North America Association, LLC v. Smith

D. Nevada

North America Association, LLC v. Smith

DecidedSeptember 16, 2020

Docket2:20-cv-01650

StatusUnknown

This text of North America Association, LLC v. Smith (North America Association, LLC v. Smith) is published on Counsel Stack Legal Research, covering District Court, D. Nevada primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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North America Association, LLC v. Smith, (D. Nev. 2020).

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Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *

7 NORTH AMERICA ASSOCIATION, LLC, Case No. 2:20-CV-1650 JCM (BNW)

8 Plaintiff(s), ORDER

9 v.

10 KATI MARIE SMITH,

11 Defendant(s).

12 13 Presently before the court is North America Association, LLC’s (“NAA”) emergency ex 14 parte motion for temporary restraining order (ECF No. 6). 15 Also before the court is defendant Kati Smith’s motion to extend the time to file her 16 opposition to the temporary restraining order (ECF No. 13). 17 Also before the court is NAA’s motion to strike portions of Smith’s opposition (ECF No. 18 16). 19 A. Motion to Strike 20 The court first turns to NAA’s motion to strike. (ECF No. 16). NAA alleges that Smith 21 has submitted statements made during settlement negotiations in violation of Fed. R. Evid. 408 22 and hearsay statements in violation of Fed. R. Evid. 802. (Id. at 2). 23 Under Federal Rule of Civil Procedure 12(f), “[t]he court may strike from a pleading an 24 insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. 25 Civ. P. 12(f). Courts strike such material under Rule 12(f) “to avoid the expenditure of time and 26 money that must arise from litigating spurious issues . . . .” Sidney-Vinstein v. A.H. Robins Co., 27 697 F.2d 880, 885 (9th Cir. 1983). 28 1 Immaterial matter is that which has no essential or important relationship to the claim for relief or the defenses being pleaded. Impertinent matter consists of 2 statements that do not pertain, and are not necessary, to the issues in question. Superfluous historical allegations are a proper subject of a motion to strike. 3 Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other grounds, 510 U.S. 4 517 (1994) (quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 5 1382, at 706–07, 711 (1990), and citing Healing v. Jones, 174 F. Supp. 211, 220 (D. Ariz. 1959)) 6 (internal quotation marks omitted). 7 The court has the inherent ability to control its docket. Ready Transp., Inc. v. AAR Mfg., 8 Inc., 627 F.3d 402, 404 (9th Cir. 2010). Thus, the court can consider the filings before the court 9 to the extent they are helpful—and, to the extent they are not, the court may disregard them— 10 when adjudicating the substantive motions in this case. The court finds that the preference for 11 merit-based dispositions warrants denying NAA’s motion to strike (ECF No. 16). See, e.g., 12 Ghazali v. Moran, 46 F.3d 52, 53 (9th Cir. 1995) (per curiam); Henderson v. Duncan, 779 F.2d 13 1421, 1423 (9th Cir. 1986). 14 B. Preliminary Injunctive Relief 15 The court now turns to NAA’s motion for preliminary injunctive relief. (ECF No. 6). 16 Under Federal Rule of Civil Procedure 65, a court may issue a temporary restraining order 17 (“TRO”) when the movant alleges “specific facts in an affidavit” that immediate and irreparable 18 harm will occur before the adverse party can be heard in opposition. Fed. R. Civ. P. 65(b)(1)(A). 19 TROs and preliminary injunctions are extraordinary remedies meant to “preserve the status quo” 20 and “prevent irreparable loss of rights prior to judgment.” Estes v. Gaston, No. 2:12-cv-1853- 21 JCM-VCF, 2012 WL 5839490, at *2 (D. Nev. Nov. 16, 2012); see also Sierra On-Line, Inc. v. 22 Phoenix Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984). The standard for granting a TRO is 23 “substantially identical” to the standard for granting a preliminary injunction. Stuhlbarg Int’l 24 Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839 n. 7 (9th Cir. 2001). 25 The court considers the following elements in determining whether to grant preliminary 26 injunctive relief: (1) a likelihood of success on the merits; (2) a likelihood of irreparable injury if 27 preliminary relief is not granted; (3) balance of hardships; and (4) advancement of the public 28 1 interest. Winter v. N.R.D.C., 555 U.S. 7, 20 (2008); Stanley v. Univ. of S. California, 13 F.3d 2 1313, 1319 (9th Cir. 1994). 3 The movant must satisfy all four elements; however, “a stronger showing of one element 4 may offset a weaker showing of another.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 5 1127, 1131 (9th Cir. 2011). This “sliding scale” approach dictates that when the balance of 6 hardships weighs heavily in the movant’s favor, he only needs to demonstrate “serious questions 7 going to the merits.” Id. at 1135. 8 The court denies NAA’s motion because, above all, the balance of hardships is not 9 clearly in its favor.1 At this stage in the case, it appears that both parties have unclean hands and 10 have breached the agreement at issue. Smith agreed that “[a]ll payment from the YouTube 11 channel will go into NAA Worldwide Bank Account and [Smith] will be paid as a 1999 12 contractor” and that the channel’s subscribers are the property of NAA. (ECF No. 6-1 at 12). 13 Smith locked NAA out of the channel, changed the banking information to divert the channel’s 14 revenue, and asked the subscribers to follow her on a new channel. (ECF No. 6 at 9). Even 15 though Smith is entitled to 50% of the revenue and owns 40% of the channel—a contractual term 16 NAA does not mention in its motion or affidavit—the agreement likely does not entitle her to 17 take the actions that she took. 18 On the other hand, Smith alleges that the agreement does not permit either party to 19 unilaterally terminate the agreement for any reason. (ECF No. 12 at 2). Smith was sent a 20 termination letter on August 31, 2020. (Id. at 4). Furthermore, she argues that she is the 21 exclusive owner and holder of the video content that she created and posted on the channel 22 because the agreement does not contain a “work made for hire” provision. (Id. at 9). And Smith 23 credibly alleges she is yet to be paid her full 50% share of the revenue earned in August 2020. 24 (Id. at 3). In other words, the court cannot agree with NAA that Smith “will suffer no harm from 25 continuing the status quo except the loss of property over which [she] appears to have no right of 26 possession.” (ECF No. 6-2 at 2). 27 28 1 The court also agrees with Smith that NAA has not shown a likelihood of success on the merits of its intentional interference and embezzlement claims. (ECF No. 12 at 7–9). 1 And finally, the court does not find credible NAA’s assertion that without preliminary 2 injunctive relief it would be forced to “lay off its employees, forego contractual obligations to others, and lose investor capital.” (Ud. at 2-3). See Fed. R. Civ. P. 65(b)(1)(A) (“The court may 4) issue a[TRO]...

