Petition for Writ of Certiorari — Law Practice of J. B. Grossman, P. A. v. Securities & Exchange Commission

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Swpreme Court, U.S.

(1) FILED

95 1766 APR 30 199%

No. OFFICE OF THE CLERK

In The

Supreme Court of the United States

October Term, 1995

LAW PRACTICE OF J.B. GROSSMAN, P.A.,

Petitioner,

versus

SECURITIES AND EXCHANGE COMMISSION,

Respondent.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

PETITION FOR WRIT OF CERTIORARI

Counsel for Petitioner

Howarp A. TescHer, Eso.

Kupnis TESCHER

LipPpMAN VALINSKY & KAIN

One Financial Plaza

Suite 2308

Fort Lauderdale, FL 33394

(954) 4457-1964

QUESTIONS PRESENTED

Should this Court grant certiorari to review the deci-

sion of the Eleventh Circuit Court of Appeals which

determined that an ex parte temporary restraining order

issued pursuant to Rule 65(b) of the Federal Rules of Civil

Procedure becomes an enforceable preliminary injunction

once the temporary restraining order expires under the

time limit set forth in Rule 65(b), notwithstanding this

Court’s decision in Granny Goose Foods, Inc. v. Brotherhood

of Teamsters & Auto Truck Drivers Local No. 70 of Alameda

County, 415 U.S. 423 (1974), that a temporary restraining

order expires within the time limit imposed by Rule 65(b)

unless a preliminary injunction containing findings of

fact and conclusions of law is issued by the district court.

Should this Court grant certiorari to review the deci-

sion of the Eleventh Circuit Court of Appeals which

determined that an ex parte temporary restraining order

issued pursuant to Rule 65(b) of the Federal Rules of Civil

Procedure becomes an enforceable preliminary injunction

once the temporary restraining order expires under the

time limit set forth in Rule 65(b), notwithstanding Rule

65(b) provides that a temporary restraining order “shall

expire” by its own terms after twenty days.

2c ND Ye Y WN

LIST OF PARTIES

Berger, Thomas W., Defendant.

Comcoa Ltd. a/k/a Comcoa Ltd., Inc., Defendant.

Law Practice of J.B. Grossman, P.A., Petitioner.

Levine, David, court-appointed Receiver.

Securities and Exchange Commission, Respondent.

Sun-Sentinel Company, Claimant.

Mobitel Services, Corporation, Claimant.

Beny Quattrociocchi, Claimant.

TABLE OF CONTENTS

Page

OPINIONS BELOW.............. a l

PE UTOCT LL ub dideebpt cagpedesscsicccess 1

ii teri itds Gebsewresenececcecasccccee: 2

STATEMENT OF THE CASE..........-.-ecceceeees 3

REASONS FOR GRANTING THE WRIT ........... 8

CONCLUSION 16

“ee verevnweneeveeneenenenwenenenenenenenwenenenenenennenrr rrr eee

TABLE OF AUTHORITIES

Page

Cases

Granny Goose Foods, Inc. v. Brotherhood of Teamsters

& Auto Truck Drivers Local No. 70 of Alameda

County, 415 U.S. 423 (1974)................... passim

Sampson v. Murray, 415 U.S. 61 (1974)............ 12, 13

STATUTES AND Rutes

| Pere ee hn Te 2

2. fg Renan oe ber 1 9, 12

8 - Sf 5 RRR ry Bek Fe iy, passim

Petitioner, Law Practice of J.B. Grossman, P.A.,

respectfully prays that a Writ of Certiorari issue to review

the judgment of the Eleventh Circuit Court of Appeals

entered on December 1, 1995, and subsequent denial of

the Motion for Rehearing on February 15, 1996.

OPINIONS BELOW

On March 13, 1995, the District Court for the South-

ern District of Florida granted Respondent's motion to

hold Petitioner in contempt for violation of a temporary

restraining order orally extended by the District Court,

which Petitioner contended violated Rule 65(b) of the

Federal Rules of Civil Procedure and directly contra-

dicted this Court’s decision in Granny Goose Foods, Inc. v.

Brotherhood of Teamsters & Auto Truck Drivers Local No. 70

of Alameda County, 415 U.S. 423 (1974). (App. 37). On

December 1, 1995, the Eleventh Circuit Court of Appeals

affirmed that decision and held that the Petitioner vio-

lated a preliminary injunction because the temporary

restraining order became a preliminary injunction when

it expired. (App. 1). The Senior Circuit Judge wrote a

concurring opinion, dubitante. (App. 8). The Eleventh Cir-

cuit Court of Appeals denied Petitioner's Motion for

Rehearing and Suggestion of Rehearing En Banc on Feb-

ruary 15, 1996. (App. 19).

JURISDICTION

Judgment of the Eleventh Circuit Court of Appeals

was entered on December 1, 1995, and rehearing denied

on February 15, 1996. This Court's jurisdiction to consider

this petition from the judgment or decree by the court of

appeals is invoked pursuant to 28 U.S.C. § 1254(1).

STATUTES

Rule 65 of the Federal Rules of Civil Procedure.

(b) Temporary Restraining Order; Notice;

Hearing; Duration. A temporary restraining

order may be granted without written or oral

notice to the adverse party or that party’s attor-

ney only if (1) it clearly appears from specific

facts shown by affidavit or by the verified com-

plaint that immediate and irreparable injury,

loss, or damage will result to the applicant

before the adverse party or that party's attorney

can be heard in opposition, and (2) the appli-

cant’s attorney certifies to the court in writing

the efforts, if any, which have been made to give

notice and the reasons supporting the claira that

notice should not be required. Every temporary

restraining order granted without notice shall be

indorsed with the date and hour of issuance:

shall be filed forthwith in the clerk’s office and

entered of record; shall define the injury and

State why it is irreparable and why the order

was granted without notice; and shall expire by

its terms within such time after entry, not to

exceed 10 days, as the court fixes, unless within

the time so fixed the order, for good cause

shown, is extended for a like period or unless

the party against whom the order is directed

consents that it may be extended for a longer

period. The reasons for the extension shall be

entered of record. In case a temporary restrain-

ing order is granted without notice, the motion

for a preliminary injunction shall be set down

for hearing at the earliest possible time and

takes precedence of all matters except older

matters of the same character; and when the

motion comes on for hearing the party who

obtained the temporary restraining order shall

with the application for a preliminary

injunction and, if the party does not do so, the

court shall dissolve the temporary restraining

order. On 2 days’ notice to the party who

obtained the temporary restraining order with-

out notice or on such shorter notice to that party

as the court may prescribe, the adverse party

may appear and move its dissolution or mod-

ification and in that event the court shall pro-

ceed to hear and determine such motion as

expeditiously as the ends of justice require.

See also Appendices at 117.

STATEMENT OF THE CASE

Petitioner Law Practice of J.B. Grossman, P.A. was

counsel to the Defendants before the United States Dis-

trict Court for the Southern District of Florida, docket no.

94-8256-CIV-SH, in an action by Respondent Securities

and Exchange Commission alleging, inter alia, the sale of

unregistered securities by the Defendants. The proceed-

ing began on May 5, 1994, when Respondent filed, among

other things, an ex parte motion for a temporary restrain-

ing order (“TRO”), a preliminary injunction and the

appointment of a receiver.

On May 6, 1994, at 9:25 a.m., the district court

entered a TRO, appointed a receiver and set a hearing for

May 16, 1994, on the application for a imi inj

, . preliminary injunc-

tion. The TRO included a freeze of the Detandenay Soa

which covered trust funds held by the Petiti

Defendants’ behalf. Pee

On May 11, 1994, the Defendants filed, inter alia, an

emergency motion to dissolve the TRO and a motion to

dismiss the complaint for lack of subject matter jurisdic-

tion. On May 16, 1994, the district court held a hearing on

the application for a preliminary injunction and heard

argument on all the aforementioned motions. The hearing

concluded on May 17, 1994. The trial judge announced at

the close of the hearing that he was extending the TRO

until further order and that the status quo would remain

until a ruling on the Defendants’ motions.

On May 27, 1994, twenty calendar days after entry of

the TRO, Petitioner, as the Defendants’ counsel, notified

the Receiver it was Defendants’ position pursuant to Rule

65(b) of the Federal Rules of Civil Procedure (“Rule

65(b)”) (App. 117) that the TRO had expired. Petitioner

informed the Receiver that the Defendants would not

consent to an extension of the TRO and, since there was

no valid restraining order in existence, the Defendants

demanded return of their property from the Receiver. The

Receiver refused the demand, in part, based upon his

position that the TRO lasted for 20 business days under

the Federal Rules and, according to his calculation, the

TRO was therefore in effect until June 1, 1994. The Defen-

dants took no further action at that time.

On June 3, 1994, Petitioner contacted the chambers of

the trial judge to ascertain whether a preliminary injunc-

tion had been issued. An administrative assistant advised

Petitioner that no preliminary injunction had been issued.

On that same day, the trial judge issued an omnibus order

which, relevant to these proceedings, denied Defendants’

May 11, 1994, motion to dissolve the TRO and motion to

dismiss.

On June 6, 1994, Petitioner contacted the Clerk of the

district court and the trial judge’s chambers to inquire

whether a preliminary injunction had been issued. The

Clerk responded that no order had been issued. The trial

judge’s assistant responded that a preliminary injunction

had been issued. Later that day, Petitioner requested a

facsimile copy of the preliminary injunction order from

the judge’s chambers. At that point, the same assistant

told Petitioner that she was previously mistaken and no

preliminary injunction had been issued. Petitioner

inquired whether any order would be rendered that

week. The assistant responded that she was not aware of

any forthcoming order.

Prior to June 6, 1994, Petitioner advised the Defen-

dants that according to Rule 65(b) (App. 117) and this

Court’s decision in Granny Goose Foods, Inc. v. Brotherhood

of Teamsters & Auto Truck Drivers Local No. 70 of Alameda

County, 415 U.S. 423 (1974) (App. 37), if no preliminary

injunction was issued by the district court and twenty

days passed from the date the district court issued the

TRO, there was no valid restraining order in effect and

the Defendants were free to reclaim and make use of their

property. Thus, on June 5, 1994 and again on June 6, 1994,

Defendants instructed Petitioner to make a second

demand upon the Receiver for return of their property

and to transfer sufficient trust account funds to compen-

sate Petitioner for the legal fees and costs incurred thus

far in their defense (including about $22,000 of costs

advanced by Petitioner). Petitioner made the demand

upon the Receiver and transferred approximately $92,000

from its trust account to Petitioner’s operating account.

When the Receiver refused the second demand, the

Defendants moved the district court to issue an order

releasing their assets.

On June 7, 1994, the district court entered an order of

preliminary injunction nunc pro tunc to June 3, 1994. The

nunc pro tunc was handwritten by the trial judge at the

end of the order without any explanation.

On June 10, 1994, Petitioner filed Defendants’ appeal

of the district court’s preliminary injunction and omnibus

order. Soon thereafter, Petitioner was permitted to with-

draw as counsel to Defendants and the appeal was not

pursued by the Defendants.

On August 11, 1994, Respondent moved to hold the

Petitioner in contempt for violating the TRO when it

transferred the Defendants’ trust funds into Petitioner's

operating account. Petitioner immediately placed the

funds in question into a segregated trust account, where

the interest earned on the funds was paid to the Florida Bar.

On January 9, 1995, a show cause hearing was held

on the motion. Petitioner presented two witnesses, attor-

neys J.B. Grossman, Esq. and Kenneth J. Dunn, Esq.,

partners/shareholders of Petitioner law firm. Grossman

and Dunn testified that in advising their clients and

subsequently transferring the trust funds pursuant to

their clients’ instruction, they relied upon the language of

Rule 65(b) and, specifically, this Court’s interpretation of

the rule in Granny Goose, that a temporary restraining

order expires within the time limit imposed by Rule 65(b)

unless a preliminary injunction containing findings of

fact and conclusions of law is issued by the district court.

On March 13, 1995, the trial judge entered an order

holding Petitioner in civil contempt for violating the

TRO. The judge ordered Petitioner to pay over the trans-

ferred funds and to pay interest on the monies from June

15, 1994, notwithstanding the interest earned on the dis-

puted funds was paid directly to the Florida Bar.

Petitioner timely appealed the district court’s con-

tempt order to the United States Court of Appeals for the

Eleventh Circuit. Petitioner and Respondent stipulated

with the Court of Appeals’ approval that Petitioner

would pay over the funds and interest to the Receiver,

who would then hold the funds in a segregated account

during the pendency of the appeal.

On December 1, 1995, a three-judge panel of the

Eleventh Circuit affirmed the district court’s contempt

order. The panel found that the TRO expired prior to

Petitioner’s transfer of the Defendants’ funds, but held

that the TRO automatically became an enforceable pre-

liminary injunction when it expired and found Petitioner

in violation of a preliminary injunction.

Senior Circuit Judge Hill, who sat on the panel, wrote

a concurring opinion, dubitante, recognizing the inherent

danger in the majority opinion. He wrote:

.. . We uphold the contempt imposed for viola-

tion of an expired TRO in this case at the

expense of making unclear the duration of emer-

gency orders that deprive a party of the free use

of his or her property. This is not appealing in a

free society. Furthermore, we eviscerate the pro-

tection afforded by Rule 65(b).

Opinion at 8-9 (App. 11).

Petitioner timely filed a Motion for Rehearing and

Suggestion of Rehearing En Banc with the Eleventh Cir-

cuit. On February 15, 1996, the Eleventh Circuit denied

Petitioner’s Motion for Rehearing and Suggestion of

Rehearing En Banc.

REASONS FOR GRANTING THE WRIT

It is respectfully contended that the United States

Court of Appeals for the Eleventh Circuit has decided an

important federal question in a way that conflicts with

relevant decisions of this Court. In the decision below, the

Eleventh Circuit refused to follow the clearly stated man-

date of this Court in Granny Goose, when interpreting

Rule 65(b) of the Federal Rules of Civil Procedure.

In Granny Goose, this Court heard the appeal of a

contempt order for violation of a TRO granted pursuant

to Rule 65(b) where such violation occurred after the

twenty-day time limit set forth in the rule. The Court held

that under Rule 65(b), where the restrained party has not

consented to an extension of the TRO and no written

preliminary injunction order has been issued by the

district court, a party may “reasonably assume” that no

valid order exists and act accordingly. Id. at 444-445. The

Court further held that for a preliminary injunction to be

a valid order from which a contempt order could issue, a

district court must (1) hold a hearing within the time

limit of Rule 65(b) on the issue of whether a preliminary

injunction is warranted, and (2) issue a written order

containing findings of fact and conclusions of law in

compliance with Rule 52(a) of the Federal Rules. Id. Oth-

erwise, this Court determined that there is no valid

injunctive order from which a contempt order can be

rendered. Id.

Granny Goose was a 9-0 decision and the only opinion

of this Court which has analyzed and interpreted the time

limit on TROs set forth in Rule 65(b). Id. at 423. Justice

Thurgood Marshall wrote the majority opinion and Chief

Justice Rehnquist, then Associate Justice Rehnquist, wrote

the only concurrence. Notably, Justice Rehnquist's con-

currence was predicated solely on the finding that,

“ .. there was no injunctive order in effect at the point in

time that respondent's allegedly contemptuous conduct

occurred.” Id. at 445. (App. 62-63).

In the instant proceeding, the Eleventh Circuit

affirmed the district court’s tinding of contempt against

Petitioner. The Eleventh Circuit’s determination was

based on the theory that upon expiration of the TRO,

notwithstanding the absence of an order containing find-

ings of fact or conclusions of law, the TRO became an

enforceable preliminary injunction. That conclusion

directly contradicts the plain language of Rule 65(b) and

“overrules” the holding of this Court in Granny Goose. In

Granny Goose, this Court wrote:

It would be inconsistent with this basic

principle to countenance procedures whereby

parties against whom an injunction is directed

are left to guess about its intended duration.

Rule 65(b) provides that temporary restraining

orders expire by their own terms within 10 days

of their issuance. Where a court intends to sup-

plant such an order with a preliminary injunc-

tion of unlimited duration pending a final

decision on the merits or further order of the

court, it should issue an order clearly saying so.

And where it has not done so, a party against

whom a temporary restraining order has been

issued may reasonably assume that the order

expired within the time limits imposed by

Rule 65(b). Here, since the only orders entered

were a temporary restraining order of limited

duration and an order denying a motion to dis-

solve the temporary order, the Union had no

reason to believe that a preliminary injunction

of unlimited duration had been issued.

Id. at 444-445 [emphasis added]. (App. 61-62).

The Court in Granny Goose was determining the cor-

rectness of a contempt order issued by a district court for

action in violation of a TRO after the time limit set forth

in Rule 65(b). Although that is the precise issue in the

instant case, the majority for the Eleventh Circuit refused

to follow Granny Goose. The Court of Appeals wrote:

We accept that, where there has been no

notice to the parties and no hearing on the var-

ious factors involved in considering a prelimi-

nary injunction, a TRO continued past the Rule

65 limit falls of its own weight. See Granny Goose

v. Brotherhood of Teamsters & Auto Truck Drivers,

94 S.Ct. 1113 (1974); Hudson v. Barr, 3 F.2d 970

(10th Cir. 1993). In Granny Goose, the district

court “did not indicate that it was undertaking a

hearing on a preliminary injunction.” Granny

Goose, 94 S.Ct. at 1125. And, neither party made

an attempt to present its position on whether a

preliminary injunction should issue. Id.

