United States Court of Appeals For the First Circuit

Nos. 12-1102, 12-1327

GLOBAL NAPS, INC.; PPUC PENNSYLVANIA PUBLIC UTILITY COMMISSION; AMERICAN REGISTRY FOR INTERNET NUMBERS, LTD.,

Plaintiffs, __________

QUALITY SPEAKS, LLC,

Plaintiff, Appellee,

v.

VERIZON NEW ENGLAND, INC., d/b/a Verizon Massachusetts,

Defendant, Appellee, __________

MA DEPT. OF TELECOMMUNICATIONS & ENERGY; PAUL B. VASINGTON, in his capacity as Commissioner; JAMES CONNELLY, in his capacity as Commissioner; W. ROBERT KEATING, in his capacity as Commissioner; DEIRDRE K. MANNING, in her capacity as Commissioner; EUGENE J. SULLIVAN, JR., in his capacity as Commissioner,

Defendants,

CARL F. JENKINS,

Receiver, Appellee,

v.

FRANK T. GANGI,

Counterclaim Defendant, Appellant. ___________________

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Rya W. Zobel, U.S. District Judge]

Before Lynch, Chief Judge, Stahl and Howard, Circuit Judges.

Andrew Good, Good & Cormier, Eric C. Osterberg and Osterberg LLC on brief for counterclaim defendant, appellant. John F. Drew, Andrea L. Martin and Burns & Levinson LLP on brief for plaintiff, appellee. Donald H.C. Libbey, Donald H.C. Libbey P.C., Steven J. Marullo and Law Offices of Steven J. Marullo on brief for receiver, appellee.

January 18, 2013 Per Curiam. Since 2002, Global NAPs, Inc. ("GNAPs") has

been engaged in litigation with Verizon New England, Inc. that

originally arose over access fees the two companies owed each other

for interconnecting their telephone networks. Verizon is the

former local telephone monopoly in Massachusetts, known as the

"incumbent local exchange carrier" (ILEC); GNAPs is a startup

competitor, known as a "competitive local exchange carrier" (CLEC).

Although Verizon prevailed in the underlying dispute roughly four

years ago, the district court is still overseeing a receivership

sale to satisfy the judgment against GNAPs. The company's former

principal, Frank Gangi, appeals to challenge an injunction the

court issued in connection with that sale. Finding no error, we

affirm.

Because these consolidated cases represent the seventh

and eighth appeals filed by Gangi or his former company GNAPs in

the course of this decade-long litigation,1 we recount only those

facts necessary to resolve the instant dispute.

In brief, GNAPs sued Verizon over the fee issue and

Verizon filed various counterclaims. In early 2009, following

serious discovery violations by GNAPs, including instances in which

1 See Global NAPs, Inc. v. Verizon New Eng. Inc. (GNAPS VI), No. 10-1962 (1st Cir. Nov. 8, 2010); Global NAPs, Inc. v. Verizon New Eng. Inc. (GNAPS V),

(1st Cir. 2010) (collecting prior cases), cert. denied,

(2011). A detailed discussion of the relevant facts may be found in our most recent substantive opinion. GNAPS V,

.

-3- the district court found that Gangi lied and withheld or destroyed

evidence, the court entered a $57.7 million default judgment in

favor of Verizon. The district court also ruled that Gangi and

various Gangi-controlled entities were alter egos of GNAPs and thus

liable for the judgment. A panel of this court affirmed in April

2010, Global NAPs, Inc. v. Verizon New Eng. Inc. (GNAPS V),

(1st Cir. 2010), cert. denied,

(2011),

and the following month the district court appointed a receiver to

marshal and sell the assets of GNAPs and its alter egos.

The receiver soon began the process, although his efforts

were hampered by Gangi, who, among other stratagems seemingly

designed to conceal or protect his assets, apparently had

transferred ownership of his $400,000 Porsche to a ten-year-old

child. In any event, the receiver eventually focused his efforts

on two Gangi-controlled companies other than GNAPs itself:

BroadVoice and Convergent. BroadVoice offers VoIP service, which

allows customers to place ordinary telephone calls over the

internet, typically at a substantial savings compared to

traditional phone service; Convergent designs network

infrastructure hardware and software that enables connections among

and between traditional telephone networks and VoIP telephone

systems.

