U.S. D.I.D. Corp. v. Windstream Communications, Inc. In the 1

13‐206‐cv
U.S. D.I.D. Corp. v. Windstream Communications, Inc.
In the 1
United States Court of Appeals 2
For the Second Circuit 3
4
August Term, 2013 5
No. 13‐206‐cv 6
U.S. D.I.D. C ORP ., 7
Plaintiff‐Appellant, 8
v. 9
W INDSTREAM C OMMUNICATIONS , INC., 10
Defendant‐Appellee. 11
12
Appeal from the United States District Court 13
for the Southern District of New York. 14
No. 12‐cv‐4023 ― Jesse M. Furman, Judge. 15
16
17
A RGUED: MARCH 31, 2014 18
D ECIDED: D ECEMBER 22, 2014 19
20
21
Before: K ATZMANN, Chief Judge, W ALKER and D RONEY , Circuit Judges. 22
23
24
Appeal from an order of the United States District Court for 25
the Southern District of New York (Furman, Judge) awarding the 26

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defendant damages from security posted by the plaintiff upon the 1
grant of a temporary restraining order under Rule 65(c) of the 2
Federal Rules of Civil Procedure. We hold that the district court 3
retained jurisdiction to award such damages from the security after 4
the plaintiff’s notice of voluntary dismissal under Rule 41(a)(1)(A)(i) 5
of the Federal Rules of Civil Procedure. Because we conclude that 6
the district court must determine that the defendant was wrongfully 7
restrained before awarding recovery on the security, however, we 8
remand. Finally, we find that, where the district court determines 9
that the defendant was wrongfully restrained by being required to 10
provide services to the plaintiff, it may order recovery from the 11
security in an amount equal to the market value of the services 12
provided. 13
Accordingly, we VACATE and REMAND. 14
15
16
JOSEPH K. S CULLY , Day Pitney LLP, Hartford, 17
Connecticut (Nancy Kourland, Rosen & 18
Associates, P.C., New York, New York, on the 19
brief), for Plaintiff‐Appellant. 20
B RIAN J. B UTLER, Bond, Schoeneck & King, PLLC, 21
Syracuse, New York, for Defendant‐Appellee. 22
23
D RONEY , Circuit Judge: 24
This appeal presents the question of whether a defendant may 25
recover costs and damages from security posted by a plaintiff in 26
obtaining a temporary restraining order (“TRO”), even though the 27

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plaintiff later filed a notice of voluntary dismissal without prejudice, 1
preventing a final adjudication on the merits. The U.S. District Court 2
for the Southern District of New York (Furman, Judge) granted 3
Plaintiff‐Appellant U.S. D.I.D. Corp. (“D.I.D.”) a TRO against 4
Defendant‐Appellee Windstream Communications, Inc. 5
(“Windstream”). In doing so, the district court required D.I.D. to 6
post security with the court clerk under Rule 65(c) of the Federal 7
Rules of Civil Procedure (the “TRO security” or “Rule 65(c) 8
security”).1 The district court later denied D.I.D.’s motion for a 9
preliminary injunction and dissolved the TRO, concluding that 10
D.I.D. failed to show a likelihood of success on the merits of the 11
underlying suit. Soon afterward, D.I.D. filed a notice of voluntary 12
dismissal without prejudice under Rule 41(a)(1)(A)(i) of the Federal 13
1 Rule 65(c) employs the term “security,” which includes bonds. Typically, bonds
securing a TRO are posted by a surety, while “security” includes amounts
deposited directly by the plaintiff into the court, as occurred here. As discussed
below in the text, Rule 65.1 of the Federal Rules of Civil Procedure provides for
an expedited procedure against sureties for such bonds.

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Rules of Civil Procedure. Windstream then moved for an award of 1
costs and damages from the TRO security. The district court found 2
that awarding recovery from such security requires a final 3
adjudication on the merits. It went on to conclude, however, that 4
D.I.D.’s voluntary dismissal without prejudice functioned as a final 5
adjudication on the merits and allowed recovery on the TRO 6
security. 7
We agree that a district court may grant recovery from a TRO 8
security after the plaintiff files a notice of voluntary dismissal. We 9
hold that recovery from a TRO security requires only a 10
determination that the defendant was wrongfully restrained, and 11
not necessarily a final adjudication on the merits. Because the district 12
court never made this specific determination, we VACATE the 13
judgment of the district court and REMAND for the district court to 14
determine whether, and for what time period, Windstream was 15

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wrongfully restrained by the TRO, and to calculate the damages 1
accordingly. 2
BACKGROUND 3
D.I.D. was, during the relevant time, a small, privately held 4
business engaged in the resale of telecommunications services to 5
“calling card” providers, “call centers,” and similar businesses. 6
D.I.D. in turn purchased telecommunications services from PAETEC 7
Communications, Inc. (“PAETEC”) under a long distance service 8
calling agreement (the “Service Agreement” or the “Agreement”) 9
entered into on May 5, 2011. The Agreement contained a 10
“limitations of service” clause, which stated that D.I.D. “may not 11
purchase services under this retail service agreement and resell 12
services to end users.” J.A. 81. The Agreement also contained a 13
termination provision, stating that “[a] party may terminate the 14
Agreement on thirty (30) days’ written notice if the other party 15
materially breaches the Agreement . . . .” J.A. 80. 16

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Windstream acquired PAETEC in late 2011. On March 27, 1
2012, Windstream informed D.I.D. that it had determined that D.I.D. 2
was engaged in resale of Windstream’s services, in violation of the 3
Agreement’s “limitations of service” clause. Windstream indicated 4
that it would raise D.I.D.’s rates to what the parties later referred to 5
as “interim” rates—between its lower “retail” rates and its higher 6
“wholesale” rates—until June 1, 2012. Windstream stated that it 7
would further increase D.I.D.’s rates to its “standard wholesale 8
rates” after June 1. In response to Windstream’s rate change 9
notification, D.I.D. did not deny that it was engaged in the resale of 10
Windstream’s telecommunications services. Instead, D.I.D. alleged 11
that Windstream’s attempt to raise its rates constituted an 12
impermissible restriction on the resale of telecommunications 13
services in violation of federal law. 14
On May 3, 2012, Windstream sent D.I.D. a termination notice. 15
Windstream asserted that its differential pricing structure for retail 16

