PASSION LABS, LLC, et al., Case No. 25-cv-06672-RS Plaintiffs, v. ORDER DENYING MOTION FOR EX PARTE TEMPORARY RESTRAINING STEPHANE GERVAIS, et al., ORDER Defendants.
Plaintiffs Passion Labs LLC and AiMi, Inc. seek a temporary restraining order (“TRO”) against Defendants Stephane Gervais and 9245-4628 Quebec, Inc. over allegations of contractual breaches and the hacking of important business and technological accounts. For the reasons explained below, the motion for a TRO is denied. In 2019, Plaintiff AiMi contracted with Quebec Inc. for the services of Gervais, a computer programmer. See Compl., Ex. A, Dkt. No. 1-1 (“Project Agreement”). According to a declaration filed by AiMi’s founder, president and CEO, Edward Balassanian, Defendants agreed to expand the scope of the services Gervais provided starting in 2020, “as shown through the parties’ course of dealing.” Balassanian Decl., Dkt. No. 5 ¶ 5. The Project Agreement attached to the complaint states that Gervais would be paid a fee set forth in an “Exhibit A” that Plaintiffs did not include with their filings, so it is unclear how much Plaintiffs agreed to pay Defendants for their services. might have inured to Defendants, those rights were transferred to Plaintiffs. Project Agreement ¶ 3. The contract also provides that “monetary damages would not be an adequate remedy if [Gervais] breaches any provision of this Agreement which protects [Plaintiffs’] intellectual property and other proprietary rights” such that Plaintiffs are entitled “to a stipulated temporary restraining order, and shall thereafter be entitled to apply for a preliminary injunction” or other equitable relief, id. ¶ 11, with venue appropriate in the Northern District of California federal court, id. ¶ 17. One project Defendants were hired to produce is called “VJ Live” or “Storyboard,” a program which incorporates AiMi’s music-generating capabilities with AI-generated visual art that synchronizes the two elements. Storyboard is intended for use on smaller platforms like phones, but it can also suit live theater settings, including a “Passion Theater” that Plaintiffs built specifically for its use. See generally, Ex Parte App., Dkt. No. 5 at 2. As recently as last month, Storyboard “was functioning as intended,” despite still being in developmental stages. Id. Plaintiffs could demonstrate the program remotely over Zoom with prospective customers and in person at the Passion Theater. Defendants confirmed to Plaintiffs that Storyboard was working as intended on July 19, and Plaintiffs anticipated demonstrating it for a prospective client on July 28, 2025. On July 26, things went sideways. Gervais texted Balassanian, stating “Financial situation came out and is known. So it’s pretty much over for me. Everything will cancel on my side. This also means I am also done. I will have to close our books and it’s time to pull the trigger.” Id. at 3. Over the next two days, Defendants allegedly “sabotaged the pitch meeting, hacked AiMi and Passion Labs’ accounts and changed their passwords and account emails, disabled their access to important accounts, and disabled Storyboard.” Compl. ¶ 25. Although Plaintiffs were able to restore access to some of the accounts, they remain unable to access the account they use for cloud computing through Amazon Web Services (“AWS”). Without that access “Storyboard does not function.” Id. ¶ 33. In a termination email sent July 28, Gervais told Balassanian that “[d]espite a verbal agreement for monthly compensation, only a single payment of $5,000 has been received, making continued involvement unsustainable.” See Compl., Ex. B, Dkt. No. 1-2 (“Termination Email”). Gervais also represented that “[a]s a final professional courtesy, and to leave the system in a working state, I am providing access for you to use the currently deployed versions.” Id. At the end of the letter, Defendants claimed that “all intellectual property, source code, and unreleased developments remain my sole property.” Id. Balassanian declares that Defendants were paid monthly based on invoices they submitted. Payments went to Quebec Inc., which he believed to be Gervaise’s corporate alias. Balassanian Decl. ¶ 7. AiMi also paid Gervais in stock options starting in August 2023. Id. ¶ 8. In May 2025, Gervais assigned his entire worldwide right, title and interest (to the extent not already owned by Plaintiffs) in the Storyboard technology to Passion Labs. See Balassanian Decl., Ex. 1 (“Assignment”). The scheduled July 29 meeting “was an