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

Filing 86

ORDER RE: PLAINTIFF'S MOTION FOR CIVIL CONTEMPT 64 by Judge Ronald S.W. Lew. The Court GRANTS Plaintiff's Motion for Civil Contempt. Defendants are ORDERED to change the name of their corporate entities to comply with the Court's O rder. Beginning with the issuance of this Order on January 11, 2018, Defendants shall pay a daily fine of $500, payable to the Court, until Defendants file an affidavit outlining their compliance with the Court's Order. Additionally, Pla intiffs counsel is ORDERED to submit a supplemental filing, including declarations, setting forth the amount of attorneys fees and costs Plaintiff incurred in filing the instant Motion. SEE ORDER FOR COMPLETE DETAILS INCLUDING BRIEFING SCHEDULE RE ATTORNEY FEES. (jre)

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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 CIVIL CONTEMPT [64] Currently before the Court is Plaintiff AECOM 24 Energy and Construction, Inc.’s (“Plaintiff”) Motion 25 for Civil Contempt (“Motion”) [64]. Having reviewed 26 all papers submitted pertaining to this Motion, the 27 Court NOW FINDS AND RULES AS FOLLOWS: the Court GRANTS 28 Plaintiff’s Motion. 1 1 I. BACKGROUND 2 On July 21, 2017, Plaintiff filed its Complaint 3 [1]. Plaintiff then filed a Motion for Preliminary 4 Injunction on August 1, 2017 [11]. The Court granted 5 Plaintiff’s Motion for Preliminary Injunction on 6 September 28, 2017 [45]. In its Order, the Court 7 enjoined Defendants John Ripley; Todd Hale; Gary 8 Topolewski; Henry Blum; Bud Zukaloff; Morrison Knudsen 9 Corporation; Morrison-Knudsen Company, Inc.; Morrison10 Knudsen Services, Inc.; and Morrison-Knudsen 11 International (collectively, “Defendants”) from: 12 13 14 15 16 17 18 19 20 21 a) using, displaying, or otherwise exploiting the MK trademarks, including MORRISON KNUDSEN and MKCO MORRISON KNUDSEN, in connection with the advertising, distribution, display, sale, or offering for sale of any products or services; b) using the Morrison Knudsen domain name ( and any associated email addresses; c) making any statement or representation or performing any act likely to lead members of the public to believe that the business Defendants operate at 2049 Century Park East, Suite 3850, Los Angeles, California 90067 is in any manner, directly or indirectly, associated, affiliated or connected with, or licensed, sponsored, authorized or approved by Plaintiff and the MK brand; 22 d) conducting business, including selling any product or service, under the names Morrison23 Knudsen Services, Inc.; Morrison Knudsen Corporation; Morrison Knudsen International 24 Inc.; Morrison-Knudsen Company, Inc.; or any other related entities. 25 Order re Pl.’s Mot. for Prelim. Inj. (“Order”) 27:3-25, 26 ECF No. 45. 27 The Court’s Order also instructed Defendants to 28 file an affidavit, within twenty-one days of Plaintiff 2 1 posting a $50,000 bond, detailing the manner in which 2 Defendants complied with the Order. Id. at 28:7-10. 3 Plaintiff posted the $50,000 bond on October 10, 2017. 4 See ECF No. 54. On November 9, 2017, nine days after 5 the twenty-one-day deadline, Defendants filed the 6 Declaration of Mike Johnson [62], one of their 7 corporate officers. According to Mr. Johnson’s 8 Declaration, he directed his staff to change the name 9 of each corporate defendant, and his staff filed four 10 certificates of amendment with the Nevada Secretary of 11 State on October 27, 2017. See Decl. of Mike Johnson 12 (“Johnson Decl.”) ¶ 4, ECF No. 62. The certificates of 13 amendment changed the corporate names as follows: 14 1. 15 16 Corporation; 2. 17 18 Morrison Knudsen Company, Inc. was changed to MK Company Inc.; 3. 19 20 Morrison Knudsen Corporation was changed to MK Morrison Knudsen Services, Inc. was changed to MK Services Inc.; 4. Morrison Knudsen International Inc. was changed to MK International Inc.1 21 22 Id. ¶ 5. 