Aecom Energy and Construction, Inc. v. John Ripley et al

Filing 119

ORDER by Judge Ronald S.W. Lew DENYING 103 MOTION FOR CONTEMPT AND GRANTING MOTION FOR ATTORNEYS FEES. The Court GRANTS in part and DENIES in part Plaintiffs Motion. Plaintiffs counsel is ORDERED to submit a supplemental filing, including declarat ions, setting forth the amount of attorneys fees and costs Plaintiff incurred in filing the instant Motion. These papers shall be submitted no later than Friday, May 18, 2018. Defendants may then file an opposition to Plaintiffs supplemental filing by May 25, 2018, and Plaintiff may file a reply in support of its filing by June 1, 2018. Upon receivingthese papers, the Court will determine what amount of fees and costs is reasonable. (shb)

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1 O 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 AECOM ENERGY & CONSTRUCTION, INC., 13 Plaintiff, 14 15 v. 16 JOHN RIPLEY; TODD HALE; 17 GARY TOPOLEWSKI; HENRY BLUM; BUD ZUKALOFF; 18 MORRISON KNUDSEN CORPORATION; MORRISON19 KNUDSEN COMPANY, INC.; MORRISON-KNUDSEN SERVICES, 20 INC.; and MORRISON-KNUDSEN INTERNATIONAL INC., 21 22 23 Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 2:17-cv-05398-RSWL-SS ORDER RE: PLAINTIFF’S MOTION FOR FURTHER CIVIL CONTEMPT [103] Currently before the Court is Plaintiff AECOM 24 Energy and Construction, Inc.’s (“Plaintiff”) Motion 25 for Further Civil Contempt (“Motion”) [103]. Having 26 reviewed all papers submitted pertaining to this 27 Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the 28 Court GRANTS in part and DENIES in part Plaintiff’s 1 1 Motion. 2 I. BACKGROUND 3 On July 21, 2017, Plaintiff filed its Complaint 4 [1]. Plaintiff then filed a Motion for Preliminary 5 Injunction on August 1, 2017 [11]. The Court granted 6 Plaintiff’s Motion for Preliminary Injunction on 7 September 28, 2017 [45]. 8 On November 9, 2017, Defendants Morrison Knudsen 9 Corporation, Morrison Knudsen Company, Inc., Morrison 10 Knudsen Services, Inc., and Morrison Knudsen 11 International Inc. (collectively, “Defendants”) filed 12 the Declaration of Mike Johnson [62], outlining their 13 compliance with the Court’s Preliminary Injunction 14 Order. According to Mr. Johnson’s Declaration, he 15 directed his staff to change the name of each corporate 16 defendant to MK instead of Morrison Knudsen. Decl. of 17 Mike Johnson re Compliance ¶¶ 4-5, ECF No. 62. 18 On November 28, 2017, Plaintiff filed its first 19 Motion for Civil Contempt [64]. The Court granted 20 Plaintiff’s first Motion for Civil Contempt on January 21 11, 2018 and ordered Defendants to change the names of 22 their corporate entities to comply with the Court’s 23 Preliminary Injunction Order. Order re Pl.’s Mot. for 24 Civil Contempt 13:7-10, ECF No. 86. The Contempt Order 25 also ordered Defendants to pay a daily fine of $500 26 until Defendants filed an affidavit outlining their 27 compliance with the Court’s Contempt Order. 28 13:10-14. 2 Id. at 1 On January 12, 2018, Defendants filed an affidavit 2 informing the Court that they had filed certificates of 3 amendment changing their corporate names to Majestic 4 Corporation, Majestic Company Inc., Majestic Services 5 Inc., and Majestic International Inc. Decl. of Mike 6 Johnson in Supp. of Defs.’ Opp’n to Pl.’s Mot. for 7 Contempt (“Johnson Decl.”) ¶ 5, ECF No. 107-1. While 8 the Nevada Secretary of State approved Majestic 9 Services Inc., on February 1, 2018, Defendants received 10 rejections from the Nevada Secretary of State for the 11 other three names due to unavailability. 