New Jersey Lawyer Magazine
One of the most important considerations New Jersey practitioners encounter when seeking injunctive relief is where to file: state (Chancery Division) versus federal (district) court. In non-emergent complex litigation, this issue can be analyzed and researched over time as the complaint and other papers are being drafted. When seeking injunctive relief, however, time is often short and such strategic decisions have to be made quickly and without extensive research or analysis. In making this decision, a few critical factors to keep in mind are:
- The Chancery Division offers judges and law clerks who specialize in handling applications for injunctive relief whereas district court judges preside over varied civil and criminal cases.
- The Chancery Division offers greater predictability with respect to judicial assignments, as the vast majority of vicinages only have one general equity judge.
- The Waste Management decision seemingly lowered the bar for seeking injunctive relief in state court by holding that it was reversible error to deny an application for injunctive relief where the plaintiffs failed to establish a likelihood of success “without consideration of the other [Crowe] factors.”
- Fed. R. Civ. P. 65(c) mandates the posting of security when moving for injunctive relief, while there is no such requirement in state court.
- Immediate appellate review of a preliminary injunction order is available in federal court pursuant to 28 U.S.C. 1292(a), while there is no such right in state court.1
These procedural and statutory distinctions were discussed in detail in the April 2014 issue of New Jersey Lawyer Magazine, in an article titled “Injunction Practice in New Jersey State and Federal Courts.” Therefore, this article will focus on another important factor that guides both the federal and state courts in deciding whether to grant injunctive relief: irreparable harm.
Standards of Irreparable Harm
Federal Court
Irreparable harm has been defined in the District of New Jersey as “potential harm which cannot be redressed by a legal or an equitable remedy following a trial.”2 The harm “must be of a peculiar nature, so that compensation in money cannot atone for it.”3
“Establishing a risk of irreparable harm is not enough. A party seeking a preliminary injunction must make a clear showing of immediate irreparable injury.”4 “Mere speculation as to an injury that will result, in the absence of any facts supporting such a claim, is insufficient to demonstrate irreparable harm.”5
State Court
Just as in federal court, the showing of irreparable harm is an essential element of obtaining injunctive relief under New Jersey law. Indeed, the “object of an interlocutory injunction is to prevent some threatening irreparable mischief which should be averted until opportunity is offered for a full and deliberate investigation of the case.”6 And, as in federal court, harm is generally considered irreparable if it cannot be redressed with monetary damages, which may be inadequate because of the nature of the injury and the right affected.7
If the party opposing an injunction demonstrates the claimed harm will never occur—either by completely denying the allegations of the motion or pointing to another cause of the moving party’s harm—New Jersey courts may deny the request for an injunction.8
Given these rather generic and seemingly similar standards, another avenue of evaluation is to review some of the common factual contexts in which requests for injunctive relief have been made in both forums.
Harm to Trade Secrets and Customer Relationships
The disclosure of trade secrets and the interference with customer relationships have been considered irreparable harm warranting injunctive relief in both federal and state court.
Federal Court
Federal courts faced with requests for injunctive relief “have shown a willingness to issue injunctions to prevent the disclosure of trade secrets.”9 This willingness is based upon the theory that the disclosure of confidential information or trade secrets constitutes irreparable harm.”10
“The loss of good will, the disclosure of confidential and proprietary information, and the interference with customer relationships” form the basis for a finding of irreparable harm in federal court.11 For instance, in Nat’l Reprographics, Inc. v. Strom, the court held that the plaintiff printing business would likely suffer irreparable harm to its business if its primary competitor was permitted to hire one of plaintiff’s high-level employees who participated in the plaintiff’s business decisions for several years, in violation of a noncompetition agreement.12 However, a plaintiff must still make a prima facie showing that the information it seeks to protect is confidential and proprietary. If a plaintiff fails to show the information known to its former employee is “not common knowledge in the industry,” the court will have difficulty enjoining the former employee from using information obtained while working for the claimant.13
State Court
New Jersey courts generally recognize that disclosure of a business’s confidential information, unlawful exploitation of customer relationships, and damage to goodwill constitute irreparable harm.14
In the context of restrictive covenants that are designed to protect these interests, New Jersey courts will presume that irreparable harm ensues from the breach of a restrictive covenant where an employee has learned of business practices and methods of the employer.15 Of course, this requires proof that the information is actually confidential and that the former employee is in the position to exploit the relationships.16
At least one New Jersey Supreme Court case, however, has rejected the imposition of an injunction in this context, holding:
...Most of the plaintiff’s customers are governmental entities, along with prime contractors doing work for them, and most of the work involves public bidding. The industry as a whole is fully aware when public work is available and the determining factor is generally price rather than personal consideration. There appears to be little likelihood that Doyle would be in any position to harm the plaintiff’s relationships with the governmental entities or with prime contractors doing work for them. So far as any incidental private customers of the plaintiff are concerned there is a denial by Doyle of improper solicitation (cf. Blake, supra, 73 Harv. L. Rev. at 653-66) along with a denial of any unfair activities or practices on his part (cf. Corbin, supra § 1394 at 100). These matters may of course be dealt with fully at final hearing together with other issues which are referred to in the pleadings and briefs but which require no discussion or determination at this stage. Cf. Solari, supra, 55 N.J. at 585-586.17
Impairment of Franchise Rights
The impairment of franchise rights has been...
