1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 BakeMark USA LLC, No. CV-23-02674-PHX-SMB 10 Plaintiff, TEMPORARY RESTRAINING 11 v. ORDER 12 Carolyn Pastis, et al., 13 Defendants. 14 15 Plaintiff filed a Complaint (Doc. 1) and Application For: (1) Temporary Restraining 16 Order; (2) Order to Show Cause Why A Preliminary Injunction Should Not Issue; and (3) 17 Expedited Discovery (Doc. 7) which was supplemented by the Memorandum of Points and 18 Authorities (Doc. 8). The Court issued an order to show cause why the temporary 19 restraining order should not issue (the “Order”). (Doc. 15.) The Order directed Defendant 20 to file a response to the order to show cause by no later than 5:00 pm on January 5, 2023 21 and set a hearing for January 12, 2023. (Id.) The Order was personally served upon 22 Defendant on December 28, 2023 (Doc. 17) and this Court held a temporary restraining 23 order hearing on January 12, 2023, for which Defendant failed to appear. 24 I. BACKGROUND 25 Plaintiff is a national company that manufactures and sells a variety of baking 26 products, ingredients, and supplies. (Doc. 1 at 2.) Defendant was previously employed as 27 a Senior Buyer at Plaintiff’s Tempe facility. (Id.) In this position, she was made privy to 28 some of Plaintiff’s customers, customer base, and other confidential company information. 1 (Id. at 4, 10.) Before beginning her job, Defendant was required to sign an employment 2 agreement (“the Agreement”). (Id. at 4, 34–38.) 3 The Agreement contained several confidentiality provisions and a return of 4 materials provision. (Id. at 34–38.) The Agreement prohibits the disclosure of 5 “confidential information” which is defined as “trade secrets (as defined by applicable law) 6 or other confidential and proprietary information relating to the Company’s customers, 7 manufacturing, products, services, pricing and sales, research, business, practices [or] 8 procedures . . . that Employee becomes privy to by virtue of employment with 9 [BakeMark].” (Id. at 4, 35.) This definition includes “(ii) information about [BakeMark’s] 10 internal methods of operation and manufacturing . . . ” and “(iii) information about the 11 companies . . . practices and strategies . . . [BakeMark’s] suppliers . . . ; and non-published 12 financial information relating to [BakeMark’s] income, budgeting, cost structures, 13 expenses, profits, and general financial standing.” (Id.) 14 In May 2022, Defendant sent a report detailing several allegations about the 15 operations of the Tempe branch and her co-workers. (Id. at 5.) In this report, Defendant 16 alleged that (1) Plaintiff was keeping goods in storage beyond their expiration dates and 17 selling them to customers, and (2) that Plaintiff was selling products that showed signs of 18 pests on the exterior of the packaging. (Id. at 5–6.) In response, Plaintiff requested an 19 inspection by the Maricopa County Environmental Service Department’s Health Division, 20 which issued Plaintiff an “A” rating in response to the claims. (Id. at 6.) Plaintiff shared 21 the results with Defendant and explained to her the falsity of those allegations with 22 information and relevant standards. (Id.) 23 Defendant subsequently made similar claims, prompting another health inspection 24 at Plaintiff’s request. (Id. at 7.) Plaintiff also conducted its own internal investigation. 25 (Id.) Neither investigation turned up any evidence of Defendant’s claims, and Plaintiff 26 received another “A” rating from Maricopa County. (Id.) In February 2023, Defendant 27 published her first accusations detailing “illegal” company activity to her LinkedIn profile. 28 (Id. at 8.) In this first post, she accused Plaintiff of “cook[ing] the books” and “forg[ing] 1 legal documents !” and accompanied her accusation with “#legal #fraud #forgery Federal 2 Bureau of Investigations (FBI) Clearlake Capital Group.” (Id.) On February 14, 2023, 3 Plaintiff demanded that Defendant remove the post, which she agreed to do three days later. 4 (Id.) 5 On July 17, 2023, Defendant resigned from her position. (Id. at 9.) However, on 6 November 30, 2023, Defendant began posting more allegations on LinkedIn. (Id.) She 7 first posted that Plaintiff sells “infested” product and claimed that the photos she posted 8 along with her allegations “[didn’t] even scratch the surface of the documentation [she] 9 [has]!” (Id.) Later that same day, Defendant posted an alleged recounting of her 10 interactions with Plaintiff and Clearlake Capital Group (“Clearlake”), an investor in 11 Plaintiff. (Id.) In the post, she repeated her allegations and stated again that Plaintiff was 12 shipping “insect-infested truckloads.” (Id.) Defendant posted one final time that day, this 13 time alleging that Plaintiff “mishandle[s] and misrepresent[s] inventory to a pathological 14 degree,” “routinely commit[s] rampant inventory and accounting fraud.” (Id. at 9–10.) 