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

F I L E D
United States Court of Appeals
Tenth Circuit

JAN 29 2004
PUBLISH
PATRICK FISHER
Clerk
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT

DOMINION VIDEO SATELLITE, INC.,

Plaintiff-Appellee,

v. No. 03-1274

ECHOSTAR SATELLITE CORPORATION and
ECHOSPHERE CORPORATION,

Defendants.
______________

WORD OF GOD FELLOWSHIP,
INCORPORATED, a Georgia Corporation, doing
business as Daystar Television Network,

Intervenor-Appellant,

and

TRINITY CHRISTIAN CENTER OF SANTA ANA,
INC., doing business as Trinity Broadcasting
Network; TRINITY BROADCASTING OF
ARIZONA; TRINITY BROADCASTING OF
FLORIDA, INC.; TRINITY BROADCASTING OF
INDIANA, INC.; TRINITY BROADCASTING OF
NEW YORK, INC.; TRINITY BROADCASTING
OF OKLAHOMA CITY, INC.; TRINITY
BROADCASTING OF TEXAS; TRINITY
BROADCASTING OF WASHINGTON; TRI-
STATE CHRISTIAN TV, INC.; TCT OF
MICHIGAN, INC.; RADIANT LIFE MINISTRIES,
INC.; FAITH BROADCASTING NETWORK;
FAMILYNET, INC.,

Amici Curiae.

DOMINION VIDEO SATELLITE, INC.,

Plaintiff-Appellee,

v. No. 03-1303

ECHOSTAR SATELLITE CORPORATION and
ECHOSPHERE CORPORATION,

Defendants-Appellants.
_______________

WORD OF GOD FELLOWSHIP,
INCORPORATED, a Georgia Corporation, doing
business as Daystar Television Network,

Intervenor,

and

TRINITY CHRISTIAN CENTER OF SANTA ANA,
INC., doing business as Trinity Broadcasting
Network; TRINITY BROADCASTING OF
ARIZONA; TRINITY BROADCASTING OF
FLORIDA, INC.; TRINITY BROADCASTING OF
INDIANA, INC.; TRINITY BROADCASTING OF
NEW YORK, INC.; TRINITY BROADCASTING
OF OKLAHOMA CITY, INC.; TRINITY
BROADCASTING OF TEXAS; TRINITY
BROADCASTING OF WASHINGTON; TRI-
STATE CHRISTIAN TV, INC.; TCT OF

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 MICHIGAN, INC.; RADIANT LIFE MINISTRIES,
INC.; FAITH BROADCASTING NETWORK;
FAMILYNET, INC.,

Amici Curiae.

Appeal from the United States District Court
for the District of Colorado
(D.C. No. 03-K-607 (CBS))

Donald M. Barnes of Porter, Wright, Morris & Arthur, LLP, Washington, D.C.
(Salvatore A. Romano and Brian M. Castro of Porter, Wright, Morris & Arthur,
LLP, Washington, D.C.; Thomas E. Downey, Jr., of Downey & Knickerehm, P.C.,
Denver, Colorado; and John Lynch, Jr. of Adams Lynch & Loftin P.C., Bedford,
Texas, with him on the briefs), for Intervenor-Appellant Word of God Fellowship,
Incorporated, in No. 03-1274.

Ross W. Wooten of T. Wade Welch & Associates, Houston, Texas (T. Wade
Welch of T. Wade Welch & Associates, Houston, Texas; and Todd Jansen of
Cockrell, Quinn & Creighton, Denver, Colorado, with him on the briefs), for
Defendants-Appellants EchoStar Satellite Corporation and Echosphere
Corporation in No. 03-1303.

Mark D. Colley of Holland & Knight LLP, Washington, D.C. (Thomas D. Leland
of Holland & Knight LLP, Washington, D.C.; and Allan L. Hale and Scott A.
Hyman of Hale Hackstaff Friesen, LLP, Denver, Colorado, with him on the
briefs), for Plaintiff-Appellee, Dominion Video Satellite, Inc., in Nos. 03-1274
and 03-1303.

Colby M. May and James M. Henderson, Sr., filed an amicus curiae brief on
behalf of Trinity Christian Center of Santa Ana, Inc., et al.

John T. Schmidt, Conrad M. Shumadine, Gary A. Bryant and Michael R.
Katchmark of Willcox & Savage, P.C., filed an amicus curiae brief on behalf of
FamilyNet, Inc.

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Before SEYMOUR, MURPHY and HARTZ, Circuit Judges.

SEYMOUR, Circuit Judge.

This appeal arises out of a contract dispute between EchoStar Satellite

Corporation and Echosphere Corporation (EchoStar) and Dominion Video

Satellite, Inc. (Dominion). Asserting EchoStar was violating its contract,

Dominion moved for a preliminary injunction to prevent EchoStar from taking

further action and to preserve the status quo while the merits of the case were

being decided. In the course of these proceedings, Word of God Fellowship, Inc.,

d/b/a Daystar Television Network (Daystar), brought a motion to intervene as an

interested party under Federal Rule of Civil Procedure 24. The district court

denied Daystar’s motion, granted Dominion’s request for a preliminary injunction,

and ordered the parties to begin arbitration proceedings pursuant to their contract.

