National Collegiate Athletic Association v.. New Jersey Thoroughbred Horsemen's Association,Inc.,Reply Brief for Petitioners No. 19-1114 (U.s. Apr. 27,2020)

1.

Rule 65(c) applies only to temporary injunctions—i.e., TROs and preliminary injunctions. Fed. R. Civ. P. 65(c). No rule requires a party to give comparable security for a permanent injunction. That difference reflects the limited but important office of Rule 65(c): It protects against the risk that the expedited nature of TRO/preliminary injunction hearings will cause a court to mistakenly award interim relief on “the basis of procedures that are less formal and evidence that is less complete than in a trial on the merits.” Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981). It does not protect against the risk of appellate reversal, much less reversal based on subsequent changes in the applicable law. If that were the rule's aim, it would require bonds (indeed, far larger bonds) to secure permanent injunctions.

NJTHA insists that petitioners' interpretation of Rule 65(c) is incorrect, but never explains why. In fact, NJTHA never even acknowledges the absence of a bond requirement for permanent injunctions, let alone offers an alternative theory for the differential treatment of interim and permanent injunctions. Instead, NJTHA just parrots the Third Circuit's claims that “a party is wrongfully enjoined when it turns out that that party had a right all along to do what it was enjoined from doing,” and that the “only question” that matters is what the last reviewing court “ultimately” holds. BIO.21, 25. But the injury from a permanent injunction after an appellate reversal is orders of magnitude greater than any injury from an interim injunction. Indeed, by NJTHA's own estimates, its injury from the years-long permanent injunction was some 13-times greater than the weeks-long TRO. BIO.15. If Rule 65(c) were concerned with securing litigants against appellate reversals based on changes in the law or otherwise, it would necessarily require a bond for permanent injunctions too. NJTHA has no explanation for this anomaly.

NJTHA's position guarantees that a district court's temporary injunction will be branded “wrongful” even when it was compelled by circuit precedent or otherwise unassailably correct when it issued. Indeed, NJTHA does not dispute that, if a district court temporarily enjoins a defendant who brazenly flouts a statute repeatedly upheld as constitutional by this Court, that injunction would be “wrongful” (with the party who vindicated the statutory policy on the hook for damages) if this Court overturned its precedent. See Pet.34. In other words, the rule would operate to penalize those who acted to enforce rights that were clear as day under then-extant law against parties whose actions were just as clearly unlawful. NJTHA offers no explanation why rules for issuing equitable relief would operate in such a patently inequitable manner.

2.

Instead of seriously engaging on the merits, NJTHA principally argues that the decision below is consistent with decisions from other courts of appeals. See BIO.21 (citing Glob. NAPs, Inc. v. Verizon New Eng., Inc., 489 F.3d 13 (1st Cir. 2007); Slidell, Inc. v. Millennium Inorganic Chems., Inc., 460 F.3d 1047 (8th Cir. 2006); Nintendo of Am., Inc. v. Lewis Galoob Toys, Inc., 16 F.3d 1032 (9th Cir. 1994); Blumenthal v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 910 F.2d 1049 (2d Cir. 1990)). But none of those cases has “explicitly interpreted” the meaning of Rule 65(c)'s “wrongfully enjoined” language, BIO.21, or embraced the Third Circuit's view that whether a party is “wrongfully enjoined” turns solely on whether an appellate court reverses, without regard to whether reversal turned on changes in governing law beyond a district court's power to anticipate or effectuate. See Pet.22–24. ¹

NJTHA claims in a footnote—without any accompanying explanation—that petitioners' reading of these cases is “without merit,” and “nothing in the[m] … supports petitioners' interpretation of Rule 65(c).” BIO.22 n.4. But that ipse dixit cannot change the language or reasoning of the decisions. All four recognize that what matters under Rule 65(c) is whether full deliberations confirm or disprove the enjoining court's initial instinct based on expedited and streamlined proceedings. NJTHA's quibbling as to whether Third Circuit precedent made the TRO inevitable, as opposed to just plainly appropriate, is thus beside the point. BIO.24. What matters is whether full and final deliberations indicate that the expedited proceedings caused the district court to err, or whether, as here, further proceedings confirm the appropriateness of injunctive relief. ²

In sum, the Third Circuit's resolution of the first question presented cannot be reconciled with the scope and text of Rule 65(c) or with other decisions interpreting it.

1.

