Zhang v. Dahua Tech., U.S.

• Decision Date: 05 December 2022
• Docket Number: 8:22-cv-02174-FWS-ADS
• Parties: Zhang v. Dahua Technology, USA, Inc.
• Court: U.S. District Court — Central District of California

Zhang v. Dahua Technology, USA, Inc.

No. 8:22-cv-02174-FWS-ADS

United States District Court, C.D. California

December 5, 2022

PROCEEDINGS: ORDER DENYING PLAINTIFF'S EX PARTE APPLICATION [1] AND DISMISSING CASE FOR LACK OF SUBJECT MATTER JURISDICTION

HONORABLE FRED W. SLAUGHTER, UNITED STATES DISTRICT JUDGE

Before the court is Plaintiff Feng Zhang's (“Plaintiff”) Petition for Commencement of Action to Secure Ex Parte Writ of Attachment and Other Equitable Relief (“Application” or “App.”). (Dkt. 1.) As of the time this order was filed, Defendant Dahua Technology, USA, Inc (“Defendant”) has not opposed the Application. (See generally Dkt.) The court finds this matter appropriate for resolution without oral argument. See Fed. R. Civ. P. 78(b) (“By rule or order the court may provide for submitting and determining motions on briefs, without oral hearings.”); L. R. 7-15 (authorizing courts to “dispense with oral argument on any motion except where an oral hearing is required by statute”). Based on the state of the record, as applied to the applicable law, the court DENIES the Application. The court also DISMISSES the case for lack of subject matter jurisdiction.

I. Background

On December 1, 2022, Plaintiff filed the Application, stating it related to “securing payment of damages for a breach of contract matter pending in the United States District Court for the District of Massachusetts, entitled Dahua Technology USA, Inc. v. Feng Zhang, 1:18-cv-11147-IT.” (App. ¶ 1.) Specifically, Plaintiff alleges that Plaintiff and Defendant executed a severance agreement on August 28, 2017, requiring Defendant to pay Plaintiff $10,880,000, and Defendant has not paid Plaintiff in violation of this agreement. (Id. ¶ 2.) Plaintiff also alleges that on October 22, 2022, “the United States District Court for the District of Massachusetts ruled that Dahua failed to make its case, and indicated its intent to issue judgment against Dahua on its claims and in favor of Zhang on his breach of contract counterclaim.”^[1] (Id. ¶ 3.)

Since that order issued, Plaintiff alleges Defendant began divesting its assets by selling one of its major North American subsidiaries. (Id. ¶ 6.) Defendant allegedly began selling its assets because the United States government “issued a nationwide ban on [Defendant's] products, citing ‘an unacceptable risk to the national security of the United States or the safety of the United States persons,'” on November 11, 2022. (Id. ¶ 5.) Defendant is allegedly acting at the behest of its parent company based in China, Zhejiang Dahua Technology, Co, Ltd. (Id. ¶¶ 7-8.)

As a result of this divestiture, Plaintiff seeks a writ of attachment, ex parte relief, and a temporary restraining order, arguing that Plaintiff will be without recourse unless the court grants the requested relief because Defendant may transfer the funds from the sale of its assets to its parent company in China. (App. ¶¶ 38-56.) In the alternative, Plaintiff requests that the court require grant an ex parte temporary restraining order “enjoining [Defendant] from selling, transferring or conveying its assets until such time as the Court can rule” or post a bond for $16,185,863. (Id. ¶¶ 58-59.)

II. Legal Standard

A. Ex Parte Standard

Ex parte applications are “rarely justified.” Mission Power, 883 F.Supp. at 490. To justify ex parte relief, the moving party must establish: (1) that their cause of action will be irreparably prejudiced if the underlying motion is heard according to regular noticed procedures; and (2) that they are without fault in creating the crisis that requires ex parte relief, or that the crisis occurred as a result of excusable neglect. Id. at 492-93. In Horne v. Wells Fargo Bank, N.A., the district court discussed the legal standard for ex parte applications:

The “opportunities for legitimate ex parte applications are extremely limited.” In re Intermagnetics America, Inc., 101 B.R. 191, 193 (C.D. Cal. 1989); see also Mission Power Engineering Co. v. Continental Casualty Co., 883 F.Supp. 488, 489 (C.D. Cal. 1995) (stating that to be proper, an ex parte application must demonstrate that there is good cause to allow the moving party to “go to the head of the line in front of all other litigants and receive special treatment”).