23 On November 28, 2017, Plaintiff filed the instant 24 Motion [64]. Defendants’ Opposition was due on 25 26 27 28 1 According to Defendants, they learned on December 5, 2017 that the Nevada Secretary of State had not recorded Defendants’ certificates of amendment for these name changes because the names were not available for use. Defs.’ Opp’n to Pl.’s Mot. for Civil Contempt (“Opp’n”) 5:17-19, ECF No. 80. 3 1 December 19, 2017. After Defendants failed to timely 2 file their Opposition on December 19, 2017, Plaintiff 3 filed its Reply on December 20, 2017 informing the 4 Court of Defendants’ failure to timely file their 5 Opposition. See Pl.’s Reply in Supp. of Mot. for Civil 6 Contempt (“Reply”) 2:4-8, ECF No. 78. 7 On December 24, 2017, Defendants filed an Ex Parte 8 Application for Leave to File a Late Opposition (“Ex 9 Parte Application”) [79]. Defendants then filed their 10 Opposition to Plaintiff’s Motion on December 26, 2017 11 [80]. The Court denied Defendants’ Ex Parte 12 Application on December 28, 2017 [82]. 13 II. DISCUSSION 14 A. Legal Standard 15 “[C]ourts have inherent power to enforce compliance 16 with their lawful orders through civil contempt.” 17 Shillitani v. United States, 384 U.S. 364, 370 (1966). 18 Civil contempt consists of a party’s disobedience to a 19 specific and definite court order by failure to take 20 all reasonable steps within the party’s power to 21 comply. In re Dual-Deck Video Cassette Recorder 22 Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993). 23 “The moving party has the burden of showing by clear 24 and convincing evidence that the contemnors violated a 25 specific and definite order of the court. The burden 26 then shifts to the contemnors to demonstrate why they 27 were unable to comply.” Stone v. City & Cty. of S.F., 28 968 F.2d 850, 856 n.9 (9th Cir. 1992)(citations 4 1 omitted). 2 A person should not be held in contempt if his 3 action “appears to be based on a good faith and 4 reasonable interpretation of the [court’s order].” 5 Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 6 689 F.2d 885, 889 (9th Cir. 1982). “[C]ivil contempt 7 may be established even though the failure to comply 8 with the court order was unintentional.” Perry v. 9 O’Donnell, 759 F.2d 702, 705 (9th Cir. 1985). A 10 showing of willfulness is not a necessary element for 11 civil contempt because while the purpose of criminal 12 contempt is punishment, the purpose of civil contempt 13 is remedial. 14 Id. “Sanctions for civil contempt may be imposed to 15 coerce obedience to a court order, or to compensate the 16 party pursuing the contempt action for injuries 17 resulting from the contemptuous behavior, or both.” 18 Gen. Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 19 1380 (9th Cir. 1986). Accordingly, there are two types 20 of civil contempt sanctions: compensatory and coercive. 21 Falstaff Brewing Corp. v. Miller Brewing Co., 702 F.2d 22 770, 778 (9th Cir. 1983). “Compensatory sanctions are 23 intended to compensate the aggrieved party for ‘actual 24 loss’ resulting from the contemnor’s noncompliance.” 25 HM Elecs., Inc. v. R.F. Techs., Inc., No. 26 12-CV-2884-MMA (JLB), 2014 WL 12059031, at *3 (S.D. 27 Cal. Apr. 18, 2014)(internal citation omitted). 28 Coercive sanctions are “intended to coerce the 5 1 contemnor to comply with the court’s orders in the 2 future.” Richmark Corp. v. Timber Falling Consultants, 3 959 F.2d 1468, 1481 (9th Cir. 1992). 4 B. Analysis 5 As noted, Defendants’ Opposition to Plaintiff’s 6 Motion was due on December 19, 2017, but Defendants did 7 not file their Opposition until December 26, 2017. 8 Pursuant to Local Rule 7-12, “failure to file any 9 required document, or the failure to file it within the 10 deadline, may be deemed consent to the granting or 11 denial of the motion.” Accordingly, the Court GRANTS 12 Plaintiff’s Motion without reaching the merits, simply 13 based on Defendants’ failure to timely oppose the 14 Motion. See Canon Sols. Am., Inc. v. Gungap, No. 15 SACV141990JLSRNBX, 2016 WL 9108916, at *2 (C.D. Cal. 16 Feb. 8, 2016)(granting motion for civil contempt when 17 defendant failed to timely file opposition to motion). 