15 This final post also repeated the claim that Plaintiff ships “infested inventory,” resulting in 16 “multiple truckloads” of returns and that Plaintiff refuses to throw away “expired” 17 inventory. 18 On December 14, 2023, Defendant published a post on Facebook, tagging Krispy 19 Kreme Doughnuts and Clearlake. (Id. at 10.) In this post, Defendant published images 20 claiming to show infested products. (Id.) In a separate post on the same day, Defendant 21 claimed that Plaintiff “illegally” refused to “track fumigation” of product apparently sold 22 to Krispy Kreme and posted images of internal communications she had with her former 23 fellow employees. (Id. at 11.) 24 Plaintiff contends that at all times, Defendant was aware through her knowledge 25 gained as a Senior Buyer and through the results of the investigations shared with her that 26 her accusations were false. (Id.) Plaintiff now seeks a temporary restraining order (“TRO”) 27 to enjoin Defendant from continuing to broadcast these allegations. 28 1 II. LEGAL STANDARD 2 Under Rule 65 of the Federal Rules of Civil Procedure, a party may seek injunctive 3 relief if it believes it will suffer irreparable harm during the pendency of an action. The 4 analysis for granting a TRO is “substantially identical” to that for a preliminary injunction. 5 Stuhlbarg Int’l Sales Co., Inc. v. John D. Brush & Co., Inc., 240 F.3d 832, 839 n.7 (9th 6 Cir. 2001); Cochran v. Rollins, No. CV 07-1714-PHX-MHM (JRI), 2008 WL 3891578, at 7 *1 (D. Ariz. Aug. 20, 2008). “A preliminary injunction is ‘an extraordinary and drastic 8 remedy, one that should not be granted unless the movant, by a clear showing, carries the 9 burden of persuasion.’” Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012) (quoting 10 Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (emphasis omitted))); see also Winter v. 11 Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008) (“A preliminary injunction is an 12 extraordinary remedy never awarded as of right.”). 13 A plaintiff seeking a preliminary injunction must show that (1) he is likely to 14 succeed on the merits, (2) he is likely to suffer irreparable harm without an injunction, (3) 15 the balance of equities tips in his favor, and (4) an injunction is in the public interest. 16 Winter, 555 U.S. at 20. “But if a plaintiff can only show that there are ‘serious questions 17 going to the merits’—a lesser showing than likelihood of success on the merits—then a 18 preliminary injunction may still issue if the ‘balance of hardships tips sharply in the 19 plaintiff’s favor,’ and the other two Winter factors are satisfied.” Shell Offshore, Inc. v. 20 Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir. 2013) (quoting Alliance for the Wild 21 Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011)). Under this “serious questions” 22 variant of the Winter test, “[t]he elements . . . must be balanced, so that a stronger showing 23 of one element may offset a weaker showing of another.” Lopez, 680 F.3d at 1072. 24 III. DISCUSSION 25 A. Likelihood of Success on the Merits 26 i. Defamation Per Se 27 Under Arizona law, there are three elements of a defamation claim: “(1) defendant 28 made a false defamatory statement about plaintiff, (2) defendant published the statement 1 to a third party, and (3) defendant knew the statement was false, acted in reckless disregard 2 of whether the statement was true or false, or negligently failed to ascertain the truth or 3 falsity of the statement.” Farrell v. Hitchin’ Post Trailer Ranch, No. 1 CA-CV 11-0011, 4 2011 WL 6057930, at *2 (Ariz. Ct. App. Dec. 6, 2011) (citing Peagler v. Phoenix 5 Newspapers, Inc., 560 P.2d 1216, 1222 (Ariz. 1977)). “To be defamatory, a publication 6 must be false and must bring the defamed person into disrepute, contempt, or ridicule, or 7 must impeach plaintiff’s honesty, integrity, virtue, or reputation.” Godbehere v. Phoenix 8 Newspapers, Inc., 783 P.2d 781, 787 (Ariz. 1989). “Under Arizona law, a statement is 9 defamatory per se when the defamatory character of the statement is apparent on its face; 10 that is, when the words used are ‘of such a nature that the court can presume as a matter of 11 law that the communication will tend to degrade or disgrace the party defamed.’” 