                                    PRECEDENTIAL

       UNITED STATES COURT OF APPEALS
            FOR THE THIRD CIRCUIT


                      No. 18-3550


 NATIONAL COLLEGIATE ATHLETIC ASSOCIATION,
an unincorporated association; NATIONAL BASKETBALL
 ASSOCIATION, a joint venture; NATIONAL FOOTBALL
   LEAGUE, an unincorporated association; NATIONAL
HOCKEY LEAGUE, an unincorporated association; OFFICE
     OF THE COMMISSIONER OF BASEBALL, an
   unincorporated association doing business as MAJOR
                  LEAGUE BASEBALL

                           v.

 GOVERNOR OF THE STATE OF NEW JERSEY; DAVID
L. REBUCK, Director of the New Jersey Division of Gaming
      Enforcement and Assistant Attorney General of the
State of New Jersey; *JUDITH A. NASON, Acting Executive
    Director of the New Jersey Racing Commission; NEW
        JERSEY THOROUGHBRED HORSEMEN'S
     ASSOCIATION, INC.; NEW JERSEY SPORTS &
  EXPOSITION AUTHORITY STEPHEN M. SWEENEY,
President of the New Jersey Senate; *CRAIG J. COUGHLIN,
             Speaker of the New Jersey Assembly

                            (Intervenors in District Court)
    New Jersey Thoroughbred Horsemen's Association, Inc.,
                                            Appellant

      *(Amended pursuant to Clerk's Order dated 12/27/18)



      On Appeal from the United States District Court
                for the District of New Jersey
             (District Court No.: 3-14-cv-06450)
     District Court Judge: Honorable Michael A. Shipp


                  Argued on July 2, 2019

 Before: McKEE, PORTER and RENDELL, Circuit Judges

            (Opinion filed September 24, 2019)

Anthony J. Dreyer
Jeffrey A Mishkin (Argued)
Skadden Arps Slate Meagher & Flom
4 Times Square
New York, NY 10036

Richard Hernandez
William J . O’Shaughnessy
McCarter & English
100 Mulberry Street
Four Gateway Center, 14th Floor
Newark, NJ 07102

                          Counsel for Appellees




                             2
Eliott M. Berman
McElroy Deutsch Mulvaney & Carpenter
570 Broad Street
Suite 1500
Newark, NJ 07102

Ronald J. Riccio (Argued)
McElroy Deutsch Mulvaney & Carpenter
1300 Mount Kemble Avenue
P. O. box 2075
Morristown, NJ 07962

                           Counsel for Appellants




                        OPINION



RENDELL, Circuit Judge:

       Temporary restraining orders are not always a sure bet.
Federal Rule of Civil Procedure 65(c) requires the party
seeking a TRO to “give[] security in an amount that the court
considers proper to pay the costs and damages sustained by any
party found to have been wrongfully enjoined or restrained.”
In this case, Appellees moved for, and the District Court
entered, a TRO that, among other things, barred the New Jersey
Thoroughbred Horsemen’s Association (“NJTHA”) from
conducting sports gambling on the basis that New Jersey’s
“authorization” of sports gambling violated the federal




                              3
Professional and Amateur Sports Protection Act (“PASPA”),
and required Appellees to post a bond as security. On appeal,
NJTHA and the other defendants successfully challenged the
constitutionality of PASPA in the Supreme Court, and, on
remand, NJTHA sought to recover on the bond that Appellees
had posted. The District Court denied the motion for judgment
on the bond. Because we conclude that NJTHA was
“wrongfully enjoined” within the meaning of Rule 65(c) and
no good cause existed to deny bond damages in this case, we
will vacate and remand.

                              I.

       Although this appeal concerns NJTHA’s ability to
recover on the bond, that is only the last shoe to drop in a
lengthy saga that involves other overarching issues, including
the constitutionality of PASPA, its interaction with New
Jersey’s attempts to legalize sports gambling, and the several
opinions of the District Court, this Court, and the Supreme
Court in the two actions litigating these issues among the same
parties. Thus, a thorough review of the unique procedural
history underlying this dispute is warranted.

                              A.

       In 1992, Congress enacted PASPA, making it
“unlawful” for “a government entity” or a person acting at the
direction of a government entity “to sponsor, operate,
advertise, promote, license, or authorize by law or compact . .
. a lottery, sweepstakes, or other betting, gambling, or
wagering scheme based . . . on” competitive sporting events.
28 U.S.C. § 3702 (emphasis added). At that time and for the
following nineteen years, New Jersey law paralleled PASPA,




                              4
prohibiting sports gambling by its Constitution and by statute.
See, e.g., N.J. Const. art. IV, § 7, para. 2; N.J. Stat. Ann. §
2C:37–2; N.J. Stat. Ann. § 2A:40–1. However, in 2011, New
Jersey constituents voted to amend the state’s Constitution to
allow the legislature to authorize sports gambling, N.J. Const.
art. IV, § 7, para. 2(D), (F), and the legislature did so by
enacting the Sports Wagering Act in 2012 (the “2012 Act”),
N.J. Stat. Ann. §§ 5:12A–1 et seq.
        The National Collegiate Athletic Association and four
professional sports leagues1 (collectively, “Appellees” or “the
Leagues”), initiated an action in federal court (“Christie I”)
against the New Jersey Governor and other state officials
(collectively, the “State Defendants”), seeking to enjoin the
2012 Act as violative of PASPA and arguing that they would
be irreparably injured unless an injunction was issued.
Because it intended to offer sports gambling at Monmouth Park
racetrack, NJTHA intervened.2 The defendants did not dispute
that the 2012 Act violated PASPA and instead argued, among
other things, that PASPA unconstitutionally commandeered
the states’ sovereign authority. The District Court disagreed,
held that PASPA was constitutional, and enjoined the
implementation of the 2012 Act. See Nat’l Collegiate Athletic
Ass’n v. Christie, 926 F. Supp. 2d 551, 573, 578–79 (D.N.J.
2013). We affirmed, reasoning that PASPA does not
affirmatively command the states to act and consequently did

1
  The professional sports leagues are the National Basketball
Association; the National Football League; the National
Hockey League; and the Office of the Commissioner of
Baseball, doing business as Major League Baseball.
2
  Stephen M. Sweeney, President of the New Jersey Senate,
and Sheila Y. Oliver, then Speaker of the New Jersey General
Assembly, also intervened.