Opinion at 7, note 7. (App. 6). The Eleventh Circuit,

therefore, attempted to distinguish Granny Goose from

this case on the grounds that a hearing on the preliminary

injunction had been held in this case, where such a hear-

ing was not undertaken in Granny Goose. However, this

Court specifically addressed that issue in Granny Goose.

In no uncertain terms, this Court held that even if a

preliminary injunction hearing is held, a TRO cannot be

made into an enforceable preliminary injunction unless a

written order containing findings of fact and conclusions

of law is issued by the district court. This Court wrote:

Even were we to assume that the District

Court had intended by its June 4 order to grant

a preliminary injunction, its intention was not

manifested in the appropriate form. Where a

hearing on a preliminary injunction has been

held after the issuance of a temporary restrain-

ing order, and where the District Court decides

to grant the preliminary injunction, the appro-

priate procedure is not simply to continue in

effect the temporary restraining order, but

rather to issue a preliminary injunction,

accompanied by the necessary findings of fact

and conclusions of law. [note omitted]

Id. at 443 [emphasis added]. (App. 60). This Court did not

recognize the validity of any injunctive order after the

expiration of a TRO unless the order was issued pursuant

to Rule 52(a), i.e., a written order containing findings of

fact and conclusions of law.

In the decision below, the Eleventh Circuit relied

upon Sampson v. Murray, 415 U.S. 61 (1974) (App. 67), to

affirm the contempt order against Petitioner. Not only

was Granny Goose decided two weeks after Sampson and

therefore stands as controlling precedent, but in Sampson

this Court was not presented with the consequences of

violating an expired TRO as was the case in Granny Goose.

In Sampson, this Court was primarily concerned with

whether injunctive relief was available to the plaintiff, a

dismissed federal government worker. The district court

granted a TRO preventing her dismissal and ruled that

the TRO would extend until the government produced a

key witness. The government did not produce the witness

and instead went before the Court of Appeals for the

District of Columbia to contest the power of the district

court to enter injunctive relief when administrative pro-

cedures were in place. The Court of Appeals affirmed the

district court’s granting of injunctive relief and this Court

reversed.

The majority of the Court, led by Justice Rehnquist,

treated the extended TRO as a preliminary injunction in

order to entertain jurisdiction over the case under 28

U.S.C. § 1292(a)(1). Id. at 62-92. The majority addressed

the merits of the plaintiff's claim for injunctive relief and

concluded that the plaintiff was not entitled to injunctive

relief. Id.

In Justice Marshall’s dissent in Sampson, he argued

against the appealability of a TRO in any situation and

stated that even if a TRO were appealable as a prelimi-

nary injunction, “it should be appealable only for the

purposes of holding it invalid for failure to comply with

Rule 52(a).” Id. at 99 (App. 110). Notably, no Justice in

Sampson recognized an extended TRO as an enforceable

order upon which contempt could issue.

The Sampson case is not cited in Granny Goose. 415

U.S. 61. Surely Justice Marshall, a dissenter in Sampson

and author of the majority opinion in Granny Goose,

would have referred to Sampson if the holding in that case

were at all relevant to the issues decided in Granny Goose.

However, he did not. Nevertheless, in the decision below,

the Eleventh Circuit stated:

That a hearing on a preliminary injunction

had been held and that appellate review was,

therefore, available under Sampson, makes this

case materially different from Granny Goose.

Even in Pan American World Airways, Inc. v.

Flight Engineers’ Int'l Assn., 306 F.2d 840, 842 (2d

Cir. 1962), the Second Circuit treated a TRO

extended following the commencement of a

hearing on the merits as a preliminary injunc-

tion for purposes of appeal. No good reason

exists to limit this rule to one of appellate juris-

diction only: a preliminary injunction is a pre-

liminary injunction.

Opinion at 8, note 8. (App. 6).

The above conclusions are a refusal by the Eleventh

Circuit to follow the clear enunciation of the governing

rule of law set forth in Granny Goose. First, it took this

Court's limited appellate treatment of a TRO as a prelimi-

nary injunction in order to entertain jurisdiction in Samp-

son, and expanded the holding to the extent that a TRO

extended beyond twenty days may automatically become

an enforceable preliminary injunction. However, that was

not the holding in Sampson and directly cont..*icts this

Court's holding in Granny Goose.

Granny Goose determined that no preliminary injunc-

tion exists after twenty days from the date of issuance of

a TRO, unless specified by a written injunctive order

containing findings of fact and conclusions of law. The

fact that the trial judge in this case orally ordered an

indefinite extension of the TRO does not change the

application of Granny Goose, but, in fact, violates its clear

holding. The Court enunciated the prerequisites for a

valid order and the trial judge in this case failed to meet

those criteria. The trial judge did not have the power to

extend the TRO past twenty days without the consent of

the restrained party and, in attempting to do so in this

case, exceeded his legal authority. This Court foresaw

such a situation in Granny Goose and held that without a

written order a restrained party may “reasonably

assume” no valid order exists and act accordingly.

The Eleventh Circuit argued in the decision below

that appellate review was the only proper action for

Petitioner to take in this case. Yet, in Granny Goose, the

restrained party did not seek appellate review of the

extended TRO, but rather proceeded with actions which

were in violation of the original TRO. This Court did not

take issue with that conduct. On the contrary, the Court

held that one may “reasonably assume” there is no valid

order after twenty days and the parties may act accord-

ingly. Thereupon, this Court upheld the reversal of the

contempt order.

Thus, the Eleventh Circuit's reliance on (1) the appel-

late treatment of a TRO as a preliminary injunction, and

(2) the holding of a preliminary injunction hearing, as

grounds for a TRO becoming a full fledged preliminary

injunction, directly contradicts this Court's interpretation

of Rule 65(b) in Granny Goose and must be reversed.

Neither the courts of appeals nor the district courts

have the power to refuse to follow Rule 65(b), a Congres-

sional enactment. Rule 65(b) is clear. Granny Goose is

clear. A district court cannot extend a TRO beyond

twenty days without requesting and receiving the con-

sent of the restrained party. If a district court seeks to

continue the effect of the TRO beyond the twenty days

without consent, the district court is not only obligated to

hold a preliminary injunction hearing, but must issue a

written preliminary injunction containing findings of fact

and conclusions of law.

The concurring judge below noted the danger inher-

ent in Eleventh Circuit's ruling. He wrote, “[i]f a TRO can

metamorphose into a preliminary injunction by the expi-

ration of the very time limits imposed as safeguards

against the indefinite restraint over one’s property, then

Rule 65(b) provides no protection at all.” Slip decision,

concurring opinion, pages 9-10. (App. 17-18). Yet, this

metamorphosis has now been authorized by the decision

of the Eleventh Circuit in this case.

This Court should review this decision and deter-

mine whether a TRO becomes an enforceable preliminary

injunction upon its expiration under Rule 65(b).

CONCLUSION

Ours is “[a] government of laws, nut men.”! The law

in this case is expressed in Rule 65(b) and this Court's

decision in Granny Goose. That law provides that a TRO

expires after twenty days unless prior to that date the

restrained party consents to an extension or there has

been a written order by the trial judge converting the

TRO into a preliminary injunction. Otherwise, the law

provides that there is no valid order. A trial judge cannot

disregard the law.

The Eleventh Circuit's opinion flatly refused to fol-

low the clear language of both Rule 65(b) and this Court's

holding in Granny Goose, resulting in affirmance of the

contempt order issued by the trial judge. When the same

situation was presented to this Court in Granny Goose,

this Court affirmed the reversal of the trial judge’s con-

tempt order. The inconsistency created by the Eleventh

Circuit's decision casts doubt upon the property rights of

all civil litigants before the federal courts, especially in

the countless government injunctive actions before the |

district courts.

! John Adams, “Novanglus” papers, Boston Gazette [1774],

no. 7. Incorporated [1780] in the Massachusetts Constitution.

Words credited to James Harrington [1611-1677].

Pursuant to Rule 10 of the Supreme Court Rules, this

Court has discretion to review the Eleventh Circuit's deci-

sion because it decided an important federal question in a

way that conflicts with relevant decisions of this Court,

i.e., Granny Goose.

For all the reasons stated, Petitioner, Law Practice of

J.B. Grossman, P.A., prays that this Court grant a Writ of

Certiorari to review the decision of the Eleventh Circuit

Court of Appeals.

Respectfully submitted,

Howarp A. Tescuer, Eso.

Kipnis TescHer LippMAN

Vauinsky & Kain

One Financial Plaza

Suite 2308

Fort Lauderdale, FL 33394

(954) 467-1964

App. 1

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 95-4391

D. C. Docket No. 94-8256-CIV-SH

DAVID LEVINE,

Receiver-Appellee,

SECURITIES EXCHANGE COMMISSION,

Plaintiff-Appellee,

versus

COMCOA LTD., a/k/a Comcoa Ltd.,

THOMAS W. BERGER,

Defendants,

J. B. GROSSMAN, Law Practice,

Movant-Appellant,

SUN-SENTINEL COMPANY, MOBITEL SERVICES

CORP., a Delaware Corporation, et al.,

Claimants.

Appeal from the United States District Court

for the Southern District of Florida

(December 1, 1995)

Belore EDMONDSON, Circuit Judge, and HILL, Senior

Circuit Judge, and MILLS", District Judge.

* Honorable Richard Mills, U.S. District Judge for the

Central District of Illinois, sitting by designation.

App. 2

EDMONDSON, Circuit Judge:

Law Practice of J.B. Grossman, P.A., appeals the dis-

trict court’s finding of contempt for its transfer of funds

from the trust account of its client, Comcoa Ltd. (“Com-

coa”), to the law firm’s operating account in violation of a

court order. We affirm.

Before January 1994, Comcoa retained J.B. Grossman

as counsel.! In mid-January 1994, Grossman told Comcoa

to establish a large retainer fee to assure Grossman's

availability in the event of an asset-freezing action. This

retainer was placed in a trust account maintained by

Grossman on behalf of Comcoa. Before April 1994, the

Division of Enforcement of the Securities and Exchange

Commission (“Division”) began an informal inquiry into

the business activities of Comcoa.

On 5 May 1994, the Division filed an ex parte Motion

for Order to Show Cause Why a Preliminary Injunction

Should Not Be Granted, Temporary Restraining Order

(“TRO”), Order Freezing Assets, Order Appointing

Receiver, Order for an Accounting, Order Prohibiting

Destruction of Documents and an Order Expediting Dis-

covery. On 6 May 1994, at 9:25 AM, a United States

District Judge entered an order, among other things,

granting a TRO and freezing Comcoa’s assets, appointing

1 While it is appellant Law Practice of J.B. Grossman, P.A.

which was held in contempt below, the law firm’s sole

involvement in this case was through the actions of J.B.

Grossman, a lawyer. As such, this opinion will describe the

behavior in this case as being that of Mr. Grossman rather than

that of the law firm.

App. 3

a Receiver, and notifying the parties of a hearing on 16

May to consider a preliminary injunction.?

On 11 May Comcoa filed, among other things, an

Emergency Motion to Vacate the TRO, a Motion to Dis-

miss for Lack of Subject Matter Jurisdiction and a Motion

for Preliminary Hearing on Defendants’ Motion to Dis-

miss.

On 16 and 17 May the district court did hold a

preliminary injunction hearing and also heard Defendants

on their Motion to Dismiss for Lack of Subject Matter

Jurisdiction. Grossman was attorney of record for Com-

coa at this hearing. Over the two days, the district judge

heard argument from counsel and received testimony

from seven witnesses; the hearing was completed.? At the

end of the hearing on 17 May, the district court told both

parties that it was extending the 6 May order until the

court ruled on the substantive motions by Defendants.

The district court said the order would be extended in all

respects and specifically said the order included the asset

freeze. The district court then asked if either party had

anything further or any questions. Grossman replied,

“No, sir.”

On 6 June 1994, Grossman called the district court to

find out if an order had been issued. At first, Grossman

was told a preliminary injunction had been issued; but

2 The May 6 order stated that the hearing on May 16 was to

show cause “why a Preliminary Injunction . . . should not be

granted....”

3 Mr. Grossman makes no contention that he was unable at

this hearing to set forth fully the reasons for which he and

Comcoa believed no preliminary injunction should issue.

App. 4

later the district court’s assistant said a preliminary

injunction had not been issued. Grossman considered the

court’s order to have expired. And he, on 6 June, trans-

ferred from Comcoa’s trust account about $92,000 of the

retainer funds into his law firm’s operating account.*

About this same time, he filed for Comcoa an Emergency

Motion for Release of Assets, based on the expiration of

the TRO.5 Also on 7 June, the district court entered an

Order of Preliminary injunction nunc pro tunc to June 3,

1994; and, the district court denied Defendants’ Emer-

gency Motion.

In August 1994, the Division filed a Motion for an

Order to Show Cause to hold Grossman in contempt for

violating the district court orders when he transferred the

* The order stated that Comcoa and their “attorneys .. . are

[ Jrestrained from, directly or indirectly, transferring . . . any

assets or property owned by, controlled by, or in the possession

of [Comcoa]”. In the contempt proceeding the court below

concluded that the asset freeze extended to the trust account,

and this determination is not in dispute. Never does Grossman

contend that he was unaware that the order of the court, if still

in force, prohibited this conduct.

5 Some confusion exists on the precise sequence of events

on June 6 and 7. The district court appears to have found that

Grossman first filed the motion for release of funds and then -

before the motion could be decided - transferred the money.

Grossman's initial brief says that he transferred the funds on 6

June and filed the motion for release of assets the next day. His

reply brief says that the motion was filed 6 June, the same day

that he transferred the funds, but later in the day. And, the

docket sheet indicates the motion was not filed until 7 June. In

any event, what is undisputed is that Grossman’s transfer of

funds was a unilateral act done without the approval of any

court.

App. 5

retainer funds. The district court entered an order hold-

ing Grossman in contempt of court for his transferring of

the funds into his own account. He now appeals this

ruling.

Rule 65 of the Federal Rules of Civil Procedure says

that a TRO can last only 10 days, unless extended, and

cannot be extended beyond 20 days without the consent

of the restrained party.© Grossman says that he never

consented to an extension; and for the sake of our discus-

sion, we accept that he did not consent.

The Supreme Court has said a TRO that is continued

beyond the time permissible under Rule 65 should be

treated as a preliminary injunction. See Sampson v. Murray,

94 S.Ct. 937, 951 (1974) (stating “[w]here an adversary

hearing has been held, and the court's basis for issuing the

order strongly challenged, classification of the potentially

unlimited order as a temporary restraining order seems

particularly unjustified”). This treatment is especially

appropriate where, as in this case, there has been notice to

the parties, a full hearing on a preliminary injunction, and

then a stated and clear decision from the bench to extend

day extension should be calculated by excluding weekends and

holidays. This argument is largely irrelevant because even if we

take the calculation which excludes weekends and holidays, the

TRO would expire at 9:25 AM on June 6. And, because the

district court did not enter the written preliminary injunction

order until June 7 (although it was entered nunc pro tunc to June

3), the TRO would have expired unless consent were given. We

do note that even under the calendar day approach, continuing

the hearing into the second day constituted a for-cause

extension of the initial 10 day period.

App. 6

the terms of the restraining order indefinitely, that is, until

the court notified the parties otherwise.”

Very likely, Grossman’s client, Comcoa along with its

agents and attorneys, was under a preliminary injunction

once the judge spoke at the end of the hearing; but we

need not go that far. If the TRO had not become a prelimi-

nary injunction before, it became a preliminary injunction

when the TRO, as orally extended by the district court,

went beyond the time permissible under Rule 65. Thus,

the proper course of conduct for Grossman was to treat

the TRO as an erroneously granted preliminary injunc-

tion and to appeal.® See Clements Wire & Mfg. Co. v. NLRB,

589 F.2d 894, 896 (5th Cir. 1979).

7 We accept that, where there has been no notice to the

parties and no hearing on the various factors involved in

considering a preliminary injunction, a TRO continued past the

Rule 65 limit falls of its own weight. See Granny Goose v.

Brotherhood of Teamsters & Auto Truck Drivers, 94 S.Ct. 1113

(1974); Hudson v. Barr, 3 F.3d 970 (10th Cir. 1993). In Granny

Goose, the district court “did not indicate that it was

undertaking a hearing on a preliminary injunction.” Granny

Goose, 94 S.Ct. at 1125. And, neither party made an attempt to

present its position on whether a preliminary injunction should

issue. Id.

8 That a hearing on a preliminary injunction had been held

and that appellate review was, therefore, available under

Sampson, makes this case materially different from Granny

Goose. Even in Pan American World Airways, Inc. v. Flight

Engineers’ Int'l Assn., 306 F.2d 840, 842 (2d Cir. 1962), the Second

Circuit treated a TRO extended following the commencement of

a hearing on the merits as a preliminary injunction for purposes

of appeal. No good reason exists to limit this rule to one of

appellate jurisdiction only: a preliminary injunction is a

preliminary injunction.

