Opinion ID: 440369
Heading Depth: 2
Heading Rank: 2

Heading: the ex parte proceedings

Text: 22 This circuit has reviewed temporary restraining orders under the abuse of discretion standard applicable to preliminary injunctions. Squillacote v. Local 248, Meat & Allied Workers, 534 F.2d 735, 744-45 (7th Cir.1976). See also Majd-Pour v. Georgiana Community Hospital, Inc., 724 F.2d 901, 902 (11th Cir.1984) (denial of restraining order not an abuse of discretion); Community Communications Co. v. City of Boulder, 630 F.2d 704, 708-09 (10th Cir.1980) (entry of restraining order an abuse of discretion where based on error of law), rev'd on other grounds, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982). However, the district court may abuse its discretion if it issues a temporary restraining order based on an erroneous view of the law or without due regard for the procedural requirements for such orders. See, e.g., Coca-Cola Co. v. Tropicana Products, Inc., 690 F.2d 312, 315-16 (2d Cir.1982) (preliminary injunction); Community Communications, supra, 630 F.2d at 708-09 (temporary restraining order). In the present case, we conclude that the district court abused its discretion by ordering ex parte relief when there was no valid reason for proceeding ex parte and by disregarding the strict procedural requirements of Fed.R.Civ.P. 65(b) for the issuance of such ex parte orders. 23 The temporary restraining order was not invalid simply because it was issued ex parte. The Supreme Court has recognized that in some limited situations, a court may properly issue ex parte orders of brief duration and limited scope to preserve the status quo pending a hearing. See Granny Goose Foods, Inc. v. Teamsters, 415 U.S. 423, 438-39, 94 S.Ct. 1113, 1123-24, 39 L.Ed.2d 435 (1974); Carroll v. President of Princess Anne, 393 U.S. 175, 180, 89 S.Ct. 347, 351, 21 L.Ed.2d 325 (1968). In addition, Rule 65(b) expressly contemplates the issuance of ex parte temporary restraining orders. Nevertheless, the circumstances in which an ex parte order should be granted are extremely limited. The stringent restrictions imposed 24 on the availability of ex parte temporary restraining orders reflect the fact that our entire jurisprudence runs counter to the notion of court action taken before reasonable notice and an opportunity to be heard has been granted both sides of a dispute. Ex parte temporary restraining orders are no doubt necessary in certain circumstances, cf. Carroll v. President and Comm'rs of Princess Anne, 393 U.S. 175, 180 [89 S.Ct. 347, 351, 21 L.Ed.2d 325] (1968), but under federal law they should be restricted to serving their underlying purpose of preserving the status quo and preventing irreparable harm just so long as is necessary to hold a hearing, and no longer. 25 Granny Goose Foods, supra, 415 U.S. at 438-39, 94 S.Ct. at 1124. 26 Ex parte temporary restraining orders are most familiar to courts where notice to the adversary party is impossible either because the identity of the adverse party is unknown or because a known party cannot be located in time for a hearing. This is not such a case. Here the identities of the defendants and their attorneys were known to plaintiff and to the district court well before the issuance of the temporary restraining order. Also, time was not a pressing factor, for the district court did not issue the order until six days after the plaintiff first made its ex parte application. During that period, neither the plaintiff nor the court made any effort to notify defendants of the proceedings. 27 Plaintiff agrees that notice could have been given to the defendants, but it argues that this case falls within a very narrow band of cases in which ex parte orders are proper because notice to the defendant would render fruitless the further prosecution of the action. See In the Matter of Vuitton et Fils S.A., 606 F.2d 1, 5 (2d Cir.1979) (Vuitton ). In Vuitton the Second Circuit issued a writ of mandamus ordering the district court to issue an ex parte temporary restraining order to assist the petitioner in its trademark infringement case. The district court had denied the application for such an ex parte order because the adverse parties were known to the petitioner. However, the Second Circuit found that the petitioner had demonstrated that, if notice were given to the alleged infringer, it was highly probable that the infringer would dispose of the infringing goods in the few hours before the hearing. The petitioner had supported that contention by describing its experience in other similar cases in which the actions became futile after defendants disposed of their inventories before the courts could issue orders and hold hearings. The Second Circuit held that the petitioner's showing was sufficient to justify issuance of an order narrow in scope and brief in its duration. 606 F.2d at 5. 28 American Can argues that it entertained the same fears as Vuitton. Appellee's Brief at 40. American Can asserts that notice of its ex parte request would have immediately caused appellants to alter the inks in their factory and secrete the pertinent documents. In addition, notice would have permitted defendants to dispose of inks which clearly fall within the purview of the Court's injunction. Notice, in effect, would have frustrated the very purpose of the action, namely, to ascertain the existence of infringing goods. Id. Because an ex parte order is proper only when there is no reasonable alternative, we must examine each of the operative terms of the restraining order to determine whether this asserted risk justified the ex parte actions. 