Restraining Orders and Other Injunctive Relief in New Jersey Business Law LItigation

Restraining Orders and Other Injunctive Relief in New Jersey Business Law Litigation

Our business attorneys represent people and businesses in New Jersey business law disputes.  Every lawsuit has two parts – liability and relief.  Liability is determining who, if anyone, is at fault – ie., “winning.”  However, just winning isn’t enough.  A person or business going through the time and expense of a lawsuit is also looking for relief.  Often times money damages will compensate for the harm the other party caused.  However, in many cases it won’t.  The harm may come from a continuing illegal course of conduct by the other party, and continuation of that conduct after the trial would continue the harm.  In this case injunctive relief may be necessary to make the party seeking relief whole.

Injunctive Relief

Basically, “Injunctive relief” is an order by a court requiring a party to stop doing something, be it an act, condition or behavior.  Injunctive relief normally comes in the form of a temporary restraining order, a preliminary injunction, and/or a permanent injunction.

Temporary Restraining Orders

In emergency situations, a temporary restraining order (or “TRO”) may be imposed by a court before a hearing can be held.  However, because this remedy deprives the restrained party of its right to due process, it is granted only in extreme circumstances.  The applicant will need file an emergency application known as a request for an order to show cause requiring the other party to show why a preliminary injunction should not be granted.  However, hearings on preliminary injunctions normally do not occur until 35 days later, so in an emergency the applicant may request a temporary restraining order until the hearing is held. 

The party seeking the temporary restraining order and preliminary injunction must satisfy the high evidentiary burden established by the New Jersey Supreme Court in the case of Crowe v. Degoia.  These elements are: First, a substantial likelihood of success on the merits of the case based on the evidence and the law; second, that immediate and “irreparable” harm  will occur if the restraining order is not granted (“irreparable harm” cannot be adequately compensated by money damages – if money could make the applicant whole, there would be no need for restraints);  and third, that the harm to the applicant would be greater if the restraints were denied than the opposing party would suffer if the restraints were granted.

Preliminary Injunctions

A preliminary injunction is a restraining order issued before trial but after a hearing.  The process and the evidentiary burdens are the same, albeit without the request for an immediate restraining order. 

The purpose or temporary restraining orders and preliminary injunctions are not to put the applicant in a better position or to give it an advantage in the litigation.  Rather, it is to maintain the status quo and prevent harm. 

Permanent Injunctions

The final form of injunctive relief is a permanent injunction which may be granted by a court after the parties have had the opportunity to conduct full discovery and a trial.  The applicant bears the burden of proving that the other party intends to commit an act or continue behavior which would cause a “irreparable” injury to the applicant.  Some of the factors courts examine when deciding whether to make an injunction permanent include whether a practical order is possible; the interests of others and the public which might be affected;  the relative harm to the parties which would occur if the injunction were granted or denied; whether the applicant had “unclean hands;” whether there was any unreasonable delay by the applicant in seeking relief; and whether money damages would be adequate.

Uses of Injunctions and Restraining Orders

Injunctive relief is a powerful tool under New Jersey business law when the viability of a business as an ongoing concern is threatened, or where needed to protect contractual rights.  A classic example is the situation where one partner is looting a business’s assets or trademark infringement by a competitor.  These acts can force an entity into bankruptcy.  Courts also often grant injunctive relief to enforce restrictive covenants, such as non-competition an and non-disclosure agreements in contracts for the sale of a business and employment agreements.

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