                              5
not prohibit them from repealing any existing bans on sports
wagering. See Nat’l Collegiate Athletic Ass’n v. Christie, 730
F.3d 208, 231–32 (2013). The Supreme Court denied
certiorari. Christie v. Nat’l Collegiate Athletic Ass’n, 537 U.S.
931 (2014).

                                B.

       In response to our reasoning that PASPA does not
prohibit states from repealing any existing bans on sports
gambling, the New Jersey legislature enacted a law repealing
certain state law provisions that prohibited gambling at
horserace tracks and casinos (the “2014 Act”). See 2014 N.J.
Sess. Law Serv. Ch. 62 (codified at N.J. Stat. Ann. §§ 5:12A-
7 to -9 (repealed 2018)). NJTHA immediately announced its
intention to conduct sports gambling at Monmouth Park.
Appellees filed the instant suit (“Christie II”) and, at the outset,
requested a TRO and preliminary injunction to enjoin NJTHA
from doing so, again asserting irreparable injury. Appellees
also asked the District Court to restrain the State Defendants
from implementing the 2014 Act and to enforce the injunction
entered in Christie I. They filed their request on both the
Christie I and Christie II dockets.

       In response, the defendants relied on our reasoning in
Christie I that the federal law allowed a repeal of state sports
gambling prohibitions. The State Defendants specifically
asserted that a grant of Appellees’ request would again raise
the issue of PASPA’s constitutionality. See A. 240–41
(“[E]ither PASPA permits States to repeal their prohibitions
against sports wagering in whole or in part, as does the 2014
Act, or PASPA unconstitutionally commandeers states[’]
authority by forcing States to maintain unwanted




                                 6
prohibitions.”). Additionally, NJTHA argued, among other
things, that the Leagues’ assertion that sports gambling would
harm them was false, since they “support, participate in, and
significantly profit from betting on the outcomes of their games
as well as the performances of the players in their games.” Br.
in Opp’n to Pls.’ Appl. for a TRO at 35, Nat’l Collegiate
Athletic Ass’n v. Christie, No. 3:14-cv-06450 (D.N.J. Oct. 24,
2014), ECF No. 21. NJTHA also complained that the Leagues
had not posted a bond, as required by Federal Rule of Civil
Procedure 65, and attached a certification asserting that they
would lose $1,170,219 per week if a TRO was granted.3

       The District Court granted the requested TRO and, in
doing so, relied on our holding in Christie I that PASPA is
constitutional. The Court ordered Appellees to post a $1.7
million bond, which it believed was “on the high side to avoid
any potential loss to defendants.” A. 64. Shortly thereafter, it
extended the TRO for an additional two weeks and increased
the bond amount to a total of $3.4 million.

        Just before the TRO was set to expire, the District Court
converted the scheduled hearing on the Leagues’ request for a
preliminary injunction into a final summary judgment hearing.
The Court granted summary judgment to Appellees, holding
that the 2014 Act was “invalid as preempted by PASPA.” Nat’l
Collegiate Athletic Ass’n v. Christie, 61 F. Supp. 3d 488, 506
(D.N.J. 2014). It also entered a permanent injunction against
the State Defendants, enjoining them “from violating PASPA




3
  Appellees did not contest this amount and instead argued
that they should not be required to put up a bond.




                               7
through giving operation or effect to the 2014 [Act] in its
entirety.”4 Id.

        On appeal, this Court first affirmed the District Court’s
order. See Nat’l Collegiate Athletic Ass’n v. Governor of New
Jersey, 799 F.3d 259, 261 (3d Cir. 2015). We then granted
NJTHA’s petition for rehearing en banc and again affirmed the
grant of summary judgment. See Nat’l Collegiate Athletic
Ass’n v. Governor of New Jersey, 832 F.3d 389, 392 (3d Cir.
2016) (en banc). In doing so, we determined that the 2014 Act,
like its predecessor, “authorize[d]” sports gambling in
violation of PASPA. Id. at 396. We explicitly rejected our
reasoning in Christie I that a repeal is not an “affirmative
authorization.” Id. at 396–97. Instead, we looked to “what the
provision actually does” and held that, “[w]hile artfully
couched in terms of a repealer, the 2014 [Act] essentially
provides that, notwithstanding any other prohibition by law,
casinos and racetracks shall hereafter be permitted to have
sports gambling,” which “is an authorization.” Id. at 397. We
then went on to again reiterate PASPA’s constitutionality. Id.
at 399.

         The Supreme Court granted certiorari and reversed our
en banc judgment. See Murphy v. Nat’l Collegiate Athletic
Ass’n, 138 S. Ct. 1461, 1485 (2018). Although the Court
agreed with one aspect of our ruling, namely, that a repeal of a
law banning an activity constitutes an “authoriz[ation]” of that
activity, id. at 1474, the Court concluded that PASPA’s
prohibition of sports gambling violated the Constitution’s
anticommandeering principle because “state legislatures are
[still] put under the direct control of Congress,” id. at 1478.

4
    The District Court did not permanently enjoin NJTHA.




                               8
                              C.

       After prevailing in the Supreme Court, NJTHA filed a
motion in the District Court for judgment on the bond.5 The
Court ordered briefing on whether NJTHA was “wrongfully
enjoined,” whether NJTHA was entitled to recover the full
bond amount as a matter of law without proving actual loss,
and whether NJTHA’s claim for damages greater than the bond
amount could be decided as a matter of law. There was no
discovery on the actual loss amount.