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customers and wholesalers was lawful, and that D.I.D. “specifically 1
agreed to that distinction when [it] signed [its] retail contract.” J.A. 2
116. Windstream indicated that it interpreted D.I.D.’s most recent 3
response “as an improper refusal to pay the increased rates” and 4
that it would terminate D.I.D.’s services five days later, on May 8, 5
2012. Id. Windstream later agreed not to disconnect D.I.D.’s service 6
before May 21, 2012. 7
On May 21, 2012, D.I.D. filed a complaint and a motion for a 8
TRO against Windstream in the U.S. District Court for the Southern 9
District of New York. The district court granted the TRO that day, 10
enjoining Windstream from terminating service to D.I.D. In issuing 11
the order, the district court required that D.I.D. deposit $314,672.80, 12
an amount equal to twice the charges on Windstream’s most recent 13
monthly invoice, as security into the registry of the district court. 14
The district court held a hearing on May 23, 2012, which it 15
continued until June 4, 2012. At the June 4 hearing, the district court 16

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determined that it would “allow Windstream to increase the rates to 1
the wholesale rates effective June 1[]” until the hearing on D.I.D.’s 2
motion for a preliminary injunction, scheduled for June 21, 2012. 3
J.A. 629. Throughout the course of these hearings, the TRO remained 4
in effect, and Windstream continued to provide telecommunications 5
services to D.I.D.2 6
At the June 21, 2012 hearing, the district court denied D.I.D.’s 7
motion for a preliminary injunction and dissolved the TRO. The 8
district court concluded that although D.I.D. had established 9
irreparable harm at the time the TRO was first issued, any risk of 10
such harm that remained on June 21 resulted from D.I.D.’s failure to 11
use the time when the TRO was in effect to obtain a new service 12
provider. The district court further concluded that D.I.D. had failed 13
2 A TRO cannot exceed fourteen days unless the district court, “for good cause,”
extends it for another period of no more than fourteen days; a TRO lasting longer
than twenty‐eight days requires that the adverse party consent, as apparently
occurred here. Fed. R. Civ. P. 65(b)(2).

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to establish a likelihood of success on the merits of the underlying 1
contractual dispute. The district court determined that D.I.D. was 2
engaged in the resale of telecommunications services, and that this 3
resale constituted a material breach of the Service Agreement. 4
Finally, in response to D.I.D.’s contention that Windstream’s May 3 5
notice of termination was ineffective because it provided that 6
services would be terminated on May 8, before the end of the 7
Agreement’s thirty‐day termination notice requirement, the district 8
court concluded that this issue was moot. The district court reasoned 9
that under New York law a termination notice that incorrectly 10
identifies the termination date nevertheless becomes effective as of 11
the correct termination date. 12
After issuing this ruling, the district court asked counsel for 13
Windstream whether it objected to the return of the TRO security to 14
D.I.D. Windstream’s counsel responded: “No objection, your Honor, 15
considering you are dissolving the TRO.” J.A. 653. The district court 16

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also noted that Windstream had not filed an answer to D.I.D.’s 1
complaint, even though Windstream’s answer was due that day. 2
Windstream’s counsel requested an extension, and the district court 3
granted an extension until 5 p.m. the following day, June 22, 2012. 4
Early in the day on June 22, before Windstream filed its 5
answer, D.I.D. filed a notice of dismissal without prejudice under 6
Rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure. Three 7
days later, Windstream sent a letter to the district court requesting 8
recovery from the TRO security. In the letter Windstream’s counsel 9
acknowledged that he had not objected to the return of the TRO 10
security at the June 21 hearing. He explained, however, that at the 11
time of the hearing he was not aware that Windstream had just 12
issued an invoice in the amount of $244,888.79 for services rendered 13
between May 15, 2012 and June 14, 2012. Windstream requested that 14
the district court direct the payment of that amount from the TRO 15
security. 16

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On January 7, 2013 the district court issued an opinion and 1
order concluding that D.I.D.’s voluntary dismissal established that 2
Windstream was entitled to recover from the TRO security. See U.S. 3
D.I.D. Corp. v. Windstream Commc’ns, Inc. (U.S. D.I.D. II), 916 F. Supp. 4
2d 501 (S.D.N.Y. 2013).3 The district court found that recovery on 5
Rule 65(c) security—“a[t] least in this Circuit”—required a final 6
adjudication on the merits. Id. at 506‐07. The district court 7
nevertheless concluded that a voluntary dismissal without prejudice 8
may function as a final adjudication on the merits for the purpose of 9
recovery on Rule 65(c) security. Id. at 508‐11. Because D.I.D.’s 10
decision to enter a voluntary dismissal without prejudice 11
immediately followed the court’s denial of D.I.D.’s motion for a 12
3 The district court’s opinion and order vacated its earlier July 13, 2012 opinion
and order granting in part Windstream’s request for recovery from the TRO
security. See U.S. D.I.D. Corp. v. Windstream Commc’ns, Inc. (U.S. D.I.D. I), No. 12
Civ. 4023, 2012 WL 2878136 (S.D.N.Y. July 13, 2012). The district court’s July 2012
opinion and order had held that a final adjudication on the merits was not
necessary for recovery on the TRO security, id. at *3, and that its denial of D.I.D.’s
motion for a preliminary injunction determined the wrongfulness of the TRO, id.
at *4.

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preliminary injunction and the dissolution of the TRO, and because 1
there was no reason to explain D.I.D.’s voluntary dismissal other 2
than the court’s determination that D.I.D. was unlikely to prevail on 3
the merits, the district court concluded that the dismissal qualified 4
as a final adjudication on the merits. Id. at 514‐15. Finally, the district 5
court calculated the damages recoverable against the TRO security 6
at $227,271.92, a figure that it reached based on the “interim” rates 7
that Windstream charged for the period from May 22, 2012 (when 8
the TRO was first entered) to May 31, 2012, and the wholesale rates 9
for the period from June 1, 2012 to June 21, 2012 (when the TRO was 10
dissolved). Id. at 515‐16. This appeal followed. 11
DISCUSSION 12
D.I.D. raises four issues on appeal. First, D.I.D. argues that the 13
district court lacked jurisdiction to order recovery from the TRO 14
security because the district court’s order followed D.I.D.’s 15
voluntary dismissal without prejudice. Second, D.I.D. contends that 16
Windstream is equitably estopped from asserting and has waived its 17

