On December 16, 2013, in a published decision, the New Jersey Appellate Division in Waste Management of New Jersey, Inc. v. Morris County Municipal Utilities Authority clarified the standard governing interlocutory injunctions in New Jersey state courts. The court held that a trial judge’s denial of an interlocutory injunction based solely on the determination that the plaintiffs were not likely to succeed on the merits constituted reversible error because “the judge mistakenly overlooked his authority to impose interlocutory relief to preserve the parties’ positions and subject matter of the suit[.]” Stated otherwise, Waste Management holds that one can obtain an injunction preserving the status quo even where he or she cannot show a likelihood of success on the merits.
Waste Management is perhaps the most significant enunciation of the law regarding injunctive relief since the New Jersey Supreme Court’s seminal 1982 case of Crowe v. De Gioia. Under Crowe and its progeny, to obtain an injunction a party must demonstrate that: (1) an injunction is needed to prevent irreparable harm; (2) the underlying cause of action “rests on settled law and has a reasonable probability of succeeding on the merits;” (3) more harm would occur if an injunction were denied than if it were granted and, when a case raises an important public issue, (4) the public interest would be served by an injunction. When a court is being asked to issue an injunction to preserve the status quo, “the court may place less emphasis on a particular Crowe factor if another greatly requires the issuance of the remedy,” but the movant still bears “the burden to prove each of the Crowe factors by clear and convincing evidence.” Garden State Equal. v. Dow. Waste Management thus breaks new legal ground by being the first reported New Jersey appellate decision finding that an injunction could be issued where the party seeking injunctive relief failed to demonstrate the likelihood-of-success prong.
Waste Management is a public bidding case, where two unsuccessful bidders objected to the awarding of a public contract to a competitor and sought to preliminary enjoin the consummation of the contract with the successful bidder. The trial court denied the injunction, concluding that the unsuccessful bidders had failed to show a likelihood of success on the merits and, as such, it was not required to address the remaining Crowe factors.
The Appellate Division granted leave for an interlocutory appeal and reversed. It held that the trial judge’s “conclusion was erroneous because it overlooked the court’s authority to impose interlocutory injunctive restraints regardless of the doubts about the movants’ likelihood of success.” The panel further recognized that “a court may take a less rigid view of the Crowe factors and the general rule that all factors favor injunctive relief when the interlocutory injunction is merely designed to preserve the status quo.” It declared that “[t]he power to impose restraints pending the disposition of a claim on its merits is flexible; it should be exercised whenever necessary to subserve the ends of justice, and [that] justice is not served if the subject-matter of the litigation is destroyed or substantially impaired during the pendency of the suit.” Recognizing that its decision was a departure from the traditional Crowe standard, the court also noted that:
This less rigid approach, for example, permits injunctive relief preserving the status quo even if the claim appears doubtful when a balancing of the relative hardships substantially favors the movant, or the irreparable injury to be suffered by the movant in absence of the injunction would be imminent and grave, or the subject matter of the suit would be impaired or destroyed.
Waste Management arguably will, in certain instances, ease the burden in obtaining interlocutory injunctions in New Jersey state courts. Practitioners will now likely stand in court pleading for “Waste Management relief.” Therefore, whatever the context may be — i.e., preserving trade secrets, enforcing a restrictive covenant, minority shareholder litigation vying over control of a business, or environmental litigation involving continuous environmental damage — it is now more critical than ever that clients move quickly so that their rights are protected and counsel can efficaciously argue injunctive relief is necessary to preserve the status quo and prevent irreparable harm.