This case involves the efforts of the plaintiff cable television company to enforce what it alleges to be valid, "exclusive" franchises to operate cable television systems within certain areas in north Georgia. Plaintiff commenced an action in federal district court against a competing company, its principal owner, and three local governmental entities, seeking a declaratory judgment that plaintiff's franchises are indeed valid and "exclusive," injunctive relief, and actual and punitive damages. The defendants counterclaimed, asserting various contract, tort, antitrust, securities, and Sec. 1983 claims. Before us is plaintiff's interlocutory appeal from an order that, inter alia, granted partial summary judgment in favor of three of the five defendants, granted a motion filed by three of the defendants to dissolve a preliminary restraint, and denied plaintiff's motion for a preliminary injunction.

We hold that 28 U.S.C. Sec. 1292(a)(1) confers upon this court jurisdiction to review those portions of the order dissolving the preliminary restraint and denying the preliminary injunction. In addition, under the circumstances of this case, we choose to exercise our pendent jurisdiction and review the grant of partial summary judgment in favor of the three defendants. We vacate the grant of partial summary judgment and the dissolution of the preliminary restraint, affirm the denial of the preliminary injunction, and remand for further proceedings.

Battlefield Cablevision Inc. ("Battlefield") is a corporation organized under the laws of Georgia for the purpose of operating cable television (CATV) systems.1 In June, 1971, Walker County, Georgia, granted Battlefield the "exclusive" right to construct and operate a CATV system within the county for a period of 15 years, with a 10-year renewal option. In September, 1972, the town of Fort Oglethorpe and the city of Chickamauga, both Georgia municipalities, granted Battlefield similar "exclusive" rights. Battlefield operated CATV systems within the three areas until 1980. On June 3, 1980, Battlefield, and the "exclusive" franchises held by it, were acquired by Cable Holdings of Battlefield, Inc. ("Cable Holdings"). Walker County and Fort Oglethorpe enacted ordinances approving this change of ownership.

In 1983, William Cooke, who previously had been a part owner of Battlefield, formed Lookout Cable Services, Inc. ("Lookout"), a Georgia corporation organized for the purpose of operating CATV systems. In April of that year, Lookout submitted to Fort Oglethorpe a proposed ordinance granting Lookout the right to construct and operate a CATV system in the town, in competition with Cable Holdings' system. The ordinance was read and approved by the town's mayor and council members.2 Lookout also applied to Walker County for a CATV franchise. On June 8, 1983, the county granted the application. One week later, Lookout applied to Chickamauga for a CATV franchise. In mid-July, the city denied the application, believing that such a franchise would contravene the terms of Cable Holdings' "exclusive" franchise.

Meanwhile, on June 7, 1983, Cable Holdings filed an eleven-count lawsuit against Lookout, Cooke, and Fort Oglethorpe in the United States District Court for the Northern District of Georgia. Cable Holdings sought (1) a declaration of rights under its "exclusive" franchise with Fort Oglethorpe and federal antitrust laws, (2) an order requiring Fort Oglethorpe to abide by the terms of the franchise agreement, (3) an injunction preventing Fort Oglethorpe from granting a competing CATV franchise to Cooke or Lookout, (4) unspecified actual damages, and (5) $1,000,000 in punitive damages. Cable Holdings also moved for a preliminary injunction preventing Fort Oglethorpe from granting a CATV franchise to Cooke or Lookout. On June 22, before the district court could act on the motion, Cable Holdings, Cooke, Lookout, and Fort Oglethorpe stipulated that the town would not pass an ordinance allowing Lookout to construct or operate a CATV system within its boundaries until the court made a "final adjudication" of Cable Holdings' lawsuit. The parties also stipulated that Lookout and Cooke would not attempt to obtain a CATV franchise from the town until the "final adjudication" of the lawsuit. This preliminary restraint, entered as an order by the district court, mooted Cable Holdings' motion for a preliminary injunction.

On June 24, Cable Holdings moved for a temporary restraining order preventing Lookout and Cooke from attempting to obtain a CATV franchise from Chickamauga or Walker County. After a hearing, the district court denied the motion because Cable Holdings had not demonstrated a sufficient likelihood of success on the merits. Cable Holdings also amended its complaint, seeking a declaration of the validity of its "exclusive" franchises with Chickamauga and Walker County, and moved for a preliminary injunction preventing Lookout and Cooke from attempting to obtain a CATV franchise from Chickamauga or Walker County.

