Court Opinion

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Date Created: 2015-09-22 18:29:07.8292+00
Date Added: 2024-06-11T12:41:21.401173
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                                   File Name: 09a0436p.06

               UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT
                                  _________________

 MICHIGAN AMERICAN FEDERATION OF STATE X
                                                  -
                                                  -
 COUNTY AND MUNICIPAL EMPLOYEES
 COUNCIL 25, LOCAL 1640,                          -
                           Plaintiff-Appellee, -
                                                      No. 09-1032

                                                  ,
                                                   >
                                                  -
                                                  -
          v.
                                                  -
                                                  -
 MATRIX HUMAN SERVICES; VISTA NUEVAS
                                                  -
                      Defendants-Appellants. -
 HEAD START; and, MARCELLA WILSON,

                                                  -
                                                 N
                   Appeal from the United States District Court
                  for the Eastern District of Michigan at Detroit.
                 No. 08-12495—George C. Steeh, District Judge.
                              Submitted: November 17, 2009
                         Decided and Filed: December 23, 2009
                                                                                      *
       Before: MARTIN and ROGERS, Circuit Judges; REEVES, District Judge.

                                   _________________

                                        COUNSEL
ON BRIEF: Michael R. Blum, FOSTER, SWIFT, COLLINS & SMITH, P.C.,
Farmington Hills, Michigan, for Appellants. Robert D. Fetter, MILLER COHEN,
P.L.C., Detroit, Michigan, for Appellee.
                                   _________________

                                         OPINION
                                   _________________

        BOYCE F. MARTIN, JR., Circuit Judge. In this case, we confront the question
of whether a defendant who successfully obtains dissolution of a temporary restraining

        *
        The Honorable Danny C. Reeves, United States District Judge for the Eastern District of
Kentucky, sitting by designation.

                                              1
No. 09-1032        Michigan American Federation v.                                 Page 2
                   Matrix Human Services, et al.

order or preliminary injunction in a labor dispute case may recover its damages, fees and
costs under section seven of the Norris-LaGuardia Act, 29 U.S.C. § 107, if no bond was
ordered prior to dissolution of the injunction. We answer in the affirmative and therefore
REVERSE the decision of the district court.

                                            I.

       Matrix Human Services and its co-defendants operate a Head Start program in
Detroit, Michigan, which employs teachers and other staff. The Michigan American
Federation of State, County, and Municipal Employees Council 25, Local 1640 is the
union that represents those employees.

       In 2003, Matrix reduced the length of the Head Start program from twelve to ten
months due to monetary restraints and, thus, only paid its employees for ten months of
work. Each year thereafter, Matrix made a determination of whether it could afford to
provide its employees with year-round healthcare benefits or whether it needed to reduce
those benefits to coincide with the ten months of wages and work.

       Matrix informed the union on October 30, 2007 that it would only provide ten
months of healthcare benefits for the 2008 calendar year. Matrix told the union that
employee healthcare benefits would terminate as of June 6, 2008 and pick back up on
August 18th. Matrix also provided the union with instructions on how its members
could purchase medical coverage through the federal Consolidated Omnibus Budget
Reconciliation Act (COBRA) program to bridge the roughly two-month gap.

       In accordance with the parties’ collective bargaining agreement, the union filed
a grievance regarding the healthcare issue on November 9, 2007. On April 3, 2008, the
American Arbitration Association notified the parties that it would hold an arbitration
hearing on October 29, 2008—more than two months after Matrix planned to resume
paying for employee healthcare benefits.

       On June 5, 2008, just one day before coverage was set to lapse, the union filed
a complaint in the Circuit Court of Wayne County, Michigan seeking to enjoin Matrix
No. 09-1032            Michigan American Federation v.                                            Page 3
                       Matrix Human Services, et al.

from discontinuing the benefits.1 The union also moved for an ex parte temporary
restraining order prohibiting Matrix from proceeding with its plan to cease paying for
coverage the following day, June 6th. Apparently without Matrix’s ever being aware of
the complaint and motion, the Michigan state court granted the ex parte temporary
restraining order. Notably, at least for purposes of this appeal, the state court did not
require that the union post an injunction bond.

