The high-profile injunction case of Defense Distributed, Inc. v. U.S. Dep’t of State involved the federal government’s effort to prevent the online distribution of 3D printing files for the critical “lower receiver” component of the AR-15 rifle. The district court declined to grant a preliminary injunction against enforcement of the relevant laws and the Fifth Circuit affirmed. In an observation broadly applicable to litigation about online postings, the Court noted: “If we reverse the district court’s denial and instead grant the preliminary injunction, Plaintiffs-Appellants would legally be permitted to post on the internet as many . . . files as they wish . . . [which] would remain online essentially forever, hosted by foreign websites such as the Pirate Bay and freely available worldwide.” A thorough and strongly-worded dissent took issue with the First Amendment ramifications of the panel opinion; a petition for en banc rehearing has been filed and is pending as of this post. No. 15-50759 (Sept. 20, 2016).
The preliminary injunction said: “Plaintiffs may contact former and current . . . employees . . . of the Debtor if and only if a written request is made by Plaintiffs’ counsel to counsel for SkyPort, and counsel for SkyPort either a) agrees to the proposed contact or b) does not respond within 1 business day,” and: “Plaintiffs are temporarily enjoined from: pursuing any and all claims or causes of action, derivative or direct, against all of the Defendants.”
Nevertheless, the trial court found that Plaintiffs’ counsel and Plaintiffs’ financial advisor “continued to pursue evidence and witnesses―namely Cole [Skyport’s former president]. They encouraged Cole to pursue her own claims . . . in other courts by arranging for her counsel, providing for a “loan” for her counsel’s retainer, and pursuing financial support for the state court litigation.”
The Fifth Circuit affirmed a substantial award of sanctions, reflecting the attorneys fees incurred to rectify the situation. The Court rejected defenses based on whether (1) the award was civil or criminal in nature, (2) fees alone could be the basis of the sanction awarded, (3) the injunction no longer was in effect, (4) the alleged violations were inadvertent, and (5) the individuals sanctioned were not subject to the order. Goldman v. Bankton Fin. Corp., No. 15-2-243 (Oct. 12, 2016, unpublished).
Emerald City Management, d/b/a the band “Downtown Fever,” won a preliminary injunction against another band with the same name. The Fifth Circuit affirmed, noting the importance of “los[ing] control over the mark’s reputation and goodwill” in establishing irreparable injury, and citing evidence of the plaintiff’s history with the band name, the defendant’s plans to play in the same area, and the defendant’s marketing using that name. Emerald City Management LLC v. Kahn, No. 14-40856 (Dec. 11, 2015, unpublished) (citing Paulsson Geophysical Servs., Inc. v. Sigmar, 529 F.3d 303 (5th Cir. 2008)). (In a later skirmish among these parties, the Court reversed a later preliminary injunction about the use of a Facebook page: “neither shutting down a Facebook account nor blocking administrator access to a Facebook account constitutes ‘use in commerce’ of a trademark.” Emerald City Management LLC v. Kahn, No. 15-40446 (March 8, 2016, unpublished)).
Plaintiffs obtained a preliminary injunction freezing many of the Defendants’ assets. The Fifth Circuit affirmed, noting the strong proof on two key topics. As to likelihood of success on RICO and fraud claims: “The [district[ court examined in detail three representative transactions, tracing funds from [Plaintiff] that were intended for legitimate vendors but ended up in accounts owned wholly by the defendants. In each case, [Plaintiff] netted less money than it should have, with the profit going to [Defendant] or his associates.” As to irreparable injury: “[Defendant] had already closed personal and corporate accounts in Hong Kong, containing exclusively money diverted from [Plainitff], transferring some of the funds to his father-in-law. [Defendant] also has international ties, including the co-defendants – natural persons and shell companies alike – who have yet to appear in court. He has experience and sophistication transferring money internationally, suggesting a high risk that funds allegedly belonging to plaintiffs could disappear.” ATN Indus. v. Gross, No. 15-20102 (Dec. 7, 2015, unpublished).
Cardoni v. Prosperity Bank, an appeal from a preliminary injunction ruling in a noncompete case, involved a clash between Texas and Oklahoma law, and led to these noteworthy holdings from the Fifth Circuit in this important area for commercial litigators:
- Under the Texas Supreme Court’s weighing of the relevant choice-of-law factors, Oklahoma has a stronger interest in the enforcement of a noncompete than Texas, “with the employees located in Oklahoma and employer based in Texas”;
- As also noted by that Court, “Oklahoma has a clear policy against enforcement of most noncompetition agreements,” which is not so strong as to nonsolicitation agreements;
- The district court did not clearly err in declining to enforce a nondisclosure agreement, given the unsettled state of Texas law on the “inevitable disclosure” doctrine; and
- “[T]he University of Texas leads the University of Oklahoma 61-44-5 in the Red River Rivalry.”
