Free Response to Motion - District Court of California - California

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Natu J. Patel, SBN 188618 THE PATEL LAW FIRM, P.C. 2532 Dupont Drive Irvine, California 92612-1524 Phone: 949.955.1077 Facsimile: 949.955.1877 [email protected] Attorney for Defendants

UNITED STATES DISTRICT COURT
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FOR THE SOUTHERN DISTRICT OF CALIFORNIA

SAMMY'S PRODUCE, INC., Plaintiff, v. REY & REY PRODUCE, INC., and MANUEL REYNOSO, Defendants.

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) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Civil Action, No.: 3:08-cv-00930-L-WMC DEFENDANTS' MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO THE IMPOSITION OF A PRELIMINARY INJUNCTION

DEFENDANTS' MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO THE IMPOSITION OF A PRELIMINARY INJUNCTION

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TABLE OF CONTENTS INTRODUCTION .........................................................................................................................5 PROCEDURAL DEFECTS RELATING TO NOTICE ..........................................................................5

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DISPUTE AS TO THE AMOUNT OF PLAINTIFF'S PACA CLAIM....................................................5
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REY & REY IS STILL IN BUSINESS ...............................................................................................5
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PLAINTIFF HAS AN ADEQUATE REMEDY AT LAW ......................................................................5
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RELEVANT FACTS .....................................................................................................................6 BACKGROUND ..............................................................................................................................6 PLAINTIFF'S FIRST TWO EX PARTE MOTIONS FOR TRO WITHOUT NOTICE ...........................6 PLAINTIFF'S EX PARTE APPLICATION FOR TRO WITH NOTICE ...............................................7 ARGUMENT .................................................................................................................................8 I. PLAINTIFF'S MOTION FOR A PRELIMINARY INJUNCTION AGAINST DEFENDANTS SHOULD BE DENIED BECAUSE THERE ARE PROCEDURAL DEFICIENCIES RELATED TO THE NOTICE PROVISIONS OF FRCP 65(B).......8 THIS MOTION SHOULD BE DENIED BECAUSE PLAINTIFF'S CLAIM FAILS TO MEET THE REQUISTE STANDARDS FOR A PRELIMINARY INJUNCTION UNDER THE NINETH CIRCUIT ...................................................................................9 Preliminary Injunction Standard Under PACA..........................................................9 Plaintiff Cannot Demonstrate a Likelihood of Success on the Merits of its PACA Claim for $95,064 because this amount is in dispute ................................................10 There Is No Danger of Irreparable Injury to the Plaintiff. ......................................10 Defendant's Financial Difficulties Do Not Give Rise To A Reasonable Fear On Plaintiff's Part That Defendant's Produce-Related Assets Are Being Or Are In Danger Of Being Depleted. .......................................................................................10 Plaintiff Has Failed To Show That There Is A Danger That Defendants Will Dissipate The PACA Trust Before The Plaintiff Is Paid Off.................................12

II.

A. B.

C. 1.

2.
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III. THIS MOTION SHOULD ALSO BE DENIED BECAUSE THE BALANCE OF HARSHIPS WEIGHS HEAVILY IN FAVOR OF REY & REY.................................12

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IV. FINALLY, A PRELIMINARY INJUNCTION SHOULD BE DENIED BECAUSE PLAINTIFF HAS AN ADEQUATE REMEDY AT LAW ...........................................13 CONCLUSION ............................................................................................................................15

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TABLE OF AUTHORITIES

Cases Driscoll Potatoes, Inc. v. N.A. Produce Co., Inc., 765 F.Supp. 174, 177 (D.N.J. 1991).......13, 14 Horizon Marketing v. Kingdom International Limited, 244 F.Supp.2d 131, 140 (E.D.N.Y. 2003)...................................................................10, 11 JC Produce, Inc. v. Paragon Steakhouse Restaurants, Inc., 70 F.Supp.2d 1119, 1120 (9th Cir. 1999)..............................................................9, 11 Tanimura & Antel, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132, 141 (3rd Cir. 2000).....................................................................12, 13 Statutes

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7 U.S.C. §499e(c)..............................................................................................5
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Rules
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FRCP 65(b) ..............................................................................................6, 7, 8 FRCP 4(h)(1)................................................................................................8, 9

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MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION Plaintiff Sammy's Produce, Inc. ("Plaintiff") has filed this Motion for Preliminary Injunction (the "Motion") against Defendants Rey & Rey Produce, Inc. ("Rey & Rey") and Manuel Reynoso ("Reynoso") (collectively "Defendants") with respect to its claim to enforce payment from the statutory trust pursuant to Section 5(c) of the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. §499e(c). Plaintiff improperly seeks to enjoin Rey & Rey from transferring any and all of its assets. For the following reasons, Plaintiff motion has no merit and should be denied in its entirety: Procedural Defects Relating to Notice Defendants were not served with the Summons, Complaint and Ex Parte Application for TRO with Notice, Civil Cover Sheet, Memorandum of

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Points & Authorities and other supporting documents and declarations (the "Ex-Parte
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Application & Complaint") on June 3, 2008, as provided in the Proof of Service ("POS")
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because Plaintiff failed to serve Rey & Rey's agent for service of process as well as Reynoso, personally. Dispute as to the Amount of Plaintiff's PACA Claim Despite Plaintiff's claim that there is no dispute as to the amount that is owed under PACA, Rey & Rey's records show otherwise. Rey & Rey Is Still in Business Although Rey & Rey has experienced financial

hardships, Rey & Rey is still is business and has no current plan to file for bankruptcy. Plaintiff Has an Adequate Remedy At Law Plaintiff has a claim for money damages which it can recover in a federal suit and there is no showing that Rey & Rey has insufficient assets to satisfy its obligation. Because Plaintiff will not suffer any irreparable harm and the balance of hardships

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weighs in favor of Rey & Rey, the Court should deny Plaintiff's Motion in its entirety.
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RELEVANT FACTS Background Plaintiff is a wholeseller of perishable agricultural commodities. Rey & Rey is a produce dealer and Reynoso, the president of Rey & Rey, is personally authorized to receive service of process on behalf of Rey & Rey. (Declaration of Manuel Reynoso ("Reynoso Decl.") ¶ 3; Exhibit B) According to Rey & Rey's Vendor Report, Plaintiff has sold and delivered to Rey & Rey various wholesale lots of produce in the net amount of $443,163.20. In return, Rey & Rey has made payments to Plaintiff in the amount of $357,840.00 for a balance of $85,323.20. Furthermore, from September 24, 2007 to January 04, 2008, Rey & Rey shipped goods to Plaintiff for a balance of $14,306.50, which offsets its obligation to Plaintiff. As of June 10, 2008, Rey & Rey's unpaid balance is only $71,016.70. (Reynoso Decl. ¶ 4; Exhibit C)

