A business should consider use of an emergency injunction when another party is breaching an obligation or violating a right of the business that is likely to cause irreparable harm, which is generally considered to be harm that cannot be corrected with a payment of money, according to Steven G. Hall, a partner at Gambrell & Stolz LLP.
“Consider a lawsuit over ownership of a unique piece of art,” he says. “If one of the parties has possession of the art and announces an intention to sell the art, the other party may well be able to pursue an emergency injunction to prevent the sale and preserve the status quo until the question of rightful ownership can be resolved.”
Smart Business spoke with Hall about how and why a business might consider obtaining emergency injunctive relief.
Why would a business consider using an emergency injunction?
Some of the more common business scenarios for using an injunction include preventing a former employee from competing against your business in violation of a noncompete agreement; preventing a supplier from improperly withholding materials; and preventing use of intellectual property such as patented technology, copyrighted materials or trademarks and trade dress.
How does a business obtain emergency injunctive relief?
It can be difficult to obtain ‘emergency’ injunctive relief because the court requires a showing of several factors before it will act. Our legal system prefers to wait until each party has had an opportunity to fully develop its case and present it at trial before taking any action. Before a court will bypass this preference and take emergency action, it will require a real showing of right and need.
Generally, the factors that need to be demonstrated to obtain an emergency injunction are a substantial likelihood that the business will ultimately prevail on the merits; a showing that there will be irreparable harm to the business if emergency relief is not granted; and that the balancing of the hardships that will be caused by injunction favors the grant of the injunction.
Are there limits on a court’s ability to grant injunctive relief?
The courts have broad authority to order what they believe is necessary to protect the status quo, but should do no more than is necessary and should fashion the relief in the manner that is least intrusive. For example, in the case of a raw material supplier who seeks to breach its contract and withhold materials that are immediately necessary, a court might require continuing shipments, but only until an alternative supplier can be obtained.
What types of injunctive relief are available prior to the trial of a case?
Two types of pre-disposition relief are a temporary restraining order, which is usually obtained first in a more truncated procedure; and a preliminary injunction that involves a more detailed presentation of evidence.
A temporary restraining order is usually sought and obtained where there is an immediate need to preserve the status quo. The circumstances usually do not allow for full notice of what is coming to the other side and therefore the relief is generally limited to 30 days. If the party seeking the emergency relief believes that the injunction is needed for longer, it must then pursue a preliminary injunction, which can last until final disposition of the case on the merits.
Both the temporary restraining order and the preliminary injunction must be sought within a formal lawsuit.
What should a business consider before asking its lawyers to pursue emergency injunctive relief?
The decision to pursue injunctive relief must be made with careful consideration of multiple factors, including: the merits and size of the underlying dispute; the likelihood that the request for injunctive relief will be granted; the additional legal time and expense that will be required to convince the court to act on an emergency basis prior to the end of the trial; and the effect that the grant or denial of the requested injunction will have on the case.
STEVEN HALL is a partner in the Litigation Department at Gambrell & Stolz LLP. He is significantly involved in cases on behalf of clients who seek to obtain or defend against claims for injunctive relief. Reach him at (404) 221-6515 or email@example.com.