On July 20, Lookout, Cooke, and Fort Oglethorpe answered Cable Holdings' complaint. Lookout raised twenty-one defenses and five counterclaims based on tort law, antitrust law, and Sec. 1983. Cooke asserted twenty-three defenses and five counterclaims based on antitrust law, federal securities law, Sec. 1983, and contract law. Fort Oglethorpe's answer contained thirteen defenses and four counterclaims based on tort law, antitrust law, and contract law. On August 29, Cable Holdings moved to dismiss three of Lookout's counterclaims, four of Cooke's counterclaims, and three of Fort Oglethorpe's counterclaims.

At a hearing on September 6, Cable Holdings renewed its request for a temporary restraining order preventing Lookout and Cooke from attempting to obtain a CATV franchise from Walker County.3 The district court denied the request because Cable Holdings had failed to demonstrate the existence of an irreparable injury, and because the public interest would not be served by such an order. On September 27, Cable Holdings made yet a third request for a temporary restraining order preventing Lookout and Cooke from seeking a CATV franchise from Walker County. The district court again denied the motion, this time holding that Cable Holdings had failed to demonstrate either the existence of irreparable injury or a substantial likelihood of success on the merits.

On October 5, Lookout and Cooke filed a motion to dissolve the order, entered on the stipulation of the parties, preventing Fort Oglethorpe from issuing a CATV franchise to Lookout and Cooke. The next day, Fort Oglethorpe also moved to dissolve this preliminary restraint, and requested partial summary judgment on the issue of the validity of Cable Holdings' "exclusive" franchise. On October 11, Lookout and Cooke moved for summary judgment on all issues raised by Cable Holdings' complaint.

On November 3, 1983, Cable Holdings requested a ruling on its June 24 motion for a preliminary injunction preventing Lookout and Cooke from attempting to obtain a CATV franchise from Walker County. On November 14, Cable Holdings moved to disqualify a law firm that had been representing Lookout and Cooke. On December 8, Cable Holdings moved to dismiss several of Fort Oglethorpe's counterclaims, and to deposit funds into the registry of the district court.4

On December 9, Cable Holdings moved to stay an action that had been filed by Lookout in the Superior Court of Walker County, Georgia. The superior court action involved (1) whether Lookout had the right to obtain CATV franchises from Fort Oglethorpe, Chickamauga, and Walker County, and (2) whether the three governmental entities had acted ultra vires in granting "exclusive" franchises to Cable Holdings. The district court, relying on the Younger doctrine, declined to stay the superior court action.5

On February 16, 1984, the district court announced that it would treat Cable Holdings' motion to dismiss as a motion for summary judgment, and asked the parties to submit any materials they wanted the court to consider in ruling on the motion. On February 27, the court added Chickamauga and Walker County as party-defendants. The city and county filed answers on April 2 and April 5, respectively. The county's answer included a counterclaim based on Cable Holdings' alleged failure to pay required franchise fees.

On April 30, Lookout and Cooke notified the district court of a declaratory judgment that had been entered in the superior court action. See Lookout Cable Services, Inc. v. Cable Holdings of Battlefield, Inc., Civ. No. 28,866 (Sup.Ct. April 26, 1984). The superior court ruled, inter alia, that Chickamauga, Fort Oglethorpe, and Walker County lacked the authority to grant "exclusive" CATV franchises, stating:

Cities and Counties in Georgia have no power or authority to grant an exclusive franchise unless such power or authority is expressly granted by the General Assembly. See, e.g. Macon Ambulance Service, Inc. v. Snow Properties, Inc., 218 Ga. 261[, 127 S.E.2d 598] (1962). This Court cannot locate such an express grant of authority to Chickamauga, Fort Oglethorpe or [Walker] County as of the time of the grant of the franchises at issue. Therefore, the exclusivity features of the 1972 franchises granted to Battlefield by Chickamauga, Fort Oglehorpe [sic] and [Walker] County are ultra vires, void and unenforceable; and the Court so declares.

In a footnote accompanying this portion of the order, the superior court added:

As of April 9, 1981, the General Assembly authorized counties "... to grant in [their] sole discretion one or more franchise licenses for the operation of Cable-Television Systems within the territorial limits of that county...." O.C.G.A. Sec. 36-18-2. This legislation, patently: is not retroactive; does not apply to municipalities; does not require but only authorizes exclusive franchises; and, in any event, cannot revive by ratification or other theory a contract which was ultra vires and void ab initio, see, e.g. Hor[k]an v. City of Moultrie, 136 Ga. 561[, 71 S.E. 785] (1911).

