filed a reply in support of its motion for a preliminary injunction, and an opposition to the
    motion to dismiss and to compel arbitration. Pl.’s Reply Br. in Supp. of PI Mot. [Dkt. # 12] (“Pl.’s
    Reply”); Mem. of P. & A. in Resp. to Def.’s Mot. [Dkt. # 13] (“Pl.’s Opp.”). For the reasons set
    forth below, the Court concludes that the arbitration agreement is enforceable, that TKS must
    arbitrate its claims against RWD, and that TKS is not entitled to an injunction in aid of the
    arbitration. Therefore, it will grant defendant’s motions to dismiss and compel arbitration, and it
    will deny the motion for a preliminary injunction as moot.
    BACKGROUND
    TKS is a Virginia corporation; its business is government contracting, and it specializes in
    providing engineering, maintenance, and operational services for government facilities managed
    by the General Services Administration. Compl. ¶ 7. In early 2016, TKS began to discuss a
    proposal with RWD, a Virginia company owned and managed by Robert W. Dozier, Jr., to provide
    operations and maintenance services for the EPA headquarters located at 1201 Constitution
    Avenue NW in Washington. 
    Id. ¶ 9.
    TKS was aware of the opportunity because it was the
    incumbent subcontractor at the time, working as a subcontractor to Chimes DC. 
    Id. On February
    23, 2016, in anticipation of RWD’s receiving a subcontract from Chimes,
    TKS and RWD entered into a Mentor Subcontractor’s Service Agreement. Compl. ¶ 11; Decl. of
    Robert Dozier, Jr. [Dkt. # 10-1] (“Dozier Decl.”) ¶ 7; Ex. A to Compl. [Dkt. # 1] (“Mentor
    Agreement”). On July 1, 2016, Chimes awarded a subcontract to RWD, which the parties refer to
    as the “Chimes Contract.” Compl. ¶ 12; Dozier Decl. ¶ 9. Under the Chimes Contract, RWD
    became the prime subcontractor responsible for providing operation and maintenance-related
    services for the EPA building. Compl. ¶ 12; Dozier Decl. ¶ 9. TKS and RWD then agreed that
    any work performed under the Chimes Contract would be performed in accordance with the
    Mentor Agreement. Compl. ¶ 12; Dozier Decl. ¶ 9.
    Under the Mentor Agreement, TKS was responsible for managing the work required by
    the Chimes Contract. Compl. ¶ 16; Dozier Decl. ¶ 15; Mentor Agreement at 8. TKS would receive
    all of the profits under the Chimes Contract, but it was required to pay RWD a fee of $5,000 per
    month. Compl. ¶ 16; Dozier Decl. ¶ 21; Mentor Agreement at 9.
    2
    The Mentor Agreement required that all funds received under the Chimes Contract were to
    be deposited into a joint bank account to which both TKS and RWD were signatories. Compl.
    ¶ 17; Dozier Decl. ¶ 10; Mentor Agreement at 9. Money could only be withdrawn from the joint
    account under the terms provided for in the Mentor Agreement. Compl. ¶ 17; Mentor Agreement
    at 9–10. TKS alleges that it was entitled to a payment of $275,051.47 for the profits attributable
    to the Chimes Contract, but that it was only paid $210,000. 
    Id. ¶ 20.
    1
    The contract also provided that TKS was required to provide “working capital” for the
    work to be done on the Chimes Contract, and the agreement prohibited RWD from withdrawing
    any portion of those funds. Mentor Agreement at 8. TKS alleges that it contributed over $140,000
    in working capital to the joint account. Compl. ¶ 18.
    The Mentor Agreement also governed the distribution of profits arising from “reimbursable
    projects” that were separate from the Chimes Contract. Mentor Agreement at 9. Fifty-one percent
    of those profits were to be distributed to RWD, and forty-nine percent of the profits were to be
    distributed to TKS. 
    Id. TKS alleges
    that it is entitled to its share of those profits for the period
    between July 1, 2016 and March 24, 2017, which it calculates to be $38,121.13. Compl. ¶ 22. The
    complaint states that TKS has not been paid its share of the profits for the reimbursable projects.
    
