National Spiritual Assembly of the Bahá'ís of the United States v. National Spiritual Assembly of the Bahá'ís of the United States, Inc.

In the

United States Court of Appeals

For the Seventh Circuit

No. 08-2306

T HE N ATIONAL S PIRITUAL A SSEMBLY OF THE

B AHÁ’ÍS OF THE U NITED S TATES OF A MERICA

U NDER THE H EREDITARY G UARDIANSHIP, INC.,

Plaintiff,

v.

N ATIONAL S PIRITUAL A SSEMBLY OF THE B AHÁ’ÍS

OF THE U NITED S TATES OF A MERICA , INC .,

Defendant-Appellant,

v.

F RANKLIN D. S CHLATTER, JOEL B. M ARANGELLA,

P ROVISIONAL N ATIONAL B AHÁ’Í C OUNCIL OF THE

U NITED S TATES, et al.,

Respondents-Appellees.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 1:64-cv-01878—Amy J. St. Eve, Judge.

____________

A RGUED F EBRUARY 20, 2009—D ECIDED N OVEMBER 23, 2010

____________

2 No. 08-2306

Before B AUER, M ANION, and SYKES, Circuit Judges.

S YKES, Circuit Judge. This appeal is from a civil-contempt

proceeding alleging violations of an injunction entered

more than four decades ago. The case is complicated not

just by the passage of time but also because it arises in the

context of a religious schism, and the individuals and

groups against whom contempt sanctions are sought were

not parties to the original litigation. The underlying suit

was a trademark and property dispute between the

American Bahá’í church—formally known as the National

Spiritual Assembly of the Bahá’ís of the United States of

America, Inc. (“National Spiritual Assembly”)—and a

dissident group incorporated in 1964 under the like-

sounding name of the National Spiritual Assembly of the

Bahá’ís of the United States of America Under the Heredi-

tary Guardianship, Inc. (“Hereditary Guardianship”). In

1966 a district-court judge enjoined the Hereditary Guard-

ianship from using the trademarked names and symbols of

the National Spiritual Assembly. Within months the

Hereditary Guardianship dissolved, and the dissenting

faithful thereafter disagreed among themselves over issues

of spiritual leadership and doctrine. This disagreement

eventually produced a second schism. Over time the

former followers of the Hereditary Guardianship estab-

lished several new religious groups and a publishing firm,

all operating in varying ways in the name of the Bahá’í

faith.

Forty years later, the National Spiritual Assembly

returned to the district court and asked for contempt

sanctions against several of these groups and their princi-

pals for allegedly violating the terms of the 1966 injunction.

No. 08-2306 3

This required proof that the alleged contemnors—all

nonparties to the original lawsuit—were in privity with the

Hereditary Guardianship and therefore bound by the

injunction. In a comprehensive opinion, the district court

rejected the privity claim and on this basis denied the

contempt motion. In reaching this conclusion, the judge

expressly declined to follow the approach to the privity

question adopted by the First Circuit in G. & C. Merriam Co.

v. Webster Dictionary Co., 639 F.2d 29 (1st Cir. 1980). The

judge said that Merriam was in “silent tension” with Judge

Learned Hand’s venerable opinion in Alemite Manufactur-

ing Corp. v. Staff, 42 F.2d 832 (2d Cir. 1930).

We think these two important opinions can be reconciled.

The common-law rule expounded in Alemite—essentially

codified in Rule 65(d) of the Federal Rules of Civil Proce-

dure—holds that an injunction is binding on the parties to

the proceeding; their officers, agents, and employees

(acting in that capacity); and nonparties with notice who

are either “legally identified” with a party or who aid and

abet a party’s violation of the injunction. The “legal

identity” component of this rule often operates to bind a

party’s successors and assigns, and sometimes other

nonparties as well, but only when doing so is consistent

with due process. As such, the “legal identity” justification

for binding nonparties is limited to those who have notice

of the injunction and are so closely identified in interest

with the enjoined party that it is reasonable to conclude

that their rights and interests were adjudicated in the

original proceeding. In Merriam the First Circuit held that

a former employee of an enjoined corporation had such a

key role in the company and in the underlying litigation

4 No. 08-2306

that he could be “legally identified” with the enjoined

corporation and therefore held in contempt for using a

newly formed company to circumvent the injunction. 639

F.2d at 39-40. This is a specific application of the “legal

identity” category of nonparty contempt identified in

Alemite; we do not read Merriam as inconsistent with Judge

Hand’s formulation.

Although the district court should have applied Merriam,

the judge’s findings are thorough enough to permit us to

resolve the privity question without a remand. The respon-

dent nonparty religious groups and their principals are not

sufficiently identified in interest with the Hereditary

Guardianship to permit a conclusion that they had their

day in court back in 1966. We affirm.

I. Background

A. The Bahá’í Schism and the 1966 Injunction

The Bahá’í faith originated in Persia in 1844 with the

teachings of the Báb, who foretold that God would soon

reveal a prophet to the world. In 1863 Bahá’u’lláh, one of

the Báb’s followers, announced that he was this prophet

and began several decades of spiritual teaching and

writing. With Bahá’u’lláh’s death in 1892, spiritual leader-

ship passed to his eldest son, Abdu’l-Bahá. Abdu’l-Bahá

died in 1921, and his eldest grandson, Shoghi Effendi, then

led the faith as its Guardian. Effendi died unexpectedly in

1957 without having clearly designated a successor.

Spiritual authority passed temporarily to the Hands of

the Cause of God, a group of 27 Effendi-appointed spiritual

leaders who stewarded the religion until 1963. At that

No. 08-2306 5

point the Hands transferred supreme authority of

the Bahá’í faith to the newly established Universal House

of Justice in Haifa, Israel.

The National Spiritual Assembly, whose predecessor

organization was formed in the United States in 1909,

recognizes and accepts this described line of succession.

Charles Mason Remey did not. Remey, one of Effendi’s

appointed Hands, proclaimed in 1960 that Effendi’s

spiritual authority had passed to him as the Second

Guardian of the Faith. The other Hands rejected this

claim, believing that Effendi was the first and last Guard-

ian of the Faith, and they expelled Remey from their ranks.

The National Spiritual Assembly likewise views Remey as

a schismatic figure.

In 1962 Remey instructed his followers to establish the

National Spiritual Assembly of the Bahá’ís of the United

States Under the Hereditary Guardianship. The

Hereditary Guardianship was incorporated in New Mexico

in 1964, and it served as the coordinating body for

an affiliation of individuals, groups, and local spiritual

assemblies in the United States dedicated to Remey’s

Guardianship. The Hereditary Guardianship itself

was comprised of nine “Members” who essentially acted as

a board of directors and, at least initially, followed Remey’s

declarations and directives.1

In the year of its incorporation, the Hereditary Guardian-

ship commenced a civil action against the National Spiri-

1

For the sake of simplicity, we refer to them as “board mem-

bers.”