        The District Court denied NJTHA’s motion. First, it
determined that NJTHA was not “wrongfully enjoined” per
Federal Rule of Civil Procedure 65(c). The Court thought that
“NJTHA’s contention that it is entitled to damages under the
injunction bond conflate[d] the issue of whether the 2014 [Act]
authorized sports betting with the Supreme Court’s ultimate
holding that PASPA is unconstitutional.” A. 18. The District
Court narrowly characterized the issue before it at the TRO
stage as “whether the 2014 [Act] . . . effectively authorized
sports betting in violation of PASPA” and noted that both the
Third Circuit and the Supreme Court agreed with its conclusion
that the 2014 Act did so. A. 16 (citation and internal quotation
marks omitted).        The Court stated, “That PASPA’s
constitutionality was introduced on appeal does not convert the
bond, which assured that the 2014 [Act] amounted to an

5
  NJTHA also sought interest and damages for the post-TRO
period (from the District Court’s grant of summary judgment
through the Supreme Court’s judgment), the latter of which
was for Appellees’ “bad faith by wrongfully blocking the
NJTHA from operating a sports betting venue.” A. 355.




                               9
authorization, into a bond that assured any and all
possibilities.” A. 19.

        The District Court also held that, even if NJTHA had
been wrongfully enjoined, good cause existed to deny
NJTHA’s motion. In doing so, the Court relied on Coyne-
Delany Co. v. Capital Development Board, in which the
Seventh Circuit held that “a prevailing defendant is entitled to
damages on the injunction bond unless there is a good reason
for not requiring the plaintiff to pay in the particular case” and
listed factors to be considered in determining whether good
reason exists. 717 F.2d 385, 391–392 (7th Cir. 1983). The
District Court considered one factor that had been relied upon
by the Court in Coyne, namely, a change in the law. The
District Court here reasoned that the law in this case had
changed, characterizing PASPA as “constitutionally valid” in
2014, when the TRO was entered, and invalid in 2018. A. 20.
NJTHA timely appealed the District Court’s order.

        On appeal, NJTHA urges that the District Court was
wrong on both counts. Specifically, NJTHA argues that the
Court erred in holding that it was not “wrongfully enjoined”
because (1) entry of the TRO was premised on the
constitutionality of PASPA, which the Supreme Court
ultimately held was unconstitutional, and (2) the District Court
incorrectly considered the law at the time it entered the TRO,
as opposed to the law at the time of the Supreme Court’s final
judgment, in making that determination. NJTHA also urges
that the District Court erred by exercising its discretion to deny
bond damages and in concluding that there was good cause to
do so. On this front, NJTHA claims that discretion to deny
bond damages under Rule 65(c) does not exist and the Seventh




                               10
Circuit case relied upon by the District Court is not
controlling.6

                              II.

       The District Court had jurisdiction pursuant to 28
U.S.C. § 1331. This Court has jurisdiction under 28 U.S.C. §
1291. Because NJTHA challenges the District Court’s
interpretation of Federal Rule of Civil Procedure 65(c), we
review the District Court’s order de novo. Garza v. Citigroup,
Inc., 881 F.3d 277, 280 (3d Cir. 2018).

                              III.

       Federal Rule of Civil Procedure 65(c) states, in
relevant part:

              The court may issue a preliminary
              injunction or a temporary
              restraining order only if the
              movant gives security in an
              amount that the court considers
              proper to pay the costs and
              damages sustained by any party
              found to have been wrongfully
              enjoined or restrained.




6
  NJTHA also argues that it is entitled to automatic recovery of
the bond amount and excess damages for Appellees’ bad faith.
Because these issues were not addressed by the District Court,
we will not consider them.




                              11
The Rule itself only implies “that when a party has been
wrongfully enjoined, it may collect some or all of the security.”
Global Naps, Inc. v. Verizon New England, Inc., 489 F.3d 13,
20 (1st Cir. 2007). It does not explicitly address when an
enjoined party may recover on a bond, nor does it indicate
whether and to what extent a district court has discretion to
deny damages. Although these issues have been considered by
a number of other circuits, they are matters of first impression
in our Court.

                               A.

         We first consider the meaning of “wrongfully
enjoined” and whether NJTHA was wrongfully enjoined by the
TRO issued in Christie II. We join the other circuits that have
explicitly interpreted this term and hold that a party is
wrongfully enjoined when it turns out that that party had a right
all along to do what it was enjoined from doing. See Global
Naps, 489 F.3d at 22 (“[A] party is wrongfully enjoined when
it had a right all along to do what it was enjoined from doing.”);
Slidell, Inc. v. Millennium Inorganic Chems., Inc., 460 F.3d
1047, 1059 (8th Cir. 2006) (“[A] party has been wrongfully
enjoined if it is ultimately found that the enjoined party had at
all times the right to do what it was enjoined from doing.”);
Nintendo of Am. v. Lewis Galoob Toys, 16 F.3d 1032, 1036
(9th Cir. 1994) (“[A] party has been wrongfully enjoined
within the meaning of Rule 65(c) when it turns out the party
enjoined had the right all along to do what it was enjoined from
doing.”); Blumenthal v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 910 F.2d 1049, 1054 (2d Cir. 1990) (stating that a
party has been wrongfully enjoined when the “party had at all
times the right to do the enjoined act”).




                               12
        The parties disagree on the application of this standard
to the case at hand. NJTHA urges that, because the Supreme
Court ultimately held that PASPA is unconstitutional, it
“turned out” that it had a right all along to conduct sports
gambling and was, therefore, “wrongfully enjoined.”
Appellees disagree, claiming that we should consider both the
state of the law and the specific issue before the District Court
at the time the TRO was granted. They argue that because “the
constitutionality of PASPA was settled law in this Circuit” at
the time the TRO was entered and because the District Court’s
holding on the only issue before it at that time (i.e., that the
2014 Act “authorized” sports gambling) was confirmed by this
Court and the Supreme Court, NJTHA was not “wrongfully
enjoined.” Br. for Appellees at 20. Appellees also urge that a
determination that NJTHA was wrongfully restrained would
require us to apply the Supreme Court’s holding retroactively.