App. 7

We believe the instances when lawyers can be told by

the district court in no uncertain terms not to do “X” and,

yet, the lawyer can go on to do “X” with impunity are

(and ought to be) few and far between, especially where

the appellate courts — as in this case - are open to the

lawyer to settle the matter in an orderly way, but the

lawyer pursues no appeal. In these circumstances, for

Grossman just to disregard the district court's clear order,

based on his personal belief that it was invalid, was not

merely bold; it was bad. We conclude his conduct war-

rants a determination of contempt.® The district court was

Two concerns about TROs are reflected in the case law and

in Rule 65. First, restrained parties often have no opportunity

for a hearing and may not know precisely what conduct is

prohibited. Second, a restrained party may not obtain appellate

review of a TRO.

Our holding respects both these concerns; Grossman and

Grossman’s client had the opportunity to contest the

preliminary injunction (and had precise notice of the enjoined

conduct) and also could have obtained appellate review of the

injunction.

* Although we decide this case under Rule 65, we do not

decide that all of the district courts’ power to give binding

orders to a lawyer and all of a lawyer’s legal duties to obey the

orders of a court with subject-matter jurisdiction over the

controversy in which the lawyer appears as counsel of record

flow from the Federal Rules of Civil Procedure only.

We are heartsick when we observe that Mr. Grossman, an

officer of the United States’ Courts, acted personally and

directly in disobeying the straightforward instruction of a

United States District Judge and did so just for money, his fee.

This case is not one in which a lawyer’s client acted, and

because the lawyer did not stop his client, the lawyer is facing

contempt. Mr. Grossman, himself, acted contrary to plain

instructions given to him when he was face-to-face with the

App. 8

within its discretion to hold Grossman in contempt of

court for violating its order.

The order of contempt against the Law Practice of

J.B. Grossman, P.A., is AFFIRMED.

HILL, Senior Circuit Judge, concurring, dubitante:

The court today affirms contempt sanctions against a

lawyer for doing what he knew the judge had ordered

him not to do. I am not attracted to this lawyer's conduct.

The problem arose, however, because the party who peti-

tioned for and obtained the TRO stood silent while the

order inadvertently expired without counselling the court

of the requirements for its extension. One would expect

more from the agency appearing here. It has obtained

court. In such circumstances, the power of district courts to

discipline their officers may possibly be considerably broader-

based than that granted by Rule 65 or even the Federal Rules of

Civil Procedure generally. Put differently, whether or not the

client Comcoa was still validly restrained about its funds,

perhaps Mr. Grossman, as an officer of the court, remained

under a valid restraint. But given the way this controversy was

decided by the district court and has been briefed and argued to

us, we will pass over the question of Mr. Grossman's

professional responsibilities and of the district court’s inherent

powers to supervise and to discipline its subordinate officers.

App. 9

temporary restraint before.' I am not pleased with the

performance of any of our cast of characters.

An ex parte temporary restraining order is an extreme

remedy to be used only with the utmost caution. Rule

65(b) of the Federal Rules of Civil Procedure imposes

strict restrictions on its scope and specific time con-

straints for its duration:

Every temporary restraining order granted

without notice . . . shall expire by its terms

within such time after entry, not to exceed 10

days, as the court fixes, unless within the time

so fixed the order, for good cause shown, is

extended for a like period or unless the party

against whom the order is directed consents that

it may be extended for a longer period.?

Fed. R. Civ. P. 65(b).

The importance of these restrictions was emphasized

by the Supreme Court in Granny Goose Foods, Inc. v.

Brot..erhood of Teamsters & Auto Truck Drivers, Local No. 70,

' An electronic search using only the words “Securities

and Exchange Commission” and “temporary restraining order”

or “TRO” yielded 11,541 cases. We are not suggesting that al/

these cases are similar to the instant situation, nor are we

implying we have read each case. We would suggest that

counsel representing the SEC are likely to have explored the

requirements for effective extension of TROs from time to time.

2 The district court found that Grossman consented to the

extension of the TRO. The majority opinion, however, accepts

without comment Grossman's contention that he did not. |

concur in this conclusion and note that, if Grossman had

consented to the extension, the TRO would have remained an

unappealable interlocutory order. Fernandez-Roque v. Smith, 671

F.2d 426, 430 (11th Cir. 1982).

App. 10

415 U.S. 423 (1974). In Granny Goose, a state court issued a

temporary restraining order to enjoin the local union

from striking. Tw days later, the case was removed to

federal court. The union moved to dissolve the restrain-

ing order. After a hearing, the court denied the union's

motion. The union went on strike some months later. The

district court held the union in contempt for violating the

TRO. The Ninth Circuit reversed, and the Supreme Court

affirmed the appellate court.

The Court held that the union violated no order

when it resumed its strike because no order was in effect

at that time. The Court rejected the employer's argument

that the district court’s hearing on the union’s motion to

dissolve the restraining order was a hearing on a prelimi-

nary injunction, or that its order denying the motion

should be construed as a grant of a preliminary injunc-

tion. Regardless of the district court’s intent in the hear-

ing, the TRO did not survive the expiration of the Rule

65(b) time limits because the district court did not follow

the appropriate procedure. The Supreme Court held:

Where a hearing on a preliminary injunction has

been held after issuance of a temporary restrain-

ing order, and where the District Court decides

to grant the preliminary injunction, the appro-

priate procedure is not simply to continue in

effect the temporary restraining order, but

rather to issue a preliminary injunction, accom-

panied by the necessary findings of fact and conclu-

sions of law.

415 US. at 443 (emphasis added); see also Hudson v. Barr, 3

F.3d 970, 975 (6th Cir. 1993) (indefinite continuation of

App. 11

TRO held improper; government's consent to TRO, pend-

ing hearing on motion for preliminary injunction, ended

on day hearing was supposed to occur); Fed. R. Civ. P.

52(a) (“ . . . and in granting or refusing interlocutory

injunctions the court shall similarly set forth the findings

of fact and conclusions of law which constitute the

grounds of its action.”).

Our panel’s opinion today purports to accept Granny

Goose but characterizes its holding as “ . . . where there

has been no notice to the parties and no hearing on the

various factors involved in considering a preliminary

injunction, a TRO continued past the Rule 65 limit falls of

its own weight.” This interpretation reads out of Rule

65(b) any requirement for consent to validate any exten-

sion of a TRO beyond the twenty-day limit. See Connell v.

Dullen Steel Products, Inc., 240 F.2d 414, 417 (5th Cir. 1957).

Under the Rules, it is not just notice and a hearing that

allows a TRO to become a preliminary injunction, but

findings of fact and conclusions of law which adjudicate

the property right involved thereby satisfying due process.

Granny Goose also emphasizes the safeguards built

into Rule 65 to prevent the serious penalties imposed

when one is found to be in contempt for violating court

injunctions.

[O]}ne basic principle built into Rule 65 is that

those against whom an injunction is issued

should receive fair and precisely drawn notice

of what the injunction actually prohibits.

It would be inconsistent with this basic principle

to countenance procedures whereby parties

App. 12

against whom an injunction is directed are left

to guess about its intended duration. Rule 65(b)

provides that temporary restraining orders

expire by their own terms within 10 days of

their issuance. Where a court intends to sup-

plant such an order with a preliminary injunc-

tion of unlimited duration pending a final

decision on the merits or further order of the

court, it should issue an order clearly saying so.

And where it has not done so, a party against

whom a temporary restraining order has issued may

reasonably assume that the order has expired within

the time limits imposed by Rule 65(b).

415 U.S. at 444-45 (emphasis added) (footnote omitted).

No case is cited to us in which the imposition of

contempt for violation of an indefinitely-extended TRO

has been upheld. Nevertheless, we hold today that “[flor

Grossman just to disregard the district court's order

based on his personal belief that it was invalid, is conduct

that warrants a determination of contempt.” I do not

concur in this, but I do not view it as a basis for the

judgment. The opinion seems to say that, notwithstand-

ing Granny Goose, it was not “reasonable” for Grossman

to assume that the TRO had expired as Rule 65(b) pre-

scribes.*

3 I believe that this conclusion denies Grossman the benefit

of that to which he is entitled under Granny Goose. Rule 65(b) is

clear that no TRO may be extended beyond the twenty days

without the consent of the party restrained. On May 27, 1994,

after the expiration of twenty calendar days, Grossman

requested the return of some of his client’s funds from the

Receiver who had custody of them. The Receiver disagreed

about the calculation of time, stating that the time would expire

App. 13

This holding is based upon Sampson v. Murray, 415

U.S. 61 (1974). In Sampson, a government employee

sought a temporary injunction against her dismissal from

employment as a probationary employee. The district

court granted a temporary restraining order. Later, after

an adversary hearing at which the government declined

to produce the discharging official as a witness to testify

as to the reasons for the dismissal, the district court

ordered the temporary restraint continued until the wit-

ness appeared. In considering the issue of appellate juris-

diction ove: the order the Supreme Court wrote:

A district court, if it were able to shield its

orders from appellate review merely by desig-

nating them as temporary restraining orders,

rather than as preliminary injunctions would

have virtually unlimited authority over the par-

ties in an injunctive proceeding. In this case,

where an adversary hearing has been held, and

the court’s basis for issuing the order strongly

challenged, classification of the potentially

unlimited order as a temporary restraining

order seems particularly unjustified. Therefore,

on June 1. On June 3, Grossman inquired of the district court

whether a preliminary injunction had issued. The staff advised

that no order had been issued. On June 6, Grossman again

inquired of the Clerk of Court and of the district court's

chambers whether any injunction had issued. Informed that no

order had issued nor was any order forthcoming, Grossman

transferred his client’s retainer from a trust fund to Grossman's

‘aw firm operating account in partial payment of his fees. As far

as the record reveals, Grossman did what Rule 65(b) permitted

Se PR ARID ES TINS ee OPEe Celie ap ante

App. 14

we view the order at issue here as a preliminary

injunction.

Id. at 87-88.

An order extending a TRO beyond the statutory

twenty-day limit, therefore, is treated as a preliminary

injunction. One might well conclude that the conversion

of an indefinitely-extended TRO into a preliminary

injunction would be for purposes of appeal only, confer-

ring jurisdiction on the court of appeals for the sole

purpose of voiding the invalidly extended TRO.4

This was exactly the approach of the Court of

Appeals for the District of Columbia Circuit in National

Mediation Bd. v. Air Line Pilots Association, Int., 323 F.2d

305 (D.C. Cir. 1963). In that pre-Sampson case, the Court

of Appeals held that an order extending a TRO beyond

the twenty days allowed by Rule 65(b) is tantamount to

the grant of a preliminary injunction, thus conferring

jurisdiction on the court of appeals. The court further

held, however, that since the restraining order was not

supported by findings of fact and conclusions of law as

required by Rule 55(a), it was not a valid preliminary

injunction and remanded the case to the district court

with directions to dissolve the void order. Id. at 305-06.°

* As noted earlier, until today there has never been a case

affirming sanctions for contempt for violation of an indefinitely-

extended TRO.

5 An earlier approach adopted by two circuits upon finding

that temporary restraining orders had expired by virtue of the

Rule 65(b) limitations, was to hold that there was no existing

order to review and dismiss the appeals as moot. Benitez v.

App. 15

This result was later endorsed by Justice Marshall in

his dissent in Sampson. In Sampson, the Supreme Court

went beyond the mere exercise of appellee jurisdiction

and considered the merits of the application for a prelimi-

nary injunction. This appeared to be a significant exten-

sion to Justice Marshall who wrote:

It is suggested that if an indefinitely

extended temporary restraining order remained

unappealable, the District Court would have

virtually unlimited authority over the parties in

an injunctive action. At the outset, this cannot

justify this Court’ reaching the merits of Mrs.

Murray’s claim for a preliminary injunction.

Even if the order entered by the District Court is

appealable, it should be appealable only for the

purposes of holding it invalid for failure to com-

ply with Rule 52(a). This was the precise course

taken by the Court of Appeals for the District of

Columbia Circuit in National Mediation Board,

supra, on which the majority relies.

° * *

Here, instead, we find the Supreme Court

determining that although the District Court

had jurisdiction to grant injunctive relief, the

equities of Mrs. Murray’s case did not support a

Anciani, 127 F.2d 121 (1st Cir. 1942), cert. denied, 317 U.S. 699

(1943) and Southard & Co. v. Salinger, 117 F.2d 194 (7th Cir. 1941).

Subsequent courts have distinguished these cases where, as

here, a district court has ordered an indefinite extension of the

TRO. See Pan American World Airways, Inc. v. Flight Engineers’

int'l Ass'n, 306 F.2d 840, 842 (2d Cir. 1962) (“In the present case,

because the district judge extended the order beyond the twenty

day period, we consider that the temporary restraining order

became an appealable preliminary injunction.” ).

App. 16

preliminary injunction, when neither the Dis-

trict Court nor the Court of Appeals has yet

confronted the latter issue. I do not believe this

makes for sound law.

Sampson, 415 U.S. at 957 (footnote omitted).

I recognize that this reasoning was rejected by the

Court in Sampson.

Justice Rehnquist, for the Court, wrote:

Our Brother Marshall, in his dissenting

opinion, nevertheless suggests that a district

court can totally or partially impede review of

an indefinite injunctive order by failing to make

any findings of fact or conclusions of law. It

would seem to be a consequence of this reason-

ing that an order which neglects to comply with

one rule may be saved from the normal appel-

late review by its failure to comply with still

another rule. We do not find this logic convinc-

ing. Admittedly, the District Court did not com-

ply with Fed. Rule Civ. Proc. 52(a), but we do

not think that we are thereby foreclosed from

examining the record to determine if sufficient

allegations or sufficient evidence supported the

issuance of injunctive relief.

Id. at 951 n. 59.

By reviewing the merits, the Supreme Court appears

to have held that the TRO cum preliminary injunction is a

valid restraining order. Otherwise, the review on the

merits would be a mere intellectual exercise which the

App. 17

Court is not wont to do.® So, I am instructed by the Court

that the indefinite extension of a TRO not only transforms

the TRO into a preliminary injunction for purposes of

appeal, but also into a valid injunction.”

Clearly, some problems emerge. We uphold the con-

tempt imposed for violation of an expired TRO in this

case at the expense of making unclear the duration of

emergency orders that deprive a party of the free use of

his or her property. This is not appealing in a free society.

Furthermore, we eviscerate the protection afforded by

Rule 65(b). If a TRO can metamorphose into a preliminary

petitioner had adequately demonstrated the irreparable harm

necessary to secure injunctive relief, concluded that she had not

done so. Therefore, although valid, the Court found the TRO

unlawful in that it was incorrectly granted. The Court reversed

the decision of the court of appeals which had upheld the

district court’s grant of the TRO.

? This determination is part of what is required in order for

this court to uphold the contempt imposed upon Grossman in

this case. Unlike criminal contempt, civil contempt may be

upheld only if the disobeyed order was valid and lawful. Smith v.

Sullivan, 611 F.2d 1050, 1052-54 (5th Cir. 1980).

Having been persuaded that the indefinitely extended TRO

becomes a valid preliminary injunction, the second step would

be to consider the injunction on the merits to determine whether

it was granted according to law, i.e., whether the applicant

demonstrated the requisite irreparable harm and inadequate

legal remedies.

In this case, however, Grossman does not appear to

challenge the injunction on its merits, choosing to argue only

that the TRO was void after the expiration of the statutory time

limits. Therefore, my inquiry is limited to the validity of the

order disobeyed.

App. 18

injunction by the expiration of the very time limits

imposed as safeguards against the indefinite restraint

over one’s property, then Rule 65(b) provides no protec-

tion at all. As the Second Circuit has observed:

It is because the remedy is so drastic and may

have such adverse consequences that the

authority to issue temporary restraining orders

is carefully hedged in Rule 65(b) by protective

provisions. And the most important of these

protective provisions is the limitation on the

time during which such an order can continue to

be effective.

Pan American World Airways, Inc. v. Flight Engineers’ Int'l

Ass'n, 306 F.2d 840, 843 (2d Cir. 1962) (holding, however,

that a TRO indefinitely extended by a district court

becomes a preliminary injunction so that it may be

reviewed).

I confess to a temptation to conclude that Sampson is

overruled by Granny Goose, or that, at least, because the

restraint imposed to Sampson was found to be unlawful,

the implications from the merits review are dicta. I do not

undertake, however, to limit Supreme Court precedent. If

our reading of Sampson is correct, it requires that, for the

first time, we affirm a contempt imposed for violating a

TRO extended beyond the statute's limit.

Not without doubt as to this conclusion. I CONCUR.

8 This approach does, however, have the virtue of easing the

burden on over-worked district judges. It appears that now they

may avoid the time-consuming chore of finding facts and making

conclusions of law, and simply allow the passage of time to

accomplish what many cases say they may not do ~ turn a TRO

into a preliminary injunction without going to this trouble.

App. 19

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 95-4391

DAVID LEVINE,

Receiver-Appellee,

SECURITIES EXCHANGE COMMISSION,

Plaintiff-Appellee,

versus,

COMCOA LTD., a/k/a Comcoa Ltd,

THOMAS W. BERGER,

Defendants,

J.B. GROSSMAN, Law Practice,

Movant-Appellant,

SUN-SENTINEL COMPANY,

MOBITEL SERVICES CORP.,

a Delaware Corporation, et al.,

Claimants.

