Commercial Litigation and Arbitration

Injunctions — Circuit Split as to Whether Likelihood of Success Must Be Shown or Balancing Approach Retains Validity

Allstate Ins. Co. v. Warns, 2012 U.S. Dist. LEXIS 26174 (D. Md. Feb. 29, 2012):

The standard for awarding preliminary injunctive relief is governed by Winter v. Natural Resources Defense Counsel, Inc., 555 U.S. 7, 20 (2008). A plaintiff seeking a preliminary injunction must establish (1) he is likely to succeed on the merits, (2) he is likely to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in his favor, and (4) an injunction is in the public interest. Id.; see also WV Ass'n of Club Owners & Fraternal Servs., Inc. v. Musgrave, 553 F.3d 292, 298 (4th Cir. 2009).

Allstate misstates the proper standard for the likelihood of success on the merits, citing Blackwelder Furniture Co. of Statesville v. Seilig Mfg. Co., 550 F.2d 189 (4th Cir. 1977). Under Blackwelder, the court employed a balancing approach in which there is a "'flexible interplay' among all the factors considered . . . for all four [factors] are intertwined and each affects in degree all the others." 550 F.2d at 196 (internal citation omitted). Thus, according to Allstate, the company "need not show a likelihood of success." (ECF No. 3, at 14) (citing Blackwelder, 550 F.2d at 196). Rather, "it is enough that grave or serious questions on the merits are presented." (Id.)

But in the wake of the Supreme Court decision in Winter, the Blackwelder balancing approach "may no longer be applied in granting or denying preliminary injunctions in the Fourth Circuit." Real Truth About Obama, Inc. v. Fed. Election Comm'n, 575 F.3d 342, 347 (4th Cir. 2009), vacated on other grounds, 130 S. Ct. 2371 (2010) and adhered to in part sub nom. Real Truth About Obama, Inc. v. F.E.C., 607 F.3d 355 (4th Cir. 2010); Montgomery v. Hous. Auth. of Baltimore City, 731 F. Supp. 2d 439, 442 n.3 (D. Md. 2010). Instead, the Fourth Circuit has held a party seeking the preliminary injunction must demonstrate by "a clear showing that it is likely to succeed at trial on the merits." Real Truth About Obama, 575 F.3d at 351 (emphasis in original). The Fourth Circuit has not expressly required a movant to prove success on the merits is "more likely than not" in order to meet the requirement of a clear showing of likelihood of success on the merits.5 But, at least, the requirement "is far stricter than the Blackwelder requirement that the plaintiff demonstrate only a grave or serious question for litigation." Id. at 345-46.

Footnote 5. Circuit courts are split on the question. The Federal Circuit has held the Winter standard is the equivalent of finding that success on the merits is "more likely than not." Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1379 (Fed. Cir. 2009). The D.C. Circuit also interprets the stricter approach of the Fourth Circuit with regard to success on the merits as requiring a finding that success is more likely than not. See Sherley v. Sebelius, 644 F.3d 388, 398 (D.C. Cir. 2011) (discussing, but not necessarily agreeing with, the concurring opinion in Davis v. Pension Benefit Guaranty Corp., 571 F.3d 1288, 1292 (D.C. Cir. 2009)). On the other hand, the Second and the Ninth Circuits have rejected any interpretation of likelihood of success that would require a finding of "more [*39] likely than not." See Leiva-Perez v. Holder, 640 F.3d 962, 967 (9th Cir. 2011); Citigroup Global Mkts., Inc. v. VCG Special Opportunities Master Fund Ltd., 598 F.3d 30, 37 (2d Cir. 2010).

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