“[W]hen district courts are properly acting as courts of equity, they have discretion unless a statute clearly provides otherwise.” United States v. Oakland Cannabis Buyers' Coop., 532 U.S. 483, 496 (2001). Rule 65(c) plainly addresses equitable relief and provides only that a district court may not “issue” temporary injunctive relief unless a movant “gives security” that the court, in its discretion, deems “proper.” Fed. R. Civ. P. 65(c). The rule is silent on the court's power to permit or deny later recovery on that bond. The absence of any textual limitation— much less the “clear” limitation this Court's precedent demands—leaves district courts with discretion to award damages or simply release the bond as the circumstances warrant. That conclusion is consistent with traditional equity practice. See, e.g., Russell v. Farley, 105 U.S. 433, 441–42 (1881). And it accords with how this Court has interpreted comparable civil rules. See Fed. R. Civ. P. 54(d); Marx v. Gen. Revenue Corp., 568 U.S. 371, 377 (2013).

NJTHA does not dispute any of this. Instead, it just maintains that the Third Circuit's view that there is an “implicit presumption” in favor of recovery is shared by other courts. See BIO.26–27. But NJTHA makes no effort to explain why those courts are correct. That is understandable; explaining why courts of equity are bound by an implicit rule of rigidity and inflexibility, when this Court has demanded a clear statement, is no mean feat. That multiple circuits have repeated the error with citations to each other, but no persuasive analysis, only reinforces the need for this Court's review—especially given the contrary (and correct) view of the Fifth Circuit.

2.

NJTHA denies that there is a circuit split, but the Third Circuit itself begged to differ. As it acknowledged, the Fifth Circuit has long held that “[t]he awarding of damages pursuant to an injunction bond rests in the sound discretion of the court's equity jurisdiction.” H&R Block, Inc. v. McCaslin, 541 F.2d 1098, 1099 (5th Cir. 1976) (per curiam). On the other side, several circuits have held that Rule 65(c) codifies an “implicit presumption” in favor of damages. See Pet.27–28.

NJTHA claims that another Fifth Circuit panel “called into question” H&R Block's viability. BIO.27 (discussing Continuum Co. v. Incepts, Inc., 873 F.2d 801 (5th Cir. 1989)). In fact, that decision arose in a different posture (appeal of a bond amount), does not even mention H&R Block, and merely cites the Seventh Circuit's decision in Coyne-Delany Co. v. Capital Development Board of Illinois, 717 F.2d 385 (7th Cir. 1983), for a different proposition in dictum. Regardless, it is a “well-established rule that one panel of the Fifth Circuit cannot overrule the prior decision of another panel.” Wal-Mart Stores, Inc. v. Tex. Alcoholic Beverage Comm'n, 945 F.3d 206, 212 n.7 (5th Cir. 2019). That is likely why other courts—both before and after that 1989 decision—have specifically cited H&R Block when acknowledging that “there is a split of authority” on this question. Glob. NAPs, Inc. v. Verizon New Eng., Inc., 489 F.3d 13, 23 (1st Cir. 2007); see also Zenith Radio Corp. v. United States, 823 F.2d 518, 521 (Fed. Cir. 1987); Coyne-Delany, 717 F.2d at 391.

NJTHA alternatively urges the Court to deny review because the split is “lopsided.” BIO.27. But the interest in maintaining uniformity in circuit practice is implicated by “lopsided” and “even” splits alike, which presumably explains the Court's practice of granting certiorari when even one “United States court of appeals has entered a decision in conflict with the decision of another United States court of appeals on the same important matter.” Sup. Ct. R. 10(a). And “lopsided” splits are often resolved in favor of the minority position, sometimes by “lopsided” margins. See, e.g., Pereira v. Sessions, 138 S. Ct. 2105, 2113 & n.4 (2018) (8–1 decision resolving 6–1 split in favor of minority position); Merit Mgmt. Grp. LP v. FTI Consulting, Inc., 138 S. Ct. 883 (2018) (unanimous decision resolving 5–2 split in favor of minority position).

In all events, NJTHA is wrong to claim that no other circuit has “endorsed” the Fifth Circuit's view. BIO.28. Despite inconsistency in their practice, see Pet.28–29, the Seventh, Tenth, and Eleventh Circuits have all relied on H&R Block to support the proposition that the awarding of damages on an injunction bond lies within the district court's sound discretion. See Henco, Inc. v. Brown, 904 F.2d 11, 13 n.2 (7th Cir. 1990); Kansas ex rel. Stephan v. Adams, 705 F.2d 1267, 1269 (10th Cir. 1983); Milan Express, Inc. v. Averitt Express, Inc., 208 F.3d 975, 980 (11th Cir. 2000). Thus, the split is real; it is mature; and it warrants this Court's review.

This case presents an ideal vehicle to resolve it. The district court expressly held in the alternative that it would exercise its discretion to deny NJTHA recovery since then-binding law “clearly favored” petitioners and changed only years later in Murphy. Pet.App.44. The Third Circuit reversed because it held that the district court had no such discretion to exercise. The issue that has split the circuits thus was plainly dispositive here. Indeed, only a rule under which district courts' equitable hands are tied could justify the inequitable result here.