On December 23, 2009, the Sixth Circuit ruled in a case of first impression that where defendants in a labor dispute persuaded the federal district court to dissolve a state-court temporary restraining order (TRO), they may recover damages, fees and costs under section seven of the Norris-LaGuardia Act, 29 U.S.C. sec. 107, even though no injunction bond was imposed on plaintiffs.
It's a principle of the Federal system that the state courts are always open. In this case, the plaintiffs obtained an injunction at the state court, but had their case removed to federal court. The defendants had the TRO dissolved. But who pays the fees and costs is the critical question.
The Sixth Circuit puts the burden on the plaintiffs, based on a policy argument: seeking a TRO involves a 'gut-check' that plaintiffs had better be willing to pay.
The problem is that in this situation it is clearly difficult for plaintiffs to estimate what the potential costs could be.
With this precedent, though, plaintiffs are going to have to have a bond in place going forward in this type of case.
Was plaintiffs' counsel in this case just 'too clever by half' in not originating the action in federal court in the first place--just to avoid the cost of a bond? Now the plaintiffs(?) are going to be out of pocket all the amounts up to the amount of the bond they should have obtained.
Michigan American Federation of State County and Municipal Employees v. Matrix Human Services, et al. (6th U.S. Circuit Court of Appeals)(Martin, J., joined by Rogers, J., and Reeves, J., sitting by designation) On appeal from the United States District Court for the Eastern District of Michigan.