12 Id. ¶ 6. After Plaintiff filed supplemental briefing 13 regarding its attorneys’ fees incurred in connection 14 with Plaintiff’s first Motion for Civil Contempt, the 15 Court granted Plaintiff’s request for attorneys’ fees 16 on February 16, 2018 and ordered Defendants to pay 17 Plaintiff $21,815.80 within twenty-one days.1 Order re 18 Pl.’s Req. for Att’ys’ Fees 4:28-5:5, ECF No. 97. 19 On February 23, 2018, Defendants faxed certificates 20 of amendment to the Nevada Secretary of State changing 21 Morrison Knudsen Corporation to International Majestic 22 Corporation, Morrison Knudsen Company, Inc. to 23 24 25 26 27 28 1 Defendants did not pay Plaintiff the fee award within the twenty-one-day deadline. Plaintiff’s counsel contacted Defendants’ counsel after the deadline passed, and Defendants’ counsel responded that Defendants were unable to pay the fee award. Decl. of Yungmoon Chang in Supp. of Pl.’s Mot. for Contempt (“Chang Decl.”) ¶ 10, Ex. 6 at 41, ECF No. 105. To date, Defendants still have not paid Plaintiff the fee award or provided a reason for failing to do so. 3 1 International Majestic Company Inc., and Morrison 2 Knudsen International Inc. to International Majestic 3 Inc. Johnson Decl. ¶ 7, Ex. C. After not receiving 4 any word from the Nevada Secretary of State, on March 5 8, 2018, Mr. Johnson contacted the Secretary of State, 6 which informed Mr. Johnson that it had not received the 7 name change requests. Id. ¶ 8. Defendants then resent 8 the certificates of amendment to the Nevada Secretary 9 of State on March 12, 2018. Id. ¶ 9. On March 22, 10 2018, Defendants received the Nevada Secretary of 11 State’s denial of these name changes due to 12 unavailability. 13 Id. ¶ 10. On March 26, 2018, Defendants submitted 14 certificates of amendment changing Morrison Knudsen 15 Corporation to Northern Majestic Corporation, Morrison 16 Knudsen Company, Inc. to Northern Majestic Company 17 Inc., and Morrison Knudsen International Inc. to 18 Northern Majestic International Inc. Id. ¶ 11, Ex. F. 19 The Nevada Secretary of State accepted the name change 20 of Morrison Knudsen International Inc. to Northern 21 Majestic International Inc. on March 29, 2018, but 22 rejected the other two name changes. Pl.’s Reply in 23 Supp. of Mot. for Contempt (“Reply”) 4:12-14, ECF No. 24 108. 25 On March 27, 2018, Plaintiff filed the instant 26 Motion [103]. On April 4, 2018, the day after 27 Defendants filed their Opposition [107] to Plaintiff’s 28 Motion, Defendants filed certificates of amendment for 4 1 the remaining two corporate Defendants. Second Decl. 2 of Mike Johnson in Supp. of Defs.’ Opp’n (“Second 3 Johnson Decl.”) ¶ 4, ECF No. 115. On April 10, 2018, 4 Defendants received confirmation that Morrison Knudsen 5 Corporation was changed to Goodbrand Corporation and 6 Morrison Knudsen Company, Inc. was changed to Goodbrand 7 Company Inc. 8 Id. ¶ 5, Ex. B. On April 17, 2018, one week after filing its Reply 9 [108] in support of its Motion, Plaintiff filed the 10 Supplemental Declaration of Yungmoon Chang [114] 11 providing new evidence to the Court in support of 12 Plaintiff’s Motion. This new evidence included a 13 website allegedly created by Defendants, which mirrored 14 the website the Court previously ordered Defendants to 15 take down.2 Chang Suppl. Decl. ¶ 10. Defendants then 16 responded on April 20, 2018 with the Second Declaration 17 of Mike Johnson [115] in support of Defendants’ 18 Opposition to Plaintiff’s Motion. Mr. Johnson declared 19 that he was not aware of the 20 website but that he had Defendants’ IT department take 21 the website down on April 17, 2018. Second Johnson 22 Decl. ¶ 6. 