Television news programs often make reference to companies or the government obtaining injunctions against various types of conduct. This article explains what an injunction is and when/how one might be obtained from a court.
Businesses sometimes have a need to stop – enjoin – a person or another business from doing something harmful to the business. Government agencies also often need to stop various types of behavior that are believed to violate laws or agency regulations. In both situations, the party that is trying to stop certain behavior will ask a court to enjoin the behavior.
In the business context, a need for an injunction often occurs when an employee leaves and taking confidential information with him/her, or a former employee attempts 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 obtain an injunction will be the same.
There are three types of injunctive relief: a temporary restraining order, a preliminary or interlocutory injunction, and a permanent injunction. Temporary restraining orders are addressed in a separate article in this series. This article discusses preliminary/interlocutory injunctions and permanent injunctions.
Preliminary Injunction/Interlocutory Injunction
A preliminary or interlocutory injunction is typically an interim injunction. It is typically issued after an evidentiary hearing a few weeks after an initial, temporary restraining order (“TRO”) has been issued. Although Georgia’s courts typically refer to such an injunction as an “interlocutory” injunction and federal court rules use the term “preliminary” injunction, in practice these injunctions are the same.
If a TRO has already been issued in the case, the party that has obtained the TRO (the “Petitioner”) will typically try to schedule a court hearing on a preliminary or interlocutory injunction for a date prior to the TRO’s expiration, in the hope that there will be a seamless transition between a TRO and a preliminary or interlocutory injunction.
Proof of the Need for the Interlocutory/Preliminary Injunction Must be Provided Under Oath
Although courts will often issue a TRO on the basis of one or two affidavits and only a sketchy understanding of the facts of a dispute, courts generally will conduct a more thorough evidentiary hearing before issuing a preliminary or interlocutory injunction. All parties to the dispute must have prior notice of the hearing and an opportunity to be heard before the injunction can issue.
In federal court, the evidentiary hearing will be conducted with live witnesses testifying under oath. Superior Court judges in Georgia have more discretion in this matter, with some opting to require live testimony and others sometimes accepting affidavit (written) testimony instead.
Criteria for Interlocutory/Preliminary Injunction
The Georgia and federal court rules set forth four criteria that must be satisfied before an interlocutory or preliminary injunction can be issued: likelihood of success on the merits; potential for irreparable harm in the absence of an injunction; harm to the plaintiff if the injunction is not granted versus harm to the defendant if the injunction is granted; and public policy considerations. Each of these criteria must be satisfied.
1. Likelihood of Success on the Merits: The Petitioner must show the judge that the facts and the law demonstrate that he is likely to win at trial. This means that the Petitioner needs to have evidence and legal analysis ready to present to the judge. For example, if the Petitioner is trying to enjoin use of information that he contends is a trade secret, he will need to be able to show the judge both that the information meets the definition of a trade secret under Georgia law and that the responding party either has already stolen and disclosed the trade secret or has somehow given an indication that he intends to do so. The respondent should be prepared to demonstrate why the information does not meet the definition of a trade secret under Georgia law, and/or demonstrate that the trade secret is not in any danger of being stolen or disclosed.
2. Potential for Irreparable Harm if no Injunction: The Petitioner must show that the harm is imminent and that the nature of the expected harm is such that an award of money damages against the Respondent at a later date will not make the Petitioner whole. The biggest obstacle to satisfying this requirement is that courts often conclude that money damages are sufficient to make a Petitioner whole. Examples of money damages not being sufficient are where market share will be permanently lost absent an injunction; where a trade secret will become known to competitors or the general public absent an injunction; or where a person may be permanently physically injured absent an injunction. Where business may be temporarily lost but the losses can be remedied with payment of money damages, this criterion likely will not be satisfied.
3. Harm to Petitioner if Injunction is Not Granted Versus Harm to Respondent if Injunction is Granted: While there may be potential for harm to the Petitioner in the absence of an injunction, there is often potential for harm to the Respondent in the event that the injunction is granted. For example, the Respondent could be forced to abandon certain types of business activities and lose income as a result. The judge must balance these competing risks and, in effect, decide which party faces more risk.