6 No. 08-2306

tual Assembly in federal court in the Northern District of

Illinois. The Hereditary Guardianship claimed entitlement

to the majestic Bahá’í House of Worship in Wilmette,

Illinois, pictured here:

and also sued for all other properties and funds in the

National Spiritual Assembly’s possession. The National

Spiritual Assembly in turn asserted counterclaims against

the Hereditary Guardianship for trademark infringement

and unfair competition, among other causes of action.

No. 08-2306 7

In a decision issued on June 28, 1966, Judge Richard

Austin sided with the National Spiritual Assembly.

Among other factual findings, Judge Austin found that

Shoghi Effendi was the only Guardian of the Baha’i

Faith, and there is no Guardian at the present time

and has been none since 1957. The procedures

followed by the Hands of the Cause and the succession

of authority from Shoghi Effendi to The Universal

House of Justice were in full accordance with

the controlling documents and sacred writings and

teachings of the Faith.

Nat’l Spiritual Assembly v. Nat’l Spiritual Assembly, No.

64 C 1878, 1966 WL 7641, at *2 (N.D. Ill. 1966). The judge

also found that the National Spiritual Assembly “is

the highest authority of the Baha’i Faith in the

continental United States, and has been recognized and

authorized as such by The Universal House of Justice and

its predecessor supreme Baha’i Faith authorities.” Id. at *3.

On the basis of these and other findings of fact, Judge

Austin concluded that “[t]here is only one Baha’i Faith,”

and that the National Spiritual Assembly is the “highest

authority for the Faith in [the] continental United States

and is entitled to exclusive use of the marks and symbols

of the Faith.” Id. at *11. The judge went on to hold that

the National Spiritual Assembly owned valid trademarks

in several specific Bahá’í symbols, names, and

phrases—including a trademark in the word “Bahá’í”—all

of which the Hereditary Guardianship had infringed.

Judge Austin then entered the following injunction:

8 No. 08-2306

IT IS ORDERED, ADJUDGED AND DECREED that the

counter-defendant, [the Hereditary Guardianship], its

officers, agents, servants, employees, attorneys, and all

persons in active concert or participation with them,

including [affiliated local groups], and individuals, or

any of them, be and they are hereby enjoined from

using in their activities the designations “National

Spiritual Assembly of the Baha’is of the United States

of America Under the Hereditary Guardianship, Inc.,”

“Baha’i News Bureau,” “Baha’i Round Robin,”

“Baha’i,” trademark representations of the Baha’i

House of Worship, the Arabic design “The Greatest

Name,” and any other designation which by colorable

imitation or otherwise is likely to be mistaken for or

confused with [the National Spiritual Assembly’s]

name or marks as indicated above or is likely to create

the erroneous impression that [the Hereditary Guard-

ianship’s] religious activities, publications or doctrines

originate with [the National Spiritual Assembly], and

from otherwise competing unfairly with [the National

Spiritual Assembly] or infringing [the National Spiri-

tual Assembly’s] rights.

Id. at *12.

Remey acquiesced in the injunction, and he forbade the

Hereditary Guardianship and its followers from pursuing

reconsideration or appeal “regardless of consequences.” A

few months later, in December 1966, the Hereditary

Guardianship ceased all activities and dissolved. Remey

eventually reconstituted his church and changed his title to

the “First Guardian of the Abha Faith.”

No. 08-2306 9

B. The Current Dispute

In 2006 the National Spiritual Assembly returned to court

seeking contempt sanctions against five religious organiza-

tions and individuals—all remnants of the Hereditary

Guardianship but nonparties to the original litigation—for

allegedly violating the 1966 injunction. The National

Spiritual Assembly contended that the alleged contem-

nors were in privity with the Hereditary Guardianship and

therefore bound by the injunction. The named respondents

can be classified into two groups. The first includes Joel

Marangella, Frank Schlatter, and the Provisional National

Bahá’í Council of the United States, Inc. The second

includes the Second International Bahá’í Council d/b/a

Bahá’ís Under the Provisions of the Covenant (“Second

International Council”) and Bahá’í Publishers Under the

Provisions of the Covenant (“Bahá’í Publishers”). We offer

a brief description of each.

1. The First Group of Alleged Nonparty Contemnors

Joel Marangella was the president of a council

that functioned essentially as a liaison between Remey

and the Hereditary Guardianship. While not a

board member of the Hereditary Guardianship, Marangella

was actively involved in the organization and

participated in some aspects of the underlying litigation,

basically as a trusted assistant to Remey. A few years

after the Hereditary Guardianship dissolved, Marangella

split with Remey and forced a second schism. He pro-

claimed himself to be Remey’s appointed Third

Guardian of the Bahá’í Faith. Remey disputed Marangella’s

10 No. 08-2306

claim; he had already announced that upon his

death, Donald Harvey was to succeed him as the next

Guardian. Remey and M arangella thus parted

ways. Starting in 1970, Marangella organized a

succession of religious assemblies dedicated to his Guard-

ianship. The first, the National Bureau of the Orthodox

Bahá’í Faith (“National Bureau”), was established in

New York as an unincorporated body. In 1972 Marangella

moved the National Bureau to New Mexico and later

changed its name to the Mother Bahá’í Council, which

was incorporated under the laws of New Mexico in 1978.

In 2000 the Mother Bahá’í Council changed its name to

the Provisional National Bahá’í Council of the United

States, Inc. (“Provisional National Council”).

Franklin Schlatter was a founding board member and

officer of the Hereditary Guardianship. He appears to

have been involved with the Hereditary Guardianship’s

activities to a considerable degree and was part of the

board that voted to sue the National Spiritual Assembly.

W h en the Rem ey-M arangella schism occu rred ,

Schlatter followed Marangella and served as secretary of

the Provisional National Council (and its predecessors)

from 1978 through 2001. In 1997 Marangella appointed

Schlatter as a Hand of the Cause of God to assist and act

on his behalf.

The Provisional National Council governs all believers

within the United States who recognize Marangella as

the Third Guardian, much like Hereditary Guardianship

governed those who recognized Remey as the

Second Guardian. Marangella personally appoints all

Provisional National Council board members and

No. 08-2306 11

reviews and approves all decisions relating to the organiza-

tion’s activities and affairs.

2. The Second Group of Alleged Nonparty Contemnors

The Second International Council and Bahá’í Publishers

were created by Dr. Leland Jensen, who signed the incor-

poration papers for the Hereditary Guardianship

and served as a board member from April 1963 to May

1964. In 1964, however, Jensen lost reelection to the board,

and he thereafter disassociated himself from any formal

governance role in the Hereditary Guardianship. Accord-

ingly, he was not a board member when the Hereditary

Guardianship sued the National Spiritual Assembly,

nor did he have any role in the litigation. Dr. Jensen

continued to follow Remey’s Guardianship, however,

and when he and his wife moved to Missoula, Montana,

sometime later that year, they established a small commu-

nity of believers there.