On Appeal from the United States

District Court for the Southern District of Florida

(Filed Feb. 15 1996)

BEFORE: EDMONDSON, Circuit Judge, and HILL, Senior

Circuit Judge, and MILLS", District Judge.

* Honorable Richard Mills, U.S. District Judge for the

Central District of Illinois, sitting by designation.

App. 20

PER CURIAM:

The petition(s) for rehearing filed by J.B. GROSS-

MAN, Law Practice, is denied.

ENTERED FOR THE COURT:

/s/ J. L. Edmondson

UNITED STATES CIRCUIT JUDGE

App. 21

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 95-4391

DAVID LEVINE,

Receiver-Appellee,

SECURITIES EXCHANGE COMMISSION,

Plaintiff-Appellee,

versus,

COMCOA LTD., a/k/a Comcoa Ltd,

THOMAS W. BERGER,

Defendants,

J.B. GROSSMAN, Law Practice,

Movant-Appellant,

SUN-SENTINEL COMPANY,

MOBITEL SERVICES CORP.,

a Delaware Corporation, et al.,

Claimants.

On Appeal from the United States

District Court for the [sic] District of [sic]

ON _PETITION(S) FOR REHEARING AND SUGGES-

TION(S) OF REHEARING EN ) OF REHEARING EN BANC (Opinion

, 11th Cir., 19 F.2d ).

(Filed Feb. 15 1996)

Before: EDMONDSON, Circuit Judge, and HILL, Senior

Circuit Judge, and MILLS*, District Judge.

* Honorable Richard Mills, U.S. District Judge for the

Central District of Illinois, sitting by designation.

App. 22

PER CURIAM:

The petition(s) for Rehearing are DENIED and no mem-

ber of this panel nor other Judge in regular active service

on the Court having requested that the Court be polled

on rehearing en banc (Rule 35, Federal Rules of Appellate

Procedure; Eleventh Circuit Rule 35-5), the Suggestion(s)

of Rehearing En Banc are DENIED.

ENTERED FOR THE COURT:

/s/ J. L. Edmondson

UNITED STATES CIRCUIT JUDGE

App. 23

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

Case No. 94-8256-CIV-HIGHSMITH

SECURITIES & EXCHANGE

COMMISSION,

Plaintiff,

vs.

COMCOA LTD., a/k/a

COMCOA LTD., INC., and

THOMAS W. BERGER,

Defendants.

ORDER

(Filed Mar. 13, 1995)

This cause came before the Court for a show cause

hearing on February 27, 1995, to determine whether the

Law Offices of J.B. Grossman (“Grossman”) should be

held in contempt of Court for violation of a temporary

restraining order (“TRO”) entered in the above-styled

action; and also upon Grossman’s Motion for Clarifica-

tion, filed November 4, 1994.

BACKGROUND

On May 6, 1994, a temporary restraining order was

entered in the above-styled action which, inter alia,

restrained the defendants and their agents, including

their attorneys, from either “directly or indirectly trans-

ferring, setting off, receiving, changing, selling, pledging,

App. 24

assigning, liquidating or otherwise disposing of, or with-

drawing any assets or property owned or controlled by

the defendants.” On May 16 and 17, 1994, the Court held

a preliminary injunction hearing. At that hearing, the

Court also considered the defendants’ various pending

motions, including their motion to dismiss for lack of

subject matter jurisdiction and motion to vacate TRO.

At the time of the entry of the TRO, Grossman,

counsel for the defendants, held $105,100.00 in a trust

account on behalf of the defendants. Pursuant to the

terms of the retainer agreement between Grossman and

the defendants, the funds in this account would become

nonrefundable upon the institution of an SEC enforce-

ment action against the defendants.

At the hearing, the Court determined that the TRO

would remain in effect until further order of the Court.

Specifically, the Court stated that: “The status quo

remains until I rule on the substantive motion, which |

will, I will rule now on the substantive motion to dismiss

for lack of subject matter jurisdiction, and depending

upon that ruling, I will then rule upon the request for

preliminary injunction as either moot, not warranted, or

warranted. All right? Do you have anything further,

questions that is?” At this point, Grossman responded

“No sir.” At no time did Grossman raise any objections or

concerns with regard to the extension of the TRO.

On June 3, 1994, the Court issued its ruling on the

defendants’ various pending motions, including the

motion to dismiss and the motion to vacate the TRO. All

the defendants’ motions were denied. Thereafter, on June

App. 25

7, 1994, the Court issued an order of preliminary injunc-

tion. The preliminary injunction was dated “nunc pro

tunc” to June 3, 1994, to correspond with the entry of the

omnibus order of that date.!

On June 6, 1994, Grossman filed an emergency

motion for release of funds. On that same day, instead of

awaiting the Court's ruling on his emergency motion,

Grossman transferred $91,500.00 out of the defendants’

trust account and into an operating account held by the

law firm, in satisfaction of the defendants’ outstanding

bill for Grossman's legal services; i.e., for costs incurred.?

Thereafter, the SEC filed its motion for an order to show

cause why Grossman should not be held in contempt of

court for violating the Court’s May 6, 1994, TRO and

“subsequent orders effectively extending it.”

' While Grossman takes issue with respect to the propriety

of the Court’s nunc pro tunc dating of the preliminary injunction,

the Court need not reach this issue as it is beyond the scope of

Se whether Grossman violated the

2 The SEC maintains that the actual amount held in the

retainer account at the onset of this action and then

transferred to the law firm's operating account is

$106,000.00. At the show cause hearing on this matter,

Grossman testified that only $91,500.00 was transferred, and

that the remainder, approximately $3,600.00, is still being held

in the defendants’ trust account. The Court finds that $91,500.00

is the correct amount in dispute, and that the remaining

$3,600.00 is unquestionably subject to disgorgement to the

Receiver.

App. 26

DISCUSSION

The principal purpose of the federal securities laws is

to protect investors by requiring the full disclosure of

information material to investment decisions, by compen-

sating defrauded investors, and by deterring fraud and

manipulative practices. Randall v. Loftsgaarden, 478 U.S.

647, 664 (1986). Because these laws are remedial in nature,

they are to be liberally construed. Craighead v. E.F. Hutton

& Co., 899 F.2d 485, 493 (6th Cir. 1990); Castleglen, Inc. v.

Commonwealth Sav. Ass'n, 689 F. Supp. 1069, 1072 (D. Utah

1988). In an SEC enforcement action, the district court has

the authority, through its equitable jurisdiction, to fashion

an appropriate remedy on a proper showing of a securi-

ties violation. SEC v. Manor Nursing Centers, Inc., 458 F.2d

1082, 1103 (2d Cir. 1972). The ultimate remedies available

to the court include disgorgement, restitution, and rescis-

sion. SEC v. Current Financial Servs., Inc., 783 F. Supp.

1441, 1443 (D.D.C. 1992). To preserve a basis for such

remedies, the district court may impose an interim asset

freeze. CFTC v. American Metals Exchange Corp., 991 F.2d

71, 79 (3d Cir. 1993); SEC v. Unifund SAL, 910 F.2d 1028,

1041 (2d Cir. 1990).

In imposing a freeze of assets, there is no require-

ment that the court exempt sufficient assets for the pay-

ment of legal fees. See SEC v. Cherif, 933 F.2d 403, 416-17

(7th Cir. 1991), cert. denied, 502 U.S. 1071 (1992). Indeed,

the use of frozen assets for attorney’s fees has been

disallowed in circumstances more extreme than in the

instant case. See, ¢.g., Caplin & Drysdale Chartered v. United

States, 491 U.S. 617 (1989) (criminal forfeiture statute)

(defendant paid attorney $25,000.00 in violation of

restraining order); United States v. Monsanto, 491 U.S. 600

App. 27

(1989) (criminal forfeiture statute) (defendant's motion to

vacate restraining order to permit use of frozen assets to

retain attorney denied); United States v. One Residential

Property Located at 501 Rimini Road, 733 F. Supp. 1382 (S.D.

Cal.’ 1990) (civil forfeiture statute) (no constitutional right

to civilly forfeitable assets for payment of legal fees).

Moreover, in other contexts, attorneys have been required

to disgorge nonrefundable retainers. See, e.g., In re Mondie

Forge Co., 154 B.R. 232, 239 (N.D. Ohio 1993) (bankruptcy

case); United States v. Harvey, 814 F.2d 905, 913, 918 (4th

Cir. 1987) (RICO/CCE action). In all of these cases, the

courts have essentially held that a defendant has no right

to spend another’s money for services rendered by an

attorney, even if those funds are the only way that the

defendant will be able to retain counsel of his choice. See

Property Located at 501 Rimini Road, 733 F Supp. at 1386

(quoting Caplin & Drysdale, 109 S. Ct. at 2652). The rea-

soning of these cases has been extended to SEC enforce-

ment actions. See, e.g., Cherif, 933 F.2d at 416-17.

In this case, the Court imposed an asset freeze en

May 5, 1994. Subject to that freeze was the trust account

maintained by Grossman on behalf of the defendants.

Grossman contends that at the moment of the freeze, the

law firm garnered title to the funds in that account.

Hence, the Court must first determine who has the supe-

rior interest in the funds, thereby establishing whether

the funds were subject to the TRO.

App. 28

1. The Nonrefundable Retainer Account.

Grossman contends that “the representation agree-

ment and retainer the law firm fashioned for the Defen-

dants was based on the firm’s experience, business

judgment and what may be needed to meet the clients’

instructions to defend their rights in an asset freezing

action,” because, “[iJn its experience, the law firm has

found that regulatory agencies move quickly and without

notice in many circumstances involving telecommunica-

tions and securities questions.” By example, Gross:nan

cites to its experience with an on-going, unrelated SEC

action, FTC v. Metropolitan Communications, et al., 94-

CIV-0142-(JFK) (SDNY).

It is a well-founded principle of contract construction

that an instrument shall be construed most strongly

against its draftsman. See United States v. Seckinger, 397

U.S. 203, 210 (1970). In this regard, given Grossman’s vast

experience with the securities laws, the Court finds that,

without a doubt, Grossman drafted the retainer agree-

ment with the intention of circumventing federal securi-

ties laws.? By drafting the retainer agreement in such a

fashion as here, Grossman has protected its own eco-

nomic interests at the expense of others. Indeed, to

uphold this type of retainer agreement would not only

3 Indeed, the Court finds that Grossman is well-versed in

the ways of SEC enforcement of the federal securities laws. The

law firm has represented several telecommunications /

securities clients other than the defendants in the instant case.

And J.B. Grossman, himself, has over 21 years legal experience.

including serving as a Commodity Futures Trading Commission

attorney and also as special counsel for the New York Stock

Exchange.

App. 29

render the SEC powerless to effectively freeze assets to

protect the interests of defrauded investors, but would

also, in essence, require the defrauded investors to foot

the bill of their opposing counsel. Such an outcome is

extremely offensive to this Court, and unquestionably

contrary to public policy and the intent and goals of the

federal securities laws.‘ Because the Court finds that the

retainer agreement at issue in this case contravenes pub-

lic policy and the law, it concludes that such agreement is

void and unenforceable as drafted. See American Casualty

Co. v. FDIC, 1993 WL 610760, at *7 (S.D. Miss. 1993). The

fact that Florida generally recognizes nonrefundable

retainers does not defeat this conclusion. Even under

Florida law, an agreement that contravenes public policy

is not enforceable as a matter of law. See American Casu-

alty Co. v. Coastal Caisson Drill Co., 542 So.2d 957, 958 (Fla.

1989). Hence, the funds at issue were subject to the TRO

entered on May 5, 1994.

The Court further finds that Grossman is not without

recourse. The funds in question are only forfeitable to the

extent they are comprised of the defendants’ ill-gotten

gains. See, e.g., SEC v. Unioil, 951 F.2d 1304, 1306-07 (D.C.

Cir. 1991) (Edwards, J., concurring) (Party seeking dis-

gorgement is entitled to recover only the amount of the

fraud.). If Grossman can show that the funds are from

some other, untainted source, it may have a legitimate

* The Court can envision still other repercussions from the

upholding of agreements such as the one presented here; one

being the potential for defendants, in the guise of paying legal

fees, to hide assets. Such a “loophole” could conceivably be

used to circumvent regulations in non-SEC areas as well.

App. 30

claim to those funds.® In addition, Grossman may have a

suit in quantum meruit against the defendants. See, e.g.,

Wong v. Michael Kennedy, P.C., 853 F. Supp. 73, 81

(E.D.N.Y. 1994) (Although retainer agreement was void as

a matter of law, counsel was not precluded from recover-

ing payment in quantum meruit.). At the very least,

Grossman can file a creditor’s claim with the Receiver

and, like all other creditors are required to do, wait its

turn in line. Cf. United States v. Thier, 801 F.2d 1463, 1474

(1986), opinion modified on denial of reh’g, 809 F.2d 249 (5th

Cir. 1987) (Attorney may bring third-party claim for rea-

sonable fee against potentially forfeitable assets under

Continuing Criminal Enterprise statute.).

2. The Temporary Restraining Order.

Because the Court has determined that Grossman has

no superior interest in the funds at issue and that the

funds were subject to the TRO, it must now determine

whether Grossman violated that TRO by transferring the

funds. Pursuant to Fed.R.Civ.P. 65(b), temporary restrain-

ing orders granted without notice must be “indorsed with

the date and hour of issuance” and “shall expire by its

terms within such time after entry, not to exceed ten days,

as the Court fixes, unless within the time so fixed the

order, for good cause shown, is extended for a like period

or unless the party against whom the order is directed

consents that it may be extended for a longer period. The

5 Grossman, however, has not argued that the funds are

untainted. Instead, its sole position is that it has a vested

interest in the funds as a matter of law by virtue of its retainer

agreement with the defendants.

App. 31

reasons for the extension shall be entered in the record.”

While TRO’s cannot be extended indefinitely, they can be

extended pending a ruling on a motion for a preliminary

injunction. S.E.C. v. Unifund Sal, 910 F.2d 1028, 1034 (2d

Cir. 1990) (“Nothing in Rule 65 of the Federal Rules of

Civil Procedure prevents a district court from continuing

a TRO while reserving decision on a motion for a prelimi-

nary injunction.”). Moreover, a TRO can be extended

beyond the 20-day period with the consent of the

restrained party. See Fernandez-Roque v. Smith, 671 F.2d

426 (11th Cir. 1982).

A. Consent to the extension of the TRO

The threshold issue for the Court to address is

whether Grossman, on behalf of the defendants, con-

sented to the extension of the TRO until the Court ruled

on the pending motions. In this regard, Grossman first

contends that it did not consent to the extension of the

TRO. The Court, however, finds otherwise. In this case, at

the close of the hearing on the SEC’s motion for prelimi-

nary injunction, the Court stated that the TRO would

remain in effect in all aspects until the Court ruled on the

pending motions to dismiss and for preliminary injunc-

tion. Grossman did not object at that time, or at any time

subsequent to the hearing. Hence, by virtue of its con-

duct, the Court finds that Grossman consented to the

extension of the TRO until the Court ruled on the pend-

ing motions. See Fernandez-Roque v. Smith, 671 F.2d 426

(11th Cir. 1982). In Fernandez-Roque, at a hearing to deter-

mine the disposition of a previously entered TRO, the

district court inquired of the restrained party whether it

was willing to let the TRO continue until some time in the

App. 32

future. The restrained party responded that it “would like

to leave it up in the air right now.” The district court

interpreted that response as consent to an extension of

the TRO. The Eleventh Circuit agreed.® Id. at 430.

Alternatively, Grossman argues that it did not con-

sent to an extension beyond the twenty days provided in

Rule 65(b). Specifically, Grossman asserts that “[njeither

the Defendant nor the law firm consented to an extension

beyond the twenty day time limit of Rule 65(b). When the

Court on May 17, 1994 extended the TRO until further

order of the Court, it was entirely reasonable for the law

firm to believe that the Court was aware of the time

limitations of Rule 65(b).” The Court finds, however, that

Grossman's subjective belief as to the length of the TRO

extension does not negate or limit its consent. See Geneva

Assurance Syndicate, Inc. v. Medical Emergency Servs.

Assocs., 964 F.2d 599 (7th Cir. 1992) (An extension of a

TRO beyond the 20-day period was deemed valid even

though consent to the extension was based on the mis-

taken assumption that such extension was appealable.).”

Moreover, Rule 65(b) clearly contemplates extension of a

6 Grossman also makes the argument that its filing of a

motion to dismiss supports a finding that it did not consent to

the extension of the TRO. The Court disagrees. Cf. Ultracashmere

House, Ltd. v. Madison's of Columbus, Inc., 534 F.Supp. 542

(S.D.N.Y. 1982) (On a motion to dissolve a stay of a TRO, the

moving party evinced implied consent to extend the stay until

the merits of dissolution were determined.).

7 To the extent Grossman asserts that the Court failed to

show “good cause” on the record for the extension, such an

assertion is without merit. The Court, in essence, stated it was

extending the TRO in order to have time to fully consider the

various arguments and motions of the parties.