18 1. 19 Even an analysis of the merits of Plaintiff’s Civil Contempt 20 Motion, including the arguments Defendants asserted in 21 their late-filed Opposition, supports granting 22 Plaintiff’s Motion. 23 To succeed on its Motion, Plaintiff must first 24 prove by clear and convincing evidence that Defendants 25 violated the Court’s Order. 26 at 695. In re Dual-Deck, 10 F.3d Defendants argue that the Court’s Order lacked 27 specificity regarding the acts sought to be restrained, 28 in violation of Federal Rule of Civil Procedure 6 1 (“Rule”) 65(d), and therefore, the Order cannot support 2 a finding of civil contempt. Opp’n 5:25-6:4. Despite 3 Defendants’ arguments, the Court’s September 28, 2017 4 Order was clear and unambiguous. The Order enjoined 5 Defendants from “making any [] representation that the 6 business Defendants operate . . . is . . . connected 7 with . . . the MK brand.” Order 27:11-19. The Order 8 further enjoined Defendants from using Defendants’ 9 corporate names. Id. at 27:20-25. While Defendants 10 argue that the Order created uncertainty as to whether 11 Defendants were prohibited from using the MK initials, 12 “[i]njunctions are not set aside under rule 65(d) . . . 13 unless they are so vague that they have no reasonably 14 specific meaning.”2 United States v. Holtzman, 762 F.2d 15 720, 726 (9th Cir. 1985). 16 Further, Defendants fail to identify any portion of 17 the Order that lacks specificity, nor could they do so. 18 See AT&T Intellectual Prop. II, L.P. v. Toll Free 19 20 2 The case Defendants cite in support of their argument that 21 the Order was too vague and thus unenforceable, International Longshoremen’s Ass’n v. Philadelphia Marine Trade Ass’n, 389 U.S. 22 64 (1967), is easily distinguishable from the instant Action. In court ordered the parties 23 International Longshoremen’s, the trial 389 U.S. at 69. When to comply with the arbitrator’s award. 24 counsel inquired into what this order meant, the trial court 25 26 27 28 refused to explain itself and at no point clarified its order. Id. at 70-72. The Supreme Court then overturned the trial court’s contempt order based on the failure to comply with Rule 65(d). Id. at 75-76. This holding is inapplicable here. The International Longshoremen’s trial court’s incredibly vague and brief order and refusal to explain its order is nothing like the four paragraph explanation in this Court’s Order of the enjoined activity. Thus, Defendants’ Rule 65(d) argument holds no merit. 7 1 Yellow Pages Corp., No. CV095707PSGPJWX, 2010 WL 2 11508795, at *5 (C.D. Cal. Feb. 8, 2010)(rejecting 3 argument that injunction lacked specificity when 4 defendants failed to cite a single instance of 5 “overbreadth or lack of specificity”). The Court’s 6 Order outlined four paragraphs explaining the various 7 conduct it enjoined. Defendants were on clear notice 8 that they could not continue to operate a business that 9 suggested a connection to Morrison Knudsen and its 10 brand. This cannot be considered so vague that it has 11 no reasonably specific meaning. 12 Defendants have failed to comply with the Court’s 13 Order. Instead of changing their corporate names to 14 names that clearly departed from Morrison Knudsen and 15 the MK brand, Defendants simply abbreviated Morrison 16 Knudsen to MK. See Johnson Decl. ¶ 5. “This act on 17 the part of [D]efendants was intentionally calculated 18 by them to deceive the public into the belief that” 19 they were still affiliated with Morrison Knudsen. See 20 Rests. & Patisseries Longchamps, Inc. v. Longchamps, 21 Inc., No. 5972-WM, 1947 WL 4003, at *3 (S.D. Cal. May 22 23, 1947). Defendants made no effort to distance 23 themselves from the MK brand and are continuing to 24 operate a business under confusingly similar names. 