# Petition for Writ of Certiorari — Rosati v. Cottman Transmission Systems, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1997
- **Citation:** 520 U.S. 1104

## Text

Supreme Court, U.S
fo FILED
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\/ 961118 JAN 1 41997,

gasmme OF THE CLERK

In The

Supreme Court of the United States

+
October Term, 1996

A.D. ROSATI,
Petitioner In Pro Per,
VS.
COTTMAN TRANSMISSION SYSTEMS, INC.,
Respondent.

Petition for a Writ of Certiorari to the United States
Court of Appeals for the Third Circuit

PETITION FOR A WRIT OF CERTIORARI

A.D. ROSATI
Petitioner In Pro Per
7115 Orchard Lake Road
Suite 140
West Bloomfield, Michigan 48322
(810) 737-4884

9972

utz
(800) 3 APPEAL « (800) 5 APPEAL » (800) BRIEF 21 L te

EL, IIOP: OPI LO OT

i
QUESTIONS PRESENTED

1. Must a nonparty file an appeal from a 28 U.S.C:S.
§ 1292(a)(1) interlocutory order within 30 days of its entry to
vest a Court of Appeals with jurisdiction to hear an appeal of
that order?

2. Is an award of attorney fees in a civil contempt
proceeding in an amount 20 times the actual damages suffered
by a party a per se unreasonable award?

li

LIST OF PARTIES

Petitioner A.D. Rosati is a nonparty and the Respondent is
the plaintiff in the proceedings in the court whose judgment is
sought to be reviewed here. The named Defendants in the lower
court proceedings are not parties to this Petition. On Petitioner’s
best information and belief, there is no parent or subsidiary of
Respondent to be listed.

iii

TABLE OF CONTENTS
Page
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Reasons for Granting the Writ ................0200. 4
I. The Third Circuit Court Of Appeals Erred In
Declining To Determine Rosati’s Appeal Of The
June 28, 1995 District Court Order Denying His
Motion To Vacate The July 17, 1992 Preliminary
Injunction On The Apparent Belief That It Lacked
Jurisdiction To Do So Because An Appeal Of That
Order Was Not Filed Within 30 Days Of Its Entry
SON UREN mn Panny eae a a 5
II. The District Court Erred In Awarding Attorney
Fees In A Civil Contempt Proceeding In An
Amount Twenty Times The Amount Of The Actual
Loss Suffered By Cottman ...............4.. 12

ie aN alg a idee wae 17

iv

Contents
Page
TABLE OF CITATIONS
Cases Cited:

Balla v. Idaho State Bd. of Corrections, 869 F.2d 461
PRs SUT ck cna beeeunae whe eeelbasCaures 4,8

Carson v. American Brands, Inc., 450 U.S. 79, 101 S.
Ct. Fs, GF bn Seer a ae LEED Ske canccavecnnenen 4,10

City of Riverside v. Rivera, 477 U.S. 561, 106 S. Ct. 2686,
ee ek eee rar erin 5, 15, 16

Fleischmann Distill. Corp. v. Maier Brewing Cottman,

386 U.S. 714, 87 S. Ct. 1404, 18 L. Ed. 2d 475 (1967)
Se re TE me aH hE per anes em RGU 13

Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76
Soc Ss SE RE EE awh Ace ox ee ck es Ook 14

Retired Chicago Police Ass ’n v. City of Chicago, 7 F.3d
Pee SPE: FOE od oer hone cancun kehea ban ekaka 4,8

Sierra Club v. Robertson, 28 F.3d 753 (8th Cir. 1994)
49a HUES eS wh Ede Ons A er ee bk eae 4,7

Toledo Scale Cottman v. Computing Scale Cottman, 261
U.S. 399, 43 S. Ct. 458, 67 L. Ed. 719 (1923) ...... 13

United States v. Ryan, 402 U.S. 530, 91 S. Ct. 1580, 29
Lins SEE AEST ED. Sc ke keg ence a ecKniseesaal 6,7

Contents
Page

United States v. United Mine Workers of America, 330

U.S. 258, 67 S. Ct. 677, 91 L. Ed. 884 (1947) ...... 12
U.S. Catholic Conference v. Abortion Rights, 487 U.S.

12, 108 S. Ct. 2268, 101 L. Ed. 2d 69 (1988) ...... 6
Statues Cited:
Ee ELD. shod Maa dr 460 boone eee theeeuee 1
Be Meee SD: oh os 5 RS eA eh eae waeeees 7
Sy State SE as bso e ks cask naewavurese vere 4
Be tes SED 2. kk 5 6 ARASR EA Pe HRGA ONS R455 i, 1,4
Rules Cited:
Federal Rules of Civil Procedure:

PE Ee £4 cs web hk bale ok ke onde ebnerae ie 14

ES u's 2's 6 eGo A RARE ROTOR ERE 1]

SU NEIRD ice vse Che OS ko ae bo bk a eas BO beewend 11

vi

Contents

APPENDIX

Appendix A — Sur Petition for Rehearing of the United
States Court of Appeals for the Third Circuit Dated
GEE A, BEE: ab Ve pid Ursvvctnedubpescbseees

Appendix B — Judgment Order of the United States Court
of Appeals for the Third Circuit Dated September 23,
FO Sdbndetinsrr ede dadonaciaedkee ent aiceeeh

Appendix C — Order of the United States District Court
for the Eastern District of Pennsylvania Dated February
Ti 6h aad been de denne kcknes hates

Appendix D — Memorandum of the United States District
Court for the Eastern District of Pennsylvania Entered
PE Me BOE heh tadnned cpbewsensWaeennees

Appendix E — Order of the United States District Court
for the Eastern District of Pennsylvania Filed June 28,
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Page

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1
OPINIONS BELOW

The unreported September 23, 1996 opinion of the Court
of Appeals affirming the district court’s Order of February 2,
1996 and its unreported October 16, 1996 opinion denying the
petition for rehearing is reproduced in the Appendix, infra at 8a
and la. The unreported opinions of the district court are
reproduced at 11a and 23a.

STATEMENT OF JURISDICTION

The Court of Appeals entered its Judgment Order on
September 23, 1996 and its Order denying rehearing on October
16, 1996. The jurisdiction of this Court is invoked under 28
U.S.C. § 1254(1).

STATUTE INVOLVED

The pertinent provision of 28 U.S.C.S. § 1292(a)(1) is set
forth below:

§ 1292. Interlocutory decisions
(a) Except as provided in subsections (c) and

(d) of this section, the courts of appeals shall
have jurisdiction of appeals from:

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

2

STATEMENT OF THE CASE

Ir, 1991, Cottman Transmission Systems, Inc., a
Pennsylvania corporation (Cottman), was a national franchiser
of transmission repair shops with an insignificant presence in
the State of Michigan. At that time, A-1 Transmissions, Inc., a
Michigan corporation (A-1), had over 30 franchised transmission
repair shops in the State of Michigan. A-1 was in financial straits
and looking for a purchaser of its business and Cottman seized
this opportunity to enter the Michigan market with a significant
presence. To avoid problems with creditors of A-1, the
acquisition technique involved the mutual termination of the
A-1 franchise agreements as of August 25, 1991 and execution
of the Cottman franchise agreements on August 26, 1991.
Included in Cottman’s franchise package was an assignment of
the telephone numbers of the corporate Defendants to Cottman.
This document is Cottman’s justification for seizure of
Defendants’ telephone numbers by enforcement of the
preliminary injunction that issued in this cause.

In signing the former A-1 franchisees to its franchise
agreements, Cottman violated the Michigan Franchise
Investment Law. This violation afforded the former A-1
franchisees the right to rescind the Cottman franchise
agreements and the Defendants rescinded effective April 8, 1992.
Cottman filed the within actions in the United States District
Court for the Eastern District of Pennsylvania (federal action)
shortly thereafter and sought a preliminary injunction primarily
directed to removing the assigned telephone numbers from
Defendants’ shops and transferring them to other Cottman
franchisees. At all relevant times, Defendants were represented
by Pennsylvania counsel in the federal action.