    Id. TKS also
    alleges that it supplied equipment valued in excess of $22,500 that was to be used
    to fulfill the parties’ obligations under the Chimes Contract. Compl. ¶ 23.
    1       The Chief Executive Officer of RWD, Robert Dozier, states in a declaration that TKS held
    a debit card for the joint account, and that the Special Controller for TKS, William Arnold, signed
    all checks related to the joint account. Dozier Decl. ¶¶ 2, 11. RWD’s principal also avers that it
    was this TKS employee that was “responsible for protecting TKS’ interest in the Deposit Account
    and ensuring that TKS received its share of profits and distributions under the Agreement.” 
    Id. 3 According
    to TKS, on March 23, 2017, without prior warning or notice, RWD withdrew
    all of the funds from the joint account – a total of approximately $35,000 – and it terminated TKS’s
    online access to the joint bank account. Compl. ¶ 24. TKS alleges that RWD took actions to
    exclude TKS from accessing the EPA building, and that RWD took steps to unilaterally terminate
    the Mentor Agreement. 
    Id. ¶ 25.
    2 Based on these facts, TKS sued for breach of contract on June
    13, 2017, and it states that – in addition to the value of its equipment – it is entitled to a minimum
    of $34,000 per month of profit for the months of March and April 2017, and that it continues to be
    damaged in that amount for each month that it is excluded from the EPA building. 
    Id. ¶¶ 29–31.
    Count I of the complaint alleges that RWD breached the Mentor Agreement by unilaterally
    terminating it, and by not properly compensating TKS. Compl. ¶¶ 32–39. In Count II, TKS alleges
    that RWD is liable for conversion of funds that rightfully belong to TKS. 
    Id. ¶¶ 40–51.
    Count III
    alleges that RWD has been unjustly enriched by its improper conduct. 
    Id. ¶¶ 52–59.
    And Count
    IV requests equitable and injunctive relief, including an accounting, an award of pre-judgment
    attachment of funds, and an injunction that requires the profits from the Chimes Contract to be
    sequestered, prevents RWD from excluding TKS from the EPA building and from the joint bank
    account, and reinstates TKS to its prior role under the Mentor Agreement. 
    Id. ¶¶ 60–66.
    Pursuant
    to Federal Rule of Civil Procedure 62, TKS filed a motion for a preliminary injunction based on
    the same factual allegations. PI Mot.
    2       RWD paints a different picture in its pleadings. In a declaration submitted in opposition
    to the motion for preliminary injunction, Robert Dozier, the Chief Executive Officer of RWD,
    avers that the termination of the contract was due to complaints about TKS’s management of the
    payroll system, and its failure to address certain issues at the EPA building. Dozier Decl. ¶¶ 18,
    20. RWD admits that it terminated TKS’s access to the joint account, Dozier Decl. ¶ 29, but it
    contests the allegation that it did so without notice. See 
    id. ¶ 18.
                                                      4
    The complaint and motion for preliminary injunction are premised upon the Mentor
    Agreement, but the contract contains an arbitration clause:
    ARBITRATION. Any controversy or claim between the PARTIES arising
    out of or in connection with this Agreement, including any claim concerning
    an alleged breach hereof, shall be subject to final settlement by arbitration.
    Notice of demand by any PARTY for arbitration of any matter must be
    given to the other PARTIES within one (1) year from the date on which the
    controversy occurred or the claim arose.
    The arbitration shall be conducted by a single arbitrator in
    accordance with the Rules of Arbitration of the American Arbitration
    Association, as then in effect. If and to the extent that it is necessary or
    appropriate to refer to and apply the law of a particular jurisdiction in
    reaching a decision on any matter submitted to arbitration under this clause,
    the arbitrator shall be authorized and directed to refer to and apply the laws
    of the State where the FACILITY is located.
    The award rendered by the arbitrator shall be final and binding on
    all PARTIES and judgment may be entered upon such award by any court
    having jurisdiction over the PARTY against which the award is sought to
    be enforced. In no event shall this paragraph be construed as conferring
    upon any court authority to inquire into and review any such award on its
    merits. Each PARTY shall bear its own costs in connection with any
    arbitration proceedings, except that fees or other charges of the arbitrator or
    of the American Arbitration association shall be borne equally by the
    Parties.
    Mentor Agreement ¶ 11.
    STANDARD OF REVIEW
    I.     Motion to compel arbitration
    By enacting the Federal Arbitration Act, Congress adopted “a liberal federal policy
    favoring arbitration agreements, notwithstanding any state substantive or procedural policies to
    the contrary.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 
    460 U.S. 1
    , 24 (1983). The
    FAA provides that an arbitration agreement “shall be valid, irrevocable, and enforceable, save
    upon any grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
    However, since arbitration is a matter of contract, parties cannot be compelled to arbitrate their
    5
    disputes unless they have agreed to do so. First Options of Chi., Inc. v. Kaplan, 
    514 U.S. 938
    , 943
    (1995). When one party resists arbitration, the opposing party may petition any United States
    district court that would otherwise have subject-matter jurisdiction “for an order directing that such
    arbitration proceed in the manner provided for in [their written arbitration] agreement.” 9 U.S.C.
    § 4. When presented with such a motion, the court should bear in mind that the FAA creates a
    strong presumption favoring the enforcement of arbitration agreements, and that “any doubts
    concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H.
    