       Appellees’ arguments are flawed for three reasons.
First, Appellees read the procedural history, as the District
Court did, a bit too narrowly. One might ask, if Christie II
involved only the discrete issue of “authorization” and had
nothing to do with the constitutionality of PASPA, how could
the Supreme Court, in granting certiorari from Christie II (after
having denied it from Christie I), address the issue of the
constitutionality of PASPA and declare it unconstitutional?
The answer is: because the constitutionality of PASPA was
inexorably intertwined with the issues in Christie II. Indeed,
the State Defendants specifically urged that “either PASPA
permits States to repeal their prohibitions against sports
wagering in whole or in part, as does the 2014 Act, or PASPA
unconstitutionally commandeers states[’] authority by forcing
States to maintain unwanted prohibitions.” And we addressed
the issue of PASPA’s constitutionality in Christie II in much




                               13
more than cursory fashion, although noting that it had been
specifically ruled upon in Christie I. Even though the case
before the Supreme Court emanated from two discrete actions,
the Supreme Court clearly considered the cases to be the
proverbial “whole ball of wax.” That the District Court parsed
the issues based upon the limited nature of the subject matter it
believed it addressed in the TRO order does not control the fact
that the constitutionality of PASPA was imbedded in that
subject matter by virtue of our opinion in Christie I.7



7
 Our disagreement with the dissent stems from the nature of
the issues raised in the unusual procedural setting of the
Christie cases, and our differing views as to how narrowly we
parse what was before the District Court when it entered the
TRO.

       Christie I was all about the constitutional implications
of removing prohibitions, versus “affirmatively authorizing”;
the latter constituting problematic commandeering.           In
opposing the TRO, the State Defendants called on the
“definitive” holding in Christie I, quoting from our opinion:
“the lack of an affirmative prohibition of an activity does not
mean it is affirmatively authorized by law.” A. 239 (quoting
Christie I, 730 F.3d at 232). At the same time they maintained
their fallback position noted above, that if the legislation
“authorized,” then PASPA unconstitutionally commandeers.

       Thus, “authorizing” was not a discrete issue but, rather,
one with weighty constitutional baggage. The District Court
in Christie II decided the issue of authorization within, as the
District Court noted, the “framework” of Christie I and its
commandeering analysis.




                               14
        Second, Appellees’ view conflates whether NJTHA was
“wrongfully enjoined” with whether the District Court abused
its discretion in issuing the TRO. In Sprint Communications
Co. v. CAT Communications International, Inc., we made clear
that “wrongfully enjoined” “does not necessarily [mean] that
the district court abused its discretion in granting the relief in
the first place.”8 335 F.3d 235, 242 n.9 (quoting Blumenthal,
910 F.2d at 1054) (internal quotation marks omitted)
(alteration in original). Instead, as noted above, whether a
party is wrongfully enjoined depends upon whether it turns out
that that party had a right all along to conduct the activity it
was enjoined from doing. The entire concept of “wrongfully
enjoined” envisions a look back from the ultimate conclusion
of the case: Should the enjoined party have been permitted to
do what it was prevented from doing? Thus, whether a party
was wrongfully enjoined depends upon the final judgment on
the merits. See id. (“[T]he ultimate determination whether a
party was wrongfully enjoined and can recover on the
injunction bond generally must wait until ‘after a trial and final
judgment on the merits.’” (citation omitted)); see also Global
Naps, 489 F.3d at 23 (stating that whether a party is
“wrongfully enjoined” is determined by the final judgment).
        Perhaps one could plausibly read Rule 65(c) as asking
whether the District Court abused its discretion in granting the
TRO. But this would distort the plain meaning and purpose of
the rule. First, the rule allows defendants to collect on the bond
if they are “found to have been wrongfully enjoined or
restrained.” Fed. R. Civ. P. 65(c) (emphasis added). The use

8
  Indeed, in Nintendo, the Ninth Circuit had, in an earlier
decision, upheld the district court’s issuance of the preliminary
injunction but, later, ultimately determined that the defendant
was wrongfully enjoined. 16 F.3d at 1036 n.4.




                               15
of a past tense verb phrase—found to have been—is important.
See U.S. v. Wilson, 503 U.S. 329, 333 (1992) (“Congress’ use
of a verb tense is significant in construing statutes.”). It
suggests that we look back at the propriety of the injunction
from the vantage point of the conclusion of the litigation, rather
than stepping into the shoes of the District Court at the time the
injunction was issued. If “wrongfully enjoined” concerned
only the propriety of the issuance of an injunction, then Rule
65(c) would explicitly state a requirement that the injunction
was improperly entered. But to focus on whether a TRO was
wrongfully issued misses the mark. “Wrongfully enjoined”
focuses on the right of an enjoined party to engage in certain
conduct.9 For example, imagine that X asks a district court for
a TRO against Y. X urges that Y’s actions violate a federal
law, Statute A. The parties and the district court assume that
Y’s actions violate the general terms of Statute A—their only
focus is on whether Y’s conduct fits within a certain exception
to Statute A, Exception B. The court rules that Exception B
does not apply to Y and issues the TRO. But an appellate court,


9
   The dissent urges that the NJTHA was not wrongfully
enjoined because the District Court properly issued the TRO
under PASPA, four years before the Supreme Court held it
unconstitutional. But that is not the relevant question. Rather,
it is whether the defendant was wrongfully enjoined given what
we know today. We agree with the dissent that the District
Court “faithfully followed our precedent.” Dissenting Op. at
6. But this is not incompatible with our holding. The District
Court can faithfully apply our precedent, and still, when the
litigation has reached its conclusion, the defendant may be
found to have been wrongfully enjoined. Such is the case
here.




                               16
much to X and Y’s surprise, finds that the district court’s
discussion of Exception B is irrelevant because Y does not
violate the general terms of Statute A. Was Y wrongfully
enjoined? Yes. While the district court’s reasoning may have
been correct, i.e., that Y’s conduct does not fit within the terms
of Exception B, and the court may have correctly interpreted
the legal issue that was pressed by the parties, nevertheless, Y
was still wrongfully enjoined, because it turned out that Y had
a right to do all along what he was enjoined from doing.

