Equity run amuck: the necessary reevaluation of the preliminary injunction standard to reflect modern day legal realities - a comparison of the Massachusetts and Delaware noncompete agreement preliminary injunction standard.
Author | McTarnaghan, Christian |
"The right to speak or vote or worship after trial does not replace the right to speak or vote or worship pending trial, and damages for temporary loss of such rights are not even approximate compensation." (1)
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INTRODUCTION
The concept of a legal remedy is an old tenant of both the English and the American legal systems. (2) At one time, based on the very remedies they had jurisdiction to provide litigants, American courts were split in two, with courts of equity and courts of law. (3)
Remedies are omnipresent in civil litigation. (4) The relief sought in civil cases fall into two broad categories: monetary or equitable. (5) The concept of monetary damages, at its most basic level, is that the liable party pays a dollar amount for the harm it caused another. (6) Conversely, equitable relief is sought in situations where money is insufficient to right the wrong suffered by the nonliable party. (7) In many instances, this form of relief can require the liable party to act or forbear from acting. (8)
A preliminary injunction--the focus of this Note--is one equitable remedy granted by the trial court, which typically lasts until a case can be fully adjudicated on the merits. (9) The preliminary injunction is one of the most powerful remedies a court can issue. (10) It is also an important tool for litigators when monetary compensation is insufficient to right the wrong suffered. (11) In modern courts, a preliminary injunction can be the difference between moving forward with the case or dropping it all together because of how long it can take for a contested case to be docketed for trial. (12)
The issuance of a preliminary injunction can provide unique equitable remedies such as: placing candidates on a ballot; blocking legislation; or forbidding strikes, and preliminary injunctions can last days, months, or even years. (13) The test utilized by a majority of courts (majority test) to decide whether to issue a preliminary injunction has three parts: the likelihood of the moving party's success on the merits, the threat of irreparable harm to the moving party, and the balance of the harms between the parties. (14) In some jurisdictions, courts also consider the harm to the public interest, a fourth and final part of the test. (15) Despite the importance of this equitable avenue, courts have historically applied the standard inconsistently and in some instances have come to incompatible holdings on similar facts. (16) This Note will address the issues associated with a strict, legal preliminary injunction standard and proffer a new standard more in keeping with modern day legal realities and equity.
This Note will focus on the preliminary injunction standards used in Delaware and Massachusetts to illustrate the differences between the pure courts of equity in Delaware and the hybrids courts of law and equity in Massachusetts. Part II provides a history of American equity jurisprudence, the history of the preliminary injunction standard, and two competing theories of the purpose of the preliminary injunction. That part also discusses noncompete agreement preliminary injunctions. Part III examines the inconsistencies in the application of the preliminary injunction standards in Massachusetts and Delaware courts as demonstrated by decisions in noncompete agreement cases. Finally, this Note suggests a new standard for preliminary injunctions that would refocus on its equitable roots, promoting rational, legal actors in a modern legal system.
