Pctv Gold, Inc. v. Speednet, LLC.

• Decision Date: 29 November 2007
• Docket Number: No. 07-2189.,07-2189.
• Citation: 508 F.3d 1137
• Parties: PCTV GOLD, INC., Appellee, v. SPEEDNET, LLC, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

508 F.3d 1137

PCTV GOLD, INC., Appellee, v. SPEEDNET, LLC, Appellant.

No. 07-2189.

United States Court of Appeals, Eighth Circuit.

Submitted: September 24, 2007.

Filed: November 29, 2007.

Bartholomew L. McLeay, argued, Paul R. Gwilt, Omaha, NE, Bradley J. Baumgart, M. Courtney Koger, on the brief, Kansas City, MO, for Appellant.

Thomas Walsh, argued, St. Louis, MO, Craig S. O'Dear, James D. Lawrence, on the brief, Kansas City, Mo, for Appellee.

Before BYE, BENTON and SHEPHERD, Circuit Judges.

BYE, Circuit Judge.

SpeedNet, LLC, appeals an order of the district court¹ entered in favor of PCTV Gold, Inc. (Sprint), a subsidiary of Sprint-Nextel Corporation. The order preliminarily enjoins SpeedNet from:

(1) closing upon, transferring assets in furtherance of, or completing any portion of the transaction envisioned in the Purchase Agreement between SpeedNet and Clearwire²;

(2) executing or entering in to the draft Joint Venture Agreement between SpeedNet and Clearwire; or

(3) selling or transferring any assets to any third party entity other than transactions in the ordinary course of business.

SpeedNet appeals from portions of paragraphs (2) and (3) of the district court's order relating to the joint venture with Clearwire. We affirm the district court.

I. BACKGROUND

Sprint holds an exclusive license from the Federal Communications Commission (FCC) to construct and operate Broadband Radio Service (BRS) in the Saginaw, Michigan, area. SpeedNet, a provider of fixed and portable high-speed wireless internet services, entered into a contract to lease "licensed spectrum"—radio frequencies used for the transmission of data, sound and video—from Sprint to enable it to offer reliable wireless service. On August 30, 2005, Sprint and SpeedNet entered into a Market Operation Agreement (MOA), wherein Sprint leased licensed spectrum to SpeedNet for a period of five years, with three five-year options to renew exercisable by SpeedNet.³

Section 15.5(b) of the MOA contains the contractual provision at issue, which the parties have identified as a "Right of First Offer" (ROFO). While the parties disagree as to the proper interpretation and application of the section, they do agree SpeedNet granted Sprint a ROFO, which SpeedNet admits at least "under certain limited circumstances" required SpeedNet to offer to sell its assets to Sprint before selling to any other entity.

Subsequent to entering into the MOA with Sprint, and unbeknownst to Sprint, SpeedNet spent several months negotiating a Purchase Agreement with Clearwire, one of Sprint's main competitors. On or about August 8, 2006, SpeedNet and Clearwire executed a Purchase Agreement, under which they agreed to either: (1) merge by exchanging substantially all of SpeedNet's assets for Clearwire stock, warrants and limited cash or (2) execute a joint venture agreement (SpeedNet JV) previously agreed upon for the purpose of utilizing the twelve channels of spectrum the parties jointly subleased from Sprint. The two companies anticipated the transaction would close on or before February 8, 2007. They did not inform Sprint of the proposed merger until on or about December 11, 2006.

On March 1, 2007, Sprint filed a breach of contract action against SpeedNet, in which it sought injunctive relief and specific performance to enforce SpeedNet's obligation to first offer the sale of its assets to Sprint. On April 16, 2007, Sprint amended its complaint and moved for a preliminary injunction to prohibit SpeedNet from transferring its assets or otherwise altering the structure of its company before Sprint's rights under the ROFO provision of the MOA had been adjudicated, i.e., to specifically prevent SpeedNet from entering into a merger or a joint venture with Clearwire. SpeedNet advised Sprint prior to the hearing about SpeedNet seeking only to pursue the SpeedNet JV and no longer intending to merge with Clearwire.

On April 16, 2007, the district court held a hearing on the motion. The court stated Sprint appears likely to succeed on the merits of its claims and found Sprint is subject to irreparable injury if SpeedNet is permitted to merge or enter into a joint venture with Clearwire. The court also found monetary relief would not provide adequate or complete relief to Sprint, and the balance of equities warranted the issuance of a preliminary injunction. The court entered a preliminary injunction order at the conclusion of the hearing, followed by a written order entered on April 24, 2007. This appeal followed.