        Similarly, in Nintendo, the enjoined defendant
introduced defenses at trial that it had not asserted at the
preliminary injunction stage. 16 F.3d at 1034. The defendant
ultimately prevailed. Id. That the new defenses were not
considered when the TRO was entered but may have affected
the final outcome of the case did not preclude a holding that
the defendant had been wrongfully enjoined. See id. at 1037–
38. Similarly, in this case, the fact that the District Court may
not have erred in its ruling in entering the TRO in Christie II
does not speak to whether NJTHA had a right all along to
conduct sports gambling.10 Because a court can only be certain
of an enjoined party’s rights after a case has been fully
litigated, “wrongfully enjoined” can only be determined after
a final judgment on the merits.




10
  Nor was the District Court “bound by this Court’s holding in
Christie I” to enter the TRO and summary judgment for
Appellees. Br. for Appellees at 9. The District Court might
have, instead, seized upon our reasoning that a repeal would
not be an authorization in violation of PASPA, as the State
Defendants did in enacting the 2014 Act.




                               17
        In their final argument, Appellees assert that accepting
NJTHA’s argument would require us to retroactively apply the
Supreme Court’s holding that PASPA is unconstitutional.
Indeed, in the mine-run of cases where a statute has been held
to be unconstitutional, the issue of its retroactive application to
invalidate previous final orders necessarily arises. See Chicot
Cty. Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 374
(1940) (instructing that “[q]uestions of rights claimed to have
become vested, of status, of prior determinations deemed to
have finality and acted upon accordingly, of public policy in
the light of the nature both of the statute and of its previous
application” be considered when determining whether a new
rule applies retroactively). But that body of caselaw, and
indeed retroactivity itself, is not implicated when we are asked
to determine whether a party was “wrongfully enjoined.”11 Did
it turn out that NJTHA had the right all along to do what they
were enjoined from doing? There is no way that the answer to
that question could be “no.” That answer would render the
bond provision, indeed the concept of “wrongfully enjoined,”
entirely meaningless. The lookback that is envisioned in the
Rule is not an issue of retroactivity, or applying a ruling to
undo or affect previous rulings; instead, it requires a simpler
inquiry as to whether, if we knew then what we know now,
should NJTHA have been restrained? This does not require the
court at the bond hearing to ask, as the dissent seems to urge,
whether the TRO was wrongfully issued, or to nullify any

11
  The dissent seems to reason that there needed to be a court
finding that the NJTHA had been wrongfully enjoined or
restrained. Again, that is not an issue to be decided later in the
case, but instead, is what the court at the bond hearing must
assess, after the case is fully concluded.




                                18
intervening action as invalid. See, e.g., Dissenting Op. at 5 n.3.
Here the “full deliberation” urged by the dissent came with the
Supreme Court’s consideration of the case as a whole, and its
declaration of PASPA’s unconstitutionality. Because the
answer to that question is “no,” the answer to whether it was
wrongfully restrained must be “yes.”

       Here, PASPA provided the only basis for enjoining
NJTHA from conducting sports gambling, and the Supreme
Court ultimately held that that law is unconstitutional.
Therefore, NJTHA had a right to conduct sports gambling all
along. We conclude that NJTHA was wrongfully enjoined and
should be able to call on the bond.

                               B.

        We next evaluate whether and to what extent a district
court has discretion to deny bond damages and whether doing
so was proper in this case. A clear majority of our sister
circuits have held that there is a rebuttable presumption that a
wrongfully enjoined party is entitled to recover provable
damages up to the bond amount. See Front Range Equine
Rescue v. Vilsack, 844 F.3d 1230, 1234 (10th Cir. 2017)
(“[W]here there is a finding that a defendant has been
wrongfully enjoined, there is a presumption of recovery and
the district court’s discretion to deny damages is limited.”);
Nokia Corp. v. InterDigital, Inc., 645 F.3d 553, 558–59 (2d
Cir. 2011) (“Although we hold that a wrongfully enjoined
party is entitled to a presumption in favor of recovery, that
party is not automatically entitled to the damages sought. The
presumption applies to ‘provable’ damages.”); Global Naps,
489 F.3d at 23 (“[W]e adopt the majority rule that there is a
rebuttable presumption that a wrongfully enjoined party is




                               19
entitled to have the security executed so as to recover provable
damages up to the amount of the security.”); Nintendo, 16 F.3d
at 1036 (“[W]e join what appears to be the majority and hold
there is a rebuttable presumption that a wrongfully enjoined
party is entitled to have the bond executed and recover
provable damages up to the amount of the bond.”); Nat’l
Kidney Patients Ass’n v. Sullivan, 958 F.2d 1127, 1134 (D.C.
Cir. 1992), cert. denied, 506 U.S. 1049 (1993) (“[A] defendant
injured by a wrongfully issued preliminary injunction is
presumptively entitled to recovery on the injunction bond.”);
Coyne, 717 F.2d at 391 (agreeing with the majority approach
that “a prevailing defendant is entitled to damages on the
injunction bond unless there is a good reason for not requiring
the plaintiff to pay in the particular case”). As noted by many
of those courts, this rule is “strongly implied” in Rule 65(c)
itself. Nokia Corp., 645 F.3d at 558; see also Global Naps, 489
F.3d at 20; Nat’l Kidney, 958 F.2d at 1135 (citing Coyne, 717
F.2d at 390–91) (“Although the Rule does not explicitly
address the disposition of the bond once the injunction is found
wrongful, payment to the injured defendant seems almost
inescapable, since the Rule imposes a requirement of security
for the precise purpose of assuring compensation of the
defendant . . . .”). Moreover, the rule increases predictability
of the law, see Coyne, 717 F.2d at 392, “discourag[es] parties
from requesting injunctions based on tenuous legal grounds,”
Nintendo, 16 F.3d at 1037, and conserves judicial resources,
since “a defendant who can recover damages against a
preliminary injunction bond will be less likely to file a separate
malicious prosecution action,” id. Because the presumption in
favor of recovery is rebuttable, the rule still affords courts some
discretion to “decline to impose damages on the rare party who
has lost a case on the merits but nevertheless should not suffer
the execution of the preliminary injunction bond.” Id.