In 1969 Dr. Jensen formed the Bahá’í Publishers as

a publishing trust and incorporated it in Montana in

1987. Bahá’í Publishers publishes books and pamphlets on

Dr. Jensen’s interpretation of the beliefs of the Bahá’í

faith “under the Provisions of the Covenant.” Dr. Jensen

also helped establish the Second International Council

in 1991, which was incorporated two years later. The

Second International Council handles administrative

responsibilities for believers in the Bahá’í faith “under

the Provisions of the Covenant” and describes its “main

responsibility” as “giv[ing] guidance to anybody

who requests it.” Jensen died in 1996.

12 No. 08-2306

C. The District Court Rejects the Privity Claim

Judge Austin had long since died by the time the Na-

tional Spiritual Assembly returned to court in 2006, so the

contempt motion was assigned to Judge Amy St. Eve. She

authorized limited discovery and then held an extensive

evidentiary hearing on the question of whether the alleged

nonparty contemnors were in privity with the Hereditary

Guardianship and thus bound by the injunction. She

concluded they were not. In reaching this decision, Judge

St. Eve declined to follow the First Circuit’s decision in

Merriam, 639 F.2d 29, on which the National Spiritual

Assembly had substantially relied in support of its privity

claim. But she made detailed findings about the relation-

ship of each of the alleged contemnors to the Hereditary

Guardianship and/or Remey, and based on those findings,

concluded that they could not be bound. This appeal

followed.

II. Analysis

The National Spiritual Assembly argues that the district

court committed legal error by rejecting the First Circuit’s

holding in Merriam that a key officer or employee of an

enjoined but later dissolved corporation can be “legally

identified” with the corporation and therefore personally

bound by the injunction. As a more general matter, the

National Spiritual Assembly challenges the district court’s

conclusion that the five nonparty alleged contemnors were

not in privity with the Hereditary Guardianship and

therefore are not bound by the 1966 injunction. We agree

with the first of these arguments. Merriam is not, as the

No. 08-2306 13

district court thought, an overbroad statement of the

principles on which a nonparty may be considered bound

by an injunction. But it does not follow that the district

court’s no-privity conclusion was in error. The facts here

do not support a finding of privity even when Merriam is

considered.

A. The Effect of Presbyterian Church

Before proceeding, a few words about the substance of

the underlying injunction and its relationship to the civil-

procedural questions at issue in this case. The injunction

was entered in 1966, before the Supreme Court’s decision

in Presbyterian Church in the United States v. Mary Elizabeth

Blue Hull Memorial Presbyterian Church, 393 U.S. 440 (1969),

but after Kedroff v. St. Nicholas Cathedral of Russian Orthodox

Church in North America, 344 U.S. 94 (1952). Kedroff

constitutionalized the general common-law principle

announced in Watson v. Jones, 80 U.S. (13 Wall.) 679 (1871),

that civil authorities may not make judgments about

religious controversies when deciding church property

disputes. Kedroff, 344 U.S. at 116 (The church-autonomy

principle recognized in Watson “must now be said to have

federal constitutional protection as a part of the free

exercise of religion against state interference.”).

Building on Kedroff, the Supreme Court held in Presbyte-

rian Church that “the First Amendment severely circum-

scribes the role that civil courts may play in resolving

church property disputes.” 393 U.S. at 449. The Court

acknowledged that “[c]ivil courts do not inhibit [the] free

14 No. 08-2306

exercise of religion merely by opening their doors to

disputes involving church property.” Id. But “First Amend-

ment values are plainly jeopardized when church property

litigation is made to turn on the resolution by civil courts

of controversies over religious doctrine and practice.” Id.

The “[First] Amendment therefore commands civil courts

to decide church property disputes without resolving

underlying controversies over religious doctrine.” Id.; see

also Serbian E. Orthodox Diocese for the U.S. of Am. & Can. v.

Milivojevich, 426 U.S. 696, 713 (1976) (noting “the general

rule that religious controversies are not the proper subject

of civil court inquiry”). Civil courts may decide church

property claims based on “neutral principles of law,

developed for use in all property disputes,” but have no

authority to resolve religious disputes.2 Presbyterian

Church, 393 U.S. at 449.

Considered in light of these First Amendment limitations

on the court’s authority, certain aspects of the 1966 injunc-

tion are troubling. The decree declares that “there is only

one Baha’i Faith,” that Shoghi Effendi was its last Guardian

and none has come since, and the National Spiritual

Assembly was its representative and “highest authority” in

the United States and was “entitled to exclusive use of the

2

For different views on the so-called “hands-off” doctrine in

disputes over religious property, see Richard W. Garnett, A

Hands-Off Approach to Religious Doctrine: What Are We Talking

About?, 84 N OTRE D AME L. R EV . 837 (2009); Kent Greenawalt,

Hands Off! Civil Court Involvement in Conflicts Over Religious

Property, 98 C OLUM . L. R EV . 1843 (1998); Samuel J. Levine,

Rethinking the Supreme Court’s Hands-Off Approach to Questions of

Religious Practice and Belief, 25 F ORDHAM U RB . L.J. 85 (1997).

No. 08-2306 15

marks and symbols of the Faith,” including the exclusive

use of the word “Bahá’í.” Declarations of this sort push the

boundaries of the court’s authority under Kedroff and

Presbyterian Church. In church property disputes (trade-

mark suits obviously qualify), the First Amendment limits

the sphere in which civil courts may operate. When a

district judge takes sides in a religious schism, purports to

decide matters of spiritual succession, and excludes

dissenters from using the name, symbols, and marks of the

faith (as distinct from the name and marks of a church), the

First Amendment line appears to have been crossed.

But a contempt proceeding is ordinarily not the proper

place for collateral attacks on the underlying injunction. See

Pasadena City Bd. of Educ. v. Spangler, 427 U.S. 424, 439-40

(1976); Walker v. City of Birmingham, 388 U.S. 307 (1967);

Reich v. Sea Sprite Boat Co., 50 F.3d 413, 415 (7th Cir. 1995);

see also 11A C HARLES A LAN W RIGHT ET AL., F EDERAL P RAC-

TICE AND P ROCEDURE § 2960, at 391 (2d ed. 1995) (“[T]he

general principle appears to be that obedience to a decree

is required, even though the issuing court has based its

decision on an incorrect view of the law, unless there was

no opportunity for effective review of the decree.”). We do

not have the substance of the 44-year-old decree before us.

Still, resolving the procedural questions at issue in this case

requires some sensitivity to the constitutional concerns

inherent in church property claims. Presbyterian Church is

in the background and circumscribes the inquiry. Applying

neutral privity principles is permissible; pronouncing on

matters of religious succession is not.

16 No. 08-2306

B. Standard of Review

We review the district court’s denial of contempt sanc-

tions for abuse of discretion. Autotech Techs. LP v. Integral

Research & Dev. Corp., 499 F.3d 737, 751 (7th Cir. 2007);

Stotler & Co. v. Able, 870 F.2d 1158 (7th Cir. 1989). A court

abuses its discretion when it bases its decision on a legal

error or on clearly erroneous factual findings. United States

v. Silva, 140 F.3d 1098, 1101 n.4 (7th Cir. 1998); In re L & S

Indus., Inc., 989 F.2d 929, 932 (7th Cir. 1993) (similar

standard of review for district court’s determination of

existence of privity); see Cooter & Gell v. Hartmarx Corp.,

496 U.S. 384, 401 (1990) (noting abuse-of-discretion stan-

dard of review is equivalent to clear-error standard of

review when reviewing a district court’s factual findings).