         The state court’s temporary restraining order kicked off a three-week frenzy of
litigation. Upon receipt of the complaint and the ex parte temporary restraining order,
Matrix promptly removed the case to the United States District Court for the Eastern
District of Michigan on June 11th, asserting that the union’s claim actually arose under
the federal labor laws. On June 13th, Matrix moved to dissolve the temporary
restraining order. The district court heard argument on Matrix’s motion on June 26th
and, on July 1st, dissolved the temporary restraining order due to the union’s failure to
show irreparable harm. During this period—from June 11th, when Matrix removed to
federal court, to July 1st, when the district court dissolved the temporary restraining
order—Matrix did not move the federal court to impose an injunction bond as a
condition of the union’s keeping the injunction in place.

         Things slowed down after the court dissolved the temporary restraining order on
July 1st. On September 24th, Matrix moved to dismiss the complaint on the grounds that
the claims were then moot. The union agreed and, on October 30th, the district court
dismissed the case. However, the court denied Matrix’s request for fees and costs as a
“prevailing party” under Federal Rule of Civil Procedure 54(d)(1).

         Thus, on November 12th, Matrix moved to recover approximately $28,000 in
fees and costs incurred in seeking dissolution of the temporary restraining order. The

         1
           The record is silent as to what happened between April 3rd, when the union found out that it
would not have a hearing on its grievance until October, and June 5th, when the union filed its complaint
and obtained the ex parte temporary restraining order, and is also silent about why the union waited until
one day before the benefits were set to lapse to file its complaint. Matrix suggests that it was a purely
strategic decision by the union to blind-side the state court by running in arguing about losing health
benefits the next day.
No. 09-1032        Michigan American Federation v.                                 Page 4
                   Matrix Human Services, et al.

basis for Matrix’s motion was section seven of the Norris-LaGuardia Act. The union
responded that Matrix may not recover fees and costs because a defendant who
successfully dissolves an injunction may recover under section seven only against an
injunction bond and, in this case, no bond was ever ordered by either the state or federal
court or posted by the union. Matrix put forth two arguments in response. First, it
contended that the only reason that there was no bond was because the union got a state
court to issue an ex parte temporary restraining order behind Matrix’s back instead of
bringing its claim in federal court and providing Matrix with sufficient notice to appear
at the temporary restraining order hearing and to request a bond. It would not be fair,
Matrix argued, to preclude it from recovering its fees on the basis of the union’s ill-
conceived litigation strategy. Second, Matrix argued that it may recover its fees in any
event because section seven of the Act does not necessarily condition recovery of fees
on a bond’s actually being in place.

       The district court agreed with the union, Michigan American Federation of State
County and Municipal Employees, Council 25 v. Matrix Human Services, No 08-cv-
12495, 2008 U.S. Dist. LEXIS 107493 (E.D. Mich. Dec. 12, 2008); Matrix timely
appealed.

                                           II.

       We typically review injunctive actions for abuse of discretion. Armco, Inc. v.
United Steel Workers, Local 169, 280 F.3d 669, 678 (6th Cir. 2002). However, whether
section seven of the Act allows for recovery of attorney’s fees in the absence of a bond
is a question of law, which we review de novo. Id.

                                           III.

       Matrix makes essentially the same arguments on appeal as it made in the district
court. The union primarily contends that the statute clearly conditions recovery of fees
on the presence of a bond and that Matrix effectively waived its right to recover under
No. 09-1032             Michigan American Federation v.                                                 Page 5
                        Matrix Human Services, et al.

section seven when it did not move the district court to impose a bond prior to ruling on
the motion to dissolve the temporary restraining order.2

         Whether a defendant who successfully dissolves an interlocutory injunction in
a labor case can recover under section seven of the Act in the complete absence of a
bond is a question of first impression. Other courts have gotten close to the question but
have reached differing conclusions, and we have previously discussed in dicta the
recovery of fees in under section seven.

