UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY CHAMBERS OF MARTIN LUTHER KING JULIEN XAVIER NEALS BUILDING & U.S. COURTHOUSE UNITED STATES DISTRICT JUDGE 50 WALNUT STREET 973-645-6042
August 9, 2021
LETTER OPINION Re: LEVINE vy. BLOCKFIINC, et al Civil Action No, 21-11934 (JXN) (JBC) Dear Counsel: □ Before this Court is Plaintiff Benjamin Levine’s (“Plaintiff”) Motion for an Order to Show Cause for a Preliminary Injunction [ECF No. 18] enjoining BlockFi Inc., BlockFi Lending LLC, and BlockFi Trading LLC (collectively “BlockFi”) to (1) return the 325 Bitcoins to Plaintiff, and (2) release the assets in Plaintiffs Interest Account. For the reasons discussed herein, and on the record, Plaintiff's Motion for an Order to Show Cause for a Preliminary Injunction is DENIED. I BACKGROUND This case is about who is the rightful owner of 329 Bitcoins worth over $16 million, which were transferred to Plaintiff's BlockFi Interest Account on May 14, 2021. Amended Complaint (“Am. Compl.”), ECF No. 17 9 1. In the days that follow, BlockFi was able to retrieve 325 of the 329 Bitcoins that it claims were “erroneously” credited to Plaintiff's account. Jd. J 61-63; ECF No. 20 at 2. Believing that he is entitled to the Bitcoins, Plaintiff initiated this lawsuit against BlockFi alleging four causes of action for (1) declaratory judgment, (2) conversion, (3) promissory estoppel, and (4) negligence. Compl., ECF No. 1.
On July 26, 2021, nearly two months after this action was commenced, Plaintiff filed an Amended Complaint, asserting for the first time that he entered into a “Stock Purchase Agreement,” under which he purportedly agreed to pay 315 Bitcoins by August 15, 2021, to acquire a stake in a company called D9 Manufacturing, Inc. Am, Compl {J 52-54, 78, 93, On the same date, Plaintiff filed an application for an order to show cause why a preliminary injunction should not be entered enjoining BlockFi to (1) return the 325 Bitcoins to Plaintiff, and (2) release the assets in Plaintiff's Interest Account. Order to Show Cause (“OTSC”), ECF No. 18-21, at 33. Following oral argument on Plaintiff's motion, the Court denied Plaintiff's request for a preliminary injunction with respect to his claims regarding the return of 325 Bitcoins. Letter Order, ECF No. 26; OTSC Tr. 32:11, ECF No. 30, The Court reserved its decision on the issue related to Plaintiffs Interest Account until the parties had an opportunity to fully brief the issue. fd; OTSC Tr, 32:12-21. Having received the parties’ supplemental papers, the issue is now ripe for the Court to decide. Il. LEGAL STANDARD “Preliminary injunctive relief is an ‘extraordinary remedy, which should be granted only in limited circumstances.”” Ferring Pharms., Inc. y. Watson Pharms., Inc., 765 F.3d 205, 210 (3d Cir. 2014) (quoting Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578, 586 (3d Cir, 2002)). “A plaintiff seeking a preliminary injunction must establish that he is [1] likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” Ferring, 765 F.3d at 210 (quoting Winter y, Natural Resources Defense Council, 555 U.S. 7, 20 (2008)). The first two factors are the “most critical,” and the Court considers these “gateway factors” before the third and fourth factors. Reilly v. City of Harrisburg, 858 F.3d 173, 179 (3d Cir. 2017). Only if a plaintiff meets the threshold for these gateway factors does the
Court consider the remaining factors; a plaintiffs failure to establish the gateway factors in its favor renders a preliminary injunction inappropriate. Id. UI. = DISCUSSION Consistent with Third Circuit precedent, this Court need not analyze every factor of the preliminary injunction analysis because Plaintiff has not established a risk of immediate irreparable harm. See Beberman y, United States Department of State, 675 Fed. Appx. 131, 135 (Gd. Cir, 2017) (stating that “[bJecause [plaintiff] has not established a risk of irreparable harm, the District Court did not act outside of its discretion in denying her motion for a preliminary injunction.”); Aim. Express Travel Related Servs., Ine. v. Sidamon—Eristoff, 