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claim to recovery from the TRO security. Third, D.I.D. argues that 1
the district court erred in concluding that D.I.D.’s voluntary 2
dismissal established that Windstream had been wrongfully 3
restrained by the TRO. Finally, D.I.D. asserts that, even if 4
Windstream were entitled to recovery from the TRO security, the 5
district court erred in calculating the amount based on the rates 6
charged by Windstream, rather than the cost to Windstream of 7
providing the telecommunications services. We address each 8
argument in turn. 9
I. Jurisdiction to Order Recovery on the TRO Security 10
D.I.D. argues that the voluntary dismissal of its complaint 11
deprived the district court of subject matter jurisdiction to award 12
recovery from the TRO security. We review jurisdictional questions 13
de novo. United States ex rel. Anti‐Discrimination Ctr. of Metro N.Y., Inc. 14
v. Westchester Cnty., 712 F.3d 761, 767 (2d Cir. 2013). 15

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Rule 41(a)(1) of the Federal Rules of Civil Procedure allows a 1
plaintiff “one free dismissal.” Cooter & Gell v. Hartmarx Corp., 496 2
U.S. 384, 397‐98 (1990). The Rule “permits a plaintiff to dismiss an 3
action without prejudice” so long as the plaintiff “files a notice of 4
dismissal before the defendant files an answer or motion for 5
summary judgment and . . . the plaintiff has never previously 6
dismissed an action based on or including the same claim.” Id. at 394 7
(internal quotation marks omitted). A voluntary dismissal without 8
prejudice “vitiate[s] and annul[s] all prior proceedings and orders in 9
the case, and terminat[es] jurisdiction over it for the reason that the 10
case has become moot.” Oneida Indian Nation of N.Y. State v. Oneida 11
Cnty., 622 F.2d 624, 629 n.7 (2d Cir. 1980) (citation and internal 12
quotation marks omitted). 13
“It is well established,” however, “that a federal court may 14
consider collateral issues after an action is no longer pending.” 15
Cooter & Gell, 496 U.S. at 395. A district court may, for instance, grant 16

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an award of costs or attorney’s fees or initiate contempt proceedings 1
after a voluntary dismissal without prejudice. Id. at 395‐96. When a 2
district court addresses such collateral issues “after a voluntary 3
dismissal[, it] does not deprive the plaintiff of his right under Rule 4
41(a)(1) to dismiss an action without prejudice” because the issues’ 5
resolution “does not signify a district court’s assessment of the legal 6
merits of the complaint.” Id. at 396. This is true “[e]ven if a district 7
court indicated that a complaint was not legally tenable or factually 8
well founded for Rule 11 purposes,” because “the resulting Rule 11 9
sanction would nevertheless not preclude the refiling of a 10
complaint.” Id. 11
Like the Rule 11 sanctions at issue in Cooter & Gell, a district 12
court’s awarding recovery from a Rule 65(c) security following the 13
voluntary dismissal of a complaint “is not a judgment on the merits 14
of an action.” 496 U.S. at 396. True, a district court may express its 15
views on the merits of the underlying claims in determining 16

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whether a party was wrongfully restrained, just as it may express its 1
views on the merits of the underlying claims in determining 2
whether a complaint is frivolous and warrants sanctions. But that 3
does not preclude the district court from considering collateral 4
issues such as sanctions or recovery from a Rule 65(c) security. 5
Our conclusion is consistent with the policies underlying both 6
Rule 41(a)(1) and Rule 65(c) of the Federal Rules of Civil Procedure. 7
In Cooter & Gell, the Supreme Court observed that Rule 41(a)(1) was 8
“designed to curb abuses of . . . nonsuit rules” by limiting the right 9
to voluntary dismissal without prejudice to “the brief period before 10
the defendant had made a significant commitment of time and 11
money.” Id. at 397. Similarly, Rule 11 operates to deter “[t]he filing of 12
complaints, papers, or other motions without taking the necessary 13
care in their preparation,” which constitutes “a separate abuse of the 14
judicial system, subject to separate sanction.” Id. at 398. 15

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Just as “the harm triggering Rule 11’s concerns has already 1
occurred” upon the mere filing of baseless papers “[e]ven if the 2
careless litigant quickly dismisses the action,” id., a defendant may 3
have already suffered harm while the TRO was in effect even if the 4
TRO is subsequently dissolved. The Rule 65(c) security requirement 5
is designed to “assure[] the [restrained] party that it may readily 6
collect damages from the funds posted in the event that it was 7
wrongfully [restrained], and that it may do so without further 8
litigation and without regard to the possible insolvency of the 9
plaintiff.” Nokia Corp. v. InterDigital, Inc., 645 F.3d 553, 557 (2d Cir. 10
2011). To achieve these purposes, a district court must retain 11
jurisdiction to award costs and damages from Rule 65(c) security 12
despite the plaintiff’s entry of a voluntary dismissal under Rule 13
41(a)(1). Like the imposition of Rule 11 sanctions, moreover, an 14
award of costs and damages from Rule 65(c) security “is useful to 15
deter . . . misconduct.” Cooter & Gell, 496 U.S. at 398. Discouraging 16

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abuse of TROs is particularly important given the “drastic” character 1
of the remedy, Pan Am. World Airways, Inc. v. Flight Eng’rs’ Int’l 2
Ass’n, 306 F.2d 840, 843 (2d Cir. 1962), which may be issued in an ex 3
parte proceeding in which the restrained party lacks the opportunity 4
to be heard, see In re Vuitton et Fils S.A., 606 F.2d 1, 4 (2d Cir. 1979) 5
(per curiam). 6
Determining whether a defendant is entitled to recover from a 7
Rule 65(c) security following a plaintiff’s voluntary dismissal is also 8
consistent with the “expeditious, summary procedure” provided for 9
by Federal Rule of Civil Procedure 65.1. 11A Wright & Miller § 2972. 10
Rule 65.1 permits a wrongfully enjoined or restrained party, by 11
motion and without filing an independent action, to collect against a 12
non‐party surety on a TRO or injunction bond. Where a plaintiff has 13
voluntarily dismissed its suit before a final adjudication on the 14
merits, the defendant’s recovery on the Rule 65(c) security would 15

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similarly be sought by motion and adjudicated in a summary 1
proceeding. 2
Accordingly, the issue of whether the defendant may recover 3
against a Rule 65(c) security is collateral to the merits of the 4
plaintiff’s underlying claims. Because it is collateral, the district 5
court retains jurisdiction to award recovery against the Rule 65(c) 6
security after the plaintiff has filed a notice of voluntary dismissal. 7
II. Equitable Estoppel and Waiver 8
D.I.D. also asserts that Windstream is either equitably 9
estopped from asserting or has waived its claim for damages from 10
the TRO security because Windstream’s attorney stated at the June 11
21 hearing that he had “[n]o objection” to the release of the TRO 12
security. J.A. 653. Where the facts are undisputed, a determination 13
regarding waiver and estoppel is a question of law, reviewed de 14
novo. See Jarvis v. Ford Motor Co., 283 F.3d 33, 59 (2d Cir. 2002) 15