App. 33

TRO beyond twenty days, and Grossman never sought to

clarify the issue in this regard. Accordingly, the Court

finds that the TRO was still in effect at the time of

Grossman’s transfer of the funds at issue.®

B. Contempt of court

The sole remaining issue for the Court to address is

whether it should find Grossman in contempt for violat-

ing the TRO. In this regard, the Court notes that Gross-

man’s failure to comply with the TRO need not have been

with the intent to disobey. See Piambino v. Bestline Prods.,

Inc., 645 F. Supp. 1210, 1213 (S.D. Fla. 1986) (Contempt

proceedings were brought against attorneys for failure to

obey a court order to repay into the court registry

amounts previously withdrawn in payment of legal fees

following settlement of a class action where settlement

had been overturned on appeal.). Indeed, the United

States Supreme Court has stated that:

The absence of willfulness does not relieve from

civil contempt. Civil as distinguished from crim-

inal contempt is a sanction to enforce compli-

ance with an order of the court or to compensate

for losses or damages sustained by reason of

noncompliance. Since the purpose is remedial, it

matters not with what intent the defendant did

the prohibited act. . . . An act does not cease to

be a violation of a law and of a decree merely

because it may have been done innocently.

8 Because the Court finds consent, it need not address

Grossman’s arguments as to the calculation of the TRO period.

App. 34

McComb v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949)

(citations omitted). Hence, even if Grossman believed, in

good faith, that it held legal title to the funds at issue, and

that its transfer of the funds was not in violation of the

Court’s orders, such belief does not protect it from a

finding of contempt.

In Lamb v. Cramer, 285 U.S. 217 (1932), a civil con-

tempt proceeding against an attorney was brought ancill-

ary to an action to set aside fraudulent conveyances of

land and other dispositions of money and personal prop-

erty by the defendant. The contempt petition alleged that

the defendant in the principal suit had transferred to the

attorney a substantial part of the property at issue,

allegedly in payment of attorney’s fees. The Supreme

Court held that the attorney was subject to contempt

proceedings for his actions in this regard. Specifically, the

Court stated:

The [attorney], as counsel in the principal suit,

had notice of the equities alleged in the bill. So

far as he acquired, pendente lite, any interest in

the property involved in the suit, he was not

only subject to those equities, but bound by any

decree which the court might make with respect

to it, to the extent that it might adjudicate the

rights of the plaintiffs against the defendants

.... His receipt and diversion of the property,

which was then in gremio legis, tended to defeat

any decree which the court might ultimately

make in the cause. That and his retention of the

property after the decree was entered were in

fraud of the rights of the plaintiffs to prosecute

the suit to its conclusion, and an obstruction of

justice constituting a contempt of court which

might be proceeded against civilly.

App. 35

Lamb, 285 U.S. at 219. Here, Grossman acquired its inter-

est in the disputed funds by virtue of the SEC’s initiation

of this law suit; i.e. pendente lite.

Grossman urges the Court to consider the case of

Republic of the Philippines v. Marcos, 1987 U.S. Dist. LEXIS

11437 (S.D.N.Y. 1987), in which the defendant, before the

court could enter a preliminary injunction and upon the

advice of counsel that the TRO in that case had expired,

transferred funds to his attorney in payment of services

rendered. The district court found that the defendant's

actions could be deemed “sly,” and that such actions were

clearly made in bad faith. Nevertheless, the court did not

hold the defendant in contempt because the court found

that there was “sufficient doubt as a matter of law” as to

whether the TRO was in effect at the time of the defen-

dant’s actions. Id. at *14-15. The Court finds the Marcos

case neither persuasive nor instructive. Unlike that case,

the TRO at issue here clearly did not expire until the

Court ruled on the pending motions to dismiss and for

preliminary injunction. Moreover, the Marcos case

involved a defendant relying on the advice of counsel

that the TRO had expired. Here, Grossman acted on its

own belief that the TRO had expired, and that it held

legal title to the funds at issue. Being composed of offi-

cers of the court trained in the laws of this country,

Grossman should be held to a higher standard of conduct

in matters of this nature. Moreover, the law is clear that

the alleged contemnor may not rely on its own inadver-

tence or misunderstanding to avoid a finding of con-

tempt. SEC v. Musella, 818 F. Supp. 600, 606 (S.D.N.Y.

1993). Grossman took a calculated risk in transferring the

funds; it must now bear the responsibility of its actions.

App. 36

To that end, the Court concludes that Grossman is in

contempt for violating the TRO entered May 5, 1994, as

subsequently extended.

CONCLUSION

Based upon the foregoing considerations, it is

ORDERED AND ADJUDGED that:

1. The SEC’s motion for contempt and sanctions is

GRANTED. The Law Offices of J.B. Grossman is hereby

found in civil contempt of Court, and is directed to remit

to the Court-appointed Receiver, within ten (10) days

from receipt of this order, the sum of $91,500.00, plus

interest calculated pursuant to 28 U.S.C. § 1961 from June

15, 1994, the date of demand by the Receiver, to the date

of this order. Payment of this amount shall purge the

aforementioned contempt. Should the Law Offices of J.B.

Grossman fail to make the required remittance within the

time allotted, the Court shall hold a hearing to determine

the appropriateness of any additional sanction as a rem-

edy to enforce the orders of this Court.

2. Grossman’s motion for reconsideration is

DENIED.

DONE AND ORDERED in Chambers in Miami, Dade

County, Florida, this 13th day of March, 1995.

/s/ ent De TES.

DISTRICT JUDGE

SHELBY HIGHSMITH

cc: Howard Tescher, Esq.

John C. Mattimore, Esq.

Steven E. Siff, Esq.

App. 37

(Cite as: 415 U.S. 423, 94 S.Ct. 1113)

IN THE SUPREME COURT OF THE UNITED STATES

GRANNY GOOSE FOODS, INC., et al., Petitioners,

BROTHERHOOD OF TEAMSTERS & AUTO TRUCK

DRIVERS LOCAL NO. 70 OF ALAMEDA COUNTY, etc.

No. 72 — 1566.

Argued Jan. 8, 1974.

Decided March 4, 1974.

Petitioner employers brought suit in California state

court alleging that respondent Union was engaging in a

strike in breach of collective-bargaining agreements. The

court issued a temporary restraining order on May 18,

1970. Two days later the case was removed to federal

court, and on June 4 the District Court denied the Union’s

motion to dissolve the restraining order. Strike activity

then stopped and the labor dispute remained dormant

until the Union, after the petitioners had refused to bar-

gain, resumed its strike on November 30, 1970. Two days

later the District Court, on petitioners’ motion, held the

Union in criminal contempt for violating the restraining

order. The Court of Appeals reversed on the ground that

the order had expired long before November 30, 1970,

reasoning thet under both state law and Fed.Rule

Civ.Proc. 65(b) the order expired no later than June 7,

1970, 20 days after its issuance, and rejecting petitioners’

contention that the life of the order was indefinitely

prolonged by 28 U.S.C. § 1450 ‘until dissolved or mod-

ified by the district court.’ Held:

App. 38

1. Whether state law or Rule 65(b) is controlling, the

restraining order expired long before the date of the

alleged contempt, since under the State Code of Civil

Procedure a temporary restraining order is returnable no

later than 15 days from its date, 20 days if good cause is

shown, and must be dissolved unless the party obtaining

it proceeds to submit its case for a preliminary injunction,

and similarly, under Rule 65(b), such an order must

expire by its own terms within 10 days after entry, 20

days if good cause is shown. Pp. 1120-1122.

2. Section 1450 was not intended to give state court

injunctions greater effect after removal to federal court

than they would have had if the case had remained in

state court, and it should be construed in a manner con-

sistent with the time limitations of Rule 65(b). Pp.

1122-1124.

(a) Once a case has been removed to federal court,

federal law, including the Federal Rules of Civil Pro-

cedure, controls the future course of proceedings, not-

withstanding state court orders issued prior to removal.

The underlying purpose of § 1450 (to ensure that no lapse

in a state court temporary restraining order will occur

simply by removing the case to federal court) and the

policies reflected in the time limitations of Rule 65(b)

(stringent restrictions on the availability of ex parte

restraining orders) can be accommodated by applying the

rule that such ~ state court pre-removal order remains in

force after removal no longer than it would have

remained in effect under state law, but in no event longer

than the Rule 65(b) time limitations, measured from the

date of removal. Pp. 1122-1124.

App. 39

(b) Accordingly, the order expired by i

, y its terms on

May 30, 1970, under the 10-day limitation of Rule 65(b)

applied from the date of removal; hence no order was in

effect on November 30, 1970, and the Union violated no

order when it resumed its strike at that time. P 1124.

3. The District Court’s denial of the Union’s motion

to dissolve the restraining order did not effectively con-

vert the order into a preliminary injunction of unlimited

duration. Pp. 1124-1127.

(a) That the Union may have had the i

be hesed on the marits of the pocliminery inbrrctinn when

it moved to dissolve the restraining order is not the

controlling factor, since under Rule 65(b) the burden was

on petitioners to show that they were entitled to a prelim-

inary injunction, not on the Union to show that they were

not. Pp. 1125-1126.

(b) Where a court intends to supplant a tempora

restraining order, which under Rule 651) expires by “d

own terms within 10 days of issuance, with a preliminary

injunction of unlimited duration pending a final decision

on the merits or further order of the court, it should issue

an order clearly saying so, and where it has not done so, a

party against whom a temporary restraining order has

issued may reasonably assume that the order has expired

within Rule 65(b)’s time limits. Here, since the only

orders entered were a temporary restraining order and an

order denying a motion to dissolve the temporary order,

the Union had no reason to believe that a preliminary

injunction of unlimited duration had been issued. Pp.

1126-1127.

472 F.2d 764, affirmed.

App. 40

George J. Tichy, Il, for petitioners.

Duane B. Beeson, for respondent.

Mr. Justice MARSHALL delivered the opinion of the

Court.

This case concerns the interpretation of 28 U.S.C.

§ 1450,! which provides in pertinent part: ‘Whenever any

action is removed from a State court to a district court of

the United States . . . (a)ll injunctions, orders, and other

proceedings had in such action prior to its removal shall

remain in full force and effect until dissolved or modified

by the district court.’ The District Court held respondent

Union in criminal contempt for violating a temporary

restraining order issued by the California Superior Court

on May 18, 1970, prior to the removal of the case from the

Superior Court to the District Court. The Court of

Appeals reversed, one judge dissenting, on the ground

that the temporary restraining order had expired long

before November 30, 1970, the date of the alleged con-

tempt. 472 F.2d 764 (CA9 1973). The court reasoned that

under both § 527 of the California Code of Civil

1 Title 28 U.S.C. § 1450: “Whenever any action is removed

from a State court to a district court of the United States, any

attachment or sequestration of the goods or estate of the

defendant in such action in the State court shall hold the goods

or estate to answer the final judgment or decree in the same

manner as they would have been held to answer final judgment

or decree had it been rendered by the State court.

“All bonds, undertakings, or security given by either party

in such action prior to its removal shall remain valid and

effectual notwithstanding such removal.

“All injunctions, orders, and other proceedings had in such

action prior to its removal shall remain in full force and effect

until dissolved or modified by the district court.”

App. 41

Procedure and of Fed.Rule Civ.Proc. 65(b), the temporary

restraining order must have expired no later than June 7,

1970, 20 days after its issuance. The court rejected peti-

tioners’ contention that the life of the order was indefi-

nitely prolonged by § 1450 ‘until dissolved or modified

by the district court,’ holding that the purpose of that

statute ‘is to prevent a break in the force of an injunction

or a restraining order that could otherwise occur when

jurisdiction is being shifted,’ 472 F.2d at 767, not to ‘create

a special breed of temporary restraining orders that sur-

vive beyond the life span imposed by the state law from

which they spring and beyond the life that the district

court could have granted them had the orders initiated

from the federal court.’ Id., at 766.

As this understanding of the statute was in conflict

with decisions of two other Circuits interpreting § 1450 to

preclude the automatic termination of state court tempor-

ary restraining orders,? we granted certiorari, 414 U.S.

816, 94 S.Ct. 130, 38 L.Ed.2d 49 (1973). Finding ourselves

in substantial agreement with the analysis of the Ninth

Circuit in the present case, we affirm.

On May 15, 1970, petitioners Granny Goose Foods,

Inc., and Sunshine Biscuits, Inc., filed a complaint in the

? See Appalachian Volunteers, Inc. v. Clark, 43

(C,6 1970), cert. denied, 401 U.S. 939,91 S.Ct. ye vr a

(1971); Morning Telegraph v. Powers, 450 F.2d 97 (CA2 1971)

cert. denied, 405 U.S. 954, 92 S.Ct. 1170, 31 L.Ed.2d 231 (1972).

See also The Herald Co. v. Hopkins, 325 F.Supp. 1232 (NDNY

1971);

mr Peabody Coal Co. v. Barnes, 308 F.Supp. 902 (ED Mo.

App. 42

Superior Court of California for the county of Alameda

alleging that respondent, a local Teamsters Union, and its

officers and agents, were engaging in strike activity in

breach of national and local collective-bargaining agree-

ments recently negotiated by multiunion-multiemployer

bargaining teams. Although the exact nature of the

underlying labor dispute is unclear, its basic contours are

as follows: The Union was unwilling to comply with

certain changes introduced in the new contracts; it

believed it was not legally bound by the new agreements

because it had not been a part of the multiunion bargain-

ing units that negotiated the contracts;> and it

3 This dispute was also the subject of a proceeding before

the National Labor Relations Board. See Airco Industrial Gases,

195 N.L.R.B. 676 (1972). From the findings of fact in that

proceeding, it appears that since 1964 it has been the practice in

the trucking industry for representatives of a group of the

various Teamsters locals and a group of various trucking

employers to negotiate national agreements and supplemental

agreements covering local areas. Agreements covering the

1967-1970 period had expired on March 31, 1970. Negotiations

between the negotiating committees of the multiunion and

multiemployer groups toward a contract for the 1970-1973

period began in January 1970 and continued in February and

April. On April 29, the Teamsters negotiating committee

approved the national and various supplemental agreements

and on April 30, two representatives from each of the Teamsters

locals in the multiunion group approved the agreements. Some

time thereafter, a nationwide referendum vote of all Teamsters

members was conducted and it was determined that the

employees had ratified the agreements. ‘The Union claimed it

was not bound by the new agreements because it had made a

timely withdrawal from the multiunion-multiemployer

bargaining unit in a letter of January 28, 1970, to various

employers, informing them of the Union's intention to negotiate

a separate agreement from the national and supplemental

App. 43

wanted to negotiate separate contracts with petitioner

employers.

The same day the complaint was filed, the Superior

Court issued a temporary restraining order enjoining all

existing strike activity and ordering the defendants to

show cause on May 26, 1970, why a preliminary injunc-

tion should not issue during the pendency of the suit. An

amended complaint adding petitioner Standard Brands,

Inc., was filed on May 18, and a modified temporary

restraining order was issued that same day adding a

prohibition against strike activities directed toward that

employer.

On May 19, 1970, after having been served with the

May 15 restraining order but before the scheduled hear-

ing on the order to show cause, the Union and the indi-

vidual defendants removed the proceeding to the District

Court on the ground that the action arose under § 301 of

the Labor Management Relations Act, 1974, 61 Stat. 156,

29 U.S.C. § 185.4 On May 20, 1970 an amended removal

petition was filed to take into account the modified tem-

porary restraining order of May 18.

Simultaneously with the filing of the removal peti-

tion, the defendants filed a motion in the District Court to

agreement. The Board ultimately determined that the Union’s

withdrawal was not timely because negotiations had begun on

January 7, 1970, prior to the attempted withdrawal. We, of

course, express no view on this issue.

* In Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 88 S.Ct.

1235, 20 L.Ed.2d 126 (1968), we held that § 301(a) suits initially

brought in state courts may be removed to the designated

federal forum under the federal-question removal jurisdiction

delineated in 28 U.S.C. § 1441.

App. 44

dissolve the temporary restraining order. The sole ground

alleged in support of the motion was that the District

Court lacked jurisdiction to maintain the restraining

order under this Court's decision in Sinclair Refining Co.

v. Atkinson, 370 U.S. 195, 82 S.Ct. 1328, 8 L.Ed.2d 440

(1962), where the Court held that notwithstanding § 301’s

grant of jurisdiction to federal courts over suits between

employers and unions for breach of collective-bargaining

agreements, § 4 of the Norris-LaGuardia Act, 47 Stat. 70,

29 U.S.C. § 104, barred federal courts from issuing an

injunction against a strike allegedly in violation of a

collective-bargaining agreement containing a no-strike

clause.

The employers then filed a motion to remand the case

to the Superior Court, alleging that the defendants had

waived their right to removal by submitting to the juris-

diction of the state court. The Union’s motion to dissolve

and the employers’ motion to remand came on for a

hearing on May 27, 1970. The motion to remand was

denied from the bench. With respect to the motion to

dissolve, the employers brought to the attention of the

District Court our grant of certiorari in Boys Markets, Inc.

v. Retail Clerks Union, 396 U.S. 1000, 90 S.Ct. 572, 24

L.Ed.2d 492 (1970), which was interpreted as an indica-

tion that the Court would re-examine its holding in Sin-

clair. As Boys Markets had been argued here in April

1970, the District Court refrained from taking any action

on the motion to dissolve until it received further guid-

ance from this Court. On June 1, 1970, we handed down

our decision in Boys Markets, Inc. v. Retail Clerks Union,

398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199, overruling

Sinclair and holding that a district court could enjoin a

App. 45

strike in breach of a nostrike clause in a collective-bar-

gaining agreement and order arbitration under the agree-

ment. Three days later, on June 4, 1970, the Distnct Court

entered a brief order denying the motion to dissolve the

= court temporary restraining order, citing Boys Mar-

ets.

