In the

United States Court of Appeals

For the Seventh Circuit

No. 09-2785

HABITAT EDUCATION CENTER, et al.,

Plaintiffs-Appellants,

v.

UNITED STATES FOREST SERVICE, et al.,

Defendants-Appellees.

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 08-C-627—Aaron E. Goodstein, Magistrate Judge.

ARGUED APRIL 14, 2010—DECIDED MAY 27, 2010

Before POSNER, RIPPLE, and KANNE, Circuit Judges.

POSNER, Circuit Judge. Habitat Education Center, a

nonprofit enterprise dedicated to promoting environmental quality, sued the forest service to obtain judicial

review of the service’s decision to allow several thousand

acres of a national forest in Wisconsin to be logged. (There

are other parties on both sides of the case, but, with one

exception mentioned later, they can be ignored.) Habitat

asked for and was granted a preliminary injunction
2 No. 09-2785

against the issuance of the permit to the company that

had been the high bidder for the logging contract. The

judge required Habitat to post a $10,000 injunction

bond, pursuant to Rule 65(c) of the civil rules, which

provides that “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.” There is an exception if the applicant for the

preliminary injunction is a federal agency or officer but

it has no application to this case.

Habitat asked the judge to reconsider the bond order.

It argued that a nonprofit enterprise—at least one

devoted to so great and general a good as the protection

of the environment—should not have to post an injunction bond. The judge declined to rescind or modify the

order. Neither it nor the judge’s refusal to rescind or

modify it was immediately appealable. True, an order

denying an injunction bond, a supersedeas bond (as security for a stay of execution of judgment), or any other

request for security to protect a litigant, is immediately

appealable. E.g., Cohen v. Beneficial Industrial Loan Corp.,

337 U.S. 541, 546 (1949); In re Carlson, 224 F.3d 716,

718 (7th Cir. 2000); Olympia Equipment Leasing Co. v.

Western Union Telegraph Co., 786 F.2d 794, 795-96 (7th Cir.

1986); In re UNR Industries, Inc., 725 F.2d 1111,

1117 (7th Cir. 1984); Atlantic Fertilizer & Chemical Corp. v.

Italmare, S.p.A., 117 F.3d 266 (5th Cir. 1997). Such an order

is a classic “collateral order,” which is to say an order

belonging to “that small class [of orders] which finally
No. 09-2785 3

determine claims of right separable from, and collateral

to, rights asserted in the action, too important to be

denied review and too independent of the cause itself

to require that appellate consideration be deferred until

the whole case is adjudicated.” Cohen v. Beneficial

Industrial Loan Corp., supra, 337 U.S. at 546.

But orders to post an injunction bond—and that is the

order challenged by this appeal—or other security generally are not appealable immediately, In re Carlson, supra;

Caribbean Trading & Fidelity Corp. v. Nigerian National

Petroleum Corp., 948 F.2d 111, 114 (2d Cir. 1991); Hitachi

Zosen Clearing, Inc. v. Tek-Matik, Inc., 846 F.2d 27, 28-29

(6th Cir. 1988); Trustees of Hospital Mortgage Group v.

Compania Aseguradora Interamericana S. A. Panama, 672

F.2d 250 (1st Cir. 1982) (per curiam), because they are less

likely to inflict irreparable harm. Swift & Co. Packers v.

Compania Del Caribe, 339 U.S. 684, 689 (1950); In re Carlson,

supra, 224 F.3d at 718. Indeed, “when setting the amount

of security, district courts should err on the high side. If

the district judge had set the bond at $50 million, as

Abbott requested, this would not have entitled Abbott

to that sum; Abbott still would have had to prove its

loss, converting the ‘soft’ numbers to hard ones. An error

in setting the bond too high thus is not serious. (The fee

for a solvent firm such as Mead Johnson or its parent

Bristol-Myers Squibb Co. to post a bond, a standby letter

of credit, or equivalent security is a very small fraction

of the sum involved.) . . . [A]n error in the other direction

produces irreparable injury, because the damages for

an erroneous preliminary injunction cannot exceed

the amount of the bond.” Mead Johnson & Co. v. Abbott
4 No. 09-2785

Laboratories, 201 F.3d 883, 888 (7th Cir. 2000) (emphasis

in original).

