Arabian Gas and Oil Development Company v. Wisdom Marines Lines, S.A., et al

Filing 101

ORDER RE: CIVIL CONTEMPT SANCTIONS by Magistrate Judge Donna M. Ryu. (dmrlc2, COURT STAFF) (Filed on 10/3/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ARABIAN GAS AND OIL
DEVELOPMENT COMPANY,
Plaintiff,

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v.

Case No. 16-cv-03801-DMR
ORDER RE: CIVIL CONTEMPT
SANCTIONS
Re: Dkt. No. 73

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WISDOM MARINES LINES, S.A., et al.,

United States District Court
Northern District of California

Defendants.
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Specially Appearing Defendants Wisdom Marine Lines, S.A. and Wisdom Marine Lines
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Co. (collectively, “Wisdom”) request that the court hold Plaintiff Arabian Gas and Oil
Development Company (“AGODCO”) in civil contempt for its failure to comply with the March
30, 2017 order to post an additional undertaking in the amount of $171,804.05. Wisdom seeks
monetary sanctions of $31,017.26 as reimbursement for attorneys’ fees and costs incurred in
seeking a contempt sanction. [Docket Nos. 73, 94]. AGODCO opposes. [Docket No. 89]. The
parties submitted supplemental briefing at the court’s request. [Docket Nos. 93, 94]. The court
held oral argument on August 10, 2017.

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Having considered the parties’ briefing and oral argument, and for the reasons stated

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below and on the record, Wisdom’s request for civil contempt sanctions is GRANTED. The court

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finds that AGODCO is in civil contempt of its March 30, 2017 order. AGODCO is subject to a

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fine of $500.00 per day, beginning on the day following the date of this order, to be paid until

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AGODCO complies with the March 30 order by posting the additional undertaking. The court

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awards Wisdom $20,091.82 for attorneys’ fees and costs reasonably expended in seeking this

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contempt sanction.

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I.

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BACKGROUND
The facts and procedural history underlying this attachment action are set forth in detail in

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prior orders. See Arabian Gas & Oil Dev. Co. v. Wisdom Marines Lines, S.A., No. 16-CV-03801-

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DMR, 2017 WL 1175592, at *1-2 (N.D. Cal. Mar. 30, 2017) [Docket No. 68]; Arabian Gas & Oil

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Dev. Co. v. Wisdom Marines Lines, S.A., No. 16-CV-03801-DMR, 2017 WL 2378060, at *1 (N.D.

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Cal. June 1, 2017) [Docket No. 84]. The court will confine its discussion to the information

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relevant to Wisdom’s request for civil contempt sanctions.

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On March 30, 2017, AGODCO was ordered to post an additional undertaking in the

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amount of $171,804.05 within 14 days of the order, or by April 13, 2017 (“March 30 order”). See

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Arabian Gas & Oil Dev. Co., 2017 WL 1175592, at *8.
AGODCO did not post the additional undertaking by April 13, 2017.

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On April 13, 2017, AGODCO filed a mandamus petition with the Ninth Circuit. See

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United States District Court
Northern District of California

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Petition for Writ of Mandamus in In re: Arabian Gas & Oil Dev. Co., No. 17-71080 [Appellate

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Docket No. 1]. It also filed an emergency motion with the Ninth Circuit to stay the March 30

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order. See Emergency Motion to Stay in In re: Arabian Gas & Oil Dev. Co., No. 17-71080

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[Appellate Docket No. 3].
On April 17, 2017, AGODCO moved this court to stay the March 30 order pending

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resolution of its mandamus petition. [Docket No. 70]. Wisdom opposed the stay and requested

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civil contempt sanctions for AGODCO’s failure to comply with the March 30 order. [Docket No.

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73].

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On May 25, 2017, the court denied AGODCO’s motion to stay. See Arabian Gas & Oil

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Dev. Co., 2017 WL 2378060 [Docket No. 84]. Despite the fact that AGODCO “conceded that it

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had violated the court’s March 30, 2017 order,” see id. at *5; 5/25/17 Tr. at 7:25-8:4 [Docket No.

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87], AGODCO received one final opportunity to post the additional undertaking by June 1, 2017.

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See Arabian Gas & Oil Dev. Co., 2017 WL 2378060, at *5. Accordingly, the court held

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Wisdom’s request for civil contempt sanctions in abeyance until the end of the day on June 1,

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2017. Id.

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On May 31, 2017, AGODCO filed a motion for leave to file a motion for reconsideration

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of the May 25 order. [Docket No. 81]. In the alternative, AGODCO requested a brief stay due to

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“the official observance of Ramadan in Plaintiff’s home country of Bahrain” so that it could post
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the additional undertaking. [Docket No. 81 at 2].

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AGODCO did not post the additional undertaking by June 1, 2017.