Evidently picketing and strike activity stopped and

the labor dispute remained dormant after June 4. The

flame was rekindled, however, when on November 9,

1970, the Union sent the employers telegrams requesting

bargaining to arrive at a collective-bargaining agreement

and expressing the Union’s continued belief that it was

not bound by the national and local agreements negoti-

ated by the multiunion-multiemployer groups. The

employers answered that there was no need to bargain

because, in their view, the Union was bound by the

national and local agreements. The conflict remained

unresolved, and on November 30, 1970, the Union com-

menced its strike activity once again.

The next day the employers moved the District Court

to hold the Union, its agents, and officers in contempt of

the modified temporary restraining order issued by the

_ Superior Court on May 18. A hearing was held on the

motion the following day. The Union’s argument that the

temporary restraining order had long since expired was

rejected by the District Court on two grounds. First, the

court concluded that its earlier action denying the motion

to dissolve the temporary restraining order gave the

order continuing force and effect. Second, the court found

that § 1450 itself served to continue the restraining order

in effect until affirmatively dissolved or modified by the

court. Concluding after the hearing that the Union had

willfully violated the restraining order, the District Court

App. 46

held it in criminal contempt and imposed a fine of

$200,000.°

Leaving aside for the moment the question whether

the order denying the motion to dissolve the temporary

restraining order was effectively the grant of a prelimi-

nary injunction, it is clear that whether California law or

Rule 65(b) is controlling, the temporary restraining order

issued by the Superior Court expired long before the date

5 Three-fourths of the fine was conditioned on the Union's

failure to end the strike within 24 hours of the court’s order,

one-half on failure to end the strike within 48 hours, and one-

fourth on failure to end the strike within 72 hours. Although we

do not rest our decision on this point, there seems to be much

evidence in the record suggesting that even if the restraining

order remained in effect and had been violated, the violation

was not willful. A finding that the violation was willful

obviously presupposes knowledge on the part of the Union that

the order was still in effect. Whether or not the order in fact

remained in effect on November 30, the Union evidently

believed it had expired. Prior to commencing its strike in

November, the Union informed the employers through its

attorney that it did ‘not understand from the file that there is

presently in effect any order which forbids Local 70 from

bargaining with the employer, or from pressing its position that

it has a right to bargain for a separate contract. A motion to

dissolve a temporary restraining order against economic action

was denied by the federal court, but that temporary restraining

order has long since become ineffective by virtue of the

statutory limitation on its duration, and there has been no

application for a preliminary injunction. ‘Accordingly, the

federal court case is pending, but there are no outstanding

orders which affect the assertion by Local 70 of rights which it

claims. ...* App. 67.

App. 47

of the alleged contempt. Section 527 of the California

Code of Civil Procedure,“ under which the order was

® Section 527 (Supp.1974) provides: ‘An injunction may be

granted at any time before judgment upon a verified complaint,

or upon affidavits if the complaint in the one case, or the

affidavits in the other, show satisfactorily that sufficient

grounds exist therefor. A copy of the complaint or of the

affidavits, upon which the injunction was granted, must, if not

previously served, be served therewith. ‘No preliminary

injunction shall be granted without notice to the opposite party;

nor shall any temporary restraining order be granted without

notice to the opposite party, unless it shall appear from facts

shown by affidavit or by the verified complaint that great or

irreparable injury would result to the applicant before the

matter can be heard on notice. In case a temporary restraining

order shall be granted without notice, in the contingency above

spec’‘ied, the matter shall be made returnable on an order

re # ag cause to be shown why the injunction should not be

» «ved, on the earliest day that the business of the court will

adruit of, but not later than 15 days or, if good cause appears to

the court, 20 days from the date of such order. When the matter

first comes up for hearing the party who obtained the

temporary restraining order must be ready to proceed and must

have served upon the opposite party at least two days prior to

such hearing, a copy of the complaint and of all affidavits to be

used in such application and a copy of his points and authorities

in support of such application; if he be not ready, or if he shall

fail to serve a copy of his complaint, affidavits and points and

authorities, as herein required, the court shall dissolve the

temporary restraining order. The defendant, however, shall be

entitled, as of course, to one continuance for a reasonable

period, if he desire it, to enable him to meet the application for

the preliminary injunction. The defendant may, in response to

such order to show cause, present affidavits relating to the

granting of the preliminary injunction, and if such affidavits are

served on the applicant at least two days prior to the hearing,

the applicant shall not be entitled to any continuance on account

thereof. On the day upon which such order is made returnable,

App. 48

issued, provides that temporary restraining orders must

be returnable no later than 15 days from the date of the

order, 20 days if good cause is shown, and unless the

party obtaining the order then proceeds to submit its

case for a preliminary injunction, the temporary restrain-

ing order must be dissolved.” Similarly, under Rule

such hearing shall take precedence of all other matters on the

calendar of said day, except older matters of the same character,

and matters to which special precedence may be given by law.

When the cause is at issue it shall be set for trial at the earliest

possible date and shall take precedence of all other cases, except

older matters of the same character, and matters to which

special precedence may be given by law.’

7 The time limitation of § 527 has been strictly construed by

the California courts. See, e.g., Smith v. Superior Court, 64

Cal.App. 722, 222 P. 857 (1923); Sharpe v. Brotzman, 145

Cal.App.2d 354, 302 P.2d 668 (1956); Oksner v. Superior Court,

229 Cal.App.2d 672, 40 Cal.Rptr. 621 (1964); Agricultural Prorate

Comm’‘n v. Superior Court, 30 Cal.App.2d 154, 85 P.2d 898

(1938). Petitioners argue that the time limitation of § 527 is not

applicable here because it is operative only with respect to

orders granted without notice to the adverse party. In the

present case, petitioners indicate, telephonic notice was given to

the Union’s counsel on May 15, the day the employers first

sought the restraining order, counsel was served with all

documents prior to a hearing arranged that day, and counsel

was present in the courtroom and presented argument on behalf

of the Union at that hearing. We think it clear from § 527,

however, that this kind of informal notice and hearing does not

convert the temporary restraining order into a preliminary

injunction of unlimited duration under state law. Section 527

provides that when a case comes up for a hearing on a

preliminary injunction, the party seeking the injunction ‘must

have served upon the opposite party at least two days prior to

such hearing, a copy of the complaint and of all affidavits to be

used in such application and a copy of his points and authorities

in support of such application. .. . ° (Emphasis added.) In

App. 49

providing that no preliminary injunction shall be granted

without notice to the opposite party, we think the statute thus

contemplates notice of at least two days, with a meaningful

opportunity to prepare for the hearing, rather than the kind of

informal, same-day notice that was given in this case. This

interpretation of state law is supported on the facts of this case.

Even though the Superior Court held some sort of hearing, with

Union counsel attending, before granting the temporary

restraining order, the court obviously felt that the hearing was

not a sufficient basis for ruling on the preliminary injunction.

Accordingly, in the same order granting the temporary

restraining order, the court set the case for a hearing on the

application for a preliminary injunction within the 15-day limit

imposed by § 527. In any event, we need not rest our holding on

this interpretation of state law, for even if this restraining order

could have had unlimited duration under California law, it was

subject to the time limitations of Rule 65(b) after the case was

removed to federal court. See infra, at 1123-1124. Although by

its terms Rule 65(b), like § 527, only limits the duration of

restraining orders issued without notice, we think it applicable

to the order in this case even though informal notice was given.

The 1966 Amendments to Rule 65(b), requiring the party

seeking a temporary restraining order to certify to the court in

writing the efforts, if any, which have been made to give either

written or oral notice to the adverse party or his attorney, were

adopted in recognition of the fact that informal notice and a

hastily arranged hearing are to be preferred to no notice or

hearing at all. See Advisory Committee’s Note, 28 U.S.C.App.

7831, 39 F.R.D. 124-125. But this informal, same-day notice

desirable though it may be before a restraining order is issued,

is no substitute for the more thorough notice requirements

which must be satisfied to obtain a preliminary injunction of

potentially unlimited duration. The notice required by Rule

65(a) before a preliminary injunction can issue implies a hearing

in which the defendant is given a fair opportunity to oppose the

application and to prepare for such opposition. Sims v. Greene,

App. 50

65(b),8 temporary restraining orders must expire by their

161 F.2d 87 (CA3 1947). The same-day notice provided in this

case before the temporary restraining order was issued does not

suffice. See Bailey v. Transportation-Communication Employees

Union, 45 F.R.D. 444 (ND Miss.1968). See also C. Wright & A.

Miller, Federal Practice & Procedure: Civil § 2949, p. 468 (1973

ed.), reading into Rule 65(a) a five-day-notice requirement

based on Fed.Rule Civ.Proc. 6(d).

8 Rule 65(b) provides: ‘(b) Temporary Restraining Order;

Notice; Hearing; Duration. ‘A temporary restraining order may

be granted without written or oral notice to the adverse party or

his attorney only if (1) it clearly appears from specific facts

shown by affidavit or by the verified complaint that immediate

and irreparable injury, loss, or damage will result to the

applicant before the adverse party or his attorney can be —

in opposition, and (2) the applicant's attorney certifies to

court in writing the efforts, if any, which have been made to give

the notice and the reasons supporting his claim that notice

should not be required. Every temporary restraining order

granted without notice shall be indorsed with the date and hour

of issuance: shall be filed forthwith in the clerk’s office and

entered of record; shall define the injury and state why it is

irreparable and why the order was granted without notice; vy

shall expire by its terms within such time after entry, not

exceed 10 days, as the court fixes, unless within the time oo

fixed the order, for good cause shown, is extended for a va

period or unless the party against whom the order is ——

consents that it may be extended for a longer period.

reasons for the extension shall be entered of record. In pres

temporary restraining order is granted without — -

motion for a preliminary injunction shall be set mm, =

hearing at the earliest possible time and takes penne _

matters except older matters of the same character; w a

the motion comes on for hearing the party who obtained a

temporary restraining order shall proceed with the applicat .

for a preliminary injunction and, if he does not do so, the wo

shall dissolve the temporary restraining order. On 2 days’ n

App. 51

own terms within 10 days after entry, 20 days if good

cause is shown.

Petitioners argue, however, that notwithstanding the

time limitations of state law, § 1450 keeps all state court

injunctions, including ex parte temporary restraining

orders, in full force and effect after removal until affirma-

tively dissolved or modified by the district court. To the

extent this reading of § 1450 is inconsistent with the time

limitations of Rule 65(b), petitioners contend the statute

must control.

In our view, however, § 1450 can and should be

interpreted in a manner which fully serves its underlying

purposes, yet at the same time places it in harmony with

the important congressional policies reflected in the time

limitations in Rule 65(b).

At the outset, we can find no basis for petitioners’

argument that § 1450 was intended to turn ex parte state

court temporary restraining orders of limited duration

into federal court injunctions of unlimited duration. Sec-

tion 1450 was simply designed to deal with the unique

problem of a shift in jurisdiction in the middle of a case

which arises whenever cases are removed from state to

federal court. In this respect two basic purposes are

served. Judicial economy is promoted by providing that

proceedings had in state court shall have force and effect

in federal court, so that pleadings filed in state court, for

to the party who obtained the temporary restraining order

without notice or on such shorter notice to that party as the

court may prescribe, the adverse party may appear and move its

dissolution or modification and in that event the court shall

proceed to hear and determine such motion as expeditiously as

the ends of justice require.’

App. 52

example, need not be duplicated in federal court.’ In

addition, the statute ensures that interlocutory orders

entered by the state court to protect various rights of the

parties will not lapse upon removal. Thus attachments,

sequestrations, bonds, undertakings, securities, injunc-

tions, and other orders obtained in state court all remain

effective after the case is removed to federal court.

But while Congress clearly intended to preserve the

effectiveness of state court orders after removal, there is

no basis for believing that § 1450 was designed to give

injunctions or other orders greater effect after removal to

federal court than they would have had if the case had

remained in state court. After removal, the federal court

‘takes the case up where the State court left it off.’ Dun-

can v. Gegan, 101 U.S. 810, 812, 25 L.Ed. 875 (1880). The

“full force and effect’ provided state court orders after

removal of the case to federal court was not intended to

be more than the force and effect the orders would have

had in state court.'®

® See, e.g., Madron v. Thomas, 38 F.R.D. 177 (ED Tenn. 1965);

Murphy v. E. I. du Pont De Nemours & Co., 26 F.Supp. 999 (WD

Pa.1939); Borton v. Connecticut Gen. Life Ins. Co., 25 F.Supp. 579

(D.C.Neb.1938). Of course, repleading may be required by the

district court in a iate cases. See, e.g., Foust v. Baltimore &

O.R. Co., 91 F.Supp. 817 (SD Ohio 1950); Shall Petroleum Corp.

v. Stueve, 25 F.Supp. 879 (D.C.Minn.1938).

10 We note that § 1450 expressly provides that attachments

or sequestrations effected by the state court prior to removal

‘shall hold the goods or estate to answer the final judgment or

decree in the same manner as they would have been held to

answer final judgment or decree had it been rendered by the

State court.’ Petitioners argue that since post-removal treatment

of an attachment effected in the state court was expressly made

dependent on the provisions of state law, while no such express

App. 53

More importantly, once a case has been removed to

federal court, it is settled that federal rather than state

law governs the future course of proceedings, notwith-

standing state court orders issued prior to removal. Sec-

tion 1450 implies as much by recognizing the district

court’s authority to dissolve or modify injunctions,

orders, and all other proceedings had in state court prior

to removal. This Court resolved this issue long ago in Ex

parte Fisk, 113 U.S. 713, 5 S.Ct. 724, 28 L.Ed. 1117 (1885).

There it was argued that an order to take the deposition

of a witness issued by the state court prior to removal

was binding in federal court and could not be recon-

sidered by the federal court, notwithstanding its inconsis-

tency with certain federal statutes governing procedure

in federal courts. The Court rejected this contention, and

- Said that the predecessor of § 1450

provision was made with respect to injunctions issued by the

state court prior to removal, Congress must have intended that

injunction orders not be controlled after removal by the

durational limitations of state law. As we view the matter, the

express provision in § 1450 that state law governs attachments

after removal is simply an additional statement of long-settled

federal law providing that in all cases in federal court, whether

or not removed from state court, state law is incorporated to

determine the availability of prejudgment remedies for the

seizure of person or property to secure satisfaction of the

judgment ultimately entered. See Fed.Rule Civ.Proc. 64. Section

1450 makes it clear that this settled rule of federal law applies to

removed cases as well. If anything, therefore, it supports our

— that the other procedural requirements of federal

aw, including the time limitations of Rule 65(b), must be

applied to state court temporary restraining orders after the

case has been removed to federal court. See infra, at 1123-1124.

App. 54

“declares orders of the State court, in a case

afterwards removed, to be in force until dis-

solved or modified by the Circuit Court. This

fully recognizes the power of the la

over such orders. And it was not intended to

enact that an order made in the State court,

which affected or might affect the mode of trial

yet to be had, could change or modify the

oe directions of an act of Congress on that

“The petitioner having removed his case

into the Circuit Court has a right to have its

further progress governed by law of the

latter court, and not by that of the court from

which it was removed; and if one of the advan-

tages of this removal was an escape from this

examination, he has a right to that it if his

case was rightfully removed.”

Id., at 725-726, 5 S.Ct., at 729-730. See also King v. Worth-

ington, 104 U.S. 44, 26 L.Ed. 652 (1881); Freeman v. Bee

Machine Co., 319 U.S. 448, 63 S.Ct. 1146, 87 L.Ed. 1509

(1943).

By the same token, respondent Union had a right to

the protections of the time limitation in Rule 65(b) once

the case was removed to the District Court. The Federal

Rules of Civil Procedure, like other provisions of federal

law, govern the mode of proceedings in federal court

after removal. See Fed.Rule Civ.Proc. 81(c)."! In addition,

we may note that although the durational limitations

imposed on ex parte restraining orders are now codified

in a federal rule, they had their origin in § 17 of the

Clayton Act of 1914, 38 Stat. 737. As the House Report

1! See generally Wright & Miller, supra, n. 7, § 1024, at

108-110, and cases there cited.

App. 55

recommending its enactment emphasized, the durational

and other limitations imposed on temporary restraining

orders were thought necessary to cure a serious problem

of ‘ill-considered injunctions without notice.’!2 The strin-

gent restrictions imposed by § 17, and now by Rule 65,!3

on the availability of ex parte temporary restraining

orders reflect the fact that our entire jurisprudence runs

counter to the notion of court action taken before reason-

able notice and an opportunity to be heard has been

granted both sides of a dispute. Ex parte temporary

restraining orders are no doubt necessary in certain cir-

cumstances, cf. Carroll v. President and Commissioners of

Princess Anne, 393 U.S. 175, 180, 89 S.Ct. 347, 351, 21

L.Ed.2d 325 (1968), but under federal law they should be

restricted to serving their underlying purpose of preserv-

ing the status quo and preventing irreparable harm just

so long as is necessary to hold a hearing, and no longer. '4

2 See H.R.Rep. No. 627, 63d Cong., 2d Sess., 25 (1914).

3 Section 17 of the Clayton Act was codified as 28 U.S.C.

§ 381 (1940 ed.), and was repealed by the Judicial Code Revision

Act of 1948, 62 Stat. 997, for the stated reason that it was covered

ae 65. See H.R.Rep. No. 308, 80th Cong., Ist Sess., A236

See, e.g., Pan American World Airways, Inc. v. Flight

Engineers’ Int'l Assn., 306 F.2d 840 (CA2 1962); Smotherman v.

