Thursday, December 20, 2012

Non-Compete Suits and TROs - Part 2

Last Saturday, I discussed a difficult procedural issue concerning TROs - appellate rights.

Today, I want to discuss a more practical problem clients face when deciding whether to move for a TRO in a non-compete case: what are the benefits and drawbacks of seeking an immediate restraining order?


I think there are three potential benefits to moving for a TRO, but like anything else, they're subject to some qualification.

First, pursuing a TRO often times leads to an agreed order that may be less than what the client wants, but still gives some measure of relief before an evidentiary hearing on a preliminary injunction motion. Look at it this way: if you don't move for a TRO, you're not getting anything until the injunction hearing - which could be 2 months down the road. And if you take something less than what you're asking for to resolve the motion, you're still getting more than you would without seeking the TRO in the first place.

Second, a TRO motion gives the plaintiff the ability to frame the dispute for a judge right away. My experience is that judges - despite their heavy dockets - remember cases that are before them on TROs and preliminary injunctions. They immediately dive into the merits, which doesn't happen in the vast majority of cases. By seeking a TRO, the plaintiff is able to tell a story and get it right before a judge, who is more likely to remember the case as opposed to those that just sit around or are a regular staple of his or her docket. In a strong case, this can be very beneficial for future disputes or contested motions.

Third, the client often benefits from a TRO motion, even if it's not entirely successful. The lawyer must communicate that TROs are difficult to obtain, and that a loss is really not a huge setback. Even unsuccessful TROs can force an immediate settlement discussion or a concession, and the very pursuit of it may achieve some measure of relief. The defendant, for instance, may prevail and defend the TRO successfully, but decide that - to minimize risk - he or she is going to stop soliciting the accounts protected by the covenant.


Despite these benefits, TROs suffer from some drawbacks, too. Again, I'll stick with three.

First, a loss can embolden a defendant into thinking he or she has a strong defense. The standards for determining a TRO are much different than at final judgment, but if a judge expresses skepticism at a TRO hearing about the covenant's enforceability, then a defendant may feel as if the cost of litigation is justified for achieving a favorable result.

Second, the compressed timeframe in which an attorney must file and present a TRO motion often leads to sloppy or incomplete work. Unless a client is prepared to provide the evidence and testimony required to support a TRO, an attorney could be hamstrung and ill-prepared to demonstrate for the court the immediate need for a TRO. In my experience, these poor evidentiary presentations doom most TRO motions.

Third, the compressed timeframe can be detrimental even if the motion is successful. Some clients are ill-prepared to go to an injunction hearing in 14 days. Since a TRO is temporary, the grant of a motion speeds up the case; the court must conduct a hearing to determine whether to convert the TRO into a preliminary injunction. And if the defense insists on a quick hearing date (that is, it doesn't consent to an extension), the plaintiff must be prepared with its witnesses and supporting evidence. In some cases, this won't be an issue. But for a client that hasn't prepared sufficient affidavits or conducted a strong factual investigation, this short turnaround time could be fatal to the success of an injunction motion.

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