Dominion Video Satellite, Inc. v. Echostar Satellite Corp.

                                                                        F I L E D
                                                                  United States Court of Appeals
                                                                          Tenth Circuit
                                   PUBLISH
                                                                         OCT 25 2001
                  UNITED STATES COURT OF APPEALS
                                                                     PATRICK FISHER
                                                                              Clerk
                               TENTH CIRCUIT




DOMINION VIDEO SATELLITE,
INC.,

             Plaintiff-Appellee,
                                                       No. 01-1084
v.

ECHOSTAR SATELLITE
CORPORATION; ECHOSPHERE
CORPORATION,

             Defendants-Appellants.




                   Appeal from the United States District Court
                           for the District of Colorado
                               (D.C. No. 01-K-206)


Submitted on the briefs:

R. Nicholas Palmer, R. Nicholas Palmer Attorney at Law, L.L.C., Denver,
Colorado; Mark D. Colley, Holland & Knight, L.L.P., Washington, D.C., for
Plaintiff-Appellee.

Todd Jansen, Cockrell, Quinn & Creighton, Denver, Colorado; Mark A. Nadeau,
Cynthia A. Ricketts, Squire, Sanders & Dempsey, L.L.P., Phoenix, Arizona; T.
Wade Welch, Ross W. Wooten, T. Wade Welch & Associates, Houston, Texas,
for Defendants-Appellants.
Before MURPHY, BALDOCK, Circuit Judges, and VAN BEBBER, *
Senior District Judge.


MURPHY, Circuit Judge.



I. INTRODUCTION

      This interlocutory appeal arises from a contract dispute based on diversity

jurisdiction that is currently in arbitration. Plaintiff-appellee

Dominion Video Satellite, Inc. (“Dominion”) brought a motion for a temporary

restraining order and preliminary injunction in the United States District Court for

the District of Colorado against defendants-appellants EchoStar Satellite

Corporation and Echosphere Corporation (collectively “EchoStar”). After a

hearing, the district court entered a temporary restraining order and preliminary

injunction against EchoStar and set bond at $10,000. Both the district court and

this court denied EchoStar’s motions to stay the injunction pending appeal and to

increase the bond. This court has jurisdiction under 28 U.S.C. § 1292(a)(1). 1




      *
       Honorable G. Thomas Van Bebber, Senior District Judge, United States
District Court for the District of Kansas, sitting by designation.
      1
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.

                                          -2-
      EchoStar raises three issues on appeal. First, it claims the district court

violated its due process and procedural rights by failing to give sufficient notice

before granting appellee’s preliminary junction. Second, addressing the merits,

EchoStar argues that the court abused its discretion in issuing the preliminary

injunction. Finally, EchoStar contests the amount of the bond set by the district

court. Because this court concludes that the district court did not abuse its

discretion in giving notice of the hearing or in issuing injunctive relief, it affirms

the preliminary injunction order, but remands to the district court for factual

findings as to the appropriate bond amount.

II. FACTUAL BACKGROUND

      EchoStar owns and operates satellites and transmits direct broadcast

programming under the “DISH Network” trade name. Dominion is a television

and radio broadcaster of predominantly religious programming that operates the

Sky Angel network.

      Each of EchoStar’s satellites houses multiple transponders, or devices that

receive broadcast transmissions from Earth and retransmit them to individual dish

antennas. Pursuant to a July 18, 1996 contract, EchoStar leased eight

transponders on its satellites to Dominion for satellite broadcasting. In

consideration, Dominion agreed to pay EchoStar cash fees and lease back three of

the eight transponders to EchoStar. In addition, the contract provides for several


                                          -3-
offsets against Dominion’s cash payments to EchoStar if certain conditions were

met.

       The contract defines a “Dominion Member” as a “Qualifying Residential

Subscriber” (“QRS”) meeting several requirements. A QRS, in turn, is an

individual who purchases a receiver from EchoStar, orders a minimum level of

programming from the DISH Network, and is a first-time subscriber. The term

“Dominion Member” appears in several instances in Article 6.3 of the contract,

which addresses “Offset of Cash Fees.” “Dominion Member” also appears in

Article 5.2.2, the provision governing “Dominion’s Fulfillment Services.”




                                       -4-
      Two other contract provisions are relevant in this case. Article

16.15includes a non-waiver provision. 2 Article 16.8 includes an arbitration

provision.