United States, 186 F.2d 676 (CA10 1950); Sims v. Greene, 161 F.2d

87 (CA3 1947). This basic purpose is implicit in Rule 65(b)’s

requirement that after a temporary restraining order is granted

without notice, ‘the motion for a preliminary injunction shall be

set down for hearing at the earliest possible time and takes

eo of all matters except older matters of the same

App. 56

We can find no indication that Congress intended

§ 1450 as an exception to its broader, longstanding policy

of restricting the duration of ex parte restraining orders.

The underlying purpose of § 1450 - ensuring that no

lapse in a state court temporary restraining order will

occur simply by removing the case to federal court - and

the policies reflected in Rule 65(b) can easily be accom-

modated by applying the following rule: An ex parte

temporary restraining order issued by a state court prior

to removal remains in force after removal no longer than

it would have remained in effect under state law, but in

no event does the order remain in force longer than the

time limitations imposed by Rule 65(b), measured from

the date of removal.'®

Applying our holding to the present case is simple.

The temporary restraining order was issued by the Supe-

rior Court on May 18, 1970, and would have remained in

effect in the state court no longer than 15 days, or until

June 2. The case was removed to federal court on May 20,

1970. The temporary restraining order therefore expired

1S The following two illustrations should suffice to clarify

this holding. Where the state court issues a temporary

restraining order of 15 days’ duration on Day 1 and the case is

removed to federal court on Day 13, the order will expire on Day

15 in federal court just as it would have expired on Day 15 in

state court. Where, however, a state court issues a temporary

restraining order of 15 days’ duration on Day 1 and the case is

removed to the federal court on Day 2, the restraining order will

expire on Day 12, applying the 10-day time limitation of Rule

65(b) measured from the date of removal. Of course, in either

case, the district court could extend the restraining order for up

to an additional 10 days, for good cause shown, under Rule

65(b).

App. 57

on May 30, 1970, applying the 10-day limitation of Rule

65(b) from the date of removal. Accordingly, no order was

in effect on November 30, 1970, and the Union violated

no order when it resumed its strike at that time.

We now turn to petitioners’ argument that, apart

from the operation of § 1450, the District Court’s denial of

the Union’s motion to dissolve the temporary restraining

order effectively converted the order into a preliminary

injunction of unlimited duration. The Court of Appeals

rejected this argument out of hand, Stating that ‘(t)he

Union’s unsuccessful effort to dissolve the order before it

died a natural death did not convert the temporary

restraining order into a preliminary injunction or estop it

from relying on the death certificate.’ 472 F.2d, at 767. We

reach essentially the same conclusion.

As indicated earlier, once a case has been removed to

federal court, its course is to be governed by federal law,

including the Federal Rules of Civil Procedure. Rule 65(b)

establishes a procedure whereby the party against whom

a temporary restraining order has issued can move to

dissolve or modify the injunction, upon short notice to

the party who obtained the order. Situations may arise

where the parties, at the time of the hearing on the

motion to dissolve the restraining order, find themselves

in a position to present their evidence and legal argu-

ments for or against a preliminary injunction. In such

circumstances, of course, the court can proceed with the

hearing as if it were a hearing on an application for a

preliminary injunction. At such hearing, as in any other

App. 58

hearing in which a preliminary injunction is sought, the

party seeking the injunction would bear the burden of

demonstrating the various factors justifying preliminary

injunctive relief, such as the likelihood of irreparable

injury to it if an injunction is denied and its likelihood of

success on the merits.'®

On the other hand, situations might arise where the

parties are not prepared and do not intend at the hearing

on the motion to dissolve or modify the temporary

restraining order to present their cases for or against a

preliminary injunction. In such circumstances, the appro- ~

priate procedure would be for the district court to deal

with the issues raised in the motion to dissolve or modify

the restraining order, but to postpone for a later hearing,

still within the time limitations of Rule 65(b), the applica-

tion for a preliminary injunction. See generally, C. Wright

& A. Miller, Federal Practice & Procedure: Civil 2954, p.

523 (1973 ed.).

In the present case we think it plain that the hearing

on the Union’s motion to dissolve the restraining order

cannot be considered to be a hearing on a preliminary

injunction, and that the District Court’s order denying the

motion to dissolve cannot reasonably be construed as the

grant of a preliminary injunction. There is no indication

in the record that either party or the District Court itself

treated the May 27 hearing as a hearing on an application

for a preliminary injunction. The employers made no

16 See, e.g., Robert W. Stark, Jr., Inc. v. New York Stock

Exchange, Inc., 466 F.2d 743 (CA2 1972); Crowther v. Seaborg,

415 F.2d 437 (CA10 1969); Garlock, Inc. v. United Seal, Inc., 404

F.2d 256 (CA6 1968).

App. 59

attempt at that time to present their case for a prelimi-

nary injunction. Likewise, the Union made no attempt at

that time to present its defense that it was not bound by

the new national and local agreements because it had

made a timely withdrawal from the multiunion bargain-

ing unit negotiating said contracts. See n. 3, supra. The

court itself did not indicate that it was undertaking a

hearing on a preliminary injunction. As far as we can tell,

it never addressed itself at the hearing to the various

equitable factors involved in considering a preliminary

injunction, but only considered the employers’ argument

that the case should be remanded to-the -state court

because the right to remove had been waived by the

Union’s appearing in the state proceeding and the

Union’s argument that the temporary restraining order

should be dissolved for want of jurisdiction under the

Sinclair holding.

We cannot accept petitioners’ argument that the con-

trolling factor is that the Union had the opportunity to be

heard on the merits of the preliminary injunction when it

moved in the District Court to dissolve the temporary

restraining order. Rule 65(b) does not place upon the

party against whom a temporary restraining order has

issued the burden of coming forward and presenting its

case against a preliminary injunction. To the contrary, the

Rule provides that ‘(i)n case a temporary restraining

order is granted without notice, the motion for a prelimi-

nary injunction shall be set down for hearing at the

earliest possible time . . . and when the motion comes on

for hearing the party who obtained the temporary

restraining order shall proceed with the application for a

preliminary injunction and, if he does not do so, the court

App. 60

shall dissolve the temporary restraining order.’ The bur-

den was on the employers to show that they were entitled

to a preliminary injunction, not on the Union to show that

they were not.

Even were we to assume that the District Court had

intended by its June 4 order to grant a preliminary injunc-

tion, its intention was not manifested in an appropriate

form. Where a hearing on a preliminary injunction has

been held after issuance of a temporary restraining order,

and where the District Court decides to grant the prelimi-

nary injunction, the appropriate procedure is not simply

to continue in effect the temporary restraining order, but

rather to issue a preliminary injunction, accompanied by

the necessary findings of fact and conclusions of law.'!7 As

stated by the Second Circuit:

‘The fact that notice is given and a hearing held

cannot serve to extend indefinitely beyond the period

limited by (Rule 65(b)) the time during which a tempor-

ary restraining order remains effective. The (Rule) con-

templates that notice and hearing shall result in an

appropriate adjudication, i.e., the issuance or denial of a

preliminary injunction, not in extension of the temporary

7 Fed.Rule Civ.Proc. 52(a) provides that ‘in granting or

refusing interlocutory injunctions the court shall . . . set forth the

findings of fact and conclusions of law which constitute the

grounds of its action.’ Where a temporary restraining order has

been continued beyond the time limits permitted under Rule

65(b), and where the required findings of fact and conclusions of

law have not been set forth, the order is invalid. See, e.g.,

National Mediation Bd. v. Air Line Pilots Assn., 116

U.S.App.D.C. 300, 323 F.2d 305 (1963); Sims v. Greene, 160 F.2d

512 (CA3 1947).

App. 61

stay.” Pan American World Airways, Inc. v. Flight Engi-

neers’ Int'l Assn., 306 F.2d 840, 842 1962) (footnotes omit-

ted). See also Sims v. Greene, 160 F.2d 512 (CA3 1947).

As the fine imposed in this case exemplifies, serious

penalties can befall those who are found to be in con-

tempt of court injunctions. Accordingly, one basic princi-

ple built into Rule 65 is that those against whom an

injunction is issued should receive fair and precisely

drawn notice of what the injunction actually prohibits. '8

‘The judicial contempt power is a potent weapon.

When it is founded upon a decree too vague to be under-

stood, it can be a deadly one. Congress responded to that

danger by requiring that a federal court frame its orders

so that those who must obey them will know what the

court intends to require and what it means to forbid. . . .

The most fundamental postulates of our legal order for-

bid the imposition of a penalty for disobeying a com-

mand that defies comprehension.’ International

Longshoremen’s Assn. v. Philadelphia Marine Trade

Assn., 389 U.S. 64, 76, 88 S.Ct. 201, 208, 19 L.Ed.2d 236

(1967).

It would be inconsistent with this basic principle to

countenance procedures whereby parties against whom

an injunction is directed are left to guess about its

intended duration. Rule 65(b) provides that temporary

restraining orders expire by their own terms within 10

8 Rule 65(d) provides: ‘Every order granting an injunction

and every restraining order . . . shall be specific in terms; shall

describe in reasonable detail, and not by reference to the

complaint or other document, the act or acts sought to be

restrained... .’

App. 62

days of their issuance. Where a court intends to supplant

such an order with a preliminary injunction of un‘imited

duration pending a final decision on the merits or further

order of the court, it should issue an order clearly saying

so. And where it has not done so, a party against whom a

temporary restraining order has issued may reasonably

assume that the order has expired within the time limits

imposed by Rule 65(b). Here, since the only orders

entered were a temporary restraining order of limited

duration and an order denying a motion to dissolve the

temporary order, the Union had no reason to believe that

a preliminary injunction of unlimited duration had been

issued.

Since neither § 1450 nor the District Court's denial of

the Union’s motion to dissolve the temporary restraining

order effectively converted that order into a preliminary

injunction, no order was in effect on November 30, 1970,

over six months after the temporary restraining order

was issued.'? There being no order to violate, the District

Court erred in holding the Union in contempt, and the

judgment of the Court of Appeals reversing the District

Court’s adjudication of contempt must be affirmed.

Judgment affirmed.

19 In view of our disposition of the case, we need not and

do not reach respondent's t that notwithstanding Boys

Markets v. Retail Clerks Union, 398 U.S. 235, 90 S.Ct. 1583, 26

L.Ed.2d 199 (1970), the temporary restraining order issued in

this case should be governed by the 5-day limit of § 7 of the

Norris-La Guardia Act, 29 U.S.C. § 107.

App. 63

Mr. Justice REHNQUIST, with whom THE CHIEF

JUSTICE, Mr. Justice STEWART, and Mr. Justice POWELL

join, concurring in the judgment.

I agree with the Court that the judgment of the Court

of Appeals for the Ninth Circuit in this case should be

affirmed, since there was no injunctive order in effect at

the time that respondent's allegedly contemptuous con-

duct occurred. But I do not join that portion of the

Court’s opinion which lays down a ‘rule’ for all cases

involving 28 U.S.C. § 1450, the statute which all parties

agree is controlling in the case before us. In my view, the

announcement of this ‘rule’ is neither necessary to the

decision of this case nor consistent with the provisions of

the statute itself.

The Court persuasively demonstrates in its opinion

that the temporary restraining order issued by the Cali-

fornia Superior Court had expired by its own terms long

before the alleged contempt occurred. And I see nothing

in the language or legislative history of 28 U.S.C. § 1450,

providing that ‘(a)ll injunctions, orders, and other pro-

ceedings had in such action prior to its removal shall

remain in full force and effect until dissolved or modified

by the district court,’ which would indefinitely extend the

Superior Court's restraining order beyond the time of its

normal expiration under state law. Since the temporary

restraining order, had the case remained in state court,

' The relevant provision of 28 U.S.C. § 1450 reads: “All

injunctions, orders, and other proceedings had in such action

prior to its removal shall remain in full force and effect until

dissolved or modified by the district court.”

App. 64

concededly would have expired in early June, respon-

dent's actions in November and December could not have

constituted a contempt of that order.

The Court also persuasively demonstrates that none

of the proceedings occurring after removal of the case to

the United States District Court had the effect of convert-

ing the subsisting state court temporary restraining order

into a preliminary injunction of indefinite duration.

Those proceedings addressed markedly different issues

and certainly did not give the state court order a new,

independent federal existence.

Having said this much, the Court has disposed of the

case before it. The opinion then goes on, however, to

devise a ‘rule’ that ‘(a)n ex parte temporary restraining

order issued by a state court prior to removal remains in

force after removal no longer than it would have

remained in effect under state law, but in no event does

the order remain in force longer than the time limitations

imposed by Rule 65(b), measured from the date of

removal.’ Ante, at 1124. (Footnote omitted.) But the deter-

mination that mere removal of a case to a federal district

court does not extend the duration of a previously issued

state court order past its original termination date makes

quite unnecessary to this case any further discussion

about time limitations contained in Fed.Rules Civ.Proc.

65(0). More importantly, the second clause of the ‘rule’

devised by the Court seems quite contrary to the specific

language of 28 U.S.C. § 1450.

The Court apparently bases this latter clause of the

‘rule’ upon the observation that ‘respondent Union had a

right to the protections of the time limitation in Rule

App. 65

65(b) once the case was removed to the District Court.’

While this premise probably has a good deal to recom-

mend it as a matter of practicality or of common sense,

the language of the statute gives no hint that rules of

Practice governing issuance of federal injunctions in *!.e

first instance were automatically to be incorporated in

applying its terms. The statute Says that the state court's

temporary restraining order ‘shall remain in full force

and effect until dissolved or modified by the district

court.’ This Court's ‘rule,’ however, says that it shall not

remain in full force and effect, even though not dissolved

or modified by the District Court, if it would have a life

beyond the time limitations imposed by Rule 65(b).

2 Indeed, respondent's motion to dissolve the state court

order because of the prohibitions contained in the Norris-

LaGuardia Act, 29 U.S.C. § 104, was just such a motion. That

motion was denied by the District Court, however, and

respondent made no further effort to obtain a modification or

dissolution of the state restraining order prior to its expiration.

App. 66

actions, would by their terms remain in effect for a period

of time far longer than that contemplated by the compa-

rable Federal! Rule of Civil Procedure. But in the rare case

where such a condition obtains, it is surely not asking too

much of a litigant in a removed case to comply with

§ 1450 and affirmatively move for appropriate modifica-

tion of the state order.

Therefore, although I cannot subscribe to the rule

which the Court fashions to govern cases of this type, I

concur in its conclusion that respondent's activity in

November and December 1970 did not violate any injunc-

tive order which was in force at that time.®

3 1 see no occasion for the Court's rather casual

speculation, contained in n. 5 of its opinion, that the

respondent's violation of the order, even were it effective at the

time of its later conduct, may not have been ‘willful™ The Court

has concluded that the order was not effective at that later time,

and it can serve no useful purpose to speculate about the

sufficiency of the evidence with respect to violation of a defunct

order.

App. 67

Arthur F. SAMPSON, Administrator

General Services Administration, et al.

Petitioners,

Jeanne M. MURRAY

No. 72 — 403.

Argued Nov. 14, 1973.

Decided Feb. 19, 1974.

Upon being notified that she was going to be dis-

charged on a specific date from her position as a proba-

tionary Government employee, respondent filed this

action claiming that the applicable Civil Service regula-

tions for discharge of probationary employees had not

been followed, and seeking a temporary injunction

to the reasons for the dismissal, ordered the temporary

injunctive relief continued. The Court of Appeals

such relief the District Court's issuance of the temporary

injunctive relief here cannot be sustained. Pp. 942-954.

App. 68

(a) The District Court’s authority to review agency

action, Service v. Dulles, 354 U.S. 363, 77 S.Ct. 1152, 1

L.Ed.2d 1403, does not come into play unti) it may be

authoritatively said that the administrative decision [sic]

to discharge an employee does in fact fail to conform to

the applicable regulations, and until administrative

action has become final, no court is in a position to say

that such action did or did not conform to the regula-

tions. Here the District Court authorized, on an interim

basis, relief that the CSC had neither considered nor

authorized - the mandatory reinstatement of respondent

in her Government position. Scripps-Howard Radio, Inc.

v. FCC, 316 U.S. 4, 62 S.Ct. 875, 86 L.Ed. 1229; FTC v. Dean

Foods Co., 384 U.S. 597, 86 S.Ct. 1738, 16 L.Ed.2d 802,

distinguished. Pp. 943-947.

