AngioDynamics, Inc. v. Biolitec AG et al
Filing
341
Judge Michael A. Ponsor: MEMORANDUM AND ORDER entered. As follows: For the reasons stated in the attached memo and order, Defendants Amended Motion for Relief from Contempt Order (Dkt. No. 269 ), Defendants Motion to Vacate Preliminary Injunction (Dkt. No. 277 ), and Defendants Motion for Recusal (Dkt. No. 274 ) are all hereby DENIED. It is So Ordered. See the attached memo and order for complete details.(Lindsay, Maurice)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
ANGIODYNAMICS, INC.,
Plaintiff
)
)
)
v.
)
)
BIOLITEC, INC., BIOLITEC AG,
)
BIOMED TECHNOLOGY HOLDINGS LTD.,)
and WOLFGANG NEUBERGER,
)
Defendants
)
C.A. No. 09-cv-30181-MAP
MEMORANDUM AND ORDER REGARDING
DEFENDANTS’ AMENDED MOTION FOR RELIEF FROM
CONTEMPT ORDER; DEFENDANTS’ MOTION FOR RECUSAL, AND
DEFENDANTS’ MOTION TO VACATE PRELIMINARY INJUNCTION
(Dkt. Nos. 269, 274, 277)
August 27, 2013
PONSOR, U.S.D.J.
I. INTRODUCTION
Defendants Biolitec AG (“BAG”), Biomed Technology
Holdings Ltd. (Biomed”), and Wolfgang Neuberger1 have filed
a motion for relief from the contempt order issued against
them (Dkt. 269), a motion for recusal (Dkt. 274) and a
motion to vacate the preliminary injunction (Dkt. No. 277)
1
Defendant Biolitec, Inc. has filed for Chapter 11
bankruptcy, and the contempt proceedings do not involve this
defendant.
issued by this court.
This injunction, affirmed on appeal
by the First Circuit, barred Defendants from proceeding with
a merger of BAG, a German corporation, with its Austrian
subsidiary.
For the reasons set forth below, all these
motions will be denied.
II. FACTS
The complex background underlying this litigation has
been detailed in a number of prior decisions.
AngioDynamics, Inc. v. Biolitec, Inc., 2011 WL 3157312, *1-2
(D. Mass. July 25, 2011); AngioDynamics, Inc. v. Biolitec
AG, 910 F. Supp. 2d 346 (D. Mass. 2012).
The facts
supporting the court’s civil contempt order and its referral
of the case to the United States Attorney for possible
initiation of charges for criminal contempt are set forth at
length in the order of April 11, 2013.
AngioDynamics, Inc.
v. Biolitec AG, --- F. Supp. 2d ----, 2013 WL 1567739 (D.
Mass. Apr. 11, 2013).
The journey of this case has been
somewhat tortuous, but the rulings on Defendants’ three
motions do not require a lengthy re-hashing, beyond, as will
be seen, a few basic facts.
This phase of the dispute largely centers on the
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preliminary injunction issued by this court on September 13,
2012.
(Dkt. No. 141.)
The order enjoined Defendants from
“carry[ing] out the proposed ‘downstream merger’ of [BAG]
with its Austrian subsidiary.”
(Id.)
The injunction was
upheld on reconsideration by this court and, as noted, upon
subsequent appeal to the First Circuit.
AngioDynamics, Inc.
v. Biolitec AG, 910 F. Supp. 2d 346 (D. Mass. 2012);
AngioDynamics, Inc. v. Biolitec AG, 711 F.3d 248 (1st Cir.
2013).
On March 15, 2013, Defendants notified the court
that, in the teeth of the injunction, they had knowingly and
intentionally proceeded with the enjoined merger anyway, and
it had been completed.
(Dkt. No. 199.)
On April 10, 2013, after a show cause hearing, the
court ordered that Plaintiff’s request for initiation of
possible criminal contempt proceedings against the
individual defendant Neuberger be referred to the United
States Attorney’s Office.
The court also found all
Defendants in civil contempt and handed down an order
designed to coerce Defendants into taking immediate remedial
action to bring them into compliance with the preliminary
injunction.