12 McKnight v. McKnight, No. CV-20-01956-PHX-DWL, 2021 WL 4133970, at *4 (D. Ariz. 13 Sept. 10, 2021) (internal quotations omitted) (quoting McClinton v. Rice, 265 P.2d 425, 14 429–30 (Ariz. 1953)). 15 Plaintiff has presented evidence that Defendant’s claims were investigated 16 internally as well as by third parties. Through these investigations, Defendant’s allegations 17 were deemed meritless. The results of the investigations were shared with Defendant, 18 therefore she knew her complaints were unfounded. Despite these results, Defendant 19 published those same allegations on social media. The Court finds Plaintiff has shown a 20 likelihood of success on the merits of the Defamation claim. 21 ii. Breach of Contract 22 Under Arizona law, a claim for breach of contract has three elements: (1) the 23 existence of a contract between the plaintiff and defendant; (2) a breach of the contract by 24 defendant; and (3) resulting damage to the plaintiff. Frank Lloyd Wright Found. v. Kroeter, 25 697 F. Supp. 2d 1118, 1125 (D. Ariz. 2010). 26 Here, Plaintiff alleges Defendant breached her employment agreement, specifically, 27 the confidentiality provision, when she posted confidential information on social media. 28 The confidentiality provision of her employment reads as follows: “Employee shall hold 1 Confidential Information . . . in the strictest confidence and shall not, without the prior 2 written authorization of an authorized Company officer, or as required by law, disclose 3 Confidential Information in any manner to any person, or use Confidential Information in 4 any way, other than in the furtherance of Employee’s duties during his/her employment 5 with the Company.” (Doc. 1 at 34.) “Confidential Information” was defined, in part, to 6 include “trade secrets . . . or other confidential and proprietary information relating to the 7 Company’s customers, manufacturing, products, services, pricing and sales, research, 8 business practices, procedures or Baking Products not generally known by or available to 9 the public that Employee becomes privy to by virtue of employment with the Company.” 10 (Id. at 35.) As discussed above, Defendant posted confidential information about 11 customers, internal communications, internal policies, and company operations. The Court 12 finds there is a likelihood of success on the breach of contract claim. 13 B. Irreparable Harm 14 Irreparable harm is harm for which there is no adequate remedy at law, such as 15 money damages. Ariz. Dream Act Coal. v. Brewer, 757 F.3d 1053, 1068 (9th Cir. 2014). 16 “The purpose of a preliminary injunction is not to remedy past harm but to protect plaintiffs 17 from irreparable injury that will surely result without their issuance. Demonstrating 18 irreparable harm is not an easy burden to fulfill.” DTC Energy Grp., Inc. v. Hirschfeld, 19 912 F.3d 1263, 1270 (10th Cir. 2018) (internal quotation marks and citation omitted); see 20 also Dalkita, Inc. v. Distilling Craft, LLC, 356 F. Supp. 3d 1125, 1131 (D. Colo. 2018). 21 However, “[e]vidence of threatened loss of prospective customers or goodwill certainly 22 supports a finding of the possibility of irreparable harm.” Stuhlbarg Int’l Sales Co., 240 23 F.3d at 841. 24 Here, Defendant is publishing false information that is clearly likely to harm the 25 goodwill of a company providing food supplies. She is also publishing confidential 26 information about Plaintiff’s customers that is likely to harm its business relationships. 27 Finally, as Plaintiff points out, they are unlikely to recover sufficient damages from an 28 individual to provide an adequate remedy. Therefore, the Court finds there is a likelihood 1 of irreparable harm if a temporary restraining order is not issued. 2 C. Balance of Equities 3 “In each case, a court must balance the competing claims of injury and must 4 consider the effect on each party of the granting or withholding of the requested relief.” 