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On June 2, 2017, the court denied AGODCO’s reconsideration motion and request for a

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brief stay, but gave AGODCO two additional weeks to file a response to Wisdom’s request for

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civil contempt sanctions. See Arabian Gas & Oil Dev. Co. v. Wisdom Marines Lines, S.A., No.

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16-CV-03801-DMR, 2017 WL 2406720 (N.D. Cal. June 2, 2017) [Docket No. 86]. Regarding

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AGODCO’s request for a brief stay, the court explained that while it would normally entertain

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such a request, this particular request was “both late and vague, and smack[ed] of foot-dragging.”

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Id. at *2. AGODCO’s request was “suspiciously short on specifics;” AGODCO provided no
details about the steps it had taken to procure the additional bond, nor did it explain how Ramadan

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United States District Court
Northern District of California

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actually affected its ability to obtain it. Id. at *3.

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On June 13, 2017, the Ninth Circuit denied AGODCO’s mandamus petition. See 6/13/17

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Order in In re: Arabian Gas & Oil Dev. Co., No. 17-71080 [Appellate Docket No. 7]. The Ninth

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Circuit explained that “Petitioner has not demonstrated that this case warrants the intervention of

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this court by means of the extraordinary remedy of mandamus.” Id. The Ninth Circuit denied

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AGODCO’s emergency stay motion as moot. Id.

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On June 16, 2017, AGODCO filed its opposition to Wisdom’s request for civil contempt

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sanctions. [Docket No. 89]. In its opposition, AGODCO raised procedural and substantive

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challenges, but did not argue that it was unable to pay the additional undertaking. Wisdom filed a

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reply on June 23, 2017. [Docket No. 91].

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On July 18, 2017, the court ordered Wisdom to submit invoices to support its request for

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attorneys’ fees and costs. [Docket No. 92]. The court ordered AGODCO to provide “evidence of

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its financial condition including, for 2016 and the first half of 2017, profit and loss statements and

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a balance sheet showing assets and liabilities.” [Docket No. 92 at 1].

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On July 28, 2017, in response to the July 18 order, AGODCO argued for the first time that

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it should not be held in civil contempt because it is unable to pay the additional undertaking.

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[Docket No. 93]. To support its claimed inability to pay, AGODCO submitted three

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unauthenticated financial documents purporting to show the precarious financial health of a
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company called Arabian Worldwide Ventures SPC (“Arabian Worldwide”). See Docket No. 93;

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2016 Financial Statement (Ex. 1) [Docket No. 93-1]; Balance Sheet for January 1 through June 30,

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2017 (Ex. 2) [Docket No. 93-2]; Trial Balance Sheet for January 1 through June 30, 2017 (Ex. 3)

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[Docket No. 93-3]. According to AGODCO, Arabian Worldwide has been doing business under

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the trade name AGODCO since April 2012. [Docket No. 93 at ¶ 2].
To date, AGODCO has not posted the additional undertaking.

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II.

DISCUSSION
Wisdom requests civil contempt sanctions for AGODCO’s failure to comply with the

March 30 order, including monetary sanctions of $31,017.26 in attorneys’ fees and costs.
Before turning to the merits, the court addresses several procedural challenges raised by

United States District Court
Northern District of California

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AGODCO. First, AGODCO contends that Wisdom’s motion should be denied because Wisdom

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should have noticed it as a separate motion, rather than seeking contempt sanctions in its

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opposition to AGODCO’s motion to stay. While technically correct, this argument elevates form

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over substance. AGODCO received two weeks to file a written opposition to the request for

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contempt sanctions—the same amount of time it would have received under the local rules for a

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regularly noticed motion. AGODCO also had the opportunity to present oral argument.

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AGODCO also asserts that it cannot be held in contempt of the March 30 order to post an

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additional undertaking because the court lacked jurisdiction to issue such an order. According to

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AGODCO, the court lacked jurisdiction because California attachment statutes do not authorize a

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court to increase an undertaking when the court has already quashed the writ of attachment and

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released the property subject to the writ. This argument has already been rejected in a prior order.

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See, e.g., Arabian Gas & Oil Dev. Co., 2017 WL 2378060, at *1, n.1 (explaining that the “court

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retained jurisdiction over Defendants’ motion to increase Plaintiff’s undertaking as it was ancillary

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or incident to the order vacating Plaintiff’s writ, and, moreover, because Plaintiff’s $10,000.00

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undertaking was and is still posted with the court”).

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Finally, AGODCO asserts that it was not in contempt of the March 30 order because it was

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in the process of seeking appellate review of a legal issue of first impression. This argument also

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lacks merit. The fact that AGODCO filed a writ of mandamus with the Ninth Circuit regarding
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the March 30 order does not excuse its compliance with the order. See Wright & Miller, 16A Fed.