The court issued an arrest warrant for
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Defendant Neuberger -– who had been invited to attend the
show cause hearing to explain his actions but failed to
appear -- to permit the court to consider appropriate civil
sanctions against him personally.
In addition, the court
established the following schedule of coercive fines
intended to compel Defendants to initiate immediate action
to return BAG to the status quo as it existed prior to the
enjoined merger:
•
On May 10, 2013, Defendants to be assessed a fine
of $1 million;
•
On June 1, 2013, Defendants to be assessed a fine
of $2 million;
•
On July 1, 2013, Defendants to be assessed a fine
of $4 million;
•
On August 1, 2013, Defendants to be assessed a
fine of $8 million;
•
After August 1, Defendants to be assessed a fine
of $8 million on the first of each month.
AngioDynamics, Inc. v. Biolitec AG, 2013 WL 1567739, at *6.
The court noted that the sanctions would be lifted as soon
as the court was satisfied that effective actions had been
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taken to revoke the forbidden merger and restore the status
quo ante.
Id.
During the hearing, the court also observed
that it would immediately consider any plan offered by
Defendants to revoke, eliminate, or in any practical way
render nugatory, Defendants’ action in defying the court’s
order and proceeding with the merger.
In the event that the
plan set Defendants on a clear course to erase the barred
merger, the court possessed the power to revoke the
sanctions.
(Dkt. No. 248, Tr. Contempt Hr’g 45:4-11.)
More than four months have now passed since the court’s
finding of contempt.
As will be seen below, Defendants
appear to recognize that it would be possible, though
cumbersome and somewhat time-consuming (a matter of months),
to take action that would effectively reverse the merger.
Nevertheless, Defendant Neuberger has not appeared, and no
plan has been offered by Defendants even to begin to do
this.
Instead, Defendants have filed a motion for relief
from the contempt order (Dkt. No. 269), a motion for recusal
(Dkt. No. 274), and a motion to vacate the preliminary
injunction (Dkt. No. 277).
III. DISCUSSION
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A.
Relief From the Contempt Order.
Defendants ask the court to grant them “relief” from
the contempt order -- essentially, to revoke the order -pursuant to Fed. R. Civ. P. 59(e), 60(b)(4), and
60(b)(6).
The request under Rule 59(e) may be quickly disposed
of.
A motion under this rule “must be filed no later than
10 days after the entry of judgment.”
59(e).
Fed. R. Civ. P.
The court entered its civil contempt order on April
10, 2013; Defendants submitted their first motion for relief
(later amended) on May 9, 2013 -- four weeks after the
contempt order was entered and only one day before the fines
designed to coerce compliance were to commence.
is therefore untimely.
The motion
In addition, a movant invoking Rule
59(e) must show “manifest errors of law or fact, newly
discovered or previously unavailable evidence, manifest
injustice, [or] an intervening change in controlling law.”
Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 7 n.2 (1st
Cir. 2005) (quoting 11 Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure § 2810.1 (2d ed.
1995)).
As will be shown in the discussion regarding relief
under Rule 60, Defendants could not meet this burden even if
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their motion under 59(e) was timely.
Pursuant to Rule 60, Defendants ask the court to
provide relief for two reasons: (1) the judgment is void
under Rule 60(b)(4); and (2) other reasons justify relief,
Rule 60(b)(6).
It is well established that relief under
Rule 60 is “extraordinary” and that “motions invoking that
rule should be granted sparingly.”
Karak v. Bursaw Oil
Corp., 288 F.3d 15, 19 (1st Cir. 2002).2
“At a bare
minimum,” the moving party must show “that his motion is
timely; that exceptional circumstances exist, favoring
extraordinary relief; that if the judgment is set aside, he
has the right stuff to mount a potentially meritorious claim
or defense; and that no unfair prejudice will accrue to the
opposing parties should the motion be granted.”
Id.
In an attempt to satisfy this standard, Defendants make
three main arguments.
