Ferguson v. Ruane Cuniff & Goldfarb Inc.
- Andrew Carter
- 1:17-cv-06685
- U.S. District Court · Southern District of New York
- 3
In Ferguson v. Ruane Cuniff & Goldfarb Inc., Judge Carter declined to require a bond for the preliminary injunction.
The order directly affected the DST Defendants and the Arbitration Claimants: the DST Defendants were not required to post an additional bond in connection with the preliminary injunction, while the Arbitration Claimants did not obtain the security they requested.
What happened
In Ferguson v. Ruane Cuniff & Goldfarb Inc., the court considered whether the DST Defendants had to post security for a preliminary injunction issued on November 18, 2021. The Arbitration Claimants submitted arguments about the bond's amount.
The court found that the Arbitration Claimants had not shown a non-speculative financial harm requiring security. It also noted that the injunction was issued to preserve the court's jurisdiction and that DST was separately posting a $12,084,500.70 bond in another federal court.
Judge Andrew L. Carter, Jr. declined to require the DST Defendants to post a bond.
The detailed version
- Ferguson v. Ruane Cuniff & Goldfarb Inc. · No. 1:17-cv-06685
- Andrew Carter
- Nov. 24, 2021
Background
The court had issued a preliminary injunction on November 18, 2021. It then considered submissions from the DST Defendants and the Arbitration Claimants about whether security should be required, and if so, in what amount. The court ruled on the security issue under Federal Rule of Civil Procedure 65(c), which allows a court to require a bond to cover costs and damages suffered by a party that is later found to have been wrongfully restrained.
Reasons for the Decision
The court explained that a bond is not required when the party seeking it does not show a likelihood of financial harm. The Arbitration Claimants had the burden of providing a rational basis for the proposed amount, but the court found that they had not met that burden.
The parties agreed that any potential harm from an improper injunction would be delay in obtaining the arbitration awards. The Arbitration Claimants argued that the bond should cover investment returns they might have earned on the awards during the injunction. The court rejected that theory as speculative, stating that an assumption that the claimants would invest their entire awards was not a sufficient basis for security. The court said that the lost time value caused by delay could instead be addressed through pre-judgment or post-judgment interest on the awards.
The Arbitration Claimants also sought an additional $22,500,000 for claimants who had not yet received arbitration awards. The court rejected that request because it was based on extrapolation and speculation, and because an injunction bond covers damages caused by the injunction itself, not damages resulting independently from the lawsuit or from the possible outcome of arbitration.
The court further concluded that a bond was unwarranted because the injunction had been issued under the All Writs Act, a federal law allowing courts to issue orders necessary or appropriate to protect their jurisdiction. The court noted that a bond may be unnecessary when an injunction is issued to preserve the court's jurisdiction over the matter. It also noted that DST was separately posting a $12,084,500.70 bond in the Western District of Missouri to secure arbitration awards while DST appealed confirmation of those awards.
Ruling
The court declined to require the DST Defendants to post a bond. Judge Andrew L. Carter, Jr. entered the order on November 24, 2021.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.