We Have to Stop Them!

Obtaining Injunctions in Business Litigation

By Tim Warner

In many business disputes, it is simply not enough for a company to file a Complaint and await a trial, a year or more later, in the hope of obtaining relief. 

When faced with immediate, irreparable harm, a party’s only remedy may be to seek an injunction from the court immediately upon the filing of a Complaint.  The party seeking an injunction can request both a Temporary Restraining Order (TRO) and a Preliminary Injunction.  These instruments are designed to stop the defendant from continuing its improper activities, to preserve the status quo and to prevent further damage while litigation is pending.

A request for a TRO and a Preliminary Injunction is governed by Ohio Rule of Civil Procedure 65.  This rule relates to the Federal Rule of Civil Procedure and requires a similar analysis.  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 defending party or his attorney can be heard in opposition.  This is a high standard and, in practice, some courts will not grant a TRO without notification to the other party and an opportunity for them to be heard.

If a TRO is granted, with or without notice to the defending party, the TRO will only last for 14 days.  It can be extended for an additional 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 14 days unless all parties agree.

Regardless of the outcome of the request for a TRO, an aggrieved party must also request a Preliminary Injunction to gain relief beyond 14 to 28 days.  Unlike a TRO, 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 to review the request.  This hearing is typically akin to a trial with witness testimony and experts if needed.  The Civil Rule allows the court to consolidate the hearing with a trial on the merits if the court so wishes.

Importantly, no TRO or Preliminary Injunction will operate until the party obtaining the relief gives 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.  Courts have upheld contracts indicating that injunctive relief can be had absent such a bond, but without such a contractual clause a bond or equivalent is necessary.

In determining whether injunctive relief should be issued under Civil Rule 65, Ohio courts consider the following criteria:

  • Whether there is substantial likelihood that a party will prevail    on the merits
  • Whether a party will suffer irreparable injury if the injunction is not granted
  • Whether third parties will be unjustifiably harmed if the injunction is granted
  • Whether the public interest will be served by the injunction

 The court will consider each of the issues individually.

The first criterion – likelihood of success on the merits – requires a determination of whether a party can succeed in proving at least one of the claims set forth in its Complaint.  For instance, if a party alleges breach of contract, the court will analyze whether the party can fulfill the elements of a breach of contract claim:

  1. A contract existed
  2. The complaining party fulfilled its obligations
  3. Breach by the opposing party
  4. Resulting damages

At this stage a company does not need to prove by a preponderance of evidence that it will prevail, but it must satisfy the court that it has likelihood of success on the merits.

While all four of the criteria to be considered by the court are important, the need to prove irreparable injury is the most closely scrutinized element.  A company must show that monetary damages alone will not fully compensate it for its loss.  If the court determines that monetary damages constitute adequate compensation, the request for injunctive relief will be denied.

The issue of unjustifiable harm to third parties frequently centers upon the effect of granting an injunction on free and fair competition.  Illegal competition, though, is not protected.  If widespread, repeated impropriety is found, the chances for an injunction improve.

When considering the final criterion – the interest of the general public – a company must convince the court that an injunction should be granted to deter future unlawful conduct and preserve its legitimate interests.  The public is always interested in seeing blatant wrongdoers enjoined from continuing improper activities.

Asking a court for injunctive relief can be arduous, time consuming and expensive.  It should not be considered lightly.  In those instances where a company is truly faced with a continuing wrong which must be immediately stopped, the only remedy is to petition the court for injunctive relief.  At the very least, the complaining party will focus the court’s attention upon its urgent need for relief.

Tim Warner is a partner with Cavitch Familo & Durkin, and serves as a trusted advisor and legal resource to corporate entities and individuals.  He is a member of the Board of Directors for The Gathering Place and is also a member of the Community Advisory Committee of WVIZ/ideastream.  He can be reached at twarner@cavitch.com

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