25 See id. (holding defendant in contempt when defendant 26 changed store name from “Longchamps” to the confusingly 27 similar name “Longshires”). 28 Defendants argue that a lay person would not think 8 1 MK is related to Morrison Knudsen because MK could 2 stand for anything. Opp’n 6:10-12. However, the 3 Morrison Knudsen trademarks, ownership over which 4 Defendants attempted to deceptively take, include the 5 MK initials. See Decl. of Annette Bottaro-Walklet in 6 Supp. of Pl.’s Mot. for Prelim. Inj., Ex. F at 8, ECF 7 No. 14. Additionally, Defendants used the initials MK 8 throughout their website to refer to Morrison Knudsen, 9 see Decl. of Charles Szurgot in Supp. of Pl.’s Mot. for 10 Prelim. Inj., Ex. C, ECF No. 13, and MK has been a 11 common way of referring to Morrison Knudsen since at 12 least the 1950s, id., Ex. A. Defendants’ use of the 13 initials MK to refer to Morrison Knudsen prior to the 14 Court’s Order, the presence of the MK initials in the 15 MK trademark, and the consistent use of the MK initials 16 to refer to Morrison Knudsen throughout history make it 17 clear that no reasonable person could argue that the 18 use of the MK initials does not infringe upon the 19 Morrison Knudsen name. Accordingly, Plaintiff has met 20 its burden to show by clear and convincing evidence 21 that Defendants violated the Court’s Order. 22 The burden then shifts to Defendants to establish 23 why they were unable to comply with the Court’s Order. 24 See Stone, 968 F.2d at 856 n.9. Defendants maintain 25 that they substantially complied with the Order. 26 Defendants assert that they made an effort to change 27 their corporate names to MK, which they felt complied 28 with the Court’s Order. Opp’n 5:12-22. 9 Defendants did 1 not discover until December 5, 2017 that the Nevada 2 Secretary of State had not accepted their paperwork 3 because the MK names were not available for use. 4 at 5:17-19. Id. This, Defendants assert, evidences 5 substantial compliance with the Court’s Order and is a 6 defense to civil contempt. 7 However, this argument provides little support for 8 a finding of substantial compliance. Even after 9 discovering the Nevada Secretary of State had not 10 accepted their certificates of amendment, Defendants 11 made no effort to inform Plaintiff or the Court of 12 this. Further, Defendants did not make any attempt to 13 remedy the situation by filing paperwork to change 14 their corporate names to names entirely unrelated to 15 Morrison Knudsen or the MK brand. This lack of effort 16 clearly evidences a failure to ensure substantial 17 compliance with the Court’s Order. See HM Elecs., 2014 18 WL 12059031, at *5 (“Defendant did not take ‘all 19 reasonable steps within its power’ to comply with the 20 labeling and disclosure requirements. Instead, 21 Defendant opted for language in both its labeling 22 stickers and written disclosure that evades the Court’s 23 clear directive.”); Honor Plastic Indus. Co. v. 24 Lollicup USA, Inc., 466 F. Supp. 2d 1217, 1224 (E.D. 25 Cal. 2006)(finding defendant deliberately violated the 26 preliminary injunction through continuing to represent 27 itself as the plaintiff’s company). Because Defendants 28 have failed to substantially comply with the Court’s 10 1 Order, the Court GRANTS Plaintiff’s Motion and finds 2 Defendants in civil contempt of the Order. 3 2. Sanctions 4 Where a court finds a party in contempt, the court 5 has discretion to impose sanctions. 6 Corp., 787 F.2d at 1380. See Gen. Signal One form of these sanctions 7 is a coercive fine, which is imposed “to coerce the 8 contemnor to comply with the court’s order in the 9 future” and “is conditioned upon continued 10 noncompliance.” 