Charlesbank Equity Fund II v. Blinds to Go, Inc.

United States Court of Appeals
For the First Circuit

No. 03-2408

CHARLESBANK EQUITY FUND II, LIMITED PARTNERSHIP AND
HARVARD PRIVATE CAPITAL HOLDINGS, INC.,

Plaintiffs, Appellants,

v.

BLINDS TO GO, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Reginald C. Lindsay, U.S. District Judge]

Before

Selya and Howard, Circuit Judges,
and Singal,* District Judge.

John T. Montgomery, with whom Martin J. Newhouse, Lesley F.
Wolf, and Ropes & Gray LLP were on brief, for appellants.
David H. Erichsen, with whom Peter A. Spaeth, Debra Squires-
Lee, Michael R. Dube, and Hale and Dorr LLP were on brief, for
appellee.

June 2, 2004

__________
*Of the District of Maine, sitting by designation.
 SELYA, Circuit Judge. This appeal challenges the

district court's denial of a preliminary injunction seeking what

amounts to a freeze order (although its proponents describe the

requested relief as being in the nature of an equitable

attachment). Concluding, as we do, that the lower court correctly

chose to employ the traditional four-part standard for gauging the

propriety of preliminary injunctive relief in this situation and

proceeded to apply that standard faultlessly, we affirm the

decision below.

I. BACKGROUND

Our starting point is the cast of characters. Defendant-

appellee Blinds To Go, Inc. (BTG) operates a slew of retail stores

in North America (a few of which are located in Massachusetts).

Plaintiffs-appellants Charlesbank Equity Fund II, Limited

Partnership (Charlesbank) and Harvard Private Capital Holdings,

Inc. (HPCH) are affiliated entities that make and hold investments

on behalf of the President and Fellows of Harvard College.

The litigation between these protagonists has its roots

in a venture capital transaction. On December 18, 1995, HPCH and

BTG entered into a preferred share purchase agreement (the

Agreement). Pursuant to the Agreement, HPCH made a $15,000,000

capital investment and, in exchange, BTG issued to HPCH the

entirety of a new class of stock, totaling 20,618,556 preferred

shares with conversion privileges. As a prophylactic device, BTG

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insisted that HPCH grant to the holders of BTG's common stock a

right of first refusal. The provision embodying this safeguard, as

amended and restated in a 1997 shareholders' agreement, required

that the holders of BTG's common stock be afforded the opportunity

of first refusal in the event of any transfer of the preferred

shares arising out of a third party's "bona-fide offer to purchase"

the shares (so long as the offeror was "acting at arm's length").

The Agreement contained several other provisions. Of

particular pertinence here, HPCH or its permitted assignee had the

right to "put" all the preferred shares in specific time frames or

upon the occurrence of certain triggering events. Receipt of

notice of the exercise of this option obligated BTG to redeem the

shares within sixty days at a per share price calculated in

accordance with a formula delineated in BTG's corporate charter.

A significant element of this formula was the EBITDA (i.e.,

earnings before interest, income tax, depreciation and amortization

as determined in accordance with generally accepted accounting

principles, consistently applied) for the immediately preceding

twelve months. In order to secure the due performance of this buy-

back obligation, BTG granted to HPCH a security interest in its

existing and after-acquired assets.

The relationship between HPCH and BTG proved uneventful

through the end of the millennium. A precursor to discord surfaced

in November of 2001, when HPCH transferred its preferred shares and

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appurtenant rights and interests under the Agreement (including its

security interest in BTG's assets) to Charlesbank. Although the

1997 shareholders' agreement was still in effect, HPCH consummated

the transfer without first offering the preferred shares to the

holders of BTG's common stock. Charlesbank proceeded to exercise

the "put" option in the first available window of opportunity,

notifying BTG on January 14, 2002, of its desire that the company

redeem the preferred shares. Under the terms of the Agreement, the

EBITDA for the fiscal year ending on February 2, 2002 would apply

to that redemption.

The calculation of the EBITDA did not go smoothly. Over

the next few months, the figure diminished to a point well below

what Charlesbank had anticipated. This shrinkage in turn lowered

the projected purchase price of the preferred shares. As these

estimates slumped, Charlesbank grew increasingly suspicious that

BTG was cooking the books. The buy-back transaction stalled.