      EchoStar and Dominion signed an amendment to the contract on December

9, 1996. The amendment includes a provision that, if Dominion did not make

certain payments to EchoStar, Dominion would automatically sublease three

additional transponders back to EchoStar. In that event, Dominion would not

have to pay certain cash fees, nor would it be entitled to “any further Offsets.”




      2
        “16.15. No Implied Waiver. Neither the waiver by a party of a breach of
or a default under any of the provisions of this Agreement, nor the failure of a
party, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right, remedy, or privilege hereunder, shall
thereafter be construed as a waiver of any subsequent breach or default of a
similar nature, or as a waiver of any such provisions, rights, remedies, or
privileges hereunder. No failure or delay on the part of a party in exercising any
right, power, or privilege hereunder, and no course of dealing between the parties,
shall operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. No change, waiver or
discharge hereof shall be valid unless in writing and signed by an authorized
representative of the party against whom such change, waiver or discharge is
sought to be enforced. A waiver by any party of any of the covenants, conditions,
or contracts to be performed by the other or any breach thereof shall not be
construed to be a waiver of any succeeding breach thereof or of any other
covenant, condition, or contract herein contained. No change, waiver, or
discharge hereof shall be valid unless in writing and signed by an authorized
representative of the party against such change, waiver, or discharge is sought to
be enforced.”

                                         -5-
Dominion elected not to make the specified payments to EchoStar, and the

amendment became effective sometime before the current dispute arose.

      Individuals wishing to view Sky Angel or DISH Network programming

must first purchase and install a DISH Network receiver. The customer cannot

view programming on either the DISH Network or Sky Angel unless EchoStar

activates the customer’s DISH Network receiver. Since the inception of

Dominion’s broadcasts of Sky Angel programming, those individuals who wanted

to subscribe to Sky Angel contacted Dominion to order service. Dominion, in

turn, contacted EchoStar to activate that particular customer’s satellite dish.

      On January 26, 2001, EchoStar sent Dominion a letter which stated, in part,

that EchoStar would not activate any Dominion subscribers unless they purchased

a minimum level of DISH Network programming, an unsubsidized satellite

receiver directly from EchoStar, or a Dominion-specific smart card. The stated

purpose of EchoStar’s demands was to remedy the “problem” of “Dominion

subscribers [] receiving subsidized prices without fulfilling their commitment to

EchoStar which would make them eligible for those subsidies.”

      EchoStar views the January 26 letter as an attempt to enforce the QRS

criteria in the original contract. Dominion contends, however, that the letter

represents EchoStar’s unauthorized attempt to impose new requirements before

activating Dominion subscribers. The parties do not dispute that, before


                                          -6-
EchoStar’s demand letter on January 26, 2001, EchoStar activated new Dominion

subscribers without enforcing the QRS criteria.

      On February 5, 2001, Dominion simultaneously filed a complaint and a

“Motion for Temporary Restraining Order and/or Preliminary Injunction” in the

United States District Court for the District of Colorado requesting that the court

enjoin EchoStar from refusing to activate Dominion subscribers or from imposing

the conditions set out in the January 26 letter. On the same day, Dominion faxed

to EchoStar a notice of election of arbitration on several issues, including the

activation of Dominion subscribers.

      The hearing for injunctive relief took place on February 8. At the

conclusion of the hearing, the district court orally issued a temporary restraining

order against EchoStar and set the bond at $10,000, which Dominion duly

submitted. Later that day, the district court entered the written order for a

temporary restraining order and a preliminary injunction.

      This appeal followed. The parties are currently in arbitration with hearings

scheduled to begin on October 24, 2001.




                                          -7-
III. DISCUSSION

A. Standards of Review

      This court reviews the grant of a preliminary injunction for abuse of

discretion. See Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d 1234,

1243 (10th Cir. 2001). A district court abuses its discretion if it “commits an

error of law, or is clearly erroneous in its preliminary factual findings.” Id. A

preliminary injunction will be set aside for abuse of discretion if the district court

applied the wrong legal standard in deciding to grant a motion for a preliminary

injunction. See SCFC ILC, Inc. v. Visa, USA Inc., 936 F.2d 1096, 1098 (10th Cir.

1991). This court reviews the issuance of a bond for abuse of discretion. See

Cont’l Oil Co. v. Frontier Ref. Co., 338 F.2d 780, 783 (10th Cir. 1964).

