939 F.3d 597
3d Cir.2019Background
- In 1992 Congress enacted PASPA, banning government authorization of sports gambling; New Jersey law previously mirrored that ban.
- New Jersey voters and the legislature authorized sports wagering (2011 amendment, 2012 Act); the Leagues sued (Christie I), and courts initially held PASPA constitutional and enjoined New Jersey’s 2012 law.
- New Jersey passed a 2014 repeal-style statute allowing wagering at racetracks/casinos; NJTHA planned to operate Monmouth Park and intervened in Christie II.
- The Leagues obtained a TRO against NJTHA in Christie II and were required to post a bond (initially $1.7M, later $3.4M); the district court later granted summary judgment enjoining the 2014 Act under PASPA.
- The Third Circuit affirmed en banc that the 2014 Act "authorized" gambling; the Supreme Court in Murphy reversed, holding PASPA unconstitutional under the anti-commandeering principle (while agreeing repeal can constitute authorization).
- On remand NJTHA moved to recover the injunction bond; the district court denied recovery, and the Third Circuit vacated and remanded, holding NJTHA was "wrongfully enjoined" and entitled to a presumption of recovery of provable damages up to the bond.
Issues
| Issue | Plaintiff's Argument (NJTHA) | Defendant's Argument (Leagues/Appellees) | Held |
|---|---|---|---|
| Whether NJTHA was "wrongfully enjoined" under Fed. R. Civ. P. 65(c) | TRO rested on PASPA; Supreme Court later held PASPA unconstitutional, so NJTHA had the right all along to operate and was wrongfully enjoined | Focus on state of law when TRO issued: PASPA was treated as constitutional in this Circuit and the TRO targeted whether the 2014 Act "authorized" gambling; thus NJTHA was not wrongfully enjoined | NJTHA was wrongfully enjoined: "wrongfully enjoined" means the enjoined party had the right all along to do what it was enjoined from doing; that is determined by final judgment (here Murphy) |
| Whether district courts have discretion to deny bond damages (good cause) | Rule 65(c) requires security be available to compensate wrongfully enjoined parties; there is a presumption of recovery for provable damages up to the bond | District court may deny damages in its equitable discretion (Fifth Circuit rule); here change in law/good cause justified denial | Adopted majority approach: rebuttable presumption that a wrongfully enjoined party may recover provable damages up to the bond; district courts may deny recovery only for good reasons and must consider relevant factors (e.g., mitigation, reasonableness, outcome, parties' resources) |
| Extent of recovery and burden of proof | Entitled to collect up to bond without proving exact loss; may also seek excess damages for bad faith | Bond recovery not automatic; plaintiff must prove proximate, non-speculative damages | Recovery is presumptive but limited to provable damages up to bond; NJTHA bears burden on remand to prove proximate, non-speculative damages (not to mathematical precision) |
Key Cases Cited
- Murphy v. Nat'l Collegiate Athletic Ass'n, 138 S. Ct. 1461 (2018) (Supreme Court held PASPA unconstitutional under the anti-commandeering principle; agreed repeal can constitute authorization)
- Nat'l Collegiate Athletic Ass'n v. Governor of New Jersey, 832 F.3d 389 (3d Cir. 2016) (en banc) (Third Circuit held 2014 Act "authorized" sports wagering and affirmed injunction under PASPA)
- Nat'l Collegiate Athletic Ass'n v. Christie, 730 F.3d 208 (3d Cir. 2013) (panel) (earlier Third Circuit decision addressing PASPA and state repeal/authorization issues)
- Coyne-Delany Co. v. Capital Dev. Bd., 717 F.2d 385 (7th Cir. 1983) (articulated factors courts may consider when deciding whether to deny bond damages despite a prevailing defendant)
- Global Naps, Inc. v. Verizon New England, Inc., 489 F.3d 13 (1st Cir. 2007) (defined "wrongfully enjoined" and endorsed presumption of recovery for provable damages up to the bond)
- Nintendo of Am. v. Lewis Galoob Toys, 16 F.3d 1032 (9th Cir. 1994) (joined majority rule that wrongfully enjoined parties are presumptively entitled to recover provable damages up to the bond)
- Nokia Corp. v. InterDigital, Inc., 645 F.3d 553 (2d Cir. 2011) (confirmed presumption in favor of recovery but limited to provable damages)
- Front Range Equine Rescue v. Vilsack, 844 F.3d 1230 (10th Cir. 2017) (reiterated presumption that a wrongfully enjoined party may recover on the bond)
- Sprint Commc'ns Co. v. CAT Commc'ns Int'l, Inc., 335 F.3d 235 (3d Cir. 2003) (noted that whether a party was wrongfully enjoined generally is determined after trial and final judgment)