We granted EchoStar’s motion to stay temporarily the district court’s injunction

pending appeal. Both EchoStar and Daystar challenge the district court’s rulings

on appeal. 1 We reverse the district court’s entry of a preliminary injunction and

1
EchoStar and Daystar appealed separately; we have consolidated their
appeals for the purpose of this disposition.

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deem Daystar’s appeal moot. 2

I

EchoStar and Dominion both operate direct broadcast satellite systems

(DBS) regulated and licensed by the Federal Communications Commission (FCC).

EchoStar’s DBS network is broadcast as the DISH Network, and Dominion’s

network is called SkyAngel. Through the SkyAngel network, which is in part

comprised of twenty television channels, Dominion provides predominately

Christian programming to its viewers. Conversely, the DISH Network broadcasts

an extensive variety of programming which is not limited to any specific genre

and offers over 150 channel options to subscribers.

EchoStar has a satellite from which it broadcasts its DISH Network

programming. That satellite contains more transponders than EchoStar is

permitted to use under its FCC license. 3 In order to enlarge its broadcast

capabilities from this satellite, EchoStar entered into a contract (the Agreement)

with Dominion under which Dominion leased eight transponders from EchoStar’s

satellite, and then subleased six of those transponders back to EchoStar along

2
Because we conclude the district court erred in granting the preliminary
injunction, we need not further address the parties’ additional requests for stays
pending appeal, which we consolidated with the merits of this action by court
order on July 22, 2003.
3
A transponder is a device on a satellite that receives signals from Earth
and then transmits those signals back to the planet for reception covering a broad
area.

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with the accompanying FCC licence rights Dominion held. EchoStar was thereby

able to increase its broadcast scope, and SkyAngel was able to broadcast via the

satellite. As a result of this arrangement, SkyAngel subscribers are required to

purchase DISH-brand equipment in order to receive Dominion’s broadcasting

from the EchoStar satellite. Consequently, both EchoStar and Dominion compete

for the same customer market: individuals who wish to receive satellite-television

programming and who are willing to buy DISH-brand equipment. Recognizing

this potential for competition and acknowledging Dominion’s interest in

providing programming to a specific sub-set of satellite-television viewers–those

who wish to watch only Christian themed broadcasting–the parties included a

programming exclusivity clause in the Agreement. Under the terms of the clause,

Dominion has the exclusive right to transmit Christian programming from

EchoStar’s satellite, while EchoStar may broadcast everything except

predominantly Christian programming. 4

4
In relevant part, Article VIII (Programming Exclusivity), section 8.1
(Exclusive Programming) states that:
programming carried by Dominion and the DISH group shall be
mutually exclusive. In this regard, and without limiting the
generality of the foregoing, except as set forth [in other portions of
this Agreement], Dominion shall be entitled pursuant to this
Agreement to transmit Christian Programs to Dominion Members and
DISH™ subscribers on an exclusive basis and the DISH Group shall
be entitled pursuant to this Agreement to transmit all other video
(including but not limited to entertainment and business television
(continued...)

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 The Agreement also states that should either party breach the agreement,

money damages would be insufficient, the harm from the breach would be

irreparable, and the non-breaching party would have the right to obtain specific

performance or injunctive relief. 5 The Agreement stipulated that “[a]t the

election of either party, any matter not resolved amicably between the parties to

the satisfaction of both parties, shall be subject to mandatory binding arbitration,

4
(...continued)
programs), audio, data and other services, to Dominion Members and
DISH™ subscribers on an exclusive basis.
Aple. App., doc. 2 at 38.
5
Article XII (Term, Termination and Other Remedies on Default), section
12.3.1 (Specific Performance) states:
the rights and benefits of each of the parties pursuant to this
Agreement are unique and that no adequate remedy exists at law if
any of the parties shall fail to perform, or breaches, any of its
obligations hereunder; that it would be difficult to determine the
amount of damages resulting therefrom, and that such breach would
cause irreparable injury to the nonbreaching parties . . . .
Accordingly, each of the parties hereto hereby agrees that the
nonbreaching parties shall, in addition to any other remedies that
such nonbreaching parties may have hereunder, at law, in equity or
otherwise, have the right to have any and all obligations,
undertakings, agreements, and other provisions of this Agreement
specifically performed by such nonbreaching parties and shall have
the right to obtain an order or decree of such specific performance,
or a preliminary or permanent injunction (without the necessity of
posting or filing a bond or other security) against the breach or
threatened breach of any term or in aid of the exercise of any power
or right granted in this Agreement . . . . It is expressly agreed that
monetary damages alone would not be adequate to fully and fairly
compensate for a breach by the breaching party of any provision of
this Agreement.
Id. at 52.