In August 2011, as a precursor to holding an auction that

he hoped would lead to a final sale order from the district court,

-4- the receiver secured a stalking horse bid for BroadVoice and

Convergent. The stalking horse bidder's asset purchase agreement

(APA) included the following provision:

Restraining Order Regarding Frank Gangi and Employees of GNAPs. The Sale Order [ultimately entered by the district court] shall provide that Frank Gangi and any other employees or agents of the Receivership Estates shall be immediately and permanently enjoined from directly or indirectly interfering with, taking action to reduce the value of, or otherwise damaging the value of the Purchased Assets. The form and substance of such order shall be satisfactory to the Purchaser.

The receiver then filed a sale motion, which requested the court's

permission to hold an auction that used the stalking horse bid as

the minimum price for bidders and the stalking horse APA as the

acceptable terms for bidders.

In September 2011, the district court issued an order

granting the request, and the following month the receiver accepted

a bid from Quality Speaks, LLC. ("QS") over competing bids from

several companies, including one affiliated with Gangi. In

December, over the objections of Gangi and the Gangi-affiliated

bidder, the district court entered a sale order authorizing the

receiver and QS to complete the transaction. In February 2012, the

district court entered a supplemental order outlining the closing

terms and imposing an injunction against Gangi, as contemplated by

both the original stalking horse APA and the final QS APA. In

relevant part, the injunction provides:

-5- All Persons, including the Judgment Debtors and the Judgment Debtors' Agents, and Frank Gangi and any person operating under Frank Gangi's direction or control, and any employee or agent of the Receivership Estates, are prohibited and enjoined from taking any action to adversely affect or interfere with the ability of the Receiver to transfer the Purchased Assets to the Purchaser or with the operation of the Purchaser's business or its enjoyment of the Purchased Assets or from directly or indirectly interfering with, taking action to reduce the value of, or otherwise damage the value of the Purchased Assets, including any contact or solicitation of any sort with existing Broad[V]oice subscribers.

Gangi filed a timely notice of appeal from the sale order

and, soon after, from the supplemental order, although in his

briefs he expressly limits his challenge to the imposition of the

injunction in the supplemental order. We review the district

court's grant of the injunction for abuse of discretion, its

underlying legal conclusions de novo, and its underlying factual

findings for clear error. Contour Design, Inc. v. Chance Mold

Steel Co.,

(1st Cir. 2012).

We begin by addressing the receiver and QS' two-fold

argument that we should not even reach the merits of Gangi's

appeal. Their primary contention is that the completion of the

sale to QS, which occurred in May 2012 while this appeal was

pending, rendered the appeal equitably moot. QS first raised this

argument in a motion to dismiss filed before the parties submitted

their briefs. At the time, a panel of this court denied the motion

-6- "subject to reconsideration by the panel that decides the merits of

the appeals."

Having now reviewed the parties' briefs, we decline to

decide the mootness issue and instead proceed directly to the

merits. Were the receiver and QS' argument one of Article III

mootness, we would of course be obligated to resolve it. See Steel

Co. v. Citizens for a Better Env't,

(1998).

When confronted with non-constitutional challenges to jurisdiction,

however, "we are not so constrained." Aponte-Rosario v. Acevedo-

Vilá,

(1st Cir. 2010). As explained below, this case

readily can be resolved in favor of the receiver and QS, and when

a party "easily wins an affirmance on the substantive issue," we

may "decline to decide the jurisdictional issues raised by it."

Restoration Pres. Masonry, Inc. v. Grove Eur. Ltd.,

(1st Cir. 2003) (quoting Menorah Ins. Co. v. INX Reinsurance Corp.,

, 223 n.9 (1st Cir. 1995)) (internal quotation mark

omitted).

Given the ease with which we may dispose of the merits,

we also decline to take up the receiver and QS' secondary argument

that Gangi has waived the sole argument he makes on appeal.

Instead, we assume arguendo that he has not. See United States v.

Brown,

, 155 n.4 (1st Cir. 2002) (bypassing complex

waiver analysis in favor of a merits decision).

-7- Proceeding then to the merits, we review the "well-

established principles of equity" that govern issuance of a

permanent injunction. eBay Inc. v. MercExchange, L.L.C.,

(2006). A court may, in its discretion, issue such an

injunction if it concludes "(1) that [a party] has suffered" -- or,

as here, will suffer -- "an irreparable injury; (2) that remedies

available at law, such as monetary damages, are inadequate to

compensate for that injury; (3) that, considering the balance of

hardships between the [parties], a remedy in equity is warranted;

and (4) that the public interest would not be disserved by a

permanent injunction." Id.; see also Esso Standard Oil Co. v.

