Although economic injury ordinarily won’t show irreparable harm to justify a preliminary injunction, the likelihood of being forced into bankruptcy can be grounds for a preliminary injunction, the Third Circuit said.

The plaintiff was a liquor wholesaler. The defendant was its primary supplier. The wholesaler was under a noncompetition agreement that effectively prevented it from having another liquor supplier. The wholesaler generated 85% of its sales from goods provided by the supplier.

When the supplier threatened to cut off the wholesaler, the wholesaler sued the supplier and sought a preliminary injunction that would compel the supplier to continue selling. The district court denied the motion for a preliminary injunction, reasoning that the wholesaler could find other suppliers.

The wholesaler appealed denial of the preliminary injunction to the Third Circuit and won a reversal in an August 17, nonprecedential opinion by Circuit Judge Stephanos Bibas. The appeals court had appellate jurisdiction over an interlocutory order denying an injunction under 28 U.S.C. § 1292(a)(1), the judge said.

To warrant issuance of a preliminary injunction, the plaintiff first must show likelihood of success on the merits and “irreparable harm” absent the injunction. Once those factors are shown, “the court must also weigh the harm to other parties and the public interest,” Judge Bibas said.

The case on appeal, Judge Bibas said, turned “on whether the threatened harms are irreparable.” Ordinarily, he said, “economic injuries usually can be repaired later on” and are not irreparable.

On the other hand, Judge Bibas cited Third Circuit authority and said, “Injuries are irreparable if they would jeopardize an ongoing case’s survival or at least threaten interim harm that the court could not redress after trial.”

While “injuries that force a business to close or go bankrupt can count,” Judge Bibas said, the “bar is high.” For example, he pointed to a case where the Third Circuit had vacated a preliminary injunction. Even though the plaintiff claimed it would lose 80% of its revenue, the plaintiff “could have gotten more business elsewhere,” Judge Bibas said.

In view of the noncompetition agreement that would bar the wholesaler from using other suppliers, Judge Bibas said that the district “clearly erred in finding that [the wholesaler] could readily get more business.”

Judge Bibas reversed. On remand, he instructed the district court to determine whether the wholesaler “offers enough concrete evidence that, absent a preliminary injunction, it will have to go bankrupt or shut down.”