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Prac. & Proc. Juris. § 3954 (4th ed.) (“The taking of an appeal does not by itself suspend the

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operation or execution of a district-court judgment or order during the pendency of the appeal.”);

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Matter of Combined Metals Reduction Co., 557 F.2d 179, 188 (9th Cir. 1977) (“Absent the grant

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of a stay or injunction and the approval of a bond, the status quo of the litigation is not fixed and

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the litigation is free to continue.”) (citation and internal quotation marks omitted).

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The court now turns to the merits of the request for civil contempt sanctions.

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A.

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As recently explained by the Ninth Circuit in Shell Offshore Inc. v. Greenpeace, Inc., 815

Legal Principles

F.3d 623, 628 (9th Cir. 2016), the “court’s contempt powers are broadly divided into two

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United States District Court
Northern District of California

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categories: civil contempt and criminal contempt.” Since the “difference between criminal and

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civil contempt is not always clear,” United States v. Rylander, 714 F.2d 996, 1001 (9th Cir. 1983),

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the Supreme Court instructed courts to look to the “character and purpose” of the sanction to

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determine whether the contempt is civil or criminal. Gompers v. Buck’s Stove & Range Co., 221

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U.S. 418, 441 (1911). Contempt is “criminal if [the sanction] is ‘punitive’ and for the purpose of

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‘vindicat[ing] the authority of the court.’” Lazar v. Ford Motor Co., 399 F.3d 1101, 1110 (9th

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Cir. 2005) (quoting Gompers, 211 U.S. at 441). By contrast, “contempt is civil if [the sanction] is

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‘remedial’ and ‘for the benefit of the complainant.’” Lazar, 399 F.3d at 1110 (quoting Gompers,

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211 U.S. at 441).

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“[C]ourts have inherent power to enforce compliance with their lawful orders through civil

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contempt.” Shillitani v. United States, 384 U.S. 364, 370 (1966); see also 28 U.S.C. § 636(e)(4)

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(“In any case in which a United States magistrate judge presides with the consent of the parties . . .

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the magistrate judge may exercise the civil contempt authority of the district court.”). “The

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standard for finding a party in civil contempt is well settled: The moving party has the burden of

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showing by clear and convincing evidence that the [non-moving party] violated a specific and

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definite order of the court.” FTC v. Affordable Media, LLC, 179 F.3d 1228, 1239 (9th Cir. 1999)

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(internal quotation marks omitted); see also In re Bennett, 298 F.3d 1059, 1069 (9th Cir. 2002)

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(same). Generally, a violation is shown by the party’s “failure to take all reasonable steps within
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the party’s power to comply.” Reno Air Racing Ass’n., Inc. v. McCord, 452 F.3d 1126, 1130 (9th

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Cir. 2006) (citation and internal quotation marks omitted). Willfulness is not an element of

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contempt. Id.

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If the moving party establishes a violation of a specific and definite court order, the burden

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shifts to the non-moving party “to prove that it ‘took all reasonable steps within [its] power to

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insure compliance.’” Logtale, Ltd. v. IKOR, Inc., No. 11-CV-05452-EDL, 2016 WL 7740750, at

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*2 (N.D. Cal. July 22, 2016) (quoting Hook v. Ariz. Dep’t of Corr., 107 F.3d 1397, 1403 (9th Cir.

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1997)). “A person should not be held in contempt if his action appears to be based on a good faith

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and reasonable interpretation of the court’s order.” Reno Air Racing Ass’n., 452 F.3d at 1130

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(internal quotation marks omitted).

United States District Court
Northern District of California

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B.

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To begin with, AGODCO contends that the sanctions sought by Wisdom are criminal

Analysis

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rather than civil in nature. Presumably, AGODCO makes this assertion in an attempt to trigger the

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significant due process protections that must be provided before a finding of criminal contempt

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can be made. See Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 826–27

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(1994) (in context of criminal contempt, due process procedural protections include the right to

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notice of charges, assistance of counsel, ability to present a defense, and, in certain instances, the

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right to a jury trial); see also Fed. R. Crim. P. 42 (procedures for criminal contempt include notice,

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appointment of a prosecutor, and a jury trial).

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AGODCO makes two attempts to paint the requested sanctions as criminal. Both are

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specious. First, AGODCO points to Wisdom’s single citation to 18 U.S.C. § 401, which is the

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criminal contempt statute. See Defs’ Opp’n to Mot. to Stay at 7 [Docket No. 73]. Although

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Wisdom’s reasons for making a sole citation section 401 are unclear, the whole of Wisdom’s

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briefing makes it abundantly clear that it seeks civil rather than criminal contempt sanctions.

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Specifically, Wisdom seeks reimbursement of the fees and costs it incurred as a result of

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AGODCO’s failure to comply with the March 30 order. This is a classic civil contempt sanction.