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and the other party shall submit to arbitration.” Aple. App., doc. 2 at 59.

Despite the terms of the agreement, EchoStar began broadcasting two

predominantly Christian channels on the DISH Network: Daystar and FamilyNet.

EchoStar rejected Dominion’s assertions that the broadcasts violated the

exclusivity clause in the Agreement, contending it was acting in compliance with

FCC regulations requiring DBS operators to set aside four percent of their

available channel capacity for public interest programming. See 47 U.S.C. §

335(b); 47 C.F.R. § 25.701(c). Dominion disagreed and sued to enjoin EchoStar

from broadcasting Daystar and FamilyNet pending arbitration between the parties.

In the course of these proceedings, Daystar sought to intervene as an interested

party. The district court denied Daystar’s motion to intervene, granted

Dominion’s request for a preliminary injunction, and ordered the parties to submit

to arbitration. Both EchoStar and Daystar now appeal.

II

EchoStar contends the district court erred by granting Dominion’s request

for a preliminary injunction. “We will not set aside a preliminary injunction

‘[u]nless the district court abuses its discretion, commits an error of law, or is

clearly erroneous in its preliminary factual findings . . . .’” SCFC ILC, Inc. v.

VISA USA, Inc., 936 F.2d 1096, 1098 (10th Cir. 1991) (citing Hartford House,

Ltd. v. Hallmark Cards, 846 F.2d 1268, 1270 (10th Cir. 1988)).

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 It is well established that in order to obtain a preliminary injunction, the

moving party must establish four factors: (1) it will suffer irreparable harm if the

injunction is not granted, (2) its threatened injury outweighs the harm caused to

the opposing party as a result of the injunction, (3) the injunction is not adverse to

the public interest, and (4) it has a substantial likelihood of success on the merits

of the case. Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d 1234, 1246

(10th Cir. 2001). In examining these factors, courts have consistently noted that

“[b]ecause a showing of probable irreparable harm is the single most important

prerequisite for the issuance of a preliminary injunction, the moving party must

first demonstrate that such injury is likely before the other requirements for the

issuance of an injunction will be considered.” Reuters Ltd. v. United Press Int’l,

Inc., 903 F.2d 904, 907 (2d Cir. 1990) (internal quotations omitted); see also

Bandag, Inc. v. Jack’s Tire & Oil, Inc., 190 F.3d 924, 926 (8th Cir. 1999) (per

curiam); Shred-It USA, Inc. v. Mobile Data Shred, Inc., 202 F. Supp. 2d 228, 233

(S.D.N.Y. 2002); Paradise Distribs., Inc. v. Evansville Brewing Co., Inc., 906 F.

Supp. 619, 622 (N.D. Okla. 1995). Likewise, because “a preliminary injunction is

an extraordinary remedy, the right to relief must be clear and unequivocal.”

SCFC ILC, Inc., 936 F.2d at 1098 (internal citation omitted).

In granting Dominion’s request for a preliminary injunction against

EchoStar, the district court found, in part, that Dominion had suffered irreparable

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harm as a result of EchoStar’s alleged breach of the Agreement. The court based

its determination on two intertwined grounds. First, it gave great weight to

section 12.3.1 of the parties’ Agreement, in which EchoStar and Dominion agreed

that any violation of their contract would constitute irreparable injury and would

therefore warrant injunctive relief. While the court declined to bind itself wholly

to the parties’ private determination regarding irreparable harm, it nonetheless

concluded that “the understanding reflected in § 12.3.1 of the parties’ Agreement

in this case is a clear and unavoidable concession of [irreparable harm] and I will

treat it as such.” Jt. App., Vol. II at 441.

In making its irreparable harm determination, however, the district court

rejected all of Dominion’s proffered arguments regarding how it suffered harm as

a result of EchoStar’s breach of the Agreement. Based on evidence presented by

EchoStar, the court dismissed Dominion’s assertion that its very existence was

threatened by EchoStar’s broadcast of Daystar and FamilyNet, noting Dominion

had not shown it was “losing customers or [its] competitive position in the

marketplace because of the violation of the exclusivity provisions. At most,

Dominion simply states that such losses are an inevitable result. The statement is

wholly conclusory and, standing alone, would not justify the issuance of a

preliminary injunction.” Id. at 442. The court similarly rejected Dominion’s

contentions that it was close to business failure and that damage to its business

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could not be quantified:

In fact, the opposite appears to be the case. EchoStar’s expert
witnesses persuasively demonstrated that a loss in the marketplace
because of a particular reason would be readily determinable if
proper methodology were used. There is simply no basis for finding
that Dominion has suffered harm to its goodwill as a result of
EchoStar’s actions.

Id. In the appeal before us, Dominion does not challenge any of these findings.