                                20
       Appellees, however, urge us to adopt the approach
espoused by the Fifth Circuit in H&R Block, Inc. v. McCaslin,
which provides, “The awarding of damages pursuant to an
injunction bond rests in the sound discretion of the court’s
equity jurisdiction.” 541 F.2d 1098, 1099 (5th Cir. 1976) (per
curiam). But the Fifth Circuit stands alone on this issue,12 and

12
  Appellees cite to Page Communications Engineers, Inc. v.
Froehlke, 475 F.2d 994, 997 (D.C. Cir. 1973), as additional
authority for the minority approach. However, the D.C. Circuit
more recently interpreted Page as aligning with the majority
approach:

              In Page we rejected a claim that
              Rule 65(c) automatically entitled
              defendants to recovery on the bond
              on a showing of damage,
              regardless of the equities of the
              case. We clearly regarded those
              equities as leaning toward the
              plaintiff; although we spoke
              loosely of the plaintiff's “good
              faith”, arguably suggesting that
              that was enough to negate recovery
              on the bond, we also noted that the
              injunction might never have been
              granted if the government
              defendant had brought a specific
              study to the court’s attention in a
              timely fashion. Accordingly, we
              do not read Page as adopting a
              maverick view but rather as in




                              21
the viability of that ruling has since been called into question
by a more recent opinion. See Continuum Co. v. Incepts, Inc.,
873 F.2d 801, 803 (5th Cir. 1989) (stating that Rule 65(c)’s
requirement of a bond “assures the enjoined party that it may
readily collect damages from the funds posted or the surety
provided in the event that it was wrongfully enjoined, without
further litigation and without regard to the possible insolvency
of the assured” (emphasis added) (citing Coyne, 717 F.2d at
391)). Because the majority approach is implied in the
language of Rule 65(c) and promotes its goals, we now adopt
that rule.

        Although it relied on Coyne in its analysis on this issue,
the District Court failed to apply the presumption in favor of
recovery that the Court in Coyne applied. Nor did the District
Court note the main thrust of the Seventh Circuit’s reasoning
in that case, namely, that a district court is required to “consider
and evaluate the full range of factors . . . that would be relevant
under the proper standard.” Coyne, 717 F.2d at 392. These
include, but are not limited to, a defendant’s failure to mitigate
damages, Nokia Corp., 645 F.3d at 559, the reasonableness of
the damages sought, id., the outcome of the underlying suit,
Coyne, 717 F.2d at 392, and the parties’ resources, id.13 Only


               accord   with     the     accepted
               presumption in favor of recovery.

Nat’l Kidney, 958 F.2d at 1134 (citations omitted), cert.
denied, 506 U.S. 1049 (1993).
13
   Appellees claim that we should also consider their good faith
in requesting the TRO. However, this is not a factor properly
considered in the good cause analysis because “[g]ood faith in
the maintenance of litigation is . . . expected of all litigants”




                                22
after listing and discussing these factors did the Court in Coyne
reference the factor relied upon by the District Court here to
deny damages, namely, a change in the law. See id. at 392.
The Court there stated, “We do not believe that a change in the
law is always a good ground for denying costs and injunction
damages to a prevailing party, but it is a legitimate
consideration, perhaps especially where the prevailing party is
a state agency that benefited from a change in the law of its
state.” Id. at 392–93.

        None of the factors cited in Coyne rebut the
presumption that NJTHA is entitled to recover bond damages
in this case. Appellees have not claimed that NJTHA has failed
to mitigate its damages or that the bond amount is
unreasonable,14 and the underlying suit resulted in a judgment
in NJTHA’s favor. And, as to a change in the law, this case
does not involve the type of “change in law” contemplated by
Coyne. There, the district court, in issuing the preliminary
injunction, had relied on an intermediate state appellate court
decision holding that an indirect bidder had a property right in
being allowed to bid on a public contract. See Coyne, 717 F.2d
at 389. While the suit was pending, the state Supreme Court


and, otherwise, the presumption in favor of awarding bond
damages would “congeal[] virtually into a rock.” Nintendo, 16
F.3d at 1037 (quoting Nat’l Kidney, 958 F.2d at 1135) (internal
quotation marks omitted); see also Coyne, 717 F.2d at 392
(stating that good faith would be a sufficient reason to deny
bond damages “only if the presumption were against rather
than in favor of awarding costs and damages on the bond to the
prevailing party”).
14
   In fact, the bond amount was set well below what NJTHA
had requested.




                               23
reversed course and held that no such property right existed.
See id. Here, there was no change in the state of the law while
the case was in the federal court. Instead, the defendants in this
case successfully challenged the constitutionality of PASPA on
appeal, such that they ultimately prevailed. That is not a
change in the law; that is success on the merits. Accordingly,
we conclude that NJTHA is entitled to recover provable
damages up to the bond amount.

                               IV.

       We will vacate the denial of NJTHA’s motion for
judgment on the bond and damages, and remand for the District
Court to determine the amount to be collected.15




15
   On remand, NJTHA will have the burden of showing
provable damages. Virginia Plastics Co. v. Biostim Inc., 820
F.2d 76, 80 n.6 (3d Cir. 1987). Although it is not required to
prove an amount “to a mathematical certainty,” Global Naps,
489 F.3d at 23–25, it must establish what damages were
proximately caused by the erroneously issued injunction . . .
and the alleged damages cannot be speculative,” Virginia
Plastics Co., 820 F.2d at 80 n.6.




