Monday, November 26, 2012

Preliminary Injunction Order Cannot Be Used As Substantive Evidence at Trial

This one completely baffles me.

Lawyers have to make judgment calls at trial over evidence all the time. Just as important as deciding what to introduce by way of oral testimony or documentary evidence is deciding what to leave out - even if it may be marginally helpful.

In a South Carolina competition dispute, the plaintiffs tried to introduce for a jury the temporary injunction order that the judge entered at the start of the case. And the court agreed to admit it and let the jury review an 11-page order the judge signed after the case was filed.

The case arose out of a business divorce in the PEO industry. PEO stands for professional employer organization, and it is common now for firms to, in effect, outsource their human resources departments. When a shareholder of Allegro failed in his efforts to buy out the majority owner, he left to start his own PEO firm. Lawsuit follows. Injunction entered. Trial ensues.

But why would the grant of an injunction ever be something the jury should see? And how did this happen?

Those questions aren't answered by the Court of Appeals' decision, except for the following:

"It is hard for this court to determine an instance where admission of a preliminary injunction order into the trial record would not be highly prejudicial."


It's not hard to see the prejudice. Injunctions are misunderstood. It takes a lot of effort, at least in this lawyer's experience, to explain to a client what a preliminary injunction is, and how that piece fits into the total litigation puzzle. Clients who prevail on an injunction motion think they've "won the case." Not so. They're surprised they may have to testify again. Injunctions are decided on truncated records. In some courts, the judge may not hear live evidence. And by their very nature, only part of the evidentiary record is developed.

Even if an aggressive plaintiff's lawyer wanted to trumpet its injunction order before a jury (which is something I can't come to terms with), a judge should know better. The court should have known its findings on a temporary injunction order would greatly influence a jury.

This was a basic mistake that never should have happened. And the plaintiff now has to retry its case at great cost. As I tell my clients, always expect the unexpected in competition disputes.


Court: Court of Appeals of South Carolina
Opinion Date: 7/11/12
Citation: Allegro, Inc. v. Scully, 2012 S.C. App. LEXIS 334 (S.C. Ct. App. July 11, 2012)
Favors: Employee
Law: South Carolina

No comments:

Post a Comment