669 F.3d 359, 374 (3d Cir. 2012) (declining to address the remaining preliminary injunction factors when the plaintiff failed to meet one factor). A party secking a preliminary injunction must make “a clear showing of immediate irreparable injury,” Hohe : vy. Casey, 868 F.2d 69, 72 (3d Cir, 1989), “Establishing a risk of irreparable harm is not enough.” ECRI v. MeGraw—Hill, Inc., 809 F.2d 223, 226 (3d Cir. 1987) (citations and quotation omitted), show irreparable harm, the plaintiff must demonstrate potential harm which cannot be redressed by a legal remedy.” Jnstant Air Freight Co. v. CF. Air Freight, Inc., 882 F.2d 797, 801 (3d Cir. 1989), Economic loss does not constitute irreparable harm. Acierno py. New Castle County, 40 F.3d 645, 653 3d Cir, 1994), The “loss of potential business opportunities, profits, customers, or contracts is compensable by money damages and does not constitute irreparable injury.” . Apollo Tech. Corp. v. Centrosphere Indus. Corp., 805 F.Supp. 1157, 1209 (D.N.J. 1992) (citing Instant Air, 882 F.2d at - 801; Frank's GMC Truck Center, Inc. v. General Motors Corp., 847 F.2d 100, 102 (3d Cir. 1988); Jn re Arthur Treacher’s Franchisee Litigation, 689 F.2d 1137, 1141 (3d Cir. 1982)). The Third Circuit has observed that “even when an action will result in the destruction of a business,” a district court’s refusal to grant a preliminary injunction is appropriate when the loss is “capable of ascertainment and
award at final judgment.” Figueroa y. Precision Surgical, Inc., No. 10-4449, 2011 WL 1368778, at *5 (3d. Cir, Apr. 12, 2011) (unpublished) (quoting Jnstant Air, 882 F.2d at 801)). Plaintiff contends that he will suffer from “imminent” irreparable harm if he is not able to raise the 315 Bitcoins necessary for him to close the Stock Purchase Agreement with D9 Manufacturing, Inc. ECF No. 32 at 3 4 Il. To raise such money, Plaintiff claims that “he requires the assets in his Interest Account.” Plaintiff further argues that if he is not able to raise the funds “he will have irreparably lost this transaction” and “his Standard Operating Procedures will have been lost to what will be a direct competitor, resulting in lost profits, lost future business, and loss of good will.” Ze. In opposition, BlockFi contends that Plaintiffs motion fails because “[a]ny harm Plaintiff purports to suffer from being unable to access the Preexisting Balance would be readily compensable in monetary damages.” ECF No. 31 at 5 42. The Court finds that a preliminary injunction is inappropriate because Plaintiff has not established a likelihood of immediate irreparable harm.
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UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY CHAMBERS OF MARTIN LUTHER KING JULIEN XAVIER NEALS BUILDING & U.S. COURTHOUSE UNITED STATES DISTRICT JUDGE 50 WALNUT STREET 973-645-6042
August 9, 2021
LETTER OPINION Re: LEVINE vy. BLOCKFIINC, et al Civil Action No, 21-11934 (JXN) (JBC) Dear Counsel: □ Before this Court is Plaintiff Benjamin Levine’s (“Plaintiff”) Motion for an Order to Show Cause for a Preliminary Injunction [ECF No. 18] enjoining BlockFi Inc., BlockFi Lending LLC, and BlockFi Trading LLC (collectively “BlockFi”) to (1) return the 325 Bitcoins to Plaintiff, and (2) release the assets in Plaintiffs Interest Account. For the reasons discussed herein, and on the record, Plaintiff's Motion for an Order to Show Cause for a Preliminary Injunction is DENIED. I BACKGROUND This case is about who is the rightful owner of 329 Bitcoins worth over $16 million, which were transferred to Plaintiff's BlockFi Interest Account on May 14, 2021. Amended Complaint (“Am. Compl.”), ECF No. 17 9 1. In the days that follow, BlockFi was able to retrieve 325 of the 329 Bitcoins that it claims were “erroneously” credited to Plaintiff's account. Jd. J 61-63; ECF No. 20 at 2. Believing that he is entitled to the Bitcoins, Plaintiff initiated this lawsuit against BlockFi alleging four causes of action for (1) declaratory judgment, (2) conversion, (3) promissory estoppel, and (4) negligence. Compl., ECF No. 1.