23 /// 24 /// 25 26 27 28 2 The new website is, while the website the Court ordered Defendants to take down was Suppl. Decl. of Yungmoon Chang (“Chang Suppl. Decl.”) ¶ 3, Ex. A, ECF No. 114. 5 1 II. DISCUSSION 2 A. Legal Standard 3 “[C]ourts have inherent power to enforce compliance 4 with their lawful orders through civil contempt.” 5 Shillitani v. United States, 384 U.S. 364, 370 (1966). 6 Civil contempt consists of a party’s disobedience to a 7 specific and definite court order by failure to take 8 all reasonable steps within the party’s power to 9 comply. In re Dual-Deck Video Cassette Recorder 10 Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993). 11 “The moving party has the burden of showing by clear 12 and convincing evidence that the contemnors violated a 13 specific and definite order of the court. The burden 14 then shifts to the contemnors to demonstrate why they 15 were unable to comply.” Stone v. City & Cty. of S.F., 16 968 F.2d 850, 856 n.9 (9th Cir. 1992) (citations 17 omitted). 18 A person should not be held in contempt if his 19 action “appears to be based on a good faith and 20 reasonable interpretation of the [court’s order].” 21 Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 22 689 F.2d 885, 889 (9th Cir. 1982). “[C]ivil contempt 23 may be established even though the failure to comply 24 with the court order was unintentional.” Perry v. 25 O’Donnell, 759 F.2d 702, 705 (9th Cir. 1985). A 26 showing of willfulness is not a necessary element for 27 civil contempt because while the purpose of criminal 28 contempt is punishment, the purpose of civil contempt 6 1 is remedial. 2 Id. “Sanctions for civil contempt may be imposed to 3 coerce obedience to a court order, or to compensate the 4 party pursuing the contempt action for injuries 5 resulting from the contemptuous behavior, or both.” 6 Gen. Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 7 1380 (9th Cir. 1986). Accordingly, there are two types 8 of civil contempt sanctions: compensatory and coercive. 9 Falstaff Brewing Corp. v. Miller Brewing Co., 702 F.2d 10 770, 778 (9th Cir. 1983). “Compensatory sanctions are 11 intended to compensate the aggrieved party for ‘actual 12 loss’ resulting from the contemnor’s noncompliance.” 13 HM Elecs., Inc. v. R.F. Techs., Inc., No. 14 12-CV-2884-MMA (JLB), 2014 WL 12059031, at *3 (S.D. 15 Cal. Apr. 18, 2014)(citing In re Crystal Palace 16 Gambling Hall, Inc., 817 F.2d 1361, 1366 (9th Cir. 17 1987)). Coercive sanctions are “intended to coerce the 18 contemnor to comply with the court’s orders in the 19 future.” Richmark Corp. v. Timber Falling Consultants, 20 959 F.2d 1468, 1481 (9th Cir. 1992). 21 B. Analysis 22 1. 23 24 Civil Contempt a. Failure to Change Corporate Names To succeed on its Motion, Plaintiff must first 25 prove by clear and convincing evidence that Defendants 26 violated the Court’s Order. 27 F.3d at 695. See In re Dual-Deck, 10 In its Motion, Plaintiff argues that 28 Defendants have not complied with the Court’s 7 1 Preliminary Injunction Order because two of the 2 corporate Defendants continue to use the Morrison 3 Knudsen name. However, this is no longer true; none of 4 the corporate Defendants currently use the Morrison 5 Knudsen name.3 Accordingly, Defendants are in 6 compliance with that particular directive in the 7 Court’s Preliminary Injunction Order. 8 It should be noted, however, that Defendants’ delay 9 in complying with the Court’s Orders regarding changing 10 the corporate Defendants’ names was inappropriate. 