Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-02522/USCOURTS-casd-3_12-cv-02522-2/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

STANCHART SECURITIES

INTERNATIONAL, INC., et al.,

Plaintiffs,

CASE NO. 12cv2522-LAB (MDD)

ORDER DENYING MOTION FOR

PRELIMINARY INJUNCTION;

AND

ORDER TO SHOW CAUSE RE:

MOOTNESS

vs.

SERGIO GAVALDON, et al.,

Defendants.

Plaintiffs Stanchart Securities International et al. filed motions for a temporary

restraining order (TRO) and a preliminary injunction, both of which Defendants opposed. 

On October 24, the Court denied the TRO. 

Currently on calendar for Tuesday, November 13, 2012 at 11:15 a.m. is a hearing on

the motion for preliminary injunction. Pursuant to Civil Local Rule 7.1(d)(1), the Court finds

this matter suitable for decision without oral argument. The hearing is VACATED and

Plaintiffs’ motion to appear telephonically (Docket no. 13) is DENIED AS MOOT.

The TRO application asked the Court to enjoin Defendants from going forward with

an arbitration evidentiary hearing scheduled to commence on October 25, 2012, just three

days after the motion was filed. The arbitration had been ongoing since January, 2011,

however. The Court denied the TRO, finding Plaintiffs hadn’t established irreparable harm.

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In advance of the hearing on the motion for preliminary injunction, the Court ordered

Plaintiffs to file a notice stating what hearings or proceedings remained in the arbitration that

they were seeking to enjoin. Plaintiffs filed their notice, stating that the evidentiary hearing

begun on October 25 will have concluded on Monday, November 12 with the telephonic

presentation of closing arguments by the parties. After that, the notice does not say what will

happen, except that the panel will issue its decision and, presumably, make some kind of

award.

A preliminary injunction is inappropriate for two reasons. First, Plaintiffs have asked

the Court to enjoin Defendants from going forward with the arbitration. But based on the

supplemental filing, the only anticipated event the Court could enjoin would be the arbitration

panel’s decision. But the Court cannot enjoin that decision, because the panel is not a party

to this litigation. See Zepeda v. U.S.I.N.S., 753 F.2d 719, 727 (9 Cir. 1984) (court may only th

enjoin persons over whom the court has personal jurisdiction, such as parties); Mitchell v.

Askelson, 2009 WL 1444694 at *2 (W.D.Wash., May 19, 2009) (“As the Court has no

jurisdiction to enjoin the conduct of individuals who are not parties to the instant action,

plaintiff's motion for preliminary injunctive relief fails on this basis alone.”)

Second, because the only event remaining in the arbitration is the panel’s issuance

of its decision, Plaintiffs have shown no irreparable harm. In other cases, being forced to

participate in arbitration proceedings was found to constitute irreparable harm. See, e.g.,

Textile Unlimited, Inc. v. ABMH & Co., 240 F.3d 781, 786 (9th Cir. 2001) (affirming issuance

of preliminary injunction based on finding that plaintiff would suffer irreparable harm if

arbitration were not stayed); Merrill Lynch Inv. Managers v. Optibase, Ltd., 337 F.3d 125,

129 (2d Cir. 2003) (holding that “being forced to expend time and resources arbitrating an

issue that is not arbitrable, and for which any award would not be enforceable” can constitute

irreparable harm). But here all Plaintiffs face is being required to wait for the panel’s award.

They do not argue that having to wait for a decision would cause them harm, and in fact they

have argued that a delay in adjudicating claims does not amount to harm. (Mot. for Prelim.

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Inj., 24:6–7, 24:16–17, 25:14–16 (arguing that a delay in adjudicating claims would not harm

Defendants).)1

If it turns out that the award improperly decides non-arbitrable issues and is adverse

to Plaintiffs, they have an adequate remedy at law, i.e., they may have it vacated. Thus, it

does not appear Plaintiffs would suffer irreparable loss if the arbitration proceeds. See

Textile Unlimited, 240 F3d at 786 (citing Sierra On-Line, Inc. v. Phoenix Software, Inc., 739

F.2d 1415, 1422 (9 Cir. 1984) (preliminary injunction is “a device for preserving the status

th

quo and preventing the irreparable loss of rights before judgment”). This too is a sufficient

reason for denying relief.

The motion for preliminary injunctive relief is therefore DENIED. 

Having reviewed the complaint, it is not clear to the Court what other issues remain

to be adjudicated. If Plaintiffs are still seeking relief, they should file a memorandum of points

and authorities, not longer than three pages, no later than December 3, 2012, stating what

relief they are seeking and explaining why their claims are not moot. If the Court’s denial of

injunctive relief has rendered their claims moot, they should file a notice so stating. If they

file nothing by December 3, this action will be dismissed as moot.

IT IS SO ORDERED.

DATED: November 9, 2012

HONORABLE LARRY ALAN BURNS

United States District Judge

Here, Defendants are claimants in arbitration, i.e., they are the parties seeking relief 1

through arbitration.

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