Despite the court’s wholesale rejection of Dominion’s specific arguments

regarding irreparable harm, the court nonetheless found Dominion had satisfied

the irreparable harm factor of the preliminary injunction test. In reaching its

conclusion, the court focused on what it deemed to be the unique nature of the

exclusivity provisions of the Agreement. The court found that by leasing eight

transponders on EchoStar’s satellite and then subleasing six of those transponders

and their accompanying FCC licence rights back to EchoStar, Dominion limited

its viewing market to customers who will either own or purchase DISH-brand

equipment. Moreover, Dominion did so in exchange for the exclusive right to

broadcast Christian programming to such customers, while granting EchoStar the

exclusive right to broadcast all other types of programming. In examining

EchoStar’s alleged breach of the Agreement’s exclusivity provisions, the district

court found “it is the loss of programming exclusivity itself that creates the

irreparable harm. Not only did Dominion and EchoStar say as much in § 12.3.1,

but the very essence of the Agreement establishes it.” Id.

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 In making its irreparable harm finding, the district court thus essentially

determined that Dominion’s loss of exclusivity rights, in and of itself, constituted

the requisite irreparable harm. It found such harm existed regardless of

Dominion’s inability to show any threat to its existence, damage to its goodwill,

loss of customers, or loss of its competitive position in the market. Such harm

existed, the district court held, irrespective of its conclusion that Dominion’s

potential marketplace losses could be quantified in damages.

After a careful and thorough analysis of the relevant case law, we cannot

sustain the district court’s ruling. Certainly the court’s conclusion is initially

attractive, and we agree with the generally accepted position that breach of an

exclusivity clause almost always warrants the award of injunctive relief. See,

e.g., Walgreen Co. v. Sara Creek Prop. Co. B.V., 966 F.2d 273, 279 (7th Cir.

1992) (noting permanent injunction may be presumptively appropriate remedy

upon the breach of exclusivity clause); Shred-It USA, Inc., 202 F. Supp. 2d at 233

(violation of do-not-compete clause generally results in incalculable damages

warranting finding of irreparable harm); J.C. Penney Co., Inc. v. Giant Eagle,

Inc., 813 F. Supp. 360, 369 (W.D. Pa. 1992) (citing Walgreen Co. for proposition

that irreparable harm is almost always inherent in breach of exclusivity clause

cases), aff’d, 995 F.2d 217 (3d Cir. 1993). And, absent the district court’s

rejection of Dominion’s specific irreparable harm arguments, which findings are

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unchallenged in this appeal, we would be inclined to reach a different conclusion

in this case. However, precedent constrains us from holding that the breach of an

exclusivity provision alone satisfies the irreparable harm factor of the preliminary

injunction test. 6

In reversing the district court, we note this case is a difficult one for which

no sufficiently direct precedent exists. In reaching our conclusion, we have

drawn guidance from cases involving do-not-compete clauses in employment

contracts, exclusivity clauses in distribution and franchise agreements, and

restrictive covenants in real estate leases. These cases take us on a somewhat

circuitous and disjointed journey, but nonetheless provide a series of guideposts

which lead us to our conclusion that the district court erred in its irreparable harm

ruling.

Determining whether irreparable harm exists can be a difficult and close

question. We have noted that “[t]he concept of irreparable harm . . . ‘does not

6
Because we hold the district court erred in its irreparable harm
determination and consequently should not have issued the preliminary injunction,
we need not address the parties’ arguments regarding the appropriate standard the
district court should have employed in evaluating Dominion’s request for
injunctive relief. See SCFC ILC, Inc., v. VISA USA, Inc., 936 F.2d 1096, 1098-99
(10th Cir. 1991) (a heightened standard should be employed for disfavored
injunctions that alter the status quo, are mandatory rather than prohibitory, or
provide the moving party with substantially all the relief it could obtain after a
full trial on the merits). Regardless of the standard employed, Dominion’s
request for an injunction cannot succeed because we conclude that the district
court erred in finding Dominion suffered irreparable harm.

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readily lend itself to definition,’” Prairie Band of Potawatomi Indians, 253 F.3d

at 1250 (citation omitted), nor is it “an easy burden to fulfill.” Greater

Yellowstone Coalition v. Flowers, 321 F.3d 1250, 1258 (10th Cir. 2003). In

defining the contours of irreparable harm, case law indicates that the injury “must

be both certain and great, and that it must not be merely serious or substantial.”

Prairie Band of Potawatomi Indians, 235 F.2d at 1250 (internal citation and

quotations omitted).

As noted earlier, it is clear that irreparable harm often arises from the

breach of an exclusivity clause. See, e.g., Walgreen Co., 966 F.2d at 279; Shred-

It USA, Inc., 202 F. Supp. 2d at 233; J.C. Penney Co., Inc., 813 F. Supp. at 369.

