As non-compete and trade secret lawyers, a major part of our practice revolves around preliminary injunctions. In most cases where plaintiffs allege the breach of a non-compete agreement or the theft of trade secrets, a motion seeking an injunction is sure to follow. In these types of cases, Plaintiffs will proceed in one of two fashions: (1) They immediately will seek an emergency injunction, referred to as a temporary restraining order or (2) They will seek a preliminary injunction.
When plaintiffs seek a temporary restraining order (“TRO”), they are seeking an emergency preliminary injunction. In essence, plaintiffs seeking a TRO take the position that the damages are so immediate and catastrophic that any delay – even a delay of a few weeks or months before holding a preliminary injunction hearing – could result in irreparable harm. In some states, including Florida, courts can issue TRO’s on an ex parte basis, meaning without any notice to the defendant. An ex parte injunction, however, should only be issued in very limited circumstances. Specifically, Florida Rule of Civil Procedure 1.610(a) provides that an injunction can be granted without notice to the adverse party only where: (1) the movant presents specific facts showing immediate and irreparable harm (2) the movant’s attorney certifies in writing any efforts to give notice to the adverse party and the reasons why notice should not be required.
Where the plaintiff seeks a preliminary injunction – as opposed to a TRO – the process is at least a bit longer and usually more orderly. In this context, the plaintiff will file a motion seeking a preliminary injunction. At the very least, the defendant will have the opportunity to respond to that motion and will be given notice of any hearing. But even in the preliminary injunction context, defendants need to act quickly to ensure their rights are protected.
Consider this basic fact: Once the defendant has been served with the complaint and the summons, the court has jurisdiction. From that moment forward, the court can issue an injunction, whether a TRO or a preliminary injunction. In Florida, I have seen sweeping injunctions entered in non-compete and trade secrets cases. In some cases, the injunction prohibited the defendants from doing business with hundreds of customers in a particular industry. In other cases, I have seen defendants literally shut down— enjoined from doing any business whatsoever, based on the notion that their entire business was built on misappropriated trade secrets. The upshot of this is obvious: In any case where the plaintiff indicates its intention to seek injunctive relief, defendants must realize they are in perilous territory and take immediate action to protect their interest. The first step is hiring counsel who have an appropriate background in commercial litigation, but also who have specific experience defending against injunctions. At that point, the following considerations should be weighed:
- Record Activity: As soon as possible, the defendants must file something in the docket. This is particularly critical in state court, where – in my view – the threat of an improvidently granted ex parte injunction is higher. If in state court, file at least a notice of appearance and designation of email addresses for electronic service. Also, in many of these cases, there is absolutely no basis for filing a motion to dismiss. Instead, defendants should simply answer. Preparing an answer and affirmative defense takes much less time than briefing an opposition to a motion for an injunction. As such, it makes sense to immediately file an answer. This may seem like a strange consideration but, from my experience in state court, I believe it is imperative to immediately signal to the court that the claims will be aggressively contested.
- Remove Immediately: If there is diversity, defendants immediately should remove the case to federal court. Filing of a notice of removal moves the case to federal court and immediately divests the state court of jurisdiction. Ideally, a defendant can remove before an injunction is issued. But defendants still have time to remove after an injunction is issued if it is issued early in the case. If I stepped into a case after an ex parte TRO was entered and saw there was a basis for removal, I would immediately remove the case to federal court and move to vacate the injunction. Bottom line: Florida courts issue lots of injunctions, particularly in non-compete and trade secret cases. State courts issue even more injunctions than federal courts. If there is diversity, remove immediately.
- TRO Context: If in state court and the plaintiff seeks a TRO, anything can happen. There is no standard guidance: Just be vigilant. Courts will frequently issue ex parte injunctions. In federal court, I find that ex parte injunctions are far less common. I have seen a number of TRO situations in federal court where the court sets a hearing and gives the parties two days’ notice. This is short notice, but it still gives defendants enough time to prepare an effective defense. It is important to understand that the strategy for defending against a TRO is somewhat different than the strategy for defending against a preliminary injunction. In dealing with a TRO, you have limited time to prepare—often just 48 hours. In this context, defendants must pick their issues. Focusing on perhaps 2 or 3 issues that are dispositive is the best way to use this limited block of time. Get one or two declarations from friendly witnesses, whether parties or third parties. With respect to briefing, brief the 2 or 3 biggest issues, the most glaring weaknesses in the plaintiff’s case.
- Preliminary Injunction Context: This is something of a different ballgame. If done correctly – in either state or federal court – the process should be far more orderly. The plaintiff files a motion seeking a preliminary injunction. The defendant responds in the time frame permitted by the applicable rules. The court then confers with both sides to schedule a hearing. In many cases, particularly in federal court, the court will give the parties several weeks – if not a few months – to prepare for the hearing. This allows both sides to engage in the discovery process and obtain evidence in support of their respective positions. This evidence, then, can be used at the preliminary injunction hearing. A note of caution: Understand the local customs. Even in federal court, I have seen cases where judges have held non-evidentiary hearings on preliminary injunctions. This means they do not allow evidence to be proffered, witness testimony, cross examination, etc. In my view, this is procedurally incorrect. But it can happen. So, if there is any confusion over whether or not the hearing will be a full-blown evidentiary one, the defendant must file papers telling the court that the hearing needs to be evidentiary. Turning to the issue of briefing, the briefings should be comprehensive. Unlike in the TRO context, there is time. Defendants should aggressively build the record, preferably with deposition testimony and documentary discovery. All of this should be used to comprehensively brief the issues and pick apart the plaintiff’s case. Defendants should also subpoena third party witnesses or prevail upon such witnesses to attend voluntarily. At the conclusion of the hearing, defendants should press for both sides to submit proposed findings of fact and conclusions of law.
Jonathan Pollard is a competition lawyer based in Fort Lauderdale, Florida. His office can be reached at 954-332-2380.