The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge
On December 18, 2003, the Court issued an order preliminarily enjoining Defendant "from moving ahead with the consent solicitation or the exchange offer [to Plaintiff's shareholders] pending final resolution of this matter[.]" Pursuant to Rule 65(c) of the Federal Rules of Civil Procedure, the Court also directed Plaintiff to post a security bond in an amount to be determined following supplemental briefing by the parties. Memoranda on this issue were submitted to the Court on December 22, 2003.
The parties take very different views of the appropriate amount of the bond. Plaintiff "requests that this Court require nothing more than a nominal bond[,]" asserting that Defendant has not identified any harm that it would suffer from this injunction; that any damages advanced by Defendant to justify a sizeable bond are either not cognizable harm or too speculative; that a sizeable bond would be disproportionate to bonds ordered in similar cases; and that imposition of a sizeable bond would frustrate Congress's intent to allow private parties to seek injunctive relief for violations of the antitrust laws. Pl. Br. at 7. Defendant, on the other hand, asks for a bond in the amount of $586.9 million. Defendant argues that, if it is unable to proceed with the consent solicitation as a result of the preliminary injunction, it will forfeit the benefits it would have received under the Memorandum of Understanding with United Air Lines, Inc. ($68 million); will lose net income from Plaintiff's operation as an United Express carrier ($309 million); will miss out on operational savings from the combination of Plaintiff's and Defendant's operations ($206 million); and will forfeit all of its expenses incurred to date in connection with the consent solicitation ($1.5 million). Defendant also contends that it has already suffered loses from the recent decline in Plaintiff's stock price, of which Defendant held 1.6 million shares ($2.4 million).
No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained.
Given the magnitude of the potential merger between Plaintiff and Defendant, the ephemeral nature of such a deal, and the lucrative terms of the MOU with United, Defendant certainly will suffer damages if it is later determined that the preliminary injunction was entered in error. However, the bond amount sought by Defendant is excessive because most of its claimed loses are "not certain[.]" Def. Br. at 6. These losses are conditioned on a successful consent solicitation; the new, independent board of directors approving the exchange offer or maintaining Plaintiff's regional air carrier relationship with United consistent with the terms of the MOU; and United and Plaintiff transforming the MOU into a binding contract.*fn1
The Court determines that ten million dollars ($10,000,000.00) is an appropriate amount for a bond in this case. This amount will adequately compensate Defendant should the preliminary injunction later be deemed erroneous and will not pose an unreasonable burden on Plaintiff, which purports to have over $200 million in cash on hand. Accordingly, pursuant to Federal Rule of Civil Procedure 65(c) and Local Civil Rule 65.1.1, Plaintiff is directed to post a security bond in the amount of ten million dollars ($10,000,000.00) no later than 4:00 p.m. on January 9, 2004.