         In 1945, the Court of Appeals for the Eighth Circuit held that an injunction
defendant could not recover fees and costs under section seven independent from or in
excess of the bond previously imposed by the trial court. Int’l Ladies’ Garment Workers
Union v. Donnelly Garment Co., 147 F.2d 246, 252-53 (8th Cir. 1945). There, the
defendant had incurred many thousands of dollars in fees and costs in seeking to dissolve
an injunction, but the district court had only ordered that the plaintiff post a bond of
$2,000. In ruling that the defendant could not recover more than the total of the bond,
the court stated:

         We may not suppose that Congress, in imposing upon the court the duty
         of determining the amount of security adequate to the protection of a
         defendant, and just to a plaintiff, intended that the court’s determination
         should be wholly ineffectual and without meaning as the measure of
         plaintiff's liability upon his undertaking. We think the statutory
         requirement of a bond, upon certain conditions, in an amount to be fixed
         by the court is conclusive evidence of the legislative intention that the
         bond should be the evidence and the measure of plaintiff’s liability and
         defendant’s protection.

         2
            The union also argues that the Norris-LaGuardia Act does not apply to this case, or at least did
not apply until the case was removed to federal court, because the temporary restraining order was issued
by a state court and the Act only applies to a federal court’s ability to issue an injunction in a labor dispute.
Matrix responds that the Act, as part of the labor relations laws, preempts state law and that section seven’s
bond requirement was therefore a precondition on the state court’s ability to issue the temporary restraining
order. Whether section seven’s bond requirement extends to the state courts is a difficult question of
federalism and federal labor policy. We need not answer this question because, as we discuss below, the
Act’s bond requirement is part of the jurisdictional precondition for injunctions in federal courts arising
out of labor disputes. See 29 U.S.C. §§ 101, 107 (setting jurisdictional requirements) & § 113 (defining
“labor dispute”). As soon as the case was removed to federal court and its jurisdiction invoked, the Act
and its bond requirement applied. Thus, because Matrix may recover under the Norris-LaGuardia Act
without regard to the fact that the injunction originated in state court, we need not address the preemption
question.
No. 09-1032         Michigan American Federation v.                                  Page 6
                    Matrix Human Services, et al.

Id. at 252. The court further reasoned that:

        Necessarily, at the beginning of an action, the amount of security
        adequate for a defendant’s protection is a matter of estimate. It may be
        fixed in a sum which the event proves inadequate or excessive. If the
        security required by the court becomes inadequate while the restraint
        continues and the litigation proceeds, a defendant has ready to hand the
        means for his protection by a motion for an increase in the amount of the
        security.

Id. at 252-53.

        Taking the exact opposite view, in 1972 the Court of Appeals for the Third
Circuit held that “the liability of the plaintiff for loss, expense or damage under § 7 was
not intended by Congress to be restricted solely to the amount of whatever bond the
court may have required” and, thus, “in any case involving a labor dispute the liability
of the plaintiff, though not of any surety, for loss, expense or damage, including
attorneys’ fees, under § 7 of the Norris-LaGuardia Act shall be fixed by the court
without regard to any limitation in an injunction bond.” U.S. Steel Corp. v. United Mine
Workers, 456 F.2d 483, 493 (3d Cir. 1972). That court read section seven to create two
different liabilities, one being the bond secured by a surety and the other being an
unsecured liability on the plaintiff to pay the delta, if any, between the bond and the
defendant’s damages, fees and costs. Id. at 492-93.

