United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE
before the Court is Plaintiff Domain Protection's Motion
for Appointment of a Receiver Over Defendant Sea Wasp, LLC,
to Effect Compliance with this Honorable Court's
Preliminary Injunction Order and for Further Relief (Dkt.
#256). Having considered the Motion and the relevant
pleadings, the Court finds that Plaintiff's Motion is
detailed resuscitation of the facts of this case, see Dkt.
#191. As for this Motion, the relevant facts are as follows.
On July 17, 2019, the Court entered a Preliminary Injunction
Order (Dkt. #192). The Order enjoined Sea Wasp from
“interfering with Domain Protection's control over
the Domain Names, including its ability to update the
nameserver records associated with the Domain Names”
(Dkt. #192). Since the Court's Preliminary Injunction
Order, the procedural history of this case has become even
more muddled than it already was. See Dkt. #192
(describing the cases history). On August 7, 2019, the Court
held a Hearing on Motions. Specifically, the Court heard: (1)
Plaintiff's Emergency Motion for Order to Show Cause Why
Defendants Sea Wasp, LLC, Faia, and Decossas Should Not be
Held in Contempt for Defiance of the Amended Preliminary
Injunction Order Entered by This Court on the Morning of July
17, 201 (Dkt. #198); and (2) Sea Wasp, LLC's Expedited
Motion to Stay (Dkt. #199). The Court took both matters under
advisement. Ultimately, Sea Wasp's Motion to Stay was
denied (Dkt. #230). Plaintiff's Motion for Order to Show
Cause is still being considered by the Court.
litigation concerning this matter was proceeding outside of
federal court. On August 23, 2019, Baron, et. al.,
“obtained an ex-parte temporary restraining
order in  state court” (Dkt. #256, Exhibit C). The
state court's order stated that “Sea Wasp agree[d]
to this requested relief” (Dkt. #256, Exhibit C). Sea
Wasp then filed a Supplemental Notice of Compliance notifying
the Court “of the TRO and the undersigned's
objection to the state court statement that Sea Wasp had
agreed to the TRO” (Dkt. #259) (citing Dkt. #239). Sea
Wasp claims it “absolutely did not” support the
statement of the state court (Dkt. #259) (citing Dkt. #239).
Sea Wasp then filed a Second Supplemental Notice of
Compliance with the Court on August 27, 2019 and expressed
concern that it was caught between two competing orders (Dkt.
#241). On September 6, 2019, Sea Wasp “provided the
state court with a copy of this Court's July 17 and
August 20 injunction orders” (Dkt. #259).
“Despite possessing a copy of this Court's orders,
the state court signed an Amended Temporary Restraining Order
on September 9” (Dkt. #259). Sea Wasp again notified
the Court of the state court proceedings by filing its Third
Supplemental Notice of Compliance with the Court on September
10, 2019 (Dkt. #246). Finally, on September 16, 2019, the
state court dissolved the Temporary Restraining Order (Dkt.
#256; Dkt. #259).
this time, Domain Protection asserts that Sea Wasp has
continually interfered with its Domain Names and disregarded
the Courts Preliminary Injunction Order (Dkt. #256).
Specifically, Domain Protection alleges that
“defendants are interfering with Domain
Protection's control over renewing its domain
names” (Dkt. #256). This interference has manifested
itself, Domain Protection claims, through Sea Wasp's
requirement that Domain Protection agree to certain
“terms and conditions” to renew any expired
Domain Names. Those conditions purportedly include that
Domain Protection agree: “(1) for Sea Wasp to seize all
of its domain names; (2) to indemnify Sea Wasp for its
liability and attorneys' fees in the instant proceeding;
(3) that all disputes between Domain Protection and Sea Wasp
will be resolved by a single arbitrator of Sea Wasp's
choosing” (Dkt. #256, Exhibit F). Further, Domain
Protection claims that “Sea Wasp has also refused to
return the domain names that Sea Wasp transferred from Domain
Protection to itself (or an affiliate) during the period that
Domain Protection's motion for preliminary injunction was
pending” (Dkt. #256). Sea Wasp counters that the
Court's Preliminary Injunction Order only concerns the
removal of the executive locks on the Domain Names and does
not “order Sea Wasp to provide the relief Plaintiff now
seeks” (Dkt. #259). Namely, the Court's Order does
not require Sea Wasp to renew the Domain Names at no cost and
free from the terms that other customers must agree to (Dkt.
