FTE Networks, Inc. v. Suneet

Background

FTE Networks, Inc. brought claims under the Racketeer Influenced and Corrupt Organizations Act and common law claims for fraud, tortious interference, and breach of fiduciary duty. The defendants included Suneet Singal, Joseph F. Cunningham, other individuals, and entities. FTE alleged that the defendants were members of its board of directors or had exercised control over the board for the purpose of defrauding FTE.

FTE made an ex parte request for a temporary restraining order, meaning an emergency order sought before the opposing party could be heard, and for an order requiring Cunningham to show cause why a preliminary injunction should not issue. FTE sought to bar Cunningham from appearing at or voting in board meetings, disclosing confidential information learned at board meetings in violation of his fiduciary duties, and challenging the board’s September 12, 2022 appointment of an independent director or actions taken by the board.

Court’s analysis

Under Federal Rule of Civil Procedure 65(b), an ex parte temporary restraining order requires specific facts in an affidavit or verified complaint clearly showing that immediate and irreparable injury, loss, or damage will occur before the opposing party can respond. The court found that FTE’s allegations did not meet that standard. FTE asserted that it could not conduct business and that FTE and its stockholders would be financially ruined without the order. But FTE did not submit an affidavit or declaration providing facts about Cunningham’s alleged continuing misconduct or establishing why specific, immediate injunctive relief was necessary to prevent irreparable harm.

The court also found that FTE had not shown a sufficient connection between the requested injunction and the claims in its complaint. The complaint did not seek relief concerning the appointment of an independent director, and it did not directly seek permanent injunctive relief against Cunningham. Based on the materials before it, the court concluded that FTE had not established the required connection between the requested emergency relief and the claims in the underlying complaint.

Disposition

Judge Paul G. Gardephe denied FTE’s motion for a temporary restraining order and for an order to show cause why a preliminary injunction should not issue, without prejudice to renewal. The clerk was directed to terminate the motions at Docket Nos. 14 and 15. The order addressed FTE’s request for emergency injunctive relief and did not decide the merits of FTE’s underlying racketeering, fraud, tortious-interference, or fiduciary-duty claims.