11 Richmark Corp., 959 F.2d at 1481. Here, Defendants failed to timely file their 12 affidavit with the Court evidencing their compliance 13 with the Court’s Order. The affidavit that Defendants 14 filed nine days after the Court’s deadline showed a 15 clear failure to comply with the Court’s Order. Even 16 after Defendants learned that the names they chose as 17 their new corporate names, simple abbreviations of 18 their previously infringing corporate names, were not 19 available, Defendants made no further effort to remedy 20 this and make another name change. Because Defendants 21 have shown no motivation to follow the Court’s Order, 22 the Court now imposes a daily fine of $500 paid to the 23 Court3 until Defendants file an affidavit with the Court 24 evidencing full compliance with Court’s Order. See HM 25 Elecs., 2014 WL 12059031, at *7 (imposing daily fine of 26 27 28 3 Gen. Signal Corp., 787 F.2d at 1380 (“If the fine, or any portion of the fine, is coercive, it should be payable to the court . . . .”). 11 1 $2,500 so long as the defendant continued to violate 2 the terms of a preliminary injunction). Full 3 compliance includes Defendants changing their corporate 4 names to ensure no confusion that they are connected to 5 Morrison Knudsen or the MK brand.4 6 Additionally, a district court “may assess 7 attorneys’ fees . . . as part of the fine to be levied 8 on the defendant.” Donovan v. Burlington N., Inc., 781 9 F.2d 680, 682 (9th Cir. 1986)(internal citation 10 omitted). Attorneys’ fees, “the cost of bringing the 11 violation to the attention of the court[, are] part of 12 the damages suffered by the prevailing party” and are 13 thus a compensatory sanction. Cook v. Ochsner Found. 14 Hosp., 559 F.2d 270, 272 (5th Cir. 1977). Attorneys’ 15 fees and costs may be awarded to the moving party even 16 if the non-moving party’s failure to comply with the 17 injunction was not willful. See Perry, 759 F.2d at 18 705. 19 Plaintiff requests that the Court award Plaintiff 20 its attorneys’ fees and costs incurred in filing the 21 instant Motion. Had Defendants fully complied with the 22 Court’s Order, Plaintiff’s Motion would have been 23 unnecessary and Plaintiff would not have incurred 24 attorneys’ fees and costs in drafting and filing such a 25 motion. Consequently, the Court finds that attorneys’ 26 27 28 4 The Court’s Order prohibits Defendants from using the name Morrison Knudsen or anything confusingly similar, such as the MK initials, in their corporate names. 12 1 fees and costs are an appropriate sanction for 2 Defendants’ failure to comply with the Court’s Order. 3 See Henry Schein, Inc. v. Certified Bus. Supply, Inc., 4 No. SA CV 03-1662 DOC, 2008 WL 9452685, at *10 (C.D. 5 Cal. Aug. 20, 2008). 6 7 IV. CONCLUSION Based on the foregoing, the Court GRANTS 8 Plaintiff’s Motion for Civil Contempt [64]. Defendants 9 are ORDERED to change the name of their corporate 10 entities to comply with the Court’s Order. Beginning 11 with the issuance of this Order on January 11, 2018, 12 Defendants shall pay a daily fine of $500, payable to 13 the Court, until Defendants file an affidavit outlining 14 their compliance with the Court’s Order. 15 Additionally, Plaintiff’s counsel is ORDERED to 16 submit a supplemental filing, including declarations, 17 setting forth the amount of attorneys’ fees and costs 18 Plaintiff incurred in filing the instant Motion. These 19 papers shall be submitted no later than Friday, January 20 26, 2018. Defendants may then file an opposition to 21 Plaintiff’s supplemental filing by February 2, 2018, 22 and Plaintiff may file a reply in support of its filing 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 13 1 by February 9, 2018. Upon receiving these papers, the 2 Court will determine what amount of fees and costs is 3 reasonable. 4 IT IS SO ORDERED. 5 6 DATED: January 11, 2018 S/ RONALD S.W. LEW 7 HONORABLE RONALD S.W. LEW Senior U.S. District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14

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