Factual findings are not clearly erroneous unless “ ’the

reviewing court on the entire evidence is left with the

definite and firm conviction that a mistake has been

committed.’ ” Anderson v. City of Bessemer City, 470 U.S. 564,

573 (1985) (quoting United States v. U.S. Gypsum Co., 333

U.S. 364, 394-95 (1948)).

As the proponent of the contempt motion, the National

Spiritual Assembly had the following burden:

To prevail on a request for a contempt finding, the

moving party must establish by clear and convincing

evidence that (1) a court order sets forth an unambigu-

ous command; (2) the alleged contemnor violated that

command; (3) the violation was significant, meaning

the alleged contemnor did not substantially comply

with the order; and (4) the alleged contemnor failed to

make a reasonable and diligent effort to comply.

No. 08-2306 17

S.E.C. v. Hyatt, 621 F.3d 687, 692 (7th Cir. 2010). In addition,

the National Spiritual Assembly had the burden of estab-

lishing that the alleged contemnors, nonparties to the 1966

injunction, are nonetheless bound by it. See Levin v. Tiber

Holding Corp., 277 F.3d 243, 250-51 (2d Cir. 2002) (applying

the clear-and-convincing standard to the question of a

nonparty’s liability for contempt).

C. Injunctions and Nonparties

This appeal raises the question of the proper reach of an

injunction—more specifically, the extent to which an

injunction binds persons who are not parties to the action

in which it is entered. “ ’It is a principle of general applica-

tion in Anglo-American jurisprudence that one is not

bound by a judgment in personam in a litigation in which he

is not designated as a party or to which he has not been

made a party by service of process.’ ” Taylor v. Sturgell, 553

U.S. 880, 884 (2008) (quoting Hansberry v. Lee, 311 U.S. 32,

40 (1940)); see also Richards v. Jefferson County, 517 U.S. 793,

798 (1996); Martin v. Wilks, 490 U.S. 755, 761 (1989); Zenith

Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 110

(1969). This principle is based on the “ ’deep-rooted historic

tradition that everyone should have his own day in

court.’ ” Taylor, 553 U.S. at 892-93 (quoting Richards, 517

U.S. at 798). It limits the extent to which a judgment is

given preclusive effect in a subsequent suit, see id. at 891-

95, and (more pertinent here) the extent to which an

injunction may be enforced against nonparties, see Zenith

Radio, 395 U.S. at 110-11; see also Lake Shore Asset Mgmt. Ltd.

v. Commodity Futures Trading Comm’n, 511 F.3d 762, 766-67

(7th Cir. 2007).

18 No. 08-2306

There are some well-established exceptions to the general

principle that an injunction binds only the parties. Rule

65(d) of the Federal Rules of Civil Procedure, which

governs injunctions and temporary restraining orders,

codifies both the general principle and its exceptions:

(2) Persons Bound. The order binds only the follow-

ing who receive actual notice of it by personal service

or otherwise:

(A) the parties;

(B) the parties’ officers, agents, servants, employ-

ees, and attorneys; and

(C) other persons who are in active concert or

participation with anyone described in Rule

65(d)(2)(A) or (B).

F ED. R. C IV. P. 65(d)(2).3

By its terms, Rule 65(d) makes injunctions binding on the

parties to the underlying action and their “officers, agents,

servants, employees, and attorneys,” even if those “offi-

cers, agents,” etc., are not named as parties to the litigation.

F ED. R. C IV. P. 65(d)(2)(B). This is based on the idea that

“[a]n order issued to a corporation is identical to an order

issued to its officers, for incorporeal abstractions act

through agents.” Reich, 50 F.3d at 417; see also Wilson v.

3

We quote from the current version of Rule 65(d)(2), which was

amended in 2007. The amended rule contains “no substantive

difference” from its predecessor. Lake Shore Asset Mgmt. Ltd. v.

Commodity Futures Trading Comm’n, 511 F.3d 762, 767 (7th Cir.

2007).

No. 08-2306 19

United States, 221 U.S. 361, 376 (1911) (“A command to the

corporation is in effect a command to those who are

officially responsible for the conduct of its affairs.”);

Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc.,

154 F.3d 1345, 1351 (Fed. Cir. 1998) (“Rule 65(d) specifically

names ‘officers’ of a defendant as among those who are

bound by an injunction, and there is a substantial body of

case law in support of that proposition.”). As such, officers,

employees, and other agents of an enjoined party must

obey the injunction—even though they are not named

parties—when they act in their official capacities. See New

York ex rel. Vacco v. Operation Rescue Nat’l, 80 F.3d 64, 70 (2d

Cir. 1996) (“An injunction issued against a corporation or

association binds the agents of that organization to the

extent they are acting on behalf of the organization. . . .

Generally, persons who cease to act in one of the desig-

nated capacities are no longer bound by the decree.”

(citation omitted)).

This aspect of the rule is not implicated in this case.

Although the individual defendants might have qualified

as “officers” or “agents” of the Hereditary Guardianship

in June of 1966 when the injunction was entered, after

the organization was dissolved in December of that year,

they obviously no longer held that status. They cannot,

in other words, act in their official capacities to cause

the Hereditary Guardianship to violate the injunction.

As to other nonparties who might properly be bound by

an injunction, the Supreme Court has explained that Rule

65(d)(2) is

20 No. 08-2306

derived from the commonlaw doctrine that a decree of

injunction not only binds the parties defendant but also

those identified with them in interest, in “privity” with

them, represented by them or subject to their control.

In essence it is that defendants may not nullify a decree

by carrying out prohibited acts through aiders and

abettors, although they were not parties to the original

proceeding.

Regal Knitwear Co. v. N.L.R.B., 324 U.S. 9, 14 (1945). Broadly

speaking, both the rule and the common-law doctrine

contemplate two categories of nonparties potentially

bound by an injunction. One includes nonparties acting in

concert with a bound party; many cases hold that a

nonparty may be held in contempt if he aids or abets an

enjoined party in violating an injunction. Id.; Chase Nat’l

Bank v. City of Norwalk, Ohio, 291 U.S. 431, 436 (1934);

S.E.C. v. Homa, 514 F.3d 661, 673-77 (7th Cir. 2008); Rockwell

Graphic Sys., Inc. v. DEV Indus., Inc., 91 F.3d 914, 919

(7th Cir. 1996). This principle is codified in subsection

(2)(C) of the rule, which provides that nonparties “who are

in active concert or participation with” a bound party are

themselves bound and may be liable for aiding and

abetting the party’s contempt. See F ED . R. C IV .

P. 65(d)(2)(C). This category of nonparty contempt liability

is also not at issue here.