On June 21, 2002, Charlesbank took matters into its own

hands. Invoking federal diversity jurisdiction, see 28 U.S.C. §

1332(a), it sued BTG in the United States District Court for the

District of Massachusetts (BTG is a Canadian corporation that

maintains its principal place of business there and Charlesbank is

a Massachusetts limited partnership). The complaint asserted

claims for breach of contract and breach of the implied covenant of

good faith and fair dealing. HPCH (a Massachusetts charitable

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corporation headquartered in that state) soon joined the fray as an

additional plaintiff. The interests of the two plaintiffs are

congruent and, from this point forward, we refer to them,

collectively, as "C-H."

In October of 2002, BTG and the holders of its common

stock countersued in a Canadian court. They sought a declaration

that BTG did not owe any money to C-H because the transfer of the

preferred shares was unauthorized. BTG posited that the

transaction between Charlesbank and HPCH triggered the right of

first refusal; that HPCH nonetheless disregarded that obligation;

and that, therefore, the shunned right of the holders of BTG's

common stock to purchase the preferred shares vitiated the

purported transfer and trumped Charlesbank's right to exercise the

"put" option. In the alternative, BTG asked for a judicial

determination that it owed only $15,453,548 for the preferred

shares.

The Canadian court of first instance dismissed the suit

on the ground of forum non conveniens. That holding was affirmed

on appeal (i.e., the Canadian appellate tribunal agreed that

Massachusetts was a more convenient forum) but the dismissal was

vacated and the case stayed pending resolution of the first-filed

action. Thus, the battle between the parties shifted back to the

federal district court.

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 C-H's primary allegation was — and is — that BTG

manipulated its finances and shrank the EBITDA by posting a series

of spurious year-end reserves after the "put" option had been

exercised. In C-H's view, these machinations artificially deflated

the EBITDA by nearly $5,000,000 (i.e., from $12,900,000 to just

over $8,000,000) and the projected purchase price for the preferred

shares by roughly $8,300,000 (every reduction of $1,000,000 in the

EBITDA translates, under the formula, into a reduction of

approximately $1,700,000 in the aggregate purchase price). BTG

denied C-H's allegations; reiterated its claim that the right of

first refusal should have been honored; and urged that, in all

events, its books fairly and accurately reflected the company's

finances.

Fed. R. Civ. P. 65(a) deals with the issuance of

preliminary injunctions. On July 15, 2003, C-H invoked that rule

and moved for a preliminary injunction "in the nature of an

equitable attachment of the assets of the defendant." In practical

effect, it sought to freeze a substantial amount of BTG's funds in

order to secure eventual payment of the purchase price for the

preferred shares. BTG opposed the motion, and the district court

summarily denied it. The court's decision rested on two

independently sufficient grounds. First, the court concluded that

it lacked the authority to issue such an injunction under the

Supreme Court's landmark opinion in Grupo Mexicano de Desarrollo,

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S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999). Second, the

court found that C-H had failed to show irreparable harm (and,

thus, had not satisfied a necessary threshold requirement for the

issuance of a preliminary injunction). After moving unsuccessfully

for reconsideration, C-H appealed. We now affirm.

II. APPELLATE JURISDICTION

Although the parties seem to be content that we have

jurisdiction over this appeal, we are duty-bound to test that

hypothesis. When a colorable question exists, an appellate court

has an unflagging obligation to inquire sua sponte into its own

jurisdiction. See Espinal-Dominguez v. Commonwealth of P.R., 352

F.3d 490, 495 (1st Cir. 2003). That is the situation here.

As a general rule, only final orders are immediately

appealable. See id. (citing 28 U.S.C. § 1291). Virtually every

general rule admits of exceptions, however, and a statutory

exception to this finality principle authorizes interlocutory

review of orders "granting, continuing, modifying, refusing or

dissolving injunctions, or refusing to dissolve or modify

injunctions." 28 U.S.C. § 1292(a)(1). Consequently, if the remedy

that C-H seeks is in the nature of an injunction, we have

jurisdiction here and now to review an order denying that relief.

