The U.S. District Court for the Southern District of New York on Jan. 7 ruled that Windstream (Nasdaq: WIN) is entitled obtain a large piece of the injunction bond from its wholesale service customer U.S. D.I.D. Corp., a telecom service reseller.
Last May, U.S. D.I.D. issued a $314,672.80 bond when it obtained a temporary restraining order (TRO) after Windstream threatened to cut off the competitive carrier's service "on the ground that U.S. D.I.D. was reselling services in violation of an express provision prohibiting resale in the retail customer contract between the parties."
This TRO was obtained to prevent Windstream from suspending services or increasing costs. However, on June 21 the court quickly vacated it because the company did not provide enough evidence to support its claims.
"The Court held, among other things, that [the] Plaintiff had failed to demonstrate either a likelihood of success on the merits or the existence of sufficiently serious questions going to the merits to make them a fair ground for litigation," said the court in an oral ruling.
Before Windstream could file an answer to the complaint, U.S. D.I.D. dismissed its suit without prejudice.
The court said "all of the relevant factors support the conclusion that U.S. D.I.D. dismissed its suit on the basis of a belief that it would lose on the merits."
Following the dismissal, Windstream told the court that part of the security bond should be applied to a bill for wholesale services it provided from May 14, 2012, to June 14, 2012.
Since U.S. D.I.D. issued the TRO at 11:59 p.m. on May 21, 2012, and it was vacated on June 21, 2012, the court said Windstream's "invoice includes seven days of services that occurred prior to the issuance of the TRO, and does not include seven days of services provided pursuant to the TRO that will not be billed until the July 15, 2012 invoice."
Even though U.S. D.I.D. decided to dismiss the case, the court said Windstream was entitled to a portion of the bond.
On Jan. 23, the court clerk in the U.S. District Court for the Southern District of New York will pay Windstream $22,271.92 of the $314,672.80 bond "for damages caused by the TRO." On the same day, the court will issue a check for $87,400.88 deposited by U.S. D.I.D. in the court's registry.
For more:
- here's the New York court's final ruling (.pdf)
- here's the July ruling (.pdf)
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