First, citing In Re Providence
Journal Co., 820 F.2d 1342, 1347 (1st Cir. 1986), Defendants
2
The normal route for relief from a contempt order is to
prosecute a timely appeal. Cf. Cotto v. United States, 993
F.2d 274, 278 (1st Cir. 1993) (holding that relief pursuant to
Fed. R. Civ. P. 60 cannot be used to circumvent the failure to
make a timely appeal). Defendants already appealed the civil
contempt order to the First Circuit on May 10, 2013. (Dkt.
No. 266, Notice of Appeal.)
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argue that the contempt order is “transparently invalid”
because Defendants’ violation of the preliminary injunction
did not harm Plaintiff.
Second, Defendants contend that the
civil contempt sanctions are improper because it is not
possible for BAG to “restore the status quo ante.”
Finally,
Defendants insist that the court must make a determination
on German law, as well as this law’s potential impact upon
Plaintiff’s future efforts to enforce an American judgment
against a now-Austrian corporation, before an enforcement of
the preliminary injunction would be appropriate.
The
failure to do this, Defendants say, vitiates the finding of
contempt and the court’s remedial order.
1.
Validity of the contempt finding.
The centerpiece of Defendants’ position is the “no
harm, no foul” argument.
Yes, Defendants say, we knowingly
violated a clear court order, but since (as Defendants seem
to suggest, but more about this below) Plaintiff has not
been injured, imposition of any painful consequence for
their defiance of the court’s order would be unfair.
Defendants take umbrage at the court’s characterization of
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this argument as childish.3
The argument is childish.
A
brief parable demonstrates why.
Suppose an eleven-year-old boy is preparing to throw a
snowball at his seven-year-old sister.
The parent notices
this and warns the boy not to throw the snowball.
The boy
nods, fully understanding the parent’s injunction.
As the
parent begins to turn away, the boy throws the snowball at
his sister anyway.
Fortunately, the snowball misses.
When
the parent points out that there will be consequences for
this misbehavior, the child indignantly protests that this
would be unfair because his sister was not harmed.4
This “no harm” argument might be understandable coming
from a child, but in the mouth of an adult litigant, or a
supposed officer of the court, it is breathtakingly silly.
3
They also express resentment that the court cut off oral
argument on this point and suggest the court did not
adequately consider it. As the transcript indicates, however,
the court “carefully considered” this argument, which was
“very forcefully and very clearly” set forth in Defendants’
memorandum, prior to oral argument (Dkt. No. 233, Tr. Apr. 3
Hr’g 6:9, 14-5.) It is not necessary for the court to endure
an obviously specious argument, or suffer counsel to embarrass
himself by presenting one, more than once.
4
Defendants’ argument here is even weaker than the
child’s, since Defendants, as will be seen, have the power to
effectively undo the merger -- to call the snowball back.
-9-
The criteria in this circuit for issuance of a finding of
contempt are straightforward.
The court must find that:
(1) the alleged contemnor had notice of the order,
(2) the order was clear and unambiguous, (3) the
alleged contemnor had the ability to comply with
the order, and (4) the alleged contemnor violated
the order.
Hawkins v. Dept. of Health & Human Servs., 665 F.3d 25, 31
(1st Cir. 2012) (internal quotations and citation omitted).
As the court has held, there was, and continues to be, clear
and convincing undisputed evidence conclusively satisfying
each of these requirements.
AngioDynamics, Inc. v. Biolitec
AG, 2013 WL 1567739, at *3-4.
Defendants, indeed, have
effectively conceded that each and every one of these four
criteria have been satisfied in this case.
As Defendants’
counsel admitted: “We violated the preliminary injunction by
completing the merger and it’s absolutely clear that the
preliminary injunction said do not complete the merger.”
(Dkt. No. 233, Tr. Apr. 3 Hr’g 24:25-25:1-2.)
Defendants, or at least their counsel, must know that
once an explicit court order is knowingly and intentionally
defied, and the snowball, so to speak, is nevertheless
thrown, the moral and legal stage on which the parties and
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the court act changes substantially.
The drama ceases to be
only about the Plaintiff; it now bears as much, or more, on
the issue of the court’s authority and the integrity of the
legal system.
Any judge confronting flagrantly contumacious
conduct of this sort must either act or take off the robe.