There is however an exception for a case in which the

bond is both higher than necessary and beyond the plaintiff’s financial capacity, and thus inflicts irreparable harm

without justification. See Friends of the Earth, Inc. v. Brinegar,

518 F.2d 322 (9th Cir. 1975); Save Our Sonoran, Inc. v.

Flowers, 408 F.3d 1113, 1126 (9th Cir. 2005). In such a

case the bond order meets the criteria for a collateral

order. But not in this case.

Eventually the judge dissolved the preliminary injunction that he had granted to Habitat, granted the forest

service’s motion for summary judgment, and dismissed

the suit. Habitat appealed the dismissal—it is the

appeal before us—and generally when a final judgment or

other order is appealed, the appellant can challenge

any interlocutory ruling that adversely affects him. In re

Salem, 465 F.3d 767, 773-75 (7th Cir. 2006); Kurowski v.

Krajewski, 848 F.2d 767, 772-73 (7th Cir. 1988); Jacksonville

Port Authority v. Adams, 556 F.2d 52, 57 and n. 15 (D.C. Cir.

1977); 11A Charles Alan Wright, Arthur R. Miller & Mary

Kay Kane, Federal Practice and Procedure § 2962, pp. 433-34

(2d ed. 1995). The order to post an injunction bond (or

refuse to rescind the order) was such a ruling.

Even when an interlocutory order is immediately

appealable, the party adversely affected by it can wait

and challenge it later, on appeal from the final judgment, provided of course that the order hasn’t become

moot in the meantime. Kurowski v. Krajewski, supra, 848

F.2d at 772-73. Far from becoming moot, the order
No. 09-2785 5

making Habitat post a bond is likely to bite harder than

when it was entered. When the security takes the form of

a surety bond, the initial cost is the surety’s fee. The

bonding company promises to pay any damages for

losses caused by the injunction should the party who got

the injunction and thus caused the loss (in this case,

Habitat) fail to pay the damages—in such a case, indeed,

the injured party can proceed against the surety directly.

Fed. R. Civ. P. 65.1. Habitat didn’t use a surety; it

deposited $10,000 with the court. The cost to Habitat

was thus the time value of that amount. Had the preliminary injunction not been vacated, that would have been

the only cost to Habitat. But now it faces the possibility

of having to pay damages to the forest service, though

only up to the bond limit of $10,000. Coyne-Delany Co. v.

Capital Development Board, 717 F.2d 385, 390-94 (7th Cir.

1983); Global Naps, Inc. v. Verizon New England, Inc., 489

F.3d 13, 20-21 (1st Cir. 2007); Sprint Communications Co. L.P.

v. CAT Communications Int’l, Inc., 335 F.3d 235, 239-40

(3d Cir. 2003); Nintendo of America, Inc. v. Lewis Galoob

Toys, Inc., 16 F.3d 1032, 1036-37 (9th Cir. 1994); National

Kidney Patients Ass’n v. Sullivan, 958 F.2d 1127, 1134-35

(D.C. Cir. 1992).

It could be argued that unless and until damages are

assessed, Habitat has incurred no loss and therefore lacks

standing to appeal. But it has incurred a loss—a loss of

the use of $10,000. Every day that a sum of money is

wrongfully withheld, its rightful owner loses the time

value of the money. Suppose no damages are ever

assessed against Habitat and so eventually the court

returns the $10,000 that it is holding; there would be no
6 No. 09-2785

procedural vehicle to enable Habitat to recover the loss

of the time value of its money. Therefore it had standing

to challenge the bond order on appeal from the final

judgment. See Sprint Communications Co. L.P. v. CAT

Communications Int’l, Inc., supra, 335 F.3d at 239.

A genuine oddity about the appeal is that it is from

a judgment—namely the dismissal of the suit—that

the appellant is not challenging, but only from an interlocutory order. A cleaner approach would have been

for Habitat to designate its appeal as an appeal from the

bond order. For it became final and therefore appealable

when the suit was dismissed, since at that point the

order was no longer interlocutory. But the oddity of

Habitat’s approach has no jurisdictional significance.