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(considering waiver); Chartier v. Marline Mgmt., LLC, 202 F.3d 89, 93 1
(2d Cir. 2000) (considering estoppel). 2
The district court rejected D.I.D.’s equitable estoppel and 3
waiver arguments, the former because it found that D.I.D. could not 4
establish detrimental reliance. U.S. D.I.D. I, 2012 WL 2878136, at *3. 5
We agree with the district court that D.I.D. failed to establish the 6
detrimental reliance required for equitable estoppel. As for waiver, 7
we conclude that Windstream’s attorney’s statement did not evince 8
a clear and unequivocal intent to forgo recovery against the TRO 9
security. 10
A. Equitable Estoppel 11
Equitable estoppel precludes a person from regaining 12
property or its value where that person “makes a definite 13
misrepresentation of fact to another person having reason to believe 14
that the other will rely upon it” and “the other in reliance upon the 15
misrepresentation . . . so change[s] his position that it would be 16

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unjust to deprive him of that which he thus acquired.” Heckler v. 1
Cmty. Health Servs. of Crawford Cnty., Inc., 467 U.S. 51, 59 (1984) 2
(quoting Restatement (Second) of Torts § 894(1) (1979)). “[A] 3
hallmark of the doctrine is its flexible application . . . .” Id. “An 4
essential element of equitable estoppel,” however, “is detrimental 5
reliance on the adverse party’s misrepresentations.” Republic of 6
Ecuador v. Chevron Corp., 638 F.3d 384, 400 (2d Cir. 2011) (internal 7
quotation marks, citations and alteration omitted). 8
We conclude later in this opinion that a recovery on Rule 65(c) 9
security turns on a determination that the defendant was wrongfully 10
restrained. Because Windstream’s ability to recover on the TRO 11
security did not depend on D.I.D.’s voluntary dismissal, and 12
because D.I.D. does not identify any other actions that it took in 13
reliance on Windstream’s counsel’s representations during the brief, 14
four‐day period between the June 21 hearing and Windstream’s 15

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request for costs and damages from the TRO security, we find that 1
D.I.D. failed to establish detrimental reliance. 2
B. Waiver 3
Waiver is the “intentional relinquishment of a known right.” 4
Hamilton v. Atlas Turner, Inc., 197 F.3d 58, 61 (2d Cir. 1999). Although 5
we have recognized that waiver “may be inferred from the conduct 6
of the parties,” we have emphasized that “[t]he conduct said to 7
constitute a waiver must be clear and unequivocal, as waivers are 8
never to be lightly inferred.” Mooney v. City of N.Y., 219 F.3d 123, 131 9
(2d Cir. 2000) (internal quotation marks omitted). “We will infer a 10
waiver only where the parties were aware of their rights and made 11
the conscious choice, for whatever reason, to waive them.” Id. 12
(internal quotation marks omitted). “Mere negligence, oversight, or 13
thoughtlessness does not create a waiver.” 28 Am. Jur. 2d Estoppel 14
and Waiver § 192 (2011). 15

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We have little difficulty rejecting D.I.D.’s waiver argument. 1
Although Windstream did indicate that it had “[n]o objection” to the 2
release of the TRO security during the June 21 hearing, this brief 3
colloquy included no mention of Windstream’s right to recover 4
damages from the TRO security before it was released. The remarks 5
of Windstream’s counsel, then, evince no conscious or unequivocal 6
choice to forgo recovery from the TRO security. On the contrary, 7
there is no reason to doubt counsel’s representation that his remarks 8
reflected his unawareness that Windstream had issued an invoice 9
for services rendered during the time the TRO was in effect, and that 10
this invoice had not been paid. Waiver “is an equitable doctrine 11
based upon fairness and justice,” which we use “to avoid a result 12
where parties have conducted themselves in such a way as to make 13
that result unfair.” 31 C.J.S. Estoppel and Waiver § 86. That standard 14
was not met here. 15

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III. Determining Recovery on Rule 65(c) Security Following a 1
Voluntary Dismissal Without Prejudice 2
Rule 65(c) of the Federal Rules of Civil Procedure allows for 3
recovery on posted security where the party has “been wrongfully 4
enjoined or restrained.” Citing our decision in Blumenthal v. Merrill 5
Lynch, Pierce, Fenner & Smith, Inc., 910 F.2d 1049 (2d Cir. 1990), D.I.D. 6
argues, and the district court held, that determining whether a 7
defendant was “wrongfully restrained” requires a final adjudication 8
on the merits. D.I.D. additionally argues that the district court erred 9
to the extent it concluded that D.I.D.’s voluntary dismissal 10
constituted the requisite final determination on the merits. We 11
review “a district court’s decision to grant or deny recovery against 12
an injunction bond . . . for abuse of discretion,” recognizing that “the 13
court’s discretion should be exercised in a manner consistent” with 14
the presumption that “wrongfully enjoined parties are entitled to . . . 15
recovery against the bond for provable damages.” Nokia Corp., 645 16
F.3d at 557. The “abuse of discretion” standard entails de novo review 17

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for legal issues and clear error review for factual findings. United 1
States v. Legros, 529 F.3d 470, 474 (2d Cir. 2008). 2
A. Whether Determining Wrongful Restraint Requires a Final 3
Adjudication on the Merits 4
The Supreme Court has held that whether a party has “been 5
wrongfully enjoined or restrained” is not always coextensive with a 6
final adjudication on the merits. See Grupo Mexicano de Desarrollo, 7
S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 314, 317 (1999). In Grupo 8
Mexicano, the plaintiffs, various investment funds, had purchased 9
unsecured notes of the defendant, Grupo Mexicano de Desarrollo, 10
S.A. (“GMD”), a Mexican company involved in the construction of a 11
toll road sponsored by the Mexican government. Id. at 310. Due to a 12
downturn in the Mexican economy, the Mexican government 13
assisted various entities involved in the construction of the toll road, 14
including GMD, by issuing guaranteed notes to them. Id. at 311. The 15
problems in the Mexican economy persisted, GMD started to 16
negotiate a restructuring of its debt, and reports began to circulate 17

