WHAT IS A TEMPORARY RESTRAINING ORDER?
Businesses sometimes have a need to stop – enjoin – a person or another business from doing something harmful to the business. Often this occurs in the context of an employee leaving and taking confidential information with him/her, or a former employee attempting to divert business away from the employer. Sometimes the business has a legitimate complaint; sometimes the business is simply trying to stifle legitimate competition. Regardless of the merits of the situation, the procedure to follow is to seek a temporary restraining order, a preliminary or interlocutory injunction, or a permanent injunction – or all three. This article will address the first of these types of relief, the temporary restraining order. Future articles will address preliminary or interlocutory injunctions and permanent injunctions.
A temporary restraining order (“TRO”) is an emergency order that can be issued by either a state or a federal trial level court. It is considered an extraordinary remedy, which means that it is difficult to obtain a TRO even where the facts and the law demonstrate that the party seeking the TRO will be harmed in the absence of a TRO.
How is a TRO Requested?
In general, the party seeking a TRO must file a written TRO Application with the court except where the matter is so urgent that there isn’t time to prepare the written application. The application for the TRO must explain why a TRO is needed, and this explanation must be supported by evidence under oath, which can be either a verified complaint, an affidavit or live testimony under oath. A court cannot issue a TRO without first receiving evidence under oath that supports the need for the TRO.
When is Notice to Opposing Party Required?
In general, the party that will be enjoined by the TRO should be given advance notice of the application for the TRO and an opportunity to explain to the judge why a TRO should not be issued. In very rare circumstances, a TRO can be issued by a judge without notice to the party that is going to be enjoined (“ex parte”), but only where prior notice to the party to be enjoined either is not practical or will potentially result in further harm. A party seeking an ex parte TRO must provide a written explanation to the judge as to the reason prior notice either cannot be provided or will be harmful. An example of a situation in which prior notice might be harmful might be where a TRO has been requested to freeze a bank account and the party to be enjoined is expected to empty the bank account if he has prior notice of the application for the TRO.
The Standard for Granting a TRO is Murky.
The law in Georgia and under the federal court rules is that a TRO is authorized where there is likely to be immediate and irreparable harm if the conduct at issue is not enjoined. The idea is that the TRO will preserve the status quo until there can be a full hearing on the facts and applicable law. In practice, a judge must listen to the facts and the law applicable to the parties’ dispute and determine whether there is going to be irreparable harm to the complaining party if a TRO is not issued. If the judge determines that there is time to schedule a more thorough hearing to consider the issues raised in the TRO application, the judge is likely to either not grant a TRO or grant a TRO only for a very brief period of time, preserving the status quo until a more thorough hearing can be scheduled.
The Expected Harm Must be More Than Monetary.
A TRO is not appropriate where the only harm expected to be incurred is financial. The party seeking the TRO must be able to show that there will be potential damage to reputation, a loss of business or market share that can’t be recovered, a loss of life, or some other damage that cannot be fully compensated with a payment of money damages in the event that a TRO is not granted. Since the courts typically regard a payment of money damages as sufficient to remedy most wrongs, it can be a big hurdle to prove that there will be harm not capable of being remedied by an award of money damages.
The TRO Must be Very Specific.
A TRO must be very specific as to what is prohibited. It must stand alone, stating on its face exactly what conduct is barred without requiring the reader to refer to any other documents.
Who is Covered by a TRO?
A TRO will bind not only the party specifically named on its face, but also agents of the party that is barred by name; attorneys for that party; and anyone else who has been given notice of the order. This means that any other person or entity who is in “active concert or participation” with the enjoined party can also be enjoined simply by being provided with notice of the TRO. Thus, if a company is able to obtain a TRO against a former employee calling on certain customers, and if the company is aware that the former employee has colleagues in his new business, the company can provide the colleagues with a copy of the TRO and thereby prevent the colleagues from calling on those customers.
How is a TRO Dissolved?
