Medrite Care, LLC v. Medrite 243 LLC

Background

The plaintiffs were Medrite Care, LLC; Medrite 22nd LLC; Medrite 72 LLC; Medrite BH LLC; Medrite Midtown West LLC; and Henry Weiss, individually and derivatively on behalf of several of those entities. The defendants included Medrite 243 LLC and other companies with “Medrite” in their names, as well as Samuel Fishman, also identified as Samuel Fisch. The opinion identifies Weiss as the “Investing Member” of Medrite Care LLC and Fishman as its “Working Member.”

The plaintiffs alleged that Fishman used his management role to operate competing Medrite-branded businesses with Weiss’s money and Dr. Jeffrey Dick’s license without their knowledge. The complaint asserted 28 claims, including alleged breaches of fiduciary duties, violations of New York licensing laws, and violations of the Lanham Act, the federal trademark statute.

The plaintiffs sought emergency relief that would have restricted Fishman’s role in the businesses, prevented the defendants from accessing company funds and assets, limited access to business locations and employees, prohibited operation of urgent-care facilities using the Medrite name or Dr. Dick’s license and insurance-provider numbers, restrained use of Medrite marks and trade dress, and appointed a temporary receiver to manage Medrite Care’s affairs. They also sought a prejudgment attachment and other asset restraints.

Temporary Restraining Order and Hearing

The plaintiffs filed the action and an emergency application on May 4, 2020. On May 5, the court issued a limited temporary restraining order to preserve the status quo until a hearing on May 7, with all parties present.

Fishman submitted a declaration and other materials disputing the plaintiffs’ account of the business’s management. He also agreed with the plaintiffs that the dispute should be resolved in a Jewish court and provided evidence that he had begun such a proceeding. The opinion states that the plaintiffs also represented that they were religiously obligated to resolve the dispute in a Jewish court if possible.

Reasons for Denying Emergency Relief

The court found that the central issue was the alleged mismanagement of the plaintiffs’ businesses, particularly the alleged misappropriation of company assets. It concluded that, if proved, those allegations could be compensated through money damages. The court also relied on the plaintiffs’ admission that the management dispute had continued for several years, finding no immediate harm that justified emergency relief under Federal Rule of Civil Procedure 65(b)(1)(A).

For preliminary injunctive relief, an extraordinary remedy, a plaintiff must show that it will suffer irreparable harm without an injunction. The court found that the plaintiffs did not make that showing regarding the defendants’ access to Medrite Care and Medrite Medical Care funds or their continued involvement in day-to-day operations.

The court separately found that the plaintiffs had not shown a likelihood of success on their Lanham Act claims. It also found that the balance of hardships and the public interest weighed heavily against an injunction, particularly because the defendants were administering testing during the COVID-19 pandemic. The court further noted that the plaintiffs intended to amend their complaint, which counseled against basing an injunction on a pleading that would soon be replaced.

Disposition

The court ordered that the May 5 temporary restraining order was vacated and that the plaintiffs’ Application for Emergency Relief was denied. The court did not dismiss the action in this order. Instead, based on the parties’ statements that the dispute should be resolved in a Jewish court and the entity defendants’ request that the federal court defer to that court, the court said it would consider written applications asking it to decline to exercise jurisdiction. The parties were also ordered to obtain and file a transcript of the May 7 hearing.