Zest Anchors, LLC v. Geryon Ventures, LLC

S.D. California

Zest Anchors, LLC v. Geryon Ventures, LLC

DecidedAugust 11, 2022

Docket3:22-cv-00230

StatusUnknown

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Zest Anchors, LLC v. Geryon Ventures, LLC, (S.D. Cal. 2022).

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ZEST ANCHORS, LLC d/b/a Zest Case No.: 22-CV-230 TWR (NLS) DentalSolutions and ZEST IP 12 HOLDINGS, LLC, ORDER (1) DENYING 13 DEFENDANTS’ EX PARTE MOTION Plaintiffs, FOR STAY OF PRELIMINARY 14 v. INJUNCTION PENDING APPEAL, 15 (2) DENYING WITHOUT GERYON VENTURES, LLC d/b/a PREJUDICE PLAINTIFFS’ EX 16 DESS-USA and TERRATS MEDICAL PARTE MOTION REQUESTING SOCIEDAD LIMITADA, 17 BRIEFING SCHEDULE, AND Defendants. (3) STAYING BRIEFING ON BOND 18 ISSUE 19 (ECF Nos. 49, 54, 59, 61, 62) 20

21 Presently before the Court are Defendants Geryon Ventures, LLC d/b/a DESS-USA 22 and Terrats Medical Sociedad Limitada’s Ex Parte Motion for Stay of Preliminary 23 Injunction Pending Appeal, or, at the Very Least, a Stay of 60 Days (“Defs.’ Ex Parte 24 Mot.,” ECF No. 54); Supplemental Brief re: Preliminary Injunction Bond (“Supp. Br.,” 25 ECF No. 59); and Opposition to Plaintiffs’ Ex Parte Motion Requesting Briefing Schedule 26 (“Defs.’ Opp’n,” ECF No. 65), as well as Plaintiffs Zest Anchors, LLC d/b/a Zest 27 DentalSolutions and Zest IP Holdings, LLC’s Motion for Civil Contempt (“Contempt 28 Mot.,” ECF No. 61), Opposition to Defendants’ Ex Parte Motion (“Pls.’ Opp’n,” ECF No. 1 61-1 at 13–21), and Ex Parte Application Requesting Briefing Schedule (“Pls.’ Ex Parte 2 Mot.,” ECF No. 62). 3 The Court first addresses Defendants’ Ex Parte Motion, which Plaintiffs oppose. 4 (See generally ECF No. 56; Pls.’ Opp’n.) As Defendants recognize, (see Defs.’ Ex Parte 5 Mot. at 5), the Court may exercise its discretion to stay the Preliminary Injunction it entered 6 on July 18, 2022 (ECF Nos. 49 (public), 50 (sealed)), pending Defendants’ appeal upon 7 consideration of the following factors: “(1) whether the stay applicant has made a strong 8 showing that he is likely to succeed on the merits; (2) whether the applicant will be 9 irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure 10 the other parties interested in the proceeding; and (4) where the public interest lies.” Fed. 11 Trade Comm’n v. Qualcomm Inc., 935 F.3d 752, 755 (9th Cir. 2019) (quoting Nken v. 12 Holder, 556 U.S. 418, 426 (2009)). In granting the Preliminary Injunction, however, the 13 Court concluded that Plaintiffs had made a strong showing that they were likely to succeed 14 on the merits of their trade dress claim, (see Prelim. Inj. at 18–35); that they would be 15 irreparably harmed absent preliminary injunctive relief, (see id. at 35–40); and that the 16 public interest favored preliminarily enjoining Defendants’ alleged trade dress 17 infringement. (See id. at 41–43.) Accordingly, as Plaintiffs recognize, (see Pls.’ Opp’n at 18 13), to grant Defendants’ their requested stay “would undermine and be contrary to the 19 court’s reasoning[] . . . finding a preliminary injunction was and remains appropriate.” See 20 OTR Wheel Eng’g, Inc. v. W. Worldwide Servs., Inc., No. CV-14-085-LRS, 2014 WL 21 2761551, at *4 (E.D. Wash. June 18, 2014). The Court therefore DENIES Defendants’ Ex 22 Parte Motion. Defendants are free to seek a stay of the Preliminary Injunction before the 23 Ninth Circuit pursuant to Federal Rule of Appellate Procedure 8(a)(2). 