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Rey & Rey is obligated to hold in trust all produce-related assets received from the sale
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of produce in order to pay $71,016.70.
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Although Rey & Rey has experienced financial difficulties, Rey & Rey continues doing business and has no plan to file for bankruptcy. (Reynoso Decl. ¶ 1) Plaintiff's First Two Ex Parte Motions For TRO Without Notice On May 28, 2008, Plaintiff filed an Ex Parte Application for Temporary Restringing Order ("TRO") Without Notice. The Court denied this application without prejudice on the grounds that Plaintiff failed to provide an affidavit and certification as required by Federal Rules of Civil Procedure ("FRCP") 65(b). Furthermore, Plaintiff did not provide any statement or discussion that would support the issuance of a TRO without notice. The Court directed Plaintiff to re-file the ExParte Application & Complaint with an affidavit attesting to the notice and means of notice that has been provided to Defendants. Later that day, Plaintiff refiled the Ex Parte Application for TRO Without Notice with a

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declaration by Plaintiff's counsel, Bryan W. Pease ("Pease"). In his declaration, Pease briefly
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argued that because an order granting the TRO was issued in a similar case, the TRO should be

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issued in this case.

The court noted that that Pease's declaration lacked any discussion

concerning the necessary elements for a TRO without notice under FRCP 65(b). The Court again denied the Plaintiff's Ex-Parte Application & Complaint because Pease's declaration in support of the Ex-Parte Application & Complaint was not trustworthy and formed a critical basis for a TRO without notice. Plaintiff's Ex Parte Application For TRO With Notice Finally, on June 3, 2008, Plaintiff filed an ex parte Application For TRO With Notice. Plaintiff also filed a Proof of Service ("POS") with this Honorable Court declaring that the Ex-Parte Application & Complaint were served upon Reynoso, personally and also on behalf Rey & Rey on June 3, 2008. Based on that and relying on the POS, the Court issued an Order granting the Ex Parte application for TRO (the "Order").1 The POS stated that Manuel Reynoso was served personally on his own behalf and on

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behalf of Rey & Rey. The POS described Reynoso to be a 48 year old man, 5 feet 9 inches with
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black hair weighing 170 pounds, was served with the Ex-Parte Application & Complaint on Tuesday June 03, 2008 at 7:13AM. (See Attachment #3 to the Motion). Unfortunately, this is NOT true. In fact, Reynoso is a 32 year-old, who is balding on the forehead, has brown hair and weighs 188 pounds. He is also a 5 feet 11 inches tall. (Reynoso Decl. ¶ 2; Exhibit A). Reynoso does not look like a 48 year old man. Reynoso was NEVER served on his behalf or on behalf Rey Rey on June 3, 2008. Reynoso received the Ex-Parte Application & Complaint on Friday on or about June 6, 2008, which was left on his desk apparently by one of his employees. Immediately thereafter, Rey & Rey retained The Patel Law Firm, P.C. (the "Firm") on Tuesday June 10, 2008 to represent Rey & Rey and Reynoso in this matter. (Reynoso Decl. ¶ 7)

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The Order noted that Defendants were served personally on June 2, 2008 with the Ex-Parte Application & Complaint. The proof of Services states that defendants were in fact served on June 3, 2008 so the June 2, 2008 date appears to be an inadvertent error in the Order.

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Since the Firm represents Rey & Rey in other matters, had Reynoso received the ExParte Application & Complaint on June 3, 2008, Defendants would have appeared before this Honorable Court and would have opposed the Ex-Parte Application & Complaint to dispute the amount of the debt and the issuance of the TRO.

ARGUMENT I. PLAINTIFF'S MOTION FOR A PRELIMINARY INJUNCTION AGAINST DEFENDANT SHOULD BE DENIED BECAUSE THERE ARE PROCEDURAL DEFICIENCIES RELATED TO THE NOTICE PROVISIONS OF FRCP 65(b) The Court may grant a temporary restraining order without written or oral notice to the adverse party: only if (1) it clearly appears from specific facts shown by affidavit or by the verified complaint that immediate and irreparable injury loss or damage will result to the applicant before the adverse party or that party's attorney can be heard in opposition, and (2) the applicant's attorney's certifies to the court in writing the efforts, if any, which have been made to hive the notice and the reasons supporting the claim that notice should not be required. FRCP 65(b). Furthermore, FRCP 4(h) (1) provides that "service upon a domestic or foreign corporation ... shall be effected: (1) ... by delivering a copy of the summons and of the complaint to an officer, a managing or general agent or to any other agent authorized by statute to receive services of process." The Court previously denied two of Plaintiff's ex parte applications for a TRO without notice on the grounds that Plaintiff failed to satisfy FRCP 65(b). Since Plaintiff failed to show that the necessary elements for a TRO without notice were met, Plaintiffs had no other choice but to file an ex-parte application for TRO with notice and provide a POS that a person authorized to receive service of process for Rey & Rey, and Reynoso himself in his individual capacity, were in fact served.

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Contrary to the POS filed by Plaintiff, Rey & Rey and Reynoso were not served on June 3, 2008. The POS, signed under oath by Ignacio Gutierrez ("Gutierrez"), provides that the person served was Reynoso, a 48 year-old man with black hair and weighing 170 pounds. But the man served on June 3, 2008 could not have been Reynoso because Reynoso is 32 year-old balding man with brown hair, who weighs 188 pounds. Reynoso also declares under oath that he was never served with the Ex-Parte Application & Complaint. Accordingly, proper service has not been effectuated against Reynoso and Rey & Rey under under FRCP 4(h)(1). Therefore, the same procedural deficiencies exist with this Motion that the Court was attempting to avoid by denying Plaintiff's first two ex parte applications for a TRO without notice. In fact, neither Rey & Rey nor Reynoso were put on notice of this action until Friday June 6, 2008 and were unable to retain the Firm until Tuesday June 10, 2008. Had Defendants

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been served with the Ex-Parte Application & Complaint on Tuesday June 3, 2008, Defendants
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would have had enough time to retain the Firm and file appropriate documents to oppose the ex14 15 16 17 18 19 20 21

parte application. Since Defendants did not receive the Ex-Parte Application & Complaint as mandated by this Court, the Order must be set aside on the grounds of inadequate service and defective notice. II. THIS MOTION SHOULD BE DENIED BECAUSE PLAINTIFF'S CLAIM FAILS TO MEET THE REQUISTE STANDARDS FOR A PRELIMINARY INJUNCTION UNDER THE NINETH CIRCUIT A. Preliminary Injunction Standard Under PACA For a preliminary injunction to issue, the party requesting the injunction must

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demonstrate "either 1) a combination of probable success on the merits and the possibility of irreparable injury, or 2) the existence of serious questions going to the merits and that the balance of hardships tips sharply in its favor." JC Produce, Inc. v. Paragon Steakhouse

