Court filing

MOTION regarding 14 Order, (to Dissolve Temporary Restraining Order) filed by Blue Acorn… — Blueacorn Beringer (Dkt. 23)

No. 5:21-cv-00251-BO · Doc. 23 · Docket on CourtListener

Summary

A motion to dissolve temporary restraining order filed June 17, 2021 as Doc. 23 in Beringer Commerce, Inc. v. Fin Cap, Inc., No. 5:21-cv-00251-BO, in the U.S. District Court for the Eastern District of North Carolina, by defendants Fin Cap, Inc., Blueacorn PPP, LLC and Blue Oak Forest, LLC under Rule 65(b)(4). The motion targets the ex parte order entered June 11, 2021, arguing that the record lacks the attorney certification Rule 65(b)(1)(B) requires and that the plaintiff gave no notice although the defendants' counsel was already in talks with its counsel. It states that the defendants have processed over 1.2 million PPP loan applications since April 2020. In the alternative, it asks the court to dissolve Paragraph 1, which bars use of the words acorn, blue acorn or blueacorn. The 9-page motion is signed by Christopher J. Blake.

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION

BERINGER COMMERCE, INC., d/b/a Civil Action No. 5:21-cv-251-BO
BLUE ACORN, iCi.,

Plaintiff,

vs.

FIN CAP, INC., d/b/a “BLUEACORN.CO,”
BLUE ACORN PPP, LLC, BLUE OAK
FOREST, LLC, MICHAEL S. COTA,
JAMES FLORES, STEPHANIE
HOCKRIDGE REIS, and NATHAN REIS,

Defendants.

MOTION TO DISSOLVE
TEMPORARY RESTRAINING ORDER

Defendants Fin Cap, Inc., Blueacorn PPP, LLC and Blue Oak Forest, LLC (collectively,

the “Blueacorn PPP Defendants”), through undersigned counsel, and pursuant to Rule 65(b)(4) of

the Federal Rules of Civil Procedure, hereby move to dissolve the Temporary Restraining Order

entered by the Court on June 11, 2021. (Dkt. 14). For the reasons set forth herein, and in the

Declaration of Jeffrey Meyerson and the supporting memorandum of law filed contemporaneously

herewith, the Temporary Restraining Order should be dissolved.

1. The Blueacorn PPP Defendants are a lender service provider that helps customers

compile loan application paperwork for Paycheck Protection Plan (“PPP”) loans. The Blueacorn

PPP Defendants utilize technology and financial expertise to streamline the PPP application

process for small businesses, independent contractors, and self-employed individuals. The

Blueacorn PPP Defendants are not a bank or a lender, and have partnered with several banks to

Case 5:21-cv-00251-BO Document 23 Filed 06/17/21 Page 1 of 9
apply for and secure PPP loans for customers. Since April 2020, the Blueacorn PPP Defendants

have processed over 1.2 million PPP loan applications for customers and submitted over 750,000

of those applications to the Small Business Administration for processing. Declaration of Jeffrey

Meyerson, ¶ 2 (hereinafter “Meyerson Dec.”).

2. On or about May 19, 2021, counsel for the Blueacorn PPP Defendants was provided

with a copy of a letter dated May 12, 2021 from counsel for BCI which enclosed a few mail items

that had been forwarded to BCI by mistake. The May 12 letter simply asked the Blueacorn PPP

Defendants to update their contact information so BCI did not receive these communications going

forward. The May 12 letter did not mention any prior correspondence to the Blueacorn PPP

Defendants. Prior to the receipt of the May 12 letter, no one at the Blueacorn PPP Defendants had

any knowledge or awareness of BCI or its business and operations, or had any contact with BCI

or any of its representatives. (Meyerson Dec. ¶ 4).

