DOJ Says States Could Owe Bond In Paramount Merger Case
By Hailey Konnath ·
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Law360 (September 15, 2026, 10:59 PM EDT) -- The U.S. Department of Justice said Tuesday that a coalition of state attorneys general and the Writers Guild of America could indeed be required to put up a bond as they challenge Paramount's acquisition of Warner Bros. Discovery, but only if the order they secured truly constitutes an injunction.
The DOJ filed a statement of interest in a pair of cases over the planned $110 billion tie-up, emphasizing that it was only addressing "the correct interpretation of the bond requirement" and not whether a July order not to close the deal "is, in fact, a preliminary injunction, or whether defendants waived their right to request a bond in this matter."
Paramount Skydance Corp. contends the Democratic attorneys general and the Writers Guild must put up a $1.9 billion bond after suing "at the eleventh hour" and securing the no-close order. Paramount said the bond is needed to compensate it for ticking fees it is obligated to pay Warner Bros. if the deal doesn't close by the end of September. Meanwhile, the union and states argue that the order doesn't qualify as an injunction because Paramount voluntarily agreed to comply with it and to delay the merger until after a trial.
The DOJ said Tuesday that if the order is an injunction, then Section 16 of the Clayton Act does require "the execution of proper bond against damages for an injunction improvidently granted" before "a preliminary injunction may issue," among other conditions.
In particular, the DOJ said Congress "provided for complementary antitrust enforcement by the federal government and private parties — but made clear that it was not a system of equals."
Congress granted the DOJ "broad equitable authority" to prevent and restrain antitrust violations, stating that courts "shall proceed, as soon as may be, to the hearing and determination of the case," and may "make such temporary restraining order or prohibition as shall be deemed just in the premises," according to the filing. The Federal Trade Commission was similarly granted broad enforcement authority, it said.
"The primacy of the federal government is particularly acute with respect to federal merger policy," it said.
In particular, the Justice Department pointed to the Hart-Scott-Rodino Antitrust Improvements Act, which "vested the federal antitrust enforcers for the first time with the power to seek confidential information in transactions above certain monetary thresholds and to request additional information prior to closing to evaluate the competitive effects of a transaction."
States, however, have no statutory role under that law, the DOJ said. Rather, it expressly prohibits any pre-merger information sharing with the "public" unless the merging parties consent to that information being shared, per the filing. And courts have agreed that state attorneys general are part of the "public" for these purposes, it said.
"Congress adopted this carefully calibrated antitrust enforcement scheme making the DOJ and FTC the primary enforcers against the background of several important constitutional limitations on state authority … and bedrock federalism principles," the Justice Department said. "Through the bond requirement and other limitations on state and private party enforcement of the Sherman Act, courts have been able to avoid constitutional tensions that might otherwise be present."
The California Attorney General's Office, which is leading the enforcer challenge, and representatives for the WGA, Paramount and Warner Bros. did not immediately respond to requests for comment late Tuesday.
In their suit, the attorneys general allege that the deal will pair two of Hollywood's five major film distributors and two of the five owners of major basic cable channels, leading to higher prices and fewer films and TV shows being produced.
In a separate suit, the Writers Guild of America West and Writers Guild of America East, known collectively as the WGA, raise concerns of losing bargaining leverage in screenwriting contract negotiations, should two of the industry's largest buyers of those services combine and deny them a chance to pit one against the other.
Paramount requested the bond on Aug. 17, arguing that the challenge is the only remaining obstacle to the transaction closing and that the plaintiffs should have to post a bond to make sure that, if Paramount and WBD prevail, the defendants will be compensated for the delay. For each day that passes after Sept. 30 without the merger closing, it will have to pay roughly $7 million in "ticking fees," which will add to about $1.3 billion by the time the March 2027 trial concludes and the parties submit their final briefs, according to Paramount.
But the states and WGA say that Paramount chose to pay WBD shareholders that ticking fee as part of the consideration for their proposed deal, and later, it "proposed, negotiated and then presented to this court for signature" a stipulation to refrain from closing the merger until June 2027 or when the court rules on the merits, whichever is sooner.
"Paramount now wishes to offload its responsibility for the first agreement by materially modifying the second," they said last month. "But whatever regret Paramount may feel for its commitments to Warner Bros., to plaintiff states, to the WGA and to the court, it cannot show that the court acted 'improvidently' in signing the joint stipulation."
On Monday, Paramount filed answers to the complaints, arguing that the deal will be good for competition and benefit consumers "not only with more high-quality content in theaters and on cable, but also with a better combined streaming offering to create real competition against dominant tech giants like Netflix, Disney and Amazon."
Also on Tuesday, U.S. Magistrate Judge Thomas S. Hixson scheduled a settlement conference for the parties for Oct. 14.
The states are represented by their respective attorneys general.
California is further represented by Richard Parker, James Weingarten, Adam Di Vincenzo, Grant Bermann, Anastasia Pastan, Julia May, Natalie Nogueira, Allison Chesky, Kelly Dodge Garcia and Emme Tyler of Milbank LLP.
The WGA is represented by Kellie Lerner, Ellison A. Snider, J. Wyatt Fore and Ben Allen of Shinder Cantor Lerner LLP, Slade Bond, Charles J. LaDuca, Michael J. Flannery and Sarah Rooney of Cuneo Gilbert Flannery & LaDuca LLP, Matthew J. Platkin and Aaron Haier of Platkin LLP, and David C. Brownstein and David M. Goldstein of Farmer Brownstein Jaeger Goldstein Siegel & Shepard LLP.
Paramount is represented by Danielle R. Sassoon and Philip Hammersley of Clement & Murphy PLLC, Beth A. Wilkinson and Rakesh Kilaru of Wilkinson Stekloff LLP, Jeffrey L. Kessler, Jeanifer Parsigian, Matt DalSanto, Conor Reidy, Kevin B. Goldstein and Matt Huppert of Winston Taylor, and Maggy Sullivan, Chris Brown, Anna M. Rathbun and Hanna Nunez Tse of Latham & Watkins LLP.
Warner Bros. Discovery is represented by Daniel M. Petrocelli, Julia Schiller and Pete Herrick of O'Melveny & Myers LLP, Barry A. Nigro Jr. and Kathy O'Neill of Fried Frank Harris Shriver & Jacobson LLP, and Derek Ludwin, Henry Liu and Ross A. Demain of Covington & Burling LLP.
The cases are State of California et al. v. Paramount Skydance Corp. et al., case number 4:26-cv-07116, and Writers Guild of America West Inc. et al. v. Paramount Skydance Corp. et al., case number 4:26-cv-07212, in the U.S. District Court for the Northern District of California.
–Additional reporting by Aneeta Mathur-Ashton, Lauren Berg and Matthew Perlman. Editing by Michael Watanabe.
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