Case: 3:12-cv-00095-TSB Doc #: 147 Filed: 11/08/13 Page: 1 of 18 PAGEID #: 7529

IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO UNITED STATES OF AMERICA Plaintiff, v. FESUM OGBAZION, et. al. Defendant. : : : : : : : : : Case No. 3:12-cv-95 Judge Timothy S. Black

DEFENDANTS MOTION FOR STAY OF INJUNCTION PENDING APPEAL

Now come Defendants, Fesum Ogbazion, ITS Financial, LLC, TCA Financial, LLC and Tax Tree, LLC, by and through counsel, and pursuant to Rule 62 of the Federal Rules of Civil Procedure ask this Court to stay the permanent injunction issued on November 6, 2013 pending the outcome of Defendants appeal filed on November 8, 2013. A memorandum in support of this motion is attached. Respectfully submitted, DINSMORE & SHOHL, LLP /s/ Thomas P. Whelley II __________________________________________ Thomas P. Whelley II (0010493) 1100 Courthouse Plaza, SW 10 N. Ludlow Street Dayton, Ohio 45402 (937) 449-2800 (937) 449-2836 (facsimile) thomas.whelley@dinsmore.com Trial Attorney for Defendants

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Co-counsel: DINSMORE & SHOHL, LLP /s/ Susan D. Solle __________________________________________ Susan D. Solle (0071269) 1100 Courthouse Plaza, SW 10 N. Ludlow Street Dayton, Ohio 45402 (937) 449-2800 (937) 449-2836 (facsimile) susan.solle@dinsmore.com Attorney for Defendants

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MEMORANDUM I. INTRODUCTION A stay in this case is necessary to protect the integrity of the appeal process. This case was filed by the government in March of 2012 after the government had been investigating Defendants and their largest franchisees for months, had over a million pages of documents and had already deposed the CEO and CFO of the Defendant companies. Armed with the knowledge gained from this investigation, the government agreed to allow Defendants to proceed with the 2012/2013 tax season subject to an Agreed Preliminary Injunction. Defendants are asking this Court in this motion to permit them to conduct business under the terms of the Preliminary Injunction pending determination of the appeal. Defendants have made significant

improvements to their processes since the parties entered into the Preliminary Injunction and as a consequence, recurrence of claimed past behavior is remote. As discussed below, all factors that permit this Court to issue a stay weigh in favor of Defendants. respectfully request that their motion be granted. II. ARGUMENT This Court should suspend the permanent injunction dated November 6, 2013 pending a resolution of the appeal of the order filed with the Sixth Circuit on November 8, 2013. Rule 62(c) of the Federal Rules of Civil Procedure provides, [w]hile an appeal is pending from an interlocutory order or final judgment that grants, dissolves, or denies an injunction, the court may suspend, modify, restore, or grant an injunction on terms for bond or other terms that secure the opposing partys rights. In deciding whether a stay is warranted courts are instructed to consider the same factors that are traditionally considered in evaluating the granting of a preliminary injunction. Service Therefore, Defendants