embarrassing disaster.” Balassanian Decl. ¶ 24. “However, that potential client has agreed to give [Plaintiffs] another opportunity if we are able to have Storyboard up and running by August 20 . . . In order to get Storyboard functioning for this demo, [Plaintiffs] need immediate access to our AWS account and the code and servers restored to the way they were immediately before Gervais sabotaged them.” Id. Apparently, the program currently runs “a constant non-sensical loop showing images of green witches standing around a kettle.” Id. ¶ 16. Plaintiffs subsequently filed this lawsuit, averring claims of breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with prospective economic advantage, unfair competition, and unauthorized access to computer data and systems. Without a temporary restraining order, Plaintiffs claim they will suffer immediate and irreparable harm in the form of “a loss of potential customers and potentially the loss of the first-to-market advantage.” Ex Parte App. at 8–9. “Having the Storyboard application non-operational will set Plaintiffs’ development back a month or more, and will certainly result in irreparable harm to Plaintiffs and their position in the marketplace.” Id. at 9. The standard for issuing a temporary restraining order effectively mirrors the standard for issuing a preliminary injunction. See Washington v. Trump, 847 F.3d 1151, 1159 n.3 (9th Cir. 2017). “A plaintiff seeking [such relief] must establish that [1] he is 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.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 21 (2008). “[I]f a plaintiff can only show that there are ‘serious questions going to the merits’—a lesser showing than likelihood of success on the merits—then a preliminary injunction may still issue if the ‘balance of hardships tips sharply in the plaintiff's favor and the other two Winter factors are satisfied.’” All. for the Wild Rockies v. Peña, 865 F.3d 1211, 1217 (9th Cir. 2017) (quoting Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir. 2013)). While the standards are similar, a temporary restraining order operates on a different timeframe than a preliminary injunction. The latter remains in effect pending final resolution of the dispute, whereas “a TRO ‘should be restricted to . . . preserving the status quo and preventing irreparable harm just so long as is necessary to hold a [preliminary injunction] hearing and no longer.’” E. Bay Sanctuary Covenant v. Trump, 932 F.3d 742, 779 (9th Cir. 2018) (quoting Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers Local No. 70, 415 U.S. 423, 439 (1974)). Under Federal Rule of Civil Procedure 65(b)(1), a TRO may issue without notice to the opposing par
Free access — add to your briefcase to read the full text and ask questions with AI
PASSION LABS, LLC, et al., Case No. 25-cv-06672-RS Plaintiffs, v. ORDER DENYING MOTION FOR EX PARTE TEMPORARY RESTRAINING STEPHANE GERVAIS, et al., ORDER Defendants.
Plaintiffs Passion Labs LLC and AiMi, Inc. seek a temporary restraining order (“TRO”) against Defendants Stephane Gervais and 9245-4628 Quebec, Inc. over allegations of contractual breaches and the hacking of important business and technological accounts. For the reasons explained below, the motion for a TRO is denied. In 2019, Plaintiff AiMi contracted with Quebec Inc. for the services of Gervais, a computer programmer. See Compl., Ex. A, Dkt. No. 1-1 (“Project Agreement”). According to a declaration filed by AiMi’s founder, president and CEO, Edward Balassanian, Defendants agreed to expand the scope of the services Gervais provided starting in 2020, “as shown through the parties’ course of dealing.” Balassanian Decl., Dkt. No. 5 ¶ 5. The Project Agreement attached to the complaint states that Gervais would be paid a fee set forth in an “Exhibit A” that Plaintiffs did not include with their filings, so it is unclear how much Plaintiffs agreed to pay Defendants for their services. might have inured to Defendants, those rights were transferred to Plaintiffs. Project Agreement ¶ 3. The contract also provides that “monetary damages would not be an adequate remedy if [Gervais] breaches any provision of this Agreement which protects [Plaintiffs’] intellectual property and other proprietary rights” such that Plaintiffs are entitled “to a stipulated temporary restraining order, and shall thereafter be entitled to apply for a preliminary injunction” or other equitable relief, id. ¶ 11, with venue appropriate in the Northern District of California