Despite the general acknowledgment that irreparable harm often arises from the

breach of this type of agreement, courts do not automatically, nor as a matter of

course, reach this conclusion. Rather, they examine whether the harms alleged by

the party seeking the preliminary injunction are in fact irreparable, and sometimes

conclude in the negative. See, e.g., Baker’s Aid v. Hussmann Foodservice Co.,

830 F.2d 13, 16 (2d Cir. 1987) (rejecting argument that irreparable harm

automatically follows breach of covenant not-to-compete, especially in light of

plaintiff’s inability to show loss of goodwill or any other type of harm); A.L.K.

Corp. v. Columbia Pictures Inds., Inc., 440 F.2d 761, 763-64 (3d Cir. 1971)

(violation of exclusive licensing agreement not irreparable harm where no injury

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to goodwill was demonstrated and damages could be calculated); Mountain Med.

Equip., Inc. v. Healthdyne, Inc., 582 F. Supp. 846, 848-49 (D. Colo. 1984) (no

irreparable harm from violation of non-disclosure agreement where past and

future losses, as well as past lost goodwill, were quantifiable). See also Paradise

Distribs., Inc., 906 F. Supp. at 623 n.4 (exclusive right to distribute product not

sufficient by itself to support irreparable harm finding).

Courts finding irreparable harm from breaches of exclusivity provisions

have not rested their determinations solely on the existence and subsequent

breaches of the exclusivity provisions. Rather, they have identified the following

as factors supporting irreparable harm determinations: inability to calculate

damages, harm to goodwill, diminishment of competitive positions in

marketplace, loss of employees’ unique services, the impact of state law, and lost

opportunities to distribute unique products. See, e.g., Tom Doherty Assocs., Inc.

v. Saban Entm’t, Inc., 60 F.3d 27, 37-39 (2d Cir. 1995) (loss of prospective

goodwill through inability to market unique product constituted irreparable harm);

JAK Prods., Inc. v. Wiza, 986 F.2d 1080, 1084 (7th Cir. 1993) (under Indiana law,

when employee uses experience gained from employer in violation of covenant

not-to-compete, irreparable injury occurs); Basicomputer Corp. v. Scott, 973 F.2d

507, 511-12 (6th Cir. 1992) (violation of covenant not-to-compete constituted

irreparable harm where damages were difficult to calculate, customer goodwill

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was damaged, and plaintiff suffered loss of competitive position); Rent-A-Center,

Inc. v. Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir.

1991) (irreparable harm established from violation of covenant not-to-compete

where intangibles like advertising efforts and goodwill were injured); Equifax

Servs., Inc. v. Hitz, 905 F.2d 1355, 1361 (10th Cir. 1990) (irreparable harm exists

where damages from breach of covenant not-to-compete difficult to calculate);

Ferry-Morse Seed Co. v. Food Corn, Inc., 729 F.2d 589, 592 (8th Cir. 1984)

(breach of exclusive distribution agreement constituted irreparable harm where

company was disadvantaged in competitive market by inability to market unique

seed corn); Shred-It USA, Inc., 202 F. Supp. 2d at 233-34 (loss of employee’s

unique services to competitor in violation of do-not-compete agreement

constituted irreparable harm); Green Stripe, Inc. v. Berny’s Internacionale, S.A.,

159 F. Supp. 2d 51, 56-57 (E.D. Pa. 2001) (violation of exclusivity clause in sales

contract constituted irreparable harm where plaintiff was denied ability to sell

unique, perishable grape and lacked market substitute to maintain its presence in

Mexican grape market); J.C. Penney Co., Inc., 813 F. Supp. at 369 (inherent

nature of exclusive provision in lease coupled with damage to goodwill, difficulty

of calculating damages, and unique nature of interest in real estate constituted

irreparable harm); Walgreen Co. v. Sara Creek Prop. Co., 775 F. Supp. 1192,

1197 (E.D. Wisc. 1991) (where exclusivity clause in lease was breached, loss of

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goodwill, erosion of customer base, and diminution of corporate image provided

grounds for finding irreparable harm), aff’d, 966 F.2d 273 (7th Cir. 1992); see

also Autoskill Inc. v. Nat’l Educ. Support Sys., Inc., 994 F.2d 1476, 1498 (10th

Cir. 1993) (loss of uniqueness in marketplace satisfied irreparable harm factor

where plaintiff established harm to goodwill and difficulty in calculating

damages); Reuters Ltd., 903 F.2d at 907-09 (loss of unique product and goodwill

supports finding of irreparable harm when customers indicate a strong preference

for the product and threaten discontinuation of business relationship).

From this litany of cases, we glean the general lesson that while irreparable

harm is frequently found upon the breach of an exclusivity provision, that finding

does not rest solely on the breach of the agreement and the resulting loss of

exclusivity rights. Rather, the irreparable harm findings are based on such factors

as the difficulty in calculating damages, the loss of a unique product, and

existence of intangible harms such as loss of goodwill or competitive market

position.