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See United States v. United Mine Workers of Am., 330 U.S. 258, 303–04 (1947) (explaining that

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compensatory civil contempt sanctions are intended to “compensate the complainant for losses
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sustained,” are “payable to the complainant” and must “be based upon evidence of complainant’s

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actual loss”). Next, AGODCO argues that Wisdom’s statement that AGODCO “should be held

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responsible” betrays a punitive purpose. See Defs’ Opp’n to Mot. to Stay at 9. This amounts to

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word play. As Wisdom explains, AGODCO will be held responsible for its “cavalier treatment of

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these proceedings” through the issuance of civil contempt sanctions. Id. at 8-9.

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Turning to the merits of the request for civil contempt sanctions, Wisdom has met its initial

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burden of establishing by clear and convincing evidence that AGODCO violated a specific and

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definite court order. The March 30 order required AGODCO to post the additional undertaking by

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April 13, 2017. The May 25 order granted AGODCO a final opportunity to comply by posting the
additional undertaking by June 1, 2017. To date, AGODCO has not posted the additional

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United States District Court
Northern District of California

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undertaking. Indeed, Plaintiff concedes the violation. See 5/25/17 Tr. at 7:25-8:4; Pltf’s Opp’n to

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Mot. for Civil Contempt Sanctions [Docket No. 89] at 9 (“Plaintiff admittedly failed to comply

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with the Court’s Order to post an additional undertaking . . . [.]”).

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The burden now shifts to AGODCO to prove that it took all reasonable steps within its

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power to insure compliance. Here, AGODCO argues for the first time that it is presently unable to

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comply with the March 30 order because it cannot pay the additional undertaking. See Pltf’s

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Supp. Brief [Docket No. 93] ¶¶ 6-11.

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A present inability to comply is a complete defense to civil contempt. See United States v.

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Rylander, 460 U.S. 752, 757 (1983) (“Where compliance is impossible, neither the moving party

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nor the court has any reason to proceed with the civil contempt action.”); United States v.

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Drollinger, 80 F.3d 389, 393 (9th Cir. 1996) (“Ability to comply is the crucial inquiry, and a court

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should weigh all the evidence properly before it determines whether or not there is actually a

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present ability to obey.”) (citations omitted). The “inability to comply” is a rigorous and

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demanding standard. Under prevailing Ninth Circuit law, the contempnor must establish

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“‘categorically and in detail’” why he is presently unable to comply with the court’s order. FTC,

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179 F.3d at 1241 (quoting N.L.R.B. v. Trans Ocean Export Packing, Inc., 473 F.2d 612, 616 (9th

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Cir. 1973). If the contempnor’s inability to comply is self-induced, it cannot avoid civil contempt.

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See United States v. Asay, 614 F.2d 655, 660 (9th Cir. 1980); see also S.E.C. v. Goldfarb, No. C
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11-00938 WHA, 2012 WL 2343668, at *4 (N.D. Cal. June 20, 2012) (citing Asay).
The court is highly skeptical of AGODCO’s “inability to pay” defense. AGODCO never

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raised an inability to pay until very recently. It did so only in response to the order for

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supplemental briefing on AGODCO’s financial condition, which the court requested for the

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purpose of fashioning an appropriate coercive sanction. In fact, in AGODCO’s May 31, 2017

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motion for reconsideration, AGODCO asked for an extension to post the increased undertaking,

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claiming that it needed a modest amount of additional time due to the observance of Ramadan in

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its home country of Bahrain. AGODCO thereby led the court to believe that it was in the process

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of obtaining the bond, and would soon be in compliance with the March 30 order. [Docket No. 81
at 2]. It now appears that AGODCO either misled the court on May 31, 2017, or it is misleading

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United States District Court
Northern District of California

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the court now.

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AGODCO’s recent assertions regarding its inability to pay are highly suspicious in light of

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the full record in this case. To begin with, it contends that “AGODCO” is simply a trade name

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used by Arabian Worldwide, an entity which is purportedly in dire financial straits. This factual

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contention is questionable. AGODCO cites to the July 24, 2016 sworn declaration of Mr.

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Eleftherios Antoniadis, who is also known as Terry Andis. AGODCO submitted the declaration

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in opposition to Defendants’ original motion to dismiss. [Docket No. 38-2]. In the declaration,

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Andis attests that he is the Group Chief Operating Officer of AGODCO and has been the Chief

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Operating Officer of Arabian Worldwide Ventures SPC since its founding in 2012. Andis Decl.,

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¶¶ 3, 8. Andis further attests that AGODCO is not a corporation, but rather is a brand and trade

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name used by Arabian Worldwide Ventures SPC:

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“Since April 2012, the AGODCO trading name and brand was
wholly-owned by Arabian Worldwide Ventures SPC, which was
doing business as AGODCO, “Arabian Gas and Oil Development
Company, and as Arabian Worldwide Ventures, SPC. In Bahrain,
the trade name AGODCO has been used exclusively by Arabian
Worldwide Ventures, SPC which carried on business as AGODCO
in that jurisdiction.”
Andis Decl., ¶ 6.
However, Andis’s assertions in his July 24, 2016 sworn declaration squarely contradict the
statements in the complaint that Andis verified under penalty of perjury in early July 2016, just a
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few weeks prior to his declaration. See Verification [Docket No. 1-1]. According to the verified

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complaint, AGODCO is “a corporation organized and existing under and by virtue of the laws of

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the Kingdom of Bahrain, with a principal place of business located in Bahrain.” Compl., ¶ 3

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[Docket No. 1].