The other category is captured under the general rubric

of “privity.” It is generally accepted that an injunction may

be enforced against a nonparty in “privity” with an

enjoined party. E.g., Golden State Bottling Co. v. N.L.R.B., 414

U.S. 168, 179-80 (1973); Regal Knitwear, 324 U.S. at 14;

No. 08-2306 21

Rockwell Graphic Sys., 91 F.3d at 919. This concept can be

hard to pin down; the use of the term “privity” has ex-

panded over time. See Taylor, 553 U.S. at 894 n.8 (“The term

‘privity’ . . . has also come to be used more broadly, as a

way to express the conclusion that nonparty preclusion is

appropriate on any ground.”); Richards, 517 U.S. at 798

(“[T]he term ‘privity’ is now used to describe various

relationships between litigants that would not have come

within the traditional definition of that term.”). In this

context, “privity” has come to be “seen as a descriptive

term for designating those with a sufficiently close identity

of interests” to justify application of nonparty claim

preclusion, Tice v. Am. Airlines, Inc., 162 F.3d 966, 971

(7th Cir. 1998) (internal quotation marks omitted), or the

enforcement of an injunction against a nonparty, see Regal

Knitwear, 324 U.S. at 14.

The concept of privity, however—both in preclusion

doctrine and in the law of injunctions—is ultimately

bounded by due process, which starts from a “presumption

that each person has a right to her day in court.” Martin H.

Redish & William J. Katt, Taylor v. Sturgell, Procedural Due

Process, and the Day-in-Court Ideal: Resolving the Virtual

Representation Dilemma, 84 N OTRE D AME L. R EV. 1877,

1881 (2009); see also Richards, 517 U.S. at 798 (“[T]here

are clearly constitutional limits on the ‘privity’ exception

. . . .”); Regal Knitwear, 324 U.S. at 13 (“The courts, never-

theless, may not grant an enforcement order or injunction

so broad as to make punishable the conduct of persons

who acted independently and whose rights have not been

adjudged according to law.”); Tice, 162 F.3d at 971 (caution-

ing against too relaxed an approach to privity because

22 No. 08-2306

“serious due process problems would arise if the earlier

nonparty were barred from her own day in court”).

Both preclusion doctrine and Rule 65(d)(2) are concerned

with the scope and effect of a judgment, and “[i]n no area

of procedure has this [own-day-in-court] ideal traditionally

played a more important role than the field of judgments.”

Redish & Katt, supra, at 1877. When privity is invoked as a

basis for binding a nonparty to an injunction, it is “re-

stricted to persons so identified in interest with those

named in the decree that it would be reasonable to con-

clude that their rights and interests have been represented

and adjudicated in the original injunction proceeding.”

11A C HARLES A LAN W RIGHT ET AL., F EDERAL P RACTICE AND

P ROCEDURE § 2956, at 340-41 (2d ed. 1995).

The caselaw suggests that when it comes to injunctions,

the concept of nonparty privity has at least two subcatego-

ries. One line of cases holds that an injunction will bind

nonparty successors in interest to an enjoined party. E.g.,

Golden State Bottling Co., 414 U.S. 168; Regal Knitwear, 324

U.S. at 14-15; Walling v. James V. Reuter, Inc., 321 U.S.

671 (1944); Reich, 50 F.3d 413; Panther Pumps & Equip. Co.

v. Hydrocraft, Inc., 566 F.2d 8 (7th Cir. 1977); see also Opera-

tion Rescue Nat’l, 80 F.3d at 70 (“[A party may not] circum-

vent a valid court order merely by making superficial

changes in the organization’s name or form . . . .”). Another

line of cases holds that a nonparty may be bound by an

injunction if the nonparty is otherwise “legally identified”

with the enjoined party. See, e.g., Merriam, 639 F.2d at 37-40;

see also Flowdata, 154 F.3d at 1352 (using “legal identifica-

tion” test and favorably citing Merriam).

No. 08-2306 23

The main dispute in this case centers on the First Cir-

cuit’s decision in Merriam, and specifically whether its

articulation of the “legal identity” basis for privity is

doctrinally sound. The question arises here because the

district court thought Merriam was inconsistent with the

Second Circuit’s famous articulation in Alemite of the

principles on which nonparties may be held in contempt

and the related limits on the court’s adjudicative power.

In Alemite the underlying suit involved four brothers

alleged to be partners in a business that was infringing the

plaintiff’s patent. Two of the brothers were never served,

and the case proceeded to trial against the remaining two,

John and Joseph Staff. Joseph was dismissed as a defendant

after John testified that the business belonged solely to

him and he merely employed Joseph as a salesman. The

court then enjoined John Staff and “his agents, employees,

associates and confederates” from infringing the plaintiff’s

patent. Sometime later Joseph left his brother’s employ,

“set up in business for himself, and was proved to have

infringed the patent.” Alemite, 42 F.2d at 832. The plaintiff

initiated contempt proceedings against Joseph. Though he

was no longer John’s employee, and John himself was not

involved in Joseph’s infringement of the patent, the district

court found Joseph—a nonparty to the injunction ac-

tion—in contempt. Id.

The Second Circuit reversed. In a decision by Judge

Hand, the court explained the background legal principles

as follows:

[N]o court can make a decree which will bind any one

but a party; a court of equity is as much so limited as a

24 No. 08-2306

court of law; it cannot lawfully enjoin the world at

large, no matter how broadly it words its decree. If it

assumes to do so, the decree is pro tanto brutum

fulmen, and the persons enjoined are free to ignore it.

It is not vested with sovereign powers to declare

conduct unlawful; its jurisdiction is limited to those

over whom it gets personal service, and who therefore

can have their day in court. Thus, the only occasion

when a person not a party may be punished, is when

he has helped to bring about, not merely what the

decree has forbidden, because it may have gone too far,

but what it has power to forbid, an act of a party. This

means that the respondent must either abet the defen-

dant, or must be legally identified with him.

Id. at 832-33. Joseph Staff was not himself a party to the

injunction and was no longer employed by John, the

enjoined party; he had not aided or abetted a violation of

the injunction by John, the bound party. Accordingly, the

court held that Joseph could not be found in contempt.

Id. at 833. “The District Court,” the Second Circuit ex-

plained, “had no more power in the case at bar to punish

the respondent than a third party who had never heard of

the suit.” Id.

In Merriam the First Circuit invoked Alemite in another

case involving two brothers, but with a different result:

Merriam held that a “key employee” of a corporation could

be personally bound by an injunction against the corpora-

tion even after he ceased being an agent of the company.

639 F.2d at 39. Brothers John and George Hoskins opened

a small reference-book marketing company known as the

No. 08-2306 25

Webster Dictionary Company in 1975; John was its presi-

dent and sole shareholder, and George was his general

sales manager. At its peak the company had six employees;

it was not in business very long. The big dictionary firm G.

& C. Merriam Co. owned the rights to the well-known

“Webster’s” line of dictionaries, and in late 1975 it sued

Webster Dictionary for trademark infringement, seeking

damages and injunctive relief. In March 1977 Webster

Dictionary advised the court that it was insolvent, was

discharging its attorneys, and would consent to entry of an

“appropriate judgment” against it. In October of that year,

the district court held that Webster Dictionary had de-

faulted and entered a permanent injunction against it and

John Hoskins barring them from using various Merriam

tradenames and marks. Webster Dictionary went out of

business and John Hoskins exited the reference-book

market.

