A trio of federal district court decisions issued last month in the district of Minnesota should remind Minnesota civil litigators of the high bar required to obtain a temporary restraining order or a preliminary injunction.
Denial of a party’s motion for an injunction is not generally noteworthy because an injunction “is an extraordinary remedy never awarded as of right” so they’re more often denied than granted. But the Minnesota federal district court’s reasoning in these recent cases highlights the potential pitfalls of moving for an injunction without strong legal arguments, backed by a solid evidentiary record.
Articulate the Irreparable Harm. Parties normally offer a litany of damages they fear will ensue if equitable relief is denied, but it is important for civil litigants and their lawyers to remember that court rules demand proof that the harm is irreparable and therefore cannot be remedied by the payment of money at some later time. Indeed, the availability of money was one of the primary reasons cited by Judge Montgomery in her recent ruling denying the EEOC’s request for an injunction against Honeywell for alleged employment violations relating to Honeywell’s employee wellness program. EEOC v. Honeywell, 14-cv-04517 (ADM/TNL) (D. Minn. Nov. 6, 2014).
The Honeywell suit alleged that employees were financially penalized if they chose to participate in Honeywell’s health plan without voluntarily submitting to a third party vendor for health testing to determine basic levels of fitness, cholesterol count and tobacco use. EEOC argued that plan participants should not be forced to make their elections for coverage under the current (arguably illegal) regime, but that all participants should be treated equally pending disposition of the case. EEOC was not seeking to enjoin the wellness program as a wholesale operation, only the disparate rate structure that penalized employees who did not agree to testing. Based on these facts, the court found that any harm alleged by the Honeywell employees could be compensated through money damages, and therefore the EEOC had failed to make a sufficient showing of irreparable harm.
Have a Legal Leg to Stand On. All the irreparable harm in the world won’t get a litigant an injunction if his or her legal case is shaky, however. A recent ruling by U.S. District Court Chief Judge Michael J. Davis (D. Minn.) against a plaintiff trying to prevent foreclosure on his home demonstrates that a party must show the likelihood of ultimate success in the case, regardless of how much harm might flow if an injunction fails to issue. See Beeks v. CitiMortgage, Inc., No. 14-cv-4603 (MJD/HB) (D. Minn. Nov. 5, 2014). Plaintiff had previously challenged the foreclosure in federal court. His claims were dismissed, and the Eighth Circuit affirmed dismissal. Plaintiff brought a second action to enjoin being locked out of his home, which he argued (quite credibly) would cause him irreparable harm.
Plaintiff’s claim was that he was legally entitled to the home because he had been the high bidder—indeed, the only bidder—at a foreclosure auction that was scheduled to take place while the first action was pending. The defendant mortgage company pointed to the fact that it elected to postpone the auction while the first action was pending and provided the court with 10 notices of postponement and proof that the notices had been provided to the Plaintiff in compliance with the applicable statute. The court made quick work of Plaintiff’s request for an injunction, finding that his novel argument about being owner of the home because of the postponed auction was not only unlikely to succeed on the merits, but was an issue that should have been litigated in the first action, and therefore barred by the doctrine of res judicata.
Put Your Best Factual Foot Forward. How is someone supposed to show she is going to win at the outset of a lawsuit, before discovery has been conducted? Plaintiffs in a recent trade secret misappropriation case found the hard way that a well-developed factual record must support the likelihood of success on the merits not only for a TRO, but to obtain expedited discovery in support of the subsequent preliminary injunction hearing. See Bay Side Recycling Co., LLC v . SKB Environmental, Inc., No. 14-cv-4550 (SRN/LIB) (D. Minn. Dec. 1, 2014).
Plaintiffs, who operated a scrap-metal recycling business, accused two former employees and their new business entity of misappropriation of trade secrets, usurpation of corporate opportunity, breach of common-law fiduciary duties, and tortious interference with Plaintiff’s contract with its largest client, among other claims. While the background facts and parties’ relationships are sufficiently complicated to accurately summarize here, the upshot of the court’s ruling was that, despite having evidence that at least one of the individual defendants used Plaintiff’s company email to make preparations to compete and form the new business entity, the record was not sufficiently well developed to show that Plaintiffs were likely to succeed on the merits:
“The Court finds that—at this stage of the litigation, and on this record—Plaintiffs have not shown a sufficient likelihood of success against Defendants on any of those claims to justify imposition of the requested injunctive relief. Discovery may produce more support for Plaintiffs’ allegations and, if so, a likelihood of success on the merits. Based on this incomplete record, however, injunctive relief is not justified.”
Judge Nelson also questioned whether the alleged harm to the moving parties was irreparable absent entry of an injunction, and she denied the Plaintiffs’ request for expedited discovery.
Although certain cases require quick action to avoid catastrophic consequences, not every case is ripe for emergency relief. Civil litigants and their counsel would be well-advised to conduct a thorough assessment of claims and a cost-benefit analysis before bringing a generally expensive and rarely granted preliminary injunction motion.
Dawn Van Tassel, owner of Van Tassel Law Firm, represents businesses in commercial disputes and employment-law matters.