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AGODCO’s recently submitted financial documents for Arabian Worldwide are also

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suspicious. None are authenticated. All three are vague, and do not explain the connection, if any,

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between AGODCO and Arabian Worldwide. The first document purports to be an audited

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financial statement for 2016 for Arabian Worldwide Ventures. See 2016 Financial Statement (Ex.

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1) [Docket No. 93-1]. This statement does not mention AGODCO at all. If AGODCO is actually
a trade name used by Arabian Worldwide, one would expect the financial statement to reference

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United States District Court
Northern District of California

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AGODCO at page 10, which lists related entities, or on page 18, which discusses pending court

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cases.

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Similarly, the second document purports to be a balance sheet for Arabian Worldwide

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Ventures for the first half of 2017. See Balance Sheet for January 1 through June 30, 2017 (Ex. 2)

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[Docket No. 93-2]. The balance sheet lists AGODCO as a current liability in the amount of BD

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(Bahraini Dinar) 96,250.000 or approximately US $255,285.14 (1BD = US $2.65). However,

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there is no explanation for this entry. The third document purports to be a trial balance sheet for

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Arabian Worldwide that shows a $0 balance in its bank accounts as of June 30, 2017. See Trial

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Balance Sheet for January 1 through June 30, 2017 (Ex. 3) [Docket No. 93-3]. This document

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also lists AGODCO as a credit of BD 96,250.000 or approximately US $255,285.14. As with the

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Balance Sheet, this entry is unexplained.

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The unauthenticated documents submitted by AGODCO stand in stark contrast to the

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existing record, which demonstrates that AGODCO has substantial financial resources. For

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example, in December 2013, AGODCO paid a $5.2 million down payment for an allegedly

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defective ship pursuant to the Memorandum of Agreement that is the subject of the London

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arbitration which underlies this attachment proceeding. See Memorandum of Agreement

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(“MOA”), ¶ 2 [Docket No. 1-4]; Defence and Counterclaim, ¶ 4 [Docket No. 1-7]. Additionally,

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in his sworn declaration, Andis declared in July 2016 that AGODCO “remained willing, ready,
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and able to perform its obligations under the respective MOA’s[,]” which would mean paying an

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additional $20 million. Andis Decl., ¶ 13; see MOA, ¶¶ 1-2.
At the hearing, Plaintiff’s counsel attempted to infuse the record with additional “facts”

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regarding AGODCO’s allegedly precarious financial condition. Counsel asserted that AGODCO

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was having difficulty in obtaining a bond for the additional undertaking, that some of AGODCO’s

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assets were tied up in the London arbitration proceedings, and that counsel had considered

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withdrawing because AGODCO was no longer paying his bills. These are unsupported assertions.

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The court must consider evidence, not counsel’s representations. AGODCO had ample

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opportunity to establish a factual record to support its “inability to pay” defense.
In sum, the court finds that AGODCO has failed to meet its burden to establish

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United States District Court
Northern District of California

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categorically and in detail why it is presently unable to comply with the March 30 order.

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The court therefore finds AGODCO in civil contempt of the March 30 order.

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C.

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If a party is found to be in civil contempt, a court may impose two types of sanctions: 1)

Civil Contempt Sanctions

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coercive sanctions, which are designed “to coerce obedience to a court order,” and 2)

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compensatory sanctions, which are designed to “compensate the party pursuing the contempt

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action for injuries resulting from the contemptuous behavior. Gen. Signal Corp. v. Donallco, Inc.,

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787 F.2d 1376, 1380 (9th Cir. 1986); see also Shell Offshore Inc., 815 F.3d at 1171. “[A]lthough

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the district court generally must impose the minimum sanction necessary to secure compliance,

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see Whittaker Corp. v. Execuair Corp., 953 F.2d 510, 517 (9th Cir. 1992), the district court retains

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discretion to establish appropriate sanctions.” United States v. Bright, 596 F.3d 683, 696 (9th Cir.

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2010).

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1.

Coercive Per Diem Fine

Coercive civil sanctions “generally take the form of conditional fines.” Shell Offshore,

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Inc., 815 F.3d at 629. The civil contemnor “‘carries the keys of his prison in his own pocket,’” by

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being able “to purge the contempt and obtain his release by committing an affirmative act.”

