Injunction Junction I: Practical Tools for Business Emergencies

18 August 2011 Second City Bench Memo Publication

Something is urgently threatening your business. Words fail. Negotiations fail. Are you out of options? No. One practical and often very effective tool at your disposal is emergency injunctive relief: the temporary restraining order (“TRO”) and preliminary injunction. You do not need to look any further than today’s headlines to see that companies use these business tools all the time. 

AT&T, for example, is attempting to merge with T-Mobile and filed suit seeking to enjoin certain of its customers who are trying to stop the merger. A court in New Jersey recently awarded AT&T competitor Verizon an injunction to limit union picketing that was allegedly intimidating customers. Apple recently obtained and then lost an injunction against Samsung in Düsseldorf, Germany related to certain intellectual property rights in “community designs” in the European Union. There are an endless variety of business emergencies, all of which share a common potential solution: an injunction. 

Over the course of this series of articles — the “Injunction Junction” – we will cover a wide variety of issues related to the practice and practicality of obtaining injunctive relief, using the relief (or threat of the relief) as an effective business tool, and defending your business against emergency claims.

Before we delve too deeply into the subject matter, we should start with the basics of differentiating between the types of emergency relief that are available: the TRO and the preliminary injunction. While the standards and tests under which a particular court will evaluate a motion for TRO or preliminary injunction vary quite a bit from state to state and from court to court within the federal system (there are two, three, four, and five factor tests), courts commonly use some variation of the following factors: (1) irreparable injury; (2) a potential for success on the merits of the claim; (3) the interests of both parties; and (4) the public interest. Although sometimes TROs and preliminary injunctions have slightly different standards in the same jurisdiction, the principle differences between the TRO and the preliminary injunction are the duration and the evidentiary standard.

TROs are very limited in length — usually an initial 10 day period with the possibility of an extension by statute, rule, or agreement. Typically, TROs remain in place until the court can hold a hearing on the preliminary injunction. The preliminary injunction then remains in effect until trial.

A court will typically rule on a TRO without the testimony of witnesses and with little in the way of evidentiary submissions. Preliminary injunctions, on the other hand, usually involve full-blown evidentiary hearings which are, in effect, expedited trials. Many times, very few issues remain after a preliminary injunction hearing, which makes it critical that the proceedings treated with a high priority in any organization. A loss at a preliminary injunction hearing is not necessarily defeat, but many times, it is a strong indication of what the judge thinks about your case. Absent something significantly persuasive arising before trial, it is often time impossible to overcome the ruling on a preliminary injunction.

Join us for the next installment of Injunction Junction where we will begin the exploration of issues you must consider before you decide to use a TRO or preliminary injunction as a business tool.

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