        Our closest cases are Aluminum Workers International Union, Local No. 215 v.
Consolidated Aluminum Corp., 696 F.2d 437 (6th Cir. 1982) and International Union,
United Automobile Workers v. LaSalle Machine Tool, Inc., 696 F.2d 452 (6th Cir. 1982).
In Consolidated Aluminum, the district court had entered an injunction and imposed a
$1,000 injunction bond. The defendant brought an interlocutory appeal, arguing both
that the injunction exceeded the district court’s authority under Norris-LaGuardia and
that the district court had used an incorrect analysis in setting the injunction bond. We
agreed that the injunction was beyond the district court’s jurisdiction, and also found that
the district court had failed to pay heed to the considerations mandated by section seven
No. 09-1032        Michigan American Federation v.                                  Page 7
                   Matrix Human Services, et al.

in setting the bond. We therefore vacated the injunction and “remanded for rehearing
on the issue of [the defendant’s] damages.” Id. at 446.

        In LaSalle Machine Tool, one question on appeal was whether a preliminary
injunction that had been imposed “pending arbitration” was rendered moot when, in the
intervening period, the arbitrator had rendered a decision and thus the injunction expired
by its own terms. We held that the appeal of the injunction was not moot because there
was still a question as to whether the injunction defendant could recover against the
bond. Thus, we had to determine whether the injunction was improperly granted as an
antecedent to determining whether the defendant could recover against the bond. 696
F.2d at 458-59. We further stated:

        After this opinion had been prepared, but before its release, the union
        filed a statement with this court to the effect that no bond was ever
        actually posted in this case. This does not alter our decision on
        mootness. The issuance of an injunction in a case involving or growing
        out of a labor dispute must be conditioned on an undertaking by the
        person seeking the injunction to make the person enjoined whole for any
        loss, expense or damage caused by the improvident or erroneous issuance
        of the injunction. This requirement is made jurisdictional by § 1 of the
        Norris-LaGuardia Act, 29 U.S.C. § 101 . . . . Having sought and
        obtained a preliminary injunction the union is obligated to pay the costs
        and damages incurred or suffered by the party found to have been
        wrongfully enjoined. The district court ordered “an undertaking” in the
        form of a bond. The fact that the bond which was ordered by the district
        court was not filed is immaterial.

Id. at 459.

        Thus, there is no authority directly on point for the question whether a defendant
may recover when no bond was ordered, and the circuits are split on the extent of an
injunction defendant’s ability to recover independent from or in excess of an injunction
bond. Our closest cases are united on the proposition that failures in the bond area—an
improper analysis by the district court or a plaintiff’s failure to post a bond—do not
preclude a defendant from recovering under section seven of the Act. But neither case
concerns a district having never ordered a bond, and neither goes so far as to hold that
No. 09-1032         Michigan American Federation v.                                  Page 8
                    Matrix Human Services, et al.

recovery may be independent of section seven’s bond requirement. Therefore, we
believe it helpful to start the analysis afresh and then return to the case law to determine
whether Matrix or the union has the better part of the matter.

        We begin with basic principles. Matrix seeks to recover the attorney’s fees that
it incurred in trying to rid itself of the union’s temporary restraining order. It is
fundamental in our civil system that each party to a lawsuit bears its own costs unless
a statute or agreement provides otherwise. See, e.g., Alyeska Pipeline Serv. Co. v.
Wilderness Soc’y, 421 U.S. 240, 256 (1975) (detailing the history of the ability to
recover fees in the American system and stating “absent statute or enforceable contract,
litigants pay their own attorneys’ fees”); Wilson v. Int’l Bhd. of Teamsters, 83 F.3d 747,
753 (6th Cir. 1996) (“Under the American Rule, unless a contract or a statute expressly
authorizes an award of attorneys’ fees, the prevailing litigant is ordinarily not entitled
to collect a reasonable attorneys’ fee from the loser.”) (citing Alyeska); McAuley v. Gen.
Motors Corp., 578 N.W.2d 282, 285 & n.7 (Mich. 1998) (stating that Michigan “follows
what is commonly termed the ‘American rule’ with regard to payment of attorney fees,”
which is that a party may not recover its fees absent express authorization by statute or
contract). Thus, though it may seem unfair, we may not award fees to a party unless we
are authorized to do so by statute or agreement.