Defendants cite a Fourth Circuit decision that includes
language suggesting that in some cases a civil contempt
order might include as part of its basis a finding that the
“movant suffered harm as a result [of the contumacious
conduct].”
Ashcraft v. Conoco, Inc., 218 F.3d 288, 301 (4th
Cir. 2000).
This decision is not controlling on this court,
of course; the Hawkins decision is.
More importantly, this court took care to address the
“no harm” argument in its memorandum.
v. Biolitec AG, 2013 WL 1567739, at *4.
AngioDynamics, Inc.
The court noted
that the First Circuit has demanded that courts look only to
the text of an order to determine what is forbidden by it.
Goya Foods, Inc. v. Wallack Mgmt. Co., 290 F.3d 63, 76 (1st
Cir. 2002).
The power of contempt makes this careful
attention to the actual wording of an order, rather than
exploration of its supposed inchoate “purpose,” crucial.
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Courts must narrowly cabin the circumstances in which
contempt may be found by anchoring the finding on the words
of the order.
United States v. Saccoccia, 433 F.3d 19, 28
(1st Cir. 2005).
Here the text could not have been clearer
about what behavior was forbidden.
If Defendants had any doubt as to what actions would
violate the order, “[they] could have asked the district
court for clarification . . ., but they eschewed that
course.
. . .
They chose instead to rely on their own judgment .
In so doing, [they] acted at their peril.”
Foods, 290 F.3d at 75-76.
Goya
At argument, Defendants conceded
that they deliberately did not confer with Plaintiff’s
counsel or notify the court before taking the supposedly
harmless action of flouting the order.
Apr. 3 Hr’g 23-4.)
(Dkt. No. 233, Tr.
Their reason for doing this was
manifest: they knew they were violating the order and did
not wish to give Plaintiff or the court notice of their
intent.
Their contempt was knowing, intentional, and
brazen.
But there is more.
Although it has no bearing on the
principle embedded in this dispute, the court in fact found
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that Plaintiff would be harmed by any merger and that
Plaintiff has been harmed now that the merger has taken
place.
In granting the original motion for preliminary
injunction, and in reconsidering the injunction, the court
was required to consider, and did consider, the issue of
likely harm to Plaintiff.
During argument in connection with reconsideration of
the preliminary injunction before this court, Defendants
made very nearly the same argument they are offering here:
that the merger of BAG with its Austrian sister corporation
would put Plaintiff in no worse a position than it was in
before the merger.
Plaintiff argued vigorously to the
contrary, pointing out that while enforcement of an American
judgment in a German court might present Plaintiff with some
difficulties, enforcement in Germany was not impossible,
whereas all parties conceded that enforcement of an American
judgment in Austria would be flatly impossible.
The court
agreed with Plaintiff’s argument.
Some series of symbols in higher mathematics may depict
the difference between a proposition that might be true and
one that is utterly impossible, but common sense can draw
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the distinction perfectly well without equations.
demonstrated likelihood of harm.
Plaintiff
This court found this
originally and found it on reconsideration, and the Court of
Appeals affirmed this finding.
Now that the merger has taken place, the stronger
evidence of record confirms that the harm, in fact, has
occurred more or less as predicted.
In other words, while
it does not matter that Plaintiff has been harmed -- in
light of the principle that valid court orders cannot be
flouted without consequences -- Plaintiff has, in fact, been
seriously harmed.
Defendants’ argument that certain assets
remain in Germany (exactly what these may be is not
specified) and that the headquarters of this now-Austrian
corporation (a lightly staffed office) remain in Germany
cannot obscure the fact that the merger has put Plaintiff in
a substantially more difficult position in terms of
enforcing any judgment it might receive in this court.
It is significant that Defendants’ arguments describing
some supposed independent justification for the merger,
apart from hamstringing Plaintiff, have never added up.
Stated differently, any rationale for the merger beyond
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harming Plaintiff’s potential enforcement efforts is a
fabrication.
Indeed, Defendant Neuberger’s former
associate, Stefan Spaniol, has submitted an affidavit
confirming that Neuberger’s intent in pushing forward with
the merger, conveyed to Spaniol explicitly, was specifically
to make enforcement of any judgment against BAG difficult if
not impossible.
