VCG Special Opportunities Master Fund Limited (“VCG”) appeals from the November 12, 2008 order of the United States District Court for the Southern District of New York (Barbara S. Jones, Judge) granting the plaintiff-appellee Citigroup Global Markets, Inc.’s (“CGMI”) motion for a preliminary injunction and enjoining VCG from proceeding with an arbitration initiated against CGMI before the Financial Industry Regulatory Authority (“FIN-RA”). VCG also appeals from the district court’s May 29, 2009 order denying its motion for reconsideration of the preliminary injunction. Because we conсlude that the “serious questions” standard for assessing a movant’s likelihood of success on the merits remains valid in the wake of recent Supreme Court cases, and because neither the district court’s assessment of the facts nor its application of the law supports a finding of abuse of discretion, we AFFIRM as to both orders.
BACKGROUND
On July 17, 2006, VCG, a hedge fund based on the Isle of Jersey, entered into a brokerage services agreement with CGMI. Under the agreement, CGMI was obligated to provide prime brokerage serviсes by clearing and settling trades in fixed income securities for VCG. VCG then entered into a credit default swap agreement with Citibank, N.A. (Citibank) (a sister-affiliate of appellee CGMI under the corporate umbrella of Citigroup, Inc.). VCG alleges that it was a “customer” of CGMI, which allegedly acted as the middleman with respect to the series of transactions culminating in the credit default swap agreement with Citibank. After entering into the swap, Citibank eventually declared a writedown of the assets covered in its credit default swap agreement with VCG, triggering VCG’s obligation to pay Citibank a total of $10,000,000.
VCG sued Citibank, seeking a declaration that, by declaring the writedown, Citibank had violated the terms of the parties’ credit default swap agreement. The district court found in Citibank’s favor and also found that VCG was in breach of the agreement by failing to fulfill its payment obligation.
VCG Special Opportunities Master Fund Ltd. v. Citibank, N.A.,
In addition to litigating its claims against Citibank, VCG began arbitration proceedings against CGMI before the FINRA pursuant to FINRA Rule 12200. 1 In response, CGMI filed а complaint in the district court to permanently enjoin the arbitration and for a declaration that CGMI had no obligation to arbitrate with VCG regarding the claims submitted to the FINRA arbitrators. On June 20, 2008, CGMI moved for a temporary restraining order and preliminary injunction against the FINRA arbitration pending a final resolution of CGMI’s claims. CGMI asserted that it was not a party to, and did not broker, the VCGCitibank credit default swap. Compl. ¶ 3. Specifically, CGMI argued that VCG was not a “customer” of CGMI for purposes of those transactions and, therefore, CGMI was under no obligation to arbitrate VCG’s claims under the FINRA rules.
*33 In opposition to the preliminary injunction motion, VCG submitted a declaration stating that “CGMI recommended and set the terms for” the credit default swap and that VCG’s employees had “dealt with several CGMI representatives in connection with the transaction, but most often with Jeff Gapusan, Donald Qu[i]ntin, and Jaime Aldama.” Wong Decl. ¶ 7. 2 The declaration further stated that “[t]he terms of the contract were negotiated directly with [a] CGMI employeе, Jeff Gapusan, who acted as liaison for the trading desk at CGMI.” Id. at ¶ 19; see also Gruber Deck, Ex. B (FINRA records listing the three men identified by Wong as the go-betweens on the Citibank deal as employees of CGMI).