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suggesting that GMD was dissipating its most valuable assets—the 1
guaranteed notes issued by the Mexican government—to the 2
detriment of its creditors, including the investment funds. Id. at 311‐ 3
12. 4
The investment funds brought suit in the U.S. District Court 5
for the Southern District of New York to recover on their unsecured 6
notes following GMD’s default. Id. at 312. The district court granted 7
a TRO and then a preliminary injunction prohibiting GMD from 8
transferring the government‐guaranteed notes. Id. at 312‐13. While 9
the interlocutory appeal of the preliminary injunction was pending, 10
the district court granted summary judgment in favor of the 11
investment funds and converted the preliminary injunction into a 12
permanent injunction. Id. at 313. GMD ultimately chose not to 13
appeal the grant of summary judgment or the permanent injunction, 14
but continued with its appeal of the preliminary injunction. Id. at 15
313‐14. 16

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The Supreme Court agreed that the preliminary injunction 1
should not have been issued, even though the plaintiffs prevailed on 2
the merits. The Court explained that, in the usual case, the final 3
injunction establishes the substantive validity of the preliminary 4
injunction because “[t]he final injunction establishes that the 5
defendant should not have been engaging in the conduct that was 6
enjoined.” Id. at 315 (emphasis in original). At times, however, “the 7
substantive validity of the final injunction does not establish the 8
substantive validity of the preliminary one,” so the defendants may 9
establish that “they have been harmed by the issuance of the 10
unauthorized preliminary injunction—and hence should be able to 11
recover on the bond—even if the final injunction is proper.” Id. 12
(emphasis in original). The Court concluded that Grupo Mexicano 13
presented the latter type of case because the district court had 14
enjoined the defendant’s transfer of assets in contravention of “the 15
historical principle that before judgment (or its equivalent) an 16

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unsecured creditor [here, the investment funds] has no rights at law 1
or in equity in the property of his debtor.” Id. at 330. 2
Just as an injunction may have been improperly issued even 3
though the plaintiff ultimately prevails on the merits, a defendant 4
may have been properly enjoined even though the plaintiff 5
ultimately loses on the merits. Several circuits have held, for 6
instance, that, where a plaintiff acquires temporary relief to enforce 7
an arbitration‐grievance procedure required under a collective 8
bargaining agreement, the defendant may not necessarily recover 9
from the Rule 65(c) security even though it ultimately prevails in the 10
arbitration process. See Newspaper & Periodical Drivers’ & Helpers’ 11
Union, Local 921 v. S.F. Newspaper Agency, 89 F.3d 629, 634 (9th Cir. 12
1996); Miscellaneous Drivers, Helpers, Heath Care & Pub. Emps. Union 13
Local 610 v. Kroger Co., 858 F.2d 415, 416 (8th Cir. 1988); Lever Bros. 14
Co. v. Int’l Chem. Workers Union, Local 217, 554 F.2d 115, 120‐21 (4th 15
Cir. 1976). These decisions reason that a grievance‐arbitration 16

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procedure in a collective bargaining agreement establishes a 1
procedural right distinct from the underlying merits of any given 2
labor dispute. Thus, temporary relief enforcing this procedural right 3
may be properly issued even if the defendant ultimately prevails on 4
the merits in arbitration. See Newspaper & Periodical Drivers’ & 5
Helpers’ Union, 89 F.3d at 634. 6
Although resolving the propriety of temporary relief can be 7
distinct from the final adjudication on the merits, as in Grupo 8
Mexicano, in the usual case the wrongfulness inquiry “generally . . . 9
must be resolved by a trial on the merits.” Univ. of Tex. v. Camenisch, 10
451 U.S. 390, 396 (1981) (emphasis added); see also Guzman v. Local 11
32B‐32J, Serv. Emps. Int’l Union, 72 F.3d 260, 263 (2d Cir. 1995) 12
(finding that the claim “should be resolved only after the District 13
Court has conducted a full evidentiary hearing” where the 14
defendant’s claim to recovery from the injunction bond turned on 15
whether the defendant was entitled to refrain from the conduct 16

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compelled by injunction). That is because it is the final adjudication 1
on the merits, after the full presentation of the parties’ cases, that 2
ordinarily establishes whether the defendant should not have been 3
engaging in the conduct that was enjoined. See Grupo Mexicano, 527 4
U.S. at 315. TRO and preliminary injunction proceedings do not 5
typically give the parties “the benefit . . . of a full opportunity to 6
present their cases []or . . . a final judicial decision based on the 7
actual merits of the controversy.” Camenisch, 451 U.S. at 396. 8
Our decision in Blumenthal is illustrative. There, the district 9
court issued a preliminary injunction prohibiting the two plaintiffs, 10
former Merrill Lynch brokers, from soliciting the firm’s clients using 11
its customer records. 910 F.2d at 1051. Following arbitration 12
proceedings before the New York Stock Exchange, the arbitrator 13
found that the plaintiffs had the right to use the customer records 14
and that the injunction should be lifted. Id. The district court, 15
however, denied recovery by the plaintiffs against the injunction 16

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bond. Id. We reversed and held that the plaintiffs were entitled to 1
recover costs and damages against the Rule 65(c) bond. Id. at 1056. 2
“In light of the ultimate decision on the merits by the arbitrators,” 3
we concluded, “Merrill Lynch was not entitled to the injunction it 4
received and that [the plaintiffs] had at all times the right to do 5
business with their Merrill Lynch clients.” Id. at 1055. 6
That a trial on the merits is usually required to determine 7
whether the defendant was entitled to engage in the conduct that 8
was enjoined is true irrespective of whether the defendant seeks 9
recovery on security posted to secure a TRO or a preliminary 10
injunction. In both situations it is only upon full presentation of the 11
parties’ evidence that it may typically be determined whether the 12
defendant should have been restrained or enjoined. But the need for 13
a final adjudication on the merits does not apply where, as here, a 14
plaintiff has voluntarily dismissed its suit following the order for 15
temporary relief. By voluntarily dismissing its suit, the plaintiff has, 16

