NCAA v. Governor—civil—reversal—Rendell

A party seeking a temporary restraining order has to pay a bond to cover damages sustained if the other side is found to have been “wrongfully enjoined.” So if the district court grants your TRO request but the court of appeals reverses, it’ll cost you. But what if your TRO request was rock solid under controlling precedent at the time you sought the TRO, but the other side persuades the Supreme Court to overrule that precedent? Do you still have to cough up damages?

On Tuesday, the Third Circuit answered that question affirmatively. If the TRO was right when it issued but turns out to have been wrong in the end, then enjoining was wrongful and the TRO’s seeker has to pay.

The issue arose in an interesting context. Recall that, in 2013 and then again in 2016, en banc, the Third Circuit rejected New Jersey’s effort to legalize sports betting. During the second round of litigation, the NCAA and four pro sports leagues got a TRO barring sports betting from starting. But the Supreme Court unexpectedly granted cert and then reversed both Third Circuit decisions, holding that the federal statute barring sports betting violated the Tenth Amendment’s anti-commandeering principle. So the operators of a racetrack argued that they’d been wrongfully enjoined and sought damages on the $3.4 million bond. The district court said no, but the Third Circuit vacated and remanded to calculate the damages. Ironic that the sports leagues’ effort to block gambling turned out to have been a gamble.

Joining Rendell was McKee; Porter dissented in part, arguing that the injunction wasn’t wrongful because it was based only on the statute not its constitutionality. Fascinating split. Arguing counsel were Jeffrey Mishkin of Skadden for the leagues and Ronald Riccio of McElroy Deutsch for the racetrack operators.