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Employees International Union Local 1 v. Husted, 698 F.3d 341, 343 (6th Cir. 2012); The Antioch Co. v. Western Trimming Co., 1998 U.S. Dist. LEXIS 23363, **1-3 (S.D. Ohio Aug. 24, 1998); Michigan Coalition of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153 (6th Cir. 1991). The four factors are: (1) the likelihood that the party seeking the stay will prevail on the merits of the appeal; (2) the likelihood that the moving party will be irreparably harmed absent a stay; (3) the prospect that others will be harmed if the court grants the stay; and (4) the public interest in granting the stay. Griepentrog, 945 F.2d at 153 (citations omitted). These factors are not prerequisites that must be met, but are interrelated considerations that must be balanced together. Id., citing In re Delorean Motor Co., 755 F.2d 1223, 1229 (6th Cir. 1985). In Griepentrog, the Sixth Circuit went into great detail describing the applicability of the first two factors on a courts decision of whether to grant a stay. Specifically, the Sixth Circuit provided: Although the factors to be considered are the same for both a preliminary injunction and a stay pending appeal, the balancing process is not identical due to the different procedural posture in which each judicial determination arises. Upon a motion for a preliminary injunction, the Court must make a decision based upon incomplete factual findings and legal research. Roth v. Bank of the Commonwealth, 583 F.2d 527, 537 (6th Cir. 1978), cert. dismissed, 442 U.S. 925, 61 L. Ed. 2d 292, 99 S. Ct. 2852 (1979). Even so, that decision is generally accorded great deference on appellate review and will only be disturbed if the court relied upon clearly erroneous findings of fact, improperly applied the governing law, or used an erroneous legal standard. NAACP v. City of Mansfield, 866 F.2d 162, 166-167 (6th Cir. 1989) (quoting Christian Schmidt Brewing Co. v. G. Heileman Brewing Co., 753 F.2d 1354, 1356 (6th Cir.), cert. dismissed, 469 U.S. 1200, 84. L.Ed. 2d 309, 105 S. Ct. 1155 (1985)). Conversely, a motion for a stay pending appeal is generally made after the district court has considered fully the merits of the underlying action and issued judgment, usually following completion of discovery. As a result, a movant seeking a stay pending review on the merits of a district courts judgment will have greater difficulty in demonstrating the likelihood of success on the merits. In essence, a party seeking a stay must ordinarily demonstrate to a reviewing court that there is a likelihood of reversal. Presumably, there is a reduced 4

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probability of error, at least with respect to a courts finding of fact, because the district court had the benefit of a complete record that can be reviewed by this court when considering the motion for a stay. To justify the granting of a stay, however, a movant need not always establish a high probability of success on the merits. Ohio ex rel. Celebrezze, 812 F.2d at 290 (citing Cuomo v. United States Nuclear Regl. Commn, 772 F.2d 972, 974 (D.C. Cir. 1985)). The probability of success that must be demonstrated is inversely proportional to the amount of irreparable injury plaintiffs will suffer absent the stay. Id. Simply stated, more of one excuses less of the other. This relationship, however, is not without its limits; the movant is always required to demonstrate more than a mere possibility of success on the merits. Mason County Medical Assn v. Knebel, 563 F.2d 256, 261 n. 4 (6th Cir. 1974). For example, even if a movant demonstrates irreparable harm that decidedly outweighs any potential harm to the defendant if a stay is granted, he is still required to show, at a minimum, serious questions going to the merits. Delorean, 755 F.2d at 1229 (quoting Friendship Materials, Inc. v. Michigan Brick, Inc., 679 F.2d 100, 105 (6th Cir. 1982)). Griepentrog, 945 F.2d at 153-154. Here, the four factors and the Griepentrog analysis weigh in Defendants favor. Accordingly, this Court should grant Defendants motion and stay the injunction pending the outcome of their appeal in the Sixth District. A. Defendants will be irreparably harmed absent a stay.

In evaluating the harm that will occur depending upon whether or not a stay is granted, the Sixth Circuit instructs courts to look to three factors: (1) the substantiality of the injury alleged; (2) the likelihood of its occurrence; and (3) the adequacy of the proof provided. Griepentrog, 945 F.2d at 154 (citing Ohio ex rel. Celebrezze, 812 F.2d at 290 (citing Cuomo, 772 F.2d at 977)). The Sixth Circuit added that in evaluating the degree of injury, it is important to remember that The key word in this consideration is irreparable. Mere injuries, however substantial, in terms of money, time, and energy necessarily expended in the absence of a stay, are not enough. The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm. 5

