Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—C.D. Cal.: Chiropractor denied preliminary injunction in soft tissue massage UCL case, (Jun 1, 2015)

By Greg Hammond, J.D.

A chiropractor that was certified in Active Release Techniques (ART)—a patented soft tissue system/movement based massage technique that treats problems with muscles, tendons, ligaments, fascia, and nerves—could not obtain preliminary injunction preventing ART LLC from refusing to recertify the chiropractor. The federal district court in Santa Ana, California, denied the motion for preliminary injunction, finding that the chiropractor failed to adequately allege a serious question regarding his likelihood of success on the merits and irreparable injury, and the balance of equities weighed in favor of ART LLC (Gatsinaris v. ART Corporate Solutions, Inc., May 29, 2015, Carter, D.).

Background. Chiropractors must receive certification through ART LLC to practice ART. Plaintiff Vasili Gatsinaris, a chiropractor, was certified in ART in 2002, and has been continuously recertified until 2014. However, ART Corporate Solutions LLC opened an investigation into a company that Gatsinaris owns that allegedly copied material from ART Corporate Solutions’ website and engaged the ART Corporate Solutions’ former clients. Gatsinaris received a cease and desist letter in August 2014, and ART Corporate decided not to recertify him.

Gatsinaris brought six claims against the ART defendants, including: (1) declaratory relief; (2) unfair competition in violation of California’s Unfair Competition Law (UCL); (3) intentional interference with a contract; (4) intentional interference with prospective economic advantage; (5) negligent interference with a prospective economic advantage; and (6) violation of California’s Cartwright Act. Gatsinaris moved for preliminary injunctive relief. In their briefing, Gatsinaris focused only on the UCL – under the unfair or unlawful prong – and California Business and Professions Code § 16600. California Business and Professions Code § 16600 provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Cal. Bus. & Prof. Code § 16600.

Injunctive relief. The court, however, denied Gatsinaris’ motion, finding that he failed to meet the three prongs of the preliminary injunction test. First, no serious questions regarding the likelihood of success on the merits was raised. Specifically, Gatsinaris essentially admitted that he had no right to the defendants’ intellectual property rights, and he failed to raise any law that would compel the court to order the defendants to allow Gatsinaris to receive certification and to call himself a certified ART provider.

Second, the court had serious doubts as to the source of funds Gatsinaris claims he will lose absent injunctive relief. In addition, he failed to causally connect decertification with his need to lay off 42 employees or contractors without injunctive relief. Gatsinaris consequently failed to meet his burden on demonstrating irreparable harm.

Finally, the court concluded that the balance of equities weighs in favor of denying injunctive relief. The defendants would suffer harm if the court granted injunctive relief, because it would essentially prohibit the defendants from enforcing their intellectual property rights. In addition, Gatsinaris failed to demonstrate that the defendants are exercising an impermissible monopoly. The motion for preliminary injunction was consequently denied.

The case number is SACV 15-0741-DOC (DFMx).

Attorneys: Carol Ann Gefis (Atkinson Andelson Loya Ruud and Romo APC) for Vasili Gatsinaris DC, Gatsinaris Chiropractic Inc., and American Corporate Health LLC. Joseph C. Daniels (Sherman and Howard LLC) for ART Corporate Solutions Inc. and ART LLC.

Companies: Gatsinaris Chiropractic Inc.; American Corporate Health LLC; ART Corporate Solutions Inc.; ART LLC

Cases: StateUnfairTradePractices CaliforniaNews