3. Thereafter, on or about May 27, 2021, the Blueacorn PPP Defendants received a

letter dated May 26, 2021 from Beth A. Stanfield, counsel for Plaintiff Beringer Commerce, Inc.

d/b/a Blue Acorn iCi (“BCI”) (Dkt. 1, Ex. O). (Meyerson Dec. ¶ 5).

4. Upon receipt of the May 26 letter, outside counsel for the Blueacorn PPP

Defendants sent an email to counsel for BCI stating:

[I]n your letter you stated that we received an April 8, 2021 cease and desist and I
cannot find that letter anywhere in our file. Can you please send me a copy of that
letter at your convenience. I will discuss with my client and respond to you but I
would ask for an extension on your current June 1 response date as it will likely
take more time than 2 business days for my client to respond and/or complete the
tasks that you are asking of them. I look forward to hearing from you.

(Meyerson Dec. ¶¶ 6-7).

5. Outside counsel for the Blueacorn PPP Defendants received the April 8 letter (Dkt.

1, Ex. I) from counsel for BCI on Friday, May 28, 2021. Upon reviewing the April 8 letter, it was

Case 5:21-cv-00251-BO Document 23 Filed 06/17/21 Page 2 of 9
determined that another attorney on behalf of BCI had sent the April 8 letter by Federal Express to

the address of the previous owners of the company and that no one currently associated with the

Blueacorn PPP Defendants had ever actually received the April 8 letter. (Meyerson Dec. ¶ 8).

6. A simple search of the Arizona Corporation Commission would have revealed the

registered address for “Blueacorn PPP, LLC” as c/o Radix Law, 15205 N. Kierland Blvd, Ste. 200,

Scottsdale, AZ 85254. This was one of the addresses to which the May 12 and May 26 letters

were sent. (Meyerson Dec. ¶ 9).

7. Counsel for the Blueacorn PPP Defendants also received an email dated May 28,

2021 from Ms. Stanfield in which she requested clarification of certain items, and stated, “Once

we receive clarification on these items, we will discuss your request for some additional time to

respond to our second Cease & Desist letter.” (Meyerson Dec. ¶ 10).

8. In response to the May 26 letter, outside counsel for the Blueacorn PPP Defendants

had a telephone conference with counsel for BCI. During that telephone conference, outside

counsel for the Blueacorn PPP Defendants: (a) advised that no one currently associated with the

Blueacorn PPP Defendants received the April 8 letter; (b) discussed the very high level of internet

traffic that the Blueacorn PPP website receives (over 1 million hits daily), as well as the fact that

over a half-million texts and emails are sent daily to and from customers of the Blueacorn PPP

Defendants; (c) stated that the Blueacorn PPP Defendants had no intention of causing BCI any

issues and that the Blueacorn PPP Defendants wanted to engage in a collaborative approach to

determine the best course moving forward; and (d) expressed that changing the name of

“Blueacorn PPP” immediately would actually create more issues for BCI rather than less because

if the Blueacorn PPP Defendants were no longer using the name “Blueacorn,” hundreds of

thousands of customers would believe the Blueacorn PPP Defendants had disappeared, and BCI

Case 5:21-cv-00251-BO Document 23 Filed 06/17/21 Page 3 of 9
would end up receiving an increase in the number of unwanted inquiries rather than a decrease.

(Meyerson Dec. ¶¶ 11-12).

9. Counsel for the Blueacorn PPP Defendants suggested to counsel for BCI that the

parties discuss these points and then reconvene to discuss possible solutions. Counsel for BCI

expressed concern over the volume of communications being received by BCI, but stated she

would discuss the issues with BCI. Following the call, and consistent with what Ms. Stanfield

indicated in her May 28 email, counsel for the Blueacorn PPP Defendants was waiting to hear

whether BCI will allow additional time for the Blueacorn PPP Defendants to respond to the cease

and desist letter dated May 26, 2021 (Meyerson Dec. ¶ 13).

