Opinion ID: 203589
Heading Depth: 2
Heading Rank: 1

Heading: Dissolving the Preliminary Injunction

Text: We review a district court's decision to dissolve a preliminary injunction for abuse of discretion. See Naser Jewelers, Inc. v. City of Concord, 513 F.3d 27, 32 (1st Cir. 2008) (Appellate review of the denial of a preliminary injunction is for abuse of discretion.); Knapp Shoes, Inc. v. Sylvania Shoe Mfg. Corp., 15 F.3d 1222, 1228 (1st Cir. 1994) (A decision to vacate an existing preliminary injunction is ... the effective equivalent of a denial of a preliminary injunction ....); see also Hoult v. Hoult, 373 F.3d 47, 53 (1st Cir.2004); Burlington N. & Santa Fe Ry. Co. v. Bhd. of Locomotive Eng'rs, 367 F.3d 675, 678 (7th Cir. 2004); Sprint Commc'ns Co. v. CAT Communc'ns Int'l, Inc., 335 F.3d 235, 241 (3d Cir.2003); 16 Wright, Miller & Cooper, Federal Practice and Procedure § 3924.2 (2d ed.1996). This standard is deferential, see Waterproofing Sys., Inc. v. Hydro-Stop, Inc., 440 F.3d 24, 28 (1st Cir.2006); Burlington, 367 F.3d at 678, and [t]he fact that the court that issued an injunction has been persuaded to modify or dissolve it ... is weighty evidence of sufficient cause, 16 Wright, Miller & Cooper, supra, § 3924.2. Yet deference has its limits: we review issues of law underlying such a decision de novo. See O'Brien v. Mass. Bay Transp. Auth., 162 F.3d 40, 42-44 (1st Cir.1998); Knapp, 15 F.3d at 1225-27; see also P.R. Hosp. Supply, Inc. v. Boston Scientific Corp., 426 F.3d 503, 505 (1st Cir.2005); Hoult, 373 F.3d at 53; Burlington, 367 F.3d at 678; Sprint, 335 F.3d at 242 n. 7. Findings of fact are reviewed for clear error. See P.R. Hosp. Supply, 426 F.3d at 505; Hoult, 373 F.3d at 53; Burlington, 367 F.3d at 678; Sprint, 335 F.3d at 242 n. 7. It is true that when we held in 2006 that the district court had erred in modifying the November 1, 2004 preliminary injunction in 2005, we also noted that the district court could modify the injunction under Fed.R.Civ.P. 60(b)(5) if defendant could show that `it is no longer equitable that the judgment should have prospective application,' and that there has been the kind of `significant change' in circumstances that the Rule requires. Belaval II, 465 F.3d at 38. A change in operative fact may serve as a basis for vacating a preliminary injunction. See Agostini v. Felton, 521 U.S. 203, 215, 117 S.Ct. 1997, 138 L.Ed.2d 391 (1997) ([I]t is appropriate to grant a Rule 60(b)(5) motion when the party seeking relief from an injunction ... can show a `significant change either in factual conditions or in law.' (quoting Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 384, 112 S.Ct. 748, 116 L.Ed.2d 867 (1992))); Sprint, 335 F.3d at 242 ([T]he standard that the district court must apply when considering a motion to dissolve [a preliminary] injunction is whether the movant has made a showing that changed circumstances warrant the discontinuation of the order. (quoting Twp. of Franklin Sewerage Auth. v. Middlesex County Utils. Auth., 787 F.2d 117, 121 (3d Cir.1986)) (internal quotation marks omitted)); 11A Wright, Miller & Kane, Federal Practice and Procedure § 2961 (2d ed.1995). The district court determined in its March 27, 2007 order that vacatur of the preliminary injunction was appropriate because defendant had come into full compliance with the Medicaid statute. [6] The district court held, and defendant now maintains, that setting up an office for making wraparound payments was sufficient for compliance under § 1396a(bb)(5) and that this was the only issue the court needed to consider. That is, defendant argues that by creating a PPS Office that is capable of issuing payments, she had completely fulfilled her obligations under the law, such that plaintiffs could have no further claims for relief. Not so. The district court's conclusion that defendant's actions were sufficient to bring her into present compliance with the wraparound payment statute was legal error. Federal law, 42 U.S.C. § 1396a(bb)(5), requires not only that the Commonwealth set up a system for making wraparound payments but that these payments be properly calculated and made. Defendant cannot be in compliance with the statute unless the system she has implemented employs an appropriate methodology for calculating wraparound payments. Plaintiffs have consistently alleged that the formula used by defendant to calculate the amounts due to them in wraparound payments violates the terms of § 1396a(bb). That defendant now maintains, as she had at numerous points while the injunction was still in place, that no payment is due under her formula means that a live and unresolved material controversy exists, one which has been part of the case from the start. The district court, however, did not rule on whether the formula adopted by the PPS Office was in compliance with the methodology provisions of § 1396a(bb), nor did it fully determine what constitutes compliance under these provisions. It made no conclusions as to the legality of the pure Medicaid modifier and no factual findings as to whether defendant had complied with its 2005 ruling rejecting defendant's phantom MCO payments argument. [7] The district court erred in refusing to consider and resolve these issues before vacating the preliminary injunction and dismissing on grounds of mootness.