United States District Court, D. Arizona
M. BRNOVICH, UNITED STATES DISTRICT JUDGE
filed a request for a preliminary injunction (Doc. 2) and a
hearing was held on July 8, 2019. The Court has now
considered the pleadings, testimony, exhibits from the
hearing,  relevant case law, and arguments of
Gary Wagner (“Wagner”) owns two companies:
Giggling Marlin, Inc. (“GM Inc.”) and Giggling
Marlin S. de R.L. de C.V. (“GM Mexico”). Wagner
started the Giggling Marlin brand about 35 years ago when he
opened the Giggling Marlin Bar & Grille in Cabo San
Lucas, Mexico. Wagner began making tequila branded as
Giggling Marlin in 2015. Wagner owns federal trademarks for
the “Giggling Marlin” under trademark nos. 4,
860, 349 (for tequila) (Ex. 1) and 4, 444, 166 (for
restaurant services) (Ex. 2). GM Inc. has an importer permit
issued by the Alcohol and Tobacco Tax and Trade Bureau with
permit no. AZ-I-21043 (the “Importer Permit”)
(Ex. 3). GM Inc. has a wholesaler permit issued by the
Alcohol and Tobacco Tax and Trade Bureau with permit no.
AZ-P-21076 (the “Wholesaler Permit”) (Ex. 4). GM
Inc. owns the tequila.
Derek Adickman (“Adickman”) met Wagner in Mexico
several years ago. The two began to discuss going into
business together to sell the tequila. Ultimately, the
parties came to some agreement and Wagner sent tequila to
Adickman to store and sell. The tequila has always been
stored in a detached RV garage at a home in Arizona owned by
Keith Foulke (the “Home”). There is no
relationship between Wagner and Mr. Foulke.
point, the parties signed a written agreement (the
“Agreement”), but they disagree as to what the
Agreement means. (Ex. 11). Adickman testified that the Agreement
was to start a company called Giggling Marlin Tequila, and he
was to be 30% owner. Wagner testified that the Agreement was
written to formalize their arrangement and Adickman was just
a salesman who was to receive 30% of the profits. There is no
dispute that Giggling Marlin Tequila had never been formally
created as either a limited liability company or a
corporation. There was no testimony nor is there anything in
the agreement as to ownership of the tequila. There was no
testimony about the purpose of the business. The Agreement
says that the primary purpose “is to provide sales,
services, goods, intel[l]ectual rights, properties and
anything else related to the Giggling Marlin
Tequila which are solely owned by
GW for Giggling Marlin
Tequila.” (Ex. 11) (emphasis in original).
working relationship between Adickman and Wagner
deteriorated, and Wagner demanded return of all the tequila
in March 2019. There are currently hundreds of cases of
tequila stored at the Home. Adickman refused to return the
tequila. Wagner offered to go to arbitration and Adickman
refused. (Exs. 12 & 13). Wagner learned that the Home
where the tequila was stored was in foreclosure proceedings.
The foreclosure was scheduled for July 9, 2019, but the
morning of the hearing it was rescheduled for July 16, 2019.
Adickman testified that he sent a wire transfer the morning
of the hearing and that the foreclosure was going to be
closed. The parties were unable to confirm that the
foreclosure was stopped altogether.
filed the current case (Doc. 1, “Complaint”) and
requested a preliminary injunction on May 17, 2019. (Doc. 2).
The Complaint alleges claims for trademark infringement,
unfair competition, breach of contract, conversion, and
Rule 65 of the Federal Rules of Civil Procedure, a party may
seek injunctive relief if it believes it will suffer
irreparable harm during the pendency of an action. “A
preliminary injunction is ‘an extraordinary and drastic
remedy, one that should not be granted unless the movant, by
a clear showing, carries the burden of
persuasion.'” Lopez v. Brewer, 680 F.3d
1068, 1072 (9th Cir. 2012) (quoting Mazurek v.
Armstrong, 520 U.S. 968, 972 (1997) (per curiam)
(emphasis omitted)); see also Winter v. Natural Res. Def.
Council, Inc., 555 U.S. 7, 24 (2008) (citation omitted)
(“A preliminary injunction is an extraordinary remedy
never awarded as of right.”). A plaintiff seeking a
preliminary injunction must show that (1) he is likely to
succeed on the merits, (2) he is likely to suffer irreparable
harm without an injunction, (3) the balance of equities tips
in his favor, and (4) an injunction is in the public
interest. Winter, 555 U.S. at 20. “But if 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.” Shell
Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291
(9th Cir. 2013) (emphasis omitted) (quoting Alliance for
the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th
Cir. 2011)). Under this “serious questions”
variant of the Winter test, “[t]he elements .
. . must be balanced, so that a stronger showing of one
element may offset a weaker showing of another.”
Lopez, 680 F.3d at 1072.
Likelihood of Success/Serious Questions
was very little discussion at the hearing regarding
Plaintiffs' likelihood of success on the merits of the
claims. Defendant Adickman did not directly address the
merits of the claims in his Response and instead argues that
Plaintiffs have not shown irreparable harm. The Court will
however analyze the claims as alleged.