noting that a settlement functions as a court order
How later courts described this case
- noting that a settlement functions as a court order
- compensatory fine must 26 “be based upon evidence of complainant’s actual loss”
- “[T]he party asserting the impossibility 13 defense must show categorically and in detail why he is 14 unable to comply.”
- concluding that although plaintiff failed to 21 provide declarants’ names in initial disclosures, 22 “[d]efendant cannot say it is surprised that [p]laintiff 23 would submit declarations from its members” establishing 24 standing to bring suit
Written by the judges who cited it.
The opinion
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 1 of 21 Page ID #:574
'O'
1
2
3
4
5
6
7
8 UNITED STATES DISTRICT COURT
9 CENTRAL DISTRICT OF CALIFORNIA
10
CV20-00587-RSWL-RAOx
11 SNOW JOE, LLC,
ORDER re: Plaintiff’s
12 Plaintiff,
Motion for Contempt and
13 v. Enforcement of Settlement
[55]
14
LINEMART INC., et al.,
15
Defendants.
16
17
18 Plaintiff Snow Joe, LLC (“Plaintiff”) brought the
19 instant Action against Defendants Linemart, Inc.;
20 Linemart NJ, Inc.; Shenzhen Sailvan Network Technology
21 Ltd.; and Shenzhen Sailvan Ecommerce Co., Ltd.
22 (collectively, “Defendants”) alleging: (1) direct and
23 contributory false advertising under 15 U.S.C.
24 § 1125(a)(1)(B); and (2) violations of California
25 Business and Professions Codes §§ 17200 and 17500.
26 Currently before the Court is Plaintiff’s Motion for
27 Contempt and Enforcement of Settlement [55] (“Motion”).
28 Having reviewed all papers submitted pertaining to this
1
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 2 of 21 Page ID #:575
1 Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the
2 Court GRANTS IN PART and DENIES IN PART Plaintiff’s
3 Motion.
4 I. BACKGROUND
5 A. Factual Background
6 1. Plaintiff’s Underlying Complaint
7 Plaintiff sells pressure washers online, including
8 through Amazon.com (“Amazon”). Compl. ¶¶ 14-16, 21, ECF
9 No. 1. Defendants sell electric pressure washers that
10 directly compete with Plaintiff’s. Id. ¶ 22.
11 Plaintiff’s Complaint alleged that Defendants falsely
12 advertised their pressure washers’ Pounds Per Square
13 Inch (“PSI”) pressure ratings and adherence to European
14 Conformity (“CE”) safety standards. Id. ¶¶ 26-28.
15 2. Parties’ Settlement and Injunction Order
16 On November 7, 2021, Plaintiff and Defendants
17 entered into a Settlement Agreement (the “Original
18 Agreement”), relating specifically to HOMDOX-branded
19 (“Homdox”) pressure washers. See generally Notice of
20 Settlement of Entire Action, ECF No. 47. The Original
21 Agreement required Defendants, inter alia, to: (1)
22 immediately submit their pressure washers for third-
23 party testing and label them according to the results;
24 (2) identify all their pressure washers, including the
25 model numbers, Amazon Standard Identification Numbers
26 (“ASINs”), and Standard Product Numbers (“SPUs”); and
27 (3) retain a third-party service to monitor and remove
28 inaccurate listings. Mot. for Contempt Ex. 1 (“Original
2
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 3 of 21 Page ID #:576
1 Agreement”), ECF No. 55-3. Pursuant to the Original
2 Agreement, the Court entered a Permanent Injunction
3 Order (“Original Injunction”) on November 17, 2021,
4 enjoining Defendants from falsely advertising their
5 pressure washers.1 See generally Permanent Inj., ECF
6 No. 49.
7 On December 20, 2021, Plaintiff notified Defendants
8 of their breach of each provision of the Original
9 Agreement. Pl.’s Mem. of P. & A. (“Mot.”) 3:11-16, ECF
10 No. 55. The parties then entered into an Amended
11 Settlement Agreement (“Amended Agreement”) on February
12 17, 2022.2 Id. at 3:18-22. Accordingly, on February
13 18, 2022, the Court entered an Amended Permanent
14 Injunction Order (“Amended Injunction”). See generally
15 Am. Permanent Inj., ECF No. 54.
16 On February 28, 2022, Plaintiff sent Defendants
17 another notice of breach of the Amended Agreement.3
18 1 The Original Injunction also expressly retained
jurisdiction over the matter to enforce the terms of the Original
19
Agreement. Permanent Inj. 2:25-3:2.