(Dkt. No. 123-1, Second Spaniol Decl. ¶ 3.)
In sum, even if harm to Plaintiff were relevant, which
it is not, harm to Plaintiff flowing from the merger,
contrary to Defendants’ arguments, has been found over and
over again.
It is well established that “[f]ederal courts are
empowered to issue civil contempt sanctions to ‘protect[]
the due and orderly administration of justice . . . and
maintain [] the authority and dignity of the court.’”
Goya
Foods, 290 F.3d at 78 (alterations in original) (quoting
Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980)).
A coercive fine or term of imprisonment is an appropriate
civil contempt sanction if it is done to induce “the purging
of contemptuous conduct.”
(1st Cir. 1985).
In re Kave, 760 F.2d 343, 351
Sanctions are coercive if they are
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conditional and can be lifted if the contemptuous conduct is
cured.
Id.
Here the sanctions are conditional and may be
reconsidered when and if Defendants ever propose a plan for
restoring the status quo prior to the merger.
Under these circumstances, Defendants are entitled to
no “relief” from the court’s order of contempt.
No
exceptional circumstances exist under Rule 60 justifying
reconsideration.
The supposed “transparent invalidity” of
the court’s order, based on the supposed lack of harm to
Plaintiff, is nonsense.5
2.
Impossibility of compliance.
Defendants make four arguments why any remedial action
it might take to undo the prohibited merger would be
impossible: (1) it is “highly unlikely to be successful”;
(2) it would take at least ten months to complete; (3) it
5
Indeed, the decision Defendants rely on simply held: “A
party subject to an order that constitutes a transparently
invalid prior restraint on pure speech may challenge the order
by violating it.” In re Providence Journal Co., 820 F.2d at
1344 (emphasis added). The First Circuit noted that this is
an exception to the “sine qua non of orderly government, that,
until modified or vacated, a court order must be obeyed.” Id.
Here, however, the First Circuit has held that the
preliminary injunction at issue was valid. Moreover, both the
initial preliminary injunction and subsequent sanctions order
impose no prior restraint on speech.
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would possibly expose the board to breach of fiduciary duty
claims under Austrian and German law; and (4) it might be
contrary to Austrian law.
(Dkt. No. 268, Am. Notice of
Impossibility 2.)
None of these arguments holds water.
Defendants
contend only that remedial steps would be cumbersome, and
both their German and Austrian law experts acknowledge that
while the process would be lengthy, it would be possible.6
(Dkt. No. 264-1, Zollner Decl. ¶ 5; Dkt. No. 264-4, Gebhardt
Decl. ¶ 25.)
Defendants’ German law expert opines that it
is “highly uncertain whether Biolitec AG could successfully
relocate its corporate domicile to Germany.”
4, Gebhardt Decl. ¶ 26.)
(Dkt. No. 264-
This is artful equivocation, not a
statement of impossibility.
Defendants’ ambiguous
representations are especially suspect in light of the
6
As noted previously in the contempt order, “ It may
indeed be impossible, as Defendants’ counsel suggested,
technically to ‘rescind’ the merger at this time. The court
makes no finding on this point, beyond the observation that
Defendants’ general credibility about what it can or cannot do
is subject to doubt. In any event, Defendants concede that
restoring the status quo ante would in fact not be impossible,
but merely lengthy, burdensome, and onerous. (Dkt. No. 233,
April 3 Hearing Tr. 36.)” AngioDynamics, 2013 WL 1567739, at
*5.
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evidence, noted both by this court and by the First Circuit,
of Defendants’ past bad faith.
AngioDynamics, Inc., 711
F.3d at 250 n.1.
The claim of possible breach of fiduciary duty rings
particularly hollow.
First, Defendant Neuberger owes this
duty mostly to himself, since he owns or controls a great
majority of the stock in both defendant corporations.
Second, it is hard to imagine any breach of fiduciary duty
on the part of an officer of a corporation greater than
behaving in such a way that a warrant is issued for his
arrest for malfeasance and the corporation is exposed to
monetary sanctions in the millions of dollars.