This question comes to the forefront because C-H appears

at times to argue that it is not seeking an injunction at all, but,

rather, an equitable attachment. See, e.g., Appellants' Br. at 1,

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4. For jurisdictional purposes, it matters whether the relief

requested is more appropriately classified as an injunction or an

attachment. While orders granting or denying injunctions are

immediately appealable, the status of attachment orders is more

problematic.

It is common ground that — at least in the absence of

special circumstances — federal appellate courts lack jurisdiction

to undertake interlocutory review of orders granting prejudgment

attachments. See Teradyne, Inc. v. Mostek Corp., 797 F.2d 43, 45-

47 (1st Cir. 1986); see also 16 Charles Alan Wright & Arthur R.

Miller, Federal Practice and Procedure § 3922 (2d ed. 1995). By

like token, orders denying prejudgment attachments are not per se

appealable when issued. See 11 Wright & Miller, supra § 2936, at

24-25. But such orders may be immediately appealable if they

satisfy the requirements of the so-called collateral order

doctrine.1 Id.

The taxonomic problem is complicated here because C-H's

original request for interim relief is not a model of clarity.

1
The collateral order doctrine is a judge-made exception to
the finality principle. See Espinal-Dominguez, 352 F.3d at 495.
To satisfy this doctrine — and thus furnish a valid basis for an
interlocutory appeal — the order appealed from must satisfy four
basic criteria. Id. at 496. First, it must involve an issue
unrelated to the merits of the main dispute, which is capable of
review without disrupting the main litigation. Second, the appeal
must be capable of finally resolving the issue. Third, the order
must implicate a right incapable of vindication upon review after
final judgment. And finally, the order must embody an important
and unsettled question of controlling law. Id.

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While that request at times employs the vocabulary of injunctive

relief, it at times suggests that what C-H actually wants is an

attachment (albeit an attachment derived from the district court's

authority under Rule 65). Given this internal inconsistency, we

must cut through the tangle of words and determine whether,

functionally, C-H is seeking an injunction or an attachment.

Morales Feliciano v. Rullan, 303 F.3d 1, 7 (1st Cir. 2002)

(explaining that a court must look "to the practical effect of the

order rather than its verbiage" to determine if it is appealable

under 28 U.S.C. § 1292(a)(1)); accord Cobell v. Norton, 334 F.3d

1128, 1137 (D.C. Cir. 2003).

This court has noted several factors that should be

considered in deciding whether a requested order is more akin to an

injunction or an attachment. These factors include "the present

and future consequences of the constraint involved; whether the

order directs or restrains conduct of one of the parties; [and] how

the order was treated below by the district court and the parties."

Teradyne, 797 F.2d at 47.

Viewed through this prism, the order appealed from

appears to be injunctive in nature. Because virtually all of BTG's

assets are located outside of Massachusetts, the order, if granted,

will operate by restraining BTG's conduct (i.e., commanding it to

take certain actions and prohibiting it from taking others). This

is the classic modus operandi of injunctive relief. See 11A Wright

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& Miller, supra § 2941, at 32-33 (defining injunctions as orders

that "require a party either to do or to refrain from doing some

act").

This perception is reinforced by the fact that the

parties and the district court treated C-H's motion as a motion for

a preliminary injunction. Although a reviewing court must look

beyond the nomenclature that parties or trial judges employ and

gauge the practical effect of a requested order, Morales Feliciano,

303 F.3d at 7, earlier characterizations of the underlying motion

are relevant to that determination, see Teradyne, 797 F.2d at 46,

47. Here, this factor tilts in favor of appellate jurisdiction.

The motion for reconsideration that C-H filed in the

district court dispels any lingering doubts. The motion papers

make pellucid that C-H wanted the court preliminarily to enjoin

BTG, its agents, officers, employees and all persons acting in

concert with it, "from spending, dissipating, transferring,

selling, or otherwise disposing of, any of BTG's assets or cash up

to the value of $15,453,548, other than in the ordinary course of

business, without first paying the same amount to [C-H]." This

iteration shows that what C-H really wanted was a freeze order —

and freeze orders directed at unspecified assets typically are in

the nature of preliminary injunctions. See, e.g., FTC v. H. N.

