What Options Does A Business Have When Faced With A Legal Dispute Where Money Damages Will Not Offset The Loss?

October 30, 2023

There is a good chance that over the course of the life of a business, it will have a dispute with an employee, competitor, partner or others where money damages will not be enough to compensate it for the loss it will experience.  In these situations, a business should consider whether to seek emergency relief from a court.  The emergency relief can take different forms, but it generally involves temporarily preventing a person or company from doing something, ordering them to stop doing something, or compelling them to return something.

Perhaps the most common use of emergency relief is to stop a former employer or competitor from using misappropriated trade secrets.  Emergency relief can also be used to stop a competitor from trading on a business’ trade dress, to stop an employee from competition against a former employer, to stop a business co-owner from hurting the business, to stop a governmental body from enacting rules and regulations beyond its authority, to stop an individual or company from taking assets... the list goes on.

There are two main types of emergency relief a business can obtain – a temporary restraining order or a preliminary injunction.  To get a temporary restraining order or a preliminary injunction, a business must show the following:

  1. That the business has a clearly ascertainable right in need of protection. This right would include a threatened business interest, as one does not have to wait to be injured before seeking emergency relief.
  2. That the business will suffer irreparable injury unless the order is entered. Irreparable injury is an injury that cannot be measured monetarily.
  3. That the business has no adequate remedy at law, meaning that money damages will not be sufficient compensation.
  4. That the business is likely to be successful on the merits of the underlying action. Absolute certainty is not required to meet this requirement.

A temporary restraining order is just what it sounds like -- an order that temporarily stops something from happening.  Temporary restraining orders are typically only effective for ten days, but are usually continued for longer periods by agreement of the parties.

The primary difference between a temporary restraining order and a preliminary injunction is how the facts are presented to the Court.  With a temporary restraining order, the court does not hear testimony.  Rather, the court reviews the complaint, answer, motion for a temporary restraining order, response to the temporary restraining order and any affidavits that are submitted by the parties.  After reviewing these materials, the court usually hears argument and then grants or denies the temporary restraining order.

Regardless of whether the temporary restraining order is granted or denied, the court usually sets the matter for a preliminary injunction hearing to take place in the coming weeks or months, which is many times referred to a “mini-trial.”  The parties are then allowed to gather evidence through written discovery and depositions and present that evidence to the court.  The preparation time for the preliminary injunction hearing is usually very compressed.  After the preliminary injunction hearing, the court will grant or deny the preliminary injunction.  If the preliminary injunction is granted, that preliminary injunction will usually stay in place for the remainder of the case.

Emergency relief is an important tool for businesses as it can be used to prevent actions that could result in irreversible harm to a business.  While obtaining emergency relief is not usually cheap, it can bring the dispute to a head earlier, provide the parties with an overview of the strengths and weaknesses of their positions and potentially save litigation costs in the long run.

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