5 Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 542 (1987); see also Stormans, Inc. v. 6 Selecky, 586 F.3d 1109, 1138 (9th Cir. 2009) (“In assessing whether the plaintiffs have met 7 this burden, the district court has a ‘duty . . . to balance the interests of all parties and weigh 8 the damage to each.’” (quoting L.A. Mem’l Coliseum Comm’n v. Nat’l Football League, 9 634 F.2d 1197, 1203 (9th Cir.1980))). There is no harm that would befall Defendant if the 10 temporary restraining order issues as it merely precludes her from posting false, disproven 11 and confidential information. Plaintiff on the other hand will continue to endure harm to 12 its business, goodwill and reputation. The balance of equities weighs in favor of granting 13 the TRO. 14 D. Public Interest 15 “In exercising their sound discretion, courts of equity should pay particular regard 16 for the public consequences in employing the extraordinary remedy of injunction.” Winter, 17 555 U.S. at 24 (quoting Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982)) “Courts 18 have held that the public interest is served by protecting a company’s right to proprietary 19 information, business operations, and contractual rights.” Compass Bank v. Hartley, 430 20 F. Supp. 2d 973, 983 (D. Ariz. 2006). Defendant’s false statements in social media threaten 21 Plaintiff’s rights. The TRO is also narrowly tailored to only prevent demonstrably false 22 statements and disclosure of confidential information. Public policy weighs in favor of 23 issuing the TRO. 24 IV. EXPEDITED DISCOVERY 25 “A party may not seek discovery from any source before the parties have conferred 26 as required by Rule 26(f), except in a proceeding exempted from initial disclosure under 27 Rule 26(a)(1)(B), or when authorized by these rules, by stipulation, or by court order.” 28 Fed. R. Civ. P. 26(d)(1). District Courts in the Ninth Circuit have required a showing of 1 “good cause” when requesting expedited discovery. See, e.g., Voltage Pictures, LLC v. 2 Unknown Party, No. CV-13-728-PHX-SMM, 2013 WL 12174691, at *1 (D. Ariz. July 15, 3 2013); Malibu Media, LLC v. Doe, 319 F.R.D. 299, 302 (E.D. Cal. 2016). Good cause 4 exists for expedited discovery because a preliminary injunction hearing will be held on 5 February 13, 2023 and expedited discovery will ensure that evidence is not lost, destroyed, 6 altered or deleted and the parties can present complete evidence to the Court at the hearing. 7 Expedited discovery will be granted. 8 V. CONCLUSION 9 For the reasons discussed above, 10 IT IS HEREBY ORDERED that until the preliminary injunction hearing on 11 February 13, 2023: 12 1. Defendant, her agents, servants, employees, attorneys, and all those persons in 13 active concert or participation with them be preliminarily and permanently enjoined 14 and restrained from: 15 a. Publishing any and all BakeMark information about its customers, customer 16 contracts, investors or any other confidential business information; 17 b. Allowing to remain published on social media any materials making 18 statements, accusations, allegations, or implications that BakeMark sells 19 contaminated or adulterated food (the “Defamatory Words”) published 20 before the issuance of this order; 21 c. Re-publishing or publishing anew the Defamatory Words; 22 d. Contacting any individual, business, enterprise or other such entity that 23 Defendant knows or suspects is affiliated with or has a relationship with 24 BakeMark, commercial or otherwise, in order to attempt to abrogate, cancel, 25 terminate, or otherwise alter its relationship with BakeMark, to BakeMark’s 26 detriment, except in connection with legitimate commercial activity, such as, 27 but not limited to, attempting to make sales to that customer on the behalf of 28 a competitor to BakeMark, as may be permitted by any applicable 1 agreements between Pastis and BakeMark; and, 2 e. Conspiring with, aiding, assisting or abetting any other person or business 3 entity in engaging in or performing any of the activities referred to in 4 subparagraphs (a) through (b) above. 5 2. Consistent with paragraph (1) above, Defendant be ordered to remove from display, 6 to the extent possible, any of their publications containing the Defamatory Words, 7 including on all internet web pages. 8 3. Defendant be ordered to file with this Court and to serve upon Plaintiff, within thirty 9 (30) days after the entry and service on Defendant of an injunction, a report in 10 writing and under oath setting forth in detail the manner and form in which 11 Defendant has complied with the injunction. 