B. Notice of Preliminary Injunction

      On appeal, EchoStar claims the district court violated its due process rights

by failing to give adequate notice that it was conducting a hearing for a

preliminary injunction. 3 EchoStar does not argue on appeal that it lacked

adequate notice for a temporary restraining order hearing. Rather, EchoStar

asserts that the one business day notice of the hearing was not enough time to


      3
        The record before this court does not disclose whether EchoStar raised
this argument in the district court. Because it does not affect our holding, this
court will assume without deciding that EchoStar properly preserved the issue for
appeal. See Coletti v. Cudd Pressure Control, 165 F.3d 767, 773 n.2 (10th Cir.
1999).

                                          -8-
prepare for a preliminary injunction hearing or conduct meaningful discovery.

EchoStar asks this court to adopt the Fifth Circuit rule that imports the five

business day notice requirement of Rule 6(d) of the Federal Rules of Civil

Procedure into Rule 65(a)(1) hearings governing preliminary injunctions. 4 See

Parker v. Ryan, 960 F.2d 543, 544-45 (5th Cir. 1992).

      Rule 65(a)(1) provides, in relevant part, that “[n]o preliminary injunction

shall be issued without notice to the adverse party.” Neither the Rule nor the

advisory committee notes specify the form or amount of notice required. This

court has not addressed the issue in a published opinion.

      The district court did not abuse its discretion in setting the preliminary

injunction hearing three days after Dominion filed its motion for injunctive relief.

On February 5, 2001, Dominion filed a “MOTION FOR TEMPORARY

RESTRAINING ORDER AND/OR PRELIMINARY INJUNCTION.” At the very

least, EchoStar thereby had notice that Dominion alternatively sought a

preliminary injunction. Dominion also served notice of hearing on EchoStar on

February 6. EchoStar never objected to the hearing date nor did it ask for more

time to prepare. Indeed, EchoStar filed a written brief in opposition to the


      4
         Rule 6(d) provides, in pertinent part: “A written motion . . . and notice of
the hearing thereof shall be served not later than 5 days before the time specified
for the hearing, unless a different period is fixed by these rules or by order of the
court.” Weekends are excluded from the five-day computation. See Fed. R. Civ.
P. 6(a).

                                          -9-
request for injunctive relief two days after Dominion filed the motion and one day

after EchoStar was notified of the hearing date. In addition, EchoStar attached

the declaration of Polly Dawkins, an EchoStar employee, in its brief opposing

injunctive relief, thus indicating that it had enough time to include papers in

support of its brief in opposition. Nothing in the record indicates that EchoStar

directly or indirectly alluded to a notice problem in its brief in opposition.

Furthermore, the record of the district court proceedings indicate that EchoStar

conducted a thorough defense at the hearing. EchoStar argued its case at the

hearing and conducted an extensive cross and re-cross examination of Robert

Johnson, the chairperson and chief executive officer of Dominion and the sole

witness at the hearing. Although EchoStar asserts that the district court

repeatedly referred to the hearing as only one for a temporary restraining order,

the transcript of the hearing reveals that the district court referred to the relief

sought as a preliminary injunction at least once. See Appellant App. at 152.

      Even if this court were to accept EchoStar’s argument that the district court

failed to give adequate notice for the preliminary injunction hearing, EchoStar

must still demonstrate that the error was prejudicial. See United States v.

Alabama, 791 F.2d 1450, 1458 (11th Cir. 1986). EchoStar does not, however,

explain how its argument or evidence would have been materially different with

more notice. See id. Instead, it asserts most generally that it would have called


                                           -10-
unidentified witnesses and conducted a more rigorous cross examination.

EchoStar does not indicate the substance, matter, or source of any additional

evidence, or how any such evidence would have affected the outcome.

      Nothing in the Federal Rules of Civil Procedure suggests that this court

superimpose the five-day requirement of Rule 6(d) into the notice provision of

Rule 65(a)(1). The Fifth Circuit has adopted this approach. See Harris County,

Tex. v. CarMax Auto Superstores, Inc., 177 F.3d 306, 326 (5th Cir. 1999)

(“[N]otice under Rule 65(a)(1) should comply with Rule 6(d). . . .” (emphasis

added)); Parker, 960 F.2d at 544. Other circuits, however, have not. See, e.g.,

Anderson v. Davila, 125 F.3d 148, 156-57 (3d Cir. 1997); Ill. ex rel. Hartigan v.