In accordance with the collective instruction provided by the cases, we

conclude that the district court’s determination of irreparable harm cannot stand

because of its own findings. As we noted, the district court wholly dismissed

Dominion’s assertions supporting its irreparable harm claim. The court refused to

accept that Dominion’s very existence was threatened, that it was losing

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customers or its competitive position in the marketplace, that it was close to

business failure, or that it had suffered harm to its goodwill. It was also

persuaded by EchoStar’s witnesses that any damages pending a decision on the

merits could be quantified. Having rejected virtually all of the factors courts

normally rely upon to support a finding of irreparable harm, the district court

hinged its harm finding on its determination that the unique nature of Dominion’s

exclusivity rights, and the loss thereof, established irreparable harm.

Certainly there are cases in which courts have made findings of irreparable

harm based on the loss of unique rights protected by contract. But those cases are

distinguishable from the controversy here because they focus on harm to a unique

market position based on evidence of loss of a unique product or goodwill, or

difficulty in calculating damages. See, e.g., Tom Doherty Assocs., Inc., 60 F.3d at

38 (irreparable harm arises where loss of ability to market unique product

damages company’s prospective goodwill); Reuters Ltd., 903 F.2d at 907-08

(damages to goodwill as a result of loss of unique product supports finding of

irreparable harm); Ferry-Morse Seed Co., 729 F.2d at 592 (company irreparably

harmed where it would suffer disadvantage in competitive market by inability to

sell unique product); Green Stripe, Inc., 159 F. Supp. 2d at 56-57 (irreparable

harm arises from denial of ability to sell unique product and inability to obtain

market substitute); J.C. Penney Co., Inc., 813 F. Supp. at 369 (irreparable harm

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found, in part, from acknowledgment that damage to interest in real estate is

generally viewed as unique); see also Autoskill, Inc., 994 F.2d at 1498 (loss of

unique position in marketplace evidenced by harm to goodwill and difficulty in

calculating damages). Here the district court rejected Dominion’s arguments

regarding loss of goodwill and difficulty in calculating damages. Nor has

Dominion been denied the ability to market its unique product of predominantly

Christian programming. While DISH subscribers can access two Christian

channels on EchoStar, Daystar and FamilyNet, if they want a full range of twenty

channels of exclusively Christian programming, which is actually what is unique

about Dominion’s product, they still have to subscribe to Dominion’s SkyAngel.

All Dominion is currently being denied temporarily is the opportunity to market

its product to individuals with DISH-brand equipment without any competition

from the two stations available to those who subscribe to EchoStar.

Nothing in the record persuades us that the rights inherent under the

exclusivity clause in the Agreement are so unique that we should make an

exception to the line of cases in which courts have found irreparable harm only

after determining the existence of such intangible factors as the inability to

calculate damages or the loss of goodwill or competitive market position. The

district court’s determination that Dominion’s loss of exclusivity rights

constitutes irreparable harm, without requiring any other showing but the breach

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of the exclusivity agreement and in the face of EchoStar’s evidence to the

contrary, cuts a wide and unacceptable swath across countless cases undermining

that very position. Were we to affirm the district court’s finding on irreparable

harm, we would in essence be ruling that whenever a party enters into a contract

containing some form of exclusivity provision, injunctive relief is automatic upon

breach of the clause even when the breaching party has refuted every assertion of

specific irreparable harm put forth by the opposing party. We are not willing to

go that far. 7

7
The cases upon which Dominion relies to make its irreparable harm
argument, many of which we have already discussed, can all be easily
distinguished. In particular, we note that Denver & R.G.W. Ry. Co. v. Linck, 56
F.2d 957, 960 (10th Cir. 1932), involved exclusive franchise rights arising out of
a state-issued permit rather than a contract entered into between the parties, and
Utah law expressly provided that an injunction should issue where a party’s
exclusive franchise rights were violated.
Time Warner Cable v. Bloomberg L.P., 118 F.3d 917 (2d Cir. 1997), is also
distinguishable. The court determined there that Time Warner suffered
irreparable harm when it lost control over the mix of programming it provided on
its cable system. Id. at 924. The City of New York aired programming on the
system’s government set-aside channels which was arguably in violation of the
parties’ franchise agreement–an agreement mandated and governed by statute. Id.
at 923-25. We are not persuaded Time Warner’s loss of programming control
over its own channels is analogous to Dominion’s loss of the exclusive right to
provide programming to a certain portion of a viewing market. In any event, the
question remains whether the loss of exclusivity rights, in and of itself,
automatically constitutes irreparable harm. As discussed above, the answer to
that question is no.
Nor do the Colorado cases regarding irreparable harm findings in do-not-
compete cases bolster Dominion’s argument. In Ditus v. Beahm, 232 P.2d 184,
185 (Colo. 1951), the Colorado Supreme Court indicated its overwhelming
(continued...)