4. Public Policy Considerations: This requirement is the hardest to describe because its meaning depends on the facts of each case. In effect, the court must consider whether the injunction, if granted, will violate the public policy of the state or county where the injunction is sought. For example, a court may be asked to issue an injunction that enforces obligations that are clearly spelled out in a written contract, where the court concludes that the contract itself violates Georgia’s public policy. The court would be unlikely to enforce clearly worded language where doing so would result in a violation of public policy. In other situations, there may be no significant public policy considerations applicable to the case. When that happens, the court will likely base its decision on the other three criteria discussed above.
Duration of Interlocutory/Preliminary Injunction
The interlocutory or preliminary injunction should state on its face when it will expire. Generally it will remain in effect until the court considers whether to issue a permanent injunction.
How Must the Preliminary/Interlocutory Injunction be Phrased?
The preliminary/interlocutory injunction must state on its face specifically what conduct is enjoined. It must stand alone, with no need for anyone to refer to any other document to determine what is prohibited. In federal court, the injunction must also state on its face the reason the injunction has been issued, generally with reference to the four criteria discussed above.
Is a Bond Required?
As with a TRO, a bond must be posted in connection with issuance of a preliminary injunction by a federal court. Georgia’s Superior Court judges have the option of requiring a bond in connection with issuance of an interlocutory injunction.
Who is Bound by an Injunction?
A preliminary or interlocutory injunction will bind not only the specifically named Respondent, but also agents of the Respondent; attorneys for the Respondent; 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 injunction. Thus, if a company is able to obtain an injunction 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 injunction and thereby prevent the colleagues from calling on those customers.
Facts Determined by the Court at the Hearing on the Preliminary/Interlocutory Injunction Can Be Deemed Established for Purposes of the Trial on the Merits of the Case.
One of the reasons that hearings on preliminary/interlocutory injunctions can be high stakes for all parties is that the court can make determinations of fact during that hearing that will be binding on the parties for the rest of the case. When the court decides to do this, the court will notify all parties either before or during the hearing that it intends to decide certain facts of the case on the basis of evidence to be presented during the hearing. Even if the court doesn’t follow this procedure, all of the evidence that is presented at the hearing on the preliminary/interlocutory injunction becomes a part of the evidence before the court and this evidence does not have to be presented a second time at the trial of the case. Thus, even though a hearing on a preliminary/interlocutory injunction may take place very early in the case, before a lot of the evidence has been developed, the court may choose to rely on the evidence presented at that hearing when the court makes decisions later in the case.
At the end of the case, after the trial, the judge can be asked to enter a permanent injunction. This decision must be made by the judge even if the jury decides other issues in the case. When deciding whether to issue a permanent injunction, the judge must consider the evidence presented at trial, the applicable law, and any facts that have been determined at any earlier point in the case. The permanent injunction will state whether it will remain in place forever, or what conditions must be met for the injunction to expire. The permanent injunction must be specific as to what is prohibited, so that it will not be necessary for anyone to refer to any other document to know what is forbidden.
Georgia: Georgia’s courts have held that a permanent injunction issued under Georgia law can apply to conduct in other states where the injunction so states. For example, in a recent case the Georgia Supreme Court approved a permanent injunction that prohibited enforcement of certain post-employment restrictive covenants not only in Georgia but also in Florida because the restrictions were not enforceable under Georgia law.
Federal: The U.S. Court of Appeals for the 11th Circuit (covering cases originating in Georgia, Alabama and Florida) has ruled that an injunction only applies within the federal court district in which it is issued, and that it is up to courts in other jurisdictions to determine whether to also enjoin the Respondent. Thus, a permanent injunction issued by a judge of the Northern District of Georgia (covering the Metro Atlanta area) would only prohibit the specified activities within the geographic boundaries of the Northern District of Georgia. To have the injunction apply elsewhere in Georgia, or elsewhere in the United States, the petitioner would have to apply to a federal court in the other jurisdictions where the respondent may be acting.
Violation of an Injunction is Very Serious.
If a person or entity that has been enjoined (or that has been given adequate notice of the injunction) violates the injunction, 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 injunction 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.