24 The Court next turns to Plaintiffs’ Contempt Motion, through which Plaintiffs seek 25 limited expedited discovery and remedies—including disgorgement of profits, reasonable 26 attorneys’ fees, and a per diem fine—for Defendants’ failure to comply to date with the 27 Preliminary Injunction. (See generally Contempt Mot.; ECF No. 61-1 at 1–13 (“Contempt 28 Mem.”).) The Contempt Motion is set for oral argument on October 13, 2022, but Plaintiffs 1 seek to have it briefed and heard on an expedited basis through their own Ex Parte Motion, 2 (see generally Pls.’ Ex Parte Motion; ECF No. 62-1 (“Pls.’ Ex Parte Mem.”)), which 3 Defendants oppose. (See generally ECF No. 64; Defs.’ Opp’n.) Although the Court 4 understands Plaintiffs’ position, the Court is disinclined to hold Defendants in contempt so 5 long as they timely seek a stay of the Preliminary Injunction before this Court and/or the 6 Ninth Circuit. See, e.g., F.T.C. v. Singer, 534 F. Supp. 24, 26 (N.D. Cal. 1981) (“The 7 proper course of action [following the entry of a preliminary injunction] is to either comply 8 with the injunction or seek a stay of it during the pendency of an appeal.”), aff’d, 668 F.2d 9 1107 (9th Cir. 1982). At this time, the Court therefore DENIES WITHOUT 10 PREJUDICE Plaintiffs’ Ex Parte Motion. In the event the Ninth Circuit denies 11 Defendants’ request for a stay of the Preliminary Injunction pending appeal, however, the 12 Court suggests Defendants take this time “to better assess the scope and impact of the 13 injunction,” (see Supp. Br. at 1), and “to more precisely pinpoint the steps they will need 14 to take to comply with the injunction.” (See Defs.’ Ex Parte Mot. at 9 n.1.) 15 Finally, the Court notes that, rather than file their “supplemental briefing as to the 16 necessity and appropriate amount of a bond in this case” pursuant to the Preliminary 17 Injunction, (see id. at 44), “Defendants respectfully request a continuance of the briefing 18 on the bond until issues related to a stay are fully adjudicated and finally decided.” (See 19 Supp. Br. at 1.) The Court finds this request to be reasonable because, as Defendants note, 20 “there w[ill] be no need for any bond” if the Ninth Circuit grants a stay of the Preliminary 21 Injunction pending Defendants’ appeal. (See id.) The Court therefore STAYS briefing of 22 the bond issue pending the Ninth Circuit’s resolution of Defendants’ anticipated motion 23 for a stay before that court. 24 In light of the foregoing, the Parties SHALL FILE a Joint Status Report within three 25 (3) days of the Ninth Circuit’s decision on Defendants’ anticipated motion for a stay of the 26 / / / 27 / / / 28 / / / 1 || Preliminary Injunction pending appeal before that Court. In particular, the Parties SHALL 2 || ADDRESS the status of the briefing on the bond issue and Plaintiffs’ Contempt Motion. 3 IT IS SO ORDERED. 4 ||Dated: August 11, 2022 —_—_ 5 | 99> (2 re 6 Honorable Todd W. Robinson United States District Court