In June of 1992, Rosati filed an action in the Circuit Court
for the County of Wayne, State of Michigan (state action) on

3

behalf of Defendants against Cottman and Michigan Bell
Telephone Company. The relief sought against Michigan Bell
was preservation of Defendants’ telephone numbers. On July
17, 1992, Cottman secured a preliminary injunction in the federal
action. On July 20, 1992, Rosati called Michigan Bell’s counsel
in the state action to discuss the applicability of the preliminary
injunction to the State Action. On July 23, 1992, Rosati learned
that Michigan Bell had disconnected Defendants’ telephone
numbers and was transferring them to other Cottmaa franchisees.
On August 5, 1992, Cottman filed a Motion for Civil Contempt
against the Defendants and Rosati alleging a violation of the
preliminary injunction by acts impeding Cottman’s taking of
Defendants’ telephone numbers. The federal action concluded
on December 22, 1993 with Cottman abandoning its contempt
claim against all of the Defendants but preserving its contempt
Claim against Rosati.

Following a number of adjournments, the contempt hearing
was scheduled for June 28, 1995. On May 17, 1995, Rosati filed
a Motion to Vacate the Preliminary Injunction. On June 28, 1995,
Rosati appeared in the district court for the contempt hearing
and was personally served with a copy of the June 28, 1995
Order denying his motion to vacate the preliminary injunction.

The June 28, 1995 hearing consumed approximately three
hours. Cottman and Rosati filed proposed findings of facts and
conclusions of law and the district court issued its opinion and
order on February 2, 1996 finding Rosati in contempt and
awarding Cottman damages of $1,358, attorney fees of $9,907.50
and expenses of $494.

On February 23, 1996, Rosati filed his Notice of Appeal
from the June 28, 1995 Order denying his motion to vacate the
preliminary injunction and the February 2, 1966 Order granting
Cottman’s motion for civil contempt and awarding Cottman

4

damages, costs and attorney fees. During oral argument in the
Third Circuit Court of Appeals, the panel indicated their belief
that it lacked jurisdiction to rule on the June 28, 1995 order. On
September 23, 1996, the Third Circuit Court of Appeals entered
an Order Affirming the district court’s judgment of February 2,
1996. On October 4, 1996, Rosati filed a Petition for Rehearing
by the Third Circuit Court of Appeals requestin,, inter alia, a
ruling as to the June 28, 1995 order. On October 16, 1996,
Rosati’s petition for rehearing was denied.

REASONS FOR GRANTING THE WRIT

The Third Circuit Court of Appeals’ holding that a nonparty
must file an immediate appeal of a 28 U.S.C.S. § 1292(a)(1)
interlocutory order to vest it with jurisdiction is in conflict with
decisions of three other circuits, Sierra Club v. Robertson, 28
F.3d 753, 756, n. 3 (8th Cir. 1994); Balla v. Idaho State Bd. of
Corrections, 869 F.2d 461, 468 (9th Cir. 1989); and Retired
Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 680 (7th
Cir. 1993). In addition this holding is contrary to this Court’s
decision in Carson v. American Brands, Inc., 450 U.S. 79, 85,
101 S. Ct. 993, 997, 67 L. Ed. 2d 59 (1981), which precludes an
interlocutory appeal unless the interlocutory order might have
a serious, perhaps irreparable consequence and can be effectually
challenged only by an immediate appeal. In the case at bar, one
telephone call on July 20, 1992 was the only and final
contemptuous act of Rosati and the parameters of an action for
civil contempt were crystallized. The June 28, 1995 order
denying Rosati’s motion to vacate the July 17, 1992 Preliminary
Injunction clearly could be effectively challenged, consistent
with judicial economy, at the time of appealing the final order
of February 2, 1996.

This case fairly presents the issue of whether an award of
attorney fees disproportionate to the award of damages in a civil

5

proceeding is unreasonable per se. This Court addressed this
issue in City of Riverside v. Rivera, 477 U.S. 561, 575, 106 S.
Ct. 2686, 2694, 91 L. Ed. 2d 466 (1986) where the majority
upheld an award of attorney fees seven times the amount of
damages on the grounds that a plaintiff in a civil rights action is
also vindicating important civil and constitutional rights that
cannot be valued in monetary terms. The within action for
damages for civil contempt invokes no such civil or
constitutional rights and an award of twenty times the amount
of damages is clearly unreasonable. The unreasonableness of
the award of attorney fees is further established by the fact that
for two and one-half years Cottman wrongfully pursued Lanham
Act damages of $24,511 when its actual loss was $496.95.

I.

THE THIRD CIRCUIT COURT OF APPEALS ERRED
IN DECLINING TO DETERMINE ROSATI’S APPEAL OF
THE JUNE 28, 1995 DISTRICT COURT ORDER
DENYING HIS MOTION TO VACATE THE JULY 17, 1992
PRELIMINARY INJUNCTION ON THE APPARENT
BELIEF THAT IT LACKED JURISDICTION TO DO SO
BECAUSE AN APPEAL OF THAT ORDER WAS NOT
FILED WITHIN 30 DAYS OF ITS ENTRY.

It is undisputed that Rosati’s status is that of a nonparty as
he is neither a party, nor attorney of record, in the federal action.
Equally undisputed is the fact that all concerned knew that Rosati
was Defendants’ attorney in the state action and that Michigan
Bell was a party in that action. No one can seriously contend
that a potential nonparty is entitled to notice of the hearing fora
preliminary injunction, the opportunity to participate in the
hearing and present proofs or have a voice in negotiating the
terms of the preliminary injunction. The obvious reason is that
a preliminary injunction hearing would be a nightmare if every

6

officer, agent, servant, employee and attorney of a party was )
deemed to be a necessary participant. While judicial economy
may warrant a preliminary injunction hearing with only parties
participating, judicial economy does not warrant depriving a |
nonparty of the right to contest a preliminary injunction and
assert any defense a party could have asserted.

United States v. Ryan, 402 U.S. 530, 532-533, 91 S. Ct.
1580, 1582, 29 L. Ed. 2d 85 (1971), confirms the right of a
nonparty to utilize a contempt hearing to test the validity of the
order underlying the contempt charge:

We think that respondent’s assertion
misapprehends the thrust of our cases. Of
course, if he complies with the subpoena he
will not thereafter be able to undo the
substantial effort he has exerted to comply.
But compliance is not the only course open
to respondent. If, as he claims, the subpoena
is unduly burdensome or otherwise unlawful,
he may refuse to comply and litigate those
questions in the event that contempt or
similar proceedings are brought against him.
Should his contentions be rejected at that
time by the trial court, they will then be ripe
for appellate review.

U.S. Catholic Conference v. Abortion Rights, 487 U.S. 72,
76, 108 S. Ct. 2268, 2271, 101 L. Ed. 2d 69 (1988), holds that a
nonparty must have the opportunity on the appeal of a civil
contempt order to fully test the power of the court to issue the
order:

The right of a nonparty to appeal an
adjudication of contempt cannot be

7

questioned. The order finding a nonparty
witness in contempt is appealable
notwithstanding the absence of a final
judgment in the underlying action. (citations
omitted) Once the right to appeal a civil
contempt order is acknowledged, arguments
in its legitimate support should not be so
confined that the power of the issuing court
remains untested.

The right of a nonparty to appeal being absolute, the real
question presented is when must a nonparty exercise this right.