                               24
PORTER, Circuit Judge, dissenting.

       I disagree with the majority’s holding that the New
Jersey Thoroughbred Horsemen’s Association (“NJTHA”)
was wrongfully enjoined for two reasons. First, the Supreme
Court invalidated the Professional and Amateur Sports
Protection Act (“PASPA”) on constitutional grounds, but the
temporary restraining order was not based on PASPA’s
constitutionality. Instead, the District Court considered
whether New Jersey law complied with PASPA itself. And
even in striking down PASPA, the Supreme Court agreed with
the District Court on that statutory question. Second, I disagree
that the Supreme Court’s decision holding PASPA
unconstitutional necessarily means that the NJTHA was
wrongfully enjoined under the PASPA-based TRO issued four
years earlier. This holding requires indulging the fiction—not
available to the District Court that issued the TRO—that
PASPA never existed at all.

                                I

       There were two proceedings involving these parties.
The first one, Christie I, involved a straight-on constitutional
challenge. The second one, Christie II, presented a much
narrower statutory question. The majority ably recites this
procedural history, but the different issues involved in the two
proceedings deserve highlighting.

        Christie I started when the major professional sports
leagues (collectively, the “Leagues”) banded together to
oppose a 2012 New Jersey law allowing sports betting at horse
racetracks and casinos. The Leagues argued that the law
violated PASPA. In response, the defendants directly
challenged “PASPA’s constitutionality; specifically, whether
it violated the Commerce Clause, the Tenth Amendment, the
Due Process Clause and related Equal Protection principles, or
the Equal Footing Doctrine.” Nat’l Collegiate Athletic Ass’n v.
Christie, No. CV146450MASLHG, 2018 WL 6026816, at *1
(D.N.J. Nov. 16, 2018). In early 2013, the district court denied
the defendants’ constitutional challenge. 926 F. Supp. 2d 551,
579 (D.N.J.). It upheld PASPA and permanently enjoined New
Jersey officials from enforcing the 2012 law. Id. We affirmed
and the Supreme Court denied certiorari. 730 F.3d 208, 215 (3d
Cir. 2013); 573 U.S. 931 (2014).
                               1
       The second proceeding—Christie II—started in 2014,
when New Jersey enacted a revised law to repeal restrictions
on gambling. Soon after the 2014 law passed, the Leagues
again sued, seeking to enjoin implementation of the 2014 law.
The District Court granted the Leagues’ TRO request but
required them to post a security bond under Rule 65(c) of the
Federal Rules of Civil Procedure. The bond was originally set
at $1.7 million, and after the TRO was extended another two
weeks, was increased to $3.4 million.

       In November 2014—after the TRO had been in place
for 28 days—the District Court granted summary judgment for
the Leagues. 61 F. Supp. 3d 488, 491 (D.N.J. 2014). Properly
applying our Christie I decision, it held that the 2014 law
authorized sports betting, which violated PASPA. Id. at 505.
The District Court rejected the characterization of the 2014 law
as a more limited, permissible successor:

       While styled as a partial repeal, the 2014 Law
       would have the same primary effect of the 2012
       Law—allowing sports wagering in New Jersey’s
       casinos and racetracks for individuals age
       twenty-one and over but not on college sporting
       events that take place in New Jersey or on New
       Jersey college teams. This necessarily results in
       sports wagering with the State’s imprimatur,
       which goes against the very goal of PASPA—to
       ban sports wagering pursuant to a state scheme.

Id.

       Once again, the District Court’s decision was appealed,
and once again, we affirmed in a panel decision. 799 F.3d 259
(3d Cir. 2015). We re-heard the case en banc and once more
affirmed the District Court. We explained that although the
2014 law was “artfully couched in terms of a repealer,” it
“essentially” legalized gambling. 832 F.3d 389, 397 (3d Cir.
2016) (en banc). Under PASPA, “[t]his is an authorization.”
Id.

       The losing parties, including the NJTHA, again sought
review from the Supreme Court. This time, they got it. In May
2018, the Supreme Court held that PASPA unconstitutionally
commandeered state legislatures, violating the Tenth
                               2
Amendment. Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S.
Ct. 1461, 1478 (2018). But the Supreme Court agreed with the
District Court (and this Court) on the issue litigated in Christie
II: “[w]hen a State completely or partially repeals old laws
banning sports gambling, it ‘authorize[s]’ that activity.” Id. at
1474 (alteration original).

        In the wake of Murphy, the NJTHA asked the District
Court to award it the $3.4 million bond. The NJTHA argued
that the Supreme Court’s holding that PASPA was
unconstitutional meant that the NJTHA was wrongfully
enjoined for 28 days in late 2014. The District Court rejected
this request and the NJTHA appealed.

                                II

       Under Rule 65(c), a “court may issue a preliminary
injunction or a temporary restraining order only if the movant
gives security in an amount that the court considers proper to
pay the costs and damages sustained by any party found to have
been wrongfully enjoined or restrained.” Fed. R. Civ. P. 65(c).
“The purpose of this provision is to enable a restrained or
enjoined party to secure indemnification for any costs … and
any damages that are sustained during the period in which a
wrongfully issued equitable order remains in effect.” Charles
A. Wright & Arthur R. Miller, 11A Federal Practice
& Procedure: Civil, § 2954 (3d ed.).

       The majority opinion aligns our Court with others that
have interpreted Rule 65(c) to “hold that a party is wrongfully
enjoined when it turns out that that party had a right all along
to do what it was enjoined from doing.” Maj. Op. 13 (collecting
cases). I agree that this is the correct standard, but I disagree
with its application here. In the sister circuit cases cited by the
majority, the injunction and full merits proceedings addressed
essentially the same issues. At the very least, none of these
cases involve an appellate court expressly upholding the basis
of the injunction while nonetheless deciding for the enjoined
party on other grounds. So while these cases properly articulate
the standard, their application of that standard offers little
guidance in this situation.

