Can a court tie up the assets of a company merely because damage claims have been filed against it -- claims that have yet to be tried? The U.S. Court of Appeals in Philadelphia recently said "yes," but that is not the rule in all of the country.

The issue comes up when there's reason to fear that unless the court steps in, the company will move assets out of the country or otherwise hide them in such a way that even if the plaintiff wins the case there will be nothing left from which to collect a judgment.

The trial court in the Philadelphia case, Hoxworth v. Blinder, Robinson, was persuaded that there was a possibility that would happen: There was evidence that both the parent firm of a brokerage company accused of deceiving investors and the president of the firm had transferred a lot of money from New York to Hong Kong during the course of the securities fraud litigation.

So the judge ordered the return of all funds that had been moved abroad, their deposit in a bank in the Philadelphia area and a freeze on all use of the assets without approval from the court.

Two years ago, the U.S. Court of Appeals in New Orleans said that such an order, intended to protect a damages order that might be issued in the future, is beyond the authority of the federal courts, even assuming "that the defendants are scoundrels who will try to escape judgment."

But the Philadelphia appellate court, siding with the U.S. Court of Appeals in Boston, came to just the opposite conclusion and said that putting strings on a defendant's assets while a case is pending can be justified in some cases. The criteria: a likelihood that the plaintiff will win, and evidence that without an injunction assets will disappear.

Nonetheless, the May 9 decision threw out the injunction in the Blinder, Robinson case. That's because the amount of money ordered repatriated bore no relationship to the potential damages the disgruntled investors might win. Judge Edward R. Becker said that a trial judge may make a liberal estimate of the amount of final damages, but that there must be a close connection between the predicted amount and the value of the assets bound up by the court.

In other cases, courts ruled that:

The U.S. Tax Court cannot change its mind. The U.S. Court of Appeals in St. Louis ruled that the tribunal has no equitable powers -- the authority that lets a court bend the rules in the cause of justice. That means that once a judgment of the court becomes final -- 90 days after a decision is handed down, unless an appeal is filed -- it has to stand. Even if new evidence is later uncovered which might help a taxpayer, the court cannot reopen the matter.

Webbe v. Commissioner, May 4 If utilities want to give to charities, the money has to come from the stockholders, not the customers. The New York Public Service Commission had approved utilities' including in their cost of operations their charitable contributions, meaning that the expenditure can be recouped in rates charged customers.

But because of that state approval, a ratepayer who objected to some of the activities of the charities involved insisted that the scheme violates the First Amendment. The state Court of Appeals, the highest court in New York, agreed.

That amendment means not only that citizens have a right to back causes of their choice, the judges ruled, but that they cannot be forced to back causes they do not choose.

Cahill v. Public Service Commission, May 10 Lawyers cannot use evidence uncovered in one case to bring another suit on behalf of the government. "Qui tam" litigation brought to collect money in the name of the government is a growing business, since the private party who brings the action gets a slice of the recovery. But such suits must be based on originally developed evidence. And the U.S. District Court in Trenton, N.J., told a law firm that records obtained with court authority in one case do not qualify as independently developed information.

U.S. ex rel Stinson, Lyons v. Prudential, May 4 Federal employee unions cannot demand that agencies discuss a proposal to let workers allow smoking in their own offices. The National Treasury Employees Union asked for individual employees of the Internal Revenue Service to have that right, and the Federal Labor Relations Authority deemed it a legitimate bargaining demand.

The U.S. Court of Appeals in Washington, however, overturned the FLRA. A General Services Administration regulation says that it is up to the head of an agency to designate smoking and nonsmoking areas, and therefore a collective bargaining agreement cannot turn the decision over to each worker to decide, Judge Abner Mikva said. He said that it would be all right for the union to ask that agency heads allow workers to smoke in their own offices whenever such a request is feasible.

IRS v. FLRA, May 1

Daniel B. Moskowitz is a Washington editor for Business Week newsletters.