Restaurants, Inc., 70 F.Supp.2d 1119, 1120 (9th Cir. 1999). "These are not two tests, but rather the opposite ends of a single continuum in which the required showing of harm varies inversely with the required showing of meritoriousness." Id. Irreparable harm is a risk that the buyer will

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have dissipated the PACA trust before the seller is paid and leave the seller out of money and luck. Horizon Marketing v. Kingdom International Limited, 244 F.Supp.2d 131, 140 (E.D.N.Y. 2003). The facts of this case show that Plaintiff is not entitled to a preliminary injunction. B. Plaintiff Cannot Demonstrate a Likelihood of Success on the Merits of its PACA Claim for $95,064 Because This Amount Is In Dispute In Horizon, the court held that Plaintiffs established likelihood of success on the merits of their claim for payment under PACA, inasmuch as the sellers and buyers had PACA licenses, the sellers submitted unpaid invoices bearing statutory notice language required to preserve their

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entitlement to PACA trust proceeds and that Plaintiffs were entitled to payment was not in
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dispute. 244 F.Supp.2d at 140.
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There is no dispute that Plaintiff and Defendants are subject to PACA, that Plaintiff sold Defendants, in interstate commerce, wholesale quantities of produce and that Plaintiff properly preserved its status as a trust creditor of Defendants under PACA by sending invoices for the produce to the Defendant. The dispute arises as to Plaintiff's allegation that the aggregate amount of $95,064.00 is past due and remains unpaid. Although Rey & Rey has an unpaid

balance for the produce delivered by Plaintiff, Rey & Rey's vendor reports show that the balance is $71,016.70. (Reynoso Decl. ¶¶ 4,5; Exhibit C) If Defendants had been properly served on June 3, 2008, as provided in the POS, Rey & Rey would have had the opportunity to produce evidence that the unpaid balance is only $71,016.70 and that Plaintiff is not entitled to payment in the amount of $95,064.00. Here, the $24,047.30 difference in the disputed amount is not insignificant and is a

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substantive consideration to be taken into account in deciding Plaintiff's PACA claim.
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C. There Is No Danger of Irreparable Injury to the Plaintiff.
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1.

Defendant's Financial Difficulties Do Not Give Rise To A Reasonable Fear On Plaintiff's Part That Defendant's Produce-Related Assets Are Being Or Are In Danger Of Being Depleted.

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In JC Produce, the court held that since defendant and its parent company was accruing significant operating losses in the amount of $1.6 million in a twelve week period; these financial difficulties gave rise to a reasonable fear on plaintiff's part that defendant's produce-related

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assets were being or were in danger of being depleted. 70 F.Supp.2d at 1123. Nevertheless, the
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court ordered defendant to post a bond sufficient to protect JC Produce's interest, rather than
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issuing an injunction, in order to minimize the hardship on the defendant. Furthermore, in Horizon, the court granted the preliminary injunction and held that the plaintiffs demonstrated that risk of irreparable harm was present because the seller was no longer in business and was in the process of liquidating its assets, consisting of $80,000 in receivables to be shared between plaintiff and six other creditors. 244 F.Supp.2d at 140. Unlike the defendant in Horizon, Rey & Rey is still in business and has no intention of filing for bankruptcy. (Reynoso Decl. ¶ 1) Furthermore, Rey & Rey's operating losses are nowhere near as significant as the defendant's in JC Produce. In the general allegations of its complaint, Plaintiff limits the extent of their business relations with the Defendants to the period of October 12, 2007 to November 3, 2007. While this is the period during which issues with the trust arose, Plaintiff fails to mention that it has been in business with the Defendants since as far

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back as June 16, 2007 and that Plaintiff has delivered to the Defendants wholesale amounts of
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produce worth $443,163.20 against which, Defendants have paid $357,840.00 and have shipped
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goods to Plaintiff in the amount of $14,306.50. (Reynoso Decl. ¶ 4; Exhibit C) In the Plaintiff's President's declaration filed in support of Motion, there is no mention of the debt owed by the Plaintiff in the amount of $14,306.50 or offset of the Plaintiff's debt against the amount owed by Defendants. Therefore, not only is the debt owed by Defendants substantially less than that claimed by Plaintiff, but Plaintiff has also failed to establish that Defendants' financial difficulties are significant enough to give rise to a fear that Plaintiff's trust assets were being or are in danger of being depleted.

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2.

Plaintiff Has Failed To Show That There Is A Danger That Defendants Will Dissipate The PACA Trust Before The Plaintiff Is Paid Off.

Trust dissipation constitutes irreparable harm if ultimate recovery is rendered unlikely. Tanimura & Antel, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132, 141 (3rd Cir. 2000). In other words, plaintiff is harmed if it is unlikely that defendant will be able to satisfy its financial obligation to plaintiff. Id. Nevertheless, in its Ex Parte Application for TRO, Plaintiff merely states that if a preliminary injunction is not granted, there will be no assets in the trust and that Plaintiff will be forever excluded as a beneficiary of the trust. Furthermore, Plaintiff's claim that

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Defendants are dissipating the trust assets in that they have failed and refused to pay plaintiff for
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the produce supplied by Plaintiff. A showing of irreparable harm requires more than a mere delay in payment. There must be evidence that Defendants are in such financial difficulties that it is likely that Defendant will be unable to satisfy their obligation to Plaintiffs. There are no such facts in this case. In fact, in the course of its business relationship with Plaintiff, Rey &

Rey has made net purchases in the amount of $443,163.00 and only $71,016.70 remains unpaid. The fact that Rey & Rey has paid off most of this amount shows that Rey & Rey is capable of satisfying its debt. Furthermore, as explained earlier, Rey & Rey is still in business and has no plan of filing for bankruptcy. (Reynoso Decl. ¶ 1) Plaintiff is taking a negative turn in the market out of proportion and thus, its request for a preliminary injunction is premature. Therefore, since Rey & Rey's financial difficulties are not so burdensome and there is no realistic danger that its financial obligation to Plaintiff will not be satisfied, Plaintiff's claim that

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there is a substantial risk that they will suffer irreparable injury is weak, at its best.
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III.
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THIS MOTION SHOULD ALSO BE DENIED BECAUSE THE BALANCE OF HARSHIPS WEIGHS HEAVILY IN FAVOR OF REY & REY Plaintiff claims that Defendants would not be harmed if a preliminary injunction is

granted because Defendants would only be required to fulfill the duties imposed by statute.
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In Tanimura, the court found that since the defendants were already financially insolvent and yet owed plaintiffs close to $1.5 million dollars, no greater harm from the granting of the preliminary injunction resulted to defendants than the plaintiffs. 222 F.3d at 140. Despite the alleged financial difficulties, Rey & Rey is not financially insolvent and continues to operate its business and produce income. In addition, there is no indication that Rey & Rey plans to file for bankruptcy; in fact an injunction would have the effect of hindering Rey & Rey from operating its business. Rey & Rey is likely to suffer much more significant hardships and may even be forced into bankruptcy if such a broad injunction is granted. Furthermore, the amount that Plaintiff seeks to recover is small given that Plaintiff and Rey & Rey have done business in the amount of $443,163.00. The amount that Plaintiff seeks to recover is no where near the $1.5 million dollars that plaintiff was owed in Tanimura.

