Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

U.S. D.I.D. Corp v. Windstream Communications

July 13, 2012

U.S. D.I.D. CORP.,
PLAINTIFF,
v.
WINDSTREAM COMMUNICATIONS, INC.,
DEFENDANT.



The opinion of the court was delivered by: Jesse M. Furman, District Judge:

MEMORANDUM OPINION AND ORDER

On June 21, 2012, the Court dissolved a temporary restraining order ("TRO") that it had granted to Plaintiff U.S. D.I.D. Corp. ("U.S. D.I.D."), in this case, requiring Defendant Windstream Communications, Inc. ("Windstream") to continue providing telecommunications services to U.S. D.I.D. Although U.S. D.I.D. filed a notice of voluntary dismissal the following day, and the case is now closed, the parties have each claimed entitlement to some or all of the security that U.S. D.I.D. was required to post when the TRO was issued. For the reasons stated below, the Court concludes that Windstream is entitled to a portion of the security.

BACKGROUND

On May 21, 2012, U.S. D.I.D., a reseller of interstate telecommunications services, filed this action against Windstream, a common and local exchange carrier, alleging breach of contract claims and violations of the Communications Act. (Compl. at 1). On the same date, U.S. D.I.D. moved for a TRO and an order to show cause why a preliminary injunction should not be granted to prevent Windstream from terminating its telecommunications services effective that night at 11:59 p.m. (Docket No. 21). Defendant threatened to terminate Plaintiff's services on the ground that Plaintiff was reselling those services in violation of an express provision in the retail customer contract between the parties. Plaintiff contended that the prohibition on resale was and is unenforceable as a violation of the Communications Act or, in the alternative, on the grounds of estoppel or waiver.

That same evening, the Court issued a TRO requiring Defendant to continue providing Plaintiff with telecommunications services, and subsequently scheduled a preliminary injunction hearing for June 4, 2012. The Court also required Plaintiff to post security in the amount of $314,672.80, amounting to twice the charges on the most recent monthly invoice it had received from Defendant. On June 4, 2012, the Court began, but did not finish, the preliminary injunction hearing. At the end of the hearing, the Court orally modified the TRO to permit Defendant to charge Plaintiff at the standard rates for reseller, rather than retail, customers, effective June 1, 2012 (as Windstream had previously demanded if U.S. D.I.D. wanted to avoid termination), and scheduled the hearing to conclude on June 21, 2012.

At the conclusion of the hearing on June 21, 2012, the Court issued an oral ruling on the record denying U.S. D.I.D.'s motion for a preliminary injunction and vacating the TRO. The Court held, among other things, that Plaintiff had failed to demonstrate either a likelihood of success on the merits or the existence of sufficiently serious questions going to the merits to make them a fair ground for litigation. After giving its ruling, the Court asked defense counsel whether there would be any objection to return of the security posted by U.S. D.I.D. while the case continued. Counsel responded: "No objection, your Honor, considering you are dissolving the TRO." (Tr. at 17). Accordingly, the Court directed Plaintiff's counsel to file a proposed order for the return of the security. (Id.)

The next day, Plaintiff submitted a proposed order for the return of the posted security. In addition, Plaintiff filed a notice of voluntary dismissal. (Docket No. 34). Within an hour of Plaintiff's submission of the proposed order, however, Defendant objected, requesting that a portion of the security be applied to pay an invoice Windstream had issued to U.S. D.I.D. on June 21, 2012, covering the period from May 14, 2012, to June 14, 2012. Since then, Plaintiff and Defendant have each submitted letters addressing what the Court should do with the posted security. (Docket Nos. 35 and 36). In the meantime, the case remains closed due to Plaintiff's notice of voluntary dismissal.

DISCUSSION

A.Applicable Law

Rule 65(c) of the Federal Rules of Civil Procedure provides that a court may issue a temporary restraining order, but "only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained." As the Second Circuit has explained, this bond requirement serves a number of functions. It assures the enjoined party that it may readily collect damages from the funds posted in the event that it was wrongfully enjoined, and that it may do so without further litigation and without regard to the possible insolvency of the plaintiff. In addition, the bond provides the plaintiff with notice of the maximum extent of its potential liability.

Nokia Corp. v. Interdigital, Inc., 645 F.3d 553, 557 (2d Cir. 2011) (internal citations omitted).

Given the language and purpose of Rule 65(c), a party wrongfully enjoined is "entitled to a presumption in favor of recovery" of "'provable' damages." Id. at 559 (quoting Global NAPs, Inc. v. Verizon New England, Inc., 489 F.3d 13, 23 (1st Cir. 2007)). To be entitled to recover, the wrongfully enjoined party must both "properly substantiate the damages sought" and demonstrate that they "were proximately caused by the wrongful injunction." Id.; see also, e.g., Blumenthal v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 910 F.2d 1049, 1056 (2d Cir. 1990) (holding that wrongfully enjoined parties "are entitled to damages as may be shown to have been proximately caused by the injunction, up to the amount of the bond") (citation omitted). The proof of damages, however, "does not need to be to a mathematical certainty." Nokia, 645 F.3d at 559 (quoting Global NAPs, 489 F.3d at 24) (brackets omitted).

If the party seeking recovery adequately establishes its damages, a court "must have a 'good reason' to deny recovery against the bond." Id. (quoting Global NAPs, 489 F.3d at 23). "Good reasons to deny recovery of all or a portion of the alleged damages would be that the damages sought were unreasonable in amount or that a party failed to mitigate them." Id. (citing cases). In light of the presumption in favor of ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.