20 2 The Amended Agreement expanded the scope of the Original
Agreement to include Defendants’ MRLIANCE-, SYNCLL-, and TEANDE-
21
branded pressure washers, and it also added a provision allowing
22 for recovery of attorneys’ fees for the enforcement of the
agreement. Decl. of Christopher Q. Pham in Supp. of Mot. (“Pham
23 Decl.”) Ex. 2 ¶ 5, ECF No. 55-4. It further provided that any
terms in the Original Agreement not modified by the Amended
24 Agreement remain in full force. Id.
25 3 Also on February 28, 2022, Defendants provided Plaintiff
with a declaration identifying the model numbers, ASINs, and SPUs
26 for all of Defendants’ pressure washers, as well as Defendants’
Amazon account names, as required by the Settlement Agreements.
27 Mot. 4:13-23. The same day, Defendants submitted five Homdox
pressure washers for testing; the testing results were not
28
completed until March 31, 2022. Id. at 5:5-11.
3
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 4 of 21 Page ID #:577
1 Mot. Ex. 6, ECF No. 55-9. On March 10, 2022, Plaintiff
2 captured evidence of three Amazon listings for pressure
3 washers under Defendants’ accounts advertising false PSI
4 claims. Mot. 8:7-11. The parties then engaged in meet-
5 and-confer sessions on March 11, March 21, and April 13,
6 2022. Id. at 4:6-9. Later, on April 19, 2022,
7 Plaintiff purchased a pressure washer from one of
8 Defendants’ confirmed Amazon listings that also
9 contained false PSI claims. Id. at 9:21-10:28. The
10 parties then held a fourth meet-and-confer session on
11 April 27, 2022. Id. at 4:6-9.
12 B. Procedural Background
13 Plaintiff filed the instant Motion [55] on April
14 28, 2022. Defendants filed their Opposition [56] on May
15 9, 2022, and Plaintiff replied [58] on May 16, 2022.
16 II. DISCUSSION
17 A. Legal Standard
18 “[C]ourts have inherent power to enforce compliance
19 with their lawful orders through civil contempt.”
20 Spallone v. United States, 493 U.S. 265, 276 (1990);
21 Shillitani v. United States, 384 U.S. 364, 370 (1966).
22 Civil contempt consists of a party’s disobedience to a
23 specific and definite court order by failure to take all
24 reasonable steps within the party’s power to comply. In
25 re Dual-Deck Video Cassette Recorder Antitrust Litig.,
26 10 F.3d 693, 695 (9th Cir. 1993). “The moving party has
27 the burden of showing by clear and convincing evidence
28 that the contemnors violated a specific and definite
4
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 5 of 21 Page ID #:578
1 order of the court. The burden then shifts to the
2 contemnors to demonstrate why they were unable to
3 comply.” Stone v. City & County of San Francisco, 968
4 F.2d 850, 856 n.9 (9th Cir. 1992) (citations omitted).
5 A person should not be held in contempt if his
6 action “appears to be based on a good faith and
7 reasonable interpretation of the [court's order].”
8 Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 689
9 F.2d 885, 889 (9th Cir. 1982). Nevertheless, “there is
10 no good faith exception to the requirement of obedience
11 to a court order.” In re Dual-Deck, 10 F.3d at 695.
12 “[C]ivil contempt may be established even though the
13 failure to comply with the court order was
14 unintentional.” Perry v. O’Donnell, 759 F.2d 702, 705
15 (9th Cir. 1985). A showing of willfulness is not a
16 necessary element for civil contempt because while the
17 purpose of criminal contempt is punishment, the purpose
18 of civil contempt is remedial. Id.
19 B. Analysis
20 1. Evidentiary Objections
21 Plaintiff objects to the Declaration of XiaoShuang
22 Zheng in Opposition to the Motion for Contempt and
23 Enforcement of Settlement (“Zheng Declaration”), along
24 with its accompanying exhibits. See generally Evid.