    Cone, 460 U.S. at 24
    –25.
    “The Supreme Court has set out ‘the proper framework for deciding when disputes are
    arbitrable.’” Dist. No. 1, Pac. Coast Dist., Marine Eng’rs’ Beneficial Ass’n, AFL–CIO v. Liberty
    Mar. Corp., 
    815 F.3d 834
    , 844 (D.C. Cir. 2016), quoting Granite Rock Co. v. Int’l Bhd. of
    Teamsters, 
    561 U.S. 287
    , 296 (2010). “Under that framework, a court may order arbitration of a
    particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute.”
    
    Id. (emphasis in
    original).
    Though defendant’s motion is styled as a motion to dismiss, a motion that seeks to compel
    or preclude arbitration is evaluated under the summary judgment standard. Aliron Int’l, Inc. v.
    Cherokee Nation Indus., Inc., 
    531 F.3d 863
    , 865 (D.C. Cir. 2008). “How the parties style the
    motion seeking arbitration is not determinative.” Booker v. Robert Half Int’l, Inc., 
    315 F. Supp. 2d
    94, 99 (D.D.C. 2004), aff’d, 
    413 F.3d 77
    (D.C. Cir. 2005). Under this standard, the party
    seeking to compel arbitration must first present “evidence sufficient to demonstrate an enforceable
    agreement to arbitrate.” Haire v. Smith, Currie & Hancock LLP, 
    925 F. Supp. 2d 126
    , 129 (D.D.C.
    2013), quoting Hill v. Wackenhut Servs. Int’l, 
    865 F. Supp. 2d 84
    , 89 (D.D.C. 2012). “The burden
    then shifts to [the non-moving party] to show that there is a genuine issue of material fact as to the
    6
    making of the agreement, using evidence comparable to that identified in Fed. R. Civ. P. 56.” 
    Hill, 865 F. Supp. 2d at 89
    . The Court will compel arbitration if the pleadings and the evidence show
    that “there is no genuine issue as to any material fact and that the moving party is entitled to
    judgment as a matter of law.” Booker, 
    315 F. Supp. 2d
    at 99, quoting Fed. R. Civ. P. 56(c).
    II.    Motion for a preliminary injunction
    A preliminary injunction is an “extraordinary and drastic remedy” that is “never awarded
    as [a matter] of right.” Munaf v. Geren, 
    553 U.S. 674
    , 689–90 (2008) (internal citations omitted).
    To obtain a preliminary injunction, a plaintiff must make a “clear showing that [it] is entitled to
    such relief” by establishing that: 1) it is likely to succeed on the merits; 2) it is likely to suffer
    irreparable harm in the absence of preliminary relief; 3) the balance of equities tips in its favor;
    and 4) an injunction serves the public interest. Winter v. Natural Res. Def. Council, Inc., 
    555 U.S. 7
    , 20, 22 (2008).
    The manner in which courts should weigh the four factors “remains an open question” in
    this circuit. Aamer v. Obama, 
    742 F.3d 1023
    , 1043 (D.C. Cir. 2014). This Circuit has long adhered
    to the “sliding scale” approach, where “a strong showing on one factor could make up for a weaker
    showing on another.” Sherley v. Sebelius, 
    644 F.3d 388
    , 392 (D.C. Cir. 2011). But because the
    Supreme Court’s decision in Winter “seemed to treat the four factors as independent
    requirements,” the Court of Appeals has “read Winter at least to suggest if not to hold ‘that a
    likelihood of success is an independent, free-standing requirement for a preliminary injunction.’”
    
