The difference between a temporary restraining order (TRO) and a preliminary injunction seems fairly subtle. In litigation cases, the terms sometimes get used interchangeably. Both a TRO and a preliminary injunction provide a remedy for an allegedly aggrieved party and typically require an undertaking to provide monetary relief to the alleged aggressor.
According to NY case law, judges only issue preliminary injunctions in instances where the movant has demonstrated likely success at trial as well as a chance of irreversible damage if not for the preliminary injunction.1 These qualifications make preliminary injunctions somewhat rare. However, the most common preliminary injunctions arise in business disputes between shareholders and management or between business partners. For example, minority shareholders may wish to stop a corporation’s board from selling the company to the shareholders’ detriment.
A temporary restraining order has the same effect as a preliminary injunction but typically lasts only a few days where as an injunction could go on for months. Attorneys will seek a TRO when their clients need immediate remedy to prevent irreversible harm. Typically, the attorney motions the court with an Order to Show Cause and the judge will ask the Plaintiff to file their undertaking within the next few days but before opposing counsel can appear in a later trial.
The undertaking on a temporary restraining order or preliminary injunction protects the Defendant in the event the later trials determine the Plaintiff lacked the entitlement to any injunctive relief. Basically – the bond protects the Defendant. Judges usually determine the bond’s amount after hearing counsels’ recommendations. These bonds are highly time sensitive and require careful consideration. Underwriters typically want partial or full collateral for these bonds because of the unpredictable outcome of litigation. Underwriters will consider the Plaintiff/Principal’s financial strength and prestige of their attorney and law firm. To read some earlier posts concerning preliminary injunctions bonds, click here and here to learn how to cancel one of these bonds.
1. Chernoff Diamond & Co. v. Fitzmaurice, Inc., 234 A.D.2d, 200, 201, First Department, 1996.
Preliminary Injunction and Temporary Restraining Order