George Hoskins did not. In 1976, still employed by

Webster Dictionary, George incorporated Webster Publish-

ing Company and two related corporations, the business of

which bore “a striking resemblance to that of Webster

Dictionary Company.” Id. at 34. After Webster Dictionary

ceased operations, George Hoskins, through Webster

Publishing, continued to use Merriam’s tradenames and

marks in much the same way as Webster Dictionary had.

The district court held that George Hoskins and Webster

Publishing were bound by the injunction against Webster

Dictionary and found them in contempt.

The First Circuit reversed based on a lack of clarity in the

district court’s order and remanded with a detailed

26 No. 08-2306

explanation of the possible legal grounds for holding

George Hoskins and Webster Publishing bound by the

injunction though they were not parties to the underlying

litigation. The court began with a discussion of Alemite,

summarizing the holding in this way: “To hold a non-

party bound by an injunction it is thus essential to prove

either that the nonparty participated in the contumacious

act of a party or that the nonparty was subject to the

injunction because [he is] legally identified with a party.”

Id. at 35. Because George Hoskins had not participated in

an act of contempt by John, the court recognized that he

could not be held in contempt as an aider and abettor. Id.

The court noted that an enjoined party’s “successors and

assigns” might be “legally identified” with the bound party

and thus obligated to obey the injunction; this justification

for nonparty contempt was also unavailable because

George Hoskins and Webster Publishing were not the

successors or assigns of John or Webster Dictionary. In this

regard, the court observed that “[i]t is not enough to prove

that the first entity went out of existence and . . . the second

entity entered into the enjoined type of business activity,

knowing about the injunction but without having acquired

the business, or a relevant part of it, from the first entity.”

Id. at 36.

But the court went on to conclude that a person could be

“legally identified” with an enjoined corporation and thus

personally bound by the injunction if he was a “key

employee” of the corporation, had a significant role in the

underlying litigation, and was closely identified with the

bound party in other relevant respects. Id. at 37. Impor-

No. 08-2306 27

tantly, the court explained that the nonparty’s status as a

“key employee” of the enjoined corporation is not suffi-

cient by itself to personally bind him to the injunction:

[T]hat George Hoskins was a “key employee” of

Webster Dictionary Company as well as “the princi-

pal” of [Webster Publishing] . . . is insufficient to

support the district court’s conclusion that George

Hoskins was bound by the injunction. The central

reason that one who is not a party to the action

in which the injunction was issued cannot be bound

by it is that he has not had his day in court with

respect to the validity of the injunction. Cf. Alemite,

supra. Absent an opportunity to contest liability, his

knowledge of the injunction is not sufficient to bind

him as an individual, id., as distinguished from prohib-

iting him from acting in the forbidden way on behalf

of the enjoined party. Thus, the relevant inquiry is not

merely whether (in addition to having knowledge of

the injunction) George Hoskins was a “key employee”

of Webster Dictionary Company but whether he had

such a key role in the corporation’s participation in

the injunction proceedings that it can be fairly said

that he has had his day in court in relation to the

validity of the injunction.

Id. The court issued these remand instructions to the

district court:

The evidence raises a fact issue as to whether this is

a case of the same person continuing to do

essentially the same thing with the same high degree

of practical control, discretion and responsibility,

28 No. 08-2306

before and after the injunction, with knowledge of the

injunction, and after participating in the enjoined

firm’s corporate decisionmaking regarding its position

in the injunction proceedings. If it is found that George

Hoskins was legally identified with Webster Dictionary

Company in this way, then he is bound by the injunc-

tion and the appellant corporations founded by him

are also subject to it.

Id. at 38.

The upshot of Merriam is that a key employee, officer,

director, shareholder, or other central figure in an

enjoined corporation can be personally bound by the

injunction even after the company has dissolved, provided

he had a controlling role in the injunction proceedings

and is otherwise so “closely identified” with the

enjoined corporation that it may reasonably be said that

he had his day in court when the injunction was issued.4

These important qualifiers keep Merriam within the limits

of due process.

4

Understood in this way, Merriam corresponds to one of the

categories of nonparty preclusion listed in Taylor, which might

be described in shorthand as “control person” preclusion. Taylor

v. Sturgell, 553 U.S. 880, 895 (2008) (“[A] nonparty is bound by a

judgment if she assumed control over the litigation in which that

judgment was rendered.” (internal quotation marks omitted));

see also Montana v. United States, 440 U.S. 147, 153-54 (1979);

Schnell v. Peter Eckrich & Sons, Inc., 365 U.S. 260, 262 n.4 (1961);

Souffront v. La Compagnie des Sucreries de Porto Rico, 217 U.S. 475,

486-87 (1910).

No. 08-2306 29

In this case, the district court rejected Merriam’s holding

for essentially two reasons. First, the judge thought

Merriam was in “silent tension” with Judge Hand’s opinion

in Alemite. Second, she concluded that Merriam conflicted

with the Supreme Court’s decision in Zenith Radio Corp. v.

Hazeltine Research, Inc., 395 U.S. 100 (1969). We disagree on

both counts.

Though Alemite and Merriam reached very different

results, the two opinions can be reconciled. For starters,

Alemite specifically noted that a nonparty to an injunction

proceeding may be held in contempt for violating the

injunction when the nonparty “either abet[s] the defendant,

or [is] legally identified with him.” 42 F.2d at 833 (emphasis

added). Moreover, Alemite’s result—that a salesman is not

bound along with his corporation—is consistent with

Merriam’s holding that a “key employee,” without more, is

not legally identified with the enjoined company. Merriam,

639 F.2d at 37. To be sure, there are factual differences

between the two cases, but we find no tension between the

two as a legal matter. See id. at 39 (distinguishing Alemite

on these grounds). Both cases recognize the following

categories of nonparty contempt liability: (1) aiders and

abettors; and (2) those who are legally identified with the

enjoined party. “Legal identity” usually means successors

and assigns, but it can include a limited class of other

nonparties as well—provided the evidence establishes a

very close identity of interest and such significant control

over the organization and the underlying litigation that it

is fair to say that the nonparty had his day in court when

the injunction was issued.

30 No. 08-2306

As for the perceived inconsistency between Merriam and

Zenith Radio, here too we disagree. In Zenith Radio the

Supreme Court reiterated the general rule that a court

may not issue an injunction against a person over which

the court had not acquired jurisdiction by service of

process. 395 U.S. at 110-12; accord United States v.

Kirschenbaum, 156 F.3d 784, 794-96 (7th Cir. 1998). But

the Court clearly anticipated that a nonparty may

properly be held in contempt for violating an injunction

if the court acquires jurisdiction over the nonparty and

gives the nonparty an opportunity to contest whether he

is bound by the injunction and is in fact in contempt.