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in effect, abandoned its right to “a full opportunity to present [its] 1
case[] [or] of a final judicial decision based on the actual merits of 2
the controversy.” Camenisch, 451 U.S. at 396. Having decided that its 3
claims should not be pursued to trial, the plaintiff can hardly insist 4
that the defendant have no opportunity to establish that it was 5
wrongfully restrained. 6
This holding resolves the district court’s well‐founded 7
concerns over the potential abuse of TROs in this context. If a final 8
adjudication on the merits is necessary to award recovery on a TRO 9
security, “[a] plaintiff who voluntarily dismisses an action after a 10
[TRO] has been issued reaps the benefit of the [TRO] and, at the 11
same time, deprives the defendant of an opportunity to establish 12
that the [TRO] ought not to have been granted.” U.S. D.I.D. II, 916 F. 13
Supp. 2d at 511 (quoting Belfer v. Minko, No. 05 CV 02473, 2008 WL 14
163615, at *2 (N.D. Ohio Jan. 17, 2008)). Apparently motivated by 15
that concern, a number of district courts—including the district 16

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court here—have concluded that a voluntary dismissal may operate 1
as a final adjudication on the merits for purposes of recovery from 2
security posted to secure a TRO.4 However, by rejecting the premise 3
that a final adjudication on the merits is always required for 4
recovery on Rule 65(c) security, our holding resolves this problem 5
without redefining a “dismissal without prejudice” as its “opposite,” 6
an “adjudication upon the merits.” Semtek Int’l, Inc. v. Lockheed 7
Martin Corp., 531 U.S. 497, 505 (2001). 8
In sum, we reject D.I.D.’s assertion and the district court’s 9
holding that recovery on Rule 65(c) security always requires a final 10
4 See Belfer v. Minko, No. 05 CV 2473, 2008 WL 163615, at *1 (N.D. Ohio Jan. 17,
2008) (plaintiffs posted bond upon granting of TRO; hearing on preliminary
injunction never occurred because parties entered into settlement negotiations);
Almoss, Ltd. v. Furman, No. 06 Civ. 8234, 2007 WL 1975571, at *1‐*2 (S.D.N.Y. July
6, 2007) (after plaintiffs discontinued action, defendants sought recovery from
Rule 65(c) bond for costs incurred in vacating TRO); LaSalle Capital Grp. v.
Alexander Doll Co., 95 C 1640, 1995 WL 584429, *1 (N.D. Ill. Oct. 2, 1995) (district
court “issued and twice continued a temporary restraining order” before
discharging it); Pace v. Ross, No. 78 Civ. 5212, 1981 U.S. Dist. LEXIS 11351, at *10
(S.D.N.Y. Mar. 13, 1981) (plaintiffs voluntarily dismissed action under Rule
41(a)(1) after district court denied plaintiffs’ motion for a preliminary injunction
and dissolved the TRO).

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adjudication on the merits. Following the voluntary dismissal of a 1
plaintiff’s complaint, recovery on Rule 65(c) security requires only a 2
determination that the defendant was “wrongfully restrained.” 3
B. Whether Windstream Was Wrongfully Restrained 4
Windstream argues that, even if the district court erred in 5
reasoning that D.I.D.’s notice of voluntary dismissal established the 6
wrongfulness of the TRO, the district court’s denial of D.I.D.’s 7
motion for a preliminary injunction and dissolution of the TRO 8
establishes that Windstream was wrongfully restrained. This 9
argument has some merit. When a plaintiff files a voluntary 10
dismissal under Rule 41(a)(1), the district court’s denial of the 11
plaintiff’s motion for a preliminary injunction may establish that the 12
TRO should not have been granted and the defendant was 13
wrongfully restrained by a preceding TRO. Cf. Middlewest Motor 14
Freight Bureau v. United States, 433 F.2d 212, 243 (8th Cir. 1970) 15
(“Where a party fails to prove grounds sufficient for the grant of an 16

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interlocutory injunction, he at the same time shows that the 1
temporary restraining order should not have been granted, at least 2
to the extent of rendering him liable in restitution for benefits 3
received under the temporary restraining order.”); Qualcomm, Inc. v. 4
Motorola, Inc., 185 F.R.D. 285, 288 (S.D. Cal. 1999) (“When a court 5
denies a preliminary injunction after it has granted a contested TRO, 6
the restrained party has been ‘wrongfully restrained,’ given that a 7
TRO is only intended to last until a preliminary injunction hearing is 8
held.”). 9
Yet, just as “the substantive validity of the final injunction 10
does not [always] establish the substantive validity of the 11
preliminary one,” Grupo Mexicano, 527 U.S. at 315 (emphasis in 12
original), denial of a motion for a preliminary injunction and 13
dissolution of a TRO will not always establish that the defendant 14
was wrongfully restrained. For instance, a plaintiff may fail to prove 15
at the preliminary injunction stage that she will suffer irreparable 16

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harm from the defendant’s conduct or that the public interest 1
weighs in favor of an injunction. See Winter v. Natural Res. Def. 2
Council, 555 U.S. 7, 20 (2008). If the denial of the preliminary 3
injunction is based on some ground other than the lawfulness of the 4
defendant’s conduct, then the denial of the preliminary injunction 5
may not be sufficient to show that the defendant was wrongfully 6
restrained. It may also be that although a TRO was justified for a 7
portion of the time period it was in effect, it was not justified for the 8
entire period. 9
After a district court has granted a TRO, the burden remains 10
on the plaintiff “to show that [it is] entitled to a preliminary 11
injunction.” Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck 12
Drivers Local No. 70 of Alameda Cnty., 415 U.S. 423, 443 (1974). Thus, 13
where a district court dissolves a TRO without granting the 14
plaintiff’s motion for a preliminary injunction, a plaintiff seeking to 15
defeat the defendant’s request for recovery from the TRO security 16

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bears the burden of establishing that the defendant was not 1
wrongfully restrained and is, therefore, not entitled to recover from 2
the TRO security. A plaintiff may satisfy this burden by showing 3
that the defendant did not have the legal right to engage in the 4
conduct restrained while the TRO was in effect, notwithstanding the 5
denial of the preliminary injunction. If the plaintiff fails to make this 6
showing, then the dissolution of the TRO likely establishes that the 7
defendant was wrongfully restrained, and the defendant 8
consequently enjoys “a presumption in favor of recovery against the 9
[security] for provable damages.” Nokia Corp., 645 F.3d at 557. 10
The effect of the thirty‐day notice of termination provision in 11
the parties’ contract here illustrates the complexities of this analysis. 12
When the TRO was first issued, it performed two functions. First, 13
the TRO prevented Windstream from terminating service based on 14
D.I.D.’s refusal to pay the higher rates that Windstream had 15
imposed on D.I.D. Second, the TRO prevented Windstream from 16