Singer, Inc., 668 F.2d 1107, 1112 (9th Cir. 1982) (noting that

while an asset freeze can have "an effect comparable to that of an

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attachment, it is not an attachment," but is an injunction). The

freeze order that C-H sought is no exception.

Teradyne buttresses this reading of the record. In that

case, the district court entered an order enjoining the defendant

from disposing of $4,000,000 worth of assets and requiring it to

set that amount aside in an interest-bearing account to ensure

satisfaction of any future judgment or arbitration award that might

eventuate in an ongoing dispute between the parties. 797 F.2d at

44-45. We held that such an order should be treated as an

injunction, id. at 47, and the factors to which we attached weight

are equally present here.2 First, the requested relief in that

case, as here, did not involve posting a bond or surrendering

specified property, but, rather, contemplated compelling a party to

act and/or refrain from acting. Id. at 46. Second, there, as

here, the district court and the parties treated the requested

relief as a preliminary injunction. Id. Third, and finally, the

Teradyne court thought tying up a large chunk of funds pending the

uncertain outcome of arbitration to be a "significant constraint."

Id. That consideration is magnified here, as C-H seeks to restrict

the use of almost four times as much money pending the outcome of

litigation.

2
The directive to escrow funds in a separate account
represents the only qualitative distinction between the order
sought in Teradyne and the order sought in this case. We see this
as a distinction without a legally significant difference.

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 Because we find the relief requested here to be in the

nature of an injunction, pure and simple, we need not probe the

applicability of the collateral order doctrine. See supra note 1.

It suffices to say that, after independent review of the record, we

are confident that we have jurisdiction to hear and determine this

interlocutory appeal. See 28 U.S.C. § 1292(a)(1).

III. STANDARD OF REVIEW

We ordinarily review the grant or denial of a motion for

preliminary injunctive relief for abuse of discretion. Ross-Simons

of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 16 (1st Cir. 1996)

(Ross-Simons I). This is a deferential standard of review, and the

deference that it entails is most appropriate with respect to

issues of judgment and the balancing of conflicting factors. See

Cablevision of Boston, Inc. v. Pub. Improvement Comm'n, 184 F.3d

88, 96 (1st Cir. 1999). Even then, however, appellate courts must

be careful to ensure that deference does not mutate into blind

allegiance. The trial court's discretion is not unbridled and

"[a]buse occurs when a material factor deserving significant weight

is ignored, when an improper factor is relied upon, or when all

proper and no improper factors are assessed, but the court makes a

serious mistake in weighing them." Indep. Oil & Chem. Workers of

Quincy, Inc. v. Proctor & Gamble Mfg. Co., 864 F.2d 927, 929 (1st

Cir. 1988).

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 We review the district court's answers to abstract

questions of law de novo. Goya Foods, Inc. v. Wallack Mgmt. Co.,

290 F.3d 63, 71 (1st Cir.), cert. denied, 537 U.S. 974 (2002). An

error of law is, of course, always an abuse of discretion.

Rosario-Urdaz v. Rivera-Hernandez, 350 F.3d 219, 221 (1st Cir.

2003).

IV. THE MERITS

Before sorting through the thicket of competing

arguments, we note — and put to one side — an issue that is not

squarely presented. Although this is a diversity case, C-H's

motion explicitly invoked Fed. R. Civ. P. 65(a). As a result, the

district court based its decision on that rule and, more generally,

on federal equitable principles. In briefing this appeal, C-H has

eschewed any argument that the availability of injunctive relief

should be determined, in the first instance, by reference to the

tenet that the law of the forum state supplies the rule of decision

in diversity cases. See generally Erie R. Co. v. Tompkins, 304

U.S. 64, 78 (1938); see also Grupo Mexicano, 527 U.S. at 318 n.3

(raising that possibility and reserving the question). We

therefore deem any such claim waived. See Teamsters Union v.

Superline Transp. Co., 953 F.2d 17, 21 (1st Cir. 1992) (describing

as "settled" the principle that, with only a very narrow band of

exceptions, "legal theories not raised squarely in the lower court

cannot be broached for the first time on appeal"); Clauson v.

