Performance Unlimited, Inc. v. Questar Publishers, Inc.
52 F.3d 1373 | Court of Appeals for the Sixth Circuit | 1995
What This Case Means for Subcontractors
Performance Unlimited sued Questar Publishers over unpaid royalties under a licensing agreement that required arbitration as the sole remedy. The district court refused to issue a preliminary injunction to preserve royalties during arbitration. The Sixth Circuit reversed, holding that courts can grant preliminary injunctions to maintain the status quo pending arbitration when standard legal requirements are met. This matters to subcontractors because it means you can ask a court to protect your payment rights while disputes go to arbitration, rather than waiting months or years without payment.
Key Takeaways
- •If your contract requires arbitration, you can still ask a court for a preliminary injunction to preserve payment or performance obligations while arbitration proceeds
- •Courts will grant emergency relief (like payment orders) during arbitration if you meet the standard four-factor test: likelihood of success, irreparable harm, balance of equities, and public interest
- •Don't assume mandatory arbitration clauses prevent you from getting court protection—arbitration and preliminary injunctions can work together
District court erred as a matter of law denying preliminary injunctive relief due to mandatory arbitration.
Frequently Asked Question
If my contract says disputes must go to arbitration, can I still ask a court to order the other party to pay me while we arbitrate?
Yes. Courts can issue preliminary injunctions to preserve payment obligations during arbitration if you show you're likely to win, you'll suffer irreparable harm without the payment, and the balance of fairness favors you. This prevents the arbitration process from becoming meaningless because you're unpaid for months.
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