25 Objs. to Zheng Decl. and Exs. 1-33, ECF No. 57. In
26 particular, Plaintiff argues that the declaration should
27 be excluded in its entirety because Zheng was not
28 identified as a potential witness in Defendant’s initial
5
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 6 of 21 Page ID #:579
1 disclosures. Id. Parties are required to provide in
2 their initial disclosures the names of individuals
3 likely to have discoverable information related to the
4 case. Fed. R. Civ. P. 26(a). Failure to do so
5 prohibits the party from using that witness to supply
6 evidence on a motion, except where the failure was
7 substantially justified or harmless. Fed. R. Civ. P.
8 37(c)(1). In determining whether to exclude evidence
9 under Rule 37, courts consider factors such as the
10 surprise to the party against whom the evidence would be
11 offered, the ability of that party to cure the surprise,
12 and the importance of the evidence. Dey, L.P. v. Ivax
13 Pharm., Inc., 233 F.R.D. 567, 571 (C.D. Cal. 2005).
14 Given that the purpose of the Zheng Declaration was
15 limited to providing evidence to rebut a finding of
16 contempt in response to Plaintiff’s Motion, the Court
17 finds that Defendants’ failure to identify Zheng in its
18 initial disclosures was harmless. See S.F. Baykeeper v.
19 West Bay Sanitary Dist., 791 F. Supp. 2d 719 (N.D. Cal.
20 2011) (concluding that although plaintiff failed to
21 provide declarants’ names in initial disclosures,
22 “[d]efendant cannot say it is surprised that [p]laintiff
23 would submit declarations from its members” establishing
24 standing to bring suit). Plaintiff’s objection on this
25 basis is therefore OVERRULED.
26 Plaintiff also objects to the Zheng Declaration and
27 the accompanying exhibits for lack of personal knowledge
28 and on hearsay grounds. The Court similarly OVERRULES
6
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 7 of 21 Page ID #:580
1 these objections. Zheng has certified under oath that
2 the emails were sent by employees of Defendants in an
3 effort to comply with the injunction and settlement
4 agreement, and that he has personal knowledge of all
5 facts stated in the Zheng Declaration. See Zheng Decl.
6 ¶¶ 1, 3, 6. Moreover, while the emails attached as
7 exhibits contain out-of-court statements, they are not
8 being offered for the truth of the matters stated within
9 the emails. Rather, they are being offered to show
10 Defendants’ attempts to comply with the injunction and
11 why those attempts have been unsuccessful. See Bates v.
12 Medtronic, Inc., No. EDCV 14-02643-VAP (KKx), 2016 WL
13 446923, at *8 (C.D. Cal. 2016) (“If an out-of-court
14 statement is not introduced for the truth of the matter
15 asserted, but to establish the effect on the listener or
16 a basis in fact for the listener’s subsequent actions,
17 the statement is not hearsay.”).
18 Plaintiff’s remaining objections are also
19 OVERRULED. The Court has considered Plaintiff’s
20 arguments and relies only on facts it considers to be
21 reliable and admissible. See F.T.C. v. Data Med. Cap.,
22 Inc., No. SA CV 99-1266 AHS (EEx), 2010 WL 1049977, at
23 *28 (C.D. Cal. Jan. 15, 2010).
24 2. Local Rule 7-3
25 Local Rule 7-3 requires that “counsel contemplating
26 the filing of any motion shall first contact opposing
27 counsel to discuss thoroughly, preferably in person, the
28 substance of the contemplated motion and any potential
7
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 8 of 21 Page ID #:581
1 resolution.” C.D. Cal. L.R. 7-3. The purpose of Local
2 Rule 7-3 is to give all parties a full understanding of
3 the relevant disputes and to allow nonmovants time to
4 evaluate proposed motions and oppose it or reach
5 agreement. Fitzgerald v. City of Los Angeles, 485 F.
6 Supp. 2d 1137, 1140 (C.D. Cal. 2007). Courts have
7 “considerable latitude” in enforcing Local Rule 7-3.
8 Christian v. Mattel, Inc., 286 F.3d 1118, 1129 (9th Cir.
9 2002). A party’s “failure to comply with the Local
10 Rules does not automatically require the denial of a
11 party's motion . . . particularly where the non-moving
12 party has suffered no apparent prejudice.” CarMax Auto
13 Superstores Cal. LLC v. Hernandez, 94 F. Supp. 3d 1078,
14 1088 (C.D. Cal. 2015).
15 Here, the parties engaged in four meet-and-confer
16 sessions before Plaintiff filed the instant Motion.
