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

Injunctive Relief

Injunctive relief is an order by a court requiring a party to cease an act, condition or behavior.  It is a powerful tool in New Jersey business law civil cases. An order for injunctive relief is typically referred to as an “injunction.”  A temporary injunction is granted only after a hearing, and a permanent injunction is granted after the case has been completed.  A temporary restraining order may be granted prior to a hearing in emergency situations.

 

Where to File

When the primary relief sought is injunctive relief, the filing party should initiate its action in the Chancery Division of the Superior Court of New Jersey.  However, if the principal remedy is money damages and injunctive relief is secondary, the case should be filed in the Law Division of the Superior Court, which can grant injunctive relief in addition to money damages (or legal remedies).

 

Temporary Restraining Orders and Preliminary Injunctions

A preliminary injunction is a restraining order issued before trial.  If the situation is an emergency which involves the risk of immediate hearing, a temporary restraining order (or “TRO”) may be obtained with out a prior hearing.  First, the party seeking the court’s intervention will file an order to show cause why a preliminary injunction should not be entered.  Because normally hearings on these applications take place after 35 days, in an emergency the applicant may also ask for a temporary restraining order until the hearing is held.  During the 35 days before the temporary injunction hearing is in place, the parties will make submissions to the court as to why the restraints should be continued, ended or why they shouldn’t.

Courts may grant temporary restraining orders to stop certain conduct before the other party before the has its hearing, much less a full trial.  Temporary restraining orders are considered extraordinary remedies because the restrained party has not had an opportunity to defend itself.  Temporary restraining orders are therefore granted only on an emergency basis.  The purpose is not to put one party in a better position, but to maintain the status quo and prevent harm.  Indeed, even preliminary injunctions are extraordinary remedies because the parties have not yet had full discovery or a trial on the merits

In the seminal case of Crowe v. Degoia the New Jersey Supreme Court laid out the requirements which an applicant must prove in order to obtain preliminary injunctive relief – ie., a temporary restraining order or a preliminary injunction.   The applicant must demonstrate: (1) a substantial likihood of success on the merits; (2) immediate and “irreparable” harm (“irreparable harm” is harm which cannot be adequately compensated by money damages);  and (3) a balancing of the equities – i.e., that the harm to the applicant would be greater if the restraining order was denied than it would be for the opposing party if the restraining order or preliminary injunction was granted.

 

Permanent Injunctions

After the parties have had full discovery and a trial on the merits, the judge may make the preliminary injunction permanent.  In order to obtain a permanent injunction, the applicant must prove that the defendant intends to do or continue some act or behavior which would cause a nuisance to the public or an injury to the applicant.  However, courts will not issue permanent injunctions when granting it would cause injury to the rights or property of innocent third parties or when money damages are sufficient to compensate the applicant.  Factors in determining whether a permanent injunction is appropriate include: the practicality of framing the order; the interests of others and the public;  balancing the equities; the nature and scope of any misconduct by the applicant; any unreasonable delay in seeking relief; and the adequacy of money damages.

 

Uses of Injunctions and Restraining Orders

Injunctive relief is a potent tool under New Jersey business law to protect a party’s rights.  Injunctive relief is appropriate in cases which threaten the viability of a business as an ongoing concern, or to enforce contractual rights.  For instance, injunctive relief may be granted  in business law cases where one partner is looting the assets of the business or where a competitor is infringing on another’s trademark.  Likewise, a court may grant an injunction to enforce restrictive covenants in contracts, such as agreements not to do business with a company’s clients.

 

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