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ZooBuh, Inc. v. Savicom, Inc.

United States District Court, D. Utah

April 5, 2019

ZOOBUH, INC., Plaintiff,
v.
SAVICOM, INC., d/b/a MINDSHARE DESIGN; DG INTERNATIONAL, a foreign entity domestically registered in Delaware; and DG INTERNATIONAL LIMITED, a Delaware limited liability company, Defendants.

          [SEALED ENTRY, SEALED ORDER] MEMORANDUM DECISION AND ORDER DENYING EX PARTE MOTION FOR TEMPORARY RESTRAINING ORDER AND ASSET FREEZE

          Jill N. Parrish United States District Court Judge

         Before the court is ZooBuh, Inc.'s (“ZooBuh”) sealed ex parte motion for a Temporary Restraining Order (“TRO”) and asset freeze (ECF No. 77) against DG International. For the following reasons, the motion is denied.

         BACKGROUND

         ZooBuh is a Utah corporation with its principal place of business in Utah County, Utah. ZooBuh provides email services to its customers, and it owns all of the servers, routers, and switches on its network. Every ZooBuh email account is registered, hosted, and serviced through ZooBuh's hardware.

         DG International is a foreign company located in Basseterre, St. Kitts. DG International contracted with DG International Limited, LLC (“DGI LLC”), a Delaware limited liability company, to send emails to persons on DG International's customer lists. The customer list at issue in this case contained email addresses for persons who had supposedly registered for the dating website xdating.com.

         Zoobuh and its customers have received thousands of email advertisements for xdating.com. But, according to ZooBuh, neither it nor its customers elected to receive email advertisements for xdating.com. ZooBuh alleges that all of the emails at issue violate at least one or more provisions of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), 15 U.S.C. §§ 7701, et seq. ZooBuh alleges that it has suffered harms to its business, including financial harm, lost time, and server crashes.

         ZooBuh filed suit against DG International and DGI LLC (collectively “Defendants”) for their alleged violations of the CAN-SPAM Act on September 29, 2017.[1] After a year and a half of litigation, on March 8, 2019 and April 3, 2019, respectively, the court entered default judgment against Defendants in favor of ZooBuh in the amount of $3, 003, 600.00. Final judgment against Defendants was entered on April 4, 2019.

         Upon learning of this lawsuit, DG International closed its U.S. operations and moved its assets overseas to avoid collectability. DG International's only assets in the United States are certain Web Domains currently registered with Godaddy.com. See Ex Parte Mot. TRO at ¶ 4. ZooBuh intends to seek Writs of Execution against the Web Domains. But, in the meantime, ZooBuh's pending ex parte motion seeks a temporary restraining order to lock DG International's web domains in place and prohibit their transfer until they can be auctioned for sale by the U.S. Marshal in order to satisfy Plaintiff's judgment. ZooBuh asserts that without an asset freeze, DG International will merely transfer its Web Domains to a third party, thereby rendering its assets untouchable.

         ANALYSIS

         A. A TRO is not an Appropriate Remedy at this Stage in the Litigation Where Final Judgment has now been Entered

         This is not a typical preliminary injunction motion. “Preliminary injunctions are extraordinary equitable remedies designed to ‘preserve the relative positions of the parties until a trial on the merits can be held.'” See Westar Energy, Inc. v. Lake, 552 F.3d 1215, 1224 (10th Cir. 2009). But in this case, the court has already entered final judgment against defendants, DG International and DG International Limited (“DG Defendants”).[2] Thus, the merits of the case have been resolved and the court has already determined that ZooBuh is entitled to a monetary judgment of $3, 003, 600.00 against both defendants. The court fails to see, and ZooBuh has failed to explain how the court could enter preliminary injunctive relief after final judgment.

         B. The District Court May Not Have Authority to Issue an Ex Parte Asset Freeze in this Case

         Even had final judgment not been entered, ZooBuh failed to establish that the district court has authority freeze Defendant's assets through a TRO or preliminary injunction. While Fed.R.Civ.P. 65 “governs the procedure for the issuance of a preliminary injunction: the authority for [an asset freeze preliminary injunction] must arise (if at all) elsewhere.” Reebok Int'l, Ltd. v. Marnatech Enterprises, Inc., 970 F.2d 552, 558 (9th Cir. 1992) (emphasis in original). In its motion, ZooBuh cites to the following cases for its proposition that the court may order an asset freeze: Levi Strauss & Co. v. Sunrise Intl Trading Inc.,51 F.3d 982, 987 (11th Cir. 1995); Federal Trade Commission v. United States Oil and Gas Corp.,748 F.2d 1431, 1433-34 (11th Cir. 1984); Commodity Futures Trading Comm'n v.Kimberlynn Creek Ranch, Inc.,276 F.3d 187, 193 (4th Cir. 2002); Grupo Mexicano de ...


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