On July 26, 2021, nearly two months after this action was commenced, Plaintiff filed an Amended Complaint, asserting for the first time that he entered into a “Stock Purchase Agreement,” under which he purportedly agreed to pay 315 Bitcoins by August 15, 2021, to acquire a stake in a company called D9 Manufacturing, Inc. Am, Compl {J 52-54, 78, 93, On the same date, Plaintiff filed an application for an order to show cause why a preliminary injunction should not be entered enjoining BlockFi to (1) return the 325 Bitcoins to Plaintiff, and (2) release the assets in Plaintiff's Interest Account. Order to Show Cause (“OTSC”), ECF No. 18-21, at 33. Following oral argument on Plaintiff's motion, the Court denied Plaintiff's request for a preliminary injunction with respect to his claims regarding the return of 325 Bitcoins. Letter Order, ECF No. 26; OTSC Tr. 32:11, ECF No. 30, The Court reserved its decision on the issue related to Plaintiffs Interest Account until the parties had an opportunity to fully brief the issue. fd; OTSC Tr, 32:12-21. Having received the parties’ supplemental papers, the issue is now ripe for the Court to decide. Il. LEGAL STANDARD “Preliminary injunctive relief is an ‘extraordinary remedy, which should be granted only in limited circumstances.”” Ferring Pharms., Inc. y. Watson Pharms., Inc., 765 F.3d 205, 210 (3d Cir. 2014) (quoting Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578, 586 (3d Cir, 2002)). “A plaintiff seeking a preliminary injunction must establish that he is [1] likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” Ferring, 765 F.3d at 210 (quoting Winter y, Natural Resources Defense Council, 555 U.S. 7, 20 (2008)). The first two factors are the “most critical,” and the Court considers these “gateway factors” before the third and fourth factors. Reilly v. City of Harrisburg, 858 F.3d 173, 179 (3d Cir. 2017). Only if a plaintiff meets the threshold for these gateway factors does the
Court consider the remaining factors; a plaintiffs failure to establish the gateway factors in its favor renders a preliminary injunction inappropriate. Id. UI. = DISCUSSION Consistent with Third Circuit precedent, this Court need not analyze every factor of the preliminary injunction analysis because Plaintiff has not established a risk of immediate irreparable harm. See Beberman y, United States Department of State, 675 Fed. Appx. 131, 135 (Gd. Cir, 2017) (stating that “[bJecause [plaintiff] has not established a risk of irreparable harm, the District Court did not act outside of its discretion in denying her motion for a preliminary injunction.”); Aim. Express Travel Related Servs., Ine. v. Sidamon—Eristoff, 669 F.3d 359, 374 (3d Cir. 2012) (declining to address the remaining preliminary injunction factors when the plaintiff failed to meet one factor). A party secking a preliminary injunction must make “a clear showing of immediate irreparable injury,” Hohe : vy. Casey, 868 F.2d 69, 72 (3d Cir, 1989), “Establishing a risk of irreparable harm is not enough.” ECRI v. MeGraw—Hill, Inc., 809 F.2d 223, 226 (3d Cir. 1987) (citations and quotation omitted), show irreparable harm, the plaintiff must demonstrate potential harm which cannot be redressed by a legal remedy.” Jnstant Air Freight Co. v. CF. Air Freight, Inc., 882 F.2d 797, 801 (3d Cir. 1989), Economic loss does not constitute irreparable harm. Acierno py. New Castle County, 40 F.3d 645, 653 3d Cir, 1994), The “loss of potential business opportunities, profits, customers, or contracts is compensable by money damages and does not constitute irreparable injury.” . Apollo Tech. Corp. v. Centrosphere Indus. Corp., 805 F.Supp. 1157, 1209 (D.N.J. 1992) (citing Instant Air, 882 F.2d at - 801; Frank's GMC Truck Center, Inc. v. General Motors Corp., 847 F.2d 100, 102 (3d Cir. 1988); Jn re Arthur Treacher’s Franchisee Litigation, 689 F.2d 1137, 1141 (3d Cir. 1982)). The Third Circuit has observed that “even when an action will result in the destruction of a business,” a district court’s refusal to grant a preliminary injunction is appropriate when the loss is “capable of ascertainment and
