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This is a general principle, but there are always exceptions. Most of these involve judgment-proof defendants. Say Fred and Sam are having a dispute over a driveway Sam uses to access his business. Fred puts up concrete barricades on the disputed right-of-way, denying access to Sam or any customers, preventing use of the business. Sam cannot operate his business and sues Fred for trespass. Sam may be able to calculate that he's losing $5,000/day in revenue while the barricades are up; under the rule, he wouldn't be entitled to a TRO. Except any court would grant him one, because if the case takes a year to resolve, it's unlikely that fred will be able to come up with $1.8 million in damages.
This example is based on a case I actually dealt with a couple years ago except the defendant wasn't some random guy but a railroad (it was a dispute over a crossing agreement). I was still able to get a TRO, not because there was any question of the railroad's ability to pay damages but because I convinced the judge that my client couldn't afford the mortgage and ongoing maintenance costs to the property without the property generating any revenue. Damages would be cold comfort if the property were foreclosed on and he were forced into bankruptcy.
Another case I was peripherally involved with during my time in oil and gas involved a contractual dispute between Warren Steel and a coal company whose name I can't remember. (This is a grossly oversimplified version) Warren had an ongoing contract with the company that required them to deliver coal to the mill a few times a week. They were way behind on payments and owed hundreds of thousands of dollars. The coal company said they weren't getting any more shipments until they paid what was overdue. Warren sued the coal company for breach of contract arguing that future deliveries weren't conditioned on payment for prior deliveries. From here it gets a bit complicated. The typical remedy here would be for Warren to buy coal on the spot market and collect the price difference from the breaching coal company. Warren argued that their financial position was precarious (there was no denying this based on their payment history) and that they would be unable to secure credit to buy at sharply inflated spot market prices. If the coal company didn't make their next scheduled shipment, they wouldn't be able to make any steel, would have to shut down the mill, and any hope of them remaining operational would be gone. the court issued the TRO and told the coal company to make the delivery. In any event, Warren Steel filed for bankruptcy a few days later.
And who could forget the man himself, Donald Trump. If you remember, last year he was on the wrong end of a nine-figure civil judgment, and was told that if he wanted to stay the judgment pending appeal he would have to post a bond of $450 million within 30 days. This is about as clear-cut as it gets—he had $450 million in assets. If he posted the bond and won the appeal, he'd get the money back. So what's the problem? He successfully argued that since no insurance company would take real estate as collateral, he would have to liquidate it at fire sale prices, causing irreparable harm. The judge agreed and reduced the bond to something an insurance company could manage.
Most court orders aren't written by the court. If I'm asking for a TRO, I have a copy of the order with me and I hand it to the judge to sign if she decides to grant it. In most cases, you're asking for the TRO in motions court early in the process before the case is listed for trial and assigned a judge.After that it has to go to calendar control for them to schedule a hearing for a preliminary injunction. By law that hearing has to be within 14 days, but the judge who's signing it doesn't know when that's going to be; the upshot is that we put the 14 day max in the order.
In this case, the judge who issued the TRO wrote the order herself after the hearing had already been scheduled. She's hearing arguments tomorrow, after which, she'll either lift the order entirely or grant an injunction. There was no reason to put a specific expiration date because it's implied that she's going to lift it after the hearing.
Am I alone in thinking this was pretty unfair to the coal company? I mean, there was clearly a serious risk that Warren wouldn't ever be able to pay, even upon bankruptcy liquidation, meaning the coal company was essentially being ordered to give them coal for free.
Like I said, this case was significantly more complicated than I made it out to be in the post. What the case actually turned on was a provision in the Uniform Commercial Code meant to address situations such as this. A complicating factor was that Warren wasn't even technically in arrears. The terms IIRC called for something like payment within 30 days plus escalating late fees after that, with breach not occurring until the bill was 6 months overdue. Warren had never once paid "on time" but had waited until the last minute and withheld the late fee. There was some argument about whether the coal company had waived that contract provision by accepting payment without protest, and the coal company was arguing that this was evidence that they were juggling their payments to see what they could get away with, and there were rumors of an impending bankruptcy, and that yes, an order requiring them to comply with the contract terms would essentially mean giving away something like $400,000 worth of coal for free.
The case boiled down to the UCC provision allowing the request for reasonable assurances of performance. The judge was sympathetic to the coal company, but he said that if they had concerns they could have requested reasonable assurances at any time, and that anticipatory repudiation of the contract wasn't proper. Then the argument became how long Warren had to provide the assurances and whether the coal company could suspend performance until it received assurances. This is where the whole irreparable harm thing came in, with Warren saying that if they didn't get the Friday shipment that over a thousand employees would be laid off by the end of the weekend and the mill would be idled indefinitely. The final ruling was that the coal company had to make the shipment but that Warren had to make reasonable assurance before the next shipment, and he would dismiss the breach of contract suit as soon as the shipment had been received.
In a general sense, no, it isn't fair, which is why the UCC has provisions for dealing with that kind of situation. If the coal company had concerns it could have asked for assurances a week prior. In any business transaction, there's always some chance that the other party isn't going to hold up his end of the bargain, and that's the risk you take doing any business. The coal company could have protected itself with a condition requiring prepayment back at the formation stage, but they didn't, even though Warren was only a few years removed from coming out of a previous bankruptcy. Up to this point, Warren had held up their end of the deal, just not in a way that inspired much confidence, and there were rumors that they were insolvent. Furthermore, if Warren had already filed for bankruptcy this question wouldn't have even come up, because suppliers have to keep honoring contracts during a bankruptcy.
How come they hadn't repudiated the contract if they didn't pay the late fees?
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Hmm point taken. You're definitely right about this.
Though for this particular case it seems that the motion for TRO wasn't well plead then, as they don't allege any concrete imminent harms such as losing your house or business. The motions all claim the possibility of disruptions to research operations as a result of the lost revenue, but stop short of pleading that it will happen. It's also especially dubious since these institutions are sitting on multi-billion-dollar endowments in the bank.
In this case I think an ex-parte TRO would be a stretch, because if that TRO needs to be turned into an injunction within 14 days, then $5,000 * 14 is only $70,000. Though since a PI still needs to show irreparable harm your point still stands. Well also I'm assuming this is state court so rule65 doesn't apply anyways.
I've never seen the order written like this, I've always seen an end date explicitly written. Since the hearing date is literally written in the paragraph above, it would be trivial to write it into the TRO order itself and save some legal ambiguity. What happens if the judge catches the rona and is out for a month? Does the illegal TRO stick until appeals smacks it down?
Also the federal government isn’t judgement proof unless they refuse to waive sovereign immunity
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