Case Number: SC121606 Hearing Date: April 18, 2014 Dept: P

TENTATIVE RULING – DEPT. P

APR. 18, 2014 CALENDAR No: 8

SC121606 — CAL AGRI PRODS. v. STECKLER, et al.

Evidentiary matters

All evidence is admitted.

Merits

In Plaintiffs’ Second Amended Complaint Plaintiffs allege, inter alia, that Defendants (including Richard Steckler, who co-founded Cal Agri (CA) with Plaintiff Kemper) have improperly exercised dominion over patents owned by CA by secretly transferring the patent rights to a company over which Defendants hold complete control, defendant CAI Patent Holding (“CAIPH”), in order to divert Agri’s business to themselves and their newly formed and competing entities.

Plaintiffs previously obtained a TRO restraining Defendants from, inter alia, prosecuting the subject patents, managing CAIPH, and requiring Defendants to turn over to Plaintiffs all indicia of the ownership of CAIPH They now seek a preliminary injunction to the same effect. Defendants assert that they formed CAIPH to protect their patent interests after being “frozen out of” CA in March 2009, that the ownership and management (and even the identity/name) of CA are “highly uncertain,” and that they would be irreparably harmed if the requested injunction is granted. Nevertheless, they “support the preliminary injunction provided the restrictions on transferring and encumbering the patents are bilateral.” Opp., 1:2-3. The Court will grant the requested preliminary injunction.

In order to obtain a preliminary injunction, a party must show: (1) a reasonable probability of success on the merits; (2) an inadequate remedy at law/irreparable injury; and (3) a balancing of the equities tilting in his/her favor. See generally, Weil & Brown (2013), paras. 9:519-533.3; CCP 526; CRC 3.1150. It is long-standing law that the granting of an injunction pendente lite, viz., a preliminary injunction, is an “extraordinary” remedy, “to be exercised always with great caution,” and only where it fairly appears to be necessary to prevent irreparable injury or to preserve the estates of the parties. Schwartz v. Arata (1920) 45 Cal.App. 596, 601. The Court has significant discretion to grant or deny a preliminary injunction. E.g., 6 Witkin, California Procedure (5th Ed. 2008), Provisional Remedies, sec. 354.

The evidence of CA’s ownership of CAIPH – and thus the patents held by CAIPH – is, as is stated in the moving brief, “overwhelming.” Indeed, it is admitted by Defendants, who are now seeking to justify their conduct after the fact. Plaintiffs have presented ample evidence that Defendants have, behind their backs, prosecuted patent rights owned by CA to Defendants’ primary (if not sole) benefit – and to Plaintiffs’ considerable harm. The Court finds insufficient and unavailing Defendants’ assertion that they would be irreparably harmed by the imposition of a unilateral injunction in Plaintiffs’ favor.

Any questions concerning the ownership, management, and identity of CA raised by the Defendants will be sorted out at trial, if necessary. In this regard, Defendants have not established that Plaintiffs lack standing to seek an injunction.

Plaintiff’s request for a preliminary injunction is granted in full. Plaintiff is to serve and lodge a proposed preliminary injunction within two court days. The Temporary Restraining Order issued by the Court on March 21, 2014 shall remain in effect until the Court executes the order granting the injunction. The Court sets the mandatory injunction bond at the nominal amount of $1000.00.

MANDATORY SETTLEMENT CONFERENCE

It appears that the parties would benefit from resolving this case prior to what could be a lengthy trial. They need to find a date with one of the MSC judges forthwith.

Other matters

On April 7, 2014, Defendants filed, among other documents, the declarations of Richard Steckler and Nathan Low in opposition to the OSC determined today. Despite the fact that a total of twenty-four (24) exhibits were attached to said declarations, none of the exhibits was tabbed, as is required – with good reason – by CRC 3.1110(f). This caused a needless delay in the Court’s processing of the motion determined today. Counsel are reminded of the need to comply with CRC 3.1110(f).

The Court notes that the motion for judgment on the pleadings currently set for hearing on April 24, 2014 relies, in part, on deposition testimony, responses to written discovery, and other matters which, with very narrow exceptions, are not proper subjects of judicial notice. If the motion cannot succeed without reliance on inadmissible, extrinsic evidence which the Court cannot properly consider, Defendants should withdraw the motion today, so that the Court need not utilize its time and resources to determine the motion. Cf., CCP 128.7(b). In this regard, the Court notes that Defendants previously improperly submitted a declaration in support of a motion to strike – which declaration the Court struck as “improperly filed.” March 3, 2014 Minute Order, at 7.

All counsel should note that it is the better practice to refrain from fax-filing documents. Fax-filed documents are often less legible than documents filed in person or by mail, as was the case with the numerous documents reviewed by the Court in connection with today’s hearing. There is the difficulty in losing pages either in transmission or once the document arrives. Faxed documents lack the exhibit tabs required by CRC 3.1110(f). Further, in light of the budget crisis, there is a significant delay in receiving fax filed documents in the courtroom. The parties have the option of over-night delivery, faxing to an attorney service with instructions to file the document (after attaching any required tabs) directly in the courtroom, or continuing to file by fax in the clerk’s office. Parties electing the last option need to understand that the court laid off 320+ persons 2 years ago and terminated approximately 540 more positions in June 2013. The result is an incredibly short-staffed clerk’s office; and documents faxed seem to get even less priority than documents personally filed.