(b) Considering the disruptive effect that the grant

of temporary relief here was likely to have on the admin-

istrative process, and in view of the historical denial of all

equitable relief by federal courts in disputes involving

discharge of Government employees; the well-established

rule that the Government be granted the widest latitude

in handling its own internal affairs; and the traditional

unwillingness of equity courts to enforce personal service

contracts, the Court of Appeals erred in routinely apply-

ing the traditional standards governing more orthodox

“stays,” and respondent at the very least must show

irreparable injury sufficient in kind and degree to over-

ride the foregoing factors. Pp. 947-950.

injunction, the Court of Appeals erred in suggesting that

at this stage of the proceeding the District Court need not

have concluded that there was actually irreparable injury,

App. 69

and in intimating that, as alleged in respondent's

unverified complaint, either loss of earnings or damage

to reputation might afford a basis for a finding of irrepar-

able injury. Pp. 950-954.

149 U.S.App.D.C. 256, 462 F.2d 871, reversed.

Keith A. Jones, Washington, D.C., for petitioners.

Thomas J. McGrew, Washington, D.C., for respor-

dent, pro hac vice, by special leave of Court.

Mr. Justice REHNQUIST delivered the opinion of the

Court.

Respondent is a probationary employee in the Public

Buildings Service of the General Services Administration

(GSA). In May 1971, approximately four months after her

employment with GSA began, she was advised in writing

by the Acting Commissioner of the Public Buildings Ser-

vice, W.H. Sanders, that she would be discharged from

her position on May 29, 1971. She then filed this action in

the United States District Court for the District of Colum-

bia, seeking to temporarily enjoin her dismissal pending

her pursuit of an administrative appeal to the Civil Ser.

vice Commission. The District Court granted a temporary

restraining order, and after an adversary hearing

extended the interim injunctive relief in favor of respon-

dent until the Acting Commissioner of the Public Build-

Pe Service testified about the reasons for respondent's

ismissal.

= os

App. 70

A divided Court of Appeals for the District of

Columbia Circuit affirmed,’ rejecting the Government's

contention that the District Court had no authority what-

ever to grant temporary injunctive relief in this class of

cases, and holding that the relief granted by the District

Court in this particular case was within the permissible

bounds of its discretion. We granted certiorari, sub nom.

Kunzig v. Murray, 410 U.S. 981, 93 S.Ct. 1494, 36 L.Ed.2d

177 (1973). We agree with the Court of Appeals that the

District Court is not totally without authority to grant

interim injunctive relief to a discharged Government

employee, but conclude that, judged by the standards

which we hold must govern the issuance of such relief,

the issuance of the temporary injunctive relief by the

District Court in this case cannot be sustained.

Respondent was hired as a program analyst by the

Public Building Service after previous employment in the

Defense Intelligence Agency. Under the regulations of the

Civil Service Commission, this career conditional

appointment was subject to a one-year probationary

period.? Applicable regulations provided that respon-

dent, during this initial term of probation, could be dis-

missed without being afforded the greater procedural

' Murray v. Kunzig, 149 U.S.App.D.C. 256, 462 F.2d 871

(1972). For a discussion of the Court of Appeals’ jurisdiction,

and the jurisdiction of this Court, see infra, at 951-952.

2 5 CFR § 315.801.

advantages available to permanent employees in the com-

petitive service.> The underlying dispute between the

parties arises over whether the more limited procedural

The procedural protections which the regulations

accord to most dismissed Probationary employees are

limited. Commonly a Government agency may dismiss a

probationary employee found unqualified for continued

employment simply “by notifying him in writing as to

why he is being separated and the effective date of the

action.”* More elaborate procedures are specified when

the ground for terminating a probationary employee is

“for conditions arising before appointment.”5 In such

cases the regulations require that the employee receiv

“an advance written notice Stating the reasons, speci-

fically and in detail, for the Proposed action”; that the

employee be given an opportunity to respond in writing

and to furnish affidavits in support of his response; that

the agency “consider” any answer filed by the employee

in reaching its decision; and that the employee be notified

of the agency’s decision at the earliest practicable date.6

* Compare 5 CFR §§ 315.801 - 315.807 with 5 CFR § 752.101

et seq.

* 5 CFR § 315.804.

5 5 CFR § 315.805.

® Section 315.805 reads in full: § 315.805 Termination of

probationers for conditions arising before appointment. “When

an agency proposes to terminate an employee serving a

probationary or trial period for reasons based in whole or in

part on conditions arising before his appointment, the employee

is entitled to the following: “(a) Notice of Proposed adverse

App. 72

Respondent contends that her termination was based in

part on her activities while in the course of her previous

employment in the Defense Intelligence Agency, and that

therefore she was entitled to an opportunity to file an

answer under this latter provision.

The letter which respondent received from the Acting

Commissioner, notifying her of the date of her discharge,

stated that the reason for her discharge was her “com-

plete unwillingness to follow office procedure and to

accept direction from [her] supervisors.” After receipt of

the letter, respondent’s counsel met with a GSA personnel

officer to discuss her situation and, in the course of the

meeting, was shown a memorandum prepared by an

officer of the Public Buildings Service upon which

Sanders apparently based his decision to terminate

respondent's employment. The memorandum contained

both a discussion of respondent's conduct in her job with

action. The employee is entitled to an advance written notice

stating the reasons, specifically and in detail, for the proposed

action. “(b) Employee’s answer. The employee is entitled to a

reasonable time for filing a written answer to the notice of

proposed adverse action and for furnishing affidavits in

support of his answer. If the employee answers, the agency shall

consider the answer in reaching its decision. “(c) Notice of

adverse decision. The employee is entitled to be notified of the

agency’s decision at the earliest practicable date. The agency

shall deliver the decision to the employee at or before the time

the action will be made effective. The notice shall be in writing,

inform the employee of the reasons for the action, inform the

employee of his right of appeal to the appropriate office of the

Commission, and inform him of the time limit within which the

appeal must be submitted as provided in § 315.806(d).”

App. 73

the Public Buildings Service and a discussion of her con-

duct during her previous employment at the Defense

Intelligence Agency. Relying upon the inclusion of the

information concerning her previous employment,

respondent’s counsel requested that she be given a

detailed statement of the charges against her and an

opportunity to reply ~ the procedures to which she would

be entitled under the regulations if in fact t+ basis of her

discharge had been conduct during her previous employ-

ment. This request was denied.

Respondent then filed an administrative appeal with

the Civil Service Comsnission pursuant to the provisions

of 5 CFR § 315.806(c), alleging that her termination was

subject to § 315.805 and was not effected in accordance

with the procedural requirements of that section.” While

her administrative appeal was pending undecided, she

filed this action. Her complaint alleged that the agency

had failed to follow the appropriate Civil Service regula-

tions, alleged that her Prospective discharge would

deprive her of income and cause her to suffer the embar-

rassment of being wrongfully discharged, and requested

a temporary restraining order and interim injunctive

relief against her removal from employment pending

agency determination of her appeal. The District Court

granted the temporary restraining order at the time of the

filing of respondent's complaint, and set a hearing on the

: Section 315.806(c) reads: “A probationer whose

termination is subject to § 315.805 may appeal on the ground

that his termination was not effected in accordance with the

procedural requirements of that section.”

App. 74

application for a temporary injunction for the following

week.

At the hearing on the temporary injunction, the Dis-

trict Court expressed its desire to hear the testimony of

Sanders in person, and refused to resolve the controversy

on the basis of his affidavit which the Government

offered to furnish. When the Government declined to

produce Sanders, the court ordered the temporary injunc-

tive relief continued, stating that “Plaintiff may suffer

immediate and irreparable injury, loss and damage before

the Civil Service Commission can consider Plaintiff's

claim.”® The Government, desiring to test the authority of

the District Court to enter such an order, has not pro-

duced Sanders, and the interim relief awarded respon-

dent continues in effect at this time.

On the Government's appeal to the Court of Appeals

for the District of Columbia Circuit, the order of the

District Court was affirmed. Although recognizing that

“Congress presumably could remove the jurisdiction of

§ The order of the District Court stated in full: “It appearing

to the Court from the affidavits and accompanying exhibits that

a Temporary Restraining Order, pending the appearance before

this Court of Mr. W. H. Sanders, Acting Commissioner, Public

Buildings Service, should issue because, unless Defendants are

restrained from terminating Plaintiff's employment, Plaintiff

may suffer immediate and irreparable injury, loss and ¢ #z3e

before the Civil Service Commission can consider Plan.. -1's

claim, “NOW, THEREFORE, IT IS ORDERED, that the

Temporary Restraining Order issued by this Court at twelve

o'clock p.m., May 28, 1971, is continued until the appearance of

the aforesaid W. H. Sanders. “IT IS FURTHER ORDERED that a

copy of this Order be served by the United States Marshal on

Defendants forthwith.”

App. 75

the District Courts to grant such equitable interim relief,

in light of the remedies available,”? the court found that

the District Court had the power to grant relief in the

absence of an explicit prohibition from Congress. The

Court of Appeals decided that the District Court acted

within the bounds of permissible discretion in requiring

Sanders to appear and testify,’ and in continuing the

temporary injunctive relief until he was produced as a

witness by the Government.

While it would doubtless be intellectually neater to

completely separate the question whether a District Court

has authority to issue any temporary injunctive relief at

the behest of a discharged Government employee from

the question whether the relief granted in this case was

proper, we do not believe the questions may be thus

bifurcated into two watertight compartments. We believe

the basis for our decision can best be illuminated by

taking up the various arguments which the parties urge

upon us.

Petitioners point out, and the Court of Appeals below

apparently recognized, that Congress has given the Dis-

trict Courts no express Statutory authorization to issue

temporary “stays” in Civil Service cases. Although Con-

gress has often specifically conferred such authority

when it so desired - for example, in the enabling statutes

* 149 U.S.App.D.C., at 262 n. 21, 462 F.2d, at 877 n. 21.

1° Id., at 263 - 264, 462 F.2d, at 878 - 879.

App. 76

establishing the NLRB,'! the FTC,'? the FPC,’° and the

SEC"* - the statutes governing the Civil Service Commis-

sion are silent on the question.'5 The rules and regula-

tions promulgated pursuant to a broad grant of statutory

authority likewise make no provision for interlocutory

judicial intervention.

The Court of Appeals nevertheless found that the

district courts had traditional power to grant stays in

such personnel cases. Commenting upon the Govern-

ment’s arguments for reversal below, the court stated:

“It is asserted that the Civil Service Commission

has been given exclusive review jurisdiction.

11 29 U.S.C. §§ 160(j), (1).

12 15 U.S.C. § 53(a).

13 16 U.S.C. § 825m(a).

14 15 U.S.C. §§ 77t(b), 78u(e).

1S Respondent does suggest that 5 U.S.C. § 705 may confer

authority to grant relief in this case. That section reads: “When

an agency finds that justice so requires, it may postpone the

effective date of action taken by it, pending judicial review. On

such conditions as may be required and to the extent necessary

to prevent irreparable injury, the reviewing court, including the

court to which a case may be taken on appeal from or on

application for certiorari or other writ to a reviewing court, may

issue all necessary and appropriate process to postpone the

effective date of an agency action or to preserve status or rights

pending conclusion of the review proceedings.” The relevant

legislative history of that section, however, indicates that it was

primarily intended to reflect existing law under the Scripps-

Howard doctrine, discussed infra, and not to fashion new rules

»f intervention for District Courts. See S.Rep.No.752, 79th

Cong., 1st Sess., 27, 44 (1945). Thus respondent’s various

contentions may be grouped under her primary theory

discussed in the text.

App. 77

But, as noted initially, there is no statutory

power in the Civil Service Commission to grant

a temporary stay of discharge. Prior to the Civil

Service Act a United States District Court would

certainly have had jurisdiction and power to

grant such temporary relief. The statute did not

explicitly take it away, nor implicitly by confer-

ring such jurisdiction and power of the CSC; we

hold the District Court still has jurisdiction and

may exercise the power under established stan-

dards in appropriate circumstances.”16

| If the issue were to turn solely on the earlier deci-

sions of this Court examining the authority of federal

courts to intervene in disputes about governmental

employment, we think this assumption of the Court of

Appeals is wrong. In Keim v. United States, 177 U.S. 290

20 S.Ct. 574, 44 L.Ed. 774 (1900), this Court held that the

Court of Claims had no authority to award damages to an

employee who claimed he had been wrongfully dis-

charged by his federal employer.'!7 In White v. Berry, 171

6 149 U.S.App.D.

omitted.) App-D.C., at 265, 462 F.2d, at 880 (footnotes

‘7 The Court there expressed the tradit’ judici

deference to administrative paiceas in the cain

The appointment to an official position in the Government,

even if it be simply a clerical position, is not a mere ministerial

act, but one involving the exercise of judgment. The appointing

general supervising power. “In the absence of specifi

1 s ¢ provisi

° the contrary, the power of removal from office is Shite se

a power of appointment. ‘It cannot for a moment be admitted

at it was the intention of the Constitution that those offices

App. 78

U.S. 366, 18 S.Ct. 917, 43 L.Ed. 199 (1898), a Government

employee had sought to enjoin his employer from dis-

missing him from office, alleging that the removal would

violate both the Civil Service Act amd the applicable

regulations.'® The Circuit Court assumed jurisdiction and

issued an order prohibiting the defendant from interfer-

ing with the plaintiff's discharge of his duty “until he

shall be removed therefrom by proper proceedings had

under the civil service act, and the rules and regulations

made thereunder, or by judicial proceedings at law... . “'

which are denominated inferior offices should be held during

life. And if removable at pleasure, by whom is such removal to

be made? In the absence of all constitutional provision or

statutory regulation it would seem to be a sound and necessary

rule to consider the power of removal as incident to the power

of appointment.’ In re Hennen, 13 Pet. 230, 259 [10 L.Ed. 138];

Parsons v. United States, 167 U.S. 324 [17 S.Ct. 880, 42 L.Ed. 185}.

Unless, therefore, there be some specific provision to the

contrary, the action of the Secretary of the Interior in removing

the petitioner from office on account of inefficiency is beyond

review in the courts either by mandamus to reinstate him or by

compelling payment of salary as though he had not been

removed.” 177 U.S., at 293-294, 20 S.Ct., at 575.

18 The plaintiff in White protested that he was being

discharged because of his political affiliation, a basis for

discharge specifically prohibited under the Civil Service rules.

171 U.S., at 367-368, 18 S.Ct., at 917-918. Such a contention

obviously went to the heart of the Civil Service legislation, since

a primary purpose of that system was to remove large sectors of

Government employment from the political “spoils system”

which had previously played a large part in the selection and

discharge of Government employees. See generally H. Kaplan,

The Law of Civil Service 1-22 (1958).

19 171 USS., at 374-375, 18 S.Ct., at 920.

App. 79

This Court reversed. Discussing the apparently well-

established principle that “ ‘a court of equity will not, by

injunction, restrain an executive officer from making a

wrongful removal of a subordinate appointee,’ “2° the

Court held that “the circuit court, sitting in equity, was

without jurisdiction to grant the relief asked.”21

Respondent's case, then, must succeed, if at all,

despite earlier established principles regarding equitable

intervention in disputes over tenure of governmental

employees, and not because of ‘them. Much water has

flowed over the dam since 1898, and cases such as Service

v. Dulles, 354 U.S. 363, 77 S.Ct. 1152, 1 L.Ed.2d 1403

(1957), cited by the District Court in its memorandum

opinion in this case, establish that federal courts do have

authority to review the claim of a discharged govern-

mental employee that the agency effectuating the dis-

charge has not followed administrative regulations.22 In

*° The Court quoted from Morgan v. Nunn, 84 F. 55

. . 1

(CCMD Tenn. 1898), and noted that “[sJimilar decisions have

been made in other circuit courts of the United States.” 171 U.S.,

at 377-378, 18 S.Ct., at 921.

21 Id., at 378, 18 S.Ct., at 922.

# In Service an employee discharged under the provisions

of the McCarran rider, 65 Stat. 581, contended that the Secretary

of State had not followed departmental regulations in effecting

his dismissal. This Court agreed with plaintiff’s position and

decided that his “dismissal cannot stand.” 354 U.S., at 388, 77

S.Ct., at 1165. However, the employee in that case had made a

full effort to secure administrative review of his discharge prior

to filing suit in the District Court. These efforts, as the Court

noted, id., at 370, 77 S.Ct., at 1156, had “proved unsuccessful.”

In the present case petitioner has petitioned the court before

ascertaining whether administrative relief will be granted.

App. 80

that case, however, judicial proceedings were not com-

menced until the administrative remedy had been unsuc-

cessfully pursued.» The fact that Government personnel

decisions are now ultimately subject to the type of judi-

cial review sought in Service v. Dulles, supra, does not,

without more, create the authority to issue interim injunc-

tive relief which was held lacking in cases such as White

v. Berry, supra.

The Court of Appeals found support for its affir-

mance of the District Court’s grant of injunctive relief in

Scripps-Howard Radio, Inc. v. FCC, 316 US. 4, 62 S.Ct.

875, 86 L.Ed. 1229 (1942). In Scripps-Howard the licensee

of a Cincinnati radio station petitioned the PCC to vacate

an order permitting a Columbus radio station to change

its frequency and to increase its broadcasting power. The

licensee also requested a hearing. When the Commission

denied the petition, the licensee filed a statutory appeal

in the Court of Appeals for the District of Columbia

Circuit and, in conjunction with the docketing of the

appeal, asked the court to stay the FCC order pending its

decision. The Court of Appeals, apparently departing

from a longstanding policy of issuing such stays,”

23 See n. 22, supra.

** The Court pointed out that “even though the Radio Act

of 1927 contained no provisions dealing with th

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