17 Mot. 4:6-8. In its Motion, Plaintiff plainly stated
18 that these four meetings had occurred pursuant to Local
19 Rule 7-3. Id. at 2:18-19. Defendants argue that these
20 meetings were insufficient because Plaintiff did not
21 mention Defendant’s alleged mislabeling of products
22 during the meetings, including its mislabeling of the
23 product that Plaintiff purchased as evidence in support
24 of the Motion. Opp’n 5:4-7, ECF No. 56.
25 Despite Defendants’ contentions to the contrary,
26 Plaintiff’s counsel satisfied the requirements of Local
27 Rule 7-3. Plaintiff made numerous attempts to inform
28 Defendants of their violations during the meet-and-
8
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 9 of 21 Page ID #:582
1 confer sessions. Reply in Supp. of Mot. (“Reply”) 4:2-
2 8, ECF No. 58; see also Mot. 3:11-17, 4:2-6. Moreover,
3 Defendants were clearly on notice of the present Motion
4 and were able to timely file an Opposition. Thus, any
5 prejudice to Defendant from a potential defect in the
6 meetings is minimal. See Fitzgerald, F. Supp. 2d at
7 1140 (finding that nonmovants suffered no prejudice
8 because they had adequate time to respond to the
9 motion).
10 3. Defendants Is in Contempt of Court Orders
11 To establish that Defendants should be held in
12 civil contempt here, Plaintiff first must demonstrate by
13 clear and convincing evidence that Defendants violated a
14 court order “beyond substantial compliance, and that the
15 violation was not based on a good faith and reasonable
16 interpretation of the [order].” Wolfard Glassblowing
17 Co. v. Vanbragt, 118 F.3d 1320, 1322 (9th Cir. 1997).
18 If Plaintiff meets this burden, the burden then shifts
19 to Defendants to show that they “took every reasonable
20 step to comply.” Stone, 968 F.2d at 856 n.9. For the
21 reasons set forth below, the Court holds Defendants in
22 civil contempt and GRANTS in part and DENIES in part
23 Plaintiff’s Motion.
24 a. Defendants Violated the Amended Injunction
25 and Settlement Agreements
26 Where a party is enjoined from falsely representing
27 a products’ adherence to certain testing standards, the
28 party’s disregard for the testing standards can support
9
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 10 of 21 Page ID #:583
1 a finding of contempt. See Gen. Signal Corp. v.
2 Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986).
3 Even where a defendant’s violative labeling occurs by
4 mistake, courts have found contempt where a reasonable
5 inspection should have revealed the misrepresentation.
6 Id.
7 Here, Plaintiff has demonstrated by clear and
8 convincing evidence that Defendants have repeatedly
9 violated the Amended Injunction. The Amended Injunction
10 prohibited Defendants from misrepresenting their
11 pressure washers’ PSI capabilities and CE compliance,
12 and Plaintiff provided evidence of Defendants’ Amazon
13 listings containing false PSI claims. See Decl. of Lee
14 Ann Sowers in Supp. of Mot. (“Sowers Decl.”) Exs. 7-9,
15 ECF Nos. 55-11, 55-12, 55-13. The pressure washer
16 Plaintiff purchased from Defendants also included
17 contradicting PSI claims between the product label,
18 instruction manual, and advertisement for the product.
19 See Sowers Decl. Exs. 10-12, ECF Nos. 55-14, 55-15, 55-
20 16. Moreover, all three of these PSI claims were
21 inaccurate based on the third-party test results.4 Id.
22 Additionally, Plaintiff has shown that Defendants
23 are in violation of paragraphs 3.a., 3.c., and 3.e. of
24 the Settlement Agreements, which further supports a
25
4 Defendants attack Plaintiff’s evidentiary purchase by
26 claiming the pressure washer may not have been sold by
Defendants. Id. at 6:7-8. However, Defendants themselves
27 confirmed that the account, ASIN, and model number associated
with the purchased product belonged to Defendants. Pham Decl.
28
Ex. 3, ECF No. 55-5.
