United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S MOTION FOR SANCTIONS AND DENYING MOTION TO WITHDRAW AS COUNSEL Re: Dkt. Nos. 35, 38
SUSAN ILLSTON, District Judge.
Before the Court is the motion of defendant, Kurt Orban Partners LLC ("Orban") to sanction plaintiff, Nemetona Trading Limited ("Nemetona"), for failing to comply with this Court's order enforcing the parties' settlement agreement. Dkt. Nos. 36, 38. For the reasons set forth below, the Court finds Nemetona in civil contempt and GRANTS in part and DENIES in part Orban's motion for sanctions, and DENIES plaintiff's counsel's motion to withdraw as counsel. Docket No. 35.
On October 20, 2014, the parties entered into a settlement agreement resolving the disputes underlying the instant litigation. See Declaration of Mark Angert in Support of Motion for Sanctions (Angert Decl.), Dkt. No. 38-2, Ex. A. As a condition precedent to dismissal of the parties' respective claims under the Settlement Agreement, Nemetona was to release to Orban certain pipe (the "TMK Pipe") in exchange for Orban's payment of a specified sum. See id. at 2, 7.
On February 6, 2015, Orban filed a motion to enforce the terms of the parties' Settlement Agreement. Mot. to Enforce Settlement Agreement, Dkt. No. 31. In its motion, Orban stated that it had fulfilled all conditions precedent to Nemetona's releasing the TMK Pipe and the dismissal of the parties' claims before the Court. Id. at 4. In its opposition to Orban's motion, Nemetona did not dispute that it had not performed its obligations under the Settlement Agreement, but argued that its performance was excused by alleged breaches of the Agreement by Orban. Opp. to Mot. to Enforce Settlement Agreement, Dkt. No. 33, at 2. By order dated March 13, 2015, the Court found Nemetona in breach of the Settlement Agreement, and provided Orban injunctive relief ordering Nemetona to release the TMK Pipe, and further ordering both parties to dismiss their respective claims with prejudice in accordance with the terms of the Settlement Agreement. Order Granting Mot. to Enforce Settlement Agreement ("Enforcement Order"), Dkt. No. 36, at 13.
On March 25, 2015, Orban filed a motion requesting sanctions against Nemetona, pursuant to the Court's contempt powers, for failure to comply with the Court's Enforcement Order. Mot. for Sanctions, Dkt. No. 38. Orban states that, as of the date of the motion's filing, Nemetona has failed to release the TMK Pipe despite the Court's Order. Id. at 2. Further, Orban states that Nemetona continues to hold payments made by Orban to secure release of the pipe under the Settlement Agreement. Id. Orban seeks the following relief: (1) a refund of $123, 440.03 for all monies paid for the release of the TMK Pipe; (2) a reimbursement of $13, 647.50 for attorneys' fees expended in bringing the prior motion to enforce the settlement agreement and the present motion for sanctions; and (3) dismissal of the underlying lawsuit with prejudice. Id. at 7. Orban further asks the Court to retain jurisdiction over the parties to enforce the settlement agreement. Id.
For the reasons that follow, the Court GRANTS in part and DENIES in part Orban's motion for sanctions.
"A district court has the power to adjudge in civil contempt any person who willfully disobeys a specific and definite order of the court." Gifford v. Heckler, 741 F.2d 263, 265 (9th Cir. 1984). Civil contempt consists of a party's disobedience to "a specific and definite court order by failure to take all reasonable steps within the party's power to comply." Reno Air Racing Ass'n, Inc. v. McCord, 452 F.3d 1126, 1130 (9th Cir. 2006). The disobeyed order that serves as the basis for a finding of civil contempt must be clear in its commands. See Balla v. Idaho State Bd. of Corr., 869 F.2d 461, 465 (9th Cir. 1989). To succeed on a motion for civil contempt, the moving party must "show by clear and convincing evidence that [the nonmoving party] violated the [court order] beyond substantial compliance, and that the violation was not based on a good faith and reasonable interpretation of the [order]." Wolfard Glassblowing Co. v. Vanbragt, 118 F.3d 1320, 1322 (9th Cir. 1997). "Substantial compliance'" with the court order is a defense to civil contempt, and is not vitiated by "a few technical violations'" where every reasonable effort has been made to comply." In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993) (quoting Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 689 F.2d 885, 891 (9th Cir. 1982)).
To find a prima facie case of contempt, a court must find that (1) the nonmoving party violated a specific and definite court order; (2) beyond substantial compliance; (3) not based upon a reasonable and good faith interpretation of the order; and (4) the foregoing has been shown by clear and convincing evidence. See id. Willfulness is not an element of civil contempt. Verizon California Inc. v. Online NIC, Inc., 647 F.Supp.2d 1110, 1115 (N.D. Cal. 2009). If the moving party establishes a prima facie case of contempt, the nonmoving party must show that he or she took every reasonable step to comply with the Court's order. Sekaquaptewa v. MacDonald, 544 F.2d 396, 404 (9th Cir. 1976). "District courts have broad equitable power to order appropriate relief in civil contempt proceedings.'" F.T.C. v. EDebitPay, LLC, 695 F.3d 938, 945 (9th Cir. 2012) (quoting S.E.C. v. Hickey, 322 F.3d 1123, 1128 (9th Cir. 2003)).
I. Motion for Sanctions
Orban has established a prima facie case of contempt. This Court's commands in its Enforcement Order were clear: Nemetona was to release the TMK Pipe in accordance with section two of the Settlement Agreement, and the parties were thereafter to dismiss their respective claims with prejudice. Enforcement Order at 13. Orban has produced an email from Nemetona's counsel which clearly and convincingly evidences Nemetona's intent to ignore the Enforcement Order until its appeal is adjudicated. Angert Decl. Ex. C, at 1. The email further demonstrates that Nemetona's non-compliance stems from its disagreement with the Court's Order, rather than a reasonable and good-faith interpretation of it. See id.
Having established a prima facie case of contempt, the Nemetona must demonstrate that it has substantially complied with the Court's Order. Sekaquaptewa, 544 F.2d at 404. Nemetona does not dispute that it has failed to comply with the Enforcement Order, however, it objects to the imposition of sanctions on three grounds. First, Nemetona states that Orban breached the Settlement Agreement. Opp. to Mot. for Sanctions, Dkt. No. 47, at 2. Second, Nemetona argues that Orban is not entitled to a refund until Orban returns the pipe that Nemetona previously released to Orban. Id. Finally, Nemetona expresses its belief that this Court erred in ...