    Id. at 392–93,
    quoting Davis v. Pension Benefit Guar. Corp., 
    571 F.3d 1288
    , 1296 (D.C. Cir. 2009)
    (Kavanaugh, J., concurring). The D.C. Circuit has not yet decided whether the “‘sliding scale’
    approach remains valid after Winter.” League of Women Voters v. Newby, 
    838 F.3d 1
    , 7 (D.C.
    Cir. 2016).
    7
    In any event, it remains the law in this Circuit that a movant must demonstrate irreparable
    harm, which has “always” been “[t]he basis of injunctive relief in the federal courts.” Sampson v.
    Murray, 
    415 U.S. 61
    , 88 (1974), quoting Beacon Theatres, Inc. v. Westover, 
    359 U.S. 500
    , 506–
    07 (1959). A failure to show irreparable harm is grounds for the court to refuse to issue a
    preliminary injunction, “even if the other three factors entering the calculus merit such relief.”
    Chaplaincy of Full Gospel Churches v. England, 
    454 F.3d 290
    , 297 (D.C. Cir. 2006); see also
    GEO Specialty Chems., Inc. v. Husisian, 
    923 F. Supp. 2d 143
    , 147 (D.D.C. 2013) (“[A] court may
    refuse to issue an injunction without considering any other factors when irreparable harm is not
    demonstrated.”).
    ANALYSIS
    There is no dispute in this case that the parties entered into an enforceable agreement to
    arbitrate. The contract plaintiff attached as an exhibit to its own motion for preliminary injunction
    contains the binding arbitration clause, see Mentor Agreement ¶ 11, and plaintiff concedes that the
    clause covers all of the claims in its complaint, except for Count IV, which requests equitable
    relief. Pl.’s Opp. at 5 (“Plaintiff acknowledges that the counts for breach of contract, unjust
    enrichment, and conversion that are set forth in the Complaint are subject to arbitration.”). But
    plaintiff urges the Court to reach the merits of the motion for a preliminary injunction anyway,
    arguing that the arbitration clause “does not specifically address injunctive or other equitable relief,
    and it does not provide that arbitration is the sole and exclusive forum for determination of interim
    injunctive relief.” 
    Id. at 4.
    This argument is not consistent with the broad, clear, mandatory language of the arbitration
    clause. The parties agreed that “[a]ny controversy or claim between the [parties] arising out of or
    in connection with this Agreement, including any claim concerning an alleged breach . . . shall be
    8
    subject to final settlement by arbitration.” Mentor Agreement ¶ 11 (emphasis added). So the fact
    that claims for injunctive relief are not specifically mentioned does not lead to the conclusion that
    they were carved out; the plain reading of the provision suggests that any carve out had to be
    explicit.
    This conclusion is bolstered by the fact that an exception for injunctive relief was not
    necessary because the rules of the arbitral forum provide for interim and injunctive relief. The
    American Arbitration Association (“AAA”) – the entity to which the parties agreed in the Mentor
    Agreement to submit disputes – has promulgated rules that govern its arbitrations, including that
    “[a] party in need of emergency relief prior to the constitution of the panel shall notify the AAA