Peters, 871 F.2d 1336, 1340 (7th Cir. 1989); Alabama, 791 F.2d at 1458. Indeed,

courts addressing the issue have stated that the sufficiency of Rule 65(a)(1) notice

is within the district courts’ discretion. See, e.g., Ciena Corp. v. Jarrard, 203

F.3d 312, 319 (4th Cir. 2000); Peters, 871 F.2d at 1340; Alabama, 791 F.2d at

1458. Under these circumstances, this court declines EchoStar’s invitation to

adopt the Fifth Circuit’s interpretation of Rule 65(a)(1). Accordingly, the district

court did not abuse its discretion in its notice to EchoStar of the preliminary

injunction hearing.




                                         -11-
C. Preliminary Injunction

      Ordinarily, a movant seeking a preliminary injunction must establish (1) a

substantial likelihood of success on the merits; (2) irreparable injury to the

movant if the injunction is denied; (3) the threatened injury to the movant

outweighs the injury to the party opposing the preliminary injunction; and (4) the

injunction would not be adverse to the public interest. Utah Licensed Beverage

Ass’n v. Leavitt, 256 F.3d 1061, 1065-66 (10th Cir. 2001). Because a preliminary

injunction is an extraordinary remedy, the movant’s right to relief must be clear

and unequivocal. See Kikumura v. Hurley, 242 F.3d 950, 955 (10th Cir. 2001).

      For certain preliminary injunctions, the movant has a heightened burden of

showing that the traditional four factors weigh heavily and compellingly in its

favor before obtaining a preliminary injunction. See id. The heightened burden

applies to preliminary injunctions that (1) disturb the status quo, (2) are

mandatory rather than prohibitory, or (3) provide the movant substantially all the

relief it could feasibly attain after a full trial on the merits. Id. This court

disfavors such injunctions. See SCFC, 936 F.2d at 1098.




                                          -12-
      1. Applicability of Heightened Burden Standard for Disfavored Preliminary
      Injunctions

      EchoStar argues that the district court erred in not applying the heightened

burden for disfavored injunctions. According to EchoStar, the preliminary

injunction disturbed the status quo, was mandatory, and provided Dominion with

substantially all the relief it could have recovered at trial.

      EchoStar first contends that the preliminary injunction altered the status

quo between the parties because the injunction forced EchoStar to activate new,

non-QRS Dominion subscribers and incur additional financial losses from these

activations. EchoStar apparently asks this court to confine the status quo to the

four days that preceded the filing of the motion for injunctive relief, after

EchoStar demanded that Dominion meet the conditions of the January 26 letter.

      In SCFC, this court explained that the status quo is “the last uncontested

status between the parties which preceded the controversy until the outcome of

the final hearing.” SCFC, 936 F.2d at 1100 n.8 (citation and quotation marks

omitted). In determining the status quo for preliminary injunctions, this court

looks to the reality of the existing status and relationship between the parties and

not solely to the parties’ legal rights. See id. at 1100.

      Here, the last uncontested status of the parties was the four years in which

EchoStar activated Dominion subscribers regardless of whether the subscriber had

met the QRS criteria. Even if EchoStar had the legal right under the contract to

                                           -13-
refuse activating new, non-QRS Dominion subscribers, the reality was that

EchoStar activated Dominion subscribers whether or not they qualified for QRS

status.

          Thus, EchoStar’s contention that the status quo was defined immediately

before the action is unavailing. Not only is this status contested by Dominion, but

it is the impetus for this litigation and the pending arbitration. Adopting

EchoStar’s position would imply that any party opposing a preliminary injunction

could create a new status quo immediately preceding the litigation merely by

changing its conduct toward the adverse party. To treat such a new status quo as

the relationship which an injunction should not disturb would unilaterally

empower the party opposing the injunction to impose a heightened burden on the

party seeking the injunction. This court declines to extend the definition of the

status quo to invariably include the last status immediately before the filing for

injunctive relief.