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Smith, 823 F.2d 660, 666 (1st Cir. 1987) (similar). Given this

waiver, our decision necessarily hinges on principles of federal

law.

A. Framing the Issue.

In some situations, federal courts possess general

equitable power to issue prejudgment injunctions in the nature of

freeze orders so as to ensure the adequacy of postjudgment

remedies. See United States v. First Nat'l City Bank, 379 U.S.

378, 385 (1965); DeBeers Consol. Mines, Ltd. v. United States, 325

U.S. 212, 220 (1945). The fact that such an order may be within

the raw power of a federal court does not end the inquiry, but

simply sets the stage for two further queries. The logically

antecedent question involves whether, categorically speaking, a

particular case is of a type in which such an order may be issued.

The second involves the proper legal standard to be employed in the

exercise of that power.

The first of these questions is extremely complex. In

Grupo Mexicano, the Supreme Court held that the district court "had

no authority to issue a preliminary injunction preventing

petitioners from disposing of their assets pending adjudication of

respondents' contract claim for money damages" where no preexisting

lien or equitable interest had been claimed. 527 U.S. at 333. It

is unclear whether Grupo Mexicano directly controls this case. On

the one hand, its rationale favors the conclusion that the district

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court lacked the inherent authority to grant the relief that C-H

solicited. See, e.g., id. at 318-27 (finding that federal courts

ordinarily lack the equitable authority to issue prejudgment

attachments in actions at law). On the other hand, the application

of the Grupo Mexicano rationale here would entail an extension of

the Court's holding. After all, it is at least arguable that the

existence of a security interest (such as C-H possesses) is a

salient distinction.

Fortunately, we have the luxury of being able to leave

this question for another day. Thus, we assume for argument's sake

that the district court had the authority to grant the relief

requested — a preliminary injunction in the nature of a freeze

order. This assumption enables us to proceed directly to the

second question and decide what legal standard governs the exercise

of that assumed power.

B. Choosing the Standard.

It is familiar lore that the issuance of a preliminary

injunction depends on the outcome of a four-part inquiry. See,

e.g., Ross-Simons I, 102 F.3d at 15; Narragansett Indian Tribe v.

Guilbert, 934 F.2d 4, 5 (1st Cir. 1991). C-H asseverates that this

inquiry is inapropos here because a federal court must apply state

attachment standards to motions seeking prejudgment freeze orders.

As best we can decipher its asseveration, C-H seems to be saying

that, in cases where the relief sought is in the nature of an

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equitable attachment, Fed. R. Civ. P. 65 should be read in light of

Fed. R. Civ. P. 64 and be construed as importing state-law

standards for determining the availability of relief.3 BTG

disagrees. It maintains that this case is a prototypical Rule 65

case — no more and no less — and that, therefore, the usual four-

part test pertains.

To begin, circuit precedent suggests the use of the

traditional four-part standard. In Teradyne, 797 F.2d at 51-57, we

applied this standard in very similar circumstances (albeit without

focused discussion). So too Unisys Corp. v. Dataware Products,

Inc., 848 F.2d 311 (1st Cir. 1988), in which we found that the

disputed order resembled an injunction and applied the same

quadripartite test. Id. at 314.

C-H attempts to blunt the force of these precedents by

arguing, first, that the decision to utilize the four-part standard

3
Rule 64, with exceptions not relevant here, provides:

At the commencement of and during the course
of an action, all remedies providing for
seizure of person or property for the purpose
of securing satisfaction of the judgment
ultimately to be entered in the action are
available under the circumstances and in the
manner provided by the law of the state in
which the district court is held . . . . The
remedies [] available include arrest,
attachment, g arnishment, replevin,
sequestration, and other corresponding or
equivalent remedies. . . .

Fed. R. Civ. P. 64.

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in Unisys was not part of the court's holding (a point that, for

argument's sake, we are willing to assume); and second, that

Teradyne should be read narrowly. To that end, C-H declares that

the Teradyne court recognized the availability of an alternative

equitable attachment standard. But that ipse dixit misreads the

opinion: the Teradyne court discussed the alternative of equitable

attachment only in considering the appealability of the lower

court's order. See Teradyne, 797 F.2d at 45-47. Having determined

(as have we) that the requested relief was really in the nature of

an injunction, the court went on to apply the traditional four-part

test in a straightforward and unequivocal manner. See id. at 51-

52. There are no two ways about it; Teradyne stands four-square

for the proposition that a prejudgment freeze order is in the

nature of an injunction and that, therefore, its propriety should

be analyzed under the traditional four-part test.