On May 17, 1984, the district court issued the interlocutory order that is the subject of this appeal. In the order, the court (1) granted partial summary judgment in favor of Lookout, Cooke, and Fort Oglethorpe, holding, primarily on the basis of the superior court's declaratory judgment, that the "exclusive" CATV franchises granted to Cable Holdings by Fort Oglethorpe, Chickamauga, and Walker County were invalid, (2) granted summary judgment in favor of Cable Holdings on various abuse of process, tortious interference, Sec. 1983, and securities law counterclaims filed by the defendants,6 (3) denied Cable Holdings' motion for summary judgment on various antitrust and indemnification counterclaims, (4) granted the motion to dissolve the preliminary restraint preventing Fort Oglethorpe from issuing a CATV franchise to Lookout and Cooke, (5) disqualified one of Lookout's and Cooke's lawyers, (6) denied Cable Holdings' motion for a preliminary injunction preventing Lookout and Cooke from seeking to obtain a CATV franchise from Walker County, and (7) granted the motion to deposit funds into the registry of the court.

Cable Holdings filed a timely notice of appeal, and asked the district court to stay its order pending appeal. After a hearing, the district court denied the motion. Cable Holdings then filed an emergency motion in this court, again seeking a stay of the district court's order pending appeal. The motion was denied. See Cable Holdings of Battlefield, Inc. v. Cooke, No. 84-8445 (11th Cir. June 7, 1984) (unpublished order).

Initially, we must determine whether we have jurisdiction to hear this appeal, and, if so, the scope of our jurisdiction.7 The order appealed from is not a final order, since numerous claims and counterclaims remain unresolved. See 28 U.S.C. Sec. 1291;8 Fed.R.Civ.P. 54(b).9 The district court has not directed the entry of a final judgment pursuant to Rule 54(b), nor has the court certified the order for interlocutory appeal pursuant to 28 U.S.C. Sec. 1292(b).10 Cable Holdings argues, nevertheless, that this court has jurisdiction to review the district court's order under 28 U.S.C. Sec. 1292(a)(1), which provides in pertinent part:

[T]he courts of appeals shall have jurisdiction of appeals from:

(1) Interlocutory orders of the district courts of the United States ... granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court....

Id. According to Cable Holdings, Sec. 1292(a)(1) provides us with jurisdiction over this appeal because the district court's order both "refused" to grant a preliminary injunction and "dissolved" a preliminary restraint that constituted a form of injunction.

The defendants, on the other hand, contend that Carson v. American Brands, Inc., 450 U.S. 79, 101 S. Ct. 993, 67 L. Ed. 2d 59 (1981), supports their view that appellate jurisdiction is lacking. In Carson, the Supreme Court stated:

For an interlocutory order to be immediately appealable under Sec. 1292(a)(1), however, a litigant must show more than that the order has the practical effect of refusing an injunction. Because Sec. 1292(a)(1) was intended to carve out only a limited exception to the final-judgment rule, we have construed the statute narrowly to ensure that appeal as of right under Sec. 1292(a)(1) will be available only in circumstances where an appeal will further the statutory purpose of "permit[ting] litigants to effectually challenge interlocutory orders of serious, perhaps irreparable, consequence." Baltimore Contractors, Inc. v. Bodinger, [348 U.S. 176,] 181, 75 S.Ct. [249,] 252[, 99 L. Ed. 2d 233 (1955) ]. Unless a litigant can show that an interlocutory order of the district court might have a "serious, perhaps irreparable, consequence," and that the order can be "effectually challenged" only by immediate appeal, the general congressional policy against piecemeal review will preclude interlocutory appeal.

Id. at 84, 101 S.Ct. at 996-97. According to the defendants, Cable Holdings has failed to demonstrate the necessity for an immediate, interlocutory appeal as required by Carson.

We do not read Carson so broadly. By its own terms, Carson applies only to interlocutory orders that have "the practical effect of refusing an injunction." Id. at 84, 101 S.Ct. at 996 (emphasis added).11 Here, the district court explicitly denied Cable Holdings' motion for a preliminary injunction and dissolved the preliminary restraint. Hence, the interlocutory order in this case fits squarely within the plain language of Sec. 1292(a)(1), and Carson is inapposite. See Donovan v. Robbins, 752 F.2d 1170, 1174 (7th Cir.1984) ("Carson, we conclude, requires that irreparable harm be shown whenever a party wants to appeal ... an interlocutory order that while not explicitly the grant or denial of a preliminary injunction may have consequences ... similar to those of such an order." (emphasis added)); see also 16 C. Wright, A. Miller, E. Cooper & E. Gressman, Federal Practice and Procedure Sec. 3924, at 67 (1977 & Supp.1985) ("Application of [Sec. 1292(a)(1) ] is easy with respect to orders that directly grant, or refuse to grant, a preliminary injunction, so long as it is clear that the trial court has in fact completed action on the injunction question. More difficulty is encountered, however, in dealing with orders that have the effect of denying preliminary relief, but are not addressed directly to it....").

