Thou Shalt NOT! Injunctions and TROs

“Can they get an injunction?” is among the first several questions asked by folks seeking advice about a non-compete agreement.  As a lawyer, I would like to be able to offer a straight answer.  And sometimes I do, but almost always with a disclaimer.  I can know what existing law states but I cannot know what the judge will say it means in your case.  However, there is a standard process and factors for courts considering motions for injunctive relief, and it is helpful for the client to understand the basics.

Rule 65 of the South Carolina Rules of Civil Procedure governs TROs and injunctions. (Federal Rule 65 applies in federal courts.) First, a TRO is simply an order of the court to refrain from doing something for 10 days, although it can be extended for a short period of time (days).  The goal of the TRO is to maintain the status quo until the matter can be more fully considered after presentation of evidence and legal argument.  The court may grant a TRO without notice.  On the other hand, Rule 65(e) states “No temporary restraining order shall be granted to suspend the general and ordinary business of an individual, partnership, association or corporation. Same may be suspended only by injunction after notice.”

Shortly thereafter, a hearing is scheduled at which both sides can present evidence and make legal arguments.  If the court determines that a temporary injunction is warranted, then the court will ask the moving party to prepare an order. A court may suspend the business of an individual or company after a hearing (although it is rare to completely shut down a business). The duration of a temporary injunction can be for a specific term or until the final trial of the matter (12-18 months). In the non-compete context, the scope of the injunction can be more limited than the non-compete but it will generally not be broader. (However, see siscussion of Inevitable Disclosure.)

First, the most basic requirement for granting an injunction is a finding that an injunction is necessary to prevent irreparable injury.  Irreparable injury is an injury that cannot be fully compensated with money damages. So, with this in mind, the court considers four factors in determining whether to issue an injunction: (1) the likelihood of irreparable harm to the plaintiff if the preliminary injunction is denied, (2) the likelihood of harm to the defendant if the requested relief is granted, (3) the likelihood the plaintiff will succeed on the merits, and (4) the public interest.  Of course, these factors lend themselves to subjective judgments, which means a court generally can find a way to do whatever the judge wants to do. (But not always.)

Practice tip: It is my belief that our thoughts have a strong tendency to follow our feelings.  The story behind a motion for an injunction will generate thoughts and feelings, which will influence how the judge perceives the evidence and weighs the parties’ competing interests.  If the story begins “she copied all my client and pricing information onto her hard-drive, quit without notice and started calling my clients first thing the next morning…”, the judge will form an unfavorable impression of the departing employee.  Naturally, the judge will be more open to granting an injunction.  However, if the story is that of a loyal employee who honestly exits the workplace or better yet a stellar employee who is fired without cause and without notice, the judge will feel differently about granting an injunction.  So, make sure your story is one that you will be proud for the judge to know, and assume the judge will know all the facts, emails, phone calls, text messages and conversations associated with your story.  (Also, check out Eight Ways to Guarantee Yourself A Non-Compete Lawsuit and E-Discovery: You Can Delete, But You Can’t Hide)

Second, you should know that an injunction is immediately appealable.  This means that if the trial judge issues an injunction, you do not have to wait until the case is over to appeal, but you can appeal the injunction ruling.  (Although, it may take a while before the appellate court can hear the appeal.) You should also know that if an injunction is granted, the party who sought the injunction must post a bond to cover damages if it is later determined that the injunction was wrongfully granted.  So, if the court grants an injunction preventing you from working, and later the non-compete is determined to be unenforceable, you can seek to recover your lost wages/income against the bond.

An injunction is a scary prospect for an employee who quits a job to take a better one or has started her own competitive business.  The stakes are high, so high that it may be the most important battle in the non-compete litigation.  However, as with most legal matters, planning in advance rather than preparing after the fact provides you with many more options to shape your story, understand your risks and develop contingency plans.

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