Court Opinion

ID: 9478816
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:58:47.911917+00
Date Added: 2024-06-11T17:46:37.888828
License: Public Domain

WILLIAM A. NORRIS, Circuit Judge:
This appeal arises out of litigation initiated by the Church of Scientology1 (“Church”) against the Church of the New Civilization2 (“New Church”). The focus of the litigation is certain scriptural material allegedly stolen from the Church by the New Church.3 Early in the litigation, the district court granted the Church a preliminary injunction restraining the New Church from using the disputed scriptures. That injunction was vacated on appeal. Religious Technology Center v. Wollersheim, 796 F.2d 1076, 1084, 1089-91 (9th Cir.1986), (“Wollersheim”), cert. denied, 479 U.S. 1103, 107 S.Ct. 1336, 94 L.Ed.2d 187 (1987). The Church then filed a second application for interlocutory relief, which was denied by the district court on the ground that it was foreclosed by Woller-sheim. The Church now appeals that denial. We reverse and remand to the district court for further proceedings in light of this opinion.
I
BACKGROUND
In its complaint, the Church stated claims against the New Church for racketeering under the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. § 1962(c)) (“RICO”), trademark infringement under federal and common law, unfair competition, receipt of stolen property, and various other state law claims. The Church sought damages as well as injunc-tive relief to prevent the New Church from disseminating the contents of scriptural materials which the Church claimed had been stolen from its Denmark offices by adherents of the New Church.
In an Ex Parte Application for Temporary Restraining Order (“TRO”) and Order to Show Cause (“OSC”), the Church sought interlocutory relief on the ground that its scriptures were trade secrets and that it would suffer irreparable harm if its trade secrets were disseminated by another organization such as the New Church. The Church did not characterize the alleged harm as commercial or economic, but rather characterized it as “spiritual” harm. Essentially, the Church argued that its adher*1308ents would suffer irreparable spiritual injury if the New Church were free to disseminate the disputed materials. See Woller-sheim, 796 F.2d at 1079.
The district court granted the Church a TRO and later extended it to a preliminary injunction, prohibiting the New Church from “using, distributing, exhibiting or in any way publicly revealing” the scriptures. Id. The preliminary injunction was based on the district court’s finding that the scriptures were trade secrets and entitled to protection under both RICO and California law.
On appeal, we vacated the preliminary injunction. We held that the scriptures did not qualify as trade secrets under California law because of the failure of the Church to claim that the scriptures had any commercial value. We rejected the Church’s argument that the scriptures qualified as trade secrets because of their spiritual value. Id. at 1090-91.4
The Church returned to the district court and filed a second Ex Parte Application for Temporary Restraining Order and Order to Show Cause, again asking the court to restrain the New Church from using the scriptural materials. This time, the Church argued that the scriptures qualified as trade secrets because they had economic value. Specifically, the Church contended that if the New Church was not enjoined from using the scriptures, “[pjlaintiffs will be forever at a loss to protect the confidential nature and resultant economic value of these materials. Defendant will obtain an economic advantage that they would not otherwise possess which will be used to divert parishioners, the value and goodwill of which cannot be monetarily measured for plaintiffs.” Excerpt of Record (“E.R.”), Yol. 1:347 at 29. (Emphasis added.) After a hearing, the district court denied the application “solely based upon the Ninth Circuit’s ... decision [in Woller-sheim ].” Id. Vol. 3:421 at 2.
II
JURISDICTION
This court may hear appeals from interlocutory orders of the district court which grant, continue, modify, refuse or dissolve injunctions. 28 U.S.C. § 1292(a)(1).5 Ordinarily, an appeal does not lie from the denial of an application for a temporary restraining order; such appeals are considered premature and are disallowed “[i]n the interests of avoiding uneconomical piecemeal appellate review.” Kimball v. Commandant Twelfth Naval District, 423 F.2d 88, 89 (9th Cir.1970).
We have recognized, however, that a denial of a TRO may be appealed if the circumstances render the denial “tantamount to the denial of a preliminary injunction.” Environmental Defense Fund, Inc. v. Andrus, 625 F.2d 861, 862 (9th Cir.1980). See also Kimball, 423 F.2d at 89. In Andrus we held the denial of the TRO was tantamount to the denial of a preliminary injunction because of the presence of two factors: the denial of the TRO followed a “full adversary hearing” and “in the absence of review, the appellants would be effectively foreclosed from pursuing further interlocutory relief.” Id.
The rationale of Andrus applies with equal force to this appeal. Here the district court denied the Church’s renewed application for a TRO and an OSC following a hearing at which all parties were represented. The transcript of the hearing and the court’s written order denying the application make it unmistakably clear that the order was tantamount to a denial of a preliminary injunction. During the hearing, the district judge was emphatic in her *1309view that our decision in Wollersheim foreclosed any interlocutory relief on the grounds advanced in the Church’s new application: “I don’t believe that the appellate court feels that in this case an injunction is appropriate____ I would say that we don’t have anything much to talk about.” Supp. E.R. at 6-7. In her written order she denied the application “solely based upon the Ninth Circuit’s August 1986 decision____” E.R.Yol. 3:421 at 2. The futility of any further hearing was thus patent; there was nothing left to talk about. In these circumstances, we hold, as we did in An-drus, that the denial of the TRO and the OSC was “tantamount to the denial of a preliminary injunction.” 625 F.2d at 862. Accordingly, the district court’s order is appealable under 28 U.S.C. § 1292(a)(1).6
Ill
LAW OF THE CASE
The denial of a preliminary injunction is subject to a limited standard of review. Colorado River Indian Tribes v. Town of Parker, 776 F.2d 846, 849 (9th Cir.1985). We reverse the denial only when the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Id. In the instant case, the district judge explained that she was basing her decision to deny the application for TRO and OSC— which we treat as the denial of a preliminary injunction — solely on our decision in Wollersheim. She interpreted Woller-sheim as foreclosing interlocutory relief on any of the grounds raised by the Church in its second application, even though the Church advanced new state law theories and for the first time offered evidence that the scriptures in fact had economic value. Of particular importance to the instant appeal, the district court apparently interpreted Wollersheim as holding that the religious scriptures could not qualify as trade secrets under California law, regardless of whether they had commercial value.
With all respect, we believe that the district court read more into Wollersheim than we intended. Putting aside that part of the opinion which addressed the Church’s claim to injunctive relief under RICO, the remainder of the opinion was fairly narrowly drawn. The only question before the court was whether a religious scripture could qualify as a trade secret under California law if it conferred a spiritual, as opposed to an economic, advantage on its owner. We determined that California law did not recognize information as a trade secret unless it conferred on its owner an actual economic advantage over com*1310petitors. 796 F.2d at 1091. Because the Church made no claim that the scriptures gave it a commercial advantage over its competitors, we held that the scriptures did not qualify as trade secrets under California law. Wollersheim turned, therefore, on the absence of any claim of economic advantage at the preliminary injunction stage. While we expressed doubts about whether the Church could allege the competitive market advantage required without “raispng] grave doubts about its claim as a religion and a not-for-profit corporation,” id., we did not decide one way or another whether the scriptures could qualify as trade secrets should the Church allege and prove economic advantage. Nor did we express any opinion as to whether the Church could be entitled to a preliminary injunction under any of the other state law theories advanced in its first application for interlocutory relief. Thus, Wollersheim did not establish the law of the case on either of these questions.
Accordingly, we REVERSE the district court’s order denying the TRO and OSC and REMAND to the district court for further proceedings in light of this opinion. In so doing, we express no view as to whether the district court should exercise its discretion and decline to consider this second application for interlocutory relief on grounds that the Church is needlessly burdening the courts with repetitive applications for the same relief.