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cutting off service before June 3, the last day of the Service 1
Agreement’s thirty‐day termination notice period. 2
The district court effectively rejected the first basis for the 3
TRO when it found, at the June 21, 2012 preliminary injunction 4
hearing, that D.I.D. had failed to establish a likelihood of success on 5
the merits of the underlying contractual dispute about D.I.D.’s resale 6
of Windstream’s services. That determination, however, does not 7
establish that Windstream was wrongfully restrained for the period 8
up until June 3 when the TRO arguably functioned to enforce the 9
thirty‐day termination notice clause. The district court declined to 10
address D.I.D.’s contention that Windstream’s May 3 notice of 11
termination violated the termination notice clause, concluding that 12
the issue had become moot because, at the time of the hearing, thirty 13
days had passed since the notice of termination. 14
The district court’s finding that D.I.D. was unlikely to prevail 15
on the merits of its underlying contractual claim is irrelevant, 16

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however, to the validity of the TRO in enforcing the termination 1
notice provision. Such a provision provides a window of time 2
during which a business may locate a different service provider, 3
thereby preventing disruption in the business’s operations that 4
could result in “an irreparable loss of customer goodwill.” Eastman 5
Kodak Co. v. Collins Ink Corp., 821 F. Supp. 2d 582, 587 (W.D.N.Y. 6
2011) (granting preliminary injunction to enforce contractual 7
termination notice provision). Although the district court found at 8
the June 21 hearing that any remaining risk of irreparable harm 9
derived from D.I.D.’s failure to use the time the TRO afforded to 10
locate a new telecommunications service provider, the district court 11
made clear that, when the TRO was initially issued, D.I.D. had 12
established a risk of irreparable harm if Windstream’s services were 13
so abruptly cut off. 14
Although the enforcement of the thirty‐day termination notice 15
provision may have been an appropriate basis for the initial issuance 16

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of the TRO, whether Windstream may recover from the TRO 1
security for unpaid charges for that period requires a different 2
analysis. A wrongfully restrained defendant may recover against a 3
TRO security “to cover the costs and damages incurred as a result of 4
complying with a wrongful [TRO].” Nokia Corp., 645 F.3d at 560. The 5
Rule 65(c) security, however, “is not security for the payment of 6
damages on an ultimate judgment on the merits.” Global Naps, Inc. v. 7
Verizon New England, Inc., 489 F.3d 13, 21 (1st Cir. 2007); see also Lever 8
Bros. Co. v. Int’l Chem. Workers Union, Local 217, 554 F.2d 115, 120 (4th 9
Cir. 1976) (“[I]t is settled that the recoverable damages under such a 10
bond are those that arise from the operation of the injunction itself 11
and not from damages occasioned by the suit independently of the 12
injunction.”). Consequently, if, for a portion of the time during 13
which the TRO was in effect the TRO functioned to enforce the 14
termination notice provision, then the unpaid service charges 15
incurred during that portion of time are not damages that 16

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Windstream suffered as a result of complying with a wrongful TRO. 1
Windstream cannot claim damages based on wrongful restraint 2
when it was not entitled to take the action that was restrained. The 3
unpaid charges represent a risk that Windstream accepted when it 4
agreed to the thirty‐day termination notice provision. As a result, 5
even though Windstream was restrained by the TRO from 6
terminating services before June 3, the district court may conclude 7
on remand that Windstream would not be entitled to recover from 8
the TRO security for that period. 9
The distinction is significant because of the implications that 10
recovery from Rule 65(c) security has for other creditors of the 11
plaintiff. Because the security requirement enables the defendant to 12
recover costs and damages “without regard to the possible 13
insolvency of the” plaintiff, it effectively gives the defendant priority 14
over the plaintiff’s other creditors. Continuum Co. v. Incepts, Inc., 873 15
F.2d 801, 803 (5th Cir. 1989). Such priority makes sense where the 16

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costs and damages were incurred as a result of a wrongful TRO or 1
preliminary injunction, because the Rule 65(c) security functions as 2
“the moving party’s warranty that the law will uphold the issuance 3
of the injunction.” Edgar v. MITE Corp., 457 U.S. 624, 649 (1982) 4
(Stevens, J., concurring in part and concurring in the judgment). 5
Where the damages suffered by a defendant did not result from 6
being wrongfully restrained or enjoined, however, the defendant 7
should not enjoy priority over other creditors as a result of the Rule 8
65(c) security, even if the defendant might be able to recover for the 9
damages via an independent action against the plaintiff. 10
The district court’s award of recovery on the TRO security 11
included damages for Windstream during the thirty‐day notice 12
period. As a result, we also remand for the purpose of revisiting that 13
portion of the award. 14

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IV. Calculating Recovery on the Rule 65(c) Security 1
For its final argument, D.I.D. contends that it was improper 2
for the district court to calculate damages on the TRO security based 3
on the “invoiced rates and charges.” D.I.D. asserts that Windstream 4
should not be permitted to recover “a windfall profit” for services 5
that Windstream would not have provided in the absence of the 6
TRO. Under D.I.D.’s approach, the district court would base its 7
damages calculation not on the amount that Windstream charged, 8
but rather on the actual cost to Windstream of providing such 9
services. We review an award of damages on Rule 65(c) security for 10
abuse of discretion, which encompasses de novo review for legal 11
issues and clear error review for factual findings. See Nokia Corp., 645 12
F.3d at 557; Legros, 529 F.3d at 474. 13
Rule 65(c) does not define the “damages” that are recoverable 14
from Rule 65(c) security. A number of courts and commentators, 15
however, have indicated that restitution can provide an appropriate 16

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measure of damages. See Middlewest, 433 F.2d at 244 (“Restitution is 1
the proper remedy to return the parties to the position they would 2
have been in had the [defendant] . . . not been judicially 3
restrained.”); Littell v. Morton, 369 F. Supp. 411, 419 (D. Md. 1974) 4
(“[U]nder the principle of ‘restitution’ a party who obtains benefits 5
from an improperly issued injunction, that he would not have 6
received but for the injunction, has a duty to restore that benefit to 7
those who have been injured by the injunction.”), aff’d, 519 F.2d 1399 8
(4th Cir. 1975); see also 11A Wright & Miller § 2973 (noting, in the 9
context of Rule 65.1 bonds, that “the bond covers incidental and 10
consequential costs and either the losses the unjustly restrained 11
party has suffered while wrongfully being prohibited from engaging 12
in certain activities or the complainant’s unjust enrichment while his 13
adversary was improperly enjoined” (emphasis added)). An award 14
of restitution, a traditionally equitable form of relief, see Mertens v. 15
Hewett Assocs., 508 U.S. 248, 256 (1993), accords with Rule 65(c)’s 16