López–Freytes,

(1st Cir. 2008).

The current situation amply warranted issuance of the

injunction. The first two factors together require "a substantial

injury that is not accurately measurable or adequately compensable

by money damages." Ross-Simons of Warwick, Inc. v. Baccarat, Inc.,

(1st Cir. 2000) (quoting Ross-Simons of Warwick,

Inc. v. Baccarat, Inc.,

(1st Cir. 1996)) (internal

quotation marks omitted). The district court of course had no way

of knowing precisely how Gangi might interfere with the receiver's

ability to transfer BroadVoice and Convergent to QS or how Gangi

might damage the value of BroadVoice, Convergent, or their assets.

The court nonetheless had every reason to fear that he might

inflict injuries that were difficult to detect, let alone measure.

-8- Over the past decade, Gangi repeatedly has employed

nefarious tactics to avoid meeting his responsibilities to others.

See, e.g., GNAPS V,

(summarizing evidence that GNAPs

lied to the district court and destroyed evidence); see also S. New

Eng. Tel. Co. v. Global NAPs Inc.,

(2d Cir.

2010) (same). He has shown an apparent propensity for using

technology to cover his tracks. See, e.g., GNAPS V,

(describing evidence that employee under Gangi's control digitally

"shred[ded]" electronic accounting files). The district court

quite rightly feared more of the same. We previously have affirmed

a finding of substantial and inadequately compensable injury when

a telecommunications company faced technological attacks on its

ability to collect subscriber revenue. CoxCom, Inc. v. Chaffee,

(1st Cir. 2008). The injury contemplated here

was similar and thus easily satisfied the first two factors.

Indeed, although we do not affirm the district court's

injunction based on events that occurred after its issuance,

subsequent events show that the court's fears about the sort of

harm Gangi might inflict may well have been justified.

Specifically, after the court imposed the injunction, the receiver

had to seek an emergency temporary restraining order when a

BroadVoice employee's computer was involved in an electronic attack

on the BroadVoice system that allowed outsiders to make thousands

of fraudulent calls to Africa and Europe, allegedly costing the

-9- receivership estate $10,000 per day. Whether the employee

intentionally helped outsiders attack BroadVoice to hinder the sale

to QS or unwittingly served as a conduit for the attack was

unclear. Given Gangi's history, the incident is at least

suspicious.

Proceeding to the third factor, the balance of hardships

between Gangi and the receivership estate quite obviously tilts in

favor of the estate; Gangi can claim no legitimate interest in

interfering with the transfer of BroadVoice and Convergent to QS or

in damaging their value. Cf. R.I. Hosp. Trust Nat'l Bank v. Howard

Commc'ns Corp.,

(1st Cir. 1992) (interference

with transfer of assets to receiver constituted "contumacious

conduct" and warranted sanctions).

Gangi attempts to spin the third factor in his favor by

arguing that the injunction actually constitutes a prohibition on

competition that bars him from re-entering the VoIP business. He

maintains that under Massachusetts law, a court may not impose such

a restriction in conjunction with a forced judicial sale, and

further contends that such a restriction is impermissible as matter

of the Commonwealth's employment law. We need not address either

argument, however, because we are not persuaded that the injunction

prohibits competition at all. While the injunction does bar

"contact or solicitation of any sort," there is no cause for

reading those words as broadly as Gangi does.

-10- Here, the injunction prohibits contact and solicitation

that "interfer[es] with, . . . reduce[s] the value of, or otherwise

damage[s]" BroadVoice and Convergent. Stretching "interfering

with" or "damaging" to mean luring away customers with better

services or rates is unwarranted. Accordingly, under the best

reading, the injunction does not prohibit Gangi from starting a new

VoIP provider that simply competes with BroadVoice on the open

market. Rather, it prohibits him from misappropriating the

BroadVoice customer list or other property, recruiting BroadVoice

customers through deceit, or engaging in other wrongful conduct.