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Id. (citing Sampson v. Murray, 415 U.S. 61, 90, 39 L. Ed. 2d 166, 94 S. Ct. 937 (1974) (quoting Virginia Petroleum Jobbers Assn v. Federal Power Commn, 259 F.2d 921, 925 (D.C. Cir. 1958))). See, also Dorinco Reinsurance Co. v. ACE American Insurance Co., 2008 U.S. Dist. LEXIS 16781 (E.D. Mich. Mar. 5, 2008). The irreparable harm without a stay is clear. Absent a stay, Defendants will be shut out of their business completely, regardless of the success of their appeal. If the permanent

injunction remains in place during the appeal, Defendants lose the opportunity to conduct any business while the Sixth Circuit considers the merits of their appeal. The negative impact of not operating during this upcoming tax season is so dire that it will force Defendants to terminate their operations for good even if the appeal is ultimately resolved in their favor. In other words, losing this upcoming tax season deprives Defendants of their right to a meaningful appeal. The permanent injunction creates approximately 150 independent tax preparation businesses (with several hundred locations nationwide) by dissolving the franchisor/franchisee relationship between Defendants and their franchisees. Affidavit of Todd Bryant, 9 (Bryant Aff.). A true and accurate copy of the Bryant Aff. is attached as Exhibit A. From a financial standpoint, the destruction of the franchisor/franchisee relationship during the pendency of the appeal cripples Defendants. As the district court is aware, Defendants are franchisors of tax preparation businesses, and their business subsists on the royalties received from franchisees and the products used by franchisee customers. Absent a stay, the current franchisees will sever their franchise relationship and operate independently from Defendants. This deprives Defendants of their revenue stream and will force them out of business even if they are successful on appeal. A stay is the only way to ensure a meaningful appeal that allows Defendants a chance for survival if the district courts decision is overturned by the Sixth Circuit. 6

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A unique aspect of the irreparable harm Defendants are exposed to relates to their investment in the upcoming tax season. The Court pointed out in its Decision After Trial to the Court: Opinion and Order with Findings of Fact and Conclusions of Law (Doc. 142) that the timing of the Decision was significantly delayed due to the Plaintiffs citation to the record that ranged from wildly inconsistent to borderline unintelligible. (Doc. 142, pp. 3, fn. 1).

Defendants had to prepare for this years tax season before the Court issued its decision See Bryant Aff., 7. Having not received the district courts decision until two months before tax season begins, Defendants had a choice: put themselves out of business by not preparing, or move forward with getting ready. See id., 6-7. Defendants moved forward. Id. To date, ITS Financial, LLC and Tax Tree, LLC have incurred operating expenses of approximately $3,200,000 since April 1, 2013 preparing for the upcoming tax season that starts in January 2014. Id., 6. This has included: the purchase and customization of software and other electronic infrastructure; holding a franchisee convention to present the proposed marketing, compliance, operations, and business plans for the upcoming year; labor to meet with vendors and other third parties to plan and negotiate relationships for the upcoming season, and other general operations. Id. Additionally, approximately 10 to 12 new licensees entered into business relationships with Defendants. Id., 8. These new licensees have invested their funds in preparing to open stores, including the signing of leases for commercial space, in reliance on being able to operate in the upcoming tax season as Instant Tax Service tax preparers. Id. If the permanent injunction is not stayed pending the appeal, Defendants and their licensees will lose practically everything invested in preparing for this new season. There is no way for Defendants to recoup their lost investment if the Sixth Circuit decides the appeal in their favor. Defendants may have been able to mitigate this loss had the Plaintiff enabled the Court to

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issue a more timely decision. There is simply no adequate compensatory or other corrective relief available to Defendants whereby they could recoup their sunk investment after a successful appeal. The approximately $3,200,000 invested by Defendants in this tax season will be forever lost if they are required to sit on the sidelines while the appeal is resolved. There is no measure of damages against the government. This is the essence of irreparable harm and the precise reason why this district court should stay the permanent injunction pending the appeal. The permanent injunction also immediately eliminates the jobs of Defendants 24 employees. Bryant Aff., 3. These employees will be forced to seek work elsewhere. Id.1 If the permanent injunction is overturned on appeal, Defendants will have lost their entire workforce in the process, and they will have to rebuild their personnel from the ground up. Id. This requires the companies to start from scratch once the injunction is lifted with new employees who need to be hired, trained, and assimilated into the workforce. If the permanent injunction is overturned, the unnecessary turnover in personnel has irreparable consequences on Defendants ability to conduct business. They will be faced with the unenviable task of

restarting their business with all new employees. The loss of human capital if the permanent injunction is not stayed puts Defendants chances for a successful rebooting of their business after appeal in grave danger. B. The likelihood that Defendants will prevail on the merits of their appeal.