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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *

7 NORTH AMERICA ASSOCIATION, LLC, Case No. 2:20-CV-1650 JCM (BNW)

8 Plaintiff(s), ORDER

9 v.

10 KATI MARIE SMITH,

11 Defendant(s).

12 13 Presently before the court is North America Association, LLC’s (“NAA”) emergency ex 14 parte motion for temporary restraining order (ECF No. 6). 15 Also before the court is defendant Kati Smith’s motion to extend the time to file her 16 opposition to the temporary restraining order (ECF No. 13). 17 Also before the court is NAA’s motion to strike portions of Smith’s opposition (ECF No. 18 16). 19 A. Motion to Strike 20 The court first turns to NAA’s motion to strike. (ECF No. 16). NAA alleges that Smith 21 has submitted statements made during settlement negotiations in violation of Fed. R. Evid. 408 22 and hearsay statements in violation of Fed. R. Evid. 802. (Id. at 2). 23 Under Federal Rule of Civil Procedure 12(f), “[t]he court may strike from a pleading an 24 insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. 25 Civ. P. 12(f). Courts strike such material under Rule 12(f) “to avoid the expenditure of time and 26 money that must arise from litigating spurious issues . . . .” Sidney-Vinstein v. A.H. Robins Co., 27 697 F.2d 880, 885 (9th Cir. 1983). 28 1 Immaterial matter is that which has no essential or important relationship to the claim for relief or the defenses being pleaded. Impertinent matter consists of 2 statements that do not pertain, and are not necessary, to the issues in question. Superfluous historical allegations are a proper subject of a motion to strike. 3 Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other grounds, 510 U.S. 4 517 (1994) (quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 5 1382, at 706–07, 711 (1990), and citing Healing v. Jones, 174 F. Supp. 211, 220 (D. Ariz. 1959)) 6 (internal quotation marks omitted). 7 The court has the inherent ability to control its docket. Ready Transp., Inc. v. AAR Mfg., 8 Inc., 627 F.3d 402, 404 (9th Cir. 2010). Thus, the court can consider the filings before the court 9 to the extent they are helpful—and, to the extent they are not, the court may disregard them— 10 when adjudicating the substantive motions in this case. The court finds that the preference for 11 merit-based dispositions warrants denying NAA’s motion to strike (ECF No. 16). See, e.g., 12 Ghazali v. Moran, 46 F.3d 52, 53 (9th Cir. 1995) (per curiam); Henderson v. Duncan, 779 F.2d 13 1421, 1423 (9th Cir. 1986). 14 B. Preliminary Injunctive Relief 15 The court now turns to NAA’s motion for preliminary injunctive relief. (ECF No. 6). 16 Under Federal Rule of Civil Procedure 65, a court may issue a temporary restraining order 17 (“TRO”) when the movant alleges “specific facts in an affidavit” that immediate and irreparable 18 harm will occur before the adverse party can be heard in opposition. Fed. R. Civ. P. 65(b)(1)(A). 19 TROs and preliminary injunctions are extraordinary remedies meant to “preserve the status quo” 20 and “prevent irreparable loss of rights prior to judgment.” Estes v. Gaston, No. 2:12-cv-1853- 21 JCM-VCF, 2012 WL 5839490, at *2 (D. Nev. Nov. 16, 2012); see also Sierra On-Line, Inc. v. 22 Phoenix Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984). The standard for granting a TRO is 23 “substantially identical” to the standard for granting a preliminary injunction. Stuhlbarg Int’l 24 Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839 n. 7 (9th Cir. 2001). 25 The court considers the following elements in determining whether to grant preliminary 26 injunctive relief: (1) a likelihood of success on the merits; (2) a likelihood of irreparable injury if 27 preliminary relief is not granted; (3) balance of hardships; and (4) advancement of the public 28 1 interest. Winter v. N.R.D.C., 555 U.S. 7, 20 (2008); Stanley v. Univ. of S. California, 13 F.3d 2 1313, 1319 (9th Cir. 1994). 