We thus hold that Sec. 1292(a)(1) provides us with jurisdiction to hear this appeal. The next question is: What is the scope of our jurisdiction? A closely analogous situation was presented in Gould v. Control Laser Corp., 650 F.2d 617 (5th Cir. Unit B 1981).12 There, the plaintiff filed a three-count complaint seeking, inter alia, preliminary and permanent injunctive relief. The district court granted summary judgment in favor of the defendants on two of the three counts, effectively though not explicitly denying the plaintiff's requested injunctive relief, and the plaintiff appealed. The Fifth Circuit dismissed the appeal in part and affirmed in part.13 In a footnote, the court discussed the scope of appellate jurisdiction under Sec. 1292(a)(1):

If we have jurisdiction of this appeal, another question naturally follows: What do we review--the summary judgments or the denial of injunctive relief? A litigant's right to appeal interlocutory injunctions only goes to the injunction itself, and he cannot force consideration of the merits of the underlying case except as necessary to review the injunction. Allen v. Mississippi Comm'n of Law Enforcement, 424 F.2d 285, 290 (5th Cir.1970). It is true that in reviewing interlocutory injunctions we may look to otherwise nonappealable aspects of the order, Mercury Motor Express, Inc. v. Brinke, 475 F.2d 1086, 1091 (5th Cir.1973); Abercrombie & Fitch Co. v. Hunting World, Inc., 461 F.2d 1040 (2d Cir.1972); Devex Corp. v. Houdaille Industries, Inc., 382 F.2d 17, 19-20 (7th Cir.1967), but we cannot examine the merits of the summary judgments at this time. Rule 54(b) is an adequate vehicle to obtain immediate review of partial summary judgments when necessary, and we should not encourage the practice of appending perfunctory requests for injunctive relief to complaints as a device to secure immediate appeal of all orders.

Id. at 621 n. 7.

Applying the Gould court's analysis to the instant case, we conclude that Sec. 1292(a)(1) confers upon us jurisdiction to review only those portions of the district court's order dissolving the preliminary restraint and denying the preliminary injunction.14 As the Gould court stated, however, "in reviewing interlocutory injunctions we may look to otherwise nonappealable aspects of the order." Id.; accord, Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1421 (9th Cir.1984) ("We have power ... to review all issues underlying an injunction."). Here, the grant of partial summary judgment in favor of the three defendants was the basis for both the dissolution of the preliminary restraint and the denial of the preliminary injunction. Consequently, we cannot properly exercise our jurisdiction under Sec. 1292(a)(1) without also reviewing the grant of partial summary judgment. We therefore choose to do so, in the exercise of our pendent jurisdiction. Cf. Sierra On-Line, Inc., 739 F.2d at 1421, 223 U.S.P.Q. (BNA) 227 (declining to exercise pendent jurisdiction because "interests of judicial economy" would not be served).15

Turning to the merits of the appeal, we consider first the grant of partial summary judgment in favor of Lookout, Cooke, and Fort Oglethorpe. The district court granted partial summary judgment because the Superior Court of Walker County, Georgia, in a parallel action filed by Lookout, had ruled that Cable Holdings' "exclusive" franchises were invalid as a matter of law. The district court, acting pursuant to the Full Faith and Credit Act, 28 U.S.C. Sec. 1738,16 gave res judicata effect to the superior court's judgment. We hold that this was error.

Under the Full Faith and Credit Act, a federal court is required to give res judicata effect to state court judgments only to the extent that the courts of the state in which the judgment was entered would do so. See Migra v. Warren City School District Board of Education, 465 U.S. 75, 104 S. Ct. 892, 79 L. Ed. 2d 56 (1984). In Georgia, the res judicata effect of judgments is defined by O.C.G.A. Sec. 9-12-40, which provides:

A judgment of a court of competent jurisdiction shall be conclusive between the same parties and their privies as to all matters put in issue, or which under the rules of law might have been put in issue in the cause wherein the judgment was rendered, until such judgment shall be reversed or set aside.