In arguing that it had not acted as a middleman for the VCGCitibank credit default swap and that VCG was not its “customer,” CGMI contended that the people identified by VCG as its CGMI contacts were acting as agents of Citibank rather than CGMI, though they were formally employed by CGMI at the time of the VCG-Citibank negotiations. Vogeli Deck ¶ 6. CGMI also submitted a copy of VCG’s initial disclosures, from VCG’s action against Citibank, in which VCG had listed Jeff Gapusan and Donald Quintín as trading personnel employed by Citibank, not CGMI. Arffa Deck, Ex. 6. 3
On November 12, 2008, the district court granted CGMI’s motion for a preliminary injunction. In granting the injunction, the district court applied this circuit’s long-established standard for the entry of a preliminary injunction, under which the movant is required to show “ ‘irreparable harm absent injunctive relief, and either a likelihood of success on the merits, or a serious question going to the merits to make them a fair ground for trial, with a balance of hardships tipping decidedly in plaintiffs favor.’ ”
Citigroup Global Mkts. Inc. v. VCG Special Opportunities Master Fund Ltd.,
No. 08-cv-5520,
The district court further noted that, while some prior cases have required arbitration under the FINRA rules for claims involving non-securities, those cases “dealt in large part with individual brokers’ fraudulent conveyances or investments, where there is a strong policy argument favoring arbitration.” Id. The district court concluded that, “in light of the undefined scope of Rule [12200’s ‘business activities’ prerequisite and its application to cases not involving securities transactions,] and the unique set of facts before the Court,” CGMI had presented legal and factual issues that made its assertions a “fair ground for litigation.” Id. at *6. Finally, the district court found that the balance of hardships tipped decidedly in CGMI’s favor given that an injunction would simply freeze the arbitration without destroying VCG’s ability to continue that arbitration in the event that the district court determined that the dispute fell within the scope of the FINRA rules. Id.
On May 29, 2009, the distriсt court denied VCG’s motion for reconsideration, rejecting VCG’s argument that
Winter v. Natural Resources Defense Council, Inc.,
— U.S. -,
This appeal followed.
DISCUSSION
This Court reviews the grant of a preliminary injunction for abuse of discretion.
See Almontaser,
VCG first contends that the district court abused its discretion by applying the wrong legal standard to CGMI’s request for a preliminary injunction. VCG argues that three recent decisions of the Supreme
Court
— Munaf v.
Geren,
Winter articulates the following standard for issuing a preliminary injunction:
A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.
Winter,
I. The Continued Viability of the “Serious Questions” Standard
For the last five decades, this circuit has required a party seeking a preliminary injunction to show “(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief.”
Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc.,
The value of this circuit’s approach to assessing the merits of a claim at the preliminary injunction stage lies in its flexibility in the face of varying factual scenarios and the greater uncertainties inherent at the outset of particularly complex litigation. Preliminary injunctions should not be mechanicаlly confined to cases that are simple or easy. Requiring in every case a showing that ultimate success on the merits is more likely than not “is unacceptable as a general rule. The very purpose of an injunction ... is to give temporary relief based on a preliminary estimate of the strength of plaintiffs suit, prior to the resolution at trial of the factual disputes and difficulties presented by the case.
*36
Limiting the preliminary injunction to cases that do not present significant difficulties would deprive thе remedy of much of its utility.” 11A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
Federal Practice and Procedure
§ 2948.3 (2d ed.2009);
see also Dataphase Sys., Inc. v. CL Sys., Inc.,
Indeеd, the Supreme Court, prior to the trilogy of cases cited by VCG, has counseled in favor of a preliminary injunction standard that permits the entry of an injunction in cases where a factual dispute renders a fully reliable assessment of the merits impossible. In
Ohio Oil Co. v. Conway,
The Supreme Court’s recent opinions in
Munaf, Winter,
and
Nken
have not undermined its approval of the more flexible approach signaled in
Ohio Oil.
None оf the three cases comments at all, much less negatively, upon the application of a preliminary injunction standard that softens a strict “likelihood” requirement in cases that warrant it.
Munaf
involved a preliminary injunction barring the transfer to Iraqi custody of an individual captured in Iraq by the Multinational Force-Iraq.
Munaf,
Nor does
Winter
address the requisite probability of success of the movant’s underlying claims. While
Winter
rejеcted the Ninth Circuit’s conceptually separate “possibility of irreparable harm” standard,
Finally,
Nken
likewise did not address the issue of a moving party’s likelihood of success on the merits.
Nken
provides a four factor standard for granting a stay pending appeal, which the Court recognized as overlapping substantially with the рreliminary injunction standard.