11 While Defendants may have needed to wait to hear back 12 from the Nevada Secretary of State regarding whether 13 Defendants’ name changes were accepted, Defendants fail 14 to provide any reason for the two separate five-week 15 delays between the Nevada Secretary of State rejecting 16 the name change requests and Defendants filing 17 subsequent name change requests.4 It took Defendants 18 over six months to change the names of all four of the 19 20 21 22 23 24 25 26 27 28 3 Defendants changed Morrison Knudsen Services, Inc. to Majestic Services Inc. on January 29, 2018. Chang Decl. ¶ 8, Ex. 4 at 5. Morrison Knudsen International Inc. became Northern Majestic International Inc. on March 29, 2018. Reply 4:12-14. On April 10, 2018, Defendants received confirmation that Morrison Knudsen Corporation was changed to Goodbrand Corporation and Morrison Knudsen Company, Inc. was changed to Goodbrand Company Inc. Second Johnson Decl. ¶ 5, Ex. B. 4 Defendants received rejections from the Nevada Secretary of State on December 5, 2017 and waited until January 12, 2018, after the Court granted Plaintiff’s first Motion for Civil Contempt, to file revised certificates of amendment. Defendants again received rejections from the Nevada Secretary of State on February 1, 2018 and waited until March 12, 2018 to file revised certificates of amendment. 8 1 corporate Defendants.5 Such delay does not sit well 2 with the Court, and future unexplained delays will not 3 be easily forgiven. Ultimately, because Defendants 4 have changed their corporate names to no longer include 5 Morrison Knudsen, they are not in contempt of that 6 portion of the Court’s Preliminary Injunction Order. 7 The Court DENIES Plaintiff’s Motion as to this instance 8 of alleged contempt. 9 10 b. Defendants’ Websites Plaintiff also provides evidence of two instances 11 of contempt regarding Defendants’ use of websites 12 related to the Morrison Knudsen brand. The first 13 instance involves one subpage of, 14, which was 15 still active as of mid-March. 16 Ex. 7. See Chang Decl. ¶ 12, According to Mr. Johnson’s Declaration, he was 17 unaware this subpage was still active and such page 18 could only be accessed by typing the exact subpage 19 address into the address bar. Johnson Decl. ¶ 14. 20 Johnson has since had the page removed. Id. Mr. “If a 21 violating party has taken ‘all reasonable steps’ to 22 comply with the court order, technical or inadvertant 23 [sic] violations of the order will not support a 24 finding of civil contempt.” Gen. Signal Corp., 787 25 F.2d at 1379 (citations omitted). Here, Defendants 26 27 28 5 Of note, Plaintiff had to file two motions for contempt before Defendants finally changed all four of the corporate Defendants’ names. 9 1 substantially complied with the Court’s Order to take 2 down the website, so this 3 technical violation, which includes one subpage of a 4 website, cannot alone support a finding of civil 5 contempt. 6 The second instance involves an entire website 7 similar in look and form to the website Defendants 8 previously utilized, Plaintiff 9 discovered this new website,, just 10 days after filing its Reply in support of its Motion, 11 and Plaintiff subsequently filed the Supplemental 12 Declaration of Yungmoon Chang to inform the Court of 13 this new evidence. The website essentially serves the 14 exact same purpose as Defendants’ prior 15 website—outlining the history of the Morrison Knudsen 16 brand, offering for sale construction equipment with 17 the Morrison Knudsen mark, and holding themselves out 18 as Morrison Knudsen. See Chang Suppl. Decl., Ex. A. 19 Such a website is a blatant and egregious violation of 20 the Court’s Preliminary Injunction Order, which 21 specifically prohibited Defendants from using a 22 Morrison Knudsen domain name and “making any statement 23 . . . likely to lead members of the public to believe 24 . . . Defendants . . . [are] associated . . . [with] 25 the MK brand.” Order re Pl.’s Mot. for Prelim. Inj. 26 27:8-19, ECF No. 45. 