Re-working
the merger is very small potatoes in comparison.
It is significant that at one point Defendants did in
fact propose to delay the start of sanctions so Defendants
could “propos[e] a plan to [Plaintiff] to start
implementing” whatever efforts were necessary to put “the
genie” “back into the bottle.”
(Dkt. No. 248, Tr. Apr. 11
Hr’g, 47:2-8 & 44:20-23; see also AngioDynamics, 2013 WL
1567739, at *6 (extending the date from May 1 to May 10 for
sanctions to begin, to permit discussions).)
impossibility was offered at that time.
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No claim of
Indeed, Defendants’ counsel offered to come back to the
court with a specific plan of action to purge the contempt.
The court noted that it would not delay the sanctions until
a plan was submitted and vetted, but that it would allow
Defendants to submit a plan that could be vetted by
Plaintiff to ensure that Defendants’ actions would result in
“effective and substantive compliance.”
Apr. 11 Hr’g 40:15-22; 45: 4-11.)
(Dkt. No. 248, Tr.
No such plan has ever
been submitted.
Even now, if the court were convinced that a plan
submitted by Defendants were effectively aimed at remedying
the contempt, a motion to reduce or vacate the sanctions
would be considered.
(Id. at 46:7-19.)
The goal of this
court is not to punish Defendants gratuitously; the goal is
to obtain compliance with the court’s order.
In sum, the argument that any effort to remedy
Defendants’ violation of the preliminary injunction and
purge themselves from contempt would be impossible is not
supported by the record and lacks credibility.
The
“impossibility” argument does not justify “relief” from the
contempt order.
3. German law.
The claim that the court must delve into the
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intricacies of German law to support its finding of contempt
requires little discussion.
Only two things need be said.
First, despite whatever disagreements may exist among
the parties’ experts, one thing is clear: the merger has
placed Plaintiff in a more difficult position than it would
have occupied had the merger never occurred.
Moreover,
ample evidence exists to support the conclusion that this
was Defendants’ clear motive for proceeding with the merger.
Other purported justifications are simply not credible.
Second, no investigation of German law can alter the
fact that Defendants knowingly and intentionally flouted the
court’s order.
Once the court found a likelihood of harm
and issued an injunction, Defendants were not entitled to
ignore the order and then demand a renewed hearing on the
issue of harm to avoid contempt.
In sum, the “German law” argument provides no basis for
relief from the contempt order under Rule 60.
Accordingly, because none of Defendants’ arguments for
“relief” from the finding of contempt is remotely
persuasive, the motion (Dkt. No. 269) will be denied.
B.
Vacating the Preliminary Injunction Based on the First
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Circuit’s Reasoning.
After taking the very action forbidden by the
preliminary injunction, Defendants have filed a motion to
vacate the preliminary injunction based on the April 1,
2013, decision of the First Circuit affirming the
injunction.
(Dkt. No. 277.)
In its decision, the First
Circuit held:
The district court did not commit clear error in
concluding that—given the conflicting testimony of
experts as to German law and the lack of evidence
as to the location of BI's stock
certificates—there was a possibility that ADI
could enforce its judgment against BI in Germany,
but no possibility of enforcement in Austria
should the merger be completed and BAG's assets
transferred to Austria. The court thus did not err
in finding that ADI had demonstrated BAG's merger
would cause it irreparable harm. Similarly, the
court did not err in concluding that ADI had
demonstrated that in the absence of a freeze on
defendants' assets, ADI would suffer irreparable
harm, since the court could not otherwise assure
that assets would remain available to satisfy
ADI's judgment against BI.
AngioDynamics, 711 F.3d at 252.
In this motion, Defendants argue that the court must
vacate the preliminary injunction and conduct proceedings to
determine, at this stage, exactly what the actual challenges
might be that Plaintiff would confront if it obtained a
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judgment against Defendants (specifically, against BAG) and
attempted to enforce that judgment in Germany against this
now-Austrian corporation.
The court bears this obligation,
Defendants say, because Defendants have provided new
evidence on certain issues -- for example, the location of
some stock certificates -- referred to in the First
Circuit’s decision on appeal.
