What is Injunctive Relief?
Injunctive relief, also known as an injunction, is a remedy which restrains a party from doing certain acts or requires a party to act in a certain way. It is generally only available when there is no other remedy at law and irreparable harm will result if the relief is not granted.
The purpose of this form of relief is to prevent future wrong. Such orders, when issued before a judgement, are known as preliminary injunctions that can be punished as contempt if not obeyed.
Injunctive relief is only granted in extreme circumstances. The party seeking a preliminary injunctive relief must demonstrate:
- Irreparable injury in the absence of such an order;
- That the threatened injury to the moving party outweighs the harm to the opposing party resulting from the order;
- That the injunction is not adverse to the public interest; and
- That the moving party has a substantial likelihood of success on the merits
Injunctive relief is a court order delivered in a civil trial or suit. This court order stops the defendant from pursuing a certain activity. This can include constructing a new building, pursuing a business venture, or making transactions that are harmful to the plaintiff. A person who fails to comply with an injunction may find themselves in contempt of court, which can lead to fines or even jail time in the worst case.
How Injunctive Relief Works
Injunctive relief usually takes one of three forms:
- Temporary Restraining Order (TRO),
- Preliminary Injunction, and
- Permanent Injunction
Each form of injunctive relief has a different level of the time commitment involved. Preventive injunctions work to address an ongoing legal wrong or prevent injury toward the plaintiff. Such injunctions can include one against a factory for polluting drinking water for locals.
A TRO is often the first line of defense used by a party seeking injunctive relief because it can be granted and implemented quickly. They are used to either preserve a status quo.
The preliminary injunction comes after the dust of the TRO has settled and the parties have a chance to hash out before the court the circumstances that lead them to this particular point. A permanent injunction is as it sounds – permanent.
Examples of Injunctive Relief
Some common examples of injunctive relief are as follows:
Infringement of Intellectual Property
The infringement of intellectual property can be incredibly costly to the owner of the property. Thus, TROs are a great tool for the patent owner to shut down the competitor who is selling his product or for the trademark owner to shut down an enterprise making and selling counterfeit purses with the owner’s trademark on them.
Examples of intellectual property infringement would be selling bootleg merchandise that belongs to a film corporation, plagiarizing another person’s work, or using music without receiving permission from the composer.
Theft of Clients
If a former employee starts poaching your best clients, what do you do? The answer to that question depends, particularly on whether the employee had an enforceable noncompete agreement (NCA) and if they are in fact poaching in areas they should not be.
Criteria can include the distance in which a former employee is engaging with clients, and a designated time period by which the person cannot engage in this industry. A TRO is the fastest way to get an undesirable action to stop.
Minority Shareholders Freezeout
In closely held, small business corporations with private stockholders, it is not uncommon for the majority (usually family) stockholders to “freeze out” the minority (usually non-family) stockholder. This includes termination of that minority stockholder’s position in the company.
In this case, a TRO is an excellent vehicle for stopping the shareholders from freezing the minority shareholder out – and in some cases, getting them back into the job they were fired from. The irreparable harm here usually occurs because the minority stockholder is terminated from employment and thus unable to earn a living.
Breaches of Fiduciary Duty
Injunctions are particularly useful in situations where a fiduciary of a company starts going down a path that is destructive to the business and thus, the beneficiaries. For example, consider if one partner begins to sell massive amounts of company assets without approval or agreement from the other partner. A timely injunction can put the brakes on the bleeding enough to allow the parties to figure out what is going on.
To prove this breach, the plaintiff must prove that the defendant is not acting within the best interests of the business. A paper trail can help with this by recording certain transactions.
Breach of Contract
Contracts are serious in the business world. They show a written agreement and designate a state by which to discuss disputes.
A breach of contract can include not paying vendors for their services. Courts usually award money to the innocent party that equates the damages, but an injunction can provide equitable remedies as well, to provide what seems right. If the innocent party asks for specific performance, that would be a form of equitable remedy.
When a business declares bankruptcy, they forfeit their assets to the court to pay off as many debts as possible. Depending on whether they declare Chapter Seven or Chapter Eleven, they decide how much control the court has over their assets and how much they need to pay.
A bankruptcy injunction is called a stay of action and prevents creditors from taking money and assets during the procedure. This gives the plaintiff some breathing room and allows the courts to maintain control. A creditor must petition the court.
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Difference Between Damages and Injunctive Relief
In brief, damages are usually awarded in the form of money, whereas injunctive relief is in the form of a court order to stope someone from doing something. Example, compensatory damages is the amount of money the plaintiff lost where the defendant’s tort was the “legal” cause of the loss. Injunctive relief is a court order prohibiting the defendant from continuing or repeating the tortious behavior.
Read here for more information on damages vs. injunctive relief.
Injunctive Relief Clause
An injunctive relief clause is a component of a contract that specifically orders one party or both parties of the contract to refrain from doing an act that would cause harm to the other party. It is used in cases where there is no remedy for having caused the stated harm by exchanging money or other property of value, and the only way to prevent damage is to stop the stated action.
In today’s legal system injunctive relief is a third type of reparation. It does not involve the exchange of money or other reparations, but just orders that person to stop whatever they are doing.
If you are involved in a civil lawsuit and either you or the other party is seeking injunctive relief, you should contact litigation lawyers to assist you with the matter. Keep in mind that injunctive relief is not always granted by a court. A judge must decide if the action that is subject to injunction truly warrants an injunction.
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