10. The Blueacorn PPP Defendants never stated they were unwilling to work to

alleviate BCI’s perceived issues being caused by the alleged infringing activity, and rather were

willing to continue discussions to identify solutions that would achieve BCI’s goal of reducing

issues they were experiencing with unwanted calls or contacts. (Meyerson Dec. ¶ 14).

11. The Blueacorn PPP Defendants received no further communication from BCI or its

counsel until an email dated June 11, 2021 transmitting a courtesy copy of BCI’s Verified

Complaint. Later that same afternoon, the Blueacorn PPP Defendants received a copy of the

Temporary Restraining Order entered by the Court. (Meyerson Dec. ¶ 15).

12. The Blueacorn PPP Defendants received no prior notice of BCI’s decision to file

this lawsuit or its intent to seek a Temporary Restraining Order from the Court, despite the fact

that BCI’s counsel knew that the Blueacorn PPP Defendants had counsel that was engaged on this

very issue. (Meyerson Dec. ¶ 16).

Case 5:21-cv-00251-BO Document 23 Filed 06/17/21 Page 4 of 9
13. Rule 65 of the Federal Rules of Civil Procedure provides that a district court may

issues a temporary restraining order without written or oral notice to the adverse party or its

attorney only if:

(A) specific facts in an affidavit or a verified complaint clearly show that immediate and
irreparable injury, loss, or damage will result to the movant before the adverse party can
be heard in opposition; and

(B) the movant’s attorney certifies in writing any efforts made to give notice and the
reasons why it should not be required.

Fed. R. Civ. Proc. 65(b)(1) (emphasis added).

14. The entry of an ex parte temporary restraining order is an exceptional procedure.

The certification by counsel for a moving party is a mandatory requirement under Rule 65(b)(1)(B)

before a court may issue an ex parte temporary restraining order.

15. The record before the Court does not include the attorney certification required by

Rule 65(b)(1)(B). Such certification is not included as any separate filing in the docket of this

proceeding, and no such certification is included in BCI’s Verified Complaint or Motion for

Temporary Restraining Order. Further: (a) none of the three letters received by the Blueacorn PPP

Defendants from counsel for BCI prior to the filing of this action make any mention of BCI seeking

any injunctive relief; and (b) in communications with the Blueacorn PPP Defendants, counsel for

BCI never mentioned seeking injunctive relief prior to sending a copy of the Verified Complaint

with the Court’s Temporary Restraining Order.

16. The Blueacorn PPP Defendants’ right to notice and an opportunity to be heard have

not been overcome by any showing by BCI as required under Rule 65(b)(1)(B).

17. Had the Blueacorn PPP Defendants been provided notice and an opportunity to be

heard, the Blueacorn PPP Defendants would have immediately retained counsel in North Carolina

who would have appeared at a hearing and apprised the Court of the nature of the parties’ ongoing

Case 5:21-cv-00251-BO Document 23 Filed 06/17/21 Page 5 of 9
discussions, and the Blueacorn PPP Defendants’ willingness to continue discussions to identify

solutions for the issues being raised on behalf of BCI, all as set forth in the Declaration of Jeffrey

Meyerson filed contemporaneously herewith. In addition, the Blueacorn PPP Defendants would

have presented arguments to this Court concerning why BCI was unlikely to succeed on the merits

of its claims, as well as why the requested injunctive relief was overly broad, in that its terms were

outweighed by the harm to the Blueacorn PPP Defendants and their customers, and not in the

public’s interest. (Meyerson Dec. ¶ 17).

18. Due to BCI’s failure to comply with the requirements of Rule 65(b)(1)(B), the

Blueacorn PPP Defendants submit that the Court’s ex parte Temporary Restraining Order should

be dissolved in its entirety.

19. Alternatively, the Blueacorn PPP Defendants submit that the Court should dissolve

Paragraph 1 of the Court’s ex parte Temporary Restraining Order requiring the Blueacorn PPP

Defendants to cease, desist and refrain from all use of the words “acorn”, “blue acorn” or

“blueacorn” in any print or electronic platform including websites and social media platforms.