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ZEST ANCHORS, LLC d/b/a Zest Case No.: 22-CV-230 TWR (NLS) DentalSolutions and ZEST IP 12 HOLDINGS, LLC, ORDER (1) DENYING 13 DEFENDANTS’ EX PARTE MOTION Plaintiffs, FOR STAY OF PRELIMINARY 14 v. INJUNCTION PENDING APPEAL, 15 (2) DENYING WITHOUT GERYON VENTURES, LLC d/b/a PREJUDICE PLAINTIFFS’ EX 16 DESS-USA and TERRATS MEDICAL PARTE MOTION REQUESTING SOCIEDAD LIMITADA, 17 BRIEFING SCHEDULE, AND Defendants. (3) STAYING BRIEFING ON BOND 18 ISSUE 19 (ECF Nos. 49, 54, 59, 61, 62) 20

21 Presently before the Court are Defendants Geryon Ventures, LLC d/b/a DESS-USA 22 and Terrats Medical Sociedad Limitada’s Ex Parte Motion for Stay of Preliminary 23 Injunction Pending Appeal, or, at the Very Least, a Stay of 60 Days (“Defs.’ Ex Parte 24 Mot.,” ECF No. 54); Supplemental Brief re: Preliminary Injunction Bond (“Supp. Br.,” 25 ECF No. 59); and Opposition to Plaintiffs’ Ex Parte Motion Requesting Briefing Schedule 26 (“Defs.’ Opp’n,” ECF No. 65), as well as Plaintiffs Zest Anchors, LLC d/b/a Zest 27 DentalSolutions and Zest IP Holdings, LLC’s Motion for Civil Contempt (“Contempt 28 Mot.,” ECF No. 61), Opposition to Defendants’ Ex Parte Motion (“Pls.’ Opp’n,” ECF No. 1 61-1 at 13–21), and Ex Parte Application Requesting Briefing Schedule (“Pls.’ Ex Parte 2 Mot.,” ECF No. 62). 3 The Court first addresses Defendants’ Ex Parte Motion, which Plaintiffs oppose. 4 (See generally ECF No. 56; Pls.’ Opp’n.) As Defendants recognize, (see Defs.’ Ex Parte 5 Mot. at 5), the Court may exercise its discretion to stay the Preliminary Injunction it entered 6 on July 18, 2022 (ECF Nos. 49 (public), 50 (sealed)), pending Defendants’ appeal upon 7 consideration of the following factors: “(1) whether the stay applicant has made a strong 8 showing that he is likely to succeed on the merits; (2) whether the applicant will be 9 irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure 10 the other parties interested in the proceeding; and (4) where the public interest lies.” Fed. 11 Trade Comm’n v. Qualcomm Inc., 935 F.3d 752, 755 (9th Cir. 2019) (quoting Nken v. 12 Holder, 556 U.S. 418, 426 (2009)). In granting the Preliminary Injunction, however, the 13 Court concluded that Plaintiffs had made a strong showing that they were likely to succeed 14 on the merits of their trade dress claim, (see Prelim. Inj. at 18–35); that they would be 15 irreparably harmed absent preliminary injunctive relief, (see id. at 35–40); and that the 16 public interest favored preliminarily enjoining Defendants’ alleged trade dress 17 infringement. (See id. at 41–43.) Accordingly, as Plaintiffs recognize, (see Pls.’ Opp’n at 18 13), to grant Defendants’ their requested stay “would undermine and be contrary to the 19 court’s reasoning[] . . . finding a preliminary injunction was and remains appropriate.” See 20 OTR Wheel Eng’g, Inc. v. W. Worldwide Servs., Inc., No. CV-14-085-LRS, 2014 WL 21 2761551, at *4 (E.D. Wash. June 18, 2014). The Court therefore DENIES Defendants’ Ex 22 Parte Motion. Defendants are free to seek a stay of the Preliminary Injunction before the 23 Ninth Circuit pursuant to Federal Rule of Appellate Procedure 8(a)(2). 24 The Court next turns to Plaintiffs’ Contempt Motion, through which Plaintiffs seek 25 limited expedited discovery and remedies—including disgorgement of profits, reasonable 26 attorneys’ fees, and a per diem fine—for Defendants’ failure to comply to date with the 27 Preliminary Injunction. (See generally Contempt Mot.; ECF No. 61-1 at 1–13 (“Contempt 28 Mem.”).) The Contempt Motion is set for oral argument on October 13, 2022, but Plaintiffs 1 seek to have it briefed and heard on an expedited basis through their own Ex Parte Motion, 2 (see generally Pls.’ Ex Parte Motion; ECF No. 62-1 (“Pls.’ Ex Parte Mem.”)), which 3 Defendants oppose. (See generally ECF No. 64; Defs.’ Opp’n.) Although the Court 4 understands Plaintiffs’ position, the Court is disinclined to hold Defendants in contempt so 5 long as they timely seek a stay of the Preliminary Injunction before this Court and/or the 6 Ninth Circuit. See, e.g., F.T.C. v. Singer, 534 F. Supp. 24, 26 (N.D. Cal. 1981) (“The 7 proper course of action [following the entry of a preliminary injunction] is to either comply 8 with the injunction or seek a stay of it during the pendency of an appeal.”), aff’d, 668 F.2d 9 1107 (9th Cir. 1982). At this time, the Court therefore DENIES WITHOUT 10 PREJUDICE Plaintiffs’ Ex Parte Motion. In the event the Ninth Circuit denies 11 Defendants’ request for a stay of the Preliminary Injunction pending appeal, however, the 12 Court suggests Defendants take this time “to better assess the scope and impact of the 13 injunction,” (see Supp. Br. at 1), and “to more precisely pinpoint the steps they will need 14 to take to comply with the injunction.” (See Defs.’ Ex Parte Mot. at 9 n.1.) 15 Finally, the Court notes that, rather than file their “supplemental briefing as to the 16 necessity and appropriate amount of a bond in this case” pursuant to the Preliminary 17 Injunction, (see id. at 44), “Defendants respectfully request a continuance of the briefing 18 on the bond until issues related to a stay are fully adjudicated and finally decided.” (See 19 Supp. Br. at 1.) The Court finds this request to be reasonable because, as Defendants note, 20 “there w[ill] be no need for any bond” if the Ninth Circuit grants a stay of the Preliminary 21 Injunction pending Defendants’ appeal. (See id.) The Court therefore STAYS briefing of 22 the bond issue pending the Ninth Circuit’s resolution of Defendants’ anticipated motion 23 for a stay before that court. 24 In light of the foregoing, the Parties SHALL FILE a Joint Status Report within three 25 (3) days of the Ninth Circuit’s decision on Defendants’ anticipated motion for a stay of the 26 / / / 27 / / / 28 / / / 1 || Preliminary Injunction pending appeal before that Court. In particular, the Parties SHALL 2 || ADDRESS the status of the briefing on the bond issue and Plaintiffs’ Contempt Motion. 3 IT IS SO ORDERED. 4 ||Dated: August 11, 2022 —_—_ 5 | 99> (2 re 6 Honorable Todd W. Robinson United States District Court

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