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Therefore, the amount of the debt and Rey & Rey's financial position shifts the balance
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of hardships heavily against granting the injunction. Since the required showing of harm varies
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inversely with the required showing of meritoriousness and the fact that the possible harm to Rey & Rey from an injunction is significant, it is of less weight that Plaintiff has shown a likelihood of success on the merits. IV. FINALLY, A PRELIMINARY INJUNCTION SHOULD BE DENIED BECAUSE PLAINTIFF HAS AN ADEQUATE REMEDY AT LAW An injunction will not be granted when there is an adequate remedy at law. Driscoll Potatoes, Inc. v. N.A. Produce Co., Inc., 765 F.Supp. 174, 177 (D.N.J. 1991). "In other words, there will be no irreparable injury if money damages will be sufficient to provide redress." Id. In Driscoll, defendants failed to pay plaintiff for potatoes they contracted to buy. Id. at 176. After filing a complaint against defendants, seeking to enforce the trust provisions of PACA and recover the $11,068.50 owed, plaintiff filed a motion for a preliminary injunction directing defendants to place the price of the potatoes in trust because, it contended, defendants had been using the proceeds from the sale of the potatoes to pay other creditors and suppliers. Id.

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Nevertheless, the court held that Plaintiff had an adequate remedy at law since PACA explicitly provided that a trust beneficiary can commence suit in federal court to enforce payment of amounts owing from a trust and plaintiff could recover all amounts owned by Defendants in a suit for money damages. Id. at 177. The court explained that plaintiff had not shown its entitlement to a preliminary injunction because there was no substance to its allegation that defendants were dissipating trust assets. Id. at 180. In addition, there was no indication that defendants were either in bankruptcy or had insufficient assets to satisfy its obligation to plaintiff. Therefore, plaintiff failed to show the irreparable injury required for an injunction. Id. As in Driscoll, Plaintiff will not suffer an irreparable injury because there is neither a significant danger of dissipation of its trust assets nor a showing that Defendant's financial position is so grave that Plaintiff will not recover in a suit for money damages. Although

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Defendants have suffered some financial hardship in the last year, Defendants are still in
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business and continue to operate the business successfully. Furthermore, as in Driscoll, there is
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no indication that Defendants either have insufficient assets to satisfy its obligation or plan to file for bankruptcy. Therefore, since Plaintiff's complaint against Defendants is for money damages owing from a trust, this amount can be recovered without an injunction freezing Defendants' assets.

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Natu J. Patel, SBN 188618 THE PATEL LAW FIRM, P.C. 2532 Dupont Drive Irvine, California 92612-1524 Phone: 949.955.1077 Facsimile: 949.955.1877 [email protected] Attorney for Defendants

UNITED STATES DISTRICT COURT
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FOR THE SOUTHERN DISTRICT OF CALIFORNIA

SAMMY'S PRODUCE, INC., Plaintiff, v. REY & REY PRODUCE, INC., and MANUEL REYNOSO, Defendants.

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) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Civil Action, No.: 3:08-cv-00930-L-WMC DECLARATION OF MANUEL REYNOSO IN SUPPORT OF DEFENDANTS' MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO THE IMPOSITION OF A PRELIMINARY INJUNCTION

I, Manuel Reynoso, declare that I am a Defendant and President of Defendant Rey &
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Rey Produce, Inc. in the above action. I am making this declaration in opposition to Petitioner's Motion for a Preliminary Injunction. As such, I have personal knowledge of the following facts and if called upon, I could and would competently testify thereto: 1. I am the President of Rey & Rey Produce, Inc. ("Rey & Rey"), which has been in business since October 2002. Rey & Rey has no current plans of filing for bankruptcy.

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DECLARATION OF MANUEL REYNOSO IN SUPPORT OF DEFENDANTS' MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO THE IMPOSITION OF A PRELIMINARY INJUNCTION

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EXHIBIT 2

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HORIZON MARKETING v. KINGDOM INTERN.
Cite as 244 F.Supp.2d 131 (E.D.N.Y. 2003)

LTD.

131

2. Factors O59 HORIZON MARKETING, a d/b/a of Evans Sales, Inc., and Venida Marketing Co., Plaintiffs, v. KINGDOM INTERNATIONAL LIMITED, Dong Ku Ra Mi Corp., Mei­ Chuen Dai a/k/a John Chuen, individually, and Ko­Yu Mo a/k/a Gibson Mo, individually, Defendants. No. 02­CV­6488(NGG). United States District Court, E.D. New York. Feb. 14, 2003. Unpaid produce sellers sued corporate produce buyer, purported corporate buyer, and purported buyer's principals, seeking payment of amounts allegedly due. Sellers moved for preliminary injunction to prevent dissipation of assets that were part of trust formed pursuant to Perishable Agricultural Commodities Act (PACA), and purported buyer moved to dismiss. The District Court, Garaufis, J., held that: (1) venue was proper; (2) sellers established irreparable harm required for preliminary injunction; (3) sellers established likelihood of success on the merits of their PACA claims; and (4) purported buyer was PACA trustee for purposes of preliminary injunctive relief. Motion for preliminary injunction granted; motions to dismiss denied. 1. Factors O59 Under Perishable Agricultural Commodities Act (PACA), PACA trust is formed at the moment produce is shipped to buyer and remains in effect until seller is paid in full. Perishable Agricultural Commodities Act of 1930, § 5(c), 7 U.S.C.A. § 499e(c); 7 C.F.R. § 46.46(c)(1). 5. Constitutional Law O305(6) Federal Courts O106 Although both office of corporation and principal place of business of purported corporate buyer of produce were in Southern District of New York, venue of produce sellers' action against purported Pursuant to Perishable Agricultural Commodities Act (PACA), produce buyer becomes trustee and has a fiduciary obligation under PACA to repay the full amount of the debt owed to the PACA beneficiary. Perishable Agricultural Commodities Act of 1930, § 1 et seq., 7 U.S.C.A. § 499a et seq. 3. Factors O59 Produce buyers who dissipate or otherwise spend the proceeds of trust created pursuant to Perishable Agricultural Commodities Act (PACA), without making full payment for produce to seller, are in breach of their fiduciary duties under PACA. Perishable Agricultural Commodities Act of 1930, § 1 et seq., 7 U.S.C.A. § 499a et seq. 4. Federal Courts O79 Venue was proper, in produce sellers' action against corporate buyer under Perishable Agricultural Commodities Act (PACA), in the Eastern District of New York, given that both buyer's corporate office and address listed on certification of incorporation for Secretary of State to mail process, as buyer's designated agent for service of process, were in county that was part of Eastern District, and therefore buyer would be domestic corporation subject to general personal jurisdiction if Eastern District were separate state. Perishable Agricultural Commodities Act of 1930, § 1 et seq., 7 U.S.C.A. § 499a et seq.; 28 U.S.C.A. § 1391(c); N.Y.McKinney's Business Corporation Law § 304.