Zenith Radio, 395 U.S. at 112 (“[A] nonparty with notice

cannot be held in contempt until shown to be in concert

or participation. It was error to enter the injunction against

Hazeltine, without having made this determination in

a proceeding to which Hazeltine was a party.” (emphasis

added)). Once a court establishes jurisdiction over a

nonparty and offers the nonparty this opportunity to be

heard on whether concerted action or privity exists,

Zenith Radio requires nothing further insofar as Rule

65(d)(2) is concerned. See Lake Shore Asset Mgmt., 511 F.3d

at 767 (offering similar understanding of Zenith Radio

and stating “whether a particular person or firm is among

[those listed in Rule 65(d)(2)(B)-(C)] is a decision that

may be made only after the person in question is given

notice and an opportunity to be heard”); see also id.

(Nonparties still “act at their peril if they disregard

the commands of the injunction, for, if the district court

ultimately determines that they are in concert with [the

enjoined party], then they will be in contempt of court.”);

No. 08-2306 31

Waffenschmidt v. MacKay, 763 F.2d 711, 718 (5th Cir. 1985)

(similar).

The district court read Zenith Radio more generally to

stand for the proposition that “a non-party cannot be

personally bound by an injunction unless that non-party

has had an actual day in court in its own right.” That’s a

true statement, but the “day in court” at issue in Zenith

Radio refers to the nonparty’s opportunity to contest

whether he acted in concert with a party contemnor or was

in privity and therefore bound by the injunction. If after

an appropriate hearing the court concludes that the

nonparty was in privity with the enjoined party, Zenith

Radio does not require relitigation of the underlying

controversy. (To the contrary, as we have noted, the

general rule is that contempt proceedings may not be used

to collaterally attack the injunction.) Merriam does not

hold, or even suggest, that a court may find a nonparty in

contempt without acquiring personal jurisdiction over him

and providing an opportunity to contest the grounds for

finding him bound by and in contempt of the injunction.

Merriam does not violate the rule in Zenith Radio.5

Finally, though we have few cases in this area, none

conflict with the approach taken in Merriam, and one

suggests substantial agreement. Reich v. Sea Sprite Boat Co.

held that the president and sole shareholder of Sea Sprite,

5

The proceedings in this case fully complied with Zenith Radio.

The respondents were served with process, and the court held

an evidentiary hearing offering them ample and complete

opportunity to contest whether they came within Rule 65(d)(2).

32 No. 08-2306

an enjoined corporation, was in contempt for diluting the

bound corporation’s assets and thereafter establishing a

new company to evade the injunction. 50 F.3d 413. We

explained that the enjoined company’s president, Robert

Smith, “was obliged to secure Sea Sprite’s compliance

[with the injunction]; instead he ensured its defiance. The

formation of [the new company] for the admitted purpose

of evading judgments against Sea Sprite was a further act

of contempt.” Id. at 417. While the new company was

clearly a successor in interest to the bound corporation, our

reasoning suggests that contempt against the president and

sole shareholder was appropriate because he was legally

identified with Sea Sprite (in the sense that he completely

controlled it), personally participated in the injunction

proceedings, and directed the use of the new corporation

to violate the injunction. Id. (“A sale of Sea Sprite’s assets

to an unrelated party would pose different, and potentially

difficult problems. . . . A shuffle between two corporations,

both wholly owned by Smith, cannot avoid the injunction.”

(citation omitted)); see also Rockwell Graphic Sys., 91 F.3d at

922 (Eschbach, J., concurring) (stressing that the president

of an enjoined company “finds no quarter in the fact that

[the company] is no longer in existence”). Merriam has

been cited with approval by one circuit, see Flowdata, 154

F.3d at 1352-53, and has not been expressly rejected

anywhere else.

Accordingly, it was a mistake to reject Merriam. A key

officer, employee, or shareholder of an enjoined corpora-

tion may be personally bound by the injunction after the

corporation dissolves if he is so closely identified in in-

terest and had a controlling role in the corporation and in

No. 08-2306 33

the underlying litigation that it is fair to conclude that he

had his day in court when the injunction was issued. The

Federal Circuit has identified the following factors that

may be pertinent to the Merriam inquiry: “[T]he officer’s

position and responsibilities in the enjoined corporation,

his participation in the litigation that preceded the entry of

the injunction, and the degree of similarity between his

activities in the old and new businesses.” Id. at 1352

(explaining the Merriam test). It bears emphasizing that

due process requires an extremely close identification and

will be satisfied only when the nonparty “key employee”

against whom contempt sanctions are sought had substan-

tial discretion, control, and influence over the enjoined

organization—both in general and with respect to its

participation in the underlying litigation—and there is a

high degree of similarity between the activities of the old

organization and the new. See Merriam, 639 F.2d at 39

(finding analogy to piercing-the-corporate-veil doctrine

to be “apt”).

D. Marangella, Schlatter, and the Provisional National

Council

Although it rejected Merriam, the district court’s findings

are sufficiently detailed and supported by the record that

we can affirm the court’s no-privity finding without a

remand. Of particular importance are the court’s findings

regarding the dissimilarities between the Hereditary

Guardianship and the Provisional National Council, and

the break between Remey and his followers on the one

34 No. 08-2306

hand and Marangella, Schlatter, and their coreligionists on

the other. It is true that Marangella and Schlatter occupied

key positions in the Hereditary Guardianship, and both

participated in varying degrees in the underlying trade-

mark litigation. In other circumstances we might require

more detailed fact-finding regarding the precise role each

nonparty alleged contemnor played in the enjoined

organization and in the underlying injunction litigation.

For reasons we will explain, however, we can dispense

with that here.

The district court concluded that the Provisional Na-

tional Council, which represents those who accept

Marangella as the Third Guardian, is substantially dissimi-

lar to the Hereditary Guardianship; the record supports

this conclusion. Although Marangella, Schlatter, and

other members of the Provisional National Council

were actively involved in the Hereditary Guardianship

in the 1960s, the record reflects that after the injunction

was issued and the Hereditary Guardianship dissolved, the

remnants of this dissident group scattered. After a two-

year period of dormancy, Marangella announced his own

Guardianship and broke with Remey on matters of succes-

sorship, doctrine, and governance. Schlatter followed him,

and a new religious organization was established, albeit

(eventually) operating in the same place and with some of

the same people as were involved in the Hereditary

Guardianship. The new group, in due course, took the

name “Provisional National Council.” The district court

specifically found that “the vast weight of the record

evidence establishes that the [Provisional National Coun-

cil] was not formed for the purpose of escaping the con-

No. 08-2306 35

fines of the injunction.” The court also found that its

membership—numbering about 40 people—“did not in

fact encompass all of the same individuals that comprised

the [Hereditary Guardianship].” Based on these facts, the

court concluded that on a “defining point of organizational

purpose, there existed a robust doctrinal divide” between

the Hereditary Guardianship and the Provisional National

Council. The court also concluded that the latter was not

“operating in effect” as the former, nor did there “other-

wise [exist] a substantial continuity between the two

groups.”

