Preliminary Injunction Reinstating Contract Ordered By Business Court

by Brooks Pierce
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[author: Mack Sperling]

It's not every day that you see a "mandatory injunction," In fact, Judge Jolly said last Friday that such an injunction was "rare and generally disfavored as an interlocutory remedy," in Bayer Cropscience LP v. Chemtura Corp., 2012 NCBC 40. Op. 22. But that didn't stop the Judge from entering an injunction that most of us would think of as mandatory: an injunction ordering Defendant Chemtura to reinstate its contract with the Plaintiff Bayer and resume its exclusive arrangement to sell a seed treatment called Ipconazole to Bayer. 

Injunctions are normally "prohibitory." They prohibit the defendant from taking a particular action. If an injunction is "mandatory," it requires the defendant to take a specific action. 

So was this injunction mandatory? No, not according to Judge Jolly.

The difference to Judge Jolly between the two types of injunction lay in the status quo between the parties, the state of affairs which an injunction is designed to preserve during litigation. Chemtura said that it had already terminated the contract so the status quo at the time of the lawsuit was that no agreement existed. The Judge rejected this argument, rolling the clock back a bit. He said the status quo was not the "circumstances existing at the moment suit was filed," but rather "the last peaceable uncontested status that existed before the dispute arose." Op. 24. The "peaceable uncontested status" was the four years that the contract had been in place, and the Court said it should remain so.

He said that Bayer was seeking in substance to prohibit Chemtura from terminating the contract, and that the injunction was therefore prohibitory. He said that ruling otherwise "would create an incentive for a party to breach an existing contract before the other party can seek injunctive relief in an effort to alter the status quo and the nature of the injunctive relief sought (i.e., mandatory relief rather than prohibitory relief)." Op. 24.

The other valuable piece of this opinion was in the Court's ruling on irreparable harm. Chemtura said that any harm to Bayer could be compensated by money damages after trial, but Bayer said its harm would be irreparable because it would lose "customer goodwill, market share, and its competitive position in the marketplace," which were not determinable by money damages.

Judge Jolly agreed, relying on North Carolina federal court rulings that harms such as the loss of "customer goodwill" and "competitive positions, including threatened loss of market share and threatened loss of existing and potential customers" are types of injuries that satisfy the irreparable harm requirement. Op. 42.

The Court set the amount of the bond to be posted by Bayer as a condition of the injunction at $3 milllion pending further submissions from the parties.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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