No irreparable harm means no injunction for Richland produce storage warehouse

It’s the commercial litigation version of “get off my lawn!” Intrigued? Read on.

Preferred Freezer Services operates a produce storage warehouse in Richland, Washington. Richland residents are well-acquainted with the facility; the building stands 120 feet tall and clocks in at 455,000 square feet. The local business journal says that the building — essentially a gargantuan freezer — “dominates the north Richland landscape.”

More than two billion pounds of produce pass through Preferred Freezer’s warehouse each year. That’s an enormous amount of produce. We’ll do some quick math to put that number in perspective. Two billion pounds per year equates to 5.4 million pounds per day. Our trusted friend Google informs us that a semi truck can haul about 50,000 lbs. of produce. So, picture 108 semis worth of fruits and veggies coming in and out of the warehouse each day. (5.4 million / 50,000 = 108 semis).

Does Preferred Freezer actually use semis to move all those fruits and veggies? No! That would be a nightmare. It uses rail cars instead.

The rail cars arrive on trains pulled by carriers like Union Pacific, and are then diverted onto a system of private tracks owned by Preferred Freezer. The company’s private tracks run right up to the warehouse, which makes loading and unloading the cars easy peasy.

But wait, you say. How do the rail cars get from the main track onto Preferred Freezer’s private tracks? Surely that’s a bit more complicated than you’re making it sound. Ok, fair question. It is rather complicated.

For purposes of this post, all you need to know is that Preferred Freezer contracts with a local railway operator, Tri-City Railroad Company (“TCRY”), to handle that task. TCRY shuttles the cars from the main track, onto Preferred Freezer’s private tracks to be loaded or unloaded, and then back onto the main track.

Preferred Freezer and TCRY had a falling out last year. The reasons aren’t especially important, so we won’t bore you with them. What is important is what happened as a result of the fallout. From what we can discern from the parties’ filings, the short story is that TCRY left several of its full-size locomotives just sitting on Preferred Freezer’s tracks. Preferred Freezer asked TCRY to move them, but TCRY refused.

Preferred Freezer moved for injunctive relief, asking Judge Bastian to order TCRY to move the locomotives. TCRY opposed the motion, arguing that it is entitled to “exclusive use” of the private tracks under the parties’ contract.

Judge Bastian denied the motion in a short, three-page order. Two factors were central to his decision. First, he ruled that Preferred Freezer failed to meet the heightened standard for so-called “mandatory injunctions” that alter the status quo by requiring a party to do something (as opposed to refraining from doing something). Second, Judge Bastian concluded that Preferred Freezer had not shown that it would be irreparably harmed. While not stated expressly, the order suggests that money damages would be an adequate remedy for Preferred Freezer if TCRY is proven to have wrongfully occupied the tracks with its locomotives.

This decision serves as a reminder that injunctive relief is reserved for truly extraordinary situations when no other remedy will do. Showing that you have a strong case is not enough. You have to go the extra mile and prove that money damages won’t be sufficient — especially if you are asking for an order that alters the status quo by requiring the other side to take action.

Preferred Freezer seems to have a pretty legitimate beef about TCRY using its tracks for an improper purpose. But its failed bid for injunctive relief was not a good way to start the case. We’ll continue to monitor the case and let you know what transpires.

The case is Tri-City Railroad Company, LLC v. Preferred Freezer Services of Richland, LLC, Case No. 19-CV-00045-SAB.

Ninth Circuit takes Erie doctrine to new heights in claim preclusion ruling

Do you love nuanced civil procedure rulings? We have just the case for you. It’s actually a Ninth Circuit case, but it originated here in the Eastern District of Washington. That’s why we’re featuring it.

Party A and Party B went to arbitration. The arbitrator issued an award in favor of Party A. Party A filed suit in federal court in Florida to have the award confirmed. The federal court, sitting in diversity, confirmed the award.

Party B then sued Party A in federal court in Washington. Party B’s complaint suggested that Party B was attempting to re-litigate the same claims that were decided in the arbitration. Party A moved to dismiss the case on claim preclusion grounds.

Sounds like a straightforward claim preclusion scenario, right? Well, not exactly. There’s a choice of law question lurking in the shadows. What claim preclusion law applies? Florida law? Washington law? Federal common law? They are all slightly different.

In a decision issued today, the Ninth Circuit held that Florida law applies. Why, you ask? Short answer: it’s an Erie doctrine thing. Stop reading and go turn your attention to more important questions.

If you’re dying for the long answer, here it is. Under the Erie doctrine, the preclusive effect of a judgment entered by a federal court sitting in diversity jurisdiction is governed by the law of the state in which the federal court is located. The same rule applies to a federal court judgment confirming an arbitration award.

The Ninth Circuit affirmed Judge Rice’s dismissal of Party B’s case on claim preclusion grounds. The case is NTCH-WA, Inc. v. ZTE Corp., Ninth Circuit Case No. 17-35833. The Ninth Circuit’s opinion can be found here. Law360 has more about the case here.