12 IT IS FURTHER ORDERED granting Plaintiff’s request for expedited discovery 13 and ordering that within fifteen (15) days of the date of this Order, Defendant shall: 14 1. Identify all solicitations, advertisements, or fundraising efforts, including but not 15 limited to those sent through email, mail, online link, or website, which use or refer 16 to the Defamatory Words or similar statements; 17 2. Produce all documents (documents shall be construed as broadly as Federal Rules 18 of Civil Procedure 26 and 25 permit and shall include, but not be limited to, any and 19 all documents, electronically stored information, communications, email, text- 20 messages, or data) referring or relating to any solicitations, advertisements, or 21 fundraising efforts, including but not limited to those sent through email, mail, 22 online link, or website, which use or refer to the Defamatory Words or similar 23 statements; 24 3. Produce all documents (documents shall be construed as broadly as Federal Rules 25 of Civil Procedure 26 and 25 permit and shall include, but not be limited to, any and 26 all documents, electronically stored information, communications, email, text- 27 messages, or data) identifying any and all recipients of any solicitations, 28 advertisements, or fundraising efforts, including but not limited to those sent 1 through email, mail, online link, or website, which use or refer to the Defamatory 2 Words or similar statements; 3 4. Identify and produce all documents (documents shall be construed as broadly as 4 Federal Rules of Civil Procedure 26 and 25 permit and shall include, but not be 5 limited to, any and all documents, electronically stored information, 6 communications, email, text-messages, or data) demonstrating, all donations, 7 payments, or money received by Defendants relating to, or as a result of, any 8 solicitations, advertisements, or fundraising efforts, including but not limited to 9 those sent through email, mail, online link, or website, which use or refer to the 10 Defamatory Words or similar statements; 11 5. Identify each person and entity which consulted, advised, or otherwise assisted 12 Defendants in preparing or distributing any solicitations, advertisements, or 13 fundraising efforts, including but not limited to those sent through email, mail, 14 online link, or website, which use or refer to the Defamatory Words or similar 15 statements; 16 6. Produce all documents (documents shall be construed as broadly as Federal Rules 17 of Civil Procedure 26 and 25 permit and shall include, but not be limited to, any and 18 all documents, electronically stored information, communications, email, text- 19 messages, or data) constituting communications, whether electronic or otherwise, 20 relating or referring to any solicitations, advertisements, or fundraising efforts, 21 including but not limited to those sent through email, mail, online link, or website, 22 which use or refer to the Defamatory Words or similar statements; 23 7. Produce all documents (documents shall be construed as broadly as Federal Rules 24 of Civil Procedure 26 and 25 permit and shall include, but not be limited to, any and 25 all documents, electronically stored information, communications, email, text- 26 messages, or data) constituting communications, whether electronic or otherwise, 27 relating or referring to any solicitations, advertisements, or fundraising efforts, 28 including but not limited to those sent through email, mail, online link, or website, 1 which use or refer to the Defamatory Words or similar statements, which were sent 2 or received by any and all employees, agents, or representatives of Defendants. 3 IT IS FURTHER ORDERED that within seven (7) days’ notice by BakeMark, 4|| Defendant shall present herself for deposition at a location to be designated by counsel for || BakeMark. 6 IT IS FURTHER ORDERED that, effective immediately, Defendant shall 7\|| preserve all originals and copies of hard copy and electronic evidence, including but not 8 || limited to all disks, personal data assistants, hard drives, virtual hard drives, online storage 9|| and other electronic storage devices in his possession, custody, or control to which they || had or have access and on which relevant information may currently or have previously existed. 12 IT IS FURTHER ORDERED setting this matter for a preliminary injunction 13 || hearing on February 13, 2024 at 1:00 p.m. (3 hours allowed). 14 Dated this 12th day of January, 2024. 15 —— 6 17 Aionorable Susan M. Brnovich =~ 8 United States District Judge 19 20 21 22 23 24 25 26 27 28
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