What is an injunction?
An “injunction” is an order of the Court that a certain act be done or not be done. There are three types of injunctions:
- A temporary restraining order (“TRO”) (issued on a temporary, emergency basis);
- A preliminary injunction (issued on a basis that usually lasts through the end of trial); and
- A permanent injunction (issued after trial and as part of the judgment).
When do you need an injunction?
An injunction is appropriate when the legal remedy (i.e., monetary damages) is inadequate. In this industry, we most commonly see examples in the partnership dispute context:
- Your business partner is “freezing you out” of the business;
- Your business partner is making transactions that are harmful to your business;
- Your business partner is pursuing a competing business venture; or
- Your business partner is straight up embezzling or stealing from the business.
Of course, other examples outside this context can include things like infringement of intellectual property, theft of business, or other breaches of contract or fiduciary duty.
How do you get an injunction?
The primary statutory authority for injunctions pending trial is Code of Civil Procedure §§ 525-533. Combined with the California Rules of Court §§ 3.1150-3.1152, these statutes provide the basic injunction-seeking procedure.
The important thing to note here, is that the Court has broad discretion in granting or denying an application for a TRO or preliminary injunction, and the burden on the application is very high. The Court will balance these two factors:
- Who will suffer the greater injury? Will the applicant suffer more if the application is denied or will the defendant suffer more if it’s granted?
- What is the probable outcome at trial? Is there a reasonable likelihood that the applicant/plaintiff will win on the merits?
Let’s frame this in a common scenario: your business partner is stealing from your business. If you know that this is happening, it’s important to take action right away to stop the bleeding. You can’t and shouldn’t wait to go through litigation (which can take years to complete) before you do something. That’s where a TRO and preliminary injunction comes in. You can ask the Court to freeze the business’ assets or remove your business partner’s access to the same right away, as long as you can show:
- You will suffer the greater injury if your request is denied (in that you will be unable to stop the stealing, which will impact your and your business’ financial status vs. your business partner will be unable to keep doing what he shouldn’t be doing anyway); and
- There is a reasonable likelihood that you will win in the litigation (in other words, you have good evidence).
In addition to the balancing of these two factors, Code of Civil Procedure § 526(a)(2) also lists the traditional consideration of “irreparable harm.” This factor obviously relates to factor 1 above, but in California, it’s also an entirely separate consideration. It will be really hard to get a TRO or preliminary injunction unless you can show that you will imminently be significantly damaged in a way that cannot be repaired later in time.
If you find yourself in a situation where an injunction might be appropriate, begin documenting EVERYTHING and reach out to our litigation team. We can help you create an effective strategy that outlines why injunctive relief is necessary and appropriate in your case, sets forth the irreparable harm you will suffer, and includes good admissible evidence to support your application.