Contract Datascan, LP v. Regis Corporation, No. 3:2011cv01079 - Document 30 (N.D. Tex. 2011)

Court Description: MEMORANDUM OPINION AND ORDER: In accordance with the court's direction at the preliminary injunction hearing yesterday, the court will allow the parties to submit simultaneously a written summation, not to exceed ten pages, to be filed with the court no later than Thursday, June 9, 2011, 5:00 p.m. The court will issue its ruling on the matter of preliminary injunction by the close of business on Wednesday, June 15, 2011. The temporary restraining order issued by State District Judge Eric Moy remains in effect until the court issues its ruling on the application for preliminary injunction. (Ordered by Judge Sam A Lindsay on 6/8/2011) (tln)

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IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION CONTRACT DATASCAN, LP, Plaintiff, v. REGIS CORPORATION, Defendant. § § § § § § § § Civil Action No. 3:11-CV-1079-L MEMORANDUM OPINION AND ORDER In accordance with the court s direction at the preliminary injunction hearing yesterday, the court will allow the parties to submit simultaneously a written summation, not to exceed ten pages, to be filed with the court no later than Thursday, June 9, 2011, 5:00 p.m. The court now briefly addresses an issue raised at the end of the hearing yesterday. Defendant Regis Corporation contends that the state-issued temporary restraining order has already expired as a matter of law because of the fourteen-day period after which a temporary restraining order issued without notice automatically expires under Rule 65(b)(2) of the Federal Rules of Civil Procedure. The court disagrees. Regis cites the 1988 Fifth Circuit case, Nissho-Iwai American Corporation v. Kline, for the proposition that a state court order must conform with federal procedural rules when the action is removed to federal court. 845 F.2d 1300, 1303-04 (5th Cir. 1988). Specifically, Regis argues that the notice requirement of Rule 65(b)(2) was not met when the state court granted the temporary restraining order because Regis was only informed of Datascan s petition two hours before the state court hearing. In other words, Regis argues that although it had notice, it did not have effective Memorandum Opinion and Order Page 1 notice. Regis ultimately contends that the state-issued temporary restraining order should be treated as ex parte and expire automatically after fourteen days from the date of issuance.* The court determines that, although state court orders that are removed to federal court become federalized within the context of procedural requirements, this does not grant the federal court an automatic license to unring the bell as to what occurred in state court. The plain language of the controlling statute states that [a]ll injunctions, orders, and other proceedings had in such action prior to its removal shall remain in full force and effect until dissolved or modified by the district court. 28 U.S.C. § 1450 (emphasis added). Regis argues that, under federal procedure, it would have been entitled to at least five days notice before the temporary restraining order hearing could have taken place; because it only had two hours notice, Regis argues that the state court order violates federal procedure. The court determines that, even if the state court issued the temporary restraining order without the same amount of notice that the federal court might have required, the court is in no position to second-guess the state court s determination. The representations made by the parties at the preliminary injunction hearing yesterday revealed that counsel for both Regis and Datascan was present during the state court hearing, and that Regis made strong arguments in opposition to the temporary restraining order. The state court judge heard, considered, and rejected these arguments before he made his ruling. * The court notes that the relevant date for calculating the fourteen-day period starts at the date of removal to federal court, not the date the temporary restraining order was issued in state court. See Kline, 845 F.3d at 1304, n.2 (stating that the limitation period is calculated from the date of removal) (citing Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Track Drivers, 415 U.S. 423, 439-41 (1974)). Because this case was removed on May 23, 2011, the temporary restraining order would have automatically expired on June 6, 2011, had it been issued without notice in the state court. See Fed. R. Civ. P. 65(b)(2). Memorandum Opinion and Order Page 2 As Kline aptly states: [T]he policy of judicial economy . . . mitigates against our imposing an obligation on the district courts to conduct a determination de novo of the propriety of state court [rulings] carried with the case upon removal to federal court, every time such an order is contested. The district court is perfectly free to adopt the state court record as the basis for sustaining a challenged state court order, as was done by the court below. Kline, 845 F.2d at 1304. Because the state court issued the temporary restraining order with notice to Regis, and because the court adopts the state court s decision, the fourteen-day period under Rule 65, after which an ex parte temporary restraining order expires, does not apply. As that fourteen-day period is inapplicable in this case, the temporary restraining order has not lapsed, and the court determines that the statutory language of 28 U.S.C. § 1450 controls. The court will issue its ruling on the matter of preliminary injunction by the close of business on Wednesday, June 15, 2011. As such, the court does not believe an additional week will cause Regis any undue legal prejudice in light of the importance of the issues and the rigid time constraints placed on the court. The temporary restraining order issued by State District Judge Eric Moyé remains in effect until the court issues its ruling on the application for preliminary injunction. A copy of the temporary restraining order is attached to this order and is made a part of this order as if repeated herein verbatim. As stated above, the parties will be allowed to each file a written summation to present their final arguments, not to exceed ten pages, by Thursday, June 9, 2011, 5:00 p.m. It is so ordered this 8th day of June, 2011. _________________________________ Sam A. Lindsay United States District Judge Memorandum Opinion and Order Page 3 Case 3:11-cv-01079-L Document 1-7 Filed 05/23/11 Page 4 of 5 PageID 82 Case 3:11-cv-01079-L Document 1-7 Filed 05/23/11 Page 5 of 5 PageID 83

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