In order to maintain a specified status quo while the plaintiff’s lawsuit is pending in New York State court, the plaintiff may obtain a preliminary injunction or a temporary restraining order (a “TRO”). An injunction usually includes a direction not to do a particular act.
For example, a preliminary injunction may enjoin and restrain the defendant or defendants, while the plaintiff’s lawsuit is pending, from transferring, selling or otherwise disposing of the assets of a specified company other than in the ordinary and usual course of that company’s business.
A prelimnary injunction keeps the status quo while an action is going on. A temporary restraining order keeps the status quo while a motion for a preliminary injunction is pending.
N.Y. C.P.L.R. 6301 authorizes a preliminary injunction in either of two circumstances:
- “where it appears that the defendant threatens or is about to do, or is doing or procuring or suffering to be done, an act in violation of the plaintiff’s rights respecting the subject of the action, and tending to render the judgment ineffectual”; or
- “in any action where the plaintiff has demanded and would be entitled to a judgment restraining the defendant from the commission or continuance of an act, which, if committed or continued during the pendency of the action, would produce injury to the plaintiff.”
A preliminary injunction may be granted, upon notice to the defendant, where the moving party establishes (1) a likelihood of ultimate success on the merits, (2) that irreparable injury will occur absent a preliminary injunction, and (3) a balancing of the equities in favor of the moving party. See N.Y. C.P.L.R. 6302.
A temporary restraining order may be granted, without notice to the defendant, pending a hearing for a preliminary injunction “where it appears that immediate and irreparable injury, loss or damage will result unless the defendant is restrained before the hearing can be had.” N.Y. C.P.L.R. 6301.
Under a rule which took effect October 1, 2006, a temporary restraining order is available only where there is “an affirmation demonstrating there will be significant prejudice to the party seeking the restraining order by the giving of notice.” 22 N.Y.C.R.R. § 202.7(f). If there is no showing of significant prejudice, then the affirmation must demonstrate “that a good faith effort has been made to notify the party against whom the temporary restraining order is sought of the time, date and place that the application will be made in a manner sufficient to permit the party an opportunity to appear in response to the application.” 22 N.Y.C.R.R. § 202.7(f).
Similarly, in the Commercial Division of the New York State Supreme Court, “Unless the moving party can demonstrate that there will be significant prejudice by reason of giving notice, a temporary restraining order will not be issued.” 22 N.Y.C.R.R. § 202.70(g) (N.Y. Sup. Ct. Comm. Div. R. 20). If the party applying for the TRO cannot demonstrate significant prejudice, then “[t]he applicant must give notice to the opposing parties sufficient to permit them an opportunity to appear and contest the application.” 22 N.Y.C.R.R. § 202.70(g) (N.Y. Sup. Ct. Comm. Div. R. 20).
If your company wants to bring, or needs a lawyer to defend it in, business litigation and you are located in the New York City area, call Attorney David S. Rich at (212) 209-3972.