The issue involved is the validity of the Preliminary
Injunction as enforced against Rosati. Under the principle
enunciated in United Stated v. Ryan, Rosati can challenge the
validity of the Preliminary Injunction at any time during the
course of the contempt proceedings. Although an order relating
to a Preliminary Injunction is an interlocutory order, 28 U.S.C.S.
§ 1291 (a) grants the right of an appeal from such an order. This
Statute, however, does not make an appeal mandatory. Sierra
Club v. Robertson, 28 F.3d 753, 756, n. 3 (8th Cir. 1994),
discusses the discretionary right insofar as when to appeal:

3. An order denying a preliminary injunction
is immediately appealable as a matter of right
under 28 U.S.C.S. § 1292(a)(1) (1988).
However, the decision to pursue an
immediate appeal is left to the party’s
discretion, and a party may forgo an
interlocutory appeal and instead raise the
issue on appeal after final judgment. Retired
Chicago Police Ass'n v. City of Chicago, 7
F.3d 584, 608 (7th Cir. 1993). There is no
Suggestion that the issues regarding the Oden

8

and Choctaw timber sales have become moot
by reason of supervening events. Thus, the
judgments denying the requests for
preliminary injunctions are properly before
us.

Balla v. Idaho State Bd. of Corrections, 869 F.2d 461, 468
(9th Cir. 1989), holds that an unappealed interlocutory order
merges in the final judgment and can be challenged in an appeal
from the final judgment:

Our opinion does not foreclose litigants from
seeking interlocutory appeals of injunctions
under 28 U.S.C.S. § 1292(a), or permissive
interlocutory appeals under 28 U.S.C:S. :
§ 1292(b). These options can be exercised

before all issues as to all parties have been

resolved. Nor are litigants foreclosed from

seeking appeals from judgments properly
certified under Federal Rule of Civil
Procedure 54(b). But when no such appeal

is taken from an interlocutory order, “the
interlocutory order merges in the final
judgment and may be challenged in an appeal
from that judgment.” Baldwin v. Redwood
City, 540 F.2d 1360, 1364 (9th Cir. 1976)
(footnote omitted), cert denied, 431 US 913,
97 S. Ct 2173, 53 L. Ed. 2d 223 (1977).

Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584,
680 (7th Cir. 1993), held that a party may forego an interlocutory
appeal of an order denying a preliminary injunction and present
the issue for appeal after final judgment:

Although an order denying a preliminary

9

injunction is immediately appealable as an
interlocutory decision under 28 U.S.C.
§ 1292(a)(1), an immediate appeal
nonetheless is not mandated by the statute.
A party may forgo an interlocutory appeal
and present the issue for appeal after final
judgment. Interlocutory orders therefore may
be stored up and raised at the end of the case
... Kurowski v. Krajewski, 848 F.2d 767,
772-773 (7th Cir.), cert. denied, 488 U.S.
926, 109 S. Ct. 309, 102 L. Ed. 2d 328(1988).
Consequently, the RCPA has not waived its
right to appeal the denial of its motion for
preliminary injunction.

The Third Circuit Court of Appeals did not determine
Rosati’s appeal of the June 28, 1995 Order of the district court
denying his motion to vacate the July 17, 1992 Preliminary
Injunction. During oral argument, it became evident that the
Third Circuit Court of Appeals believed that it lacked jurisdiction
to hear the appeal of the June 28, 1995 order. Rosati’s suggestion
that this was an interlocutory order drew a rapid, disbelieving
response from a member of the panel. Clearly, the June 28, 1995
order is an interlocutory order by the language of 28 U.S.C.
§ 1292(a), providing in pertinent part for an appeal as follows:

§ 1292. Interlocutory decisions
(a) Except as provided in subsections (c) and

(d) of this section, the courts of appeals shall
have jurisdiction of appeals from:

(1) Interlocutory orders of the districts
courts of the United States ... granting,
continuing, modifying, refusing or dissolving

10

injunctions, or refusing to modify
injunctions, except where a direct review may
be had in the Supreme Court. . . .

As the right to appeal the June 28, 1995 order is expressly
provided for by statute, the obvious explanation for the Third
Circuit Court of Appeals refusal to hear this appeal is its belief
that it lacked jurisdiction. To clarify this issue, Rosati filed a
petition for rehearing in which the court was requested to issue
a written opinion to explain the reason for its inaction. The
petition for rehearing was denied leaving only speculation as to
the reason the Third Circuit Court of Appeals declined to hear
Rosati’s appeal of the June 28, 1995 order.

If this is the Third Circuit Court of Appeals position, it is
contrary to decisions of three other Circuits which support
Rosati’s contention that he timely filed an appeal of the June
28, 1995 order by filing within the time for appealing the final
judgment of February 2, 1996. This position is also contrary to
the holding of Carson v. American Brands, Inc., 450 U.S. 79,
85, 101 S. Ct. 993, 997, 67 L. Ed. 2d 59 (1981):

Unless a litigant can show that an
interlocutory order of the district court might
have a serious, perhaps irreparable
consequence, and that the order can be
effectually challenged only by immediate
appeal, the general congressional policy
against piecemeal review will preclude
interlocutory appeal.

The order denying Rosati’s motion to vacate the Preliminary
Injunction issued on June 28, 1995, the hearing date for
Cottman’s contempt motion. If the district court found no
contempt on the part of Rosati, or no damages, the issue of an

1]

appeal of the June 28, 1995 order would be moot. Clearly, there
was no need for an immediate appeal and Rosati properly waited
for final judgment to determine whether an appeal was necessary.
And finally, the refusal to hear the appeal of the June 28, 1995
order cannot be condoned under the concept of harmless error.

The thrust of Rosati’s motion to vacate the July 17, 1992
Preliminary Injunction was that the district court abused its
discretion in granting injunctive relief by failing to:

(a) make the findings of facts and conclusions of law
required by Federal Rule of Civil Procedure 52(a);

(b) set forth in the injunction the reasons for its
issuance as required by Federal Rule of Civil Procedure
65(d);

(c) require a showing of immediate and irreparable
injury and a reasonable probability of eventual success;

(d) abstain from the inferential determination of the
disputed issue of fact as to ownership of the telephone
numbers in question;

(e€) recognize that Appellee’s action was one for
damages in the amount of unpaid franchise fees for which
there was an adequate remedy at law;

(f) apply the doctrine of balancing of conveniences
in that to insure Cottman’s receipt of its franchise fees of 7
1/2% of Defendants’ sales it deprived Defendants of the
remaining 92 1/2% of the sales;

(g) maintain the status quo; and

12

(h) to provide in specific terms and in reasonable detail
the act or acts sought to be restrained, as evidenced by the
fact that one telephone call to opposing counsel in a pending
state action was Appellant’s alleged violation of paragraph
(3) of the preliminary injunction, which provided as
follows:

that defendant’s, acting alone or in concert,
combination, or agreement with others, are:
. .. (3) enjoined from impeding or interfering
with Cottman’s right to use, intercept,
transfer, or otherwise exercise its rights with
respect to the telephone numbers presently
appearing under listings or advertisements
for “A-l/Cottman” and “Cottman” in
telephone directories.

The Third Circuit Court of Appeals erred in declining to
hear Rosati’s appeal of the June 28, 1995 order and this Court
should remand with a directive to that court to hear this appeal.

Il.

THE DISTRICT COURT ERRED IN AWARDING
ATTORNEY FEES INA CIVIL CONTEMPT PROCEEDING
INAN AMOUNT TWENTY TIMES THE AMOUNT OF THE
ACTUAL LOSS SUFFERED BY COTTMAN.

An award of damages as a sanction for civil contempt is
limited by that party’s actual loss. United States v. United Mine
Workers of America, 330 U.S. 258, 304, 67 S. Ct. 677, 701, 91
L. Ed. 884 (1947). The district court found that Rosati impeded
the transfer of the telephone numbers for two days and calculated
Cottman’s damages to be $1,358. This figure was arrived at by
multiplying the sales of the Defendants for the two days in the

a a ee ee ee Ce

13

amount of $6,626 by 742% for unpaid franchise fees of $496.95
and 13% for uncollected advertising fees of $861.05. Cottman
is merely the conduit for passing the advertising fees to the
sources providing advertising services for Defendants. Equitable
principles preclude an agent from diverting to his personal use
funds of his principal given to him to be used for a specific
purpose. As Cottman provided no advertising services to
Defendants subsequent to the April 8, 1992 rescission, Cottman
has no claim for advertising fees subsequent to April 8, 1992.
In short the only actual loss to Cottman is franchise fees of
$496.95. Nevertheless, the district court awarded Cottman
attorney fees of $9,907.50, an amount twenty times the actual
loss of Cottman. The Third Circuit Court of Appeals did not see
fit to address this issue.