As discussed above, the harm to Defendants in not granting this stay is absolute devastation because the district court has ordered the business death penalty. Keeping that in mind, there is also a likelihood of success on appeal because (1) the Permanent Injunction is an abuse of discretion, (2) in the Sixth Circuits de novo review of the law, it will find that it was

As discussed below, the ambiguous language of the order may also improperly impact non-party employees from their ability to change jobs.

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applied in a way never done before by any court and never intended by the legislature, and (3) the district courts findings of fact were clearly erroneous for failing to weigh the evidence.2 1. The Permanent Injunction is an abuse of discretion as it enjoins individuals and entities not subject to the Courts jurisdiction and is ambiguous in scope.

The Courts November 6, 2013 Permanent Injunction orders Defendants ITS Financial, LLC, TCA Financial, LLC, Tax Tree, LLC, and Fesum Ogbazion, and their representatives, agents, employees, attorneys, and/or any person or entity acting in active concert or participation with them, are PERMANENTLY ENJOINED from directly or indirectly, by use of any means and then lists the various activities being enjoined, including: A. Operating, or being involved with in any way, any work or business relating in any way to preparation of tax returns; *** E. Representing before the Internal Revenue Service any person or organization * * * F. Organizing, promoting, providing, advising or selling any business or work of tax services; This order is ambiguous at best, and at worst can be interpreted to enjoin individuals that are not defendants in this action and over whom the district court has no jurisdiction, from engaging in activity that is entirely unrelated to Defendants. While Defendants do not agree that the district court has jurisdiction under the statutes to enjoin Defendants in this way, it certainly rises to the level of a due process violation to enjoin the listed non-parties. Such an order must not be enforced before it is tested by appeal. Rule 65(d)(2) of the Federal Rules of Civil Procedure lists those individuals that can be bound by an injunction. However, the district court does not have the jurisdiction or power to enjoin non-party individuals for activity entirely unrelated to Defendants in this case. The order
In an appellate courts review of a district courts grant of a permanent injunction, factual findings are reviewed under the clearly erroneous standard, legal conclusions are reviewed de novo, and the scope of injunctive relief is reviewed for abuse of discretion. Luckys Detroit, LLC v. Double L, Inc., 2013 U.S. App. LEXIS 16589, 2013 FED App. 0741N (6th Cir. Aug. 9, 2013).
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is ambiguous and does not clearly limit the injunction to association with Defendants. The Supreme Court has explained that Rule 65(d)(2) is intended to prevent the people listed from carrying out the prohibited acts through aiders and abettors, although they were not parties to the original proceeding. Nat'l Spiritual Assembly of the Bah's of the United States Under the Hereditary Guardianship, Inc. v. Nat'l Spiritual Assembly of the Bah's of the United States, Inc., 628 F.3d 837, 848-850 (7th Cir. 2010), citing Regal Knitwear Co. v. N.L.R.B., 324 U.S. 9, 14, 65 S. Ct. 478, 89 L. Ed. 661 (1945). The Rule is intended to prevent those parties from doing two things: (1) acting in concert with a bound party; and (2) acting in "privity" with an enjoined party, or to circumvent the order by carrying on the business of the named defendants. Id. Any attempt to bind non-parties to an injunction is ultimately subject to due process, which begins with a presumption that each person has a right to her day in court. Id. See, also, Regal Knitwear, 324 U.S. at 13 ("The courts, nevertheless, may not grant an enforcement order or injunction so broad as to make punishable the conduct of persons who acted independently and whose rights have not been adjudged according to law."); Tice v. Am. Airlines, Inc., 162 F.3d 966, 971 (7th Cir. 1998) (cautioning against too relaxed an approach to privity because "serious due process problems would arise if the earlier nonparty were barred from her own day in court"). It is elementary that one is not bound by a judgment in personam resulting from litigation in which he is not designated as a party or to which he has not been made a party by service of process. Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100, 110 (U.S. 1969) (Superseded on other grounds). See, also, Herrara v. Mich. Dep't of

