Friday, December 21, 2012

Non-Compete Suits and TROs - Part 3

In the last installment of my series on temporary restraining orders (TROs), I will discuss some practical problems and considerations for parties who argue these motions in court.

I will address this both from the perspective of the moving party (usually the employer) and the responding party (usually the employee). One caveat first. The first, most important consideration is to understand local practice.

From my perspective, it is harder to obtain a TRO in federal court than it is in state court. But practice varies widely among jurisdictions - and even within jurisdictions among judges. Preliminarily, any attorney needs to understand what it is judges want and expect at a TRO hearing.

Practical Problems and Considerations - The Moving Party's Perspective

Start with the premise that judges aren't inclined to grant many TROs. By definition, the relief is extraordinary. It will cause problems with the court's docket. And it may require the court to do a lot of work in a short amount of time.

So any party moving for a TRO better tie up every single loose end. In my experience, TROs are often poorly put together, likely because of the haste in getting something on file. But taking shortcuts and failing to cover the necessary areas is the surest (and easiest) way for a court to deny the motion.

I have come up with five key considerations that a moving party must keep in mind, irrespective of the particular merits of any case.

(1) Describe the immediate harm. This sounds obvious. But many TROs fail to address this. In a non-compete case, for instance, a moving party should attempt to show that customer solicitation efforts are occurring as of the filing (not that they once occurred) and that valuable customer relationships are at risk. If data has been taken or compromised, the moving party must show what type of harm could occur absent a court order. Conclusions are not enough. Specificity rules.

(2) Identify compelling facts in affidavits. TROs that overemphasize conclusions and speculation are destined to fail. Sworn declarations should identify customers solicited, orders lost, data taken, or other specific acts of unfair competition. If a moving party doesn't have at least some hard evidence to point to, then the motion won't carry the day.

(3) Keep it short. A party seeking a TRO will have a judge's attention - but not for very long. A TRO brief does not have to cite every case or come in just at the word limit (it's a limit, not a goal). A concise brief highlighting sworn declaration testimony, touching upon the key TRO elements, is much better than a sprawling 200-page filing that a judge will only glance at and quickly discount.

(4) Tell a story. This is my advice for just about any motion or brief. But on a TRO, you have a narrow window to make a quick, powerful impression. A strong introduction demonstrating ongoing harm and the need for an immediate order is critical. Even more important is a story describing why the non-compete is reasonable and enforceable. Because a court likely won't be considering anything but a movant's submission, it is important not to get bogged down into unnecessary details.

(5) Be prepared with a bond. It is essential for a moving party to know that it may have to post a bond to get a restraining order. Federal Rule 65(c) discusses the requirement of posting security. Courts must consider the amount of a bond when granting any type of preliminary injunction or TRO. If the court is inclined to grant the motion, it may ask counsel for the moving party what its position is on security. It is not enough simply to ask for a waiver. Counsel must be prepared to acknowledge some amount has to be posted and give a rationale for what that amount is.

Practical Problems and Considerations - The Responding Party's Perspective

A party responding to a TRO is both in the driver's seat and somewhat stuck. On the one hand, most TRO motions are denied - so that's naturally a plus-fact. However, the responding party often is caught flat-footed and has little opportunity to tell his or her side of the story.

Practical tips? There are many. Here's five:

(1) Identify procedural problems. As TROs are almost always slapped together, it is inevitable that a moving party will make mistakes. It's incumbent upon a defendant to know the TRO rules and standards, and describe for the court why the plaintiff failed to meet its burden. For instance, in Illinois state courts, our pleading rules require a moving party to show specific facts concerning irreparable injury. Conclusions won't suffice. I have defeated TROs when plaintiffs make undeveloped or conclusory arguments concerning this critical TRO element.

(2) Focus on what is being requested. Often times, a court may agree that a TRO - in comcept - is warranted. But the plaintiff may overplay its hand and ask for too much relief. For instance, a draft order submitted may sweep too broadly or not describe with specificity the conduct to be enjoined. A responding party should always seek to narrow the TRO the plaintiff seeks, or describe why the scope of the relief is too broad or vague to be enforced. This often dooms a TRO seeking some relief concerning use of trade secrets.

(3) Point to delay, lack of an emergency. Courts will require a moving party to act quickly if it wants a TRO. But sometimes a plaintiff will wait too long; even a week's delay in acting can spell the end of a TRO motion. A defendant is well-advised to point to evidentiary holes or facts demonstrating that the plaintiff was aware of the challenged conduct and sat on its rights for an unreasonable period of time.

(4) Submit a concise response - if you can. Difficult as it may seem, a responding party should try to submit a response brief, with or without affidavits. Again, brevity is very important because a judge won't have time to review a lengthy submission. And, also, it may give the court a better idea of the defendant's story before any hearing. In federal court, it is common for courts to give the responding party a few days to submit a brief before conducting any sort of a hearing. In state court, this is less common.

(5) Consider an agreed order. It's never fun conceding. But a defendant can do well by averting a TRO hearing altogether. It can propose an agreed injunction order that gives a plaintiff some relief, but not all of what it's asking for. A plaintiff has a natural incentive to consider this, given the reluctance with which courts grant TROs. Common ways to resolve a TRO in a non-compete case include an agreement not to solicit a narrow (as opposed to broad) group of customers, to return documents or information, and not to work in a defined role at a competitor pending an injunction hearing.

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