On to the merits of Habitat’s challenge to the bond. The

winning bidder had bid $55,000. The preliminary injunction, which was entered on January 13, 2009, prevented

the logging from being undertaken for at least a year,

because logging in this forest is done only in winter,

when the ground is hard. The injunction was dissolved

on May 12, 2009, but we are told without contradiction

that the rules of the forest service require that the

project be rebid. An affidavit submitted by the forest

service in the district court stated that the project would

be rebid in “early October 2009,” but as far as we’re able

to determine, as of the date of oral argument (April 14

of this year) it had not yet been rebid.

We are not persuaded by Habitat’s argument that

nonprofit entities, at least those devoted to public goods

of great social value, such as the protection of the en-
No. 09-2785 7

vironment, should be exempted from having to post

injunction bonds. The argument flies in the face of Rule

65(c), which not only contains no such exception but also

states flatly that “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.” The language of Rule 65(c) was even more

emphatic before changed in 2007; it read: “no restraining

order or preliminary injunction shall issue except upon

the giving of security by the applicant, in such sum as

the court deems proper, for the payment of such costs

and damages as may be incurred or suffered by any

party who is found to have been wrongfully enjoined or

restrained.” The committee notes to the 2007 revision

make clear that no substantive change was intended—

only clarification, and consistency in style and terminology.

In seeming contradiction of the rule, a number of cases

allow a district court to waive the requirement of an

injunction bond. In some of these cases the court is satisfied that there’s no danger that the opposing party will

incur any damages from the injunction. There is no

reason to require a bond in such a case—and cessante

ratione legis cessat ipsa lex (when the reason for a law

leaves off, the law leaves off). See, e.g., Connecticut

General Life Ins. Co. v. New Images of Beverly Hills, 321

F.3d 878, 882-83 (9th Cir. 2003); Doctor’s Associates, Inc. v.

Stuart, 85 F.3d 975, 985 (2d Cir. 1996); Hoxworth v. Blinder,

Robinson & Co., 903 F.2d 186, 210 (3d Cir. 1990); 11A Wright
8 No. 09-2785

et al., supra, § 2954, pp. 292-93. And in another class of

cases a bond that would give the opposing party

absolute security against incurring any loss from the

injunction would exceed the applicant’s ability to pay

and the district court balances (often implicitly) the

relative cost to the opponent of a smaller bond against

the cost to the applicant of having to do without a preliminary injunction that he may need desperately. See,

e.g., Wayne Chemical, Inc. v. Columbus Agency Service Corp.,

567 F.2d 692, 701 (7th Cir. 1977); Temple University v. White,

941 F.2d 201, 220 (3d Cir. 1991); People ex rel. Van De Kamp

v. Tahoe Regional Planning Agency, 766 F.2d 1319, 1325-26

(9th Cir. 1985); City of Atlanta v. Metropolitan Atlanta

Rapid Transit Authority, 636 F.2d 1084, 1094 (5th Cir.

1981). This case fits neither category. The forest service

may lose money as a result of the now-dissolved preliminary injunction (in fact it’s bound to lose at least a little,

as we’ll see), and Habitat admits that posting the $10,000

bond caused it no hardship, let alone deterred it from

asking for the injunction—it might have been able to buy

a surety bond for as little as $300. See CourtBondNet,

“Bonds for Judicial Proceedings,” www.courtbondnet.com/

judicial.html (visited May 3, 2010). And while Habitat

hasn’t told us what its total assets or revenues are, one of

its coplaintiffs has annual revenues of some $7 million.

Environmental Law & Policy Center, “ELPC Is Financially

Sound and Well-Managed,” elpc.org/elpcs-financial-status

(visited May 3, 2010).

Turning to Habitat’s alternative ground for canceling

or reducing the bond, we ask whether $10,000 is

excessive in relation to the forest service’s likely loss
No. 09-2785 9

from a logging delay of a year. Money has time value,

as we’ve said. If you part with money, you lose

liquidity (the instant ability to deploy cash) and in addition incur a risk of never getting your money back. So

you demand compensation for parting with money, and

that compensation normally takes the form of interest at

a specified rate, though other factors besides loss of

liquidity and risk of default may influence the rate, such

as expected inflation. Businesses, individuals, and doubtless even federal agencies (considering the staggering

federal budget deficit—$1.4 trillion in 2009 and likely to

be as great or greater this year) value having cash

now rather than a promise, however reliable, of cash later.