In the first instance, the American rule is that attorney fees
are ordinarily not recoverable in the absence of a statute or
enforceable contract providing therefore. Fleischmann Distill.
Corp. v. Maier Brewing Cottman, 386 U.S. 714, 717, 87 S. Ct.
1404, 1407, 18 L. Ed. 2d 475 (1967). Cottman cited no statute
authorizing an award of attorney fees for civil contempt.

However, a judicial exception to the American rule has been
recognized in a civil contempt action. In a civil contempt action
occasioned by willful disobedience of a court order, an award
of attorney fees may be authorized as part of the fine levied on
the defendant. Toledo Scale Cottman v. Computing Scale
Cottman, 261 U.S. 399, 426-428, 43 S. Ct. 458, 465-466, 67 L.
Ed. 719 (1923). The district court held “the Court finds by clear
and convincing evidence that Mr. Rosati disobeyed the Court’s
preliminary injunction order”. This is hardly a finding of willful
disobedience to justify an award of attorney fees for civil
contempt. Assuming arguendo that attorney fees properly lie,
the district court abused its discretion in determining the amount
of fees to be awarded.

ia

This Court has addressed the issue of a reasonable attorney’s
fee in a number of cases involving 28 U.S.C.S. § 1988, which
provides for an award of reasonable attorney fees to the
prevailing party in a civil rights action. The most useful starting
point for determining the amount of a reasonable fee is the
number of hours reasonably expended on the litigation multiplied
by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424,
434, 103 S. Ct. 1933, 1939, 76 L. Ed. 2d 1310 (1983). Hours
that were noi reasonably expended must be excluded from the
fee calculation, id., at 434-435, 103 S. Ct. at 1939. The extent
of a plaintiff’s success is a crucial factor in determining the
amount of fees to be awarded and, where the plaintiff achieved
only limited success, the district court should award only that
amount of fees that is reasonable in relation to the results
obtained, id., at 441, 103 S. Ct. at 1943.

In the case at bar, Cottman, for a period in excess of three
years, pursued a Lanham Act damage claim against Rosati in
the amount of $24,511, consisting of infringing sales by
Defendants for an eight day period — July 17, 1992 to July 25,
1992. This claim is not warranted by existing law and was
rejected by the district court. The district judge elicited the
amount of the franchise and advertising fees from counsel for
Appellee in the hearing and issued its opinion in which it
calculated the actual loss to be $1,358. Under Hensley, the
district court was obligated to exclude the attorney fees expended
on the meritless claim of damages in the amount of the infringing
sales of $24,511 and award attorney fees only in relation to the
damage award of $495.96. It follows that no attorney fees should
be awarded as Cottman never expended legal services to secure
the only allowable damages — franchise fees. In fact, attorney
fees should be awarded to Rosati under Rule 11 as Cottman’s
factual claim of eight days of damages lacked evidentiary
support and its claim for damages based on infringing sales was
not warranted by existing law.

15

It is fairly obvious that the attorney fees are twenty times
the amount of Cottman’s actual loss of $496.95. In a case
involving § 1988, this Court dealt with the question of whether
attorney fees should be proportionate to the amount of damages.
Attorney fees seven times the amount of the damage award was
upheld ir City of Riverside v. Rivera, 477 U.S. 56] , 575, 106 S.
Ct. 2686, 2694, 91 L. Ed. 2d 466 (1986), on the foliowing
rationale:

As an initial matter, we reject the notion that
a civil rights action for damages constitutes
nothing more than a private tort suit
benefiting only the individual plaintiffs
whose rights were violated. Unlike most
private tort litigants, a civil rights plaintiff
seeks to vindicate important civil and
constitutional rights that cannot be valued in
monetary terms. (Citation omitted) And,
Congress hus determined that “the public as
a whole has an interest in the vindication of
the rights conferred by the statutes
enumerated in § 1988, over and above the
value of a civil rights remedy to a particular
plaintiff ...”

Chief Justice Burger in dissent opined:

I write only to add that it would be difficult
to find a better example of legal nonsense
than the fixing of attorney’s fees by a judge
at $245,456.25 for the recovery of
$33,350.00.

Id., at 588, 106 S Ct. at 2700. It is respectfully suggested that
the case at bar is the better example of legal nonsense in fixing
attorney fees.

16

The case at bar in the final analysis seeks contract damages,
measured by the amount of franchise and advertising fees
required to be paid by defendants under the terms of their
franchise agreement with Cottman. Cottman knew on July 23,
1992 that it was only entitled to damages in the amount of these
fees for a two day period and, based on previous sales records,
knew that the maximum recovery would be an insignificant
amount. The dissent in City of Riverside, supra, addressed this
situation as requiring “billing judgment”:

And in such a case, where the prospective
recovery is limited, it is exactly this “billing
judgment” which enables the parties to
achieve a settlement; any competent attorney,
whether prosecuting or defending a contract
action for $10,000, would realize that the
case simply cannot justify a fee in excess of
the potential recovery on the part of either
the plaintiff’s or the defendant’s attorney. All
of these examples illuminate the point made
in Hensley that “the important factor” in
determining a “reasonable” fee is the “results
obtained” 461 US at 434, 103 S Ct at 1940.
The very “reasonableness” of the hours
expended on a case by a plaintiff’s attorney
necessarily will depend, to a large extent, on
the amount that may reasonably be expected
to be recovered if the plaintiff prevails.

477 U.S. at 594, 106 S. Ct. at 2704.

As there was a limited possible recovery and no public
interest to be served by Cottman’s recovery of monetary
damages, an award of attorney fees in excess of the amount of
damages is per se unreasonable. The unreasonableness is further

17

illustrated hy the fact that Cottman waived its right to proceed
against the Defendants for civil contempt damages in December
of 1993 but continued to pursue Rosati, the agent of Defendants,
for another 18 months to collect an insignificant amount of
damages. As the damages were franchise fees and advertising
fees required to be paid by Defendants who were benefited by
not paying, a conclusion to be drawn is that the legal efforts of
Cottman against Rosati were motivated by other than a sincere
effort to collect damages.

It is not the function of a court to award attorney fees out of
proportion to a possible recovery as this elevates the cause of
action <0 one for attorney fees rather than one to recover damages
for a client. The district court clearly abused its discretion in
awarding Cottman attornev fees in an amount twenty times the
amount of the actual damages.

CONCLUSION

For the reasons stated, the petition for a writ of certiorari
should be granted.

Respectfully submitted,

A. D. ROSATI

Petitioner In Pro Per

7115 Orchard Lake Road,

Suite 140

West Bloomfield, Michigan 48322
(810) 737-4884

la

APPENDIX A — SUR PETITION FOR REHEARING OF
THE UNITED STATES COURT OF APPEALS FOR THE
THIRD CIRCUIT DATED OCTOBER 16, 1996

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 96-1162
COTTMAN TRANSMISSION SYSTEMS, INC.
v.

