United States of America v. Spectrum Brands, Inc.

Filing 243

ORDER granting in part and denying in part 236 Motion to Stay Pending Appeal by Defendant Spectrum Brands, Inc. Signed by District Judge William M. Conley on 11/13/2017. (voc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
UNITED STATES OF AMERICA,
Plaintiff,

ORDER

v.

15-cv-371-wmc

SPECTRUM BRANDS, INC.,
Defendant.
Following the court’s order entering judgment in favor of the United States, which
included both a civil penalty and a permanent injunction (see dkt. ##234, 235), defendant
Spectrum Brands moved for a partial stay pending appeal and filed a supporting
memorandum (dkt. ##236, 237).

Specifically, defendant seeks relief from the civil

penalty for failure to report timely and from the permanent injunction. (See dkt. #236 at
1-2.) As discussed below, this motion will be GRANTED IN PART AND DENIED IN
PART.
A. Civil Penalty
On October 3, 2017, the court entered judgment against defendant, including
$1,936,675 in civil damages. (Dkt. #235 at 1.) Of this amount, Spectrum indicates an
intention to appeal only from the $821,675 attributable to its failure to report timely. (See
dkt. #236 at 1-2.) The government does not oppose this request, nor the request that this
stay be without bond. (See dkt. #239 at 4.) Based on Spectrum’s representations and the
government’s response, the court previously entered an order staying this portion of the
judgment until the court could enter an order addressing the entirety of Spectrum’s postjudgment motion. (Dkt. #238.)

Given that there is no opposition from the government and the parties agreement
that “Spectrum is a large, global company . . . that had net sales of $5 billion in fiscal year
2016” (dkt. #234 at 9), the court will now continue to stay that portion of the civil
damages judgment relating to defendant’s failure to report timely pending appeal without
requiring a supersedeas bond. See Dillon v. City of Chicago, 866 F.2d 902, 904-05 (7th Cir.
1989) (summarizing factors a district court may examine under Rule 62(d) in deciding
whether to waive the supersedeas bond requirement, including “whether ‘the defendant’s
ability to pay the judgment is so plain that the cost of a bond would be a waste of money’”
(quoting Olympia Equip. Leasing Co. v. W. Union Tel. Co., 786 F.2d 794, 796 (7th Cir.
1986)); see also In re Carlson, 224 F.3d 716, 719 (7th Cir. 2000) (“The district court has
the discretion to waive this [bond-posting] requirement, but waiver is appropriate only if
the appellant has a clearly demonstrated ability to satisfy the judgment in the event the
appeal is unsuccessful and there is no other concern that the appellee’s rights will be
compromised by a failure adequately to secure the judgment.” (citing Dillon, 866 F.2d at
904-05; NIPSCO v. Carbon Coal Co., 799 F.2d 265, 281 (7th Cir. 1986))). As Spectrum
acknowledges, should the Seventh Circuit rule against it, Spectrum will be responsible for
this remaining payment of $821,675 penalty plus interest. (Dkt. #236 at 2.)

B. Permanent Injunction
Spectrum also seeks a stay of this court’s permanent injunction, sans ¶ B, with which
it reports having already complied. (See dkt. #236 at 2.) Unlike the request for a stay of
the civil penalty associated with the failure to timely report, the government opposes this
request.

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In support, Spectrum revives two arguments that the court rejected at summary
judgment: that the Consumer Product Safety Act (“CPSA”) did not authorize prospective
injunctive relief; and that the government’s claim of late reporting is barred by the statute
of limitations. (See dkt. #237 at 8-9, 12; dkt. #196 