Jump Operations, LLC v. Merryman

• Court: District Court, D. Nevada
• Decided: April 8, 2022
• Docket: 2:22-cv-00575
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA

3 Jump Operations, LLC, ) 4 ) Plaintiff, ) Case No.: 2:22-cv-00575-GMN-DJA 5 vs. ) 6 ) ORDER Richard Wright Merryman, ) 7 ) Defendant. ) 8 ) 9 10 Pending before the Court is the ex parte Emergency Motion for Temporary Restraining 11 Order, (ECF No. 7), filed by Plaintiff Jump Operations, LLC. (“Jump Operations”). For the 12 reasons set forth below, Plaintiff’s Motion for Temporary Restraining Order is GRANTED. 13 I. BACKGROUND 14 This case arises out of the sale of an internet domain name. Defendant Richard 15 Merryman (“Defendant”) owns the internet domain name “www.wormhole.com” (the 16 “Wormhole Domain”), which he listed with domain name registrar Network Solutions, LLC. 17 (Compl. ¶ 1, ECF No. 1); (Mot. Temporary Restraining Order “TRO” 5:5–6, ECF No. 7). 18 Offers can be made to purchase domain names through DomainAgents, a third-party website 19 created to assists domain owners and buyers “through the often daunting process of domain 20 negotiations and transfers.” (Compl. ¶ 11); (About Domain Agents, https://domainagents.com/ 21 about-us, (last visited April 8, 2022)). DomainAgents allows a buyer to make on offer on a 22 domain name, which it then communicates to the domain owner. (Compl. ¶ 12). If the domain 23 owner chooses to engage in negotiations, it does so directly with the potential buyer by 24 exchanging messages through DomainAgents’ platform. (Id.). When an agreement is reached 25 1 between a seller and buyer, DomainAgents facilitates payment and transfer of the domain name 2 through the service Escrow.com. (Id. ¶ 13). 3 Plaintiff is involved in the development of a blockchain project entitled the “Wormhole 4 Network.” (Id. ¶¶ 1, 9). On June 29, 2021, Plaintiff offered Defendant $2,500 to purchase the 5 Wormhole Domain. (Compl. ¶ 16); (Printout Messages at 2, Ex. 13 to TRO, ECF No. 7-13). 6 On July 1, 2021, Defendant counteroffered for $50,000. (Compl. ¶ 17); (Printout Messages at 2, 7 Ex. 13 to TRO, ECF No. 7-13). Plaintiff accepted Defendant’s counteroffer to sell the 8 Wormhole Domain for $50,000. (Compl. ¶ 18). After DomainAgents provided escrow 9 instructions to the parties, Defendant reneged on the deal, stating: 10 Nope, sorry, I changed my mind. This was too easy, I’m either leaving a lot of money on the table or it is a scam. Either way no sale. If you want to make a 11 reasonable offer, then you are encouraged to do so. 12 (Id.); (Printout Messages at 1, Ex. 13 to TRO, ECF No. 7-13). DomainAgents notified 13 Plaintiff that Defendant was not complying with instructions to move the transaction 14 into escrow, and thus, that Defendant was in breach of the purchase agreement. (TRO 15 6:8–13); (Marcus Decl. ¶ 6, Ex. 2 to TRO, ECF No. 7-2). On July 21, 2021, Plaintiff’s 16 in-house counsel sent a letter to Defendant demanding that he accept the agreed-upon 17 amount and transfer the domain name. (Compl. ¶ 24); (Letter, Ex. 14 to TRO, ECF No. 18 7-14). Defendant did not respond. (Id.). 19 Plaintiff filed the present case, alleging three causes of action: (1) breach of 20 contract and specific performance; (2) breach of implied covenant of good faith and fair 21 dealing; and (3) declaratory judgment pursuant to 28 U.S.C. § 2201. (Compl. ¶¶ 30–46). 22 Plaintiff filed its Motion for Temporary Restraining Order, related to the breach of 23 contract claim only, which asks the court to: (1) restrain Defendant from selling the 24 Wormhole Domain to a third party during the pendency of this case; and (2) lock the 25 Wormhole Domain with the registrar Network Solutions, LLC. (TRO 11:24–12:4). 1 II. LEGAL STANDARD 2 The same legal standard applies to both temporary restraining orders and preliminary 3 injunctions sought pursuant to Federal Rule of Civil Procedure 65. See Stuhlbarg Int’l Sales 4 Co. v. John D. Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001) (noting that the analysis 5 applied to temporary restraining orders and preliminary injunctions is “substantially identical”). 