The short answer to this argument is that, even
assuming that the evidence might be pertinent, no sufficient
new evidence has been proffered by Defendants to merit any
reconsideration.
For example, the record still contains no
authoritative evidence on where the stock certificates were
located at the commencement of this action.
Defendants point to the affidavit of Defendant
Neuberger as supposed proof that the stock certificates are
located in Germany.
However, a reading of the affidavit
reveals that all Defendant Neuberger actually states in his
deposition is that he “personally recall[s] seeing those
original share certificates in Germany . . . in November
2000.”
(Dkt. No. 277-2, Neuberger Aff. ¶ 2.)
Neuberger
opines that there would be no reason to send the stock
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certificates to the United States.
He also testifies that
he saw the certificates in Germany years after the public
offering, but he does “not recall the precise year or the
circumstances.”
(Id.)
This declaration, which was
available to the court when it made the contempt finding,
does not remotely show that the “judgment is void” or
demonstrate any other reason that justifies the
“extraordinary relief” that is only granted sparingly under
Fed. R. Civ. P. 60(b)(4) or (6).
Karak, 288 F.3d at 19.
Additionally, while Defendants have provided voluminous
submissions on the content of German law, nothing
definitively refutes Plaintiff’s argument that enforcement
of an American judgment against a German corporation in
Germany is, in the proper circumstances, possible.
Even
Defendants’ attorney conceded that there was “no question”
that the judgment Plaintiff obtained in New York in a
separate case would not be enforced in Austria, while there
was a “very remote” chance of enforcement in Germany.
No. 142, Tr. Sept. 17 Hr’g 75: 9-12; 76:6-7.)
(Dkt.
Morever, the
stronger evidence confirms that attempting to enforce an
American judgment in Germany against an Austrian corporation
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with no significant identified assets in Germany would
present Plaintiff with as difficult a challenge as the
impossible task it would face in enforcing the judgment in
Austria.
In sum, Defendants have offered no new evidence, and no
compelling argument, justifying allowance of their motion to
vacate the preliminary injunction.
For this reason,
Defendants’ Motion to Vacate Preliminary Injunction Based on
the Reasoning of the First Circuit’s April 1, 2013 Decision
(Dkt. No. 277) will be denied.
C.
Recusal.
Defendants have filed a Motion for Recusal or
Disqualification pursuant to 28 U.S.C. § 455(a).
As the First Circuit has recently observed, 28 U.S.C. §
455(a) requires recusal based on “the existence of facts
that would prompt a reasonable question in the mind of a
well-informed person about the judge’s capacity for
impartiality in the course of the trial and its
preliminaries.”
2013).
In re Bulger, 710 F.3d 42, 46 (1st Cir.
Application of this standard requires care to
“prevent parties from too easily obtaining the
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disqualification of a judge, thereby potentially
manipulating the system for strategic reasons, perhaps to
obtain a judge more to their liking.”
Id. at 47 (quoting In
re Allied-Signal Inc., 891 F.2d 967, 970 (1st Cir. 1989)).
In this legal landscape, a few basic facts are
relevant.
Apart from this litigation, the undersigned has
had no contact with the individual Defendant Neuberger at
any time, or any connection of any kind with any of the
corporate Defendants, Plaintiff, the witnesses, or anyone
connected to this case.
Defendants do not suggest
otherwise.
Defendants’ only asserted basis for recusal is rooted
in their unhappiness in the way the court has conducted
portions of the hearings and particularly the court’s
comments following Defendants’ defiance of the injunction.
It is well established that “the general rule is that
remarks a judge makes in the course of ongoing judicial
proceedings, remarks that are in the nature of reactions to
what the judge has observed, do not warrant
disqualification.”
Charles Gardner Geyh, Fed. Judicial
Ctr., Judicial Disqualification: An Analysis of Federal Law
-25-
31 (2d ed. 2010).
“[Parties are] entitled to an impartial
judge; [they are] not entitled to an ingenuous one.”
Logue
v. Dore, 103 F.3d 1040, 1046 (1st Cir. 1997).
