A preliminary injunction is a powerful tool in commercial litigation. It allows a court to intervene before a case is fully decided and take actions to, for example, preserve the status quo of a business relationship while litigation is pending. Given the significant consequences to a business that a dispute can cause, waiting until the end of litigation can result in damage already being done.

For cases in federal court, a party seeking a preliminary injunction generally must establish the following: (a) irreparable harm; (b) either (i) likelihood of success on the merits or (ii) sufficiently serious questions going to the merits to make them a fair ground for litigation, and (c) demonstrate that the balance of hardships  tips decidedly toward the party requesting the preliminary relief. See Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979).

To establish “irreparable harm,” courts consistently hold that monetary damages to a business are insufficient. However, things such as loss of goodwill, loss of customer relationships, destruction of a developing business model, or loss of market exclusivity can constitute irreparable harm because those injuries are difficult, if not impossible, to quantify or calculate.

When examining the balance of hardships, courts frequently consider whether denying the injunction would effectively destroy one side’s business before trial, where granting temporary relief would merely preserve the status quo until the merits are decided.

If irreparable harm, balance of equities, and likelihood of success on the merits (or serious qualities) can be established, preliminary injunctions can be extraordinary remedies for businesses. They have the power to prevent irreversible commercial harm before the litigation even reaches trial. If you are a business or an individual that is suffering or about to suffer irreparable harm due to the actions of others, reach out to Porter Thomas Grabell & Baumwoll P.C. for a consultation.