METRO DISTRIBUTING, INC. d/b/a A-I TRANSMISSIONS
OF LIVONIA; ERNEST IAFRATE; GAIL IAFRATE,
individually and on behalf of Metro Distributing, Inc. d/b/a
A-I Transmissions of Livonia; VIPER TRANSMISSIONS, INC.:
RICHARD HAMILTON, individually and on behalf of Viper
Transmissions, Inc., MARK CULBERTSON, individually and
on behalf of Viper Transmissions, Inc.: T.G.L.W., INC.; ROBERT
L. RIEMER, individually and on behalf of T.G.L.W., Inc.; J.P.
1, INC.; JAMES DILLON, individually and on behalf of J.P. 1,
INC.; JIM DIXON ENTERPRISES, INC. d/b/a A-1
TRANSMISSIONS OF WESTLAND; JIM DIXON, individually
and on behalf of Jim Dixon Enterprises, Inc. d/b/a A-1
Transmissions of Westland; G.G.S., INC. d/b/a A-]
Transmissions; JIM GREGORY, individually and on behalf of
G.G.S., Inc., d/b/a A-1 Transmissions; BODNAR, INC.;
ANTHONY A. BODNAR, individually and on behalf of Bodnar,

(E.D. PA Civil No. 92-cv-02131)

2a

Appendix A
COTTMAN TRANSMISSION SYSTEMS, INC.

Vv.

CHERRY HILL PRODUCTIONS, INC.; D.M.S., INC. of
LANSING; DARRYL SMALL, individually and on behalf of
Cherry Hill Productions Inc. and D.M.S. of Lansing; J.B.S.
ENTERPRISES, INC.; PHILIP V. VERMIGLIO, individually
and on behalf of JBS Enterprises, Inc.; G & I ENTERPRISES;
MILTON GREEN, individually and on behalf of G & I
Enterprises; PAUL IAFRATE, individually and on behalf of
G & I ENTERPRISES

(E.D. PA Civil No. 92-cv-02253)

A.D. Rosati*, Appellant
*(pursuant to F.R.A.P. 12(a))

No. 96-1180
COTTMAN TRANSMISSION SYSTEMS, INC.

Vv.

METRO DISTRIBUTING, INC. d/b/a A-I TRANSMISSIONS
OF LIVONIA; ERNEST IAFRATE; GAIL IAFRATE,
individually and on behalf of Metro Distributing, Inc. d/b/a
A-I Transmissions of Livonia; VIPER TRANSMISSIONS, INC.;
RICHARD HAMILTON, individually and on behalf of Viper
Transmissions, Inc.. MARK CULBERTSON, individually and
on behalf of Viper Transmissions, Inc.; T.G.1.W., INC.; ROBERT
L. RIEMER, individually and on behalf of T.G.I.W., Inc.; J.P.
1, INC.; JAMES DILLON, individually and on behalf of J.P. 1,

PAETRRAGANORRUARAURREOTE_ Nei nna anc neem

3a
Appendix A

INC.; JIM DIXON ENTERPRISES, INC. d/b/a A-1
TRANSMISSIONS OF WESTLAND: JIM DIXON , individually
and on behalf of Jim Dixon Enterprises, Inc. d/b/a A-1
Transmissions of Westland: G.G.S., INC. d/b/a A-1
Transmissions; JIM GREGORY, individually and on behalf of
G.G.S., Inc., d/b/a A-1 Transmissions; BODNAR, INC.:
ANTHONY A. BODNAR, individually and on behalf of Bodnar,
Inc.; SNAYYAN, INC.; AHMAD AWAD, individually and on
behalf of Snayyan, Inc.; TRI-CONTINENTAL PETROLEUM,
Inc.; TIM GAULT, individually and on behalf of Tri-Continental
Petroleum, Inc.; JULIANO INC.; FRANK A. JULIANO,
individually and on behalf of Juliano, Inc.

(E.D. PA Civil No. 92-cv-02131)
COTTMAN TRANSMISSIONS SYSTEMS, INC.
v.

CHERRY HILL PRODUCTIONS, INC:; D.M.S., INC. of
LANSING; DARRYL SMALL, individually and on behalf of
Cherry Hill Productions Inc. and D.M:S. of Lansing; J.B.S.
ENTERPRISES, INC.; PHILIP V. VERMIGLIO, individually
and on behalf of JBS Enterprises, Inc.: G & I ENTERPRISES;
MILTON GREEN, individually and on behalf of G & I
Enterprises; PAUL I[AFRATE, individually and on behalf of
G & I ENTERPRISES

(E.D. PA Civil No. 92-cv-02253)

Cottman Transmission Systems, Inc., Appellant

SUR PETITION FOR REHEARING

4a

Appendix A

Present: SLOVITER, Chief Judge, COWEN and LEWIS, Circuit
Judges

The petition for rehearing filed by AppellantA.D. Rosati in
the above-entitled case having been submitted to the judges who
participated in the decision of this court, and no judge who
concurred in the decision having asked for rehearing, the petition
for rehearing is denied.

By the Court,

s/ D. Sloviter
Chief Judge

Dated: Oct. 16, 1996

Sa

APPENDIX B — JUDGMENT ORDER OF THE UNITED
STATES COURT OF APPEALS FOR THE THIRI’
CIRCUIT DATED SEPTEMBER 23, 1996

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 96-1162
COTTMAN TRANSMISSION SYSTEMS, INC.,

Vv.

METRO DISTRIBUTING, INC. d/b/a A-I TRANSMISSIONS
OF LIVONIA; ERNEST IAFRATE; GAIL IAFRATE,
individually and on behalf of Metro Distributing, Inc. d/b/a A-I
Transmissions of Livonia; VIPER TRANSMISSIONS, INC.:
RICHARD HAMILTON, individually and on behalf of Viper
Transmissions, Inc., MARK CULBERTSON , individually and
on behalf of Viper Transmissions, Inc.: T.G.L.W., INC.; ROBERT
L. RIEMER, individually and on behalf of T.G.LW., Inc., J.P.
1, INC.; JAMES DILLON, individually and on behalf of J.P. 1,
INC.; JIM DIXON ENTERPRISES, INC. d/b/a A-1
TRANSMISSIONS OF WESTLAND: JIM DIXON , individually
and on behalf of Jim Dixon Enterprises, Inc. d/b/a A-1
Transmissions of Westland: G.G.S., INC. d/b/a A-1
Transmissions; JIM GREGORY, individually and on behalf of
G.G.S., Inc., d/b/a A-1 Transmissions; BODNAR, INC.:
ANTHONY A. BODNAR, individually and on behalf of Bodnar,
Inc.; SNAYYAN, INC.; AHMAD AWAD, individually and on
behalf of Snayyan, Inc.; TRI-CONTINENTAL PETROLEUM,
Inc.; TIM GAULT, individually and on behalf of Tri-Continental
Petroleum, Inc.; JULIANO INC.; FRANK A. JULIANO,
individually and on behalf of Juliano, Inc.

(E.D. PA Civil No. 92-cv-02131)

6a

Appendix B
COTTMAN TRANSMISSION SYSTEMS, INC.

Vv.

CHERRY HILL PRODUCTIONS, INC.; D.M.S., INC. of
LANSING; DARRYL SMALL, individually and on behalf of
Cherry Hill Productions Inc. and D.M.S. of Lansing; J.B.S.
ENTERPRISES, INC.; PHILIP V. VERMIGLIO, individually
and on behalf of JBS Enterprises, Inc.; G & I ENTERPRISES;
MILTON GREEN, individually and on behalf of G & I
Enterprises; PAUL IAFRATE, individually and on behalf of
G & I ENTERPRISES

(E.D. PA Civil No. 92-cv-02253)

A.D. Rosati*, Appellant
*(pursuant to F.R.A.P. 12(a))

No. 96-1180

COTTMAN TRANSMISSION SYSTEMS, INC.
v.