*38
If the Supreme Court had meant for
Munaf, Winter,
or
Nken
to abrogate the more flexible standard for a preliminary injunction, one would expect some reference to the considerable history of the flexible standards applied in this circuit, seven of our sister circuits, and in the Supreme Court itself.
8
We have recognized this flexible standard since at least 1953,
see Hamilton Watch,
II. The District Court’s Analysis
Having determined that the district court did not err by applying the “serious questions” standard to CGMI’s motion for a preliminary injunction, we turn to VCG’s contentions that the district court misapplied that standard. VCG argues that the district court erred in assessing the issue of arbitrability when it (1) failed to construe the FINRA arbitration rules in favor of arbitration absent “positive assurance” that VCG’s claims in fact fell outside the scope of the arbitration agreement; (2) failed to recognize that VCG was a “customer” of CGMI as a matter of law; (3) found “serious questions” regarding whether a party requesting FINRA arbitration over a non-securitiеs transaction must provide a strong policy argument in favor of arbitration; and (4) inappropriately weighed the balance of hardships. 10
*39 A. “Positive Assurance” as to NonArbitrability and the Definition of “Customer”
VCG contends that our decision in John Hancock Life Insurance v. Wilson, 254 F.3d 48 (2d Cir.2001), requires the district court to order the parties to arbitrate, even in the face of doubts as to the scope of the arbitration provision, “unless it maybe said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” Id . at 58. VCG misapplies the holding of John Hancock in attacking the district court’s decision.
John Hancock rеquired a “positive assurance” of non-arbitrability in the face of an ambiguity in the scope of the arbitration provision of the NASD rules. Id at 59-60 (finding that the term “customer” in the NASD rules includes the clients of an “associated person” of the firm against whom arbitration is sought). In this case, however, there is no ambiguity as to the scope of the FINRA rules defining the term “customer”; the only unresolved question is whether, as a factual matter, VCG was CGMI’s “customer” under any definition of that term. If VCG’s credit default swap arrangements were never handled by an agent of CGMI, acting for that purpose, then VCG was not the “customer” of CGMI under any reasonable construction of that term. VCG’s argument based on John Hancock is inapposite given the nature of the dispute. Because the relevant question, in light of the contradictions in the record, is whether VCG was a “customer” of CGMI in even the broadest sense of the word, and because this issue is in sharp dispute, the district court committed no error of law or fact in holding that this uncertainty poses a serious question going to the merits of CGMI’s claims.
B. Arbitrability of Disputes Involving Non-Securities
VCG next argues that the preliminary injunction was based in part on too narrow a view of the types of disputes that are arbitrable under FINRA Rule 12200. The district court held that FINRA arbitration was not limited solely to disputes involving “business activities” related to securities, but stated that nonsecurities cases “have dealt in large part with individual brokers’ fraudulent conveyances or investments, where there is a strong policy argument favoring arbitration.”
Citigroup Global Mkts., Inc.,
Were the application of the FINRA rules to non-securities cases the sole ground on which the district court granted CGMI’s motion for preliminary relief, we would be forced to confront the district court’s suggested limitation of the definition of the term “business activities” in non-securities cases. However, because the district court correctly ruled that VCG’s customer status was a serious question going to the merits, we affirm the entry of the preliminary injunction even assuming an error of law as to the district court’s understanding of the term “business activity.”
*40 C. Weighing the Balance of Hardships
VCG next argues that the district court failed to consider that VCG would be “deprived of its right to a speedy resolution of its grievance with a broker-dealer” and would have “to incur the cost and expend the energy involved in litigating the threshold arbitrability question.” VCG Br. 45. The district court did not neglect these concerns: it expressly considered the imрact of delay on VCG and weighed that hardship against those that would be imposed on CGMI in the absence of a preliminary injunction. The district court’s balancing of those hardships did not constitute an abuse of discretion.
CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s orders granting CGMI’s motion for a preliminary injunction and denying VCG’s motion for reconsideration.