6 A preliminary injunction is “an extraordinary remedy that may only be awarded upon a clear 7 showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council, Inc., 8 555 U.S. 7, 24 (2008). A court may grant such relief only upon a petitioner’s showing of (1) 9 likelihood of success on the merits, (2) likelihood of irreparable harm in the absence of 10 preliminary relief, (3) the balance of equities weighs in petitioner’s favor, and (4) an injunction 11 is in the public interest. Id. at 20. A temporary restraining order is distinguished by its 12 “underlying purpose of preserving the status quo and preventing irreparable harm just so long 13 as is necessary to hold a hearing, and no longer.” Granny Goose Foods, Inc. v. Brotherhood of 14 Teamsters & Auto Truck Drivers Local No. 70, 415 U.S. 423, 439 (1974); see also Fed. R. Civ. 15 P. 65(b) (limiting temporary restraining orders to 14 days unless extended for good cause, and 16 providing for expedited hearings on preliminary injunctions). 17 “The urgency of obtaining a preliminary injunction necessitates a prompt determination 18 and makes it difficult to obtain affidavits from persons who would be competent to testify at 19 trial. The trial court may give even inadmissible evidence some weight, when to do so serves 20 the purpose of preventing irreparable harm before trial.” Flynt Distrib. Co., Inc. v. Harvey, 734 21 F.2d 1389, 1394 (9th Cir. 1984) (citing 11 C. Wright and A. Miller, Federal Practice and 22 Procedure, Civil, § 2949 at 471 (1973)). 23 III. DISCUSSION 24 The Court, having considered the Complaint, Plaintiff’s Motion, supporting affidavits, 25 and accompanying exhibits, finds that Plaintiff has met each of the Winter factors as to its 1 breach of contract claim. Thus, the issuance of a limited temporary restraining order 2 prohibiting Defendant from selling the Wormhole Domain and locking it with the registrar is 3 appropriate. 4 A. NOTICE 5 A court may issue an ex parte temporary restraining order only if “the movant’s attorney 6 certifies in writing any efforts to give notice and the reasons why it should not be required.” 7 Fed. R. Civ. P. 65(b)(1)(B). Furthermore, the movant must supply “specific facts in an 8 affidavit or verified complaint clearly show[ing] that immediate and irreparable injury, loss, or 9 damage will result to the movant before the adverse party can be heard in opposition.” Fed. R. 10 Civ. P. 65(b)(1)(A). 11 Here, Plaintiff sufficiently demonstrates that notice and further delay will cause 12 immediate and irreparable injury. On July 21, 2021, Plaintiff’s counsel directly contacted 13 Defendant to attempt to resolve the dispute, but Defendant failed to respond. (See Marcus Decl. 14 ¶¶ 7–8, Ex. 2 to TRO, ECF No. 7-2); (Letter, Ex. 14 to TRO, ECF No. 7-14). Plaintiff explains 15 that internet domain names are unique, and thus, Plaintiff needs ownership of the Wormhole 16 Domain because it is an exact match for the name of the Wormhole Network project. (See 17 Marcus Decl. ¶ 10, Ex. 2 to TRO); (TRO 4:11–23). Plaintiff argues that it will be harmed if 18 Defendant were to transfer the Wormhole Domain to another party because it would then be 19 deprived of a unique and irreplaceable asset. (See Marcus Decl. ¶ 10, Ex. 2 to TRO); (TRO 20 4:11–23). Additionally, Plaintiff explains that it submitted this Motion ex parte because “upon 21 receiving notice of this action, [Defendant] could transfer the Wormhole Domain to another 22 registrar or registrant prior to an opportunity for [Plaintiff] to be heard on its Motion for 23 Preliminary Injunction,” and “Plaintiff would have no recourse against a subsequent 24 purchas[er] who was not a party to the agreement breached by [Defendant].” (TRO 4:16–20, 25 1 10:18–21). Accordingly, Plaintiff has shown that immediate and irreparable harm will result if 2 Defendant is notified of the temporary restraining order. 