    and all other parties in writing of the nature of the relief sought and the reasons why such relief is
    required on an emergency basis.” Am. Arb. Ass’n., Commercial Arbitration Rules & Mediation
    Process     at   24   (Oct.   1,     2013),   https://adr.org/sites/default/files/document_repository/
    Commercial%20Rules.pdf; see also Mentor Agreement ¶ 11 (“The arbitration shall be conducted
    by a single arbitrator in accordance with the Rules of Arbitration of the American Arbitration
    Association, as then in effect.”).
    Plaintiff also contends that the Court has the power to enter an injunction to maintain the
    status quo while the arbitration is pending. Pl.’s Opp. at 5–6. But the cases cited by plaintiff limit
    that authority to particular circumstances, and they call for a showing in addition to, and different
    from, the sort of harm that would support preliminary injunctive relief. “When the parties have
    agreed to arbitrate a dispute, a court may issue an injunction if, in addition to the usual equitable
    concerns, the integrity of the arbitration process would be threatened absent interim relief.” Am.
    Postal Workers Union, AFL-CIO v. USPS, 
    372 F. Supp. 2d 83
    , 90–91 (D.D.C. 2005), quoting Int’l
    Bhd. of Elec. Workers, Local 1900 v. PEPCO, 
    634 F. Supp. 642
    , 643 (D.D.C. 1986). “[A]n
    9
    injunction in aid of arbitration is appropriate . . . only when the actual or threatened harm to the
    aggrieved party amounts to a frustration or vitiation of arbitration.” 
    Id. at 91,
    quoting Local Lodge
    No. 1266, Int’l Ass’n of Machinists & Aerospace Workers, AFL-CIO v. Panoramic Corp., 
    668 F.2d 276
    , 286 (7th Cir. 1981).
    Plaintiff has not begun to make the necessary showing – indeed, it does not expressly argue
    that there is some threat to the arbitration itself. In its memorandum in support of the motion for
    a preliminary injunction plaintiff makes a passing statement that RWD is “permanently dissipating
    the source of funds intended for payment to TKS.” PI Mem. at 5–6. But this unsupported
    conclusory allegation does not constitute evidence that the integrity of the arbitration is at risk or
    that RWD will be unable to fund an eventual award.
    Plaintiff posits that the arbitration process will be “essentially meaningless” absent an
    injunction because TKS will suffer irreparable harm in the meantime. Pl.’s Opp. at 6. But a
    showing of irreparable harm is one of the “usual equitable concerns” that a party seeking an
    injunction must establish in addition to the threat to the arbitration; it is not an independent reason
    in support of an injunction in aid of arbitration. And, as noted above, if plaintiff is in dire financial
    straits, it is free to seek interim relief from the arbitrators.
    Moreover, it is not at all clear that TKS has met its burden to establish irreparable harm.
    “First, the harm must be ‘certain and great,’ ‘actual and theoretical,’ and so ‘imminent that there
    is a clear and present need for equitable relief to prevent irreparable harm.’ Second, the harm
    ‘must be beyond remediation.’” 
    Newby, 838 F.3d at 7
    –8, quoting Chaplaincy of Full Gospel
    