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buyer under Perishable Agricultural Commodities Act (PACA) was proper in Eastern District of New York, pursuant to statute under which purported buyer was deemed to ``reside'' in Eastern District if its district contacts would support personal jurisdiction if district were separate state, given evidence that purported buyer was doing business in Eastern District, subjecting it to personal jurisdiction under New York law, and that its contacts with Eastern District were continuous and systematic, satisfying due process requirements for general personal jurisdiction. U.S.C.A. Const.Amend. 14; Perishable Agricultural Commodities Act of 1930, § 1 et seq., 7 U.S.C.A. § 499a et seq.; 28 U.S.C.A. § 1391(c); N.Y.McKinney's CPLR 301. 6. Constitutional Law O305(6) Federal Courts O79 In deciding whether corporation was subject to personal jurisdiction in Eastern District of New York, for purposes of venue statute deeming corporation to ``reside'' in district for which corporation's contacts would support personal jurisdiction if district was separate state, in addition to finding jurisdiction under New York law, court was required to find that exercise of jurisdiction would be permissible under the Due Process Clause of the Fourteenth Amendment. U.S.C.A. Const.Amend. 14; 28 U.S.C.A. § 1391(c). 7. Corporations O665(1) Under New York law, foreign corporation may be found to be subject to general personal jurisdiction if it is engaged in such a continuous and systematic course of doing business within forum as to warrant a finding of its presence in jurisdiction, and, to sustain such a finding, corporation must do business within forum not occasionally or casually, but with a fair mea-

sure of permanence and N.Y.McKinney's CPLR 301. 8. Corporations O665(1)

continuity.

Factors considered when determining whether foreign corporation is subject to general personal jurisdiction under New York law, on grounds that it is engaged in such a continuous and systematic course of doing business within forum as to warrant a finding of its presence there, include existence in the state of an office, the solicitation of business, the presence of bank accounts or other property, and the presence of employees or agents. N.Y.McKinney's CPLR 301. 9. Constitutional Law O305(5) For general personal jurisdiction to be proper, federal due process requires a finding that foreign defendant's contacts with forum state are sufficient, such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. U.S.C.A. Const.Amend. 14. 10. Constitutional Law O305(6) To sustain a finding of general personal jurisdiction over foreign corporation under federal due process principles, corporation's contacts must be continuous and systematic. U.S.C.A. Const.Amend. 14. 11. Injunction O138.1 Obtaining a preliminary injunction requires a showing of (a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief. 12. Injunction O138.37 Standard for obtaining preliminary injunction applies with equal force in actions for injunctive relief brought under Perish-

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HORIZON MARKETING v. KINGDOM INTERN.
Cite as 244 F.Supp.2d 131 (E.D.N.Y. 2003)

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able Agricultural Commodities Act (PACA). Perishable Agricultural Commodities Act of 1930, § 1 et seq., 7 U.S.C.A. § 499a et seq. 13. Injunction O138.37 Produce sellers seeking preliminary injunctive relief against alleged produce buyers, pursuant to Perishable Agricultural Commodities Act (PACA), established requisite irreparable harm in light of risk that buyers would dissipate PACA trust without paying sellers, particularly given that one buyer was no longer in business and was in process of liquidating its assets. Perishable Agricultural Commodities Act of 1930, § 1 et seq., 7 U.S.C.A. § 499a et seq. 14. Injunction O138.37 Produce sellers seeking preliminary injunctive relief established likelihood of success on the merits of their claims for payment under Perishable Agricultural Commodities Act (PACA), inasmuch as sellers and alleged buyers had PACA licenses and were subject to statute, sellers submitted unpaid invoices bearing statutory notice language required to preserve their entitlement to PACA trust proceeds, and sellers' entitlement to payment was not in dispute. Perishable Agricultural Commodities Act of 1930, § 5(c)(3, 4), 7 U.S.C.A. § 499e(c)(3, 4). 15. Injunction O138.37 Produce sellers were entitled to preliminary injunctive relief against corporation from which payment for produce was sought pursuant to Perishable Agricultural Commodities Act (PACA), notwithstanding corporation's contention that related company was buyer and thus was only party properly subject to injunction, given that corporation, as consignee named in bills of lading, was presumptive owner and receiver of produce, that original invoices produced by corporation, its principals, and

related company indicated that corporation was buyer of produce, and that corporation took no steps to correct its purportedly erroneous designation as buyer in invoices or to otherwise document that it was not buyer subject to fiduciary duties associated with being PACA trustee. Perishable Agricultural Commodities Act of 1930, § 5(c)(2-4), 7 U.S.C.A. § 499e(c)(2-4); 49 U.S.C.A. § 80102(3); 7 C.F.R. § 46.46(a)(1, 5). 16. Factors O59 Under Perishable Agricultural Commodities Act (PACA), invoices presumptively indicate both seller and buyer of produce for purpose of preserving seller's right to PACA trust assets received by buyer. Perishable Agricultural Commodities Act of 1930, § 5(c)(3, 4), 7 U.S.C.A. § 499e(c)(3, 4); 7 C.F.R. § 46.46(a)(5). 17. Factors O59 That related company issued checks to pay for some purchases of produce did not preclude finding that corporation listed on bills of lading and invoices ordered and received produce, such that corporation could not be found to be trustee under Perishable Agricultural Commodities Act (PACA) in produce sellers' action for amounts owed, particularly given testimony that corporation transferred funds to related company. Perishable Agricultural Commodities Act of 1930, § 1 et seq., 7 U.S.C.A. § 499a et seq. 18. Factors O63 Even if related company sold produce for which produce sellers sought payment, corporation that allegedly bought and received produce was also liable under Perishable Agricultural Commodities Act (PACA), under which trust was impressed not only on proceeds derived from sale of produce, but on produce itself. Perishable Agricultural Commodities Act of 1930,