. Formally, the plaintiffs and appellants are Religious Technology Center, Church of Scientology International, Inc. and Church of Scientology California, which are related entities constituting the Church of Scientology founded by L. Ron Hubbard. For convenience, we refer to the plaintiffs/appellants collectively as the Church.

. Defendants and appellees are the Church of the New Civilization and various individuals involved with the Church of the New Civilization. For convenience, we refer to the defendants/appellees collectively as the New Church.

.See generally, Religious Technology Center v. Wollersheim, 796 F.2d 1076, 1077-79 (9th Cir.1986), cert. denied, 479 U.S. 1103, 107 S.Ct. 1336, 94 L.Ed.2d 187 (1987) for discussion of the underlying facts in this litigation.

. In Wollersheim, we also held that the Church’s RICO claim could not provide the basis for injunctive relief. Id. at 1077.

. 28 U.S.C. § 1292(a)(1) provides:
"(T]he courts of appeals shall have jurisdiction of appeals from: (1) Interlocutory orders of the district courts of the United States, the United States District Court for the District of the Canal Zone, the District Court of Guam, and the District Court of the Virgin Islands, or of the judges thereof, granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court; ...”

. Arguably, one could read Andrus as laying down a black-letter rule that "a full adversary hearing” is a necessary, if not a sufficient, condition to the appealability of a denial of a TRO. We reject this wooden reading of Andrus. The teaching of Andrus is that a denial of a TRO is appealable if the circumstances make it unmistakably clear that the denial ‘‘is tantamount to the denial of a preliminary injunction.” There the circumstances included “a full adversary hearing,” which presumably means an eviden-tiary hearing; here the circumstances included a non-evidentiary adversary hearing at which all parties were represented. The record below makes it clear that an evidentiary hearing would have been pointless; in light of the district judge’s ruling that Wollersheim barred all interlocutory relief, it would have been a waste of party and judicial resources to have conducted an evidentiary hearing.
The New Church argues that Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 433 n. 7, 94 S.Ct. 1113, 1121 n. 7, 39 L.Ed.2d 435 (1974) forecloses our treating this as an appeal from an order denying a preliminary injunction. We disagree. Granny Goose is simply inapposite. That case had nothing to do with the appealability of a denial of a TRO or any other question of appellate jurisdiction. It stands for the unremarkable proposition that a TRO issued by a state court remains in effect after removal to federal court only so long as it would under state law, notwithstanding the literal requirement of 28 U.S.C. § 1450 that all orders issued prior to removal remain in effect “until dissolved or modified by the district court.” We fail to see how the holding of Granny Goose has any bearing on the issue of the appealability of the denial of the TRO in this case. However, we do agree with the New Church’s apparent concern that we could not enjoin the use of the scriptures without giving the New Church a meaningful opportunity to file opposing papers and present evidence in a full adversary hearing. Whether this court may grant certain relief, however, is quite a different question from whether we have jurisdiction in the first place to review a TRO that is tantamount to a denial of a preliminary injunction.