Notes
. In relevant part, FINRA Rule 12200 requires members of the FINRA to arbitrate the disputes pursuant to the FINRA Code of Arbitration Procedure if arbitration is “requested by [a] customer,” "[t]he dispute is between a customer and a member or associated person of a member,” and “[t]he dispute arises in connection with the business activities of the member.”
. The declaration stated that "the fee to be paid to CGMI was 5.5% per annum, calculated on the 'notional amount’ of $10,000,000 of the collateralized debt obligation, Millstone .... In return, VCG agreed to pay CGMI only upon the occurrence of a credit event.” Wong Decl. ¶ 19. The declaration misstates the parties to, and obligations provided in, the credit default swap agreement. As each of the documents underlying the swap agreement demonstrates, and contrary to the statements in Wong's declaration, Citibank, not CGMI, was the party with whom VCG contracted, and VCG, not CGMI, was to be paid 5.5% per annum. See Arffa Deck, Exs. 1-5.
. Following oral argument on CGMI’s motion for a preliminary injunction, VCG filed a supplemental initial disclosure in its case against Citibank and submitted the new disclosure to the district court in this case. The supplemental disclosure lists Gapusan and Quintín as employees of CGMI. VCG Sur-Reply in Oрp'n to Mot. for Prelim. Inj., Ex. A. The district court noted that the original disclosures were "not judicial admissions demonstrating that VCG knew that it was dealing with Citibank [and not CGMI],” but also that the disclosures gave the court reason to pause when considering VCG’s understanding of the three relevant employees’ roles at the time VCG interacted with them.
Citigroup Global Mkts. Inc. v. VCG Special Opportunities Master Fund Ltd.,
No. 08-cv-5520,
. We have recognized three limited exceptions to this general standard, none of which is relevant here. First,
[W]here the moving party sеeks to stay government action taken in the public interest pursuant to a statutory or regulatory scheme, the district court should not apply the less rigorous [“serious questions''] standard and should not grant the injunction unless the moving party establishes, along with irreparable injury, a likelihood that he will succeed on the merits of his claim.
Able v. United States,
Second, “[a] heightened 'substantial likelihood' standard may also be required when the requested injunction (1) would provide the plaintiff with ‘all the relief that is sought’ and (2) could not be undone by a judgment fаvorable to defendants on the merits at trial.”
Mastrovincenzo v. City of New York,
Third, a "mandatory” preliminary injunction that "alter[s] the status quo by commanding some positive act,” as opposed to a “prohibitory” injunction seeking only to maintain the status quo, "should issue ‘only upon a clear showing that the moving party is entitled to the relief requested, or where extreme or very serious damage will result from a denial of preliminary relief.’ ”
Tom Doherty Assocs.,
. We note that, prior to
Winter,
seven of the twelve regional Courts of Appeals, including this circuit and the Eighth Circuit in
Data-phase,
applied a preliminary injunction standard that permitted flexibility when confronting some probability of success on the merits that falls short of a strict fifty-one percent.
See Lands Council v. Martin,
On the other hаnd, three of our sister circuits have traditionally limited their prelimi
nary
injunction standards to the four factors cited in
Winter,
without reference to the possibility of obtaining an injunction based on a showing of serious questions going to the merits.
See Snook v. Trust Co. of Ga. Bank of Savannah, N.A.,
. To this extent,
Winter
reiterates thе majority position of the circuits, including this one, that a showing of irreparable harm is fundamental to any grant of injunctive relief.
See, e.g., Almontaser,
. The Supreme Court implies just the opposite in
Nken,
which contrasts a showing of a likelihood of success with a chance of success that is only "better than negligible.”
.As the Supreme Court noted in
Nken,
"[t]here is substantial overlap bеtween [the factors governing a motion to stay] and the factors governing preliminary injunctions; not because the two are one and the same, but because similar concerns arise whenever a court order may allow or disallow anticipated action before the legality of that action has been conclusively determined."
. We note that two of our sister circuits have retreated from a flexible approach in assessing the merits of a movant's case in light of
Winter. See Real Truth About Obama,
. Neither party contests that arbitrability itself was an issue for the district court to decide.
See Howsam v. Dean Witter Reynolds,
*39
Inc.,