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§ 5(c)(2), 7 U.S.C.A. § 499e(c)(2); 7 C.F.R. § 46.46(b). 19. Factors O59 Under Perishable Agricultural Commodities Act (PACA), burden is on produce buyer to demonstrate the source of PACA trust assets. Perishable Agricultural Commodities Act of 1930, § 1 et seq., 7 U.S.C.A. § 499a et seq.; 7 C.F.R. § 46.19. 20. Corporations O1.4(1), 1.5(1) The law of piercing the corporate veil applies when a party wishes to hold an individual or a related corporation liable for the acts of another corporation.

tion, pursuant to Federal Rule of Civil Procedure 65, restraining defendants, produce buyers, from dissipating assets that are part of a trust formed under the Perishable Agricultural Commodities Act, 1930, 7 U.S.C. § 499a, et seq. For the following reasons the preliminary injunction is GRANTED as to both corporate defendants. FACTS AND PROCEDURAL BACKGROUND Plaintiffs Horizon Marketing (``Horizon'') and Venida Marketing Co. (``Venida'') are sellers of produce in interstate commerce. (Amended Complaint (``Am. Compl.''), ¶ 1.) Defendants Kingdom International Limited (``Kingdom'') and Dong Ku Ra Mi Corp. (``Dong'') are two New York corporations which allegedly bought large amounts of fresh fruits from plaintiffs.1 (See id., ¶¶ 5­8.) Defendant Ko­Yu Mo (``Mo'') owns 85% of defendant Kingdom,2 and 50% of defendant Dong. (See Transcript of Dec. 26, 2002 Hearing on Order to Show Cause for Preliminary Injunction (``Dec. 26 Tr.''), at 4­5; Affidavit of Gibson Mo (``Mo Aff.''), Exh. C.) Defendant Mei­Chuen Dai owns the remaining 15% of Kingdom.3 The remaining 50% owner of Dong is non-party Jung Sook Kang.4 (Mo Aff., Exh. C.)
Chuen is the sales manager for Dong. (Id. at 9.) Later, Mr. Mo's attorney, in an effort to clarify the record, informed the court that the name of Dong's sales manager is Ju Gil Joen, and that plaintiffs may have been confused by the similarity in the way the names sound. (Id. at 15.) Mr. Mo then testified that Ju Gil Joen is usually called ``John''. Thus, it appears that plaintiffs dealt with a sales manager whom they believed was named ``John''. That person, however, is not defendant Mei­ Chuen Dai. 4. The confusion in names continues, as Mr. Mo's affidavit identifies John Chuen as ``the remaining principal of Dong.'' (Mo Aff. ¶ 5.)

David A. Adelman, Keaton & Associates, P.C., Palatine, IL, Elizabeth A. Haas, Barr & Haas, LLP, Spring Valley, NY, for Plaintiff. Leonard Kreinces, Kreinces & Rosenberg, P.C., Westbury, NY, for Defendant. MEMORANDUM AND ORDER GARAUFIS, District Judge. Plaintiffs, unpaid sellers of produce, move this court for a preliminary injunc1. To be clear, defendants do not dispute that Dong was a purchaser. The central dispute is whether Kingdom was also a purchaser during the relevant time period. In his affidavit, Mr. Mo stated that he was the ``sole principal'' of Kingdom. (Mo Aff. ¶ 1.) Whether Mr. Mo in fact owns all of Kingdom, or 85% of it, is not material in light of my decision. At the December 26, 2002 hearing, Defense counsel stated that the caption incorrectly states that Mei­Chuen Dai is also known as ``John Chuen''. (Dec. 26 Tr., at 4.) It is not entirely clear who ``John Chuen'' is. At one point in his testimony, Mr. Mo said that John

2.

3.

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HORIZON MARKETING v. KINGDOM INTERN.
Cite as 244 F.Supp.2d 131 (E.D.N.Y. 2003)

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The instant suit concerns various purchases of fruits from plaintiffs during September and October 2002. The amount plaintiffs claim is due for these purchases is $220,091.15. Plaintiffs maintain that they sold the produce to both Kingdom and Dong, believing that Dong was ``a division or trade name of Kingdom.'' (Am. Compl., ¶¶ 5, 7.) Accordingly, they seek a preliminary injunction against both corporate defendants. Kingdom argues, however, that despite plaintiffs' belief, only Dong bought the produce and only Dong should be subject to the injunction. [1­3] The sales of produce in this case are subject to the Perishable Agricultural Commodities Act, 1930, (``PACA''), 7 U.S.C. § 499a, et seq. Under § 5(c) of PACA, 7 U.S.C. § 499e(c), buyers of produce subject to PACA are required to hold proceeds from the sale of such produce in trust for the benefit of the sellers. See 7 U.S.C. § 499e(c)(2). This is meant to ensure that sellers are paid in full from the proceeds derived from the re-sale of the produce. Under the statute, the trust is formed at the moment the produce is shipped to the buyer and remains in effect until the seller is paid in full. See 7 C.F.R. § 46.46(c)(1); In re Kornblum & Co., 81 F.3d 280, 286 (2d Cir.1996) (agreeing with creditors' position that trust is formed upon sale of produce); Matter of Snyder, 184 B.R. 473, (D.Md.1995). The buyer--in this case Dong or both Kingdom and Dong--therefore becomes a trustee and ``has a fiduciary obligation under PACA to repay the full amount of the debt owed to the PACA beneficiary.'' C.H. Robinson Co. v. Alanco Corp., 239 F.3d 483, 488 (2d
5. The parties do not dispute that Dong was a purchaser, and is liable under PACA. In fact, it consented to the continuation of the Temporary Restraining Order. (See Dec. 26 Tr., at 73.)

Cir.2001). Buyers who dissipate or otherwise spend the proceeds of the trust without making full payment to the seller are in breach of their fiduciary duties. That much is clear. The wrinkle in this case is deciding whether Kingdom is also a buyer/trustee, or whether Dong is the only liable corporate party.5 Kingdom is a New York corporation formed in November 1990. (Mo Aff., Exh. A.) While its certificate of incorporation lists New York County as the location of the corporate office, Mr. Mo testified that Kingdom shares an office with Dong at 41­ 25 Kissena Boulevard in Flushing, Queens, (Dec. 26 Tr. at 17­18, 31), a fact confirmed by Kingdom's bank statement, which also bears the Flushing address. Kingdom's principal place of business, 1350 Lafayette Avenue, appears to be the Hunts Point Market in the Bronx. Dong was incorporated in May 2002, and has its corporate office at 41­25 Kissena Boulevard, in Flushing, Queens. (Mo Aff., Exh. B.) It appears that while it was in business,6 Dong also operated out of the Hunts Point Market, and its bank statements list 1350 Lafayette Avenue as its address. According to Mr. Mo, Kingdom is in the business of importing food, while Dong purchases produce domestically. (Mo Aff. ¶ 4.) The parties' business relationship began in the Spring of 2002. At that time, Dong did not have a PACA license, and therefore was not able to purchase or sell produce.7 See 7 U.S.C. § 499c(a); Mo. Aff. ¶ 5. Due to this circumstance, Mr. Mo claims that plaintiffs, and other produce suppliers, agreed to sell produce to Dong,
6. According to Mr. Mo, Dong is no longer buying or selling produce; it is in liquidation. (Dec. 26 Tr. at 20­21, 59­60, 66, 74­75.) It is undisputed that at all relevant times both plaintiffs as well as Kingdom had valid PACA licenses.

