We Have To Stop Them!
09 Jun 2016
OBTAINING RESTRAINING ORDERS AND INJUNCTIONS IN CIVIL BUSINESS LITIGATION
In many civil disputes, it is simply not enough for a party to file a Complaint against another party and await a trial, a year or more later, in the hopes of obtaining relief. When faced with an immediate, irreparable harm, a plaintiff’s remedy is to file a motion for a Temporary Restraining Order (“TRO”) simultaneously with the Complaint and ultimately to motion for a Preliminary Injunction. The TRO and the Preliminary Injunction are designed to stop the defendant from continuing its improper activities, to preserve the status quo and to prevent further damage to the plaintiff while the litigation is pending.
Temporary Restraining Order (TRO) to Prevent Further Damage
The request for a TRO and a Preliminary Injunction are governed in Ohio by Ohio Rule of Civil Procedure 65. The Ohio rule tracks the Federal Rule of Civil Procedure and the analysis is similar. According to the Ohio rule, a party may request a TRO without having notified the other party or its counsel, if it clearly appears that immediate and irreparable injury, loss or damage will result to the applicant before the adverse party or his attorney can be heard in opposition. This is a pretty high standard and, in practice, some courts will not grant a request for a TRO absent notification to the other party and an opportunity to be heard.
If a TRO is granted, with or without notice to the adverse party, the TRO will only last for fourteen (14) days. It can be extended for an additional fourteen (14) days, for good cause shown, and can be extended for a longer period of time only if all parties consent to the extension. Here again, some courts are loathe to continue a TRO beyond the initial fourteen (14) days unless all parties agree.
Preliminary Injunction: May Stay In Place While Litigation is Pending
Regardless of the outcome of the request for a TRO, a plaintiff may still request a Preliminary Injunction. A request for a Preliminary Injunction can only be granted after reasonable notice to the adverse party. Upon receiving a request for a Preliminary Injunction, the court will schedule a hearing on the request. This hearing is typically akin to a trial with witness testimony and experts if needed. If granted, a Preliminary Injunction may stay in place as long as the litigation remains pending. The Civil Rule allows the court to consolidate the hearing with a trial on the merits if the court so wishes. Both the TRO and the Preliminary Injunction process can be time-consuming and expensive.
Importantly, no TRO or Preliminary Injunction will operate until the party obtaining relief provides a bond executed by sufficient surety, in an amount fixed by the court. In lieu of a bond, a party may deposit money or an equivalent. Some courts will uphold contracts that indicate injunctive relief can be had absent a bond, but without a contractual clause, a bond or equivalent is necessary.
How Ohio Courts Determine to Issue Injunctive Relief:
In determining whether injunctive relief should be issued under Civil Rule 65, Ohio courts consider the following criteria:
- whether there is a substantial likelihood plaintiff will prevail in the merits;
- whether plaintiff will suffer irreparable injury if the injunction is not granted;
- whether third parties will be unjustifiably harmed if the injunction is granted; and
- whether the public interest will be served by the injunction.
The court will consider each of the issues individually.
1. Likelihood of Success on the Merits
The first element, likelihood of success on the merits, requires a determination of whether a plaintiff can succeed in proving its case on any one of the claims set forth in its Complaint. For instance, if a plaintiff alleges breach of contract in its Complaint, the court will analyze whether the plaintiff can fulfill the elements of a breach of contract claim, i.e., (1) that a contract existed; (2) that the complaining party fulfilled its contractual obligations; (3) that the opposing party failed to fulfill its obligations; and (4) that the complaining party incurred damages as a result of this failure. At this stage, a party need not prove by a preponderance of the evidence that it will prevail, but it must satisfy the court that it has a likelihood of success on the merits of its claims.
2. Irreparable Injury
While all four of the criteria considered by the court are important, the need to prove irreparable injury is perhaps the most important element that a plaintiff must prove to be awarded injunctive relief. Indeed, many requests for injunctive relief boil down to a question of whether the complaining party can actually prove that it will be irreparably injured if an injunction is not granted. The irreparable injury suffered can relate to any of the claims outlined in the Complaint so long as a plaintiff can show that monetary damages alone will not compensate it for its loss. If the court ultimately determines that monetary damages will adequately compensate the complaining party, the request for injunctive relief will be denied.
As an example, both actual and threatened misappropriation of a company’s trade secrets have been held to constitute “irreparable harm” and may be enjoined under Ohio law. Injunctive relief is appropriate when there exists a present and real threat of disclosure of trade secrets, even without actual disclosure. There is no adequate remedy at law for such misappropriation, as it is difficult to calculate in monetary terms the impact of the disclosure. Ohio law specifically authorizes injunctions in cases of actual or threatened misappropriation of trade secrets. Other examples of “irreparable harm” include the loss of business from a defendant’s unfair competition or tortious interference with business relations.
3. Unjustifiable Harm to Third Parties
The issue of “unjustifiable harm” frequently centers upon the effect of granting an injunction on free and fair competition. However, courts have frequently found that fair competition does not mean competition through illegal means. In a case on point, the court stated:
Had defendants entered the field through their own entrepreneurship, plaintiff would have no legal protection against their competition. However, where competition arises solely from the misappropriation of trade secrets, injunction is the proper remedy.
4. Public Interest
The identification of a public interest in favor of granting an injunction is largely a fact-based endeavor. It is necessary to argue that an injunction should be granted to deter future unlawful conduct by the defendants, and to preserve a party’s legitimate interests. Depending on the underlying facts, further arguments in support of the public interest factor may present themselves.Tags: Business Law, Employment Law, Litigation