No. 14-20682 (Oct. 29, 2015).
In an intellectual property dispute with several pending motions, the district court held a telephone conference and said the following about the pending application for preliminary injunction:
“I can see that there at least would be a fact issue as to whether or not the contract’s violated, but that’s a different proposition from concluding that a preliminary injunction should be granted. There are a lot of factors to take into account to decide whether or not, ultimately there would — a breach of contract would be found to exist, such as, whether or not there’s a possibility for some relief besides injunctive relief, such as the recovery of damages. I haven’t found anything in the papers to indicate to me that the defendant couldn’t respond to a judgment in damages, if required to do so. I don’t — I don’t think a preliminary injunction is necessary or appropriate in this case, so I’m going to deny that request.”
Observing that the district court’s statmeent in damages “seems to relate to [Defendant’s] ability to respond to a judgment in damages, which does not relate to whether damages would be an adequate remedy,” the Fifth Circuit vacated and remanded for a lack of findings of fact and conclusions of law under Fed. R. Civ. P. 52(a). Software Development Technologies v. Trizetto Corp., No. 13-10829 (Nov. 5, 2014, unpublished).
World Wrestling Entertainment sought ex parte seizure and temporary restraining orders, against unnamed defendants selling fake WWE merchandise at live events, under the Trademark Counterfeiting Act. The district judge denied relief, noting concerns about WWE’s ability to prove a likelihood of success against an unknown defendant. The Fifth Circuit (who reviewed the case because the district court certified the matter for interlocutory appeal) took a different view, noting: “WWE does not license third parties to sell merchandise at live events . . . The resulting confined universe of authorized sellers of WWE merchandise necessarily ‘identifies’ any non-WWE seller as a counterfeiter.” The opinion also observed that “the very nature of the ‘fly-by-night’ bootlegging industry” involves “counterfeiters who, upon detection and notice of suit, disappear without a trace and hide or destroy evidence, only to reappear later at the next WWE event down the road.” World Wrestling Entertainment, Inc. v. Unidentified Parties, No. 14-30489 (Nov. 4, 2014).
Claimants in the compensation system created by BP after the Deepwater Horizon accident received an award in October 2013. Lake Eugenie Land & Development v. BP Exploration & Production, No. 14-30398 (Aug. 25, 2014, unpublished). Unpaid by March 2014, they filed a “Motion to Confirm Award and Order Payment,” which the district court denied because an interim injunction had stayed the entire program while aspects of it were under legal challenge. After appealing, the injunction lifted. The Fifth Circuit dismissed for lack of jurisdiction, finding that the trial court’s ruling was neither an order that “vacates, modifies, or corrects” an arbitration award, nor an “interlocutory order . . . continuing . . . an injunction against an arbitration.”
In one of the many unpublished cases dismissing “split-the-note” cases after Martins v. BAC Home Loans Servicing, LP, 722 F.3d 249 (5th Cir. 2013), the Fifth Circuit addressed a foreclosure sale that had taken place while a TRO purported to stop it. Hall v. BAC Home Loans Servicing, No. 12-41023 (Oct. 7, 2013, unpublished). Because the TRO did not state why it was granted without notice, the Court concluded that it “did not meet the requirements of Texas Rule of Civil Procedure 680,” making it “void under Texas law” and “a mere nullity.” Accordingly, it could not support a wrongful foreclosure claim.
The Fifth Circuit affirmed a preliminary injunction about pharmaceutical development in Daniels Health Sciences v. Vascular Health Sciences. No. 12-20599 (March 5, 2013). The opinion offers a practical road map for basic issues in trade secret litigation. As to likelihood of success on the merits, the Court found adequate findings about damage, specific confidential information, a trade secret arising from a “compilation,” and a confidential relationship between the parties. As to irreparable injury, the Court found sufficient findings about reputational injury that was not speculative. While it found no abuse of discretion in the district court’s weighing of public and private interest factors, it did see a “close question” about the overall scope of the injunction in light of the conduct at issue and the defendant’s business plans and suggested that the district court “try to narrow the scope of its injunction on remand.”