Habitat argues that a one-year delay in receiving

$55,000 is costless to the forest service because the

inflation rate was zero (or close to it) in 2009 and is likely

to remain very low this year (remember that we don’t

know whether the forest service has rebid the logging

contract yet). But the inflation rate is not the only

influence on interest rates. The Federal Reserve has

pushed short-term interest rates down very low of late

by flooding banks and other lenders with trillions of

dollars to lend and invest, but has not by doing so eliminated the time value of money. $55,000 would be worth

more today than a year ago only if there were deflation—that is, only if a given number of dollars would

buy more goods and services today than a year ago—

and although inflation has been very mild since the

economic crisis hit, it has not been negative.

Still, Habitat has a point when it says that $10,000 is an

extravagant estimate of the loss in time value from defer-
10 No. 09-2785

ring the receipt of $55,000 for one year; it implies an annual

interest rate of 18.2 percent ($10,000 ÷ $55,000). But an

injunction bond is intended to secure against possible

as well as certain costs—recall the passage we quoted

from the opinion in Mead Johnson. There is some risk

that the rebidding of the logging contract will not yield

$55,000. Maybe not a big risk; for January 2009 was

near the nadir of the economic crisis; housing construction was greatly depressed; since then lumber prices

have risen. Tony C. Dreibus, “Lumber Rises to Highest

Price Since 2006 on Economic Outlook,” Bloomberg Business

Week (Apr. 16, 2010), www.businessweek.com/news/2010-

04-16/lumber-jumps-to-highest-price-since-2006-onoutlook-for-demand.html (visited Apr. 27, 2010); Liam

Pleven and Lester Alrich, “High Lumber Prices Threaten

Housing Market,” Wall Street Journal (Feb. 16 2010),

online.wsj.com/article/SB1000142405274870356240457506

7750815490316.html (visited Apr. 27, 2010). But a risk is

a risk; all that we can know with certainty at this time

is that the judge may decide not to award damages. Actually that’s unlikely, because the bidding process is not

costless, although the forest service reckons the cost of

rebidding the logging contract at a modest $2,350. The

service has already asked the magistrate judge to award

this amount in damages without awaiting the outcome of

the appeal or the determination of the other damages, if

any, inflicted by the injunction bond. He decided to

wait until the appeal was resolved and any additional

damages determined. This delay underscores our earlier

remarks about Habitat’s loss of the time value of its

$10,000, and this is further evidence for the timeliness of
No. 09-2785 11

its request that we order the money refunded to it forthwith.

But we won’t do that because we think the bond was

proper. And we especially wish to emphasize our

rejection of the rule proposed by Habitat that nonprofit

entities should be exempt from having to post injunction

bonds, or a slightly narrower rule that would pick and

choose among them on the basis of likely contribution

to the overall public welfare. Preliminary injunctions,

because issued before a full adjudication, often turn out

to have been issued in error, and when that happens the

costs imposed on the party against whom the injunction ran are costs incurred by an innocent person (at

least innocent in the preliminary-injunction phase of the

litigation). The innocent may be a private firm or a government agency or a hapless individual (or even

another nonprofit), but that doesn’t make it or him or

her unworthy of the law’s protection. The costs of government are borne ultimately by taxpayers (or by

victims of inflation when government finds it infeasible

or politically undesirable to raise revenues by outright

taxation and instead reduces its expenses by paying

them in ever-cheaper money), and the greater the

expenses of the forest service the higher the tax burden

is likely to be. Obviously, dissolving this injunction

bond would not materially affect the budget of the

forest service. But the principle that nonprofit entities

should pay their way, reimbursing the losses incurred

by entities whose operations the nonprofits impede

by obtaining preliminary injunctions later dissolved, is

general. And remember that Habitat’s appeal does not
12 No. 09-2785

challenge the judge’s dissolution of the preliminary

injunction that he had issued.

Nonprofit entities such as Habitat have the benefit of

exemption from federal income tax, and often from

local property taxes, as well as the indirect tax subsidy

provided to nonprofits by the charitable deduction from

personal income tax. Need the courts grant them an

exemption from Rule 65(c) as well?

