Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-02051/USCOURTS-cand-4_05-cv-02051-1/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
Cause of Action: 28:1332 Diversity-Stockholders Suits

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IRWIN REINHARZ,

Plaintiff,

v.

MEDIAGATE, LTD, an Israeli

corporation, MEDIAGATE, INC., a

Delaware corporation, and

MEDIAGATE, N.V., a Dutch

corporation,

Defendants.

 /

No. C 05-2051 CW

ORDER DENYING

PLAINTIFF'S

MOTION FOR A

TEMPORARY

RESTRAINING

ORDER

Plaintiff Irwin Reinharz moves for a temporary restraining

order enjoining Defendant Mediagate, N.V. from transferring or

disposing of any assets without prior approval of the Court. To

date, there is no proof of service of the initial complaint, of

the first amended complaint (FAC), or of this motion. Having

considered the moving papers, the Court DENIES Plaintiff's

motion for a temporary restraining order.

BACKGROUND

The following facts are alleged in the FAC. Plaintiff

resides in San Francisco, California. Mediagate, N.V. is a

Dutch corporation that maintains research facilities in Santa

Clara County. Mediagate, LTD is an Israeli corporation, and

Mediagate, Inc. is incorporated in Delaware. These entities

together form Mediagate Group, which develops advanced unified

messaging and voice mail technology.

Case 4:05-cv-02051-CW Document 9 Filed 06/14/05 Page 1 of 6
United States District Court

For the Northern District of California

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Plaintiff is a principal partner in MG Investments, which

formed in 1997 with the sole purpose of purchasing shares in

Mediagate, N.V. On February 18, 1997, Mediagate, N.V. issued a

financing letter and initial subscription form to MG

Investments. In May, 1997, MG Investments bought $313,269.60

worth of stock in Mediagate, N.V. In August, 1999, Plaintiff

individually invested an additional $24,403.10 in preferred

shares in the company. Plaintiff has made several attempts to

secure stock certificates from Mediagate, N.V. for his

purchases, including hiring attorneys both in the United States

and in The Netherlands. To date, Plaintiff has not received

stock certificates from the company. On February 8, 2005,

Mediagate, N.V. stated that it would not issue Plaintiff his

stock certificates because it was "winding down."

On May 19, 2005, Plaintiff filed his initial complaint

alleging causes of action for (1) breach of contract, (2)

material misrepresentation, (3) conversion, (4) fraud and (5)

breach of fiduciary duties. Also on May 19, Plaintiff moved for

a temporary restraining order. On May 24, the Court denied

Plaintiff's motion for a temporary restraining order; the Court

ruled that, from the facts alleged in the complaint, it did not

appear that the Court had subject matter jurisdiction. 

Plaintiff's initial complaint alleged that the Court had subject

matter jurisdiction under Title 28 U.S.C. section 1332(a)(4),

however there did not appear to be complete diversity because

the complaint also alleged that Mediagate, N.V. maintained

headquarters in Santa Clara County, California. The Court also

Case 4:05-cv-02051-CW Document 9 Filed 06/14/05 Page 2 of 6
United States District Court

For the Northern District of California

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held that the motion for a temporary restraining order was

deficient in factual support. Specifically, Plaintiff had not

submitted any evidence that he was entitled to stock

certificates, or that Mediagate, N.V. would be unable to redeem

Plaintiff's shares if interlocutory injunctive relief was not

granted. 

On June 7, 2005, Plaintiff filed the FAC and again moved

for a temporary restraining order. The FAC alleges the

following causes of action: (1) violation of section (a)(2) of

the Securities Act, (2) breach of contract, (3) material

misrepresentation, 

(4) conversion, (5) fraud, and (6) breach of fiduciary duty. 

Attached to the complaint is a sworn declaration from

Plaintiff's counsel stating that the initial complaint erred in

alleging that Mediagate, N.V. still maintained headquarters in

California.