27 In response to Plaintiff’s newly discovered 28 evidence, Defendants filed the Second Declaration of 10 1 Mike Johnson, in which Mr. Johnson testified that he 2 was unaware of the website prior 3 to Plaintiff bringing it to the Court’s attention. 4 Second Johnson Decl. ¶ 6. Nonetheless, Mr. Johnson 5 instructed Defendants’ IT department to take down the 6 website, which now currently states “under 7 construction.” Id. The Court finds it highly suspect 8 that Defendants were not aware of the morrison9 website when Mr. Johnson was able to so 10 easily have Defendants’ IT department take down the 11 website. However, the website is no longer active, and 12 Plaintiff has not offered any further evidence of 13 contempt with regard to any Morrison Knudsen-related 14 website that Defendant operates. Therefore, there is 15 no clear and convincing evidence that Defendants are 16 currently in contempt of the section of the Court’s 17 Preliminary Injunction Order covering a Morrison 18 Knudsen website. See also Buildex Inc. v. Kason 19 Indus., Inc., 849 F.2d 1461, 1463 (Fed. Cir. 1988) 20 (“Although not susceptible to precise definition, clear 21 and convincing evidence has been described as evidence 22 which produces in the mind of the trier of fact an 23 abiding conviction that the truth of [the] factual 24 contentions are highly probable.” (internal quotation 25 marks and quotation omitted)). The Court DENIES 26 Plaintiff’s Motion related to contempt based on 27 Defendants’ websites. Defendants are warned that any 28 further issues with Morrison Knudsen-related websites 11 1 that are so clearly in violation of the Court’s 2 Preliminary Injunction Order may result in harsh 3 contempt sanctions, including, as Plaintiff requests, 4 the striking of Defendants’ Answer. 5 6 c. Failure to Pay Attorneys’ Fees Finally, Plaintiff argues that Defendants have 7 failed to pay the attorneys’ fees the Court awarded 8 Plaintiff in connection with Plaintiff’s first Motion 9 for Contempt. Mot. 3:20-25. On February 16, 2018, the 10 Court awarded Plaintiff $21,815.80 in attorneys’ fees 11 and gave Defendants twenty-one days to make the payment 12 to Plaintiff. 13 4:28-5:5. Order re Pl.’s Req. for Att’ys’ Fees Following the expiration of this twenty-one- 14 day deadline, before which Defendants did not make the 15 payment to Plaintiff, Plaintiff’s counsel contacted 16 Defendants’ counsel and Defendants’ counsel indicated 17 that Defendants did not have the ability to pay. 18 Decl. ¶ 10, Ex. 6 at 41. Chang However, in their Opposition, 19 Defendants do not make any argument regarding their 20 ability to pay the attorneys’ fees award. The only 21 argument they offer is that finding Defendants in 22 contempt is not the proper remedy; instead, Plaintiff 23 should have the award reduced to a judgment. Opp’n 24 6:19-21. 25 First, “[u]se of the contempt power is an 26 appropriate way to enforce a sanction for misconduct, 27 which is not an ordinary money judgment.” Cleveland 28 Hair Clinic, Inc. v. Puig, 106 F.3d 165, 166 (7th Cir. 12 1 1997). Sanctions for misconduct include attorneys’ 2 fees incurred by the moving party in obtaining the 3 contempt finding, and therefore, the Court can use its 4 contempt power to enforce its prior award of attorneys’ 5 fees. See S.E.C. v. Amerifirst Funding, Inc., No. 6 3:07-CV-1188-D, 2008 WL 5191896, at *4 (N.D. Tex. Dec. 7 11, 2008). 