United States District Court, D. Oregon, Medford Division
OPINION & ORDER
MICHAEL McSHANE United States District Judge
matter comes before the Court on Plaintiff LRY, LLC's
Motion for Preliminary Injunction, filed April 28, 2017. ECF
No. 2. LRY seeks to enjoin Defendant Lake County ("the
County") from terminating LRY's lease pending final
resolution of this matter on the merits. The Court heard oral
argument on this motion on May 12, 2017. ECF No. 17. For the
reasons discussed below, LRY's motion is DENIED.
preliminary injunction is an "extraordinary remedy that
may only be awarded upon a clear showing that the plaintiff
is entitled to such relief." Winter v. Nat. Res.
Def. Council, 555 U.S. 7, 22 (2008). A plaintiff seeking
a preliminary injunction generally must show that: (1) the
plaintiff is likely to succeed on the merits; (2) the
plaintiff is likely to suffer irreparable harm in the absence
of preliminary relief; (3) the balance of equities tips in
favor of the plaintiff; and (4) an injunction is in the
public interest. Id. at 20.
Supreme Court's decision in Winter, however, did
not disturb the Ninth Circuit's alternative "serious
questions" test. All. for the Wild Rockies v.
Cottrell, 632 F.3d 1127, 1131-32 (9th Cir. 2011). Under
this test, '"serious questions going to the
merits' and a hardship balance that tips sharply toward
the plaintiff can support issuance of an injunction, assuming
the other two elements of the Winter test are also
met." Id. at 1132. Thus, a preliminary
injunction may be granted "if there is a likelihood of
irreparable injury to plaintiff; there are serious questions
going to the merits; the balance of hardships tips sharply in
favor of the plaintiff; and the injunction is in the public
interest." M.R. v. Dreyfus, 697 F.3d 706, 725
(9th Cir. 2012). While a stronger showing of irreparable harm
may offset a weaker showing of likelihood of success on the
merits, a preliminary injunction is never appropriate upon a
showing of a mere possibility of irreparable harm.
Winter, 555 U.S. at 22.
operates a railroad service across portions of southern
Oregon and northern California. Compl. ¶ 1. LRY leases
approximately fifty-five miles of track from Lake County
("the Lakeview Branch"). Compl. ¶¶ 6, 9.
LRY and the County entered into the Lake County Lease and
Operating Agreement ("the Agreement") on November
3, 2010. Compl. ¶ 10. When LRY commenced operations, the
line was in serious disrepair and LRY has made $700, 000 in
capital investments to triage the line. Didelius Decl.
¶¶ 7-8. LRY provides rail service to two clients: a
perlite mine and a lumber mill. Didelius Decl. ¶ 5.
contracted with the State of Oregon through a grant program
known as ConnectOvegon for funds to improve and
repair portions of the Lakeview Branch. Didelius Decl.
¶¶ 10-15. Under certain circumstances, violation of
the ConnectOvegon contract may obligate LRY to
refund the grant money. See, e.g., Didelius Decl.
Ex. 4, at 15. As part of the ConnectOvegon grant
program, the County and LRY amended the Agreement to extend
the lease through December 31, 2035. Didelius Decl. Ex. 2, at
13 of the Agreement governs termination of the lease.
Didelius Decl. Ex. 2, at 8- 9. Section 13.04 of the Agreement
requires LRY to cooperate with the orderly transition of
common carrier obligations to a third party in order to avoid
disruption of rail service. Didelius Decl. Ex. 2, at 9.
Section 13.05 provides:
In the event the County terminates this lease agreement
without reasonable cause, including through condemnation of
all or a sufficient portion of the leased premises to prevent
service to one or more LRY customers, then, in that event,
the County shall pay termination costs of twenty five
thousand dollars ($25, 000) to LRY as liquidated damages.
Decl. Ex. 2, at 9.
April 12, 2017, the County sent a letter to LRY announcing
that the County was terminating the Agreement pursuant to
Section 13.05 and that it expected that LRY would comply with
its obligations under Section 13.04. Didelius Decl. Ex. 1.
Based on the record, the termination was the result of an
ongoing dispute over a number of issues, including LRY's
rates and which party was responsible for repairs and
improvements. There is no indication in the record of any
third party prepared to take over operation of the Lakeview
Branch and the County's briefing indicates that it
expects LRY to continue operations, notwithstanding the
termination of the Agreement, until a new carrier can be
April 28, 2017, LRY filed the Complaint and a Motion for a
Preliminary Injunction and Temporary Restraining Order. ECF
Nos. 1, 2. On May 1, 2017, this Court granted a temporary
restraining order maintaining the pre-termination status
quo between the parties. ECF No. 8. On May 12, 2017, the