10
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 11 of 21 Page ID #:584
1 finding of contempt.5 Paragraph 3.a. of the Original
2 Agreement required Defendants to immediately submit all
3 their Homdox power washers for third-party testing. See
4 Original Agreement ¶ 3.a. The Amended Agreement
5 expanded this provision to include Defendants’ MRLIANCE,
6 SUYNCLL, and TEANDE pressure washer brands. See Amended
7 Agreement ¶ 3. However, Defendants have not submitted
8 any MRLIANCE-, SUYNCLL-, or TEANDE-branded models for
9 testing. Reply 7:14-18, ECF No. 58. Defendants only
10 submitted five models of Homdox pressure washers for
11 testing and did so eleven days late. Pham Decl. Exs. 3-
12 4, ECF Nos. 55-5, 55-6.
13 Defendants also breached paragraph 3.c. of the
14 Original Agreement, which requires Defendants to base
15 all PSI claims on the testing results found in paragraph
16 3.a. See Pham Decl. Ex. 1. Because Defendants did not
17 submit the majority of their electric pressure washers
18 for testing, there is no basis upon which Defendants
19 could make any accurate PSI claims in their product
20 labeling. Even considering the five Homdox models that
21 Defendants did submit for testing, at least one model
22
5 The Settlement Agreements spell out clear procedures to
23 ensure Defendants’ compliance with the Amended Injunction.
Further, the Court expressly retained jurisdiction to enforce the
24
terms of the Settlement Agreements. Am. Permanent Inj. 2:25-28;
25 Flanagan v. Arnaiz, 143 F.3d 540, 544 (9th Cir. 1998). Thus,
violations of the Settlement Agreements may constitute
26 independent grounds for contempt. See Plummer v. Chem. Bank, 668
F.2d 654, 659 (2d Cir. 1982) (holding that provisions of a
27 settlement operate as an injunction); see also Buckhannon Board &
Care Home v. W. Va. Dep’t of Health and Human Res., 532 U.S. 598,
28
604 (2001) (noting that a settlement functions as a court order).
11
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 12 of 21 Page ID #:585
1 contained false PSI claims. Mot. 7:16-28.
2 Moreover, Paragraph 3.e. of the Original Agreement
3 obligates Defendants to retain a third-party monitoring
4 service to monitor the online listings of Defendants’
5 electric pressure washers. Pham Decl. Ex. 1 ¶ 3.e.
6 Defendants agreed to authorize the third-party
7 monitoring service to remove listings containing false
8 or unverified PSI ratings.6 However, in the seven
9 months since the parties entered the Original Agreement,
10 Defendants have not provided any proof that they
11 retained a third-party monitor. Had they done so,
12 Defendants likely could have discovered and removed the
13 false, unverified, or inconsistent PSI claims of which
14 Defendants claim they were unaware. Since a third-party
15 monitor could have discovered Defendants’ false
16 advertisements, Defendants’ failure to modify or remove
17 their Amazon listings is contemptuous. See Gen. Signal
18 Corp., 787 F.2d at 1379.
19 ///
20
21 6 Defendants blame their failure to retain a third-party
monitor on the fact that they discussed an alternative solution
22 to this requirement with Plaintiff’s counsel. Opp’n 7:23-28.
However, the Settlement Agreements include an integration clause
23 and state that any amendment or modification to the Settlement
Agreements must be written and signed to be binding. Ex. 1 ¶ 10,
24
ECF No. 55-3; Ex. 2 ¶ 11, ECF No. 55-4. Regardless of any
25 discussion between the parties, no signed writing exists to
modify the third-party monitor requirement. The parties must
26 therefore be held to the terms of the written and signed Amended
Agreement. See Cal. Civ. Code § 1698(c) (“Unless the contract
27 otherwise expressly provides, a contract in writing may be
modified by an oral agreement supported by new consideration.”)
28
(emphasis added).
12
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 13 of 21 Page ID #:586
1 Defendants have repeatedly failed to satisfy their
2 obligations under both the Amended Injunction and the
3 Settlement Agreements. Therefore, the Court finds that
4 Defendants have violated court orders beyond substantial
5 compliance.
6 b. Defendants Did Not Take Reasonable Steps to
7 Comply
8 To defend against Plaintiff’s prima facie showing
9 of contempt, Defendants must demonstrate that they took
10 “all reasonable steps” to substantially comply with the
11 order but compliance was nevertheless impossible. Gen.
