Stop The Bleeding: Affirmative

Injunctive Relief And Other

Non-traditional Remedies

Arthur M. Kauffman

Peter Silverman

Christina Fugate

Hypothetical

The Dumbo’s Gumbo franchise agreement

• ABC is franchisee; Billy Bob is guarantor; ten years.

• Standard in-term and 3-year post-term non-compete

• Right to conduct a compliance audit.

• Must follow designated menu, franchisor pricing,

and mandatory promotions.

• Franchisor right to place lien.

• No arbitration clause.

Hypothetical Cont.

The $5 menu promotion

• Nationally advertised; franchisee

participation required.

• ABC declines to serve menu or follow

pricing.

• Billy Bob’s Gumbo pops up.

Hypothetical Cont.

Termination and lawsuit

• Dumbo Gumbo terminates agreement; sends

cease and desist; demands audit.

• Billy Bob refuses; empties accounts to avoid

attachment of funds.

• Dumbo Gumbo initiates suit for preliminary

injunction.

What remedies should Dumbo Gumbo pursue?

• Traditional Preliminary Injunction

– Stop the competition

• Mandatory Preliminary Injunction

– Compel compliance with the Franchise

Agreement

What's the Difference?

Traditional Standard

• Substantial likelihood of success on the merits.

• Substantial threat of irreparable harm.

• Balance of harms weighs in favor of moving party.

• No other available remedy.

• Injunction would serve the public interest

Mandatory Injunction Standard

• A heightened burden of proof !

• The moving party must establish the

traditional factors weigh heavily and compellingly in its favor!

Focus is on Irreparable Harm

What about Specific Performance?

• Not an emergency remedy.

• Limited to claims involving a valid and

enforceable contract.

• Prohibited in some jurisdictions.

• Court may hold that it is a claim for

injunctive relief in disguise.

What can Gumbo Dumbo do?

RULE 64 REMEDIES

Rule 64 Remedies

• WHAT TO WATCH OUT FOR:

– Preemption

– Notice

– Decision Maker

– Self Help

– Self Destruction

Attachment

• Movants must demonstrate that defendants are moving property beyond the reach of creditors with the intent to defraud creditors or frustrate the enforcement of a judgment.

• If this test is met, plaintiff must also show: – There is a viable cause of action – Probability of success on the merits – The amount demanded exceeds all counterclaims known

to plaintiff

• Even if all criteria are met, attachment is a harsh remedy so great care must be taken in its application

Forcible Entry and Detainer

• Tenant in wrongful occupancy

• Given notice letter stating period of time upon which tenant must act – May be as short as 5 – 7 days

• If property not vacated, action is filed

• Sole issue at hearing is whether or not the tenant/occupant has right to possession, and does not necessarily implicate title

Garnishment

• Creditor files a complaint for breach of contract and affidavit with the court clerk: – Must contain identification of property and location

• Court clerk, pursuant to an order of the court (depending on state), issues writ of garnishment

• Writ delivered to sheriff/US Marshall, who serves on garnishee • Garnishee can either accept the writ and complaint or raise

defenses – Garnishee doesn't hold property – Property entitled to set off – Property exempt from garnishment – Challenge debt

Replevin

• Demonstrate by complaint and affidavit: – Prima facie case of superior right to possession

of the disputed property

– Probability of success on the merits

– Property subject to removal from state, assignment, destruction, or perishability

• Depending on state, hearing may or may not be required

Rule 64 remedies

PRACTICE POINTERS

Federal vs. State Court Local Counsel

Upstairs Downstairs Manage Expectations

Arbitration Injunctions

Assume an arbitration clause

• Any dispute between the parties is subject to arbitration administered by

– American Arbitration Association (AAA)

– JAMS

– International institute for Conflict Prevention and Resolution (CPR)

Emergency relief -- key characteristics

• Timing

– AAA: clause agreed to after Oct. 1, 2013 (“then-current” language?)

– JAMS: arbitration filed after July 1, 2014

– CPR: no time restriction

Emergency relief -- key characteristics

• Initiation

– Notice to other side.

– Explanation of why relief needed.

– Appointment of emergency arbitrator with partiality disclosures and objections.

– Schedule prompt, flexible hearing.

Emergency relief -- key characteristics

• Standard

– AAA: “immediate and irreparable loss or damage shall result in the absence of emergency relief….”

– JAMS: “immediate and irreparable loss or damage will result in the absence of emergency relief.”

– CPR: “any interim measures as he or she deems necessary”

Emergency relief -- key characteristics

• Enforcement issues

– Security;

– Sanctions for non-compliance;

– Retain jurisdiction until ordinary-course arbitrator appointed;

– Court jurisdiction to confirm or vacate?

Whither court injunctions pending arbitration?

• General rule: preserve the status quo.

• Withholding of injunction would render arbitration a “hollow formality” because arbitration award, when rendered, couldn’t return parties to status quo ante.

Whither court injunctions pending arbitration?

• Problem with cases

– Status quo: the special relativity rule?

– Arbitrators decide arbitrability. (What if clause provides for court injunction?)

– Don’t interfere with merits

– Defer to arbitrators’ flexibility in remedies.

Strategy issues

• No ex parte TRO in rules

• Rule standard v. 4-factor test

• Location

• Evidence

• Quality of decision-maker

• Flexibility