Update (July 2, 2018): Notch another successful prediction of Minnesota Litigator. The Minnesota Supreme Court, as we predicted below, reversed the Minnesota Court of Appeals this past week. Phew! A private party cannot hog-tie and force a trial court to issue an injunction, so-called equitable relief, and it follows that private parties cannot “stipulate and agree” that all of the elements for such relief exist, which would result in just that — forcing trial courts to issue injunctive relief even in cases where, objectively and subjectively, it is inappropriate and unjust.
We put “stipulate and agree” in “scare quotes” to highlight the fundamental tension that runs throughout U.S. contract law jurisprudence.
There is rarely genuine understanding and agreement in most legally binding contracts that most of us enter into every day. It is a legal fiction. Whether it is because the agreement requires a law degree to understand (and a few hours of trained lawyer time) that we don’t have or cannot afford (see, e.g., car rental agreements) or the agreement is “take it or leave it,” non-negotiable (see, e.g., “click-through” agreements on-line), or both, as we expect was the case for Mr. Heath Carter, to suggest that we have stipulated and agreed to every clause is a transparent legal fiction and the only time enforcement is evaluated by a dispassionate and competent arbiter is when such “agreements” are challenged in court. While courts must generally respect and honor the purpose and intent of private agreements, they must not be bound by them all in any just society.
Update (February 7, 2018): When two parties stipulate and agree that breach of a contract will result in irreparable harm, can a court go against that stipulation and find, as a matter of fact, that one party’s breach caused no irreparable harm to the other party? That’s the issue in the case described below, argued yesterday before the Minnesota Supreme Court.
On the one hand, the harm caused by a breach of a covenant not to compete or a breach of the duty to maintain the confidentiality of information is obviously difficult (maybe impossible) to measure. Can’t parties hold down litigation costs up front by locking themselves into an agreement as to this point?
On the other hand, as Martin Chester, counsel for the defendants, argued, giving a stipulation of irreparable harm conclusive effect binds trial courts, which seems antithetical to established law governing courts’ exercise of equitable relief, and it is also antithetical to courts’ long-held view that restrictive covenants are to be enforced narrowly.
Edward Fox, St. Jude’s lawyer, agreed that the stipulation is not conclusive of irreparable harm. But, then, what is it? “Is it an admission, is it a prediction, is it an estoppel?” Justice Lillehaug questioned both Fox and Chester.
Minnesota Litigator prediction: the Minnesota Supreme Court will overrule the decision of the Minnesota Court of Appeals. If a trial court is not bound by an “irreparable damage clause,” a proposition that both sides agree to, the trial court can exercise its discretion to decide whether irreparable damage occurred and St. Jude loses (because this is exactly what the trial court did in St. Jude’s case).