8 Second, Defendants have failed to prove they are 9 unable to pay the attorneys’ fee award. “[T]he burden 10 is on the party against whom contempt is sought to show 11 ‘categorically and in detail’ why the party is unable 12 to pay.” Facebook, Inc. v. Power Ventures, Inc., No. 13 08-CV-05780-LHK, 2017 WL 3394754, at *10 (N.D. Cal. 14 Aug. 8, 2017) (quoting NLRB v. Trans Ocean Exp. 15 Packing, Inc., 473 F.2d 612, 616 (9th Cir. 1973)). 16 Defendants have provided no evidence, or even argument, 17 for their inability to pay the award of attorneys’ 18 fees. Accordingly, the Court GRANTS Plaintiff’s Motion 19 related to Defendants’ failure to pay the attorneys’ 20 fee award. 21 2. 22 Where a court finds a party in contempt, the court Sanctions 23 has discretion to impose sanctions. 24 Corp., 787 F.2d at 1380. See Gen. Signal A district court “may assess 25 attorneys’ fees . . . as part of the fine to be levied 26 on the defendant.” Donovan v. Burlington N., Inc., 781 27 F.2d 680, 682 (9th Cir. 1986) (internal citation 28 omitted). Attorneys’ fees, “the cost of bringing the 13 1 violation to the attention of the court[, are] part of 2 the damages suffered by the prevailing party” and are 3 thus a compensatory sanction. Cook v. Ochsner Found. 4 Hosp., 559 F.2d 270, 272 (5th Cir. 1977). Attorneys’ 5 fees and costs may be awarded to the moving party even 6 if the non-moving party’s failure to comply with the 7 injunction was not willful. See Perry, 759 F.2d at 8 705. 9 Plaintiff requests that the Court award Plaintiff 10 its attorneys’ fees and costs incurred in filing the 11 instant Motion. It ultimately took Defendants six 12 months to comply with the Court’s Preliminary 13 Injunction Order, which required Defendants to remove 14 Morrison Knudsen from their corporate names. Such 15 compliance only occurred after Plaintiff filed two 16 separate contempt motions. Further, Plaintiff tried to 17 meet and confer with Defendants regarding Defendants’ 18 failure to pay the court-ordered attorneys’ fees award, 19 and Defendants offered nothing other than stating that 20 they could not pay the award, an argument they 21 abandoned upon responding to Plaintiff’s Motion. 22 Plaintiff therefore had no choice but to file another 23 contempt motion. Defendants’ litigation tactics and 24 frequent refusal to comply with the Court’s orders have 25 increased Plaintiff’s costs of litigation. See Henry 26 Schein, Inc. v. Certified Bus. Supply, Inc., No. SA CV 27 03-1662 DOC, 2008 WL 9452685, at *9 (C.D. Cal. Aug. 20, 28 2008) (“[I]t is important that [the defendant] realize 14 1 the substantial legal expenses [the plaintiff] has 2 incurred in order to enforce the Injunction.”). 3 Accordingly, the Court GRANTS Plaintiff’s request for 4 its attorneys’ fees incurred in filing the instant 5 Motion. 6 III. CONCLUSION 7 Based on the foregoing, the Court GRANTS in part 8 and DENIES in part Plaintiff’s Motion. Plaintiff’s 9 counsel is ORDERED to submit a supplemental filing, 10 including declarations, setting forth the amount of 11 attorneys’ fees and costs Plaintiff incurred in filing 12 the instant Motion. These papers shall be submitted no 13 later than Friday, May 18, 2018. Defendants may then 14 file an opposition to Plaintiff’s supplemental filing 15 by May 25, 2018, and Plaintiff may file a reply in 16 support of its filing by June 1, 2018. Upon receiving 17 these papers, the Court will determine what amount of 18 fees and costs is reasonable. 19 IT IS SO ORDERED. 20 21 DATED: May 10, 2018 22 s/ RONALD S.W. LEW HONORABLE RONALD S.W. LEW Senior U.S. District Judge 23 24 25 26 27 28 15

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