Reeves & Associates, PLC v. Muller

Filing 41

ORDER REQUIRING DEFENDANT TO SHOW CAUSE RE CONTEMPT OF COURT by Hon. William Alsup granting in part 34 Ex Parte Application.(whalc2, COURT STAFF) (Filed on 12/24/2012) (Additional attachment(s) added on 12/24/2012: # 1 Certificate/Proof of Service) (dt, COURT STAFF).

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1 2 IN THE UNITED STATES DISTRICT COURT 3 4 FOR THE NORTHERN DISTRICT OF CALIFORNIA 5 6 7 REEVES & ASSOCIATES, PLC, 8 9 Plaintiff, ORDER REQUIRING DEFENDANT TO SHOW CAUSE RE CONTEMPT OF COURT v. 11 For the Northern District of California United States District Court 10 No. C 11-04762 WHA MATTHEW D. MULLER, AND DOES 125, Inclusive, 12 Defendants. / 13 14 INTRODUCTION 15 In this employee-misappropriation action, plaintiff moves to require defendant to show 16 cause for why he should not be held in contempt for violating a stipulated injunctive relief and 17 protective order. Plaintiff’s request for a show-cause hearing is GRANTED. 18 STATEMENT 19 This action was initially filed on September 2011. It arises from defendant’s alleged 20 misappropriation of confidential and proprietary data during his final days of employment at 21 Reeves. On October 2011, the parties filed a stipulation for an order for injunctive relief and 22 protective order. The terms of the stipulated order were incorporated and became an order of 23 this Court (Dkt. No. 24 at 8). Less than two weeks after the stipulation was entered, the parties 24 stipulated to a voluntary dismissal with prejudice (Dkt. No. 29). 25 The stipulated order prevents defendant from using, altering or destroying data and 26 requires defendant to deliver certain hard-drives to a computer security firm. The order provides 27 that a computer security firm was to print out a map of the drive contents to identify any and all 28 of plaintiff’s files on the drives. Plaintiff now contends, nearly a year after the action was dismissed, that defendant is in violation of the order by refusing to cooperate in the mapping of 1 the drives. Plaintiff seeks to hold defendant in contempt for allegedly violating the stipulated 2 order. Defendant was served with this motion but has failed to file an opposition or respond in 3 any manner. 4 5 ANALYSIS This Court has jurisdiction to enforce its prior orders. The issue of jurisdiction turns on 6 whether the parties’ stipulated injunctive relief and protective order is more akin to a private 7 settlement agreement or to a consent decree. 8 9 “[A] consent decree has attributes of both a contract and a judicial act.” Olney v. United States, 543 F.3d 1168, 1173–74 (9th Cir. 2008). The Supreme Court has explained that a consent decree is “an agreement that the parties desire and expect will be reflected in, and be 11 For the Northern District of California United States District Court 10 enforceable as, a judicial decree that is subject to the rules generally applicable to other 12 judgments and decrees.” Rufo v. Inmates of Suffolk Cnty. Jail, 502 U.S. 367, 378 (1992). “A 13 consent decree is a judgment, has the force of res judicata, and it may be enforced by judicial 14 sanctions, 15 including . . . citations for contempt.” S.E.C. v. Randolph, 736 F.2d 525, 528 (9th Cir. 1984). 16 In contrast, district courts only have jurisdiction to enforce the terms of a private 17 settlement agreement in limited circumstances. Kokkonen v. Guardian Life Ins. Co. of America, 18 511 U.S. 375 (1994). The Supreme Court has held that 19 20 21 federal courts do not have inherent or ancillary jurisdiction to enforce a settlement agreement simply because the subject of that settlement was a federal lawsuit. When the initial action is dismissed, federal jurisdiction terminates. A motion to enforce the settlement agreement, then, is a separate contract dispute requiring its own independent basis for jurisdiction. 22 O'Connor v. Colvin, 70 F.3d 530, 532 (9th Cir. 1995) (citing Kokkonen) (internal citations and 23 quotations omitted). In this way, “[a] consent decree offers more security to the parties than a 24 settlement agreement where the only penalty for failure to abide by the agreement is another 25 suit.” Randolph, 736 F.2d at 528. 26 Generally, federal courts lack jurisdiction to enforce settlement agreements when the 27 action is dismissed with prejudice. As stated by our court of appeals, the Supreme Court in 28 Kokkonen recognized an exception to this rule. 2 1 2 3 We think the court is authorized to embody the settlement contract in its dismissal order (or, what has the same effect, retain jurisdiction over the settlement contract) if the parties agree. If the dismissal order incorporates the settlement terms, the Court reasoned, a violation of those terms would amount to a violation of the court’s order. The court would then have ancillary jurisdiction to vindicate its authority. 4 O'Connor, 70 F.3d at 532 (internal citations and quotations omitted). 5 The stipulated injunctive relief and protective order herein is an enforceable order of the 6 Court. The order is an agreement between the parties that they requested and expected to be 7 enforceable as a judicial decree. It specifically provides for judicial oversight (see, e.g., Dkt. No. 8 24 at 8). The stipulation was signed and entered as an order of this Court. District courts have 9 jurisdiction to enforce settlement agreements if the court incorporated the agreement into a 10 retains jurisdiction to enforce its judgments, including consent decrees.” Hook v. Arizona Dep’t For the Northern District of California United States District Court consent decree. California v. Randtron, 284 F.3d 969, 974 (9th Cir. 2002). “A district court 11 12 of Corrections, 972 F.2d 1012, 1014 (9th Cir. 1992). Moreover, as recognized in Kokkonen, 13 federal courts have ancillary jurisdiction to address violations of prior orders, such as consent 14 decrees or orders incorporating settlement agreements, even where an action had previously been 15 dismissed with prejudice. Therefore, this Court has jurisdiction to enforce the stipulated order, 16 notwithstanding the dismissal. 17 Defendant must therefore show cause why he should not be held in contempt for the 18 alleged violations of the stipulated injunctive relief and protective order. 19 CONCLUSION 20 For the reasons discussed above, plaintiff’s motion is GRANTED to the extent that 21 defendant is required to show cause for why he should not be held in contempt for violating the 22 stipulated injunctive relief and protective order. A show cause hearing is hereby set for 23 JANUARY 10, 2013 AT 8:00 A.M. Pre-hearing filings are due by JANUARY 7 AT NOON. 24 25 IT IS SO ORDERED. 26 27 Dated: December 24, 2012. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 28 3

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