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 The district court’s related justification for finding irreparable harm was

the parties’ stipulation to it in section 12.3.1 of the Agreement. While courts

have given weight to parties’ contractual statements regarding the nature of harm

and attendant remedies that will arise as a result of a breach of a contract, they

nonetheless characteristically hold that such statements alone are insufficient to

support a finding of irreparable harm and an award of injunctive relief. See, e.g.,

Smith, Bucklin & Assocs., Inc. v. Sonntag, 83 F.3d 476, 481 (D.C. Cir. 1996)

(“Although there is a contractual provision that states that the company has

suffered irreparable harm if the employee breaches the covenant and that the

employee agrees to be preliminarily enjoined, this by itself is an insufficient

7
(...continued)
preference for and general presumption that awarding injunctive relief is
appropriate upon the breach of a do-not-compete contract arising out of the sale
of a business. In Harrison v. Albright, 577 P.2d 302 (Colo. Ct. App. 1977),
Ditus’ holding was extended to a case involving a do-not-compete clause in a loan
security agreement. Id. at 305. However, the court in Harrison noted that Ditus’
presumption of irreparable injury was rebuttable. Id. See also Am. Television &
Communications Corp. v. Manning, 651 P.2d 440, 444-46 (Colo. Ct. App. 1982)
(noting Ditus presumption of irreparable harm and finding that evidence regarding
loss of goodwill substantiated conclusion that irreparable harm existed). Here,
EchoStar challenged Dominion’s assertions of irreparable harm by presenting
evidence to the district court. The court largely accepted EchoStar’s contentions,
as evidenced in its findings that any potential losses suffered by Dominion could
be quantified; Dominion’s very existence was not being threatened; it was losing
neither customers nor its competitive position in the marketplace; it was not close
to business failure; and it had not suffered any harm to its goodwill. Therefore,
even under Ditus and Harrison, any presumption of irreparable harm was rebutted
here.

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prop.”); Baker’s Aid, 830 F.2d at 16 (“contractual language declaring money

damages inadequate in the event of a breach does not control the question of

whether preliminary injunctive relief is appropriate”); Markovits v. Venture Info

Capital, Inc., 129 F. Supp. 2d 647, 661 (S.D.N.Y. 2001) (provision in contract

providing that breach would cause irreparable damage is merely one factor to be

examined in making irreparable harm determination); Dice, 887 F. Supp. at 810

(contractual provision cannot act as substitute for finding by court regarding

injunctive relief); Firemen’s Ins. Co. of Newark v. Keating, 753 F. Supp. 1146,

1154 (S.D.N.Y. 1990) (“it is clear that the parties to a contract cannot, by

including certain language in that contract, create a right to injunctive relief

where it would otherwise be inappropriate”). Instead, the courts also identify

other factors which establish that the harm is indeed irreparable. See, e.g., North

Atlantic Instruments, Inc. v. Haber, 188 F.3d 38, 49 (2d Cir. 1999) (loss of trade

secrets); Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 68-69 (2d Cir. 1999)

(difficulty in calculating damages plus New York law dictating that violation of

covenant not to compete constitutes irreparable injury); True North

Communications Inc. v. Publicis S.A., 711 A.2d 34, 44-45 (Del. Ch. 1998)

(plaintiff would lose unique opportunity in merger acquisition, the value of which

could not be quantified).

Although, EchoStar and Dominion agreed that any breach of the Agreement

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would constitute irreparable harm and would warrant an award of injunctive

relief, that stipulation without more is insufficient to support an irreparable harm

finding. Because the district court articulated no other ground to substantiate a

finding of irreparable harm, the court erred in determining Dominion suffered

irreparable harm by EchoStar’s breach of the Agreement. On this record, it is

apparent that should Dominion win in arbitration on the merits, any damage

caused by EchoStar’s breach of the exclusivity agreement can be quantified in

damages. Consequently, we reverse the preliminary injunction entered in this

case. 8

III

We now briefly address Daystar’s appeal. Daystar alleges the district court

erred in denying its motion to intervene as an interested party under Federal Rule

of Civil Procedure 24 in the preliminary injunction proceedings. Daystar was

Because we determine the district court erred in its irreparable harm
8

finding, we need not address the other preliminary injunction factors. See Reuters
Ltd. v. United Press Int’l, Inc., 903 F.2d 904, 907 (2d Cir. 1990) (“the moving
party must first demonstrate that [irreparable harm] is likely before the other
requirements for the issuance of an injunction will be considered”). We likewise
decline to address EchoStar’s contention that the district court’s grant of a
preliminary injunction violated the First Amendment of the United States
Constitution under Shelly v. Kraemer, 334 U.S. 1, 19 (1948) (judicial enforcement
of racially restrictive covenants constitute state action). It is commonly accepted
that “[i]t is not the habit of the court to decide questions of a constitutional nature
unless absolutely necessary to a decision of the case.” Burton v. United States,
196 U.S. 283, 295 (1905).

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obviously interested in challenging Dominion’s request for a preliminary

injunction because Dominion’s success would result in the removal of Daystar as

one of EchoStar’s programming offerings. Even assuming there was substance to

Daystar’s intervention challenge, however, Daystar’s appeal must be dismissed as

moot.