3 The movant must satisfy all four elements; however, “a stronger showing of one element 4 may offset a weaker showing of another.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 5 1127, 1131 (9th Cir. 2011). This “sliding scale” approach dictates that when the balance of 6 hardships weighs heavily in the movant’s favor, he only needs to demonstrate “serious questions 7 going to the merits.” Id. at 1135. 8 The court denies NAA’s motion because, above all, the balance of hardships is not 9 clearly in its favor.1 At this stage in the case, it appears that both parties have unclean hands and 10 have breached the agreement at issue. Smith agreed that “[a]ll payment from the YouTube 11 channel will go into NAA Worldwide Bank Account and [Smith] will be paid as a 1999 12 contractor” and that the channel’s subscribers are the property of NAA. (ECF No. 6-1 at 12). 13 Smith locked NAA out of the channel, changed the banking information to divert the channel’s 14 revenue, and asked the subscribers to follow her on a new channel. (ECF No. 6 at 9). Even 15 though Smith is entitled to 50% of the revenue and owns 40% of the channel—a contractual term 16 NAA does not mention in its motion or affidavit—the agreement likely does not entitle her to 17 take the actions that she took. 18 On the other hand, Smith alleges that the agreement does not permit either party to 19 unilaterally terminate the agreement for any reason. (ECF No. 12 at 2). Smith was sent a 20 termination letter on August 31, 2020. (Id. at 4). Furthermore, she argues that she is the 21 exclusive owner and holder of the video content that she created and posted on the channel 22 because the agreement does not contain a “work made for hire” provision. (Id. at 9). And Smith 23 credibly alleges she is yet to be paid her full 50% share of the revenue earned in August 2020. 24 (Id. at 3). In other words, the court cannot agree with NAA that Smith “will suffer no harm from 25 continuing the status quo except the loss of property over which [she] appears to have no right of 26 possession.” (ECF No. 6-2 at 2). 27 28 1 The court also agrees with Smith that NAA has not shown a likelihood of success on the merits of its intentional interference and embezzlement claims. (ECF No. 12 at 7–9). 1 And finally, the court does not find credible NAA’s assertion that without preliminary 2 injunctive relief it would be forced to “lay off its employees, forego contractual obligations to others, and lose investor capital.” (Ud. at 2-3). See Fed. R. Civ. P. 65(b)(1)(A) (“The court may 4) issue a[TRO]... only if specific facts in an affidavit or a verified complaint clearly show that 5 | immediate and irreparable injury, loss, or damage will result....”). After all, the channel was 6 | created in December 2019 and only became profitable in or about June 2020. (ECF No. 6 at 2). 7 Accordingly, 8 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that NAA’s emergency ex 9 | parte motion for temporary restraining order (ECF No. 6) be, and the same hereby is, DENIED. 10 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that Kati Smith’s motion to 11 | extend the time to file her opposition to the temporary restraining order (ECF No. 13) be, and the same hereby is, GRANTED. 13 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that NAA’s motion to strike portions of Smith’s opposition (ECF No. 16) be, and the same hereby is, DENIED. 15 DATED September 16, 2020. 16 btw ©. Atala UM ITED, STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28

es C. Mahan District Judge _4-

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