See, e.g., Register.com, Inc. v. Verio, Inc.,

(2d Cir. 2004) (affirming a permanent injunction that barred a

company from acquiring customers by deceiving them into thinking it

was related to another company with which they already did

business). If Gangi has concerns about the sorts of contact and

solicitation permissible under the injunction, he of course is free

to seek clarification from the district court based on specific

facts. Regal Knitwear Co. v. NLRB,

(1945).

Turning at last to the fourth and final factor, the

injunction plainly serves the public interest, which undoubtedly

includes seeing that losing parties respect the judgments entered

against them and that debtors pay their creditors. See, e.g., NML

Capital, Ltd. v. Republic of Argentina,

(2d Cir.

2012) (finding that in light of debtor's "disregard of its legal

-11- obligations" to creditors, public interest favored permanent

injunction requiring specific performance of those obligations).

Here, GNAPs, Gangi, and various Gangi alter egos together owe

Verizon more than $57 million. The district court determined that

accepting QS' bid and its associated terms and conditions, which

include imposing the injunction, constitutes a "sound business

judgment" and thus is the best way of ensuring that Gangi at last

begins to pay what he owes.

Gangi again attempts to turn in his favor a factor that

cuts against him by misconstruing the breadth of the injunction.

He maintains that the district court has enjoined everyone outside

of QS from contacting or soliciting BroadVoice customers.

Obviously such a restriction would violate the public interest, see

CVD, Inc. v. Raytheon Co.,

(1st Cir. 1985)

(noting "public interest in free competition"), not to mention the

provision of the Federal Rules of Civil Procedure governing

injunctions, Fed. R. Civ. P. 65(d)(2) (an injunction may only bind

the parties, their representatives, and "other persons who are in

active concert or participation with" them).

Gangi argues that his reading follows inescapably from

the plain language of the injunction, which by its terms applies to

"All Persons, including the Judgment Debtors and the Judgment

Debtors' Agents, and Frank Gangi and any person operating under

Frank Gangi's direction or control" (emphasis added).

-12- Gangi's interpretation holds up, however, only if one

does not read the rest of the order imposing the injunction. Just

a few paragraphs before the passage Gangi quotes, the district

court defined "Persons" as, inter alia, those "holding Claims

arising under or out of, in connection with, or in any way relating

to, the Judgment Debtors." Thus the court properly enjoined only

Gangi's creditors, Gangi, and those working in concert with him, as

contemplated by the Federal Rules. See Fed. R. Civ. P. 65.

In short, the injunction plainly was justified under

longstanding equity principles, and Gangi's various other arguments

against its imposition do not merit serious discussion. His

protest that the district court did not support the injunction with

adequate findings is without merit. The findings here, though

brief, satisfied "the common sense rule that a court should let the

parties and an appellate court know why it acts, and on what

factual basis." Ben David v. Travisono,

(1st

Cir. 1974). The district judge who issued the injunction has been

managing this case for ten years, and although the supplemental

order imposing the injunction did not go into great detail, other

closely related orders were more thorough. These orders included

the original order authorizing the auction and the sale order

approving QS' bid, both of which specifically contemplated imposing

the injunction. In such a situation, the brevity of the actual

injunction order itself is perfectly acceptable. See CoxCom, Inc.,

-13-

("The district court's earlier findings in support

of the . . . preliminary injunction, combined with [the

plaintiff's] success on the merits, supports the permanent

injunction.").

Gangi's argument that the injunction is vague fails as

well. Again, as noted above, if he is uncertain as to what is

permissible under the injunction, he is free to seek clarification

from the district court. Regal Knitwear Co.,

. "The

mere fact that . . . interpretation is necessary does not render

the injunction so vague and ambiguous that a party cannot know what

is expected of him." United States v. Greyhound Corp.,

(7th Cir. 1974); accord United States v. Brown,

(5th Cir. 2009).

Finally, we decline to consider Gangi's assertion that

the injunction "infringes on non-commercial and commercial speech

protected by the First Amendment." Although he invokes Sorrell v.

IMS Health Inc.,

(2011), for the proposition that

restrictions on commercial speech are constitutionally suspect, he

does not advance any substantive argument. The "settled appellate

rule" is "that issues adverted to in a perfunctory manner,

unaccompanied by some effort at developed argumentation, are deemed

waived." United States v. Zannino,

(1st Cir.),

cert. denied,

(1990); accord Igartúa v. United

-14- States,

(1st Cir. 2010), cert. denied,

(2012);

(2012).

Affirmed.

-15-