C-H next seeks to minimize the impact of these precedents

by citing to decisions of other courts. This is wasted motion.

The rule is firmly settled that, in a multi-panel circuit, a newly

constituted panel is bound by prior panel decisions directly on

point. See Jusino v. Zayas, 875 F.2d 986, 993 (1st Cir. 1989).

Although there are two well-defined exceptions to this rule, see

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Williams v. Ashland Eng'g Co., 45 F.3d 588, 592 (1st Cir. 1995),

neither applies here.4

In all events, the precedents that C-H marshals are not

persuasive. A clear majority of courts confronting similar

circumstances have approved the use of the traditional four-part

preliminary injunction standard. See, e.g., United States ex rel.

Taxpayers Against Fraud v. Singer Co., 889 F.2d 1327, 1331 (4th

Cir. 1989); EBSCO Indus., Inc. v. Lilly, 840 F.2d 333 (6th Cir.

1988); Newby v. Enron Corp., 188 F. Supp. 2d 684, 707 (S.D. Tex.

2002); cf. Deckert v. Ind. Shares Corp., 311 U.S. 282, 290 (1940)

(finding injunction reasonable because available remedies at law

would be inadequate). Although most of these decisions have

applied this standard without any developed analysis of the issue

that C-H advances here, see, e.g., Singer Co., 889 F.2d at 1330-31,

resort to that standard makes eminently good sense in this context.

With the exception of a pair of Eleventh Circuit cases —

to which we shall return — the precedents to the contrary comprise

isolated district court rulings. To the extent that these cases

apply state standards rather than the traditional four-part test to

4
The first exception provides that a panel decision may be
"undermined by controlling authority, subsequently announced," such
as a decision of the Supreme Court or of the circuit court sitting
en banc, or a statutory overruling. Williams, 45 F.3d at 592. The
second pertains to those rare instances in which authority that
postdates the original decision "offers a sound reason for
believing that the former panel, in light of fresh developments,
would change its collective mind." Id.

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determine the availability of preliminary injunctive relief under

Rule 65, see, e.g., Hasbro, Inc. v. Serafino, 958 F. Supp. 19, 22-

23 (D. Mass. 1997); Anderson Foreign Motors, Inc. v. New Engl.

Toyota Distrib., Inc., 475 F. Supp. 973, 978 (D. Mass. 1979), we

regard them as wrongly decided. Moreover, they are not fairly

representative of the genre. See, e.g., Hunter v. Youthstream

Media Networks, Inc., 241 F. Supp. 2d 52, 54 (D. Mass. 2002)

(applying the traditional four-part preliminary injunction standard

in analogous circumstances).

We turn now to the Eleventh Circuit cases hawked by C-H.

See Rosen v. Cascade Int'l, Inc., 21 F.3d 1520 (11th Cir. 1994);

Mitsubishi Int'l Corp. v. Cardinal Textile Sales, Inc., 14 F.3d

1507 (11th Cir. 1994). Those opinions contain language which, at

first blush, might be read to suggest that the Eleventh Circuit

follows a rule opposite to that formulated in Teradyne. See, e.g.,

Mitsubishi, 14 F.3d at 1521-22 (stating that "Rule 64, and not Rule

65 . . . provides the standard for evaluating a request for

preliminary injunctive relief that is, in reality, no more than a

request for a prejudgment attachment"). Taken in context, however,

this language does not betoken an irreconcilable conflict.

In Rosen, the Eleventh Circuit made clear that district

courts had no power under Rule 65 to issue a preliminary injunction

that amounts to a prejudgment attachment when the underlying action

seeks only monetary damages and no statute specifically authorizes

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ancillary prejudgment relief. Rosen, 21 F.3d at 1529. The focus

of the case at hand is different (although we are sympathetic to

Rosen's core holding, we do not need to pass upon that question

here). Furthermore, both Rosen and Mitsubishi dealt with assets

that seem to have been located within the forum state (a

circumstance that, as C-H has acknowledged, is absent here). For

that reason, the district court in each case actually was applying

Rule 64, not Rule 65. Nothing in either decision fairly can be

read to support the notion that state standards govern the

determination of when a federal court, acting under Rule 65, can

issue an injunction in the nature of a freeze order designed to

affect assets located outside the forum state.