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Bagwell, 512 U.S. at 828 (quoting Gompers, 211 U.S. at 442); Shell Offshore Inc., 815 F.3d at 629

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(“[T]he ability to purge is perhaps the most definitive characteristic of coercive civil contempt.”).
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In determining the amount and duration of a coercive fine, courts “must . . . consider the

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character and magnitude of the harm threatened by continued contumacy, and the probable

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effectiveness of any suggested sanction in bringing about the result desired.” United Mine

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Workers of Am., 330 U.S. at 304; see also Whittaker Corp., 953 F.2d at 516. “[I]n fixing the

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amount of a fine to be imposed as a . . . means of securing future compliance, [a court shall]

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consider the amount of defendant’s financial resources and the consequent seriousness of the

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burden to that particular defendant.” United Mine Workers, 330 U.S. at 304; see also United

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States v. Anderson, No. 14-cv-01932-JST, 2016 WL 1169309, at *4 (N.D. Cal. Mar. 25, 2016) (in

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order to determine the amount of the appropriate sanction, the court ordered the parties to provide

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United States District Court
Northern District of California

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information about the defendant’s financial resources).
Here, the court finds that a coercive daily fine should be imposed on AGODCO for each

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day it remains out of compliance with the March 30 order, starting from the day following the date

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of this order. AGODCO was ordered to the post the additional undertaking by April 13, 2017.

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See March 30 order. Nearly half a year later, AGODCO still has not posted the additional

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undertaking despite multiple opportunities to do so. It appears that the only way to gain

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AGODCO’s compliance with the March 30 order is through use of a coercive fine.

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The court finds that a fine of $500.00 a day payable to the court is appropriate under the

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circumstances. As discussed above, the record shows that AGODCO recently has had access to

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substantial resources. AGODCO paid a $5.2 million down payment on a ship in December 2013,

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and as of July 2016, it remained willing, ready, and able to perform the remainder of the MOA,

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which meant paying an additional $20 million. At the hearing, AGODCO’s counsel confirmed

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that the London arbitration proceedings are ongoing, which strongly suggests that AGODCO has

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access to the significant assets necessary to fund its legal position in that matter.

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A daily fine of $500.00 is well within the range of coercive per diem fines issued by courts

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in this district for civil contempt. See, e.g., United States v. Wen-Bing Soong, No. C-13-4088

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EMC, 2015 WL 5168786, at *4 (N.D. Cal. Sept. 3, 2015) (imposing a coercive daily fine of

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$500.00 per spouse, or $1,000 a day collectively as a couple, was appropriate because the couple

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appeared to have significant financial resources, a lesser fine was unlikely to secure compliance
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due to the lengthy period of non-compliance, and further delay would prejudice the other party’s

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investigation); In re Chase Bank USA, N.A. Check Loan Contract Litig., No. 3:09-MD-2032

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MMC, 2013 WL 772714, at *6 (N.D. Cal. Feb. 28, 2013), aff’d in part, appeal dismissed in part,

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607 F. App’x 737 (9th Cir. 2015) (imposing a coercive daily fine of $300.00 against a class

5

member for violating a court order enjoining class members from prosecuting released claims

6

against the released parties in a class action settlement); United States v. Gillies, No. CV-11-3623

7

CW MEJ, 2013 WL 968244, at *2 (N.D. Cal. Feb. 22, 2013), report and recommendation adopted,

8

No. C 11-03623 CW, 2013 WL 968231 (N.D. Cal. Mar. 12, 2013) (imposing a coercive daily fine

9

of $250.00 against an individual for failure to comply with court order for more than 300 days).

10

In its supplemental brief, AGODCO argues that the appropriate sanction, if any, would be

United States District Court
Northern District of California

11

to dismiss the case with prejudice. See Opp’n to Defs’ Request for Civil Contempt Sanctions at 8-

12

9. The court rejects this bald attempt to escape a contempt sanction, and ultimately to avoid

13

compliance with the March 30 order.

14
15

2.

Compensatory Sanction

Wisdom seeks sanctions of $31,017.26 as reimbursement for attorneys’ fees and costs

16

incurred as a result of AGODCO’s failure to comply with the March 30 order. [Docket Nos. 73,

17

94]; see also Ex. A through Ex. F, Voss Decl. [Docket Nos. 94-2 through 94-7].

18

“In fashioning civil contempt sanctions, the court has the discretion to award reasonable

19

fees and costs as a remedial measure, regardless of whether the party that is in contempt acted

20

wilfully.” In re TFT-LCD (Flat Panel) Antitrust Litig., 289 F.R.D. 548, 553 (N.D. Cal. 2013),

21

dismissed (May 23, 2014) (citing Perry v. O’Donnell, 759 F.2d 702, 704–705 (9th Cir. 1985).

