Preliminary injunctions how to apply the 4 factor test
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Preliminary Injunctions – How to apply the 4-factor test. Courts consider 4 factors: Likelihood of success on the merits Irreparable injury to P in the absence of preliminary relief Balance of the hardships/equities Public interest Lower courts generally take two approaches:

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Preliminary Injunctions – How to apply the 4-factor test

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Preliminary Injunctions – How to apply the 4-factor test

  • Courts consider 4 factors:

    • Likelihood of success on the merits

    • Irreparable injury to P in the absence of preliminary relief

    • Balance of the hardships/equities

    • Public interest

  • Lower courts generally take two approaches:

    • Require P to prevail on all 4 factors, or

    • Apply a sliding scale approach re P’s harm/likelihood of success so that a large showing on one could lessen the showing on the other

  • After Winter, courts appear to be trending toward either the strict application of the 4-factors or a less plaintiff-friendly balancing.

The nature of “irreparable” harm at the preliminary injunction stage:

  • All versions of the test require P to have irreparable harm for the preliminary injunction to issue. What does irreparable harm mean in this context?

  • Timing of Required Harm: Injury must necessarily occur before there is time for a trial on the merits

  • Nature of Harm: at this stage, small incremental harms aren’t good enough and it really can’t seem as if money is adequate compensation. Courts want to see significant harms for which damages are truly inadequate.

    • What if the Winter P’s could show that a specific marine species was likely to die out or nearly so within a year because they couldn’t reach a traditional mating habitat as a likely result of Navy’s actions. Trial can’t be held for 18 months.

    • How is that harm different than the one P’s actually (apparently) showed in Winter?

  • La Coliseum v. NFL (p. 447) – why isn’t loss of the Raiders irreparable injury to the Coliseum at the preliminary injunction stage when it clearly is at the permanent injunction stage?

  • Preliminary injunctions and the status quo

    • Conventional Wisdom:

      • Preliminary injunctions are only granted to preserve the status quo (aka last peaceable contested status quo).

    • Why?

    What is the “status quo” – just how manipulable is this concept?

    In Winter?

    In OCentro?

    What does the “status quo” concept add to courts’ use of the four factor balancing test – i.e., when is it most likely to make a difference?

    Protecting the Defendant – the risk of error with preliminary relief

    • 2 kinds of risk of error re preliminary injunction:

      • Risk that preliminary injunction will be erroneously denied – hurts P

        • P can sue for damages for harm done while D was not enjoined (i.e., during the period w/out preliminary relief and until permanent injunction issues

      • Risk that preliminary injunction will be erroneously granted – hurts D

        • D has no damages remedy for the harm done while the preliminary injunction was wrongfully in place – P hasn’t done anything wrong so D has no cause of action

      • How can we protect D from harm of being wrongfully enjoined?

    The Bond Requirement & Preliminary Relief

    • Because of the possibility that preliminary injunction or TRO will be erroneously issued, jurisdictions have BOND requirements:

      • FRCP 65(c)– “The court may issue a preliminary injunction or TRO only if the movant gives security in an amount the court considers proper to pay costs and damages sustained by any party found to have been wrongfully enjoined or restrained. The US, its officers, and its agencies are not required to give security.”

      • MRCP 92.02(d)– “No injunction or restraining order shall issue, unless on final judgment or hearing, …until the plaintiff … shall have executed a bond with sufficient surety or sureties to the other party, in such sum as the court may deem sufficient to secure … all damages that may be occasioned by such injunction or restraining order …, conditioned that the plaintiff will abide by the decision that shall be made thereon and pay all sums of money, damages and costs that shall be adjudged if the injunction or temporary restraining order shall be dissolved.”

    Is Setting the bond discretionary or mandatory – what courts actually do:

    • Federal – discretionary (despite seemingly mandatory language)

      • In what circumstances might a court waive the bond requirement?

      • There is such a thing as inadvertent waiver – D is supposed to raise the bond issue. If D doesn’t and the court fails to require a bond then provisional relief is binding even if there is no bond.

    • Missouri

      • Bond is a jurisdictional prerequisite – P’s burden to make sure is set

      • Preliminary injunction/TRO are void if bond is not posted

      • BUT courts can set bond at a nominal amount

        • Same reasons as “waiver” above for setting bond at nominal amount

    When is D “wrongfully enjoined” so as to trigger P’s liability under the bond?

    • Conventional Wisdom:

      • When D is subject to a preliminary injunction but then prevails on the merits at trial, she has been wrongfully enjoined.

        • Note FRCP & MRCP essentially get you to the same result here.

        • Missouri courts hold that dissolution of injunctions usually amounts to a determination that the injunction was wrongfully obtained.

    • What if D (as in Coyne-Delany) prevails on the merits at trial due to a change in the substantive law while the preliminary injunction was in place – should courts allow D to recover on the bond?

    “Wrongfully Enjoined” cont’d

    • In a trademark infringement case the court issues a preliminary injunction enjoining D from selling his product in 30 states. At trial, the court determines that infringement occurred in only 3 states and narrows the injunction. Has defendant been wrongfully enjoined?

      • Yes – this is a classic case of D being wrongfully enjoined in at least 27 states.

    • P instigates a lawsuit and obtains a preliminary injunction. The lawsuit is later dismissed with prejudice due to P’s total failure to prosecute and the injunction is dissolved. Has defendant been wrongfully enjoined?

    • P files lawsuit and obtains preliminary injunction. The lawsuit is later dismissed because P & D have settled and agree to ask the court to dissolve the injunction. Has D been wrongfully enjoined?

    If a preliminary injunction is wrongfully issued, can a court nevertheless refuse to enforce a bond that has already been set?

    • Rarely. There must be a very good reason for the court to refuse to enforce a bond once it has already been set.

      • Why? If a court can refuse to set a bond (federal) or set it at a nominal amount (Missouri) – why can’t it refuse to enforce it?

    • For what reason can a court refuse to enforce a bond?

      • Change in the substantive law (much like in Coyne-Delany)

      • D’s failure to mitigate damages

        • A court should not refuse to enforce the bond because P acted in good faith when bringing the lawsuit – bond is designed to protect D against judicial error regardless of P’s lack of malice

    Does the bond amount limit P’s liability for the wrongfully issued injunction?

    • General Rule – the bond amount is the limit of P’s liability

      • Why? Bond is a compromise between P&D’s interests -- alleviates D’s harm from risk of error but also allows P to know ahead of time what liability is.

    • BUT:

      • Some other source of law may provide independent liability for P aside from the bond

        • E.g., malicious prosecution

      • Some statutes specifically provide greater recovery than the bond amount

    What damages can D recover on the bond?

    • D can recover only those actual losses stemming from the wrongful granting of the preliminary injunction/TRO.

      • Can’t recover damages caused by the litigation generally

    • What are the kinds of damages caused by the wrongful granting of provisional relief that D can recover?

      • e.g.,lost profits if operation of business wrongfully enjoined

      • e.g., storage costs of construction equipment during period construction project enjoined

      • e.g., maybe atty’s fees related to defending against, dissolving the temporary injunction or setting the bond amount (depending upon the jurisdiction)

        • recover as damages (not as fees)

        • unlikely to recover any attorneys fees in federal court

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