3 B. LIKELIHOOD OF SUCCESS ON THE MERITS 4 A claim for breach of contract must allege (1) the existence of a valid contract; (2) that 5 plaintiff performed or was excused from performance; (3) that the defendant breached the terms 6 of the contract; and (4) that the plaintiff was damaged as a result of the breach. See Restatement 7 (Second) of Contracts § 203 (2007); Calloway v. City of Reno, 116 Nev. 250, 993 P.2d 1259, 8 1263 (Nev. 2000) (“A breach of contract may be said to be a material failure of performance of 9 a duty arising under or imposed by agreement.”). An enforceable contract requires: (1) an offer 10 and acceptance; (2) meeting of the minds; and (3) consideration. May v. Anderson, 121 Nev. 11 668, 119 P.3d 1254, 1257 (Nev. 2005). 12 Here, Plaintiff has demonstrated that a valid contract likely existed between the parties. 13 After accepting Plaintiff’s invitation through DomainAgents to negotiate, Defendant made a 14 firm offer to sell the Wormhole Domain for $50,000, which Plaintiff accepted. (See Purchase 15 Agreement, Ex. 15 to TRO, ECF No. 7-15). This demonstrates that the purchase agreement 16 was likely supported by valid, bargained-for consideration: an exchange of something of value 17 from Defendant (the Wormhole Domain) for something of value from Plaintiff ($50,000). See 18 May v. Anderson, 121 Nev. 668, 672 (2005) (“Basic contract principles require, for an 19 enforceable contract, an offer and acceptance, meeting of them imps, and consideration.”). 20 Further, Plaintiff has repeatedly demonstrated its intent to perform on this contract through its 21 communications with DomainAgents and Defendant. (See, e.g., Letter, Ex. 14 to TRO) 22 (confirming that Plaintiff “fully intends to pay the entire amount agreed.”). However, Plaintiff 23 cannot complete the transaction until Defendant sets up his Escrow.com account, which he has 24 yet to do. (Sale Confirmation at 1, Ex. 12 to TRO, ECF No. 7-12); (Printout Messages at 4, Ex. 25 13 to TRO). 1 As to breach, Plaintiff expressly communicated his refusal to transfer the Wormhole 2 Domain at the agreed upon price of $50,000. (See Printout Messages at 1, Ex. 13 to TRO, ECF 3 No. 7-13). Instead, Defendant is now demanding a higher price for the Wormhole Domain, 4 even though he already agreed to a price of $50,000, which is a breach of the purchase 5 agreement. Finally, Plaintiff has demonstrated that it was likely damaged as a result of 6 Defendant’s breach because it lost access to a unique and valuable asset that it can only obtain 7 from Defendant. As such, the Court finds that the first Winter factor—likelihood of success on 8 the merits—weighs in Plaintiff’s favor. 9 C. LIKELIHOOD OF IRREPARABLE HARM 10 Plaintiff also argues that it will be irreparably harmed if the Court declines to issue a 11 temporary restraining order. (TRO 9:24–10:21). To carry its burden, Plaintiff must also 12 establish that it will likely suffer irreparable harm without the issuance of injunctive relief. 13 Winter, 555 U.S. at 21. Plaintiff must “demonstrate a likelihood of irreparable injury—not just 14 a possibility—in order to obtain preliminary relief.” Id. 15 Here, given Defendant’s communicated belief that he is not bound by the terms of the 16 purchase agreement, the Court can reasonably infer that he would sell the Wormhole Domain to 17 another interested party if he is not restrained from doing so. Upon the transfer of the 18 Wormhole Domain to another party, Plaintiff would have no legal recourse against that 19 subsequent purchaser through which to obtain the Wormhole Domain. Accordingly, the 20 likelihood of irreparable harm element is satisfied. See, e.g., Las Vegas Sands Corp. v. Ming, 21 360 F. Supp. 3d 1072, 1080 (D. Nev. 2019) (“Irreparable harm is also implicated where there is 22 a potential for an infringing defendant to transfer domain names to a different registrar outs ide 23 of a court’s jurisdiction.”); Hakkasan LV, LLC v. Wang, No. 2:13-cv-01122-GMN, 2013 WL 24 3944175, at *3 (D. Nev. July 30, 2013) (“Plaintiffs will suffer irreparable injury if the Court 25 does not require the domain name registrar . . . to lock the infringing . . . domain name pending 1 litigation of this matter . . . because Defendants could transfer the Infringing Domain Name to 2 another registrant or registrar.”). 