Why Restraining Orders Are So Important in a New York Non-Compete Case
As the title of this article suggests, the first step in a case alleging that a former officer or other employee breached a fiduciary duty by violating a non-compete clause is the company's filing of a request with the court for a temporary restraining order, which in legal circles is known by the shorthand abbreviation, "TRO."
"Why is this filing so signficant?" you ask.
Because the company is seeking to prevent its former employee from either working for a competitor, or exploiting some knowlege or client relationship that he or she gained while working for the company. And if the company is successful in securing this restraining order - even temporarily - that can put this former employee "on ice," or in other words, out of work, until a further order of the court.
Naturally, such an order can put a lot of pressure on the former employee, who may now be without a paycheck.
I am confident we can all agree that this is very signficant indeed.
Additionally, it bears mention that the company which is seeking this extraordinary relief bears a high burden of proof on its request for such an order - i.e., that it has a legitimate business interest worth protecting, and that unless this emergent relief is granted, it stands to suffer immediate and irreparable harm. Therefore, by granting this relief, the Court may be signalling its view that the company is likely to ultimately prevail at the conclusion of the case.
The importance of that should be relatively apparent: before the employee expends significant sums defending this action, the Court is giving him insight into its thinking on the likely ultimate outcome of the case.
Conversely, being granted access to the court’s “crystal ball” also affords the plaintiff the opportunity to ascertain whether it is indeed worthwhile to pursue a case about which the court may have expressed grave doubt.