#259). Sea Wasp further claims that Domain Protection is free
to transfer any of its Domain Names because the executive
locks have been removed in compliance with the Court's
Preliminary Injunction Order (Dkt. #259). All that Domain
Protection needs to do, according to Sea Wasp, is renew those
Domain Names that have expired (Dkt. #259). Sea Wasp
additionally states that it “stands ready to provide
the services Plaintiff appears to be asking for: a list of
authentication codes for the names Mr. Schepps claims he
want[s] to manage” (Dkt. #259). The Court now considers
Domain Protection's Motion.
Federal Rule of Civil Procedure Rule 66, a district court has
the power to appoint a receiver “to take possession of
the judgment debtor's property for preservation . . .
.” Santibanex v. Wier McMahon & Co., 105
F.3d 234, 241 (5th Cir. 1997) (discussing Fed. R. Civ. Pro.
66); see also Securities & Exchange Comm'n v.
First Fin. Group of Tex., 645 F.2d 429, 439 (5th Cir.
1981) (“The appointment of a receiver is “within
the discretion of the court, as an ancillary to preliminary
injunctive relief.”). A party may seek the appointment
of a receiver if they show “an interest in certain
property or a relation to the party in control or ownership
thereof such as to justify conservation of the property by a
court officer.” Id. (citing 7 James Moore
et al., Moore's Federal Practice ¶ 66.05
(2d. ed. 1996). A district court, in its sound discretion,
determines what evidence to consider when determining whether
to appoint a receiver. See Id. (citing 12 Charles A.
Wright & Arthur R. Miller, Federal Practice and Procedure
§ 2983 (1973)). When making the final determination of
whether to appoint a receiver, a court may consider several
a valid claim by the party seeking the appointment; the
probability that fraudulent conduct has occurred or will
occur to frustrate that claim; imminent danger that property
will be concealed, lost, or diminished in value; inadequacy
of legal remedies; lack of a less drastic equitable remedy;
and likelihood that appointing the receiver will do more good
Id. at 241-42 (citing Aviation Supply Corp. v.
R.S.B.I. Aerospace, Inc., 999 F.2d 314, 316-17 (8th
to the Court's Preliminary Injunction Order, “Sea
Wasp is ENJOINED from interfering with Domain
Protection's control over the Domain Names, including its
ability to update the nameserver records associated with the
Domain Names” (Dkt. #192). As noted in footnote 16,
however, “Sea Wasp may . . . exercise any control over
the Domain Names that is proper under the UDRP and not
inconsistent with this Order . . . .” (Dkt. #192).
Domain Protection is effectively asking the Court to Order
that Sea Wasp renew Domain Protection's expired Domain
Names free of cost and free of any terms of service. That is
not what the Court's Preliminary Injunction Order
requires. Sea Wasp has made it abundantly clear that Domain
Protection is free to control its Domain Names. Indeed, Sea
Wasp has lifted the executive lock on the Domain Names (DKt.
#259). All that Sea Wasp is requesting is that Domain
Protection renew any Domain Names that have expired; the same
request that Sea Wasp would make to any other customer (Dkt.
#259). Sea Wasp's conduct is far from conduct that
warrants a receiver. Santibanex, 105 F.3d at 241.
the Santibanex factors, it is evident that the
appointment of a receiver is unnecessary. Sea Wasp has not
acted fraudulently. Rather, Sea Wasp has made the steps for
renewal of the Domain Names abundantly clear-steps that are
not governed by the Court's Preliminary Injunction Order.
There is no risk to Domain Protection's Domain Names.
Id. All Domain Protection needs to do is comply with
the same terms and services that any other customer would
have to comply with. Domain Protection has not proposed any
“less drastic equitable remedy.” Id. As
has been the custom in this case, Domain Protection has not
sought the middle ground but opted for a more extreme remedy.
When these factors ...