    Churches, 454 F.3d at 297
    .
    Plaintiff argues that it has suffered irreparable harm based on “[t]he loss of funds and
    equipment, the loss of access to the [EPA building], and the continued bad acts by the Defendant
    10
    in depriving TKS of its lawfully owned property.” PI Mem. at 8. But because economic losses
    are seldom beyond remediation, “[i]t is . . . well settled that economic loss does not, in and of itself,
    constitute irreparable harm.” Wis. Gas Co. v. FERC, 
    758 F.2d 669
    , 674 (D.C. Cir. 1985); see also
    
    Davis, 571 F.3d at 1295
    .        Economic loss can constitute irreparable injury only in limited
    circumstances: where “monetary loss . . . threatens the very existence of the movant’s business,”
    Wis. 
    Gas., 758 F.2d at 674
    , or where the claimed economic loss is “certain, imminent, and
    unrecoverable.” Nat’l Mining Ass’n v. Jackson, 
    768 F. Supp. 2d 34
    , 53 (D.D.C. 2011); see also
    Sterling Comm. Credit–Mich., LLC v. Phx. Indus. I, LLC, 
    762 F. Supp. 2d 8
    , 15 (D.D.C. 2011)
    (“The critical consideration under this exception is the effect that the purported economic harm
    will have on a movant’s business or its very existence – not any monetary amount per se.”).
    In support of its motion for preliminary injunction, plaintiff submitted the declaration of
    Chief Executive Officer James Kim, who predicted that because “[t]he income from the Mentor
    Agreement constitutes a large percentage of TKS’s overall revenues[,] [w]ithout this income, TKS
    will be forced to go out of business in a matter of months.” Verified Statement of James Kim, Ex.
    B to PI Mot. [Dkt. # 2] ¶ 28. This did little to make the necessary showing of a threat to the
    company’s very existence, but plaintiff submitted additional detail concerning its finances in its
    reply.
    Plaintiff’s financial records show that the loss of the revenue from the contract with RWD
    will diminish its projected total annual revenue by 17.68%. See Ex. A to Verified Statement of
    William Arnold [Dkt. # 12-1]. “A claim of substantial financial losses must be evaluated from the
    perspective of the organization’s total revenues in order to determine if the harm is of a magnitude
    that warrants injunctive relief.” ConverDyn v. Moniz, 
    68 F. Supp. 3d 34
    , 48 (D.D.C. 2014), and
    the losses in plaintiffs’ projections do not necessarily rise to the level of irreparable harm. See
    11
    Experience Works, Inc. v. Chao, 
    267 F. Supp. 2d 93
    , 96 (D.D.C. 2003) (finding that a reduction of
    approximately 24% of the plaintiff’s funding would not constitute irreparable harm).
    Plaintiff presented additional evidence showing that without the income from the
    subcontract at issue, it will be facing a negative cash flow situation as of August 2017, and this
    will affect plaintiff’s ability to meet its obligations under a Chapter 11 Reorganization plan filed
    in the U.S. Bankruptcy Court for the Eastern District of Virginia. Verified Statement of William
    Arnold, Ex. 1 to Pl.’s Reply [Dkt. # 12-1] ¶¶ 12–13. But the force of plaintiff’s request that the
    Court respond to this claimed emergency is undermined by plaintiff’s own delay in bringing a
    lawsuit. While TKS alleges that the contract was breached on March 23, 2017, it waited until June
    13, 2017 – almost three months later – to file its complaint and motion for preliminary injunction,
    and it assumed the risk of further delay by choosing this forum in the face of the binding arbitration
    clause. See, e.g., Fund for Animals v. Frizzell, 
    530 F.2d 982
    , 987 (D.C. Cir. 1975) (finding a 44-
    day delay in bringing a motion for injunctive relief to be “inexcusable”); Newdow v. Bush, 355 F.
    Supp. 2d 265, 292 (D.D.C. 2005) (“An unexcused delay in seeking extraordinary injunctive relief
    may be grounds for denial because such delay implies a lack of urgency and irreparable harm.”). 3
    Moreover, defendant RWD has come forward with evidence that undercuts plaintiff’s
    3          Plaintiff also contends that, in addition to economic damages, it has suffered “damage
    . . . to [its] business reputation.” Pl.’s Mem. at 9. (“[I]n refusing to honor RWD’s legal, contractual
    obligations . . . TKS’s business reputation continues to be harmed. Chimes and other government
    contractors are all parties with whom TKS continuously conducts business. It has nurtured and
    now greatly relies upon these critical relationships to be able to conduct business. Should those
    relationships continue to be damaged, TKS will be irreparably harmed.”). But this allegation is
    wholly conclusory, and it is not a sufficient basis for extraordinary injunctive relief. See 
    Sampson, 415 U.S. at 90
    –91; Trudeau v. FTC, 
    384 F. Supp. 2d 281
    , 296–97 (D.D.C. 2005) (holding that “the
    showing of reputational harm must be concrete and corroborated, not merely speculative”).
    12
