1 2 3 4 5 6 7 8 United States District Court 9 Central District of California 10 Western Division 11 12 SDLA COURIER SERVICE, INC., et al., CV 24-07544 TJH (ASx)

13 Plaintiffs, Order 14 v. and 15 UNLIMITED CAPITAL, LLC, et al. Order To Show Cause 16 Defendants. 17 18 19 The Court has considered the application for a temporary restraining order filed 20 by Plaintiffs SDLA Courier Service, Inc. [“SDLA”] and James E. Goodman, Jr. [dkt. 21 # 10], together with the moving papers. 22 The following facts are as alleged in the verified Complaint. 23 SDLA is a California corporation based in Torrance, California. Until 24 Amazon.com, Inc. [“Amazon”] recently cancelled its contract with SDLA, SDLA 25 delivered packages for Amazon. Amazon was SDLA’s only client. Goodman is 26 SDLA’s sole shareholder. 27 Defendant Unlimited Capital, LLC [“Unlimited”], is a Connecticut limited 28 liability company based in Greenwich, Connecticut. Defendants Samuel Sterns and 1 | Leopold Vargas are officers of Unlimited. 2 On June 3, 2024, because SDLA could not obtain financing from a bank, SDLA 3 || and Unlimited entered into a written merchant agreement [“the Merchant Agreement” ], whereby Unlimited purchased 30% of SDLA’s future receivables, valued at 5 | $989,340.00, for a discounted price of $660,000.00. In turn, SDLA was obligated to 6 | make daily remittance payments of $8,999.00 to Unlimited. The daily remittance 7 | amount was based on a portion of SDLA’s expected future receivables. SDLA 8 || authorized Unlimited to electronically debit the daily remittance out of SDLA’s bank 9 || account. 10 The Merchant Agreement’s choice of law provision states that it shall be 11 || governed by Connecticut law, while the forum selection provision states that: 12 Except to enforce a security interest or otherwise required by applicable 13 law, any suit ... arising hereunder, or the interpretation, performance or 14 breach hereof, shall, if [Unlimited] so elects, be instituted in any court 15 sitting in Connecticut, to the exclusion of all other forums... . 16 On June 14, 2024, Unlimited assigned its right to collect SDLA’s future 17 || receivables to Defendant Triton Recovery LLC [“Triton”], a Florida limited liability 18 || company based in Miami, Florida. Defendant Erica Gilerman is Triton’s chief legal 19 || officer. 20 On June 25, 2024, SDLA sued Unlimited for breach of contract and breach of 21 || the implied covenant of good faith and fair dealing in Stamford, Connecticut Superior 22 || Court [“the Connecticut Case”]. SDLA alleged that Unlimited breached the Merchant 23 || Agreement by requesting an increase in the daily remittance amount. SDLA asserted 24 | that because it had not defaulted on its obligations under the Merchant Agreement, 25 | Unlimited could not increase the daily remittance amount. 26 On July 24, 2024, SDLA, Goodman and Unlimited settled the Connecticut Case 27 || and entered into a written settkement agreement [“the Settlement Agreement”]. The 28 || Settlement Agreement called for SDLA and Goodman to pay $900,000.00 to Unlimited,

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1 with an agreed upon payment schedule. The payment schedule called for payments of: 2 (1) $250,000.00 to be paid by July 12, 2024, via Amazon; (2) $200,000.00 to be paid 3 by July 25, 2024, by wire transfer; and (3) $450,000.00 to be paid by November 22, 4 2024, by bank deposit. The Settlement stated that if SDLA and Goodman failed to 5 make any of the required payments, then Unlimited could send Amazon a Uniform 6 Commercial Code [“UCC”] lien notice. 7 The Settlement Agreement’s choice of law provision states that it shall be 8 governed by New York law, while the forum selection provision states that: 9 ... venue shall lie in Monroe County, New York. Jurisdiction is limited 10 to this Settlement Agreement only. 11 On August 2, 2024, Triton sent a UCC lien notice to Amazon because the first 12 scheduled settlement payment was not made by the July 12, 2024, due date. After 13 Amazon received the lien notice, it terminated its contract with SDLA. Because 14 Amazon was SDLA’s sole client, the contract termination SDLA left SDLA insolvent. 15 On September 4, 2024, SDLA and Goodman filed this case, alleging claims for: 16 (1) Violation of the Racketeer Influenced and Corruptions Act [“RICO”], 18 U.S.C. 17 § 1962, et seq.; (2) Usury; (3) Violation of California’s Unfair Competition Law 18 [“UCL”],