After the district court denied Daystar’s motion to intervene, Daystar filed a

motion to reconsider, or in the alternative, to stay the preliminary injunction

proceedings pending appeal. The district court denied these motions and

proceeded to conduct an evidentiary hearing on Dominion’s motion for a

preliminary injunction. After the court issued its order in favor of Dominion,

Daystar filed this appeal.

In Plain v. Murphy Family Farms, 296 F.3d 975, 981 (10th Cir. 2002), we

noted that after a district court has rejected a party’s attempt to intervene in an

action and also refuses to stay the proceedings pending appeal, the unsuccessful

intervening party should, pursuant to Federal Rule of Appellate Procedure

8(a)(2), 9 move before this court for a stay. “[T]he sole purpose of such a stay is

9

A motion [for stay pending appeal] may be made to the court of
appeals or to one of its judges. The motion . . . must state that, a
motion having been made, the district court denied the motion or
failed to afford the relief requested and state any reasons given by
the district court for its action.
F ED . R. A PP . P. 8(a)(2).

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to preserve the status quo pending appeal so that the appellant may reap the

benefit of a potentially meritorious appeal.” 30 Am. Jur. 2d, Executions and

Enforcement of Judgments § 34 (2003).

Plain’s reasoning is applicable here. Daystar failed to protect its position

as an alleged interested party in the preliminary injunction action by seeking a

stay of the injunction proceedings with this court. “Such a motion would have

provided us with a timely opportunity to review the merits of [Daystar’s] claim

and decide whether a stay was warranted pending final resolution of [its] appeal.

We do not believe we can review now what we could have reviewed then.” Plain,

296 F.3d at 981. As a result of Daystar’s failure to seek a stay in our court, we

are not in a position to provide Daystar with the relief it is seeking: the ability to

intervene in the preliminary injunction action. The preliminary injunction hearing

is over, the district court has issued a ruling, and we have determined on appeal

that the district court ruling was erroneous – a result, coincidentally, for which

Daystar would have advocated had it been permitted to intervene below.

Moreover, pursuant to the Agreement between EchoStar and Dominion,

those parties must now submit to arbitration, where the ultimate question of their

dispute – whether EchoStar is in breach of the agreement by broadcasting Daystar

and FamilyNet – will be determined. Hence, there no longer remains any further

court proceeding in which Daystar can intervene to raise a substantive challenge.

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It is thus clear that Daystar’s appeal of the denial of its motion to intervene is

moot. To the extent that Daystar may be seeking to intervene on appeal to brief

the merits of the preliminary injunction, we deny intervention. Daystar’s interests

have obviously been represented adequately by EchoStar.

IV

Accordingly, we REVERSE the district court’s decision granting a

preliminary injunction to Dominion pending arbitration of the merits of this case.

We hold Daystar’s motion to intervene MOOT and therefore DISMISS Daystar’s

appeal.

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03-1274, 03-1303 - Dominion Video Satellite, Inc. v. EchoStar Satellite
Corporation

HARTZ, Circuit Judge, concurring:

I join Judge Seymour’s opinion. I write separately only to comment briefly

on the contractual provision that the amount of damages from a breach “would be

difficult to determine.” Inability to measure damages accurately is, of course,

often a key factor in determining whether to grant a preliminary injunction. First,

it raises the risk that the injured party will not be adequately compensated,

resulting in "unrepaired" harm. Second, the greater the difficulty in measuring

damages, the greater the expenditure of judicial resources necessary to resolve the

matter; a court could properly decide to avoid that expenditure by issuing a

preliminary injunction to prevent any damages that would need to be measured.

Cf. Walgreen Co. v. Sara Creek Prop. Co., B. V., 966 F.2d 273, 275-79 (7th Cir.

1992) (comparing administrative burdens of issuing injunction and relying on

damages remedy).

Yet it may not always be obvious that accurately measuring damages would

be difficult. One might assume that damages from violation of an exclusivity

contract can be measured accurately by simply comparing pre-breach and post-

breach profits. Expert testimony could be necessary to demonstrate that such a

simplistic approach would be mistaken because of the numerous factors, aside

from breach of the exclusivity contract, that could affect profits. Therefore, it
seems to me quite appropriate for parties to an exclusivity contract to try to avoid

the expense of expert witnesses or the like by agreeing that such a demonstration

is unnecessary—it is presumed that damages would be hard to measure. My

inclination would be to honor that presumption, which would place the burden on

the breaching party to prove that damages could be accurately calculated in the

circumstances.

This case, however, does not require us to resolve whether a contractual

provision could shift the burden of persuasion, because EchoStar satisfied any

such burden. Its expert witness convinced the district court that damages from a

breach “would be readily determinable.” Although I might not have been

persuaded by the expert, we must defer to the district court on this matter, and

Dominion has not challenged the finding.

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