When unexpected disputes arise among trustees and beneficiaries, a commercial transaction collapses, or a former employer leaves his place of work with a client list and company playbook, filing an Order to Show Cause in New Jersey may be the first step in righting a wrong (or preventing further irreparable harm from occurring).
New Jersey courts have long recognized Orders to Show Cause. However, the circumstances that would support an Order to Show Cause are relatively infrequent.
To obtain an Order to Show Cause for injunctive relief, the requesting party must show the court that the situation at hand could cause serious and irreparable harm to the moving party if the court does not act. This has also been described as “immediate and irreversible harm” to the movant.
The seminal case in New Jersey regarding Orders to Show Cause and Preliminary Injunctions is Crowe v. DeGioia, 90 N.J. 126 (1982). Under Crowe, there are four elements moving parties must prove for the court to grant the relief:
- Irreparable harm would result to the moving party if the relief sought is not granted;
- The moving party’s claims are based on legally settled rights;
- There is a reasonable probability that the moving party will succeed;
- And a balancing of the relative hardships to the parties militates in favor of granting the moving party equitable relief.
The moving party must prove each element by clear and convincing evidence. Failing to prove just one element will likely result in the application’s denial.
A showing of imminent, irreparable injury is the essence of this type of injunctive relief. Irreparable harm is considered a type of damage that cannot be remedied or reversed by any means available to a court. Additionally, irreparable harm cannot be compensated through money alone.
Additionally, the irreparable injury must be neither remote nor speculative; it must be actual and imminent.
Moreover, the court must balance the likelihood of irreparable harm to the moving party versus the hardship imposed on the defendant should the court issue the temporary injunction.
The moving party seeks the temporary injunction to preserve the status quo while the parties litigate the underlying case.
While the moving party must show the likelihood of success, that party does not have to show the certainty of success.
As a result, the timeliness and degree of potential harm are elements critical to the success (or failure) of the application.
For example, let’s say a salesman for a software company that makes and sells office management software for doctors resigns and joins a competing software company. When first hired, he signed a standard employment contract in which he agreed to not take customer lists or trade secrets to a new employer.
However, that is exactly what he did. He is now calling on his former employer’s customers, telling them his new employer has software just as good as the former employer’s.
In these circumstances, the former employer is facing the loss of customers and future revenue due to the salesman’s violation of his employment contract.
In that scenario, the former employer can file an application for an Order to Show Cause to restrain the salesman from interacting with customers and requiring him to return the customer list and any software he took with him.
Where Are Orders to Show Cause Filed?
Typically, Orders to Show Cause are filed in the Superior Court, Chancery Division, General Equity Part. Such cases do not predominantly concern a party seeking money damages. Rather, they are looking for some sort of equitable relief that an award of money will not satisfy.
In many cases, a party files an Order to Show Cause so that the status quo remains while the parities litigate their dispute. For instance, a co-trustee may allege that another co-trustee is improperly withdrawing funds from the trust. The co-trustee may ask the Chancery court to “freeze” the trust so it is not depleted while the trustees litigate their dispute.
The co-trustee would argue that the beneficiary of the trust would be harmed if the court allowed the trust to be further depleted, while any harm to the other co-trustee would be minimal or non-existent.
As explained by the Appellate Division, “Doubt about a suit’s merits does not entirely preclude the entry of an interlocutory injunction designed to preserve the status quo.” Waste Mgmt. of New Jersey, Inc. v. Union Cnty. Utils. Auth., 399 N.J. Super. 508, 535 (App. Div. 2008). The court may ultimately take a less rigid view than it would after a final hearing when considering whether to grant an interlocutory injunction. Id. at 520. “In acting only to preserve the status quo, the court may place less emphasis on a particular Crowe factor if another greatly requires the issuance of the remedy.” Brown v. City of Paterson, 424 N.J. Super. 176, 183 (App. Div. 2012) (citations and internal quotation marks omitted). Indeed, “[s]o long as there is some merit to the claim, a court may consider the extent to which the movant would be irreparably injured in the absence of pendente lite relief and compare that potential harm to the relative hardship to be suffered by the opponent if an injunction preserving the status quo were to be entered.” Waste Mgmt. of New Jersey, Inc., supra, 399 N.J. Super. at 535.
The Chancery court’s power to impose restraints pending the disposition of a claim on the merits is flexible, and “should be exercised whenever necessary to subserve the ends of justice.” Waste Mgmt. of N.J., Inc. v. Morris Cty. Mun. Utils. Auth., 433 N.J. Super. 445, 453 (App. Div. 2013) (holding that “[J]ustice is not served if the subject matter of the litigation is destroyed or substantially impaired during the pendency of the suit.” (internal citations omitted)).
Obtaining or Defending Against an Order to Show Cause in New Jersey Is Complicated and Requires Immediate Action.
Obtaining or defending against Orders to Show Cause and Preliminary Injunctions requires immediate action from experienced trust and business litigation attorneys who understand the law and are comfortable in Chancery court.
If you have an emergent matter, and need legal protection NOW, contact the experienced New Jersey attorneys at Schiller, Pittenger & Gaffney, P.C., at their Scotch Plains office at 908-490-0444. You can also email them here.