, et seq.; (4) Intentional interference with 19 contractual relations; (5) Breach of contract; (6) Breach of the implied covenant of good 20 faith and fair dealing; (7) Fraudulent misrepresentation; and (8) Unjust enrichment. In 21 sum, SDLA alleged that Unlimited is a predatory loan shark that uses illegal debt 22 collection methods, and that its sale of future receivables to Unlimited was really an 23 illegal loan from Unlimited. 24 SDLA and Goodman, now, apply for a temporary restraining order to: 25 (1) Require Triton to withdrawal the UCC lien notice it sent to Amazon; 26 (2) Suspend Defendants’ debt collection efforts; 27 (3) Prohibit Defendants from accessing Plaintiffs’ bank accounts; 28 (4) Prohibit Unlimited from exercising any rights it was granted by any power 1 of attorney the Plaintiffs granted to Unlimited; 2 (5) Prohibit Defendants from taking any “protections against default” 3 authorized by the Merchant Agreement; and 4 (6) Prohibit Defendants from communicating with any account debtor. 5 Equitable Jurisdiction over the Unfair Competition Law Claim 6 Because only equitable remedies are available for a UCL claim, for the Court to 7 have equitable jurisdiction over the UCL claim, here, Plaintiffs must allege that all 8 available legal remedies are inadequate. See Sonner v. Premier Nutrition Corp., 971

(9th Cir. 2020). Here, SDLA and Goodman failed to allege that all 10 available legal remedies are inadequate. Consequently, the Court lacks equitable 11 jurisdiction over the UCL claim. 12 Venue and Choice of Law 13 The Merchant Agreement and the Settlement Agreement each contain different 14 choice of law provisions and different forum selection provisions. Those differences 15 are problematic. 16 Though Defendants have not yet appeared, here, the Court may, sua sponte, 17 question whether venue is proper in the Central District of California by ordering 18 Plaintiffs to show cause why this action should not be transferred or dismissed for 19 improper venue. See Costlow v. Weeks,

(9th Cir. 1986). 20 Generally, venue is proper in: (1) A district where any defendant resides, if all 21 defendants reside in the same state; (2) A district in which a substantial part of the 22 events or omissions giving rise to the claim occurred; or (3) Any judicial district in 23 which any defendant is subject to the court's personal jurisdiction, if venue is not 24 proper under the first two grounds.

(b). However, forum selection 25 clauses supercede § 1391(b) if they are contractually valid. Atl. Marine Constr. Co. 26 v. U.S. Dist. Ct. for W. Dist. of Tex.,

(2013). In the absence of 27 extraordinary circumstances, forum selection clauses are presumptively valid. Atl. 28 Marine Constr. Co.,

. Based on the limited record, here, Plaintiffs have 1 not established the existence of any extraordinary circumstances to deviate from the 2 presumptive validity of the two forum selection clauses at issue, here. 3 The Settlement Agreement’s forum selection clause appears to limit venue to a 4 court in Monroe County, New York, while the Merchant Agreement’s forum selection 5 clause gives Unlimited the option to limit venue to any court in Connecticut. Because 6 Unlimited has not yet appeared, here, it is unknown whether it will elect to exercise it 7 forum selection rights under the Merchant Agreement. 8 Regardless, because the claims, here, implicate both the Settlement Agreement 9 and the Merchant Agreement, the proper venue for this dispute is not clear at this 10 procedural juncture. But, what is clear, is that if venue is not proper in the Central 11 District of California, based on the forum selection clauses, then the Court lacks 12 authority to grant the requested injunctive relief. See Hendricks v. Bank of Am., N.A., 13

(9th Cir. 2005). 14 Consequently, the Court can not consider the appropriateness of emergency or 15 preliminary injunctive relief until after it determines where venue is proper or, at a 16 minimum, determines whether venue is proper in the Central District of California. If 17 the Court determines that venue is not proper in the Central District of California, it 18 will dismiss this case if it cannot conclusively determine whether this case should be 19 transferred to the Western District of New York or to the District of Connecticut. 20 Another concern is that the Merchant Agreement states that it is to be governed 21 by Connecticut law, while the Settlement Agreement states that it is to be governed by 22 New York law. If it is determined that venue is proper in the Central District of 23 California, the Court must, then, consider whether Plaintiffs are entitled to assert 24 California state law claims. Consequently, the Court will order the Plaintiffs to show 25 cause as to why its California state law claims should not be dismissed based on the two 26 choice of law clauses. 27 28 Accordingly, 1 It is Ordered that Plaintiffs’ unfair competition claim, brought under

, et seg., be, and hereby is, Dismissed for lack of equitable 3 || jurisdiction. 4 5 It is further Ordered that Plaintiffs’ application for a temporary restraining 6 | order be, and hereby is, Denies, 7 8 At is further Ordered that Plaintiffs shall Show Cause, if they have any, as 9 || to why: (1) This case should not be transferred to the Western District of New York 10 || or to the District of Connecticut based on the forum selection clauses in the Merchant 11 | Agreement and the Settlement Agreement; and (2) Their California state law claims 12 || should not be dismissed based on the choice of law clauses in the Merchant Agreement 13 || and the Settlement Agreement. Plaintiffs shall file a written response to this Order to 14 || Show Cause by September 16, 2024. Defendants may file an opposition, if any, to 15 || Plaintiffs’ written response within ten days after Defendants are served with copies of 16 || the Complaint, this Order to Show Cause, and Plaintiffs’ written response to this Order 17 | to Show Cause. The matter will then stand submitted. 18 19 | Date: September 6, 2024 ee Lo ee gee / on y lle bse 21 Cerryp J. Hatter, Jr. 99 Senior United States District Judge 23 24 25 26 27 28

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