A three-judge panel of the U.S. Ninth Circuit Court of Appeals in Seattle on Tuesday denied Australian-based gaming company PlayUp’s bid for a preliminary injunction against its former U.S. CEO, Dr. Laila Mintas, for allegedly violating her employment agreements with the company.
The original lawsuit, filed in U.S. District Court in Nevada in December, stems from the collapse of an expected $450 million sale of the company to cryptocurrency firm FTX.
PlayUp won round one of this sometimes acrimonious court battle that month, when a judge granted a temporary restraining order against Mintas, claiming that she was threatening to cause “irreparable damage” to the company by her public statements. But in January, the same judge denied a request for an injunction, finding that an email in late November by FTX was not presented to the court as required.
“The threat that was claimed by the plaintiff seemed very real at the time; and under the circumstances, the Court issued the order that was necessary,” Judge Gloria Navarro wrote in her ruling. “But now we have more information. The plaintiff has failed to demonstrate that the defendant breached the non-disparagement provision under the employment agreement. … It was just as likely or more likely that the actions of [PlayUp CEO] Daniel Simic are the ones that caused the negotiations [with FTX] to cease irreparably.”
Appeals court reviews the facts
The three Ninth Circuit judges first explained that their review was focused only on a potential “abuse of discretion” by Navarro based on “an erroneous legal standard or clearly erroneous finding of fact.”
“A plaintiff seeking a preliminary injunction must establish that [it] is likely to succeed on the merits, that [it] is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in the public interest,” the judges wrote. “In appropriate cases, we have applied a ‘sliding scale’ approach, ‘allowing a stronger showing of one element to offset a weaker showing of another.’”
The district court here concluded that PlayUp “ha[d] not met … the likelihood of success on the merits. … PlayUp argues that the denial of relief was erroneous because the district court failed to discuss whether PlayUp raised ‘serious questions going to the merits.’ We disagree. Though our review might have been simpler if the district court had commented specifically on PlayUp’s argument under the alternative standard, it is clear from the court’s discussion that it concluded that PlayUp did not make the showing necessary under the alternative standard, either.
“Only if the balance of hardships tipped sharply in its favor could PlayUp obtain a preliminary injunction under the ‘serious questions’ alternative. Implicit in the district court’s ruling and surrounding discussion was its conclusion that PlayUp did not make that showing.
“The district court expressly stated its view, based on the record at that point, that it appeared ‘more likely’ that Mintas had properly ‘exercise[d] her executive responsibility and that she was turned into the scapegoat’ for the failed deal.
“It observed that there was ‘substantial evidence’ that her comments were not the reason the acquisition failed. The court also expressed doubt about the evidence offered to support the contention that she had made a disparaging comment to the proposed purchaser of the company.
“Based on the district court’s assessment of the evidence at the time it considered the motion, there was no possibility of PlayUp establishing that it was entitled to a preliminary injunction under the sliding-scale standard.
“To be clear, we do not hold that one party or the other will necessarily prevail on the merits if this case proceeds to trial. In terms of preliminary relief, however, the district court’s denial of the motion for preliminary injunction was not an abuse of discretion. AFFIRMED.”
Another angle on the sale collapse
Mintas has argued that the real reason the deal fell apart is not because of any involvement by her, but because Simic sought to tie the purchase of another company to the original deal as well as large bonuses for top PlayUp executives — adding $170 million to the purchase price.
Mintas, a 15-year veteran of the U.S. gaming industry, has been a frequent panelist at national industry conferences and was named one of 25 “Executives to Watch” in 2019 by the Global Gaming Business trade magazine.
The level of vitriol in some of the court filings by both parties led U.S. Magistrate Court Judge Nancy J. Koppe to take the unusual step in late January of insisting on more decorum.
“The Court is dismayed by the snarky tenor of the papers,” Koppe wrote. “Such sniping may impede the ability to advance a client’s interests and and may erode the credibility of the attorney(s) engaged in such conduct. The privilege of practicing in this courthouse requires professionalism and civility not exhibited in the pending motion practice. Counsel must do better moving forward.”
But in May, after another flurry of filings, Koppe stepped forward again.
“Although the Court has already done so, it again reminds both sides that they need to be civil and cooperative with one another,” Koppe wrote.
“That is particularly true in the context of discovery. The vast majority of discovery disputes should be resolved through cooperative dialogue.
“To the extent those obligations are not taken seriously and motion practice ensues, the rules provide for monetary consequences as a means to ‘deter the abuse implicit in carrying or forcing to carry a discovery dispute to the court when no genuine dispute exists.’
“To the extent both sides are not living up to their obligations, the Court may fashion other appropriate relief. Both sides are being put on notice that the Court will not hesitate to impose sanctions if they are warranted.”