3 D. BALANCE OF EQUITIES 4 Here, the balance of the equities tips in favor of Plaintiff. The issuance of a temporary 5 restraining order merely prevents the sale or transfer of the Wormhole Domain pending a 6 preliminary injunction hearing on this matter. Defendant will not be prohibited form otherwise 7 using this asset. Conversely, if a temporary restraining order does not issue, Defendant would 8 have the ability to dispose of the Wormhole Domain, the loss of which will cause Plaintiff 9 irreparable harm. 10 E. PUBLIC INTEREST 11 “The public interest analysis for the issuance of [injunctive relief] requires [district 12 courts] to consider whether there exists some critical public interest that would be injured by 13 the grant of preliminary relief.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1138 14 (9th Cir. 2011) (citation omitted). In this case, the Court finds no such public interest that 15 would be injured by the issuance of such injunctive relief. To the contrary, public interest 16 strongly favors enforcing contracts. See, e.g., NAC Foundation, LLC v. Jodoin, No. 2:16-cv- 17 1039-GMN-VCF, 2016 WL 4059648, at *2 (D. Nev. July 26, 2016) (“an injunction in this 18 instance protects the public’s interest in the integrity and enforceability of contracts.”). 19 In sum, the Court finds that Plaintiff has satisfied the requirements of imposing a 20 temporary restraining order on Defendant. The Court accordingly grants a limited temporary 21 restraining order to: (1) prohibit Defendant from selling, transferring, or otherwise encumbering 22 the Wormhole Domain; and (2) lock the Wormhole Domain with the Network Solutions, LLC 23 registrar. 24 // 25 // 1 F. BOND 2 The issuance of a temporary restraining order is conditioned on the movant posting 3 security “in an amount that the court considers proper to pay the costs and damages sustained 4 by any party found to have been wrongfully enjoined or restrained.” Fed. R. Civ. P. 65(c). “The 5 district court is afforded wide discretion in setting the amount of the bond, and the bond amount 6 may be zero if there is no evidence the party will suffer damages from the injunction.” Conn. 7 Gen. Life Ins. Co. v. New Images of Beverly Hills, 321 F.3d 878, 882 (9th Cir. 2003). Further, a 8 strong likelihood of success on the merits may favor “a minimal bond or no bond at all.” 9 California v. Tahoe Regional Planning Agency, 766 F.2d 1319, 1326 (9th Cir. 1985). 10 Given the likelihood that Plaintiff will succeed on the merits of its breach of contract 11 claim and the limited hardship that a temporary restraining order will impose, there is a low 12 probability that Defendant will suffer damages caused by an improperly granted temporary 13 restraining order. The Court therefore declines to order a bond in this case. 14 IV. CONCLUSION 15 IT IS HEREBY ORDERED that Plaintiff’s Motion for Temporary Restraining Order, 16 (ECF No. 7), is GRANTED. Defendant is TEMPORARILY RESTRAINED from selling, 17 transferring, or otherwise encumbering the domain name “www.wormhole.com,” unless 18 Defendant is selling or transferring it to Plaintiff. 19 IT IS FURTHER ORDERED that Defendant shall immediately inform the registrar 20 Network Solutions, LLC that the Wormhole Domain shall be placed on lock for the duration of 21 this Order. 22 IT IS FURTHER ORDERED that Plaintiff shall serve Defendant with a copy of this 23 Order by Monday, April 11, 2022. 24 25 1 IT IS FURTHER ORDERED that Defendant shall have until Friday, April 15, 2022, 2 to file his response to Plaintiff’s Motion for Preliminary Injunction, (ECF No. 8). Thereafter, 3 Plaintiff shall have until Monday, April 18, 2022, to file its reply. 4 IT IS FURTHER ORDERED that this matter is set for hearing on Plaintiff’s Motion 5 for Preliminary Injunction IN PERSON on Wednesday, April 20, 2022, at 1:30 P.M. in Las 6 Vegas Courtroom 7D. 7 DATED this __8__ day of April, 2022. 8 9 ___________________________________ Gloria M. Navarro, District Judge 10 United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25