II. DISCUSSION

A. Failure to Appeal From Paragraph One

At the outset, Sprint suggested this court is unable to allow SpeedNet any meaningful relief as it did not appeal from the first paragraph of the district court's order. The first paragraph enjoins SpeedNet from carrying out "any portion of the transaction envisioned by the Purchase Agreement." Sprint claims, since the SpeedNet JV is a transaction envisioned by the Purchase Agreement as an alternative to the proposed merger, the first paragraph enjoins SpeedNet from consummating the SpeedNet JV. Sprint argues because SpeedNet has expressly declined to appeal this alternate ground for the district court's ruling, the injunction below must be affirmed because an alternatively dispositive provision stands unchallenged. We disagree.

The Eighth Circuit construes notices of appeal liberally as long as the intent to appeal the judgment in question is apparent and there is no prejudice to the adverse party. Herts v. Smith, 345 F.3d 581, 584-85 (8th Cir.2003); Parkhill v. Minn. Mut. Life Ins. Co., 286 F.3d 1051, 1058 (8th Cir.2002); Berdella v. Delo, 972 F.2d 204, 207 (8th Cir.1992). SpeedNet's intent in appealing only paragraphs two and three was to challenge the injunction as it applied to the SpeedNet JV and not to challenge the injunction as it applied to the contemplated merger. SpeedNet stated in its Notice of Appeal: "Speednet appeals from the joint-venture-prohibition in subparagraph 2, and the prohibition in subparagraph 3 to the extent it prohibits the formation and operation of the joint venture, but does not appeal from any other portion of that Order." In the Statement of Facts section of its Appellant Brief, SpeedNet stated it "appeals only that part of the Order enjoining SpeedNet from consummating the SpeedNet Joint Venture" and notes it "also appeals that part of the Order prohibiting SpeedNet from transferring assets outside the ordinary course of business, but only to the extent it impedes SpeedNet's ability to consummate the SpeedNet Joint Venture." SpeedNet placed Sprint on notice as to its challenge of the injunction with respect to the SpeedNet JV, and Sprint did prepare a responsive argument; Sprint is not prejudiced.

Sprint relies on Parkhill for the notion an appellant is precluded from challenging an order he or she failed to identify in the notice. In Parkhill, however, this Court specifically stated "[w]hen determining whether an appeal from a particular district court action is properly taken, we construe the notice of appeal liberally and permit review where the intent of the appeal is obvious and the adverse party incurs no prejudice." Id. (citing Moore v. Robertson Fire Prot. Dist., 249 F.3d 786, 788 (8th Cir.2001)). This Court found the intent to appeal a separate order was not obvious in the Parkhill case. In the instant case, however, SpeedNet has appealed the district court's order granting a preliminary injunction and specifically identified the provisions it appeals as those which pertain to the SpeedNet JV and not that which it believes pertains to the merger. For this reason, we consider the merits of SpeedNet's appeal.

B. Standard of Review

We review the district court's grant of a preliminary injunction for abuse of discretion, giving deference to the discretion of the district court. Doe v. South Iron R-1 School Dist., 498 F.3d 878, 880 (8th Cir.2007); Emerson Elec. Co. v. Rogers, 418 F.3d 841, 844 (8th Cir.2005). Abuse of discretion occurs if the district court rests its conclusion on clearly erroneous factual findings or if its decision relies on erroneous legal conclusions. In re SDDS, Inc., 97 F.3d 1030, 1040 (8th Cir.1996). We will not disturb a district court's discretionary decision if such decision remains within the range of choice available to the district court, accounts for all relevant factors, does not rely on any irrelevant factors, and does not constitute a clear error of judgment. Walser v. Toyota Motor Sales, U.S.A., Inc., 43 F.3d 396, 401 (8th Cir.1994). In every case, an appellate court must remain mindful as to the district courts being closer to the facts and the parties, and not everything which may be important in a lawsuit necessarily comes through in exactly that way on the printed page. Kern v. TXO Prod. Corp., 738 F.2d 968, 970 (8th Cir.1984).

C. Preliminary Injunction

"Whether a preliminary injunction should issue involves consideration of (1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest." Dataphase Sys., Inc. v. C L Systems, Inc., 640 F.2d 109, 114 (8th Cir. 1981). We hold the district court did not abuse its discretion in granting the preliminary injunction, and properly applied the Dataphase factors. The court concluded: (1) Sprint is subject to irreparable injury should SpeedNet be permitted to merge or enter into a joint venture with Clearwire because monetary relief will not provide adequate or complete relief to it; (2) Sprint is likely to succeed on the merits as to its claim of SpeedNet breaching the ROFO provision of its MOA agreement with Sprint and must first tender an offer to sell to Sprint before all others; (3) the balance of equities warrants the issuance of a preliminary injunction; and (4) the granting...