And some respect should be paid to the language of

the rule, especially when we consider that a rule of civil

procedure can be amended much more easily than a

statute. The language of Rule 65(c) provides no support

for a blanket exemption of nonprofit entities; and in

this regard notice also the express exemption of the

federal government from having to post a bond, which

suggests—what is anyway obvious—that the framers of

the rules know how to make exceptions to them. And

cause litigation by nonprofits is not a new phenomenon

of which the framers of the rule and of its amendments

would have been unaware.

In deference to the written word, Habitat suggested

that it would not have objected to the district court’s

imposing a nominal bond, say $200—but in response to

some pesky questioning from the bench indicated that

by nominal it meant any amount more than zero and

less than significant, so a bond of $1 would in its view

comply with the statute. Of course the bond would cost

much more to administer than $1; and what would

that expenditure procure? Absolutely nothing.
No. 09-2785 13

It is true that nominal damages are sometimes awarded,

see, e.g., Carey v. Piphus, 435 U.S. 247, 266-67 (1978) (due

process violation); Columbia Wire Co. v. Kokomo Steel &

Wire Co., 194 F. 108 (7th Cir. 1911) (patent infringement);

Boule v. Hutton, 328 F.3d 84, 94-95 (2d Cir. 2003) (defamation), and often when that happens—because they really

are nominal—the plaintiff doesn’t bother to collect

them. They may be little better than a fossil remnant of

an earlier legal system, when it was thought that to say

such things as that “from my earliest reading, I have

considered it laid up among the very elements of the

common law, that, wherever there is a wrong, there is

a remedy to redress it; and that every injury imports

damage in the nature of it; and, if no other damage

is established, the party injured is entitled to a verdict

for nominal damages,” Webb v. Portland Mfg. Co., 29 F. Cas.

506, 507 (C.C. Me. 1838) (Story, J.), was to say something,

rather than to talk in a circle.

It is true that awarding nominal damages is a way of

communicating an important result in many cases: that

the plaintiff proved a violation of his rights but was

unable to prove damages as a consequence of the violation. But in lieu of awarding nominal damages (and

puzzling laypersons by doing so), the court could just

say: the plaintiff proved a violation of his rights, but

the violation caused no monetizable injury. We read in a

modern case that “nominal damages can be a practical and

effective remedy, both in constitutional and in other

civil cases, where there is a genuine case or controversy

between the parties but the injury to the plaintiff

is not monetary and there is no basis for compensatory

damages.” Utah Animal Rights Coalition v. Salt Lake City
14 No. 09-2785

Corp., 371 F.3d 1248, 1264 (10th Cir. 2004) (concurring

opinion). But why is that more “practical and effective”

than just declaring that the plaintiff proved a violation

but could not establish damages?

The award of nominal damages is especially common

in breach of contract cases, see, e.g., Shepard v. State Automobile Mutual Ins. Co., 463 F.3d 742, 748-49 (7th Cir.

2006); Movitz v. First National Bank, 148 F.3d 760, 765 (7th

Cir. 1998); Hydrite Chemical Co. v. Calumet Lubricants Co.,

47 F.3d 887, 890-91 (7th Cir. 1995); E. Allan Farnsworth,

Contracts § 12.8, p. 757 (4th ed. 2004), where the award

signifies that there was indeed a breach. That determination may be significant in future dealings between

the parties. Again, the court could just say, as in a

declaratory-judgment proceeding, that the plaintiff had

proved a breach. But however that may be, ordering the

posting of a nominal injunction bond has less to recommend it than awarding nominal damages, because an

order to post a nominal bond has no communicative value.

We note finally that if and when Habitat is ordered to

pay damages based on the injunction bond, that award

will be separately appealable since there is no longer an

appealable judgment to which such an order would be

interlocutory. Orion Sales, Inc. v. Emerson Radio Corp., 148

F.3d 840, 842-43 (7th Cir. 1998); Henco, Inc. v. Brown, 904

F.2d 11, 13 (7th Cir. 1990); see Buddy Systems, Inc. v. ExerGenie, Inc., 545 F.2d 1164, 1169 (9th Cir. 1976).

AFFIRMED.

5-27-10