federal court, id. ¶ 17. One project Defendants were hired to produce is called “VJ Live” or “Storyboard,” a program which incorporates AiMi’s music-generating capabilities with AI-generated visual art that synchronizes the two elements. Storyboard is intended for use on smaller platforms like phones, but it can also suit live theater settings, including a “Passion Theater” that Plaintiffs built specifically for its use. See generally, Ex Parte App., Dkt. No. 5 at 2. As recently as last month, Storyboard “was functioning as intended,” despite still being in developmental stages. Id. Plaintiffs could demonstrate the program remotely over Zoom with prospective customers and in person at the Passion Theater. Defendants confirmed to Plaintiffs that Storyboard was working as intended on July 19, and Plaintiffs anticipated demonstrating it for a prospective client on July 28, 2025. On July 26, things went sideways. Gervais texted Balassanian, stating “Financial situation came out and is known. So it’s pretty much over for me. Everything will cancel on my side. This also means I am also done. I will have to close our books and it’s time to pull the trigger.” Id. at 3. Over the next two days, Defendants allegedly “sabotaged the pitch meeting, hacked AiMi and Passion Labs’ accounts and changed their passwords and account emails, disabled their access to important accounts, and disabled Storyboard.” Compl. ¶ 25. Although Plaintiffs were able to restore access to some of the accounts, they remain unable to access the account they use for cloud computing through Amazon Web Services (“AWS”). Without that access “Storyboard does not function.” Id. ¶ 33. In a termination email sent July 28, Gervais told Balassanian that “[d]espite a verbal agreement for monthly compensation, only a single payment of $5,000 has been received, making continued involvement unsustainable.” See Compl., Ex. B, Dkt. No. 1-2 (“Termination Email”). Gervais also represented that “[a]s a final professional courtesy, and to leave the system in a working state, I am providing access for you to use the currently deployed versions.” Id. At the end of the letter, Defendants claimed that “all intellectual property, source code, and unreleased developments remain my sole property.” Id. Balassanian declares that Defendants were paid monthly based on invoices they submitted. Payments went to Quebec Inc., which he believed to be Gervaise’s corporate alias. Balassanian Decl. ¶ 7. AiMi also paid Gervais in stock options starting in August 2023. Id. ¶ 8. In May 2025, Gervais assigned his entire worldwide right, title and interest (to the extent not already owned by Plaintiffs) in the Storyboard technology to Passion Labs. See Balassanian Decl., Ex. 1 (“Assignment”). The scheduled July 29 meeting “was an embarrassing disaster.” Balassanian Decl. ¶ 24. “However, that potential client has agreed to give [Plaintiffs] another opportunity if we are able to have Storyboard up and running by August 20 . . . In order to get Storyboard functioning for this demo, [Plaintiffs] need immediate access to our AWS account and the code and servers restored to the way they were immediately before Gervais sabotaged them.” Id. Apparently, the program currently runs “a constant non-sensical loop showing images of green witches standing around a kettle.” Id. ¶ 16. Plaintiffs subsequently filed this lawsuit, averring claims of breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with prospective economic advantage, unfair competition, and unauthorized access to computer data and systems. Without a temporary restraining order, Plaintiffs claim they will suffer immediate and irreparable harm in the form of “a loss of potential customers and potentially the loss of the first-to-market advantage.” Ex Parte App. at 8–9. “Having the Storyboard application non-operational will set Plaintiffs’ development back a month or more, and will certainly result in irreparable harm to Plaintiffs and their position in the marketplace.” Id. at 9. The standard for issuing a temporary restraining order effectively mirrors the standard for issuing a preliminary injunction. See Washington v. Trump, 847 F.3d 1151, 1159 n.3 (9th Cir. 2017). “A plaintiff seeking [such relief] must establish that [1] he is 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.