Don't Bet the Business

In Michigan, as in the federal courts and most, if not all the states I suspect, the decision to grant a preliminary injunction is based largely on interests of fairness and equity.

In briefs and opinions alike, it is typically noted that the granting of an injunction is extraordinary relief that one receives only when justice so requires, because there is no adequate legal remedy available and, most importantly, there exists a real and imminent danger of irreparable injury if an injunction is denied.

Preliminary injunctions, as the name indicates, are not final rulings.  Rather, they are temporary measures, often entered soon after a case is filed, aimed at preserving the status quo pending a thorough development of the facts and law and awaiting the trial court’s opportunity to render a full, fair and final determination of the parties’ rights and responsibilities.

Under MCR 3.310, the party seeking a preliminary injunction carries the burden of satisfying to the court that a preliminary injunction should be issued.  In making that determination trial courts are guided by four common factors:

(1) the likelihood that the party seeking the injunction will prevail on the merits,

(2) the danger that the party seeking the injunction will suffer irreparable harm if the injunction is not issued with the proviso that the mere apprehension of future injury or damage cannot be the basis for injunctive relief;

(3) the risk that the party seeking the injunction would be harmed more by the absence of an injunction than the opposing party would be by the granting of the relief, and

(4) the harm to the public interest if the injunction is issued.

Experienced litigators are generally well versed in these requirements.  If they are like me, they have sample briefs in their drawer, or stored on their computer, outlining how to argue these points both for and against the issuance of an injunction. 

In the commercial arena, we tend to focus on the first two factors:  whether the claims pled are likely to succeed and whether there is truly a threat of irreparable harm if an injunction is not entered.  Lawyers often cast their arguments definitively, as if the four factors are a check list – check all the boxes and you are entitled to an injunction, or if a box is left empty, the injunction should be denied.  Were the law so simple.

Recently the Michigan Court of Appeals reminded us that preliminary injunction analysis is not as regimented as lawyers sometimes make it out to be.  In Vincent Johnson et al v Michigan Minority Purchasing Council, 2022 WL 627021; ___ NW2d ___ (Mich App, Mar 3, 2022), the appellate court concluded that the plaintiffs were unlikely to prevail on their claims yet affirmed the trial court’s decision to enter a preliminary injunction blocking the defendant from decertify the plaintiff businesses as “minority business enterprises.”  So how did that happen you ask?

In Vincent Johnson the appellate court reaffirmed an established principle that is quite often overlooked:  “the four factors governing consideration of injunctive relief are meant to ‘simply guide the discretion of the court; they are not meant to be rigid and unbending requirements.’”  So, forget about checking boxes because a preliminary injunction is an equitable remedy and it is the pursuit of equity in which the four factors have context.  Exploring that context in but one example when judges are asked to exercise some measure of judgment. 

Because of this, a trial court's decision to grant a preliminary injunction is reviewed by an appellate court only for an abuse of discretion.  Under Michigan law an abuse of discretion is not found if the trial court's decision is within the range of reasonable and principled outcomes.  This means that the appellate court may fully disagree with a trial court’s analysis or conclusions pertaining to some or all of the applicable four factors, but “[b]ecause of the great discretion afforded the circuit court on these equity-based decisions, and our concomitant circumscribed standard of review,” the grant of a preliminary injunction may, nonetheless, be affirmed on appeal.

The decision in Vincent Johnson does not signal a drastic departure from the rules and procedures as we know them.  Nor is it a signal that preliminary injunctions can be commonly expected in disputes when the success is doubtful or an available legal remedy, such as money damages, seems clear.

Rather, the lesson from Vincent Johnson is that courts are places where justice is sought and where some of the rules flex, equitably, as justice requires. We may not always agree with a trial court’s decisions in the pursuit of that end, but that is OK.  The appellate court “trust[ed] that the circuit court will handle the case with the attention, efficiency, and timeliness required when a preliminary injunction has been issued” and we should too.  We can find some comfort in that ideal.