    That is because here, no court at any point “found” the
NJTHA “to have been wrongfully enjoined or restrained.” Fed.
                                3
R. Civ. P. 65(c). Quite the contrary, in fact. As the procedural
history shows, the District Court issued the TRO based on its
conclusion that the 2014 law violated PASPA. Christie II, 61
F. Supp. 3d 488, 491 (D.N.J. 2014). We affirmed, holding that
the 2014 law violated PASPA by authorizing gambling.
Christie II, 832 F.3d 389, 397 (3d Cir. 2016) (en banc). And
the Supreme Court agreed that New Jersey’s repealer law was
actually an authorization. Murphy, 138 S. Ct. 1461, 1474
(2018).1 In sum, every court to have considered the issue of
whether the 2014 law was actually an authorization—the very
ground for the TRO—agreed with the District Court.2

        Given the unanimity on this statutory point, the NJTHA
must rely on a far-reaching view of retroactivity to support its
claim that it was wrongfully enjoined. The majority purports to
sidestep this point, asserting without any explanation that
retroactivity is not implicated in this analysis at all. In its view,
Rule 65 presents “a simpler inquiry” that asks “whether, if we
knew then what we know now, should NJTHA have been
restrained?” Maj. Op. 19. But that begs the question by simply
assuming that the Supreme Court’s 2018 decision on the

1
  The majority correctly reads the Supreme Court’s decision to
have “agreed with one aspect” of our decision—“namely, that
a repeal of a law banning an activity constitutes an
‘authoriz[ation]’ of that activity.” Maj. Op. 9.
2
  To be sure, the NJTHA’s failure to re-litigate PASPA’s
constitutionality in Christie II was hardly improper. Our
decision in Christie I made that constitutional issue res
judicata. As the NJTHA acknowledges, any follow-on
constitutional challenge would have “been an exercise in
futility,” since a “lower court has no power to overrule the
precedent of its judicial superior.” NJTHA Br. 28.
        In spite of that acknowledgment, the majority views
Christie I’s constitutional question and Christie II’s statutory
question as forming the same “ball of wax.” Maj. Op. 14. But
the fact that the Supreme Court reached more broadly to decide
the constitutional question does not mean that the statutory and
constitutional questions were intertwined for purposes of the
TRO. That TRO issue was much narrower. While the Supreme
Court had wide discretion to review the commandeering
question, on which it passed in Christie I, that issue was not
before the District Court in Christie II.
                                 4
commandeering issue means that PASPA never existed—in
other words, the statute was void ab initio. That questionable
assumption is the only way to explain the majority’s assertion
that the NJTHA had the right “all along” to conduct sports
gambling. Maj. Op. 13. But the Supreme Court has long
cautioned against stretching this concept too far. See Chicot
Cty. Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 374
(1940) (“The actual existence of a statute, prior to [a
determination of unconstitutionality], is an operative fact and
may have consequences which cannot justly be ignored. The
past cannot always be erased by a new judicial declaration.”).3
The majority thus commits the “writ-of-erasure fallacy,” or the
mistaken “assumption that a judicial pronouncement of
unconstitutionality has canceled or blotted out a duly enacted
statute” and rendered it a nullity. Jonathan F. Mitchell, The
Writ-of-Erasure Fallacy, 104 Va. L. Rev. 933, 937 (2018).

       Such an expansive view of retroactivity in this context
is out of step with Rule 65’s function. The rule’s bond
requirement “is rooted in the belief that a defendant deserves
protection against a court order granted without the full
deliberation a trial offers.” Am. Bible Soc. v. Blount, 446 F.2d
588, 595 n.12 (3d Cir. 1971). In other words, the bond protects
the enjoined party “if it turns out that the order issued was
erroneous in the sense that it would not have been issued if
there had been the opportunity for full deliberation.” Id. Here,
of course, the District Court engaged in just that full
deliberation following the TRO, satisfying Rule 65.

       That full deliberation separates this case from the usual
instances of a party being found to have been wrongfully
enjoined. Typically, this finding occurs after the trial court’s

3
 See also United States v. Baucum, 80 F.3d 539, 541 (D.C. Cir.
1996) (per curiam) (denying argument “premised on the theory
that if an Act of Congress is unconstitutional, it is void ab
initio, and any action taken pursuant to it is thus invalid,”
noting that the Supreme Court “has rejected such a broad-
sweeping proposition”); cf. State of Kan. ex rel. Stephan v.
Adams, 705 F.2d 1267, 1270 (10th Cir. 1983) (explaining that
“the TRO was not dissolved because it was wrongfully issued,
but rather because of an intervening event,” noting that it was
“the intervention of Congress that brought about the change”).
                               5
merits adjudication following the temporary injunction.4 The
finding may also be made by an appellate court reversing a
temporary injunction. See Div. No. 1, Detroit, Bhd. of
Locomotive Engineers v. Consol. Rail Corp., 844 F.2d 1218,
1225 (6th Cir. 1988) (collecting cases). But the majority has
not cited any case in which an appellate decision like
Murphy—agreeing with the basis for the injunction while
invalidating the law on other grounds—has supported a finding
that a party was wrongfully enjoined.

                           *****

       In sum, I see little support for holding that a party was
wrongfully enjoined when the District Court faithfully
followed our precedent—as we and the Supreme Court
acknowledged even as the Supreme Court invalidated the
underlying law on different grounds. Had the District Court
based the TRO on the constitutional question ultimately
decided by the Supreme Court, I would view this matter
differently. But that is not what happened here. And without an
actual finding that a party was wrongfully enjoined, Rule 65 is
not satisfied. Because the majority holds otherwise, I
respectfully dissent.




4
  See, e.g., Sprint Commc’ns Co. L.P. v. CAT Commc’ns Int’l,
Inc., 335 F.3d 235, 242 n.9 (3d Cir. 2003) (“But the ultimate
determination whether a party was wrongfully enjoined and
can recover on the injunction bond generally must wait until
‘after a trial and final judgment on the merits.’ (quoting Clark
v. K–Mart Corp., 979 F.2d 965, 969 (3d Cir. 1992) (en banc));
U.S. D.I.D. Corp. v. Windstream Commc’ns, Inc., 775 F.3d
128, 139 (2d Cir. 2014) (“That a trial on the merits is usually
required to determine whether the defendant was entitled to
engage in the conduct that was enjoined is true irrespective of
whether the defendant seeks recovery on security posted to
secure a TRO or a preliminary injunction.”).
                               6