Knoles v. Wells Fargo presented a rare encounter between an eviction and the Rooker-Feldman doctrine. No. 12-40369 (Feb. 19, 2013, unpublished). The borrower lost a forcible entry & detainer (eviction) matter at trial in JP court and on appeal. The borrower then sued for damages, Wells removed, and the borrower unsuccessfully tried to get a TRO about possession from the federal district court. The district court denied relief based on the Rooker-Feldman doctrine about federal review of final state court judgments. The Fifth Circuit found that it had jurisdiction over the interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1), even though the appeal was nominally from a TRO, because the relief at issue was “more in the nature of a temporary injunction in fact, though not in name.” The court deflected an argument about mootness to hold that the order sought a federal injunction against a final state court judgment in violation of the Anti-Injunction Act.
Plaintiffs obtained a preliminary injunction against enforcement of a school voucher program, alleging it violated a desegregation consent decree. Moore v. Tangipahoa Parish School Board, No. 12-31218 (Jan. 14, 2013, unpublished). The Fifth Circuit found an abuse of discretion in denying a stay pending appeal. One reason was Pullman abstention, which arises “when an unsettled area of state law . . . would render a decision on the federal issue unnecessary,” and where the Court said the defendant had a “a strong likelihood of establishing” it in light of pending state litigation about the constitutionality of the law under state law. Another was jurisdiction under the All Writs Act, where the Court said the plaintiffs’ evidence of harm was “based merely on general financial information and speculation.” A dissent further discussed Pullman abstention and advocated outright dismissal of the case. The opinion appears to have been unpublished because of its expedited procedural posture, and a later panel will fully address the merits on a conventional briefing schedule. Id. at 4 n.1
New Orleans taxicab owners challenged new city ordinances about their business and cars. The Fifth Circuit vacated a preliminary injunction in their favor, primarily on grounds related to the substantive constitutional issues in play, and affirmed the district court’s denial of an injunction on other matters for lack of irreparable injury. Dennis Melancon, Inc. v. City of New Orleans, No. 12-30921 (Dec. 18, 2012, revised Jan. 17, 2013). Reminding that “when the threatened harm is more than de minimis, it is not so much the magnitude but the irreparability that counts for purposes of a preliminary injunction,” the Court found that plaintiffs could later sue the city for costs of complying with the ordinances if they prevailed. Footnotes 14 and 15 address other potential theories of irreparable injury based on “impairment of contract” and privacy rights.
Paddle Tramps Manufacturing made wooden paddles with the emblems of several fraternities, a group of 32 fraternities sued to enjoin it for trademark infringement and unfair competition, and the company defended with unclean hands and laches. Abraham v. Alpha Chi Omega, No. 12-10525 (revised Feb. 7, 2013). The district court entered partial injunctive relief after a jury trial found for the company on the defenses. The Fifth Circuit affirmed the instructions given, finding that the appellant’s arguments about unclean hands conflated elements of trademark liability with elements of the defense and that the laches instruction fairly handled the concept of “progressive encroachment.” The Court also found sufficient evidence to support the “undue prejudice” element of laches, although calling it a “close question,” and found that the district court properly balanced the equities — especially injury to the alleged infringer — in crafting the injunction. The opinion discusses and distinguishes other cases denying relief in related situations. Professor Rebecca Tushnet further analyzes the case on her intellectual property blog.
While Opulent Life Church v. City of Holly Springs turned on First Amendment religion clause issues about the legality of a zoning ordinance, it offers some general insights about preliminary injunction practice. No. 12-60052 (Sept. 27, 2012). Irreparable injury can potentially be shown from evidence about the likely loss of a lease, or a looming lack of building capacity (although the capacity issue in this case focused on religious practice.) Id. at 27. Even if evidence of injury is strong, the party opposing a preliminary injunction should have the opportunity to be heard and present evidence about the potential harm to it of an injunction so that the equities can be balanced. Id. at 28-29.
Texas Medical Providers v. Lakey, No. 11-50814 (Jan. 10, 2012), is a high-profile constitutional challenge to Texas laws requiring a physician who performs an abortion to show a sonogram to the woman. The Fifth Circuit reversed a preliminary injunction against enforcement of the statute, finding that the plaintiffs failed to demonstrate a substantial likelihood of success on their First Amendment and vagueness challenges. While most of the thorough opinion reviews the highly specific constitutional principles in this area, its treatment of the “likelihood of success” factor for a preliminary injunction is also of general interest to civil litigators.