    characterization of its financial circumstances. See Def.’s Opp. at 14–15. But ultimately, the Court
    need not resolve these factual questions because it has come to the firm conclusion that it may not.
    In the end, the answer to the question posed by the motion to compel arbitration and the
    opposition becomes clear upon a review of the proposed order that plaintiff would have the Court
    enter, supposedly “to maintain the status quo.”4 Plaintiff has submitted a seven page proposed
    injunction, which is chock full of findings about the terms of the contract and the strength of
    plaintiff’s allegations concerning RWD’s alleged breach. See Proposed Order [Dkt. # 14] ¶ 5
    (“Plaintiff has properly alleged, and supported by verified statement(s), that Defendant’s
    termination of Plaintiff under the Mentor Agreement was effected without notice expressly
    required under the terms and conditions of such agreement.”). And the order would impose the
    following requirements, among others:
    A. Defendant shall immediately reinstate Plaintiff to, and Plaintiff should
    thereafter perform, its operational and financial oversight and management
    of the building operational and maintenance related services provided for
    the EPA Building.
    B. Plaintiff shall perform all contract services required at the EPA Building
    except those expressly intended for Defendant.
    ...
    G. From time to time, follow on or supplemental work may be ordered or
    requested with respect to the EPA Building (“Reimbursable Projects”).
    4       A preliminary injunction is ordinarily sought to preserve the status quo pending the
    resolution of the underlying litigation. City of Moundridge v. Exxon Mobil Corp., 
    429 F. Supp. 2d 117
    , 126 (D.D.C. 2006). It is questionable whether the proposed injunction can fairly be
    characterized as such an order since plaintiff, which has not been working at the EPA’s
    headquarters since late March, is asking to be “reinstated.” Proposed Order at 5. Courts have held
    that a preliminary injunction that would change the status quo is an even more extraordinary
    remedy. Exxon Mobil 
    Corp., 429 F. Supp. 2d at 126
    –27; Spadone v. McHugh, 
    842 F. Supp. 2d 295
    , 301 (D.D.C. 2012) (“In this Circuit, the power to issue a preliminary injunction, especially a
    mandatory one, should be sparingly exercised.”), quoting Mylan Pharms., Inc. v. Shalala, 81 F.
    Supp. 2d 30, 36 (D.D.C. 2000).
    13
    Income generated or received with respect to each and any such
    Reimbursable Project shall be distributed as follows:
    a. All G&A, direct costs and incidental costs associated with a
    Reimbursable Project shall first be paid to Plaintiff on a monthly
    basis after receipt of payment for services.
    b. The net profits from any Reimbursable Project shall thereafter
    accrue to the parties in the following percentages: 51% to Defendant
    and 49% to Plaintiff, with such profits being distributable on a
    monthly basis after payment of all G&A, direct and indirect
    expenses associated with each such Reimbursable Project.
    Proposed Order at 5–6.
    While the Eighth Circuit stands alone in its view that any preliminary injunction in aid of
    arbitration would be prohibited, the Court agrees with that court’s observation that “the judicial
    inquiry requisite to determine the propriety of injunctive relief necessarily would inject the court
    into the merits of issues more appropriately left to the arbitrator.” Merrill Lynch, Pierce, Fenner
    & Smith, Inc. v. Hovey, 
    726 F.2d 1286
    , 1292 (8th Cir. 1984). The four-pronged analysis necessary
    under Rule 65, and particularly, the inquiry TKS is asking the Court to undertake in order to grant
    the specific relief it is seeking here, is a merits based inquiry. Since the merits of the contract
    dispute and the preliminary injunction requested in this case are inextricably intertwined, the Court
    cannot treat the motion for a preliminary injunction separately from the complaint to which it is
    attached, and it must dismiss the case. For all of these reasons, the motion to compel arbitration
    will be granted, and the motion for a preliminary injunction will be denied as moot.
    AMY BERMAN JACKSON
    United States District Judge
    DATE: June 23, 2017
    14
    

Document Info

Docket Number: Civil Action No. 2017-1152

Citation Numbers: 263 F. Supp. 3d 64

Judges: Judge Amy Berman Jackson

Filed Date: 6/23/2017

Precedential Status: Precedential

Modified Date: 11/7/2024

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Winter v. Natural Resources Defense Council, Inc. , 129 S. Ct. 365 ( 2008 )

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Granite Rock Co. v. International Brotherhood of Teamsters , 130 S. Ct. 2847 ( 2010 )

International Brotherhood of Electrical Workers, Local 1900 ... , 634 F. Supp. 642 ( 1986 )

National Mining Ass'n v. Jackson , 768 F. Supp. 2d 34 ( 2011 )

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