It is also black-letter law that opinions formed by a
judge about the parties before him or her, formed during the
course of the litigation can only rarely provide the basis
of a motion for recusal.
540, 555-56 (1994).
Liteky v. United States, 510 U.S.
“[O]pinions formed by the judge on the
basis of facts introduced or events occurring in the course
of the current proceedings . . . do not constitute a basis
for a bias or partiality motion unless they display a deepseated favoritism or antagonism that would make fair
judgment impossible.”
Id. at 555.
This limitation on recusal is obvious.
A litigant
cannot behave badly, then point to the judge’s disapproval
of its misconduct, even intense and strongly worded
disapproval, as a basis to remove him or her.
It is true that the type of deep-seated antagonism that
requires recusal can, in extreme circumstances, be evidenced
by a judge’s oral comments.
However, “judicial remarks
during the course of a trial that are critical or
-26-
disapproving of, or even hostile to, counsel, the parties,
or their cases, ordinarily do not support a bias or
partiality challenge.”
Id.
Remarks that do not establish
partiality include “expressions of impatience,
dissatisfaction, annoyance, and even anger, that are within
the bounds of what imperfect men and women, even after
having been confirmed as federal judges, sometimes display.
A judge's ordinary efforts at courtroom administration -even a stern and short-tempered judge's ordinary efforts at
courtroom administration -- remain immune.”
Id.
When a court is faced with allegations of partiality
toward a party, the First Circuit has counseled that the
record must be read as a whole instead of focusing on
isolated incidents.
United States v. Espinal-Almeida, 699
F.3d 588, 607 (1st Cir. 2012).
It is certainly true that
the brazenness of Defendants’ contumacy struck the court as
extraordinary, and some of their counsel’s arguments to
justify this conduct as childish and patently deficient.
The court used strong language to express its opinions, but
that was all.
Two things about the relations between court and
-27-
counsel are important to emphasize.
First, although the
court was impatient with some of counsel’s arguments and
disgusted by Defendants’ misconduct, there was no personal
abuse of counsel.
No voice was raised; the court used
strong words but delivered them dispassionately.
Second, Defendants’ attorney acknowledged that the
court’s frustration was understandable.
(Dkt. No. 233, Tr.
Apr. 4 Hearing 35:19-22 (“I understand that you are upset
about it.
Frankly if I was in your shoes, I would be upset
about it too.”).)
He also conceded that the First Circuit
likely held a similar opinion of his client’s conduct. (Id.
37:13-16 (“I recognize that the First Circuit’s decision is
a clear indication that it was also very unhappy with the
conduct of my client in completing this merger.”).)
In the end, the First Circuit has said it best.
[J]udging is all about making judgments,
obviously. And human nature being what it is,
those tasked with making some of the hardest calls
imaginable may, quite understandably, develop
strong feelings about the cases they work on. So
while they must avoid even the appearance of
partiality, even when bias or prejudice does not
exist, we do not expect trial judges to act like
unemotional cyborgs of sci-fi fame. That is why
problems with the views they form in slogging
through cases typically do not provide ‘a sound
-28-
basis either for required recusal or for directing
that a different judge be assigned on remand.’
Candelario del Moral v. UBS Financial Services Inc. P.R.,
699 F.3d 93, 106 (1st Cir. 2012) (quoting Hull v. Mun. San
Juan, 356 F.3d 98, 104 (1st Cir. 2004) (internal citations
omitted).
There is simply no basis for recusal here.7
IV. CONCLUSION
For the foregoing reasons, Defendants’ Amended Motion
for Relief from Contempt Order (Dkt. No. 269), Defendants’
Motion to Vacate Preliminary Injunction (Dkt. No. 277), and
Defendants’ Motion for Recusal (Dkt. No. 274) are all hereby
DENIED.
It is So Ordered.
/s/ Michael A. Ponsor
MICHAEL A. PONSOR
U. S. District Judge
7
In Act III, scene iv, of Hamlet the Danish prince
recommends to his mother that she “lay not that flattering
unction to your soul. That not your trespass but my madness
speaks.” Defendants might do well to consider this advice.
-29-
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