LEGAL STANDARD

A temporary restraining order may be issued only if

"immediate and irreparable injury, loss, or damage will result

to the applicant" if the order does not issue. Fed. R. Civ. P.

65(b). To obtain a temporary retraining order, the moving party

must establish either: (1) a combination of probable success on

the merits and the possibility of irreparable harm, or (2) that

serious questions regarding the merits exist and the balance of

hardships tips sharply in the moving party's favor. See Baby

Tam & Co. v. City of Las Vegas, 154 F.3d 1097, 1100 (9th Cir.

1998); Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215,

Case 4:05-cv-02051-CW Document 9 Filed 06/14/05 Page 3 of 6
United States District Court

For the Northern District of California

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1217 (9th Cir. 1987).

A temporary restraining order may be granted without notice

to the adverse party only if it clearly appears from specific

facts shown by affidavit or in the verified complaint that

immediate and irreparable injury, loss, or damage will result to

the applicant before the adverse party can be heard in

opposition, and the applicant's attorney certifies to the court

in writing the efforts, if any, which have been made to give

notice and/or the reasons that notice should not be required. 

Fed. R. Civ. P. 65(b). 

The test for granting a temporary restraining order, like

that for a preliminary injunction, is a "continuum in which the

required showing of harm varies inversely with the required

showing of meritoriousness." Rodeo Collection, 812 F.2d at 1217

(quoting San Diego Comm. Against Registration & the Draft (Card)

v. Governing Bd. of Grossmont Union High Sch. Dist., 790 F.2d

1471, 1473 n.3 (9th Cir. 1986)). The moving party ordinarily

must show "a significant threat of irreparable injury," although

there is "a sliding scale in which the required degree of

irreparable harm increases as the probability of success

decreases," United States v. Odessa Union Warehouse Co-op, 833

F.2d 172, 174, 175 (9th Cir. 1987), and vice versa.

DISCUSSION

Plaintiff has failed to remedy the deficiencies in factual

support that the Court identified in its order denying

Plaintiff's first motion. First, Plaintiff has not submitted

any evidence that he is entitled to stock certificates as a

Case 4:05-cv-02051-CW Document 9 Filed 06/14/05 Page 4 of 6
United States District Court

For the Northern District of California

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result of his alleged purchases. According to allegations in

the FAC, Plaintiff did not receive a certificate after his

initial purchase in May, 1997 of more than $300,000 worth of

Mediagate, N.V. stock. Nevertheless, Plaintiff purchased an

additional $24,403.10 worth of stock in August, 1999, more than

two years after his initial purchase. Thus, it appears that

Plaintiff himself did not believe that he was entitled to stock

certificates as a result of his purchases. The FAC does not

allege when Plaintiff first requested stock certificates from

Mediagate, N.V.

Plaintiff has also failed to submit evidence that

Mediagate, N.V. will be unable to redeem his shares if

interlocutory injunctive relief is not granted. The FAC does

allege that a Mediagate, N.V. representative informed Plaintiff,

in February, 2005, that the company was "winding down." 

However, there is no evidence of when, or even if, Mediagate,

N.V. will become insolvent, or that the company would be unable

adequately to compensate Plaintiff if it were forced to declare

bankruptcy.

Moreover, Plaintiff's counsel has not submitted a sworn

affidavit or declaration certifying that any efforts have been

made to give notice of this motion or the FAC to Mediagate,

N.V., which is required by Federal Rule of Civil Procedure

65(b). There is no evidence that, to date, any Defendant has

been served with any pleading or document in this case.

For the foregoing reasons, Plaintiff's motion for a

temporary restraining order must be denied.

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United States District Court

For the Northern District of California

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CONCLUSION

For the foregoing reasons, Plaintiff's motion for a

temporary restraining order (Docket No. 7) is DENIED.

IT IS SO ORDERED.

Dated: 6/14/05 /s/ CLAUDIA WILKEN 

CLAUDIA WILKEN

United States District Judge

Case 4:05-cv-02051-CW Document 9 Filed 06/14/05 Page 6 of 6