These findings and conclusions are sufficient to defeat

any claim that Marangella, Schlatter, and the Provisional

National Council are “legally identified” with the Heredi-

tary Guardianship and therefore in privity with it and

bound by the 1966 injunction. This is so even assuming

Marangella and Schlatter could be considered “key”

officers or agents of the Hereditary Guardianship. The

doctrinal differences—especially when combined with

the passage of time—make it clear as a matter of law that

the Provisional National Council and its principals cannot

be considered “legally identified” with the Hereditary

Guardianship or Remey. To take note of these differences

is not to decide a religious dispute; the district court’s

findings and conclusions do not transgress Presbyterian

Church. Accordingly, even when Merriam is taken

into account, the district court’s no-privity conclusion as

to this group of alleged contemnors was correct.

36 No. 08-2306

E. Second International Council and Bahá’í Publishers

The National Spiritual Assembly also challenges the

district court’s decision that the Second International

Council and Bahá’í Publishers are not bound by the

injunction. It offers two reasons for binding these

nonparties: First, they were created by Jensen, who (the

argument goes) was personally bound by the injunction;

and second, they are successors in interest to Remey, who

also was personally bound by the injunction.

1. The Jensen Connection

The district court rejected the contention that the Second

International Council and Bahá’í Publishers were in privity

with the Hereditary Guardianship through Jensen. After

declining to apply Merriam, the judge explicitly entered an

alternative holding that Jensen was not legally identified

with the Hereditary Guardianship even if Merriam applied.

The judge acknowledged that Jensen was an incorporator

of the Hereditary Guardianship, that he served as one of its

first board members, and that contemporaneous evidence

suggested that Jensen remained a follower of the Heredi-

tary Guardianship during the underlying litigation.

Nevertheless, the court found that Jensen disassociated

himself from any governing role in the organization shortly

after serving his one-year term on the board. This was well

before the underlying injunction was issued.

The National Spiritual Assembly disputes these findings.

It argues that Jensen’s extensive involvement with the

Hereditary Guardianship prior to the underlying litigation

No. 08-2306 37

establishes legal identity. We see no clear error in the

district court’s findings, which were amply supported by

the record. Jensen’s term on the Hereditary Guardianship

board ended in the middle of 1964; he was not reelected as

a board member. After he lost reelection, he did not serve

in a governance, advisory, or any other controlling position

in the Hereditary Guardianship, and he had no involve-

ment in the underlying litigation. As such, Jensen did not

occupy the sort of “key” role in the Hereditary Guardian-

ship—either generally or with respect to injunction litiga-

tion—that could form the basis of a “legal identity” finding

under Merriam.

The National Spiritual Assembly argues in the alternative

that Jensen (and by extension, the Second International

Council and the Bahá’í Publishers) should be bound by the

injunction because Jensen remained an adherent and the

Hereditary Guardianship adequately represented its

believers’ interests in the underlying suit against the

National Spiritual Assembly. The Supreme Court in Taylor

and our own recent decision in Tice recognize that the

concept of privity in preclusion doctrine includes a very

limited adequate-representation category. See Taylor, 553

U.S. at 894 (observing that “adequate representation” by

“someone with the same interests who [wa]s a party” to

the earlier suit sufficed for privity purposes “in certain

limited circumstances,” including “properly conducted

class actions” and “suits brought by trustees, guardians,

and other fiduciaries”); Tice, 162 F.3d at 973 (“[U]nless a

formal kind of successor interest is involved . . . , there

should be some indication . . . that the second party either

had participated or had a legal duty to participate.”); see

38 No. 08-2306

also R ESTATEMENT (SECOND) OF JUDGMENTS § 41 (similarly

limiting adequate-representation theory of privity). The

trademark litigation 44 years ago does not fit into this

limited category.

A finding of privity based on “adequate representation”

in the circumstances of this case would be entirely unwar-

ranted. The Hereditary Guardianship did not conduct the

underlying litigation as anything like a fiduciary for its

members, and there is no evidence to suggest it was acting

in a representative capacity for its followers personally. To

find privity based on “adequate representation” here

would treat every suit by an organization as having res

judicata and contempt implications for the organization’s

members individually. This is contrary to the Supreme

Court’s language in Taylor carefully limiting the scope of

the adequate-representation category of privity.

At bottom, this argument is an appeal to the theory of

“virtual representation,” which the Supreme Court has

firmly rejected in the field of claim preclusion. Taylor, 553

U.S. at 904. Having rejected virtual-representation theory

in its traditional res judicata setting, we see no reason why

the Supreme Court would view it more favorably in the

context of injunctions. The district court properly rejected

the attempt to bind the Second International Council and

Bahá’í Publishers through Jensen.

2. The Remey Connection

The National Spiritual Assembly also argues that the

Second International Council and Bahá’í Publishers are

No. 08-2306 39

bound by the injunction through privity with Remey. This

argument is based on trademark-registration filings with

the United States Patent and Trademark Office in which

Neal Chase, the current president of the Second Interna-

tional Council and Bahá’í Publishers, explained that the

throne to the “Davidic kingdom” passed by succession

from Bahá’u’lláh to Abdu’l-Bahá, to Charles Mason Remey,

to Pepe Remey (Remey’s adopted son), and now to him.

The National Spiritual Assembly treats these filings as an

admission of legal successorship to Remey, who in turn

was legally identified with the Hereditary Guardianship.

The district court treated the trademark-registration

filings as nonbinding evidentiary admissions rather than

binding judicial admissions. See Help at Home, Inc. v. Med.

Capital, L.L.C., 260 F.3d 748, 753 & n.2 (7th Cir. 2001);

Higgins v. Mississippi, 217 F.3d 951, 954 (7th Cir. 2000);

Murrey v. United States, 73 F.3d 1448, 1455 (7th Cir. 1996);

Keller v. United States, 58 F.3d 1194, 1198 n.8 (7th Cir. 1995).

The National Spiritual Assembly apparently agrees with

this characterization, but argues that the court gave them

insufficient weight. We find no fault with the district

court’s treatment of this factual matter. Other than the

version of spiritual-leadership succession described in

trademark filings, the National Spiritual Assembly offered

no evidence of a link between Remey and the Second

International Council or Bahá’í Publishers. Indeed, Remey

had no involvement in either organization and died more

than 25 years before the Second International Council was

established. Neither the Second International Council nor

Bahá’í Publishers received any money, property, or other

assets from Remey or the Hereditary Guardianship. On

40 No. 08-2306

these facts the district court properly concluded that the

Second International Council and Bahá’í Publishers are not

successors to Remey. See Walling, 321 U.S. at 674 (succes-

sors are “those to whom the business may have been

transferred”); Flowdata, 154 F.3d at 1355 (nonparty succes-

sorship liability under injunction requires a “substantial

continuity of identity”); cf. Golden State Bottling Co., 414

U.S. at 179 (finding bona fide purchaser of a business

enterprise was the legal successor to the enterprise and

thus subject to enterprise’s liability); Reich, 50 F.3d at 417 (a

company that “acquired the business subject to this court’s

order” was legal successor and bound by the order).

A FFIRMED.

11-23-10