award at final judgment.” Figueroa y. Precision Surgical, Inc., No. 10-4449, 2011 WL 1368778, at *5 (3d. Cir, Apr. 12, 2011) (unpublished) (quoting Jnstant Air, 882 F.2d at 801)). Plaintiff contends that he will suffer from “imminent” irreparable harm if he is not able to raise the 315 Bitcoins necessary for him to close the Stock Purchase Agreement with D9 Manufacturing, Inc. ECF No. 32 at 3 4 Il. To raise such money, Plaintiff claims that “he requires the assets in his Interest Account.” Plaintiff further argues that if he is not able to raise the funds “he will have irreparably lost this transaction” and “his Standard Operating Procedures will have been lost to what will be a direct competitor, resulting in lost profits, lost future business, and loss of good will.” Ze. In opposition, BlockFi contends that Plaintiffs motion fails because “[a]ny harm Plaintiff purports to suffer from being unable to access the Preexisting Balance would be readily compensable in monetary damages.” ECF No. 31 at 5 42. The Court finds that a preliminary injunction is inappropriate because Plaintiff has not established a likelihood of immediate irreparable harm. More specifically, Plaintiff has not demonstrated that his alleged harm is imminent and that he cannot be compensated by monetary damages. First, Plaintiff fails to show an immediate injury arising from the “freeze” on his Interest Account. Plaintiff claims that the Interest Account assets are essential to closing the Stock Purchasing Agreement, which expires on August 15, 2021. Despite this deadline, Plaintiff agreed to extend the parties’ briefing on the instant motion until August 31, 2021, and a hearing at a time convenient for the Court on or after September 7, 2021, See Plaintiff's July 28, 2021 Letter, ECF No. 21 (“Levine respectfully requests that the Court attend to this motion in an expedited fashion, subject to the briefing schedule proposed by BlockFi”); see also BlockFi’s July 27, 2021 Letter, ECF No. 20 (“Defendants respectfully request that the Court enter the following schedule in accordance with the Local Civil
Rules: opposition brief due August 24, 2021; reply papers due August 31, 2021; and a hearing at a time convenient for the Court on or after September 7, 2021.”). Moreover, Plaintiff delayed the filing of the instant order to show cause nearly two months following the commencement of this action. The initial Complaint was filed on May 28, 2021 and the application for an order to show case was filed on July 26, 2021. Thus, Plaintiffs own action, to wit: lack of urgency and delay in filing the application for an order to show cause, undermines any assertion of immediate irreparable harm. See e.g., MNI Mgint., Inc. v. Wine King, LLC, 542 F. Supp. 2d 398, 403 (D.N.J. 2008) (“[I]Jnexcusable delay in seeking a preliminary injunction may defeat a movant’s assertion of itreparable harm.”); see also Chaves vy. Int'l Boxing Fed'n, Civ. No. 16-1374, 2016 WL 1118246, at *2 (D.N.J. Mar. 22, 2016) (denying the plaintiffs application for an OTSC, finding “[T]he nature and extent of irreparable harm is not clear, given that [the p]laintiffs waited until the last minute to file this application”). Plaintiff also has not established that his alleged harm cannot be compensated by monetary damages, Plaintiff asserts that he will lose profits, future business, and goodwill if the injunction is not granted. ECF No, 32 at 3. Courts in this District have held that “loss of potential business opportunities, profits, customers, or contracts is compensable by money damages and does not constitute irreparable injury.” Apollo Tech. Corp, 805 F.Supp. at 1209. Because Plaintiff fails to establish a likelihood of imminent, irreparable injury, which failure renders a preliminary injunction inappropriate, the Court denies Plaintiffs application for an order to show cause and a preliminary injunction.
IV. CONCLUSION For the foregoing reasons, Plaintiff's Motion for an Order to Show Cause and Preliminary Tnyunction enjoining BlockFi to release the assets in Plaintiff's Interest Account [ECF No. 18] is DENIED. im
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