12 Signal Corp., 787 F.2d at 1379 (quoting Vertex Distrib.
13 V. Falcon Foam Plastics, Inc., 689 F.2d 891–92). “If a
14 violating party has taken all reasonable steps to comply
15 with the court order, technical or inadvertent
16 violations of the order will not support a finding of
17 civil contempt.” Id. (internal quotation marks and
18 citations omitted).
19 Defendants have not put forth sufficient evidence
20 of its attempts to substantially comply with the Amended
21 Injunction or the Settlement Agreements. Defendants’
22 emails to Amazon do not demonstrate substantial
23 compliance because the email exchanges took place after
24 Defendants had already been in violation of the Original
25 Agreement for months, and most emails were sent after
26 the filing of this Motion. See Zheng Decl. Exs. 1-33,
27 ECF Nos. 56-2, 56-3, 56-4, 56-5, 56-6. Other than these
28 untimely emails, Defendants provide no evidence of
13
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 14 of 21 Page ID #:587
1 affirmative steps taken to comply with the Amended
2 Injunction or Settlement Agreements. Cf. Harbor Breeze
3 Corp. v. Newport Landing Sportfishing, Inc., No.
4 SACV1701613CJCDFMX, 2020 WL 816135, at *1 (C.D. Cal.
5 Jan. 23, 2020) (declining to hold defendants in contempt
6 where defendants took affirmative steps to comply, and
7 defendants’ only violation was a technical error).
8 Nor have Defendants shown that compliance with the
9 Amended Injunction was impossible. Amazon never took
10 more than one day to respond to Defendants’ inquiries,
11 despite Defendants’ claim that in some instances Amazon
12 would “state for days or weeks” that requested changes
13 were in process. Opp’n at 7:2-4; Zheng Decl. Exs. 1-33.
14 Defendants also allude to Amazon’s “web crawling”
15 algorithm, which allegedly causes listings “to revert
16 back to the old unchanged content.” Opp’n 6:4-7.
17 However, no evidence indicates that this so-called “web
18 crawling” algorithm actually affected Defendants’
19 listings, nor that Defendants were unable to simply
20 remove the listings altogether. Further, the changes
21 Defendants requested from Amazon still included PSI
22 claims that were all either unsubstantiated or higher
23 than the tested 1300 PSI rating. By requesting
24 modifications that still included false PSI claims,
25 Defendants have not only failed to show a reasonable
26 effort to comply with the Amended Injunction but have
27 also actively continued to violate it.
28 Defendants additionally claim to have experienced
14
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 15 of 21 Page ID #:588
1 challenges with employees due to COVID-19 lockdowns, but
2 Defendants do not indicate that these lockdowns made
3 compliance impossible. Opp’n 6:12-24. For instance,
4 Defendants do not argue that the lockdowns prevented
5 their employees from accessing the internet, nor that
6 the lockdowns prevented Defendants from manufacturing
7 and selling their pressure washers in a manner that
8 complies with the Amended Injunction. Id. Thus, while
9 Defendants may have experienced challenges due to COVID-
10 19, these challenges do not excuse their non-compliance.
11 See F.T.C. v. Affordable Media, 179 F.3d 228, 1241 (9th
12 Cir. 1999) (“[T]he party asserting the impossibility
13 defense must show categorically and in detail why he is
14 unable to comply.”).
15 While Defendants contend that they “have been as
16 diligent as possible in attempting to comply,” Opp’n at
17 6:12-14, conclusory statements about diligence alone do
18 not excuse their violations. Plaintiff has demonstrated
19 clear violations of the both the Amended Injunction and
20 the Settlement Agreements, and Defendants have failed to
21 meet their burden to show that they took all reasonable
22 steps to comply. This Court therefore holds Defendants
23 in contempt and ORDERS Defendants to comply with the
24 terms of the Amended Injunction and the Settlement
25 Agreements, namely paragraphs 3.a., 3.c., and 3.e.
26 4. Coercive and Compensatory Sanctions
27 Plaintiff’s Motion seeks sanctions against
28 Defendants to coerce their obedience and to compensate
15
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 16 of 21 Page ID #:589
1 Plaintiff for damages resulting from Defendants’
2 behavior. Mot. 2:4-10. As for compensatory sanctions,
3 Plaintiff asks this Court to order Defendants to pay to
4 Plaintiff all profits received by Defendants from the
5 sale of their pressure washers in violation of the
6 Amended Injunction. Id. at 17:11-13.
7 “A court may wield its civil contempt powers for
8 two separate and independent purposes: (1) ‘to coerce
9 the defendant into compliance with the court’s order’;
10 and (2) ‘to compensate the complainant for losses
11 sustained.’” Shell Offshore Inc. v. Greenpeace, Inc.,
12 815 F.3d 623, 629 (9th Cir. 2016) (quoting United States
13 v. United Mine Workers of Am., 330 U.S. 258, 303-04
14 (1947)).