29 The first operative portion of the ex parte order enjoined defendants for ten days from the continued sale of jet inks of any type ... to any of plaintiff's customers, previously serviced by Mansukhani when he was employed by plaintiff or its predecessors .... 10 There is no plausible reason for issuing this portion of the order ex parte. Even if we were to conclude that American Can had shown sufficient reason under Vuitton to permit the ex parte order for the preservation of ink samples and documents, that reason has utterly no application to the portion of the order which, for practical purposes, closed defendants' business for ten days. As the Supreme Court explained in Granny Goose Foods, supra, ex parte temporary restraining orders should be restricted to serving their underlying purpose of preserving the status quo and preventing irreparable harm just so long as is necessary to hold a hearing, and no longer. 415 U.S. at 439, 94 S.Ct. at 1124 (emphasis supplied). This order was not thus restricted, and it should not have been issued. 11 30 The second operative portion of the ex parte order authorized plaintiff's employees, with the assistance of the United States Marshals, to enter defendants' premises, take samples of jet inks and obtain for copying all documents relating to defendants' sales of jet inks including sales to plaintiff's customers, defendants' production documents used to prepare the inks and Mansukhani's correspondence with customers of plaintiff. This is the portion of the order to which Vuitton might be applicable. We agree with the Second Circuit that ex parte orders of very limited scope and brief duration may be justified in order to preserve evidence where the applicant shows that notice would result in destruction of evidence. The problem we face here is whether American Can made a sufficient showing of the need for proceeding ex parte. 31 Where there are no practical obstacles to giving notice to the adverse party, an ex parte order is justified only if there is no less drastic means for protecting the plaintiff's interests. In this case, it would have been possible for the court to issue an order ex parte telling defendants to be prepared to show cause in an immediate hearing why an order permitting such sampling and disclosure of documents should not have been entered. Such an order could have instructed defendants not to disturb their inventory or to secrete documents pending the hearing, and an order of that scope would not have raised the concerns we have here about the ex parte proceedings. To show that a less drastic order would not have been sufficient to protect its interests, plaintiff must show, in effect, that the defendants would have disregarded a clear and direct order from the court to preserve the inks and documents for a few hours until a hearing could have been held. 32 In the papers filed in support of the motion for a temporary restraining order, American Can supported its assertion that the defendants would hide or destroy documents and falsify ink samples by saying that the defendants had failed to produce prior to or at trial any formula, ink sample or document in response to plaintiff's discovery requests and subpoenas. Plaintiff also pointed out that Mansukhani had had a number of plaintiff's confidential documents in his possession at the time of the court's permanent injunction. Mansukhani turned those documents over to plaintiff in compliance with the court's order. 33 We have examined the record to search for support for plaintiff's contentions, and we conclude that the record does not support any presumption that the defendants would have deliberately disregarded a direct court order to preserve inks and documents for a few hours. 12 The record leading up to the court's permanent injunction reveals numerous discovery disputes involving discovery requests by both side, but there is nothing unusual about such disputes in a trade secret case where both sides seek highly confidential information. See, e.g., Natta v. Zletz, 405 F.2d 99, 101-02 (7th Cir.1968). Both sides here have sought technical data, financial information and customer lists from one another, and both sides have resisted those requests. The district court has had to resolve several of the disputes, but nothing suggests that defendants did not comply with the court's orders. It is one thing to resist in good faith an opposing party's discovery request, as the record shows here, and it is quite another to disobey the court's order resolving such a dispute. There is simply no basis for inferring that a party who resists in good faith the opponent's discovery requests will also deliberately disobey the court's discovery orders. 13 34 American Can also claims that defendants were shown to have been willing to disregard court orders because the inks they were selling were in violation of the terms of the court's permanent injunction. However, an ex parte allegation of contempt, upon which the ex parte order was based, is far different from a court's conclusion that its order has been violated. In addition, as we shall discuss in Part III, the scope of the permanent injunction was not entirely clear, and we do not think the plaintiff or the court could infer from the defendants' actions a willingness to disobey clear, specific and direct court orders.