Arkwright Advanced Coating, Inc. v. MJ Solutions GmbH

Filing 71

ORDER denying 59 Motion for Contempt. Signed by Senior Judge David S. Doty on 9/23/2015. (DLO)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 14-5030(DSD/TNL)
Arkwright Advanced Coating, Inc.,
Petitioner,
v.

ORDER

MJ Solutions GmbH,
Respondent.
Bruce J. Koch, Esq., Thorsten Schmidt, Esq. and Schmidt LLC,
560 Lexington Avenue, 16th Floor, New York, NY 10022; Erin E.
Westbrook, Esq. and Barnes & Thornburg, LLP, 225 South Sixth
Street, Suite 2800, Minneapolis, MN 54402, counsel for
petitioner.
David A. Davenport, Esq., and Winthrop & Weinstine, PA, 225
South Sixth Street, Suite 3500, Minneapolis, MN 55402, counsel
for respondent.

This

matter

is

before

the

Solutions GmbH for civil contempt.

court

upon

the

motion

of

MJ

Based on a review of the file,

record, and proceedings herein, and for the following reasons, the
court denies the motion.

BACKGROUND
The background of this matter is fully set forth in the
court’s June 2, 2015, order granting respondent MJ Solutions’
motion

to

confirm

arbitration

award

and

denying

petitioner

Arkwright Advanced Coating, Inc.’s motion to vacate arbitration
award. The court recites only those facts necessary to resolve the
instant motion.

On December 18, 2014, the arbitrator issued a final award in
MJ Solutions’ favor, which included the following injunction:
a.

[Arkwright] is hereby permanently enjoined
from making, using, or selling its dark
transfer products, which are hereby deemed
“Covered
products”
under
the
License
Agreement, subject to the exception noted
below in 3(b):

b.

To the extent that [Arkwright] inventory is
already in stores, or subject to existing
orders from distributors, retailers or other
customers, [Arkwright] may sell those products
and fulfill existing orders provided that a
complete and ongoing accounting is maintained
and presented to [MJ Solutions], and that all
such revenues are subject to the payment of 2%
royalties with 60 days of the receipt of
revenues from such transactions.

Davenport Decl. Ex. A, at 34.
confirm or vacate the award.
the award in full.

The parties then cross-moved to

On June 2, 2015, the court confirmed

MJ Solutions now moves for an order of

contempt, contending that Arkwright has violated the arbitration
award by continuing to sell covered products after the arbitration
award was issued.

DISCUSSION
“[I]t

is firmly established that the power to punish for

contempt[ ] is inherent in all courts.”

Chambers v. NASCO, Inc.,

501 U.S. 32, 44 (1991) (citation and internal quotation marks
omitted).

Specifically, the court has the power to punish “such

contempt

of

its

authority,

and

2

none

other,”

including

“[d]isobedience or resistance to its lawful writ, process, order,
rule, decree, or command.” 18 U.S.C. § 401 (emphasis added). “One
of the overarching goals of a court’s contempt power is to ensure
that litigants do not anoint themselves with the power to adjudge
the validity of orders to which they are subject.”

Chi. Truck

Drivers v. Bhd. Labor Leasing, 207 F.3d 500, 504 (8th Cir. 2000).
“A party seeking civil contempt bears the initial burden of
proving,

by

clear

and

convincing

evidence,

contemnors violated a court order.”

that

the

alleged

Id. at 505 (emphasis added).

“At that point, the burden ... shift[s] to the [defendant] to show
an inability to comply.”

Id.

The arbitration award at issue is not a court order and, as
such, cannot serve as the basis for a contempt order.

See MedCam,

Inc. v. JDS Uniphase Corp., No. 06-1509, 2006 WL 2095434, at *4 (D.
Minn. July 27, 2006) (denying contempt motion because “there is no
underlying order which [defendant] could have violated because
[plaintiff] never petitioned any court for an order confirming the
arbitration award”); Donel Corp. v. Kosher Overseers Ass’n of Am.,
Inc., No. 92-8377, 2001 WL 1135625, at *1 (S.D.N.Y. Sept. 26, 2001)
(finding

no

contempt

based

on

conduct

occurring

after

the

arbitration award, but before the court confirmed that award,
because the award was “not enforceable until it was confirmed by
[the]

Court”);

see

also

Tube

City

IMS,

LLC

v.

Anza

Capital

Partners, LLC, 25 F. Supp. 3d 486, 488-89 (S.D.N.Y. 2014) (noting

3

that “[a]rbitration awards are not self-enforcing” .... Rather,
“they must be given force and effect by being converted to judicial
orders

by

omitted).

courts”)

(internal

quotation

marks

and

citations

Accordingly, the court’s review is limited to whether

Arkwright’s post-order conduct constitutes contempt.
The evidence in the record does not support a finding of
contempt.

MJ Solutions focuses its briefing on pre-order sales

and, although Arkwright acknowledges that it sold covered products
after June 2, those sales appear to have been inadvertent, de
minimus,

or

Niederlueke

to

fulfill

Decl.

Ex.

orders
1;

placed

before

Jendzejec-Blanchard

June

2.

Decl.

¶¶

See
6-9.

Further, Arkwright does not appear to have retained any revenue for
those sales due to credits owed to the customers.
Blanchard Decl. ¶ 2.

Jendzejec-

To the extent Arkwright owes MJ Solutions

royalties for those post-order sales, however, Arkwright shall make
appropriate payment immediately.1

1

Arkwright has offered to pay MJ Solutions a two-percent
royalty - consistent with the underlying agreement - on sales after
September 27, 2014. Pet’r’s Mem. at 16. The court encourages MJ
Solutions to accept the offer and finally resolve the matter.
4

CONCLUSION
Accordingly, IT IS HEREBY ORDERED that the motion for civil
contempt [ECF No. 59] is denied.

Dated:

September 23, 2015
s/David S. Doty
David S. Doty, Judge
United States District Court

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