Corrections, 2011 U.S. Dist. LEXIS 98576, 2011 WL 3862640 (E.D. Mich. 2011) (To the extent that the plaintiff seeks an injunction binding officials who are not parties to the action, the court lacks jurisdiction to enter the injunction). The consistent constitutional rule has been that

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a court has no power to adjudicate a personal claim or obligation unless it has jurisdiction over the person of the defendant. Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100, 110 (U.S. 1969). A person who was not a party to a suit generally has not had a "full and fair opportunity to litigate" the claims and issues settled in that suit. Taylor v. Sturgell, 553 U.S. 880, 892-893 (U.S. 2008). Furthermore, the language of the order is so ambiguous that Defendants are left scrambling to determine what they can and cannot do. An order can only be enforced if it is a clear and unambiguous order that left no reasonable doubt at to what behavior was expected . . . In determining specificity, the party enjoined must be able to ascertain from the four corners of the order precisely what acts are forbidden." Project B.A.S.I.C. v. Kemp, 947 F.2d 11, 17 (1st Cir. 1991) (citations omitted). Defendants are not able to ascertain the extent of the activities enjoined based on the language of the order. A literal interpretation of this order could be read to prohibit the undersigned counsel and any other outside counsel for Defendants from representing other clients that are involved in the tax preparation business or from representing entities before the IRS. It could also be interpreted to prohibit in-house or outside counsel to continue its obligations to defend ITS and satisfy court deadlines in ongoing litigation. If this order is permitted to remain in effect, it will force licensed attorneys into a Hobsons choice between complying with this order and satisfying their ethical obligations to the client and other courts. The decision also impacts other non-parties including employees of Defendants who are not individually named in the litigation. While the employees are not permitted to continue working for Defendants, the order could be read to prohibit them from becoming employed at another company in any way related to the tax industry. The district court has no jurisdiction to

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enjoin the employees in such a way, and in fact violates their due process. The district court has either overreached or has rendered a decision so ambiguous that determining its breadth for compliance is nearly impossible. Along the same lines, the breadth of the activity enjoined is equally ambiguous. It is not clear if Defendants are permitted to wind down the company, whether Tax Tree can, as required by law, process refunds currently being deposited from returns prepared pursuant to the Agreed Preliminary Injunction, and whether Defendants can continue to collect receivables and pay debts of the company. Bryant Aff., 11. If a stay of the order is not granted, Defendants, their employees and their attorneys (in house and private) are faced with the choice of violating the order or violating other laws and obligations due to the ambiguity of the order. A stay while this order is tested on appeal is necessary and proper. 2. The District Court Created New Law with its Decision.

The district courts injunction issued the business death penalty to Defendants business as a franchisor in the tax industry. No other court has ever enjoined a franchisor from engaging in the tax business under 7408, 7402 and 6701 or any other statute. The statutes relied on by the district court have only ever been applied to those who actually file tax returns or provide tax advice to customers; no court has ever applied these statutes in any respect to a franchisor. The district court here has created entirely new law that will be reviewed de novo by the Sixth Circuit. The law does not permit the extreme relief imposed by the court, and the result is so utterly devastating to thousands of people that Defendants respectfully request that the injunction be stayed until an appeal can be heard. While it is not clear from the district courts decision, it must have relied on 7402 to issue the business death penalty since such a remedy is not available under 7408. There are