15 When imposing coercive sanctions, courts must
16 “consider the character and magnitude of the harm
17 threatened by continued contumacy, and the probable
18 effectiveness of any suggested sanction in bringing
19 about the result desired.” United Mine Workers, 330
20 U.S. at 304. Coercive fines are payable to the court,
21 rather than the movant. Id. Coercive sanctions often
22 take the form of a conditional daily fine. Shell
23 Offshore, 815 F.3d at 629; see, e.g., Whittaker Corp. v.
24 Execuair Corp., 953 F.2d 510, 617 (9th Cir. 1992)
25 (noting that coercive sanctions “are by their very
26 nature ‘conditional’ because they only operate if and
27 when the contumacy continues”). While courts may
28 exercise discretion in fashioning an amount of fines,
16
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 17 of 21 Page ID #:590
1 see United Mine Workers, 330 U.S. at 305, the
2 conditional fine should afford the contemnor an
3 opportunity to purge the fine by complying with the
4 court order. Shell Offshore, 815 F.3d at 629. In
5 determining the amount of the fine, courts should also
6 “consider the amount of [the contemnor’s] financial
7 resources and the consequent seriousness of the burden”
8 to the contemnor. United Mine Workers, 330 U.S. at 304.
9 Here, Defendants’ continued contumacy poses an
10 ongoing threat to Plaintiff as a direct competitor.
11 Seven months have passed since the Original Agreement
12 and Permanent Injunction were entered, and four months
13 have passed since the Amended Agreement and Amended
14 Injunction were entered. Defendants’ contumacy has
15 continued through this entire period. See Mot. 1:3-10.
16 While Plaintiff has not suggested an amount of
17 coercive sanctions to impose, a conditional daily fine
18 in the amount of $250 per day is appropriate here for
19 three reasons. First, a conditional daily fine would
20 likely induce Defendants’ compliance with the Amended
21 Injunction and the Settlement Agreements, given their
22 failure to comply in the absence of a coercive sanction.
23 Second, a conditional daily fine would provide
24 Defendants an opportunity to purge the fine by ceasing
25 their contemptuous conduct. See Shell Offshore, 815
26 F.3d at 629. Third, the amount of $250 per day is
27 warranted given the lack of information about
28 Defendants’ financial resources and given the
17
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 18 of 21 Page ID #:591
1 substantial magnitude of Defendants’ continued
2 contumacy. Arabian Gas & Oil Dev. Co. v. Wisdom Marines
3 Lines, S.A., No. 16-CV-03801-DMR, 2017 WL 4390184, at *7
4 (N.D. Cal. Oct. 3, 2017) (noting that a $250 per diem
5 fine was “well within the range of coercive per diem
6 fines issued by courts in this district for civil
7 contempt”); United States v. Gillies, No. CV-11-3623 CW
8 MEJ, 2013 WL 968244, at *2 (N.D. Cal. Feb. 22, 2013),
9 report and recommendation adopted, No. C 11-03623 CW,
10 2013 WL 968231 (N.D. Cal. Mar. 12, 2013) (imposing a
11 coercive daily fine of $250 against an individual).
12 Thus, this Court GRANTS Plaintiff’s request for coercive
13 sanctions and ORDERS Defendants to pay a daily fine of
14 $250, starting from the date of this Order, for each day
15 they remain in violation of the Amended Injunction and
16 the Settlement Agreements.