C-H has a fallback position. It observes that Grupo

Mexicano, 527 U.S. at 330-31, explicitly preserves the availability

of state-law remedies. This is true as far as it goes — but it

does not take C-H very far. In those few sentences, the Grupo

Mexicano Court explained that a freeze order related to property in

which the putative creditor possessed no legal or equitable

interest essentially amounted to a prejudgment attachment. The

Court then stated that allowing such relief in an action seeking

only remedies at law "could render Federal Rule of Civil Procedure

64, which authorizes use of state prejudgment remedies, a virtual

irrelevance." Id. at 330. The Court's reasoning supports the

continued vitality of Rule 64 — but the mere fact that state

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attachment standards remain applicable in federal courts under Rule

64 tells us nothing about the wonted operation of Rule 65. C-H is

not seeking an attachment under Rule 64, and it has identified no

property that is subject to the district court's in rem

jurisdiction.

At the expense of carting coal to Newcastle, we add that

the very nature of a freeze order counsels against commingling the

jurisprudence of Rule 65 with that of Rule 64. Even though a

freeze order may serve many of the same ends as an attachment, the

former acts upon a party whereas the latter is directed at specific

property. Restraining (or compelling) individual action is

especially strong medicine, and courts should hesitate to issue

such orders on an interlocutory basis without a showing of urgent

need. The traditional four-part standard for preliminary

injunctive relief provides a prophylaxis against the hasty or

intemperate use of that power. Consequently, sound policy

considerations support the imposition of that standard in

connection with freeze orders.

To say more would be to paint the lily. We hold that the

traditional four-part preliminary injunction standard applies in

full flower to motions brought under Rule 65 in hopes of securing

prejudgment freeze orders.

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 C. Applying the Discerned Standard.

This brings us to the final leg of our journey. Having

concluded that the district court appropriately resorted to the

traditional four-part standard for preliminary injunctive relief en

route to its alternative holding, the question reduces to the

supportability of the court's determination that C-H failed to

achieve that benchmark. Upon close perlustration, we find no fault

with that determination.

Under the accepted framework, the four elements that a

district court faced with a motion for a preliminary injunction

must assess are the following:

(1) the likelihood of success on the merits;
(2) the potential for irreparable harm if the
injunction is denied; (3) the balance of
relevant impositions, i.e., the hardship to
the nonmovant if enjoined as contrasted with
the hardship to the movant if no injunction
issues; and (4) the effect (if any) of the
court's ruling on the public interest.

Ross-Simons I, 102 F.3d at 15. In conjunction with the use of this

standard, trial courts have wide discretion in making judgments

regarding the appropriateness vel non of preliminary injunctive

relief. Id. at 16.

In most cases — and the case at hand is no outlier —

irreparable harm constitutes a necessary threshold showing for an

award of preliminary injunctive relief. Matos v. Clinton Sch.

Dist., ___ F.3d ___, ___ (1st Cir. 2004) [No. 03-1332, slip op. at

8]; accord Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 217 F.3d

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8, 13 (1st Cir. 2000) (describing irreparable harm as "an essential

prerequisite" for receiving such redress). The burden of

demonstrating that a denial of interim relief is likely to cause

irreparable harm rests squarely upon the movant. Ross-Simons I,

102 F.3d at 18.

In this case, the district court found that C-H had

failed to carry that burden. This finding draws substantial

comfort from the record. A finding of irreparable harm must be

grounded on something more than conjecture, surmise, or a party's

unsubstantiated fears of what the future may have in store. Regan

v. Vinick & Young (In re Rare Coin Galleries of Am., Inc.), 862

F.2d 896, 902 (1st Cir. 1988). Here, we have been unable to

discern anything resembling a realistic prospect of irreparable

harm.