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hundreds of cases that rely on 7402 to order injunctive relief. The parties opposing the government in the cases cited ranged from tax preparers and accountants (see, e.g., U.S. v. Ernst & Whinney, 735 F.2d 1296 (11th Cir. 1984); U.S. v. Gibson, 2010 U.S. Dist. LEXIS 27831 (E.D. Mich 2010); U.S. v. Moser, 2005 U.S. Dist. LEXIS 28256 (D. Haw. 2005)); to tax protestors (see, e.g., U.S. v. Hendrickson, 2008 U.S. App. LEXIS 27988 (6th Cir. 2008)); to sellers of tax fraud schemes (see, e.g., U.S. v. Benson, 561 F.3d 718 (7th Cir. 2009)); to taxpayers (see, e.g., Brody v. U.S., 243 F.2d 378 (1st Cir. 1957)). In each of those cases, the party opposing the government was either the actual taxpayer or an entity or individual providing services directly to taxpayers. None of these cases involved franchisor or any other entity or individual that did not have direct involvement with the taxpayer. While 7402 provides courts with broad powers for the enforcement of the internal revenue laws, courts have limited this power to enjoining individuals or entities directly involved with those internal revenue laws. Further, the 11th Circuit has addressed a very similar case and stated that, while the government brought its action under 7402(a), 7407 and 7408, it focused on 7407 because that is the only statute that explicitly authorizes the business death penalty. U.S. v. Cruz, 611 F.3d 880, 884 (11th Cir. 2010). The court also referred to the business death penalty as a farreaching injunction. Id. See, also, U.S. v. Davison, 2010 U.S. Dist. LEXIS 45898 (W.D. Mo. 2010) (finding that injunction prohibiting defendant from engaging in tax business instead of just specified tax fraud schemes would violate his First Amendment rights). As pointed out

repeatedly to the district court, issuing the death penalty in this case does not have the effect of shutting down the franchisees who actually prepare the taxes. Instead, all 800+ stores are still free under the courts order to conduct their individual tax businesses without court or franchisor supervision.

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Shutting down a franchisor in the tax preparation business under 7402 sets a dangerous precedent. While Instant Tax Service claims to be the fourth largest tax preparation business in the country, the three larger are much larger, and for the most part, involve franchise relationships. Enforcing the business death penalty against a franchisor not engaged in actual tax preparation or involvement with customers, without testing the decision on appeal, will open a very wide the door to other, larger tax preparation companies, and will also significantly impact the legal separation between franchisor and franchisee. The Sixth Circuits de novo review of the law in this case will reveal that the district court has unnecessarily and improperly created new law. 3. The District Courts Findings of Fact Are Clearly Erroneous.

Defendants acknowledge that the clearly erroneous standard of reviewing the district courts factual findings is a higher standard than de novo. Nonetheless, a review of the district courts decision reveals that there was no weighing of the evidence, but simply a near complete recitation of the governments findings of fact. There is little indication in the district courts lengthy findings that it even considered Defendants evidence. For example, the district court never discussed whether there was a good faith effort by Defendants to reform past practices. There was an abundance of evidence of those good faith efforts presented at trial and that evidence was not even addressed in the courts decision. The decision demonstrated that the district court reviewed the evidence with the purpose to punish Defendants rather than to determine recurrence in the future as required for injunctive relief. See, Cruz, supra. A review of the evidence in the record compared to the district courts findings of fact is surprisingly inaccurate and incomplete. "A finding is clearly erroneous when, although there is evidence to support it, the

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reviewing court on the entire evidence is left with the definite and firm conviction that a mistake as been committed." Michael v. Futhey, 2009 U.S. App. LEXIS 28217 (6th Cir. Ohio 2009), citing Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S. Ct. 1504, 84 L. Ed. 2d 518 (1985) (quotations and citation omitted). After the Sixth Circuit reviews the full record, it will discover that the district court did not even weigh the evidence, and there is likelihood that the Court will have a firm conviction that a mistake has been committed. The government and Defendants agreed to a Preliminary Injunction in November 2012 that permitted Defendants to proceed with the 2012/2013 tax season under very limiting parameters with oversight by the government. The government had already had all of