7.

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but bill Kingdom because it had a PACA license. (Mo Aff. ¶¶ 5­6.) Likewise, customers of Dong would pay Kingdom, which would deposit the proceeds of Dong's sales into its (Kingdom's) account, and then issue its own check to Dong. (See Pl. Exh. 3). It appears that this was typical of defendants' practice in July and August 2002. Mr. Mo testified that ``before July, [Dong Ku Ra Mi] used Kingdom's name because [it didn't] have a [PACA] license. People [paid] Kingdom--pay [Dong Ku Ra Mi] by Kingdom's name.'' (Dec. 26 Tr., at 21.) Mr. Mo also stated that after July 2002, although some of Dong's customers began paying Dong directly, other customers continued to pay Kingdom.8 Mr. Mo maintains that the ``parties had agreed that once Dong received it[s] PACA license that it would then be the purchaser of the commodities sold by Horizon and Venida. The fact remains that it was always Dong which purchased the product and it was always Dong which paid for the product.'' (Mo Aff. ¶ 6.) In support of this assertion, Mr. Mo produced checks drawn in September and October on Dong's corporate account, payable to each of the plaintiffs.9 Also, Dong produced handwritten invoices to its customers, ostensibly showing that it sold the produce received from plaintiffs. (Mo Aff., Exh. H.) Thus, Kingdom urges the court not to disregard the separate corporate identity of each company, and recognize that since Kingdom ``never sold those commodities TTTT never took custody of those commodities TTTT never received these commodities or received any monies de8. The checks produced by Kingdom at the December 26 hearing bear notations indicating that they were drawn for the purpose described here. Although Mr. Mo testified that this practice occurred only through July 2002, the checks indicate that Kingdom continued to pay Dong in August as well. (See Dec. 26 Tr., at 25­26; Plaintiffs' Exhibit 3.)

rived from these commodities,'' it cannot be deemed a PACA trustee in this action. (Mo Aff. ¶ 11.) Plaintiffs, on the other hand, maintain that when John Chuen contacted plaintiffs in the Spring, he represented that he was with Kingdom, and that plaintiffs agreed to sell only to Kingdom, relying on ``Kingdom's name, Kingdom's credit references, which were checked out[, and] Kingdom's license from the USDA to transact the produce sales and purchases.'' (Transcript of Dec. 18, 2002 Hearing on Order to Show Cause (``Dec. 18 Tr.''), at 4­5.) The invoices and bills of lading issued contemporaneously with the sales indicate that the produce was sold and delivered to Kingdom at the Bronx address, (Def. Exhs. B, C), but the invoices attached to plaintiffs' complaint and amended complaint list the buyer as ``Kingdom/Dongkurami'' at the Flushing address. (Am. Compl., Exhs.A, B.) Plaintiffs explain this discrepancy by acknowledging that they were asked by defendants to modify their records to indicate that Dong, rather than Kingdom, was the buyer, but rejected that request because Dong had ``no credit history [and] no credit reference.'' (Dec. 18 Tr., at 5.) Instead, out of a desire to accommodate defendants, plaintiffs re-issued invoices for sales that had already occurred but listed both Kingdom and Dong as buyer, with the Flushing address, as designated by defendants. (Id.) Plaintiffs argue that under PACA, the trust follows the produce, and, regardless of who paid, Kingdom ordered the produce,
Since Dong only received its PACA license on or about August 27, 2002, (Mo Aff., Exh. C), the checks written in August merely confirm this method of doing business. 9. It should be noted that none of the invoices noted on those checks include the unpaid invoices that are the subject of this suit.

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HORIZON MARKETING v. KINGDOM INTERN.
Cite as 244 F.Supp.2d 131 (E.D.N.Y. 2003)

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accepted delivery of the produce, and received the proceeds of the sale of the produce. Whatever arrangement Kingdom and Dong may have had with each other is irrelevant, because as far as plaintiffs were concerned, they were dealing only with Kingdom, believing that ``Dong was a division or trade name of Kingdom.'' (Am.Compl.¶ 7.) On December 11, 2002, plaintiffs filed a complaint, an application for a temporary restraining order and preliminary injunction, and a memorandum of law in support. On that date, I issued an Order to Show Cause (``Dec. 11 Order'') requiring the parties to appear on December 18. On December 17, defendants filed Mr. Mo's affidavit in opposition, arguing that venue was not proper and that plaintiffs' claims against Kingdom ought to be dismissed under Rule 12(b)(6).10 On December 18, 2002, the return date of the Order to Show Cause, counsel for defendants informed the court that he was representing all the defendants except Dong. Accordingly, as Dong failed to appear pursuant to my Dec. 11 Order, I issued a Temporary Restraining Order against it, and continued the hearing until December 26, 2002. I also ordered both corporate defendants to produce their financial records from July 2002 through December 2002. Prior to the December 26 hearing, defendants submitted a memorandum of law in support of their position that the corporate identity of each defendant must be kept separate and that only Dong was liable to plaintiffs. On December 26, all parties appeared, but at that time the same defense counsel represented all defendants. The court heard testimony from
10. Defendants requested that the affidavit be treated as a motion to dismiss, but failed to include a memorandum of law because, in their expert opinion, ``none need be submitted.'' (Mo Aff. ¶ 12.)

Mr. Mo and oral argument on the preliminary injunction application. I continued the TRO against Dong, with its consent, and reserved decision on the injunction against Kingdom. DISCUSSION I. Jurisdiction and Venue

The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331, because the cause of action arises under federal law, 7 U.S.C. § 499a, et seq. In addition, PACA vests jurisdiction in the district courts over ``actions by trust beneficiaries to enforce payment from the trust.'' 7 U.S.C. § 499e(c)(5). Defendants argue that venue is not proper in this district, as all relevant events occurred in the Bronx, both corporate defendants operate their businesses in the Bronx and the produce was shipped to the Bronx.11 (See Mo Aff. ¶ 10; Dec. 18 Tr., at 13, 30.) I previously ruled that venue was proper in the Eastern District of New York. (Dec. 18 Tr., at 30.) Here, I merely set forth more fully my reasons for that ruling. Questions of venue in cases such as this one are governed by 28 U.S.C. § 1391(b). Under that provision, actions may be brought in ``a judicial district where any defendant resides, if all defendants reside in the same State.'' 28 U.S.C. § 1391(b)(1). Here, although all defendants reside in New York, the court must also consider the venue rules applicable to corporations. Under 28 U.S.C. § 1391(c), a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal
11. Bronx County is part of the Southern District of New York.

