David Reichenberg, Mar 19, 2013
Preliminary injunctions in antitrust cases are sought most frequently-almost exclusively in fact-in the merger context. Perhaps this is because, to some degree, the fate of such motions is often outcome determinative. Namely, if the Government’s PI motion is granted, that often results in the abandonment of a deal, and vice versa. Even though a District Court may be working with a limited record in a highly fact specific inquiry, both parties are willing to accept the associated risks so that a conclusion can be reached sooner.
Some have argued that the evidentiary hurdle the Department of Justice must clear to obtain a PI in a merger case is higher than the Federal Trade Commission’s hurdle. In Whole Foods Market, the D.C. Circuit suggested that pursuant to Section 15(b) of the FTC Act, the FTC could seek a PI pursuant to a “more lenient rule” in which “a unique public interest standard . . . rather than the more stringent, traditional equity standard for injunctive relief” is applied. Regardless of whether this is true or not, it seems undisputed that PIs, whether sought by the FTC or DOJ, are an effective tool to address the time sensitivity associated with merger challenges. The cases come out both ways, with unique facts driving each outcome.
Yet, in cases between private parties in the non-merger context, PI motions seem infrequent, and cases in which they are granted appear even rarer. This is despite the fact the same general questions are applied in both contexts:
1. Has the party seeking the injunction shown a substantial likelihood of success on the merits?
2. Is there is a substantial threat of irreparable injury in absence of the injunction?
3. Do the balance of harms favor the party seeking the injunction? and
4. Would entry of the injunction serve the public interest?
The following discussion suggests that a primary factor driving this outcome is the sacrifice a damage-seeking plaintiff must make in seeking such relief. The private plaintiff must show that its threatened loss cannot be fully quantified by a future damages award. This is because “[a] prerequisite to a preliminary injunction, as to other forms of equitable relief, is a showing that the plaintiff’s remedy at law is inadequate.” Thus, to some extent, a PI seeking plaintiff is forced to admit that at least some of the damage it will sustain cannot be tied to a monetary award without undue speculation.