United States District Court, E.D. Virginia, Norfolk Division
JTH TAX, INC., d/b/a LIBERTY TAX SERVICE, et al. Plaintiffs,
GREGORY AIME, et al. Defendants,
OPINION AND ORDER
Coke Morgan, Jr. Senior United Slates District Judge.
matter is before the Court on Plaintiff JTH Tax, Inc. d/b/a
Liberty Tax Service and SicmpreTax LLC's
("Plaintiff") Motion for a Temporary Restraining
Order and a Preliminary Injunction Should Not Issue
("the Motion"). Doc. 7. In a Report and Recommendation
("R&R"). the Magistrate Judge RECOMMENDED that
the Motion be GRANTED IN PART. Doc. 16. Defendants Gregory
Aime, Aime Consulting, LLC, Wolf Ventures, Inc.. and Aime
Consulting, Inc. ("Defendants") object to the
R&R. Doc. 18. For the reasons below, the Court OVERRULES
Defendants' objections and ADOPTS the Magistrate
Judge's R&R. Doc. 16.
is a lax preparation company. R&R al 2. Defendants have
been franchisees of at least nine (9) Liberty Tax and
SiempreTax locations since about 2011. Id. In about
January 2016. Plaintiff learned that the Internal Revenue
Service ("IRS") revoked the Electronic Filing
Identification Number ("EFIN") for Defendants'
franchise locations as a consequence of Defendants"
activities. Doc. 8 at 3. Defendants were required to maintain
the EFIN under their franchise agreements with Plaintiff,
Id.; see Doc. 6, Exs. A, B, C, D, E, F, G, H. I.
Plaintiff could have terminated the franchise agreements
under the terms of the contract, but instead executed a
Purchase and Sale Agreement ("PSA") with Defendants
and gave them until May 8, 2016 to regain their EFIN and buy
back the locations. Doc. 6. Ex. L ¶ 4.
seeks a temporary restraining order, alleging that
(1) refused to assign leases for the franchise locations to
the Plaintiff. (2) refused to return confidential proprietary
tiles and records, including customer lists. related to the
operation of the franchise locations, (3) refused to transfer
the franchise assets to Plaintiff (4) failed to return
Plaintiffs confidential operations manual and other business
information, and (5) indicated their intent to operate a
competing tax preparation business using Plaintiffs
R&R at 2. Plaintiff also seeks a preliminary injunction.
Doc. 7 at 2.
9, 2016, Plaintiff filed a Complaint in this Court. Doc. 1.
On June 22. Plaintiff filed an Amended Verified Complaint to
add Aime Consulting. Inc. as a Defendant. Doc. 6. Plaintiff
also tiled the Motion on June 22. Hoc. 7. On June 30. 2016.
Defendants filed a Response in Opposition to the Motion. Doc.
13. On July 1. Plaintiff filed two declarations in support of
the Motion. Docs. 14. 15. Also on July 1. Judge Leonard held
a hearing on the temporary restraining order
("TRO") and filed an R&R RECOMMENDING that the
Court GRANT IN PART Plaintiffs Motion for a 'PRO as to
six (6) of the nine (9) Liberty Tax and SiempreTax franchise
locations in Defendants' control. R&R at 6-8; see
Id. at 2. The R&R also required objections to be
filed within seven (7) days and responses to objections to be
filed within seven (7) days. Id. at 9. On July 8.
Defendants filed five (5) objections to the R&R. Doe, 18.
On July 15, Plaintiff filed a response to Defendants
objections. Doe. 20. On July 15. Defendants* counsel waived
service for all Defendants. Doc. 22.
Review of the R&R
motion for injunctive relief, the Magistrate Judge may make
only a recommendation to the Court. 28 U.S.C. §
636(b)(1)(A). The recommendation has no presumptive weight,
and the Court is responsible for making a final
determination. Owens ex rel. Metcalf v. Barnhart.
444 F.Supp.2d 485, 488 (D.S.C. 2006) (citing Mathews v.
Weber. 423 U.S. 261. 269 (1976)). The district court
"may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate judge. The
judge may also receive further evidence or recommit the
matter lo the magistrate judge with instructions." 28
U.S.C. § 636(b)(1)(C).
Court reviews de novo any part of a Magistrate
Judge's recommendation to which a party has properly
objected. Fed.R.Civ.P. 72(b)(3); Little v. Colvin.
No. 2:15cv47, 2016 WL 778026, at *2 (H.D. Va. Feb. 24. 2016).
If the Court finds that substantial evidence exists to uphold
the Magistrate Judge's findings, the Court must uphold
them, even if evidence also exists to support contrary
findings. Little. 2016 WL 778026. at *2. When a
Court conducts a de novo review, it reexamines all
relevant evidence previously reviewed by the Magistrate Judge
to determine whether any particular findings of fact raised
in the objections are supported by "substantial
evidence." 42 U.S.C. § 405(g); Coffman v.
Bowen, 829 F.2d 514, 517 (4th Cir. 1987); see also
Richardson v. Parales, 402 U.S. 389, 390 (1971).
Substantial evidence is "more than a mere scintilla of
evidence but may be somewhat less than a preponderance."
See Laws v. Celebrezze. 368 F.2d 640. 642 (4th Cir.
1966). Substantial evidence is evidence that a reasonable
mind might accept as adequate to support a conclusion and
sufficient to withstand a directed verdict were the case
before a jury. See Teague v. Califano. 560 F.2d 615.
618 (4th Cir, 1977), overruled by Hyatt v. Heckler.
807 F.2d 376, 378 (4th Cir. 1986).
restraining orders and preliminary injunctions are
extraordinary equitable remedies, Micro Strategy Inc. v.
Motorola. Inc., 245 F.3d 335, 339 (4th Cir. 2001):
Eagle On Alliance v. Jewell. No. 2:13ev371. 2013 WL
6188998, at *4 (E.D. Va. Nov. 22. 2013). A temporary
restraining order ''may be issued without full notice
[to the other parties], even, under certain circumstances, ex
parte." Fed.R.Civ.P. 65(b); Hoeehst Diafoil Co, v.
Nan Ya Plastics Corp.. 174 F.3d 411, 422 (4th Cir.
1999). Unlike preliminary injunctions, temporary restraining
orders are of limited duration, usually lasting fourteen (14)
days. Fed.R.Civ.P. 65(b)(2). But cf. Hoecake. 174
F.3d at 422 ("[I] fa temporary restraining order is
continued indefinitely, it will be evaluated on appeal as if
it were a preliminary injunction."). To receive a
temporary restraining order, a plaintiff must show through
"specific facts in an affidavit or a verified complaint.
. . that immediate and irreparable injury, loss, or damage