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jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State. Thus, the issue of venue turns on whether Kingdom, Dong, or either of them ``resides''--that is, subject to personal jurisdiction--in the Eastern District, if it were a separate state. As both corporations are concededly New York corporations, the court must engage in the somewhat artificial process of deciding whether each corporation is subject to personal jurisdiction in Queens County (part of the Eastern District), or Bronx County (part of the Southern District). [4] Dong's residence is obvious from its Certificate of Incorporation. (Mo Aff., Exh. B.) That document states that the office of the corporation is in Queens County, and the address listed for the Secretary of State, as its agent, to mail process is the Flushing address. (Id.) Being a domestic corporation (domestic to Queens County, that is), it is subject to general jurisdiction, by virtue of designating the Secretary of State as its agent for service of process. See Kaufman v. Luzern, 1996 WL 79322, at *4 (S.D.N.Y. Feb.23, 1996); see also N.Y. Business Corporation Law § 304. Such designation ``has been equated with a form of constructive consent to personal jurisdiction.'' Kaufman, 1996 WL 79322, at *4 (internal quotation marks and citation omitted). Thus, were the Eastern District of New York a separate state, containing Queens County, Dong would be a domestic corporation subject to general jurisdiction. Ac-

cordingly, venue in the Eastern District is proper as to Dong. [5] Kingdom's Certificate of Incorporation lists New York County as the office of the corporation; its principal place of business, according to defense counsel, is in the Bronx. Both of these locations are part of the Southern District. Thus, for purposes of this venue analysis, I regard Kingdom as a foreign corporation in relation to Queens County and the Eastern District. [6] Deciding whether Kingdom is subject to personal jurisdiction in the Eastern District requires an analysis of the New York law on personal jurisdiction. See PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir.1997) (``In a federal question case where a defendant resides outside the forum state, a federal court applies the forum state's personal jurisdiction rules if the federal statute does not specifically provide for national service of process.'') (internal quotation marks omitted). In addition to finding jurisdiction under New York law, the court must find that such exercise of jurisdiction ``would be permissible under the Due Process Clause of the Fourteenth Amendment.'' Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir.2002). [7, 8] Under New York law, Kingdom may be subject to personal jurisdiction if it is ``doing business'' in the Eastern District of New York. See N.Y. C.P.L.R. § 301; Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57­58 (2d Cir.1985) (noting that C.P.L.R. § 301 ``keeps alive the case law existing prior to its enactment, which provided that a corporation is `doing business' and is therefore `present' in New York and subject to personal jurisdiction with respect to any cause of action, related or unrelated to the New York contacts''). Kingdom may be found to be subject to

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general personal jurisdiction if it ``is engaged in such a continuous and systematic course of doing business here as to warrant a finding of its presence in this jurisdiction.'' Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 918 F.2d 1039, 1043 (2d Cir.1990) (internal quotation marks and citation omitted). To sustain this finding, Kingdom must do business in the Eastern District ``not occasionally or casually, but with a fair measure of permanence and continuity.'' Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115 N.E. 915 (1917) (Cardozo, J.) (quoted in Landoil Resources Corp., 918 F.2d at 1043). The factors considered in this determination include ``the existence of an office in [the Eastern District]; the solicitation of business in [the Eastern District]; the presence of bank accounts or other property in [the Eastern District]; and the presence of employees or agents in [the Eastern District].'' Landoil Resources Corp., 918 F.2d at 1043. [9, 10] The federal due process analysis requires a finding that Kingdom's contacts with the Eastern District are sufficient ``such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'' Bank Brussels Lambert, 305 F.3d at 127 (quotation marks and citations omitted). In order to sustain a finding of general jurisdiction in the Eastern District, Kingdom's contacts must be ``continuous and systematic.'' Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415­16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Application of these principles to Kingdom's activities in Queens County and the Eastern District indisputably supports a finding of personal jurisdiction, and therefore venue, in this court. Mr. Mo testified that Kingdom shares an office with Dong
12. http:// wdb.dos.state.ny.us/corp--public/

in Flushing, Queens. (Dec. 26 Tr., at 17, 31.) Moreover, both corporations apparently have employees in Queens, as process was served and accepted at the Flushing address on behalf of both corporate defendants. Mr. Mo testified that he signs checks at the Flushing office. (Id.) Kingdom also maintains a bank account at a Citibank branch located in Flushing, and had, until recently, another bank account at an Asia Bank branch also located in Flushing. (Id. at 12.) Kingdom has a listing in the Queens, but not the Bronx, phone directory. Finally, it should be noted that although Kingdom's Certificate of Incorporation lists New York County as the site of the corporate headquarters, a recent visit to the New York Secretary of State's website 12 disclosed an address in Flushing as the site of the executive office and the address for service of process. Thus, pursuant to C.P.L.R. § 301, Kingdom is undoubtedly doing business in the Eastern District, which subjects it to personal jurisdiction. Furthermore, its contacts with the Eastern District are continuous and systematic, thus satisfying the requirements of Due Process. Accordingly, venue, for Kingdom, is likewise proper in the Eastern District. II. A. Preliminary Injunction Standard for Injunctive Relief

[11, 12] The now well-established standard in the Second Circuit for obtaining a preliminary injunction requires a showing of ``(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief.'' Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d
corp--wdb.corp--search--inputs.show.

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70, 72 (2d Cir.1979) (per curiam). That standard applies with equal force in cases, such as this one, brought under PACA for injunctive relief. See JSG Trading Corp. v. Tray­Wrap, Inc., 917 F.2d 75, 79 (2d Cir.1990). Plaintiffs have amply demonstrated that the risk of irreparable harm is present, and that they are likely to succeed on the merits. [13] First, the irreparable harm in this case, as in other PACA cases, is the risk that a produce buyer will have dissipated the PACA trust without paying the produce seller, thus leaving the produce seller out of luck and out of money. Indeed, the protection of produce sellers from this predicament was one of the main reasons cited by Congress in enacting the trust provisions of PACA. Congress recognized that most produce sellers are small businesses which are ``least able to withstand the losses'' that result from dissipation of trust assets through late payment or business failure. H.R.Rep. No. 98­453, at 3 (1983), reprinted in 1984 U.S.C.C.A.N. 405, 406. Moreover, because of a seller's economic position, if he ``cannot realize any returns on the sale of the crop when due, he may not be able to survive.'' Id. In this case, this danger has already materialized in that Dong is no longer in business and is in the process of liquidating its assets, which consist of approximately $80,000 in receivables to be shared between plaintiffs and six other creditors. (See Dec. 26 Tr., at 73­75.) Accordingly, the court finds that there is a substantial risk of further irreparable harm and that injunctive relief is n