        In this case, Matrix points to section seven of the Act as the font of its
entitlement to fee shifting. We must therefore examine that statute to determine whether
it allows Matrix to recover in these circumstances. The statute provides, in relevant part:

        No temporary restraining order or temporary injunction shall be issued
        except on condition that complainant shall first file an undertaking with
        adequate security in an amount to be fixed by the court sufficient to
        recompense those enjoined for any loss, expense, or damage caused by
        the improvident or erroneous issuance of such order or injunction,
        including all reasonable costs (together with a reasonable attorney’s fee)
        and expense of defense against the order or against the granting of any
        injunctive relief sought in the same proceeding and subsequently denied
        by the court.
No. 09-1032        Michigan American Federation v.                                   Page 9
                   Matrix Human Services, et al.

       The undertaking mentioned in this section shall be understood to signify
       an agreement entered into by the complainant and the surety upon which
       a decree may be rendered in the same suit or proceeding against said
       complainant and surety, upon a hearing to assess damages of which
       hearing complainant and surety shall have reasonable notice, the said
       complainant and surety submitting themselves to the jurisdiction of the
       court for that purpose. But nothing in this section contained shall deprive
       any party having a claim or cause of action under or upon such
       undertaking from electing to pursue his ordinary remedy by suit at law
       or in equity.

29 U.S.C. § 107.

       Although drafted in the 1930s using the legalese that was the vernacular of that
era, we find this statute to be unambiguous. “An undertaking with adequate security”
is just a five-word way of saying “bond,” and, indeed, it is commonly accepted that
section seven discusses bonds. See, e.g., Int’l Ladies’ Garment Workers’ Union, 147
F.2d at 252 (citing Webster’s dictionary for the proposition that an “undertaking” is
ordinarily understood to be a bond). We are further convinced that the plain language
of section seven discusses only bonds.        We therefore reject the Third Circuit’s
interpretation in United States Steel that section seven provides for two liabilities, one
against the bond secured by a surety and another unsecured against the plaintiff.

       In addition to the unambiguous text of the statute, other factors confirm our
interpretation of section seven. First, this reading of the statute is implicit in our
discussion of section seven in Consolidated Aluminum. There, we found that the district
court had not considered the appropriate factors in setting the injunction bond and
therefore remanded “for rehearing on the issue of [the defendant’s] damages.” 696 F.2d
at 446. Had we read section seven as allowing recovery from the plaintiff independent
of a bond, we would have simply remanded to assess damages; we need not have
discussed the proper bond analysis. Instead, because we interpreted section seven to tie
recovery of fees and costs to the amount of the bond, we remanded the case to the
district court to redo the analysis of what would have been an appropriate bond under
the considerations set forth in section seven and to allow recovery against whatever that
No. 09-1032             Michigan American Federation v.                                             Page 10
                        Matrix Human Services, et al.

amount turned out to be.3 Our reading of section seven is also reinforced by the
Supreme Court’s statement that generally “[a] party injured by the issuance of an
injunction later determined to be erroneous has no action for damages in the absence of
a bond.” W.R. Grace & Co. v. Local Union 759, Int’l Union of United Rubber Workers,
461 U.S. 757, 770 n.14 (1983).4 We therefore hold that section seven of the Norris-
LaGuardia Act allows recovery only in relation to a bond set according to the conditions
in the act. If it turns out that the bond is less than the total of the defendant’s damages,
the defendant will only be made partially whole; if the bond exceeds the defendant’s
damages, the defendant will be made whole.

