U.S. D.I.D. Corp. v. Windstream Communications, Inc.
775 F.3d 128
| 2d Cir. | 2014Background
- D.I.D. obtained a TRO against Windstream in SDNY, requiring security under Rule 65(c).
- Windstream sought to recover from the TRO security after D.I.D. filed a voluntary dismissal without prejudice.
- District court initially held that recovery required final adjudication on the merits, but later allowed recoveries based on dismissal.
- D.I.D. challenged the district court’s authority and the legal basis for recovery from the TRO security.
- Court held that recovery from TRO security is collateral to merits and may follow a voluntary dismissal if there was wrongful restraint.
- Remand for factual and rate-based calculations to determine which periods and rates justified restitutionary damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction after dismissal | Dismissal voids jurisdiction to award security damages. | Collateral issues remain jurisdictional and recoverable post-dismissal. | Collateral recovery from Rule 65(c) security remains permissible after dismissal. |
| Equitable estoppel and waiver | Windstream cannot recover due to alleged reliance on objection to release. | No detrimental reliance or clear waiver; objections were inadvertent. | Equitable estoppel and waiver not established. |
| Wrongful restraint standard | Voluntary dismissal establishes wrongfulness of restraint. | Dissolution of TRO after denial of injunction does not always prove restraint was wrongful. | Wrongful restraint can be shown without final merits adjudication; dismissal alone not decisive. |
| Damages measure on security | Damages should reflect actual costs incurred by Windstream. | Damages should reflect market value/restitution to avoid windfall profits. | Restitutionary measure preferred; market value favored over cost in restitutionary framework. |
| Timing and periods of recoverable damages | All periods the TRO restrained are recoverable. | Some periods (e.g., thirty-day notice) may not be recoverable. | Remand to determine which periods were wrongful and the corresponding recoverable damages. |
Key Cases Cited
- Grupo Mexicano de Desarrolló v. Alliance Bond Fund, Inc., 527 U.S. 308 (U.S. 1999) (wrongful restraint not always tied to final merits; equities may justify recovery)
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (U.S. 1990) (collateral issues may be decided after voluntary dismissal without prejudicing right to dismiss)
- Blumenthal v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 910 F.2d 1049 (2d Cir. 1990) (recovery on injunction bond permitted after merits adjudication via arbitration)
- Nokia Corp. v. InterDigital, Inc., 645 F.3d 553 (2d Cir. 2011) (Rule 65(c) damages are recoverable without regard to insolvency; damages allowed for wrongful restraint)
- University of Texas v. Camenisch, 451 U.S. 390 (U.S. 1981) (final merits proceedings typically required to determine wrongfulness, but not always)