METRO DISTRIBUTING, INC. d/b/a A-I TRANSMISSIONS
OF LIVONIA; ERNEST IAFRATE; GAIL IAFRATE,
individually and on behalf of Metro Distributing, Inc. d/b/a A-I
Transmissions of Livonia; VIPER TRANSMISSIONS, INC.;
RICHARD HAMILTON, individually and on behalf of Viper
Transmissions, Inc.. MARK CULBERTSON, individually and
on behalf of Viper Transmissions, Inc.; T.G.I.W., INC.; ROBERT
L. RIEMER, individually and on behalf of T.G.1.W., Inc.; J.P.
1, INC.; JAMES DILLON, individually and on behalf of J.P. 1,

See ee

7a
Appendix B

INC.; JIM DIXON ENTERPRISES, INC. d/b/a A-1
TRANSMISSIONS OF WESTLAND; JIM DIXON, individually
and on behalf of Jim Dixon Enterprises, Inc. d/b/a A-1
Transmissions of Westland: G.G.S., INC. d/b/a A-1
Transmissions; JIM GREGORY, individually and on behalf of
G.G.S., Inc., d/b/a A-1 Transmissions; BODNAR, INC.:
ANTHONY A. BODNAR, individually and on behalf of Bodnar,
Inc.; SNAYYAN, INC.; AHMAD AWAD, individually and on
behalf of Snayyan, Inc.; TRI-CONTINENTAL PETROLEUM,
Inc.; TIM GAULT, individually and on behalf of Tri-Continental
Petroleum, Inc.; JULIANO INC.; FRANK A. JULIANO,
individually and on behalf of Juliano, Inc.

(E.D. PA Civil No. 92-cv-02131)
COTTMAN TRANSMISSION SYSTEMS, INC.
v.

CHERRY HILL PRODUCTIONS, INC.; D.M.S., INC. of
LANSING; DARRYL SMALL, individually and on behalf of
Cherry Hill Productions Inc. and D.M.S. of Lansing; J.B.S.
ENTERPRISES, INC.; PHILIP V. VERMIGLIO, individually
and on behalf of JBS Enterprises, Inc.; G & I ENTERPRISES;
MILTON GREEN, individually and on behalf of G & I
Enterprises; PAUL IAFRATE, individually and on behalf of
G & I ENTERPRISES

(E.D. PA Civil No. 92-cv-02253)

Coitman Transmission Systems, Inc., Appellant

8a

Appendix B

On Appeal from the United States District Court for the
Eastern District of Pennsylvania
(D.C. Nos. 92-cv-02131, 92-cv-02253)
District Judge: Hon. Raymond J. Broderick

Argued September 10, 1996

Before: SLOVITER, Chief Judge
COWEN and LEWIS, Circuit Judges

JUDGMENT ORDER

After consideration of all contentions raised by appellants,
it is
ADJUDGED and ORDERED that the judgment of the
district court entered February 2, 1996 be and is hereby affirmed.
Each party to bear its own costs.
By the Court,

s/ D. Sloviter
Chief Judge

Attest:

s/ P. Douglas Sisk
P. Douglas Sisk, Clerk

Dated: SEP 23 1996

9a
APPENDIX C — ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA DATED FEBRUARY 2, 1996

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

CIVIL ACTION

NO. 92-2131

COTTMAN TRANSMISSION SYSTEMS, INC.
v.
METRO DISTRIBUTING, INC., ET AL.
-and-
CIVIL ACTION
No. 92-2253
COTTMAN TRANSMISSION SYSTEMS, INC.
v.
‘CHERRY HILL PRODUCTIONS, INC., ET AL.

ORDER

AND NOW, this 2nd Day of February, 1996; for the reasons
set forth in this Court’s Memorandum of February 2, 1996;

10a

Appeadix C

IT IS ORDERED: Plaintiff’s Motion for Civil Contempt
against A.D. Rosati, Esq. is GRANTED. A.D. Rosati shall pay
compensatory damages to Cottman Transmission Systems, Inc.
in the amount of $1,358.00 and shall pay attorneys’ fees and
costs to Cottman Transmission Systems, Inc. in the amount of
$10,402.00.

s/ Raymond J. Broderick
Raymond J. Broderick, J.

lla
APPENDIX D — MEMORANDUM OF THE UNITED
STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF PENNSYLVANIA ENTERED
FEBRUARY 2, 1996

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENN SYLVANIA

CIVIL ACTION
NO. 92-2131

COTTMAN TRANSMISSION SYSTEMS, INC.
V.
METRO DISTRIBUTING, INC., ET AL.
and

CIVIL ACTION
No. 92-2253

COTTMAN TRANSMISSION SYSTEMS, INC.
-
CHERRY HILL PRODUCTIONS, INC. ET AL.

MEMORANDUM

Broderick, J. February 2, 1996

Before the Court is Cottman Transmission, Inc.’s
(“Cottman”) motion for civil contempt against A.D. Rosati,
Esquire (“Mr. Rosati”), defendants’ Michigan attorney, for

12a

Appendix D

violating this Court’s preliminary injunction order of July 17,
1992. A hearing was held on June 28, 1995 to determine whether
Mr. Rosati had engaged in a pattern of conduct to violate the
preliminary injunction and whether the Court should hold Mr.
Rosati in contempt for failing to appear for previously scheduled
contempt hearings.

For the reasons set forth below, the Court finds Mr. Rosati
in civil contempt for violating the Court’s preliminary injunction
of July 17, 1992 and will order kim to pay Cottman
compensatory damages in the amount of $1358.00 and attorneys’
fees and costs in the amount of $10,402.00.

I, BACKGROUND

The complicated history of this litigation is set forth at
length in this Court’s Memoranda of October 5, 1992 and
December 22, 1993. A condensed version follows.

Cottman, a Pennsylvania corporation, is a nationwide
franchisor of automotive transmission repair businesses.
Defendants are Michigan corporations and corporate officers
of the defendant corporations and citizens of Michigan.
Defendants operate automotive transmission repair shops in
central and southeastern Michigan. A-1 Transmissions, Inc. is a
non-party franchisor of automotive transmission repair shops
in Michigan.

In Summer 1991, Cottman and A-1 entered into an
agreement granting Cottman the exclusive use of the “A-]
Transmission” mark in Michigan and giving Cottman the right
to convert existing A-1 franchises into Cottman franchises. In
August 1991, each defendant entered into a licensing agreement

13a
Appendix D

with Cottman and a related agreement terminating its A-1
franchise. In March 1992, because Cottman had failed to comply
with certain provisions of Michigan law, it offered to rescind
the licensing agreements. On April 6, 1992, all defendants
accepted Cottman’s offer of rescission, effective Wednesday,
April 8, 1992. Cottman responded that defendants’ purported
rescissions were invalid on several grounds and advised them
that unless the deficiencies were cured, Cottman considered the
License Agreements to be valid and expected defendants to
continue to operate pursuant to the terms of those agreements.
On or about April 9, 1992, defendants ceased operating as A-1,
A-1 Cottman or Cottman transmission centers and began
Operating competing transmission repair facilities.

On or about April 10, 1992, Cottman instituted litigation in
this Court against defendants alleging that they had conspired
to violate Cottman’s exclusive right to use the “A-1
Transmission” trademark and the “Cottman” trademark in
Michigan. Cottman also alleged that defendants were exploiting
the goodwill of the Cottman mark and Causing confusion as to
the origin of the services provided by defendants.

On July 14, 1992, this Court held a hearing on Cottman’s
request for a preliminary injunction. On the basis of the evidence
presented at that hearing, this Court issued a preliminary
injunction on July 17, 1992, which provided in relevant part:

that defendants, acting alone or in concert,
combination, or agreement with others, are:
. . (3) enjoined from impeding or interfering
with Cottman’s right to use, intercept,
transfer, or otherwise exercise its rights with
respect to the telephone numbers presently

l4a

Appendix D

appearing under listings or advertisements
for “A-1/Cottman” and “Cottman” in
telephone directories.

On August 8, 1992, Cottman filed a civil contempt motion
alleging that the defendants and their Michigan attorney, Mr.
Rosati had engaged in a pattern of conduct which violated { 3
of the preliminary injunction. Specifically, Cottman asserted that
the defendants and Mr. Rosati had tried to prevent Michigan
Bell from implementing Cottman’s order to transfer phone
numbers listed under “A-1/Cottman” in telephone directories
to Cottman locations and had filed an action in Michigan state
court against Michigan Bell seeking relief contradicting this
Court’s preliminary junction.