          Similarly, this court concludes that the district court did not abuse its

discretion in resolving that a heightened burden was inapplicable because the

injunctive relief here is not mandatory, but prohibitory. EchoStar asserts that the

injunction forces it to take affirmative action to activate new Dominion

subscribers. The injunction, however, prohibits EchoStar from refusing to

activate new Dominion customers on the same terms and conditions previously


                                             -14-
applicable. It does not compel EchoStar to do something it was not already doing

during the last uncontested period preceding the injunction.

      Nor has EchoStar persuaded this court that the preliminary injunction

affords Dominion substantially all the relief which it might be entitled after a full

trial on the merits. This court has recently explained that

             [t]he only reason to disfavor a preliminary injunction
             that grants substantially all the relief sought is if it
             would render a trial on the merits largely or completely
             meaningless. Therefore, all the relief to which a
             plaintiff may be entitled must be supplemented by a
             further requirement that the effect of the order, once
             complied with, cannot be undone.

Potawatomi Indians, 253 F.3d at 1247 (citation and internal quotation marks

omitted). Here, the effect of the preliminary injunction can be unwound by means

of an award of damages if EchoStar prevails at a trial on the merits. Moreover,

the injunction does not address Dominion’s claims of exclusive programming and

monetary damages.

      The district court did not abuse its discretion in failing to apply the

heightened standard for obtaining a preliminary injunction. The issue remains,

however, whether the district court erred in granting the preliminary injunction

under the traditional standard for preliminary injunctive relief.




                                         -15-
      2. Preliminary Injunction Analysis

      a.     Irreparable Harm

      EchoStar contends that the district court abused its discretion in finding

irreparable harm. A plaintiff suffers irreparable injury when the court would be

unable to grant an effective monetary remedy after a full trial because such

damages would be inadequate or difficult to ascertain. See Kikumura, 242 F.3d at

963. The district court found that denying Dominion injunctive relief would

result in Dominion’s loss of reputation, good will, marketing potential, and ability

to meet its contractual obligations to programmers and lifetime subscribers.

      EchoStar asserts that Dominion has offered only generalities and

speculation to establish irreparable injury if injunctive relief is denied. In support

of this assertion, EchoStar relies on SCFC ILC, Inc. v. Visa USA, Inc. In SCFC,

this court vacated the district court’s preliminary injunction ordering the

defendant Visa to approve plaintiff MountainWest’s unprecedented 1.5 million

credit card order. See id. at 1098-99. MountainWest argued that denial of

injunctive relief would cause irreparable injury because it would lose a “window

of opportunity” to launch a new credit card program. See id. at 1100.

      The facts in this case, however, are distinguishable. At the district court

hearing, Dominion CEO Robert Johnson testified that Dominion’s preexisting

business had already suffered from EchoStar’s actions. Johnson stated that up to


                                         -16-
500 Dominion subscribers had not been activated because of EchoStar’s actions,

and that Dominion had already begun to receive cancellations from subscribers as

a result. The district court also heard testimony about one of Dominion’s

programmers expressing concern over how the dispute would affect its launch.

Because Dominion’s business relies heavily on word-of-mouth business, Johnson

testified that EchoStar’s refusal to activate new, non-qualifying Dominion

subscribers would damage Dominion’s reputation, especially after Dominion had

told subscribers that their satellite dish would be activated within three days of

contacting Dominion after purchase.

      EchoStar also claims that any harm Dominion would suffer from the denial

of injunctive relief would be strictly monetary and thus not irreparable. This

argument relies on EchoStar’s assertion that the only damage Dominion would

suffer is the lost income from subscribers who did not meet the purchase

eligibility requirements and a five dollar monthly access fee EchoStar wants to

assess on new, nonqualifying Dominion subscribers. The parties dispute whether

the five dollar fee alternative was properly before the district court. Even if the

five dollar proposal were before the district court, no remedy could repair the

damage to Dominion’s reputation and credibility. Accordingly, this court cannot

say that the district court abused its discretion in finding irreparable harm to

Dominion.


