Thursday, October 14, 2010

The Liverpool Temporary Restraining Order

Mr George Gillett and Tom Hicks Co Chairman share a joke before the start of the Match ( Today 16/04/10 Both Chairman put Liverpool Football Club up for sale) Liverpool 2008/09 Liverpool V Arsenal (4-4) 21/04/09 The Premier League Photo Robin Parker Fotosports International Photo via Newscom

In yesterday's article I discussed how personal jurisdiction in relationship to the Liverpool lawsuit works in Texas. Today, a quick glimpse at the Temporary Restraining Order. This article is meant along the lines of what Wikipedia calls a stub and is not intended as a detailed discussion of the law of temporary restraining order - this article is not legal advice, does not create an attorney-client relationship, and is not intended as attorney advertising.

In addition to filing a lawsuit in Texas state court yesterday, Tom Hicks and George Gillett, through their various holding and investment companies, also requested and obtained a temporary restraining order that essentially delays the sale of Liverpool FC to John Henry and NESV.

Temporary restraining orders are considered something of an extreme remedy and are only issued in certain instances. In essence, a plaintiff has to show the court that if it does not issue a TRO then some imminent event or action is about to occur that basically hurts the plaintiff or the plaintiff's claim in an irreparable manner. In this instance it is the completion of the sale, which had been scheduled for Friday October 15, 2010.

Since TROs are issued solely on the oath (and bond) of one party, they don't last long, in fact the court has to have a hearing, where the defendant can contest the matter, within 14 days. In the Liverpool matter, the hearing is set for Monday October 25th. The defendants can try to get the court to move the hearing up to an earlier date, but unlikely that a hearing would be held before Monday.

There are indications that the defendants will be pursing their own legal avenues in English court today, seeking injunctive relief that would prevent or limit the ability of the Hicks & Gillett to move forward with their Texas litigation. The immediate impact of any such order by the English courts would result in something of a standoff that will still make it difficult to move forward with the sale of Liverpool this week.

Assuming that the English court rules against Hicks & Gillett, it doesn't remove the fact that there is a valid (under Texas law), standing order in a Texas court and failure to comply with that order could result in costly contempt charges or prolonged additional litigation over which court has ultimate authority. To protect themselves, the defendants in the Texas litigation will need to get the Texas court to lift the TRO before completing the sale of the club. To do this, they can try to get a hearing as soon as possible, and due to notice requirements, that will probably be no earlier than Monday.

Alternatively, if the English court forbids Hicks & Gillett from pursuing their Texas litigation, the defendants can wait till the 25th to see if Hicks & Gillett allow the TRO to expire on its own. If Hicks & Gillett disobey the English court order and move forward with the Texas litigation, then they would be in contempt of the English court and subject to penalties under English law.

As the attorney in the interview below notes, the Texas court will not completely ignore what has occurred in the English courts and could give judicial notice to those results. However, the Texas litigation is not at that stage in the process yet, and until then, NESV and Royal Bank of Scotland are smart to comply with any orders of the Texas court.

These proceedings highlight not only the international nature of big business these days but the international nature of the English Premier League, and the types of litigation nightmares that can result when there is no contractual choice of law provision governing disputes between parties.

The sad reality of this matter is that it has gone this far and has entered a realm that is a nightmare to Liverpool fans and a legal/financial minefield for the parties who own, run, and operate Liverpool.

CLICK HERE to jump to an interview another Texas attorney did on BBC 5 Live's Wake up to Money.

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