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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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 15 ) ) ) Plaintiff, ) ) vs. ) ) Business Recovery Services, LLC; Brian) ) Hessler, ) ) Defendants. ) ) United States of America, No. CV 11-0390-PHX-JAT ORDER 16 Pending before the Court is Plaintiff’s Motion for Entry of Judgment (Doc. 160). The 17 Court now rules on this motion. 18 I. Background 19 Defendant Business Recovery Services (“BRS”) is an Arizona limited liability 20 company with its principal place of business in Maricopa County. Defendant Brian Scott 21 Hessler is the owner of BRS (collectively referred to herein as “Defendants”). 22 Defendants sell goods and services, including “recovery kits,” that they state allow 23 customers to recover funds that consumers have lost in previous transactions. Some of the 24 customers who purchase Defendants’ recovery kits lost money or other items of value in 25 previous telemarketing transactions. 26 Plaintiff filed a Motion for a Preliminary Injunction (Doc. 5) to enjoin Defendants 27 from violating the Telemarketing Sales Rule. After holding a hearing on April 5, 2011, 28 1 the Court granted the Plaintiff’s Motion. The Court enjoined Defendants from: 2 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. 3 4 5 (Doc. 34 at 8.) 6 On May 24, 2011, Plaintiff moved for an order to show cause why Defendants 7 should not be held in contempt for violating the preliminary injunction, and on October 8 17, 2011, after a hearing and a full briefing on the issue, the Court held Defendants in 9 civil contempt. (Doc. 117). As part of that holding, the Court granted Plaintiff its 10 attorneys’ fees associated with the contempt proceedings as a sanction against 11 Defendants. 12 On November 5, 2011, Defendants filed a notice of appeal in which they appealed 13 the Court’s contempt ruling as well as the Court’s rejection of a request to modify or 14 dismiss the preliminary injunction. (Doc. 128). On June 20, 2012, the Court of Appeals 15 for the Ninth Circuit affirmed the denial of the motion to modify or dissolve the 16 preliminary injunction. United States v. Bus. Recovery Servs., LLC, No. 11-17677, at *3 17 (9th Cir. June 15, 2012). In that opinion, the Circuit Court also ruled that they did “not . . . 18 have jurisdiction over the contempt order.” Id. Plaintiff now moves the Court to enter 19 judgment pursuant to Rule 58 of the Federal Rules of Civil Procedure (Rule 58) on the 20 attorneys’ fees order. 21 II. Analysis 22 Plaintiff asserts that Rule 58 of the Federal Rules of Civil Procedure should apply 23 in this case. Part (d) of that Rule reads: “[a] party may request that judgment be set out in 24 a separate document as required by Rule 58(a).” Fed. R. Civ. P. 58(d). Section (a) of Rule 25 58 indicates “[e]very judgment and amended judgment must be set out in a separate 26 document, but a separate document is not required for an order disposing of a motion . . . 27 (3) for attorney’s fees under Rule 54.” Fed. R. Civ. P. 58(a)(3). Plaintiff cites to a split of 28 authority regarding whether or not the exception listed in Rule 58(a)(3) applies to an -2- 1 award of attorneys’ fees ordered as a sanction. (Doc. 160 at 2-3). Plaintiff first cites to a 2 Seventh Circuit opinion indicating that awards of attorneys’ fees, whether explicitly 3 arising under Rule 54 or not, do not require a separate judgment pursuant to the Rule 4 58(a)(3) exception. Feldman v. Olin Corp., 673 F.3d 515, 517 (7th Cir. 2012) (“Rule 58 5 should not be read to mean that some motions for awards of attorneys' fees are ‘under’ 6 Rule 54 and others are ‘under’ something else and therefore require a separate judgment 7 document”). That court held that Rule 54 does not create a right to claim attorneys’ fees, 8 but instead outlines the appropriate procedure for enforcing such a right to attorneys’ fees. 9 Id. The court found that a sanction in the form of attorneys’ fees was indeed “under Rule 10 11 54” if it followed Rule 54 procedures. Id. Plaintiff next cites to a New York District Court opinion that held that a court 12 should enter a judgment on an order for attorneys’ fees awarded as a sanction. Burgie v. 13 Euro Brokers, Inc., 2008 WL 4185701 at *8 (E.D.N.Y. Sept. 8, 2008)(“[c]ourts routinely 14 enter judgment in the amount of sanctions when an attorney fails to satisfy the amount of 15 the sanction award, even when the overarching litigation is not yet terminated”). The 16 court in Burgie appears to have read Rule 58(a)(3) to be inapplicable to attorneys’ fees 17 awarded as sanctions. Id. at 7 (See “Rule 58(a), in turn, provides that ‘[e]very judgment 18 and amended judgment must be set out in a separate document,’ with exceptions not 19 relevant herein.”) (emphasis added). The Court finds this non-binding District Court 20 opinion unpersuasive. 21 The Court, in the absence of Ninth Circuit law, agrees with the reasoning of the 22 Seventh Circuit. The Court ordered Plaintiff to comply with Local Rule of Civil 23 Procedure 54.2 when filing its motion for attorneys’ fees associated with the contempt 24 proceedings. (Doc. 117). Rule 54.2 was designed to be consistent with Rule 54. Fed. R. 25 Civ. P. 83(a)(1). Because Plaintiff’s motion for fees was made in a manner consistent 26 with the procedures listed in Rule 54, the exception contained in Rule 58(a)(3) should 27 apply. The Court does not need to enter a separate judgment on the attorneys’ fees order 28 and therefore will not do so. -3- 1 The Court’s conclusion here does not free Defendants from their obligation to pay 2 Plaintiff its attorneys’ fees of $33,064.87 pursuant to the Court’s Order of March 8, 2012 3 (Doc. 155). Plaintiff does not need a separate judgment to collect on its award of fees. 4 Defendants are required to pay pursuant to the Court’s earlier award of attorneys’ fees. 5 (Doc. 155). 6 III. Conclusion 7 Based on the foregoing, 8 IT IS ORDERED denying Plaintiff’s Motion for Entry of Judgment (Doc. 160) as 9 10 unnecessary. DATED this 26th day of July, 2012. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4-

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