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HISTORY
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Equity
The legal theory of equity developed not only as a way to provide a remedy completely unavailable to litigants at law, but also to lessen the potentially harsh nature of the common-law system. (17) Historically, courts used this equitable power to grant parties "justice," using general principles of fairness where the court found that strict application of the law prevented the appropriate, necessary relief. (18) Both ancient and modern legal systems accepted equity as means to achieve a remedy. (19) Most notably, equity was, and still is, a tenet of both English and American Jurisprudence. (20)
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Equity in American Courts
Influenced by the teachings of Aristotle, separate courts of law and equity were eventually developed in England. (21) In England, the courts of equity served to correct injustice, pulling heavily from general concepts of right and wrong and canon law. (22) Developed as a writ system, the English form of equity generally bucked the trend of legal precedent, allowing the judges more discretion in their decision-making. (23)
England's Court of Chancery shaped the American vision of equity. (24) The American legal system's equitable practices continued to give the judge much discretion but were administered in a nonuniform way, unlike the English Chancery courts. (25) Equity survived America's independence from England after the Revolutionary War, but the same courts typically offered both legal and equitable remedies. (26) American equity, despite these differences, still focused on basic fairness. (27) The concept of equity was so influential to American legal thought that it was explicitly written into the U.S. Constitution. (28)
Despite this dedication to equity, no statute, or case for that matter, has defined what the phrase "a case in equity" actually means. (29) Section 11 of the Judiciary Act, which created the entire court system in the United States, did not attempt to define "equity." (30) The United States Supreme Court came closest to a definition in Atlas Life Insurance Co. v. W. I. Southern, Inc., (31) mentioning that equity rights originate from the English Chancery. (32)
Notwithstanding the lack of definition, some of the most influential minds in American legal history have adopted the concept of equity as judging right from wrong. (33)
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The Courts of Equity in Massachusetts
There are no, nor have there ever been, separate equity courts in the Commonwealth of Massachusetts. (34) In fact, the Massachusetts Constitution lacks any direct provision for equity jurisdiction within the state, although its text implicitly grants equity jurisdiction to the state's courts. (35) In the commonwealth, equity jurisdiction was not derived through the creation of particular courts but instead through statute and the court's own action. (36)
The Massachusetts form of equity, like the entire American legal system, was largely influenced by the English. (37) The process of broadening the state court's equity jurisdiction began in the first half of the nineteenth century when the state legislature conferred upon the Supreme Judicial Court (SJC), the highest court in Massachusetts, equity power over the foreclosure and redemption of mortgages. (38) Over the next fifty years, statutes granting equitable jurisdiction increased the court's equity powers; this increase was piecemeal, however, conferring equitable jurisdiction subject by subject, statute by statute. (39)
The next statutory grant of equity jurisdiction was embodied in the Law of 1817, chapter 87, giving the SCJ equity jurisdiction over "all cases of trust arising under deeds, wills, or in the settlement of estates" and in contract cases where a party claimed specific performance and there was no "plain, adequate, and complete remedy at law." (40) Over the next thirty years the enactment of several statutes enlarged the scope of the SJC's equity jurisdiction. (41) Despite this broadening, these statutes still required the court to first determine that the parties did not have an existing legal remedy available. (42)
In 1857, the legislature rewrote the statute, changing the word "plain" to the word "full." (43) This limitation on the court's equity jurisdiction was kept in a revision of the statute completed in 1873. (44) Despite the legislature's attempt to affirm the SJC's equity jurisdiction, the court still construed all equity statutes strictly and used its equity jurisdiction less often than the English Court of Chancery. (45) The SJC's hesitance to use its equitable powers led to it sometimes denying equitable relief when available. (46) In 1877, the legislature eliminated the "remedy at law" requirement from the statute, removing all statutory limitations to the SJC's equity jurisdiction. (47)
The superior courts in the Commonwealth of Massachusetts originally had no equity jurisdiction, but in 1883 it gained the power to grant equitable remedies. (48) Today, chapter 214 section 3 of the Massachusetts General Laws governs the equity jurisdiction of both the Superior and Probate Courts. (49) This statute gives both courts equitable power. (50)
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Courts of Equity in Delaware
In stark contrast to Massachusetts, the equitable powers of the Delaware courts are a long standing tradition and are also heavily influenced by the Court of Chancery in England. (51) As a result, the history of Delaware's courts of equity is less complicated than that of Massachusetts and began during its colonial era. (52) Equity in colonial Delaware can be broken into two distinct phases: primitive equity and English Chancery equity. (53) In its primitive form, lasting from 1664 to 1701, governors and other royal authorities issued decisions in order to correct unfair jury decisions and attempted to forward natural justice without any formal chancery proceedings. (54) In many instances, the equity power exercised by these courts was similar to some judicial proceedings today that allow judges to reopen judgments, control verdicts, or allow a new trial. (55) It was not until approximately 1726 or 1727 when a drastic shift in equity began and the Gordon statute (the Act) established official courts of chancery. (56) This was the beginning of the second period of equity in Delaware, which was in the purview of their new chancery courts. (57) This statute contained a familiar limitation: the Court of Chancery did not have jurisdiction over matters where a remedy at law was available. (58)
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