Defendants documents in its possession for a year at that time and already knew about all or most of the evidence it later presented at trial. And yet, it permitted Defendants to proceed with the tax season subject to the Preliminary Injunction. Defendants respectfully request that this Court permit Defendants to proceed with the season that is already underway subject to the Preliminary Injunction. C. Harm to others weighs in favor of the stay.

Prior to trial, the government agreed to a preliminary injunction that permitted Defendants to operate during the entire 2012 tax season under certain parameters. (Doc. 37). Accordingly, the government itself recognized that others do not face harm if Defendants operate during the pendency of this litigation. In fact, failing to suspend the permanent injunction presents a significant risk to others during the pendency of the appeal. In addition to the 24 employees who will immediately lose their jobs as noted above, many of the 150 franchisees will be unable to survive without Defendants oversight and assistance. These franchisees rely on Defendants advertising,

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training, and financial assistance to have a profitable tax season. Absent this infrastructure and support, many franchisees will be unable to navigate through the upcoming season. This also forces innocent franchisees out of business altogether. Finally, third parties are harmed absent of a stay because of the confusion created by the decision. Defendants are unclear of their rights and abilities to wind down Defendants affairs. Bryant Aff., 11. Defendants counsel and representatives are harmed by their inability to proceed with obligations in other courts that began prior to the current litigation. Id. Finally, customers are harmed because many of the now independent tax preparers will operate under the Instant Tax Service trade name without the backing, infrastructure, and oversight of Defendants. There will be confusion in the marketplace as to the use of the trade name, the products offered by the tax preparers, and the identity behind who is processing customers returns. Therefore, a suspension of the permanent injunction is necessary to reduce the harm to others, and this Court should grant Defendants motion for a stay. D. The public interest in granting the stay.

It is a long standing principal that cases be decided on their merits. See Eitel v. McCool, 782 F.2d 1470 (6th Cir. 1986). Likewise, it serves the public interest that the fate of the nations fourth largest tax preparation company be decided after a meaningful appeal on the merits of the district courts decision. As discussed in detail, Defendants peril is certain if a stay is not issued while this case progresses in the Sixth Circuit. A successful appeal is inconsequential if

Defendants cease to operate and go out of business as a result of missing the upcoming tax season. This is the type of irreparable harm stays pending appeal are intended to protect against. The public is best served by allowing due process to fully run its meaningful course. Accordingly, this Court should grant Defendants motion for a stay.

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III.

CONCLUSION For the foregoing reasons, Defendants respectfully request this Court stay the permanent

injunction issued on November 6, 2013 and reinstate the preliminary injunction pending the outcome of Defendants appeal filed on November 8, 2013. Respectfully submitted, DINSMORE & SHOHL, LLP /s/ Thomas P. Whelley II __________________________________________ Thomas P. Whelley II (0010493) 1100 Courthouse Plaza, SW 10 N. Ludlow Street Dayton, Ohio 45402 (937) 449-2800 (937) 449-2836 (facsimile) thomas.whelley@dinsmore.com Trial Attorney for Defendants Co-counsel: DINSMORE & SHOHL, LLP /s/ Susan D. Solle __________________________________________ Susan D. Solle (0071269) 1100 Courthouse Plaza, SW 10 N. Ludlow Street Dayton, Ohio 45402 (937) 449-2800 (937) 449-2836 (facsimile) susan.solle@dinsmore.com Attorney for Defendants

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CERTIFICATE OF SERVICE The undersigned hereby certifies that a copy of the foregoing has been served upon all counsel of record via operation of this Courts electronic filing system this 8th day of November 2013. /s/ Susan D. Solle __________________________________________ Susan D. Solle (0071269)

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