The use of such a procedure is justified only when (1) there is a threat of immediate or irreparable injury; (2) there is danger that notice to the other party may result in the destruction of evidence or the party's flight; or (3) the party seeks a routine procedural order that cannot be obtained through a regularly noticed motion (i.e., to file an overlong brief or shorten the time within which a motion may be brought).

969 F.Supp.2d 1203, 1205 (C.D. Cal 2013). The Horne court also reiterated the dangers of ex parte applications:

[E]x parte applications contravene the structure and spirit of the Federal Rules of Civil Procedure and the Local Rules of this court. Both contemplate that noticed motions should be the rule and not the exception. Timetables for the submission of responding papers and for the setting of hearings are intended to provide a framework for the fair, orderly, and efficient resolution of disputes. Ex parte applications throw the system out of whack. They impose an unnecessary administrative burden on the court and an unnecessary adversarial burden on opposing counsel who are required to make a hurried response under pressure, usually for no good reason. They demand priority consideration, where such consideration is seldom deserved. In effect, they put the applicant ‘ahead of the pack,' without cause or justification.

Id. (citation omitted).

B. Temporary Restraining Order Standard

“The underlying purpose of a TRO is to preserve the status quo and prevent irreparable harm before a preliminary injunction hearing may be held.” Jones v. H.S.B.C. (USA), 844 F.Supp.2d 1099, 1100 (S.D. Cal. 2012) (citing Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local No. 70 of Alameda Cty., 415 U.S. 423, 439 (1974)). “The standard for issuing a temporary restraining order is identical to the standard for issuing a preliminary injunction.” Lockheed Missile & Space Co. v. Hughes Aircraft Co., 887 F.Supp. 1320, 1323 (N.D. Cal. 1995).

A plaintiff seeking a preliminary injunction must show (1) they are “likely to succeed on the merits”; (2) they are “likely to suffer irreparable harm in the absence of preliminary relief”; (3) that the “balance of equities tips in h[er] favor”; and (4) that an “injunction is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). Courts in the Ninth Circuit may consider the Winter factors on a sliding scale and grant an injunction where the plaintiff raises “serious questions going to the merits, and a balance of hardships that tips sharply toward the plaintiff” if “the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011); id. at 1132 (noting the latter two showings are “the other two elements of the Winter test”).

When considering a motion for preliminary injunction, “[t]he weight to be given each of these statements is in the discretion of the trial court.” Oakland Trib., Inc. v. Chron. Pub. Co., 762 F.2d 1374, 1377 (9th Cir. 1985); see also Bracco v. Lackner, 462 F.Supp. 436, 442 (N.D. Cal. 1978) (when considering affidavits submitted in support of a TRO or preliminary injunction, “[t]he weight to be given such evidence is a matter for the Court's discretion, upon consideration of the competence, personal knowledge and credibility of the affiant.”).

III. Discussion

As a threshold matter, the court finds Plaintiff has not adequately established the court's subject matter jurisdiction because there are no underlying claims in this action. “Federal courts are courts of limited jurisdiction, possessing only that power authorized by Constitution and statute.” Gunn v. Minton, 568 U.S. 251, 257 (2013) (citation and internal quotation marks omitted). “Accordingly, ‘the district courts may not exercise jurisdiction absent a statutory basis.'” Home Depot U.S.A., Inc. v. Jackson, 139 S.Ct. 1743, 1746 (2019) (quoting Exxon Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546, 552 (2005). This threshold requirement “‘spring[s] from the nature and limits of the judicial power of the United States' and is ‘inflexible and without exception.'” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998) (quoting Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884); see also Orient v. Linus Pauling Inst. of Sci. & Med., 936 F.Supp. 704, 706 (D. Ariz. 1996) (“Federal subject matter jurisdiction is a threshold issue that goes to the power of the court to hear the case, so subject matter jurisdiction must exist at the time the action commences.”). Additionally, because subject matter jurisdiction is a threshold inquiry, a pleading must contain “a short and plain statement of the grounds for the court's jurisdiction.” Fed.R.Civ.P. 8; see also Harris v. Rand, 682 F.3d 846, 850 (9th Cir. 2012) (“Under Federal Rule of Civil Procedure 8(a), a pleading must contain ‘a short and plain statement of the grounds for the court's jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support.'”).

Here Plaintiff argues that the court possesses subject matter jurisdiction based on diversity jurisdiction, pursuant to 28 U.S.C. § 1332, because: (1) Plaintiff resides in Massachusetts, (App. ¶ 14); (2) Defendant is a California corporation with its principal place of business in Irvine, CA, (id. ¶ 15); and (3) Plaintiff claims at least $75,000 in...