If ever there was a super legal-sounding term for a fairly common occurrence, it would be injunctive relief, which essentially means to get someone to stop doing something. In other words, you want to enjoin (stop) the other party from doing something. The act of getting them to not do that something is your desired outcome or relief.
What Is An Injunction?
An injunction is a court order delivered in a civil trial or suit. This court order stops the defendant from pursuing a certain activity. This can include constructing a new building, pursuing a business venture, or making transactions that are harmful to the plaintiff. A person who fails to comply with an injunction may find themselves in contempt of court, which can lead to fines or even jail time in the worst case.
Most often, there must be a showing of irreparable harm if the injunction is not implemented. This means that an injunction is the only thing standing between the plaintiff and substantial (usually) financial harm.
Injunctive relief usually takes one of three forms: temporary restraining order (TRO), preliminary injunction, and permanent injunction. As their modifying terms imply, each has a different level of the time commitment involved. Preventative injunctions work to address an ongoing legal wrong or prevent injury toward the plaintiff. Such injunctions can include one against a factory for polluting drinking water for locals.
A TRO is often the first line of defense used by a party seeking injunctive relief because it can be granted and implemented quickly. They are used to either preserve a status quo. A TRO may be used, for example, to protect a wildlife preserve from getting bulldozed to construct a theme park.
The preliminary injunction comes after the dust of the TRO has settled and the parties have a chance to hash out before the court the circumstances that lead them to this particular point. A permanent injunction is just as it sounds – permanent.
One extreme example would be a mandatory injunction, which courts rarely implement. The reason is that such an injunction forces an affirmative act to be implemented immediately, and they are usually considered quite harsh. The case for performing a mandatory injunction would be if the court needs a party to take a specific course of action, and as soon as possible.
In business, there are several scenarios in which injunctive relief may play a starring role in resolving a dispute. Here are some of the most common ones.
1) Infringement Of Intellectual Property
The infringement of intellectual property, even for a day, can be incredibly costly to the owner of the property. Thus, TROs are a great tool for the patent owner to shut down the competitor who is selling his product or for the trademark owner to shut down an enterprise making and selling counterfeit purses with the owner’s trademark on them.
Examples of intellectual property infringement would be selling bootleg merchandise that belongs to a film corporation, plagiarizing another person’s work, or using music without receiving permission from the composer. More often than not, if the owner of the intellectual property can show that there is actual infringement, the injunction will easily evolve into a permanent injunction.
2) Theft Of Clients
What do you do if a former employee starts poaching your best clients? It depends, particularly on whether the employee had an enforceable non-compete agreement (NCA) and if they are in fact poaching in areas they should not be. Criteria can include the distance in which a former employee is engaging with clients, and a designated time period by which the person cannot engage in this industry. Specialist doctors, for example, have to sign a NCA when leaving a hospital and set up a private practice a great distance away.
If that is the case, again, a TRO is the fastest way to get the undesirable action to stop. And, when the dust settles and the employee stops poaching clients, the parties can figure out how to move forward.
3) Minority Shareholder Freezeouts
In closely held, small business corporations with private stockholders, it is not uncommon for the majority (usually family) stockholders to “freeze out” the minority (usually non-family) stockholder. This includes termination of that minority stockholder’s position in the company.
In this case, a TRO is an excellent vehicle for stopping the shareholders from freezing the minority shareholder out – and in some cases, getting them back into the job they were fired from. The irreparable harm here usually occurs because the minority stockholder is terminated from employment and thus unable to earn a living.
4) Breaches Of Fiduciary Duties
Injunctions are particularly useful in situations where a fiduciary of a company starts going down a path that is destructive to the business and thus, the beneficiaries. For example, consider if one partner begins to sell massive amounts of company assets without approval or agreement from the other partner. A timely injunction can put the brakes on the bleeding enough to allow the parties to figure out what is going on.
To prove this breach, the plaintiff has to prove that the defendant is not acting within the best interests of the business. A paper trail can help with this by recording certain transactions.
5) Breach of Contract
Contracts are serious in the business world. They show a written agreement and designate a state by which to discuss disputes.
Breaching a contract can include not paying vendors for their services. Courts usually award money to the innocent party that equates the damages, but an injunction can provide equitable remedies as well, to provide what seems right. If the innocent party asks for specific performance, that would be a form of equitable remedy.
When a business declares bankruptcy, they forfeit their assets to the court to pay off as many debts as possible. Depending on whether they declare Chapter Seven or Chapter Eleven, they decide how much control the court has over their assets and how much they need to pay.
A bankruptcy injunction is called a stay of action and prevents creditors from taking money and assets during the procedure. This gives the plaintiff some breathing room and allows the courts to maintain control. A creditor must petition the court.
Let Trembly Law Handle Your Court Issues
Trembly Law has a formidable team that will take your case. We are equipped to handle injunctions and help you preserve the status quo. Maintain your business interests with our help in court.
Contact us today. If you find your business in a situation that could use injunctive relief, your first call should be to the Trembly Law Firm. We can provide assistance with all aspects of the representation, from start to finish.