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 21 (2008). “[I]f a plaintiff can only show that there are ‘serious questions going to the merits’—a lesser showing than likelihood of success on the merits—then a preliminary injunction may still issue if the ‘balance of hardships tips sharply in the plaintiff's favor and the other two Winter factors are satisfied.’” All. for the Wild Rockies v. Peña, 865 F.3d 1211, 1217 (9th Cir. 2017) (quoting Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir. 2013)). While the standards are similar, a temporary restraining order operates on a different timeframe than a preliminary injunction. The latter remains in effect pending final resolution of the dispute, whereas “a TRO ‘should be restricted to . . . preserving the status quo and preventing irreparable harm just so long as is necessary to hold a [preliminary injunction] hearing and no longer.’” E. Bay Sanctuary Covenant v. Trump, 932 F.3d 742, 779 (9th Cir. 2018) (quoting Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers Local No. 70, 415 U.S. 423, 439 (1974)). Under Federal Rule of Civil Procedure 65(b)(1), a TRO may issue without notice to the opposing party (i.e., ex parte) only if “specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition” and “the movant’s attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.” Plaintiffs have not satisfied the requirements for issuing an ex parte temporary restraining order. To be sure, Counsel’s submissions demonstrate substantial efforts to give notice of this case and TRO request to Defendants, satisfying Rule 65(b)(1)(B). Indeed, it appears that Defendants were properly served with the court’s order requiring responsive briefing by August 14, 2025. See Dkt. No. 11 (counsel declaration stating, under penalty of perjury, that on August 12 a process server had given notice that it personally served on Defendants the summons, complaint, TRO pleadings, and the August 8 order on Defendants).1 August 14 has come and gone, suggesting Defendants are not going to respond in a timely matter. Based on the averments in the complaint and the motion, however, it is not sufficiently clear that immediate and irreparable injury, loss, or damage will result to Plaintiffs without imminent court action. See Rule 65(b)(1)(A). The sought-after injunctive relief is for an order directing, inter alia, Defendants to return all of Plaintiffs’ property, reinstate Plaintiffs’ control of all passwords (including as to the AWS account), and restore the product so that it will function as it did prior to the challenged conduct that began on July 28. Yet, Plaintiffs’ claimed imminent injury is the potential loss of a first-to-market advantage related to an upcoming client meeting. Therein lies a disconnect—even if the requested injunctive relief is granted, it does not necessarily mean the claimed injury will be prevented. To the contrary, Plaintiffs could secure all the injunctive relief they seek and still lose out on first-to-market advantages or the potential business of a client. In this respect, Plaintiffs’ bid for relief is quite unlike the standard TRO motion. The immediate and irreparable harm asserted here appears as likely to occur regardless of the imposition of injunctive relief, which means the causal nexus is insufficient to meet the relevant standard. See Rule 65(b)(1) (permitting ex parte TROs “only if . . . specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition”) (emphasis added). Because the facts averred do not clearly show that the necessary degree of injury, loss, or damage will
1 Counsel’s declaration stated that proof of service would be filed upon receipt of the affidavit of service from the process server. No proof has yet been filed, and Plaintiffs are advised to do so at the earliest opportunity. Considering counsel’s sworn declaration, it is peculiar that three days have passed with no affidavit of service appearing on the docket. In any event, no affidavit having been filed, the analysis here remains under the rubric of Rule 65(b). 1 result without immediate court intervention, an ex parte order in this case is inappropriate. 3 Plaintiffs’ motion for a temporary restraining order is denied. Plaintiffs’ request for a 4 preliminary injunction shall be heard on September 4, 2025, at 2:30 pm via remote proceedings on 5 Zoom. An opening brief may be filed on or before August 22, and a responsive brief, if any, may 6 be filed on or before August 29. A reply brief, if any, may be filed on or before September 2. 4 9 10 Dated: August 15, 2025 11 RICHARD SEEBORG 12 Chief United States District Judge
15 16
= 17
Z 18 19 20 21 22 23 24 25 26 27 98 ORDER DENYING MOTION FOR TRO CASE No. 25-cv-06672-RS