United States of America v. Business Recovery Services LLC et al
Filing
183
ORDER denying Plaintiff's 160 Motion for Entry of Judgment as unnecessary. Signed by Judge James A Teilborg on 7/26/12.(REW)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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Plaintiff,
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vs.
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Business Recovery Services, LLC; Brian)
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Hessler,
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Defendants.
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United States of America,
No. CV 11-0390-PHX-JAT
ORDER
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Pending before the Court is Plaintiff’s Motion for Entry of Judgment (Doc. 160). The
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Court now rules on this motion.
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I.
Background
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Defendant Business Recovery Services (“BRS”) is an Arizona limited liability
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company with its principal place of business in Maricopa County. Defendant Brian Scott
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Hessler is the owner of BRS (collectively referred to herein as “Defendants”).
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Defendants sell goods and services, including “recovery kits,” that they state allow
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customers to recover funds that consumers have lost in previous transactions. Some of the
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customers who purchase Defendants’ recovery kits lost money or other items of value in
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previous telemarketing transactions.
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Plaintiff filed a Motion for a Preliminary Injunction (Doc. 5) to enjoin Defendants
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from violating the Telemarketing Sales Rule. After holding a hearing on April 5, 2011,
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the Court granted the Plaintiff’s Motion. The Court enjoined Defendants from:
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requesting or receiving payment of any fee or consideration from a person
for goods or services represented to recover or otherwise assist in the return
of money or any other item of value paid by that person in a previous
telemarketing transaction, until seven (7) business days after such money or
other item is delivered to that person.
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(Doc. 34 at 8.)
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On May 24, 2011, Plaintiff moved for an order to show cause why Defendants
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should not be held in contempt for violating the preliminary injunction, and on October
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17, 2011, after a hearing and a full briefing on the issue, the Court held Defendants in
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civil contempt. (Doc. 117). As part of that holding, the Court granted Plaintiff its
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attorneys’ fees associated with the contempt proceedings as a sanction against
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Defendants.
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On November 5, 2011, Defendants filed a notice of appeal in which they appealed
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the Court’s contempt ruling as well as the Court’s rejection of a request to modify or
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dismiss the preliminary injunction. (Doc. 128). On June 20, 2012, the Court of Appeals
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for the Ninth Circuit affirmed the denial of the motion to modify or dissolve the
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preliminary injunction. United States v. Bus. Recovery Servs., LLC, No. 11-17677, at *3
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(9th Cir. June 15, 2012). In that opinion, the Circuit Court also ruled that they did “not . . .
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have jurisdiction over the contempt order.” Id. Plaintiff now moves the Court to enter
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judgment pursuant to Rule 58 of the Federal Rules of Civil Procedure (Rule 58) on the
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attorneys’ fees order.
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II.
Analysis
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Plaintiff asserts that Rule 58 of the Federal Rules of Civil Procedure should apply
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in this case. Part (d) of that Rule reads: “[a] party may request that judgment be set out in
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a separate document as required by Rule 58(a).” Fed. R. Civ. P. 58(d). Section (a) of Rule
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58 indicates “[e]very judgment and amended judgment must be set out in a separate
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document, but a separate document is not required for an order disposing of a motion . . .
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(3) for attorney’s fees under Rule 54.” Fed. R. Civ. P. 58(a)(3). Plaintiff cites to a split of
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authority regarding whether or not the exception listed in Rule 58(a)(3) applies to an
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award of attorneys’ fees ordered as a sanction. (Doc. 160 at 2-3). Plaintiff first cites to a
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Seventh Circuit opinion indicating that awards of attorneys’ fees, whether explicitly
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arising under Rule 54 or not, do not require a separate judgment pursuant to the Rule
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58(a)(3) exception. Feldman v. Olin Corp., 673 F.3d 515, 517 (7th Cir. 2012) (“Rule 58
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should not be read to mean that some motions for awards of attorneys' fees are ‘under’
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Rule 54 and others are ‘under’ something else and therefore require a separate judgment
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document”). That court held that Rule 54 does not create a right to claim attorneys’ fees,
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but instead outlines the appropriate procedure for enforcing such a right to attorneys’ fees.
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Id. The court found that a sanction in the form of attorneys’ fees was indeed “under Rule
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54” if it followed Rule 54 procedures. Id.
Plaintiff next cites to a New York District Court opinion that held that a court
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should enter a judgment on an order for attorneys’ fees awarded as a sanction. Burgie v.
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Euro Brokers, Inc., 2008 WL 4185701 at *8 (E.D.N.Y. Sept. 8, 2008)(“[c]ourts routinely
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enter judgment in the amount of sanctions when an attorney fails to satisfy the amount of
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the sanction award, even when the overarching litigation is not yet terminated”). The
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court in Burgie appears to have read Rule 58(a)(3) to be inapplicable to attorneys’ fees
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awarded as sanctions. Id. at 7 (See “Rule 58(a), in turn, provides that ‘[e]very judgment
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and amended judgment must be set out in a separate document,’ with exceptions not
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relevant herein.”) (emphasis added). The Court finds this non-binding District Court
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opinion unpersuasive.
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The Court, in the absence of Ninth Circuit law, agrees with the reasoning of the
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Seventh Circuit. The Court ordered Plaintiff to comply with Local Rule of Civil
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Procedure 54.2 when filing its motion for attorneys’ fees associated with the contempt
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proceedings. (Doc. 117). Rule 54.2 was designed to be consistent with Rule 54. Fed. R.
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Civ. P. 83(a)(1). Because Plaintiff’s motion for fees was made in a manner consistent
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with the procedures listed in Rule 54, the exception contained in Rule 58(a)(3) should
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apply. The Court does not need to enter a separate judgment on the attorneys’ fees order
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and therefore will not do so.
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The Court’s conclusion here does not free Defendants from their obligation to pay
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Plaintiff its attorneys’ fees of $33,064.87 pursuant to the Court’s Order of March 8, 2012
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(Doc. 155). Plaintiff does not need a separate judgment to collect on its award of fees.
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Defendants are required to pay pursuant to the Court’s earlier award of attorneys’ fees.
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(Doc. 155).
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III.
Conclusion
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Based on the foregoing,
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IT IS ORDERED denying Plaintiff’s Motion for Entry of Judgment (Doc. 160) as
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unnecessary.
DATED this 26th day of July, 2012.
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