Some TROs state on their face when they will expire. If a TRO doesn’t state on its face when it will expire, and if the law of the jurisdiction where the TRO has been issued doesn’t set expiration dates automatically (as is discussed below), then it is safest to assume that a TRO will remain in effect until a judge has entered an order dissolving it.
In general, a party can seek to dissolve or modify a TRO on 48 hours’ notice, or whenever the court determines that less notice is appropriate.
What Kinds of Conduct Can Lead to an Application for a TRO?
The Georgia Trade Secrets Act specifically allows entry of a TRO to prevent or stop threatened or actual misappropriation of trade secrets. In addition, Georgia’s newly enacted laws governing post-employment competition specifically authorize injunctive relief where a former employee is competing; soliciting business from the employer’s customers; soliciting the employer’s employees to leave; or using or disclosing confidential business information. The use of injunctive relief is a primary means used by employers to prevent former employees from taking business away from the employer.
The procedure for obtaining and retaining a TRO can vary depending on whether the TRO has been sought in a Georgia Superior Court or in a United States District Court.
Procedure in a Superior Court in a Georgia County
Georgia has several levels of trial courts, but only a Superior Court judge can enter a TRO. Georgia law specifies that a TRO issued on an ex parte basis must state on its face the date and time that the TRO is issued. The TRO will expire not later than 30 days to the minute after it is entered. The party seeking the TRO must request a court hearing to justify the TRO during those 30 days if he/she wishes to keep the TRO in effect.
Typically, a TRO will be considered only after the party to be enjoined has had a day (maybe longer) to prepare for a hearing. At the hearing, the judge will consider the facts that are known at that time along with the applicable law before deciding whether to grant a TRO. The judge has great discretion in how to conduct the hearing and can allow live testimony or can rely on the affidavits that have been filed by the parties in determining the facts.
If a TRO has been granted after notice to the party to be enjoined and a hearing as to the merits of the TRO, the TRO can remain in effect as long as the judge wishes to specify in the order. It is not unusual for a TRO that has been issued following a hearing with all counsel present to state on its face that it will remain in effect until further order of the court. In effect, such an order will keep the TRO in place until either the defendant returns to court on a motion to reconsider the TRO or the lawsuit is otherwise resolved.
The court can (but need not) require the party seeking the TRO to post a bond in connection with the issuance of the TRO. The party opposing the TRO generally must request the bond, as judges typically do not require a bond that has not been requested. The reason for a bond is that sometimes an enjoined party will be financially harmed by complying with what will later turn out to be a poorly considered TRO. The bond should be set in an amount that, if paid to the enjoined party, will adequately compensate the enjoined party for being the victim of a wrongfully issued TRO.
Procedure in a United States District Court
A primary distinction between the federal and state rules is that a TRO issued by a federal court can only last a maximum of 30 days even where the enjoined party has had notice and an opportunity to be heard in opposition to the TRO.
Where a federal judge has entered an ex parte TRO, the TRO must specify on its face (1) specifically what conduct is prohibited; (2) when the TRO will expire; (3) the nature of the injury alleged and the reason it is expected to result in irreparable harm; and (4) the reason the TRO has been issued without notice to the opposing party. An ex parte TRO entered by a federal court can last a maximum of 10 days. The judge can extend the duration of the TRO for good cause or by agreement of counsel, but the court record must document the reasons for the extension.
A final difference between the federal and state rules governing issuance of a TRO is that in federal court a bond is mandatory except where the party obtaining the TRO is the federal government. The federal judge has discretion in setting the amount of the bond.
Violation of a TRO is Very Serious.
If a person or entity that has been enjoined by a TRO (or that has been given adequate notice of the TRO) violates the terms of the TRO, the potential penalty is a finding that the person/entity is in contempt of court. Punishments can include being sent to jail until the enjoined party complies with the TRO or assessment of a monetary fine.
The analysis set forth in this article is provided for general understanding only and should not be considered legal advice. Counsel should always be consulted for advice regarding a specific situation.