After a contempt hearing on September 17, 1992, for which
Mr. Rosati did not appear, the Court found defendant Robert
Reimer in contempt of paragraph 3 of the preliminary injunction
for, on July 27, 1992, ordering two telephone numbers listed in
the Yellow Pages under “A-1/Cottman Transmission Centers”
disconnected. By Order of October 6, 1992, the Court continued
the hearing as to A.D. Rosati and the other defendants to
December 14, 1992 at which time they were to show cause why
they should not be held in contempt of the Court’s preliminary
injunction. Cottman served a copy of the October 6, 1992
scheduling order on Mr. Rosati.

In December, 1992, most of the defendants filed for
bankruptcy and the Court placed these actions in civil suspense
pursuant to the automatic stay triggered by the bankruptcies.
The Court postponed the contempt hearing scheduled for
December 14, 1992. In the fall of 1993, after the case was
removed from civil suspense, the parties engaged in a series of

|
|
|
|
,

15a
Appendix D

negotiations which eventually culminated in settlements with
most of the defendants in November of 1993. The remaining
defendants consented to an entry of default judgment.

Cottman advised the Court by letter dated January 18, 1994
that it still intended to pursue the contempt motion against Mr.

Rosati. A contempt hearing was scheduled several times and
finally took place on June 28, 1995.

I. Findings of Fact

Based on the “clear and convincing” evidence presented at

the contempt hearing, the Court makes the following findings
of fact:

As set forth above, on July 17, 1992, after a hearing, this

Court entered a preliminary injunction which provided in
relevant part:

that defendants, acting alone or in concert,
combination, or agreement with others, are:
- - - (3) enjoined from impeding or interfering
with Cottman’s right to use, intercept,
transfer, or otherwise exercise its rights with
respect to the telephone numbers presently
appearing under listings or advertisements
for “A-1/Cottman” and “Cottman” in
telephone directories.

Mr. Rosati is an attorney licensed to practice in the States
of Michigan and Ohio. He represented the defendant franchisees
in a series of lawsuits against Cottman in Michigan beginning
in 1992. Although he never entered an appearance in the this

16a
Appendix D

Court, he retained local counsel, assisted local counsel in
developing a defense strategy, and kept fully apprised of the
status of the litigation. Mr. Rosati admits that he received notice
of the preliminary injunction order when he was faxed a copy
the day it was entered, Friday, July 17, 1992.

Cottman also received a copy of the preliminary injunction
on Friday, July 17, 1992 and faxed a copy to Michigan Bell. At
approximately 3:30 p.m. on July 17, 1992, Cottman directed
Michigan Bell to transfer approximately seventeen phone
numbers listed in the Yellow Pages under “A-1/Cottman” to other
Cottman locations in the Detroit area. Cottman faxed typed
instructions to Michigan Bell which listed the numbers to be
transferred and the new locations for each number. Prior to July
17, 1992, Michigan Bell had consistently refused the parties’
requests to change the status of any of the phone numbers at
issue in the Cottman litigation without a court order. After
reviewing the preliminary injunction order on July 17, 1992,
however, Michigan Beli’s attorneys determined that it authorized
them to execute Cottman’s transfer request.

Michigan Bell usually implements a transfer order within
one to two business days after the order is placed. Service order
numbers confirming the request are ordinarily issued the same
day the customer places the order. Cottman’s transfer request
should have been completed by close of business on Tuesday,
July 21, 1992. In this case, however, Michigan Bell did not issue
service order numbers until late July 22, 1992 or July 23, 1992,
and the transfers were not completed until July 24, 1992. The
transfer of the numbers was delayed, therefore, by two business
days — July 22 and July 23, 1992. During these two days,
customers calling the phone numbers in question continued to
reach the defendant franchisees.

ET ER EE ST NM

17a
Appendix D

A substantial factor in causing the two-day delay in
transferring the numbers was pressure Mr. Rosati placed on
Michigan Bell to disregard the preliminary injunction order. Mr.
Rosati believed that the preliminary injunction order did not
apply to Michigan Bell because Michigan Bell was not a party
to the litigation, and that it did not authorize Michigan Bell to
transfer phone numbers listed “A-1 Cottman” in the Yellow
Pages. He also believed that the injunction did not clearly define
Cottman’s rights to the numbers. Mr. Rosati never sought
Clarification of the preliminary injunction in this Court.

Instead, beginning on July 17, 1992, Mr. Rosati began
calling Michigan Bell’s attorneys in an effort to prevent the
transfer of the phone numbers. Between July 17, 1992 at 8:25
a.m. and July 23, 1992, he placed ten calls to Michigan Bell —
three on July 17th; three on July 20th; one on July 21st; two on
July 22nd; and one on July 23rd. Mr. Rosati did not actually
reach Charles Anderson, an attorney for Michigan Bell, until
July 20, 1992 at which time he expressed his opinion that the
preliminary injunction did not apply to Michigan Bell and urged
him to disregard the order. He actually spoke to Mr. Anderson
at least one or two other times between July 20 and July 23,
1992. By making these phone calls in an effort to delay or prevent
Michigan Bell from implementing Cottman’s order, Mr. Rosati
impeded and interfered with Cottman’s right to use and transfer
the telephone numbers appearing under listings or
advertisements for “A-1/Cottman”.

During the period of time in which Mr. Rosati was
attempting to dissuade Michigan Bell from executing the
transfer, defendants were trying to establish new phone numbers.
It was to the defendants advantage to delay the transfer of the
phone numbers until they established new numbers.

18a

Appendix D

On July 24, 1992, Mr. Rosati again called Charles Anderson
to complain that certain numbers had been transferred in error.
Mr. Anderson insisted on holding a conference call with Mr.
Rosati and Todd Leff, counsel for Cottman in this Court, to
resolve the issue. They determined that none of the numbers
had been transferred in error.

On July 17, 1992, after this Court entered its injunction,
Mr. Rosati filed on action on behalf of defendants against
Michigan Bell in Michigan State Court in which he sought a
temporary restraining order and a preliminary injunction
directing Michigan Bell to maintain the status quo as to the
telephone numbers in question until further order of the
Michigan State Court. The request for a temporary restraining
order and preliminary injunction was in direct violation of this
court’s injunction. No temporary restraining order or preliminary
injunction was issued by the Michigan State Court. Furthermore,
there is no evidence that this lawsuit delayed the transfer of the
numbers.

During the four weeks prior to the transfer of the numbers,
the defendants average gross sales were $55,491.00, or $9248.00
per day (calculation based on a six day business week). During
the four weeks following the transfer of the numbers, the
defendants’ average gross sales were $35,607.00, or $5,935.00
per day. During the two days in which the phone numbers
continued to ring in the defendants’ centers, the defendants
conducted an average of $6,626.00 in additional gross sales.
Thus the loss of sales on which Cottman was entitled to 20.5%
royalties and advertising fee was $6,626.00. Cottman would have
received a royalty and advertising fee in the amount of $1,358.00.
The Court finds that Cottman sustained a loss of $1358.00 as a
result of Mr. Rosati’s contempt.

19a
Appendix D

Mr. Rosati failed to appear for contempt hearings scheduled
for September 17, 1992 and November 22, 1993. Mr. Rosati is
therefore in contempt for failure to appear or provide the Court
with an acceptable reason for his failure to appear.

II. Conclusions of Law

As a threshold matter, and as the Court made clear in its
Order of March 17, 1995 scheduling the contempt hearing for
June 28, 1995, this is an action for civil and not criminal
contempt in that Cottman seeks reimbursement for losses
sustained as a result of Mr. Rosati’s contempt and not a punitive
sanction. In a recent exploration of the distinction between
criminal and civil contempt, the Supreme Court affirmed the
longstanding principle that “whether a contempt is civil or
criminal turns on the ‘character and purpose’ of the sanction
involved. Thus, a contempt sanction is considered civil if it ‘is
remedial, and for the benefit of the complainant. But if it is for
criminal contempt the sentence is punitive, to vindicate the
authority of the court.’ ” International Union y. Bagwell, 114
S.Ct. 2552, 2557 (1994), quoting Gompers v. Bucks Stove &
Range Co., 221 U.S. 418, 441, 31 S.Ct. 492, 498 (1911).