         At first blush, finding that the Act allows recovery only in relation to a bond
would seem to be the end of the matter because, in fact, there was no bond in this case.
But, Matrix claims, this conclusion does not dispose of the matter. According to Matrix,
the fact that a bond was never actually ordered is irrelevant because a bond should have
been ordered. Thus, Matrix, argues, we must now remand this matter back to the district
court to order a bond that Matrix may then collect against. In support of this theory,
Matrix cites our statements in LaSalle Machine Tool, Inc., 696 F.2d at 459, where we
stated that the Act’s bond “requirement is made jurisdictional by §1 of the
Norris-LaGuardia Act” and that “[h]aving sought and obtained a preliminary injunction
the union is obligated to pay the costs and damages incurred or suffered by the party
found to have been wrongfully enjoined” and our decision in Consolidated Aluminum,

         3
            We recognize that this creates a somewhat difficult exercise on remand akin to putting the horse
back in the barn. Injunctions are fluid situations. Much transpires between the time when a district court
sets an injunction bond and when an appellate court has the opportunity to rule upon the propriety of a
district court’s analysis in setting the bond. Thus, on remand the court is privy to a lot more information
than it had at the time it improperly determined the amount of the bond, yet it must place itself back in time
to determine what a proper bond amount would have been at the time of the bond hearing. However, this
approach is the only possible way to subject a lower court’s injunction bond analysis to appellate review,
see, e.g., United Healthcare Ins. Co. v. AdvancePCS, 316 F.3d 737, 745 (8th Cir. 2002) (amount of bond
reviewed for abuse of discretion), without resulting in a potential windfall to defendants of recovering
more than they would have had the court used the correct analysis in the first place. The case books are
full of such legal fictions and the system still survives.
         4
           W.R. Grace did not concern section seven of the Norris-LaGuardia Act. However, the Third
Circuit cited W.R. Grace in its opinion in Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797,
804 n.9 (3d Cir. 1989) to question the continued validity of its holding in United States Steel.
No. 09-1032         Michigan American Federation v.                                 Page 11
                    Matrix Human Services, et al.
696 F.2d at 446, where we remanded to the district court to re-conduct the bond analysis
so that the defendant could recover in relation to a properly set bond.

        We agree with Matrix that our prior statements indicate an ability to recover
under section seven that is not necessarily tied to the amount of a bond that was ordered
or posted prior to dissolution of the injunction. We also agree that, in light of these prior
statements, it is not a large logical step to conclude that the district court could, even
after dissolution of the injunction, determine what would have been a proper bond
amount for purposes of Matrix’s recompense. Thus, the only question is whether the
statute and the policies underlying the requirement of an injunction bond allow for this
scenario.

        Beginning with the statute, although we do not interpret section seven to give rise
to two distinct liabilities, see supra, we read the text as being silent on the question of
whether a defendant may recover under section seven even though no bond was ordered
prior to dissolution of the injunction. The statute merely requires that a bond be imposed
as a precondition to the ability to enter a preliminary injunction and that a defendant is
entitled to recover its damages and reasonable fees and costs against that bond in the
event of an improvidently granted injunction. 29 U.S.C. § 107. It says nothing about
how to proceed if, for whatever reason, a bond is not ordered or posted to begin with.
In sum, though the statute does not explicitly state that Matrix may recover here, it
makes clear that Matrix should have the ability to recover. Moreover, the statute
certainly does not forbid the setting of a bond even after the injunction is dissolved and,
indeed, our decision in Consolidated Aluminum envisions this very scenario. Thus,
although the text of the statute does not answer the question squarely, it cuts in favor of
Matrix’s position insofar as it indicates that Matrix should be able to recover against a
bond here and our prior cases indicate the same.

        In the face of the statutory silence, we look to the underlying policies to
determine whether Matrix may recover in this case. Of particular relevance are the
policies underlying the existence of injunction bonds and whether allowing recovery
No. 09-1032         Michigan American Federation v.                                Page 12
                    Matrix Human Services, et al.

here would further or hinder those policies. Injunction bonds serve two purposes. As
Professor Rendleman aptly explains it,

         An injunction bond has dual purposes. The judge grants plaintiff a
         preliminary injunction on an incomplete record before the litigation
         process has functioned; this increases the possibility of error that harms
         the defendant. On the plaintiff’s side, posting a bond deters a plaintiff’s
         rash application for an interlocutory injunction; paying a bond premium
         plus the chance of liability on it force a plaintiff to think carefully
         beforehand. On the defendant’s side, if a plaintiff’s incorrect
         interlocutory order harms the defendant, a bond provides a fund to
         compensate it.