Id. An important judicial gloss on this statute, however, is that res judicata effect will be given only to final judgments. See Gresham Park Community Organization v. Howell, 652 F.2d 1227, 1241-42 (5th Cir. Unit B 1981);17 First National Bank of Dublin v. Colonial Fire Underwriters Insurance Co., 160 Ga. 166, 127 S.E. 455 (1925). Furthermore, "[d]icta in a recent Georgia Supreme Court case, Culwell v. Lomas & Nettleton Co., 242 Ga. 242, 248 S.E.2d 641 (1978), indicates that finality for res judicata purposes is measured by the same standard as finality for appealability purposes." Gresham Park, 652 F.2d at 1242 & n. 43.

The district court undoubtedly believed the superior court's judgment to be final. Subsequent to the issuance of the district court's interlocutory order, however, the Georgia Court of Appeals dismissed Cable Holdings' appeal from the superior court's judgment, holding that the judgment was not final. See Cable Holdings of Battlefield, Inc. v. Lookout Cable Services, Inc., 173 Ga.App. 355, 326 S.E.2d 552 (1985) ("Under the circumstances of this case, the judgment below was not final and this appeal is premature because various counterclaims and cross claims were still pending in the trial court...."). In light of this intervening decision, we conclude that the district court erroneously interpreted Georgia law when it gave res judicata effect to the superior court's judgment. We therefore vacate the grant of partial summary judgment in favor of Lookout, Cooke, and Fort Oglethorpe.18

IV. THE DISSOLUTION OF THE PRELIMINARY RESTRAINT

The district court dissolved the preliminary restraint preventing Lookout and Cooke from seeking to obtain a CATV franchise from Fort Oglethorpe, which had been entered on the stipulation of the parties involved, on the ground that the preliminary restraint was no longer justified because Cable Holdings' "exclusive" franchises were invalid as a matter of law. We have already vacated the portion of the district court's order holding invalid Cable Holdings' "exclusive" franchises, because that conclusion was premised on an erroneous application of the doctrine of res judicata. Therefore, we must also vacate the dissolution of the preliminary restraint.19

The final issue before us is the propriety of the district court's denial of Cable Holdings' June 24, 1983 motion for a preliminary injunction. The district court denied this motion for the same reason that it granted the partial summary judgment and dissolved the preliminary restraint, namely, the erroneous belief that the superior court's judgment had res judicata effect and that Cable Holdings' "exclusive" franchises thus were invalid as a matter of law. Our rejection of the district court's reasoning, however, does not mean that Cable Holdings was entitled to the preliminary injunction.

On the same day that Cable Holdings filed its motion for a preliminary injunction, the district court denied a request for a temporary restraining order, directed to the same parties and intended to serve the same purpose as the preliminary injunction, because Cable Holdings had failed to demonstrate a substantial likelihood of success on the merits. On September 27, 1983, the district court denied another request for a temporary restraining order, in part because Cable Holdings still had not demonstrated a substantial likelihood of success on the merits. Two weeks later, the court issued an order explaining its September 27 ruling in greater detail, and extensively discussing the merits of the case. All of this preceded the superior court's April, 1984 judgment.

As is the case with a temporary restraining order, a party seeking a preliminary injunction must show a substantial likelihood of success on the merits. See Harris v. Wilters, 596 F.2d 678, 680 (5th Cir.1979). It is apparent, therefore, that the district court ultimately would have denied Cable Holdings' June 24, 1983 motion for a preliminary injunction even absent the erroneous reliance on the superior court's judgment. Consequently, although the district court denied the motion for the wrong reason, we cannot say that the denial constituted an abuse of discretion. See id. ("Only in rare instances is the issuance of a mandatory preliminary injunction proper.... The denial of such a remedy will not be reversed on appeal except for an abuse of discretion."). Instead, we affirm the denial on the alternative ground that Cable Holdings had not demonstrated a substantial likelihood of success on the merits. See Dandridge v. Williams, 397 U.S. 471, 475 n. 6, 90 S. Ct. 1153, 1156 n. 6, 25 L. Ed. 2d 491 (1970) ("The prevailing party may, of course, assert in a reviewing court any ground in support of his judgment, whether or not that ground was relied upon or even considered by the trial court.").20

On the basis of the foregoing discussion, we hereby VACATE the grant of partial summary judgment in favor of Lookout, Cooke, and Fort Oglethorpe, and the dissolution of the preliminary restraint, but we AFFIRM the denial of Cable Holdings' motion for a preliminary injunction. The case is REMANDED for further proceedings consistent with this opinion.21