22

Courts “calculate an award of attorneys’ fees by first calculating the ‘lodestar.’” Caudle v. Bristow

23

Optical Co., 224 F.3d 1014, 1028 (9th Cir. 2000) (citing Morales v. City of San Rafael, 96 F.3d

24

359, 363 (9th Cir. 1996)). “The ‘lodestar’ is calculated by multiplying the number of hours the

25

prevailing party reasonably expended on the litigation by a reasonable hourly rate.” Morales, 96

26

F.3d at 363. The lodestar can then be adjusted upon consideration of the twelve factors outlined in

27

Kerr v. Screen Guild Extras, Inc., 526 F.2d 67, 70 (9th Cir. 1975), cert. denied, 425 U.S. 951

28

(1976) to determine the reasonableness of the award:
12

1
2
3
4
5
6
7
8
9

(1) the time and labor required, (2) the novelty and difficulty of the
questions involved, (3) the skill requisite to perform the legal service
properly, (4) the preclusion of other employment by the attorney due
to acceptance of the case, (5) the customary fee, (6) whether the fee
is fixed or contingent, (7) time limitations imposed by the client or
the circumstances, (8) the amount involved and the results obtained,
(9) the experience, reputation, and ability of the attorneys, (10) the
“undesirability” of the case, (11) the nature and length of the
professional relationship with the client, and (12) awards in similar
cases.
Id. at 364 n.8 (citing Kerr, 526 F.2d at 70 (9th Cir. 1975).
Wisdom bears the burden of producing satisfactory evidence “that the requested rates are
in line with those prevailing in the community for similar services by lawyers of reasonably
comparable skill, experience, and reputation.” Blum v. Stenson, 465 U.S. 886, 895, n.11 (1984).

11
United States District Court
Northern District of California

10

“Affidavits of the . . . attorney and other attorneys regarding prevailing fees in the community, and

12

rate determinations in other cases, particularly those setting a rate for the . . . attorney, are

13

satisfactory evidence of the prevailing market rate.” United Steelworkers of Am. v. Phelps Dodge

14

Corp., 896 F.2d 403, 407 (9th Cir. 1990); Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210

15

(9th Cir. 1986), opinion amended on denial of reh’g, 808 F.2d 1373 (9th Cir. 1987) (“In

16

determining reasonable hours, counsel bears the burden of submitting detailed time records

17

justifying the hours claimed to have been expended.”). Courts also may rely on decisions by other

18

courts awarding similar rates for work in the same geographical area by attorneys with comparable

19

levels of experience. See Rodriguez v. Barrita, Inc., 53 F. Supp. 3d 1268, 1277-78 (N.D. Cal.

20

2014) (citing Nadarajah v. Holder, 569 F.3d 906, 917 (9th Cir. 2009)). As a general rule, the

21

forum district represents the relevant legal community. Gates v. Deukmejian, 987 F.2d 1392,

22

1405 (9th Cir. 1992). The court “should . . . exclude from the lodestar fee calculation any hours

23

that were not ‘reasonably expended,’ such as hours that are excessive, redundant, or otherwise

24

unnecessary.” Rodriguez, 53 F. Supp. 3d at 1281 (quoting Hensley, 461 U.S. at 433-34).

25

Wisdom requests the following hourly rates for its attorneys: $363.00 for shareholder

26

Elizabeth P. Beazley; $364.74 for shareholder James A. Marissen; $316.27 for shareholder Tara B.

27

Voss; $268.03 for associate Christopher Farnsworth; and $200.45 for associate Rachel Weitzman.

28

Voss Decl. ¶¶ 7-9.
13

The Voss declaration sets forth the relevant facts supporting the requested hourly rates for

1
2

each of these timekeepers. Having reviewed the record, the court finds that the requested hourly

3

rates are within the range of reasonable hourly rates for attorneys of comparable skill and

4

experience litigating similar cases in the San Francisco Bay Area. See, e.g., Ingram v. Oroudjian,

5

647 F.3d 925, 928 (9th Cir. 2011) (explaining that “judges are justified in relying on their own

6

knowledge of customary rates and their experience concerning reasonable and proper fees”).1

7

Wisdom requests fees for a total of 101 hours for the work performed by its attorneys.

8

Having reviewed Wisdom’s submissions including the billing records, the court finds that the

9

following hours were reasonably incurred in connection with AGODCO’s failure to comply with

10

the March 30 order:


United States District Court
Northern District of California

11

4.25 hours for reporting and advice to client regarding Plaintiff’s failure to post
increased security as ordered by the court, totaling $1,502.49

12


13

1.5 hours for exchanges with counsel for Plaintiff regarding its failure to post
increased security as ordered by the court, totaling $710.00

14


15

6.5 hours for opposing Plaintiff’s motion for leave to file a motion for
reconsideration; totaling $2,042.30

16


17

12 hours for preparing Defendants’ reply brief in support of Defendants’ request
for civil contempt sanction, totaling $3,770.40

18


19

13.25 hours preparing the supplemental brief and supporting documentation for its
request for attorneys’ fees and costs, totaling $4,190.57

20

Wisdom argues that it is entitled to all of the fees incurred in opposing AGODCO’s motion

21
22

to stay, because it would not have had to oppose a stay motion had AGODCO complied with the

23

March 30 order. This argument is unpersuasive. AGODCO could have filed a stay motion in the