An injunction binds not only the enjoined parties but also
non-parties who act with the enjoined parties, see Regal
Knitwear Co. v. National Labor Rel. Bd., 324 US. 9, 14, 65
S.Ct. 478, 481 (1945), and an injunction issued by a federal
district court is nationwide in scope. See Leman vy. Krentler-
Arnold Hinge Last Co., 284 U.S. 448, 451, 52 S.Ct. 238, 240
(1932); Waffenschmiadt v. Mackay, 763 F.2d 711, 716 (5th Cir.
1985), cert. denied, Currey v. Waffenschmidt, 474 U.S. 1056,
106 S.Ct. 794 (1986). Under Federal Rule of Civil Procedure
65(d), an injunction is binding upon the “parties to the action,

20a

Appendix D

their officers, agents, servants, employees, and attorneys, and
upon those persons in active concert or participation with them
who receive actual notice of the order by personal service or
otherwise.” A non-party may be held in contempt of a
preliminary injunction order if “he or she has actual knowledge
of a court’s order and either abets the defendant or is legally
identified with him.” Quinter v. Volkswagen of America, 676
F.2d 969, 972 (3d Cir. 1982).

The Court finds that Mr. Rosati was bound by the Court’s
July 17, 1992 preliminary injunction. He was counsel for the
defendants in the State of Michigan and was responsible for
retaining local counsel in this litigation. Although he was not a
party to the action in this Court, nor did he enter an appearance,
there is no question that as defendants’ Michigan counsel, he
had actual knowledge of the proceedings in this litigation. As
he admitted at the contempt hearing on June 28, 1995, he
received a copy of the preliminary injunction order on the very
day it was entered.

To establish liability for civil contempt, the moving party
must prove three elements by clear and convincing evidence:
“(1) that a valid order of the court existed; (2) that the defendants
had knowledge of the order; and (3) that the defendants
disobeyed the order.” Roe, et al. v. Operation Rescue, 54 F.3d
133, 137 (3d Cir. 1995). Wilfulness is not an element of civil
contempt. McComb v. Jacksonville Paper Co., 336 U.S. 187,
191, 69 S.Ct. 497, 499 (1949); Waste Conversion v. Rollins
Environmental Services, 893 F.2d 605, 609 (3d Cir. 1990).

The Court finds by clear and convincing evidence that a
valid order existed. Moreover, as the United States Supreme
Court has recently underscored in Celotex Corp. v. Edwards,

21a
Appendix D

115 S.Ct. 1493 (1995), quoting GTE Sylvania, Inc. v. Consumers
Union of United States, Inc., 445 U.S. 375, 386, 100 S.Ct. 1194,
1201 (1980), “ ‘persons subject to an injunctive order issued by
a court with jurisdiction are expected to obey that decree until
it is modified or reversed even if they have proper grounds to
object to the order.” Moreover, “the validity of the order may
not be collaterally challenged in a contempt proceeding for
violating the order.” Roe vy. Operation Rescue, 919 F.2d 857,
871 (3d Cir. 1990).

As set forth above, the Court also finds by clear and
convincing evidence that Mr. Rosati had actual notice of the
Court’s preliminary injunction order of July 17, 1992. Finally,
based on its findings of fact as heretofore set forth, the Court
finds by clear and convincing evidence that Mr. Rosati disobeyed
the Court’s preliminary injunction order. Thus, Mr. Rosati is in
civil contempt of the Court’s July 17, 1992 preliminary
injunction.

This Court has broad discretion to fashion an appropriate
civil contempt remedy. Woods v. Woods, 28 F.3d 396, 399 (3d
Cir. 1994); Northeast Women’s Center vy. McMonagle, 939 F.2d
57, 70 (3d Cir. 1991). The appropriate civil contempt sanction
should compensate the moving party for actual losses sustained
as a result of the contempt. See McDonald’s Corp. v. Victory
Investments, 727 F.2d 82, 87 (3d Cir. 1984).

As the Court heretofore found, the appropriate civil
contempt remedy in this case is compensatory damages in the
amount of $1,358.00. The Court also finds that Cottman is
entitled to attorneys’ fees and costs in the amount of $10,402.00.

The Third Circuit has made it clear that “attorney’s fees
may be awarded for litigation activity of in-house counsel who

22a
Appendix D

has entered an appearance and played an active role in handling
the litigation.” Delaware Valley Citizens’ Council v. Com. of Pa.,
762 F.2d 272, 278. There is no question that Mr. Leff and
associate counsel at Cottman entered appearances and actively
represented Cottman before this Court in this litigation.

Cottman has requested a total of $20,063.00 in attorneys’
fees. Cottman seeks reimbursement for 94.5 hours for Todd Leff
based on an hourly rate of $175.00 and 23.5 hours for associate
counsel based on an hourly rate of $150.00. The Court has
determined that the hourly rates requested by Cottman are
reasonable.

The Court has also determined, however, that Cottman is
entitled to be reimbursed for only 46.8 hours for Todd Leff
($8,190.00) and 10.95 hours for associate in-house counsel
($1,642.50) for a total of $9,832.50. The Court has reduced
Cottman’s request to reflect the fact that the contempt motion
was originally brought and litigated against all the defendants
and Mr. Rosati. A settlement was reached with the defendants
in late November, 1993, thereby terminating this litigation and
the contempt as to the defendants. As heretofore pointed out,
the settlement did not terminate Cottman’s contempt motion as
to Mr. Rosati. The Court has determined that Mr. Rosati’s share
of Cottman’s fees prior to the termination of the litigation is
7.1% and that his share after the settlement was reached with
the defendants is 100%. Likewise, the court will reduce the fees
sought by Cottman for its Michigan attorneys from $1,053.00
to $75.00. Finally, Cottman is also entitled to be compensated
for expenses in the amount of $494.00.

An appropriate Order follows.

23a
APPENDIX E — ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA FILED JUNE 28, 1995

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENN SYLVANIA

CIVIL ACTION
NO. 92-2131
COTTMAN TRANSMISSION SYSTEMS, INC.
7,
METRO DISTRIBUTING, INC., ET AL.
-and-
CIVIL ACTION
No. 92-2253
COTTMAN TRANSMISSION SYSTEMS, INC.
V.
CHERRY HILL PRODUCTIONS, INC., ET AL.

ORDER

AND NOW, this 27th day of June, 1995:A.D. Rosati having
filed a Motion to Vacate the Court’s July 17, 1992 Preliminary
Injunction Order on the grounds that the record from the
preliminary injunction hearing shows that Cottman failed to

24a

Appendix E

establish irreparable injury or reasonable probability of eventual
success on the merits; Cottman having filed a Motion for
Sanctions against Mr. Rosati for filing said Motion to Vacate in
violation of Fed. Rule Civ. Proc. 11; A.D. Rosati having also
filed a Motion to Strike Cottman’s Claim for Compensatory
Damages on the ground that Plaintiffs’ objected to some of Mr.
Rosati’s interrogatories and provided non-responsive answers
to others; the Court having considered all of the above motions;

IT IS ORDERED: A.D. Rosati’s Motion to Vacate the
Court’s July 17, 1992 Preliminary Injunction is DENIED.

IT IS FURTHER ORDERED: Cottman’s Motion for
Sanctions against Mr. Rosati for filing said Motion to Vacate in
violation of Fed. Rule Civ. Proc. 11 is DENIED.

IT IS FURTHER ORDERED: A.D. Rosati’s Motion to
Strike Cottman’s Claim for Compensatory Damages is DENIED.

s/ Raymond J. Broderick
Raymond J. Broderick, J.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_0095%3A1. Public record. Not legal advice.