Irreparable harm most often exists where a party has no

adequate remedy at law. See Rosario-Urdaz, 350 F.3d at 221. In

this case, C-H ultimately seeks an award of pecuniary damages (and,

in a best case scenario, that is all it will be entitled to

receive). Such an award will make it whole.5 Accordingly, its

legal remedy is adequate.

To escape the ineluctable conclusion that it cannot show

a meaningful risk of irreparable harm, C-H asserts that a denial of

5
We note that, under Massachusetts law, C-H will be entitled
to prejudgment (and perhaps even all post-breach) interest. See
Mass. Gen. Laws ch. 231, § 6C.

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preliminary injunctive relief will allow "BTG to enjoy the fruits

of [C-H's] investment in the company without any reciprocal

obligations." Appellants' Reply Br. at 22. This assertion begs

the question. At any rate, it is more properly viewed in

addressing the likelihood of success on the merits (an issue that

we need not reach). C-H has not yet proven its mettle. If and

when it does (by prevailing on the merits of its claim), it will be

entitled to execute upon the judgment entered against BTG. Unless

and until that happens, C-H must identify some independent reason

why it will be irreparably harmed without the imposition of interim

relief.

In a second offer to show irreparable harm, C-H posits

that it is not able to monitor its admittedly substantial

investment and that, therefore, it "face[s] the risk that [it] will

be left with nothing at the end of the day." Appellants' Reply Br.

at 22. That sort of statement can be made by virtually every

person who sues another for money damages. Its very ubiquity

indicates why it cannot conceivably be enough to justify the

issuance of a prejudgment injunction of this nature. The case law

so holds. See, e.g., In re Rare Coin Galleries, 862 F.3d at 902;

Public Serv. Co. of N.H. v. Town of W. Newbury, 835 F.2d 380, 383

(1st Cir. 1987); see also Ross-Simons I, 102 F.3d at 19 (explaining

that a "tenuous or overly speculative forecast of anticipated harm"

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does not possess the substance required to show irreparable

injury).

Two further points seem worthy of mention. First, C-H's

cries of urgency are sharply undercut by its own rather leisurely

approach to the question of preliminary injunctive relief. It

waited more than a year after the commencement of the action to

seek an injunction. That chronology has evidentiary significance:

delay between the institution of an action and the filing of a

motion for preliminary injunction, not attributable to intervening

events, detracts from the movant's claim of irreparable harm. See

JSC Foreign Econ. Ass'n Technostroyexport v. Int'l Dev. & Trade

Servs., Inc., 295 F. Supp. 2d 366, 390 (S.D.N.Y. 2003). The longer

the delay, the more pervasive the doubt.

Second, even assuming that there is a risk that BTG will

be unable to pay a future judgment — a conclusion that has utterly

no footing in the record — the Agreement granted C-H a security

interest in all of BTG's property. C-H's counsel conceded at oral

argument that this security interest has been perfected. Thus, C-H

— unlike an ordinary plaintiff — has an alternative means for

ensuring payment of any judgment that it eventually might obtain.

The existence of this anchor to windward further undermines C-H's

argument that it is facing an intolerable risk of irreparable harm.

A preliminary injunction is a potent weapon that should

be used only when necessary to safeguard a litigant's legitimate

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interests. The instant record reflects no basis for a reasoned

belief that such an order is necessary. Accordingly, we hold that

the district court acted well within the encincture of its

discretion in denying a preliminary injunction on the ground that

C-H had failed to make the requisite showing of irreparable harm.6

Cf. Ross-Simons I, 102 F.3d at 19 (noting that, in appeals relating

to preliminary injunctions, "battles over the quality and quantity

of the harm alleged most often will be won or lost in the trial

court").

V. CONCLUSION

We need go no further. To the extent a party seeks a

preliminary injunction under Rule 65, the traditional four-part

standard governs — and this remains so notwithstanding that the

sought-after injunction is in the nature of an equitable attachment

or freeze order. Because the district court applied the

appropriate legal standard and because its ensuing determination —

that, on the facts of this case, C-H had made no showing of

irreparable harm — was not an abuse of discretion, we uphold its

ukase.

Affirmed.

6
In view of this conclusion, we need not address the other
three prongs of the traditional four-part standard.

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