24

normal course of litigation; therefore, Wisdom’s work in opposing the stay is not sufficiently tied

25
1

26
27
28

Defense counsel compares its hourly rates with those published by RBZ, LLP, a law services
group in Los Angeles, California which publishes an annual survey of billing rates charged by
Southern California law firms. See Defs’ Supp. Brief at 4 [Docket No. 94]. Since the forum
district represents the relevant legal community for purposes of determining the reasonableness of
the requested hourly rates, see Gates, 987 F.2d at 1405, the hourly rates charged by Southern
California law firms are not particularly relevant here.
14

1

to obtaining AGODCO’s compliance with the March 30 order. However, Wisdom devoted

2

approximately half of its opposition brief to its request for civil contempt sanctions. The court

3

finds it reasonable and appropriate to award half of the requested fees for this work, or $7,265.97.

4

The court declines to award Wisdom any fees expended in opposing AGODCO’s petition

5

for writ of mandamus, as Wisdom has failed to show that these fees were reasonably incurred as a

6

result of AGODCO’s failure to comply with the March 30 order.

7
8
9

In sum, the court awards Wisdom $19,481.73 in attorneys’ fees for the hours reasonably
expended as a result of AGODCO’s failure to comply with the March 30 order.
Wisdom requests $1,102.21 in costs for LEXIS research, parking and mileage for the May
25, 2017 hearing on Plaintiff’s motion to stay; airfare and hotel for the May 25, 2017 hearing on

11
United States District Court
Northern District of California

10

Plaintiff’s motion to stay; ground transportation for the May 25, 2017 hearing on Plaintiff’s

12

motion to stay; and fees paid to an attorney service. See Ex. C through Ex. F to Voss Decl.

13

Having reviewed these invoices, the court finds that it is appropriate to award half of the

14

requested costs for LEXIS research incurred for Wisdom’s opposition brief to AGODCO’s motion

15

to stay, or $31.73, because Wisdom devoted approximately half of its opposition brief to its

16

request for civil contempt sanctions. See Ex. C to Voss Decl. (May 31, 2017 invoice listing

17

$63.45 in LEXIS research). It is similarly appropriate to award half of the requested costs for

18

parking, mileage, airfare, hotel, travel, fees paid to an attorney service, copying costs, and LEXIS

19

research incurred for the May 25, 2017 hearing on Plaintiff’s motion to stay, or $460.40. See Ex.

20

D to Voss Decl. (June 19, 2017 invoice listing $920.80 in costs). It appears that Wisdom’s

21

counsel incurred LEXIS research charges on June 20-21, 2017 solely in connection with drafting

22

and researching Wisdom’s reply brief in support of its request for civil contempt sanctions.

23

Accordingly, the court awards the entire requested cost for LEXIS research and fees to the

24

attorney service, or $117.96. See Ex. E to Voss Decl. (July 21, 2017 invoice). In sum, the court

25

awards Wisdom $610.09 for the costs reasonably incurred as a result of AGODCO’s failure to

26

comply with the March 30 order.

27
28

In total, the court awards Wisdom a monetary sanction in the amount of $20,091.82 for the
attorneys’ fees and costs reasonably expended as a result of Plaintiff’s failure to comply with the
15

1

March 30 order.
At the hearing, AGODCO’s counsel argued that Wisdom was not entitled to an award of

2
3

attorneys’ fees and costs because its insurer was responsible for those payments, rather than

4

Wisdom. This argument is not well-taken. To begin with, AGODCO raised it for the first time at

5

oral argument, thereby depriving Wisdom of a proper opportunity to respond. Moreover,

6

Plaintiff’ counsel is speculating about who actually paid the invoices in question. Finally,

7

AGODCO has not identified any authority which would preclude an award of attorneys’ fees to a

8

party because its insurance carrier paid the attorneys’ invoices, instead of the party itself.

9

III.

10

CONCLUSION
In conclusion, the court finds AGODCO in civil contempt of the March 30 order.

AGODCO is ordered to pay a daily fine of $500.00 for each day it remains out of compliance with

12

the March 30 order, beginning with the day following the date of this order. The court awards

13

monetary sanctions to be paid by AGODCO to Wisdom in the amount of $20,091.82 for

14

reimbursement of attorneys’ fees and costs reasonably incurred as a result of AGODCO’s failure

15

to comply with the March 30 order. AGODCO shall make full payment to Wisdom within 30

16

days of the date of this order.

S

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R NIA

______________________________________
Donna M. Ryu
Ryu
United States Magistrate M.
onna Judge
eD

NO

RT

ER

H

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Judg

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FO

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DERED

O OR
IT IS S

LI

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Dated: October 3, 2017

A

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IT IS SO ORDERED.

UNIT
ED

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S DISTRICT
TE
C
TA

RT
U
O

United States District Court
Northern District of California

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N

F
D IS T IC T O
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C