DOUG RENDLEMAN, COMPLEX LITIGATION: INJUNCTIONS, STRUCTURAL REMEDIES, AND
CONTEMPT 360-61 (2010); see also, e.g., Instant Air Freight, 882 F.2d at 805 n.9 (“The
bond can thus be seen as a contract in which the court and [the applicant] agree to the
bond amount as the price of a wrongful injunction.”) (citations and internal quotations
omitted).

         On the one side, injunction bonds act as a rough estimate of what the defendant’s
damages may be and protect injunction defendants against improvidently issued
injunctions by requiring plaintiffs to compensate defendants for improvidently issued
injunctions and by ensuring that the plaintiffs are able to do so. The district court found
that the temporary restraining order was improvidently granted, so allowing Matrix to
recover here, at least in part, would further the compensatory purpose of injunction
bonds.

         On the other side, injunction bonds also serve as a gut-check for the plaintiff,
making sure that the plaintiff has a financial risk in the outcome of the litigation if it
wants to seek the extraordinary remedy of a preliminary injunction. It would do violence
to the gut-check goal of injunction bonds to allow a plaintiff to avoid the burden of a
bond based on nothing more than the happenstance of the trial judge not ordering a bond.
For reasons of consistency and predictability, we believe it the best course to make clear
that, whenever a plaintiff obtains interlocutory injunctive relief in a labor case and the
injunction is subsequently dissolved under the federal labor laws, the plaintiff will have
No. 09-1032            Michigan American Federation v.                                          Page 13
                       Matrix Human Services, et al.

to post a bond.5 This is so even if, for whatever reason, the bond is not ordered or posted
until after dissolution of the injunction. Although in these cases the plaintiff does not
get actual notice of the extent of its potential liability, it is still aware of both the
potential for liability and the considerations set forth in section seven used to determine
the amount of liability.

         In sum, we find that both of the dual policies underlying the imposition of
injunction bonds counsel in favor of remanding to allow the court to determine an
appropriate bond amount that Matrix may then recover from the union. Although we
recognize that this reasoning places us at odds with some of our sister circuits, we find
this to be the only conclusion that harmonizes our prior cases with the statute.

         Finally, we reject the union’s argument that Matrix waived its right to recover
by not affirmatively seeking a bond prior to dissolution of the injunction. Although we
certainly agree that this would have been the more efficient course, we do not agree that
Matrix’s right to recover evaporated because it did not seek imposition of a bond. The
Act makes clear that a bond is an absolute precondition of a federal court’s jurisdiction
over labor injunctions. 29 U.S.C. §§ 101, 107; LaSalle Machine Tool, 696 F.2d at 459.
As soon as the district court’s jurisdiction was invoked on removal, so too was section
seven’s bond requirement. Because the bond requirement arose as soon as the case was
removed, Matrix had no affirmative duty to seek a bond. Thus, although we do not fault
the district court for not sua sponte ordering a bond prior to dissolution of the temporary
restraining order, the court nevertheless erred in finding that it was powerless to do so
afterward.

         5
         We wish to make clear that this statement does not apply to that small category of cases in which
we have allowed interlocutory injunctive relief without posting a bond.
No. 09-1032        Michigan American Federation v.                              Page 14
                   Matrix Human Services, et al.

                                          IV.

       For the reasons set forth above, we REVERSE the decision of the district court
denying Matrix’s section seven motion for recovery of fees and costs, and REMAND
for the district court to determine what would have been an appropriate bond at the time
of removal, which amount shall be the maximum of Matrix’s recovery from the union.