                                         -17-
      b.     Balance of Injuries

      At the hearing, the district court concluded that the balance of injuries

weighed in favor of Dominion, because EchoStar will suffer only monetary

damages from the injunction, which may be self-inflicted; Dominion, however,

will suffer irreparable harm. On appeal, EchoStar claims that the district court

abused its discretion because it failed to consider EchoStar’s contention that it

loses three million dollars per month to comply with the injunction and that

EchoStar would not be able to recover monetary damages if it prevails at

arbitration because Dominion is in a “precarious financial situation.” The district

court did not address either of these arguments, and it is not apparent whether

EchoStar made these arguments below. In any event, EchoStar has presented

nothing indicating that the district court abused its discretion in finding that the

balance of injuries tips in favor of Dominion.

      c.     Public Interest

      On this point, EchoStar’s only argument on appeal is that granting the

injunction violates the public policy of upholding lawful contracts and

discouraging their breach. EchoStar does not dispute or challenge the district

court’s reasoning that the injunction protected the interests of Dominion’s

customers and supported the public policy of favoring arbitration. This court




                                          -18-
concludes that the district court’s stated reasons were supported by the record,

and thus the court did not abuse its discretion.

         d.    Likelihood of Success on the Merits

         If a party seeking the injunction has met its burden on the above three

factors, this court has stated that it may meet the showing of likelihood of success

on the merits “by showing that questions going to the merits are so serious,

substantial, difficult, and doubtful as to make the issue ripe for litigation and

deserving of more deliberate investigation.” Fed. Lands Legal Consortium v.

United States, 195 F.3d 1190, 1195 (10th Cir. 1999). In addressing this question,

the district court judge below stated that “the most perceptive way of viewing and

trying to interpret a contract to the extent that I have to here today is to see how

the parties have behaved in the past and how they’ve treated it. And that should

be controlling as a matter of the intent of the parties.”

         Dominion has met the modified burden for showing likelihood of success

on the merits, although for reasons different than that stated by the district court.

This court may affirm a district court decision “on any grounds for which there is

a record sufficient to permit conclusions of law, even grounds not relied upon by

the district court.” United States v. Sandoval, 29 F.3d 537, 542 n.6 (10th Cir.

1994).




                                           -19-
      Whether Dominion can show a likelihood of success on the merits turns on

how the December 1996 amendment affects the underlying contract. Dominion

argues that the amendment, by stating that “no further payments shall be required

to be made by Dominion to the DISH Group for the Channel Use Cash Fee or for

the Lease Cash Fee, nor shall Dominion be entitled to any further Offsets,”

nullified any contractual obligation that Dominion members also be QRSs.

EchoStar counters that the amendment relieved Dominion only from paying

certain cash fees, but did not alter the requirement that Dominion subscribers

obtain QRS status.

      In finding that Dominion had met the modified burden for showing

likelihood of success on the merits, the district court relied solely on the parties’

course of dealings. The non-waiver clause in Article 16.15, however, states that

“no course of dealing between the parties[] shall operate as a waiver” of a party’s

contractual rights. As a consequence, the parties’ course of dealings, upon which

the district court relied, does not provide a basis for the district court’s conclusion

that the Dominion complaint raised questions so substantial and serious as to

make the matter ripe for litigation.

      The record, however, shows that the parties’ conflicting interpretations of

the contract and the December 1996 amendment present serious questions that

warrant greater investigation. At the hearing, the district judge had concluded


                                          -20-
that there were “ambiguities” in the contract, and that “[i]t’s up to an arbitrator to

resolve the ambiguities that are in the contract and to determine on the basis of

the contract, including the amendments, who is specifically right in this instance.”

This court agrees, and concludes that Dominion satisfied the fourth prong of the

preliminary injunction test. 5

D. Bond Amount

      Rule 65(c) provides in part that no 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.” This court

has stated that the trial court has “wide discretion” in setting the amount of the

preliminary injunction bond. See Cont’l Oil, 338 F.2d at 782.

      At the hearing, the district court made no findings on the security amount

before setting the bond at $10,000. This court should not and thus will not

perform the fact-finding function reserved for the district courts. See Davis v.

United States, 192 F.3d 951, 961 (10th Cir. 1999). Without factual findings, this

court cannot determine whether the district court abused its discretion in setting

the bond amount for the preliminary injunction. Accordingly, this matter must be

remanded to the district court to make factual findings in setting the bond under

Rule 65(c).

      5
         In doing so, this court expresses no opinion as to whether the status quo
represents the prevailing interpretation of the contract. It is up to the arbitrators
in this case to decide the matter.

                                          -21-
IV. CONCLUSION

      For the foregoing reasons, this court AFFIRMS the district court’s

preliminary injunction in favor of Dominion, but REMANDS to the district court

for factual findings and further proceedings, if necessary, concerning the amount

and form of bond.




                                       -22-


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