FILED
NOT FOR PUBLICATION MAY 26 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SHIGE TAKIGUCHI; et al., No. 14-17061
Plaintiffs - Appellees, D.C. No. 2:13-cv-01183-JAD-
VCF
v.
MRI INTERNATIONAL, INC., MEMORANDUM*
Defendant,
and
JUNZO SUZUKI and PAUL MUSASHI
SUZUKI,
Defendants - Appellants.
Appeal from the United States District Court
for the District of Nevada
Jennifer A. Dorsey, District Judge, Presiding
Argued and Submitted May 11, 2015
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: THOMAS, Chief Judge, and BENAVIDES** and OWENS, Circuit
Judges.
Junzo Suzuki and Paul Musashi Suzuki appeal from the district court’s
preliminary injunction freezing all of their assets. We have jurisdiction under 28
U.S.C. § 1292, and we review the district court’s preliminary injunction order for
abuse of discretion. Doe v. Harris, 772 F.3d 563, 570 (9th Cir. 2014).
The Suzukis argue that the preliminary injunction is overbroad because it
imposes a constructive trust for the benefit of a proposed class that has not been
certified. “[I]n the absence of class certification, the preliminary injunction may
properly cover only the named plaintiffs.” Nat’l Ctr. for Immigrants Rights, Inc. v.
INS, 743 F.2d 1365, 1371 (9th Cir. 1984). However, a preliminary injunction may
incidentally benefit putative class members prior to class certification, so long as
the breadth of the injunction is necessary to give the named plaintiffs the relief to
which they would be entitled if they prevail. See Easyriders Freedom F.I.G.H.T. v.
Hannigan, 92 F.3d 1486, 1501-02 (9th Cir. 1996).
It is unclear whether the district court properly tailored the preliminary
injunction to preserve assets for the benefit of the 25 named plaintiffs. Certain
statements in the district court’s order suggest that the preliminary injunction may
**
The Honorable Fortunato P. Benavides, Senior Circuit Judge for the
U.S. Court of Appeals for the Fifth Circuit, sitting by designation.
2 14-17061
have been impermissibly issued to afford relief to unnamed class members, while
other statements suggest that the preliminary injunction was properly crafted to
protect a potential recovery by the named plaintiffs. We remand so that the district
court may either clarify that the broad scope of the preliminary injunction is
necessary to benefit the named plaintiffs, or, if not, may modify the preliminary
injunction to protect only the named plaintiffs’ interests. See Nat’l Ctr., 743 F.2d
at 1371-72. If need be, the district court should hold an evidentiary hearing or
permit discovery to determine whether the Suzukis hold assets beyond those
necessary to compensate the named plaintiffs if they prevail. To prevent harm to
the named plaintiffs, the current injunction will remain intact while the district
court reconsiders its scope. See, e.g., Ashcroft v. ACLU, 535 U.S. 564, 586 (2002);
Nat’l Org. for Reform of Marijuana Laws v. Mullen, 796 F.2d 276, 276 (9th Cir.
1986).1
The Suzukis also argue that the preliminary injunction is overbroad because
it impermissibly freezes assets for the purpose of securing a potential award of
legal damages. The Supreme Court has held that an asset-freezing preliminary
1
Although this case is assigned to District Judge Jennifer Dorsey,
preliminary injunction motions have been referred to District Judge Howard
McKibben, who issued the order that is the subject of this appeal. We, of course,
have no objection to Judge McKibben continuing to handle preliminary injunction
proceedings on remand.
3 14-17061
injunction is an equitable device that may not issue to prevent the dissipation of
assets pending adjudication of a claim for legal damages. Grupo Mexicano de
Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 333 (1999). However,
this court has held that the Grupo Mexicano rule applies only in cases seeking
exclusively legal damages. Johnson v. Couturier, 572 F.3d 1067, 1083-84 (9th Cir.
2009); In re Focus Media Inc., 387 F.3d 1077, 1084-85 (9th Cir. 2004). Where, as
here, both equitable and legal remedies are sought, this court has never held that a
preliminary injunction may only freeze assets for the potential equitable recovery.
The Suzukis next argue that the preliminary injunction should be reversed
because plaintiffs have not established a likelihood of success or serious questions
going to the merits of their claims. We disagree. The Suzukis appear to have
played key roles in orchestrating a massive Ponzi scheme that defrauded the
plaintiffs out of millions of dollars. As a result, the district court did not err in
concluding that the plaintiffs have, at a minimum, raised serious questions
regarding whether the Suzukis had actual or constructive knowledge of the fraud.
Furthermore, although communications involving the Suzukis bolster the
conclusion that they had knowledge of the fraud in April 2012, other evidence
raises serious questions with respect to their knowledge prior to April 2012. We
4 14-17061
therefore reject the Suzukis’ contention that the preliminary injunction may only
apply to the proceeds of the fraud that they received after April 2012.
Finally, the Suzukis argue that the district court improperly considered
evidence that the plaintiffs submitted with their preliminary injunction reply brief
and allegations pleaded for the first time in the Third Amended Complaint, which
was filed after all of the preliminary injunction briefing. The Suzukis waived their
challenge to the district court’s consideration of the reply brief evidence by failing
to raise that challenge below. Getz v. Boeing Co., 654 F.3d 852, 868 (9th Cir.
2011). The Suzukis cite no authority for the proposition that a district court is
prohibited from reciting facts alleged in the operative complaint, and even if it
were error to do so, it would be harmless, see United States v. Nutri-cology, Inc.,
982 F.2d 394, 398 (9th Cir. 1992), because the mere allegations of a complaint will
never suffice to establish the prerequisites for obtaining a preliminary injunction,
see Winter v. NRDC, Inc., 555 U.S. 7, 20 (2008).
We VACATE the judgment and REMAND. The preliminary injunction
shall remain in place for a reasonable time to allow the district court to conduct
further proceedings consistent with this disposition. Each party shall bear its own
costs on appeal.
5 14-17061