This requirement of the Court’s ex parte Temporary Restraining Order is impracticable, will

impose an undue and unnecessary hardship on the Blueacorn PPP Defendants and their customers,

and will not achieve the results desired by BCI.

20. As confirmed by the allegations of the Verified Complaint, BCI and the Blueacorn

PPP Defendants are in completely different lines of business and are not in direct competition with

each other. The damage BCI has allegedly incurred and which it seeks to stop through this

litigation involves receiving unwanted contacts customers of the Blueacorn PPP Defendants that

BCI is receiving in error. As the Blueacorn PPP Defendants made clear in communications with

counsel for BCI prior to the filing of this lawsuit, removing the “Blueacorn” name from websites

Case 5:21-cv-00251-BO Document 23 Filed 06/17/21 Page 6 of 9
and other platforms will only serve to sow further confusion among hundreds of thousands of

customers of the Blueacorn PPP Defendants, who no longer will know how to contact the

Blueacorn PPP Defendants with inquiries concerning their PPP loans and loan applications.

Further, immediate removal of the “Blueacorn” name likely will result in a significant increase in

the volume of unwanted communications received by BCI – the exact opposite of the result that

BCI is seeking to achieve. Further, in cases where reverse confusion is established, injunctive

relief relating to disclaimers and corrective advertising would be the more appropriate remedy.

21. Because they were provided no prior notice of the Temporary Restraining Order or

any opportunity to be heard, the Court is unaware: (a) that the Blueacorn PPP Defendants have

been and remain willing to address the concerns raised by BCI; (b) of the practical reality that

compliance with the ex parte Temporary Restraining Order is not in the public interest as it will

impose significant burdens and hardships on the Blueacorn PPP Defendants and their thousands

of customers; and (c) that the ex parte Temporary Restraining Order will not achieve the results

being sought by BCI.

22. The Blueacorn PPP Defendants have complied with the remaining portions of the

Court’s ex parte Temporary Restraining Order, and submit that though such compliance, the

volume of unwanted communications received by BCI should be reduced dramatically.

For the foregoing reasons, the Blueacorn PPP Defendants’ Motion to Dissolve Temporary

Restraining Order should be GRANTED, and the Court’s ex parte Temporary Restraining Order

dated June 11, 2021 should be dissolved in its entirety, or in the alternative, the Court should

dissolve Paragraph 1 of the Court’s ex parte Temporary Restraining Order.

Case 5:21-cv-00251-BO Document 23 Filed 06/17/21 Page 7 of 9
This the 17th day of June, 2021.

NELSON MULLINS RILEY & SCARBOROUGH LLP

/s/ Christopher J. Blake
Christopher J. Blake
N.C. State Bar No. 16933
chris.blake@nelsonmullins.com
D. Martin Warf
N.C. State Bar No. 32982
martin.warf@nelsonmullins.com
4140 Parklake Avenue, Suite 200
Raleigh, North Carolina 27612
Phone: (919) 329-3800
Fax: (919) 329-3799

Counsel for Defendants Fin Cap, Inc., Blueacorn PPP,
LLC and Blue Oak Forest, LLC

Case 5:21-cv-00251-BO Document 23 Filed 06/17/21 Page 8 of 9
CERTIFICATE OF SERVICE

I hereby certify that on June 17, 2021, I electronically filed the foregoing with the Clerk of

the Court using the CM/ECF system which will send notification of such filing to all counsel of

record.

NELSON MULLINS RILEY & SCARBOROUGH LLP

/s/ Christopher J. Blake
Christopher J. Blake
N.C. State Bar No. 16933
chris.blake@nelsonmullins.com
4140 Parklake Avenue, Suite 200
Raleigh, North Carolina 27612

Case 5:21-cv-00251-BO Document 23 Filed 06/17/21 Page 9 of 9

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