17 Unlike coercive sanctions, compensatory awards are
18 limited to “actual losses sustained as a result of the
19 contumacy.” Shuffler v. Heritage Bank, 720 F.2d 1141,
20 1148 (9th Cir. 1983). Compensatory awards are payable
21 to the party moving for contempt. United Mine Workers,
22 330 U.S. at 304. Here, Plaintiff has failed to provide
23 the Court with evidence as to sales it actually lost as
24 a direct result of Defendants’ contumacy. See United
25 Mine Workers, 330 U.S. at 304 (compensatory fine must
26 “be based upon evidence of complainant’s actual loss”);
27 see also Gen. Signal Corp., 787 F.2d at 1380 (denying a
28 compensatory fine where movant provided no evidence of
18
Case 2:20-cv-00587-RSWL-RAO Document 60 Filed 07/18/22 Page 19 of 21 Page ID #:592
1 losses caused by non-movant’s contumacy). Lacking
2 evidence of losses attributable to Defendants’
3 contumacy, this Courts DENIES Plaintiff’s request for
4 compensatory sanctions.
5 5. Attorneys’ Fees
6 In addition to sanctions, Plaintiff seeks
7 attorneys’ fees and costs in the amount of $12,192.25
8 incurred in connection with bringing the instant Motion
9 and enforcing the Settlement Agreements. Mot. 17:14-16,
10 18:1-3. The Amended Agreement provides in Paragraph 5
11 that, in the event that either party breaches the
12 Settlement Agreements, the accused party “shall pay all
13 reasonable attorneys’ fees, costs and expenses incurred
14 by the prevailing Party in any civil action relating to
15 the enforcement of the Original Agreement, the Amended
16 Agreement, [and] the Amended Permanent Injunction.” Ex.
17 2 ¶ 5.
18 Courts have considerable discretion to award
19 attorneys’ fees. Fitzgerald v. City of Los Angeles,
20 No. CV 03–01876 DDP (RZx), 2009 WL 960825, at *3 (C.D.
21 Cal. April 7, 2009). Courts have awarded attorneys’
22 fees based on the terms of a settlement agreement where
23 an unambiguous provision in the settlement agreement
24 provided payment of attorneys’ fees and costs,
25 especially where it was likely that an agreement or
26 injunction “w[ould] need monitoring.” Id. at *6.
27 Additionally, because “[a]ttorneys’ fees frequently must
28 be expended to bring a violation of an order to the
19
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1 court’s attention,” courts in civil contempt proceedings
2 may exercise discretion to decide whether an award of
3 attorneys’ fees is “appropriate as a remedial measure.”
4 Perry, 759 F.2d at 705.
5 Here, Plaintiff is entitled to attorneys’ fees
6 under the express terms of the Settlement Agreements.
7 However, Plaintiff has not submitted financial records,
8 such as billing statements, to establish the amount of
9 reasonable attorneys’ fees and costs beyond its bald
10 assertion that it incurred costs of $12,192.25 in
11 bringing this Motion. See Global Ampersand, LLC v.
12 Crown Eng'g & Constr., 261 F.R.D. 495, 502 (E.D. Cal.
13 2009) (citing Van Gerwen v. Guarantee Mut. Life Co., 214
14 F.3d 1041, 1045 (9th Cir. 2000)) (holding that a party
15 seeking an award of attorney’s fees “must submit
16 evidence to support the number of hours worked and the
17 rates claimed”). Thus, the Court GRANTS Plaintiff’s
18 request for attorneys’ fees and ORDERS Plaintiff to
19 provide supplemental briefing to establish the amount of
20 reasonable attorneys’ fees and costs.
21 III. CONCLUSION
22 Based on the foregoing, the Court GRANTS in part
23 and DENIES in part Plaintiff’s Motion for Contempt and
24 Enforcement of Settlement. Specifically, the Court
25 ORDERS Defendants to comply with the Amended Injunction
26 and the Settlement Agreements and cease their use of
27 false or unverified PSI claims. The Court also GRANTS
28 Plaintiff’s request for coercive sanctions and ORDERS
20
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1 Defendants to pay a daily fine of $250, starting from
2 the date of this Order, for each day they remain in
3 violation of the Amended Injunction and the Settlement
4 Agreements. The Court DENIES Plaintiff’s request for
5 compensatory sanctions. The Court additionally GRANTS
6 Plaintiff’s request for attorneys’ fees and ORDERS
7 Plaintiff to submit supplemental briefing to establish
8 the amount of reasonable attorneys’ fees and costs
9 within fourteen (14) days of this Order.
10 IT IS SO ORDERED.
11
12 DATED: July 18, 2022 ______/_s/_ R_o_n_a_ld_ _S_.W__. L_e_w_______
HONORABLE RONALD S.W. LEW
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Senior U.S. District Judge
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