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“origin in early equity practice,” Nokia Corp., 645 F.3d at 557 1
(quoting Commerce Tankers Corp. v. Nat’l Mar. Union of Am., 553 F.2d 2
793, 800 (2d Cir. 1977)). 3
We agree that where a defendant is wrongfully restrained by 4
being compelled to provide services that it was not legally required 5
to provide, the district court may employ a restitutionary measure to 6
calculate damages recoverable against the Rule 65(c) security. “The 7
restitutionary goal is to prevent unjust enrichment of [one party] by 8
making him give up what he wrongfully obtained from [another 9
party].” 1 Dan B. Dobbs, Dobbs Law of Remedies § 1.1 (2d ed. 1993). 10
Accordingly, a restitutionary approach bases damages on the 11
“objective or market value” of the benefit unjustly acquired by the 12
plaintiff under the wrongful TRO, rather than the value of the loss 13
sustained by the defendant. Id. § 4.1(1). Several considerations lead 14
us to conclude that a restitutionary approach to damages calculation 15
will normally be appropriate where a plaintiff acquires a wrongful 16

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TRO that compels the defendant to provide the plaintiff with 1
services. 2
First, a restitutionary approach to damages calculation 3
prevents an inequitable benefit transfer to a party that acquires the 4
wrongful TRO. The market value of services typically exceeds the 5
cost of providing them, because the market value includes the 6
provider’s profit margin. Hence, if a defendant that is compelled to 7
provide services under a TRO could recover only the costs that it 8
incurred, the plaintiff would receive a discount not enjoyed by the 9
defendant’s other customers. A restitutionary award, therefore, 10
prevents a plaintiff from being able to use a wrongful TRO to 11
compel a defendant to provide the plaintiff with terms and prices 12
not available to other customers. Cf. Kansas ex rel. Stephan v. Adams, 13
705 F.2d 1267, 1269 (10th Cir. 1983) (observing that the “extent” of 14
damages awarded from Rule 65(c) security “is in the discretion of 15

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the district court and is based upon considerations of equity and 1
justice”). 2
Second, a restitutionary approach in these circumstances will 3
normally be more administrable than an approach based on the 4
costs to the defendant. The market value of services can usually be 5
readily determined. By contrast, to determine the cost that a 6
defendant incurs in providing services, a district court may have to 7
resolve difficult factual questions, likely necessitating extensive 8
discovery. We think it unwise to require such a burdensome inquiry 9
to resolve the collateral issue of recovery from a TRO security. 10
Finally, a restitutionary approach to damages calculations 11
accords with the function of Rule 65(c) security. Rule 65(c) security 12
can “be viewed as a contract in which the court and plaintiff ‘agree’ 13
to the [security] amount as the ‘price’ of a wrongful injunction.” 14
Continuum Co., 873 F.2d at 803 (citation omitted). In accordance with 15
this function, courts have repeatedly held that, in the absence of bad 16

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faith on the plaintiff’s part, “the [security] provides the plaintiff with 1
notice of the maximum extent of its potential liability.” Nokia Corp., 2
645 F.3d at 557; see also Blumenthal, 910 F.2d at 1054; Continuum Co., 3
873 F.2d at 803; Coyne‐Delany Co. v. Capital Dev. Bd. of the State of Ill., 4
717 F.2d 385, 393 (7th Cir. 1983); Int’l Ladies’ Garment Workers’ Union 5
v. Donnelly Garment Co., 147 F.2d 246, 253 (8th Cir. 1945). Similarly, 6
because the market value of a given service is typically publicly 7
known, a restitutionary approach to a damages calculation will 8
usually allow the plaintiff to predict its potential liability and make 9
an informed “business judgment that it [i]s willing to incur the ‘cost’ 10
of a possibly wrongful” TRO. Global Naps, Inc., 489 F.3d at 21. Here, 11
for instance, D.I.D. could readily ascertain the market value of the 12
services it was obtaining from Windstream, and so could easily 13
predict its liability if the TRO was found to be wrongful. 14
We believe that the district court’s approach in this case, in 15
basing its damages calculation on the rates that Windstream charged 16

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for services rather than the cost of providing services, is consistent 1
with a restitutionary approach to damages calculation. We identify, 2
however, two issues that we believe must be addressed on remand 3
should the district court determine that Windstream was wrongfully 4
restrained. 5
First, the district court allowed Windstream to recover 6
damages for the period from June 1, 2012 to June 21, 2012 based on 7
the “wholesale” rates. Although Windstream described the 8
“wholesale” rates as “standard,” J.A. 86, the district court did not 9
determine that these rates reflected the market value of 10
Windstream’s services.5 And although the plaintiff bears the burden 11
of showing that a subsequently dissolved TRO was not wrongfully 12
issued, the burden of “demonstrat[ing] that the damages sought 13
5 The district court required Windstream to file a supplemental declaration
providing support for its claim for damages on the security. However, that
declaration did not demonstrate that the indicated rates reflected their market
value.

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were proximately caused by the wrongful injunction” lies on the 1
defendant seeking to recover on the security. Nokia Corp., 645 F.3d at 2
559. On remand, therefore, to recover damages from the TRO 3
security based on the wholesale rates, Windstream must establish 4
that the wholesale rates represent the market value of the services 5
Windstream was wrongfully compelled to provide to D.I.D. while it 6
was wrongfully restrained.6 7
Second, the district court must determine the amount of 8
damages that may be recovered from the TRO security. In particular, 9
the district court must determine whether the provision of services 10
by Windstream during the thirty‐day termination notice period may 11
result in damages recoverable from the TRO security. 12
6 The district court awarded damages for services provided from May 21 to June
1 based on the “interim” rates that Windstream imposed via its March 27 letter.
If the district court concludes that, notwithstanding the thirty‐day termination
notice period provided for in the Agreement, recovery from the TRO bond is
appropriate beginning May 21, it will also need to evaluate the appropriate rates
for May 21 to June 1.

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U.S. D.I.D. C ORP . V. WINDSTREAM C OMMUNICATIONS , INC.
‐51‐
CONCLUSION 1
For the foregoing reasons, we VACATE the order of the 2
district court. We REMAND the case to the district court to: 1) 3
determine whether and for which portions of the time when the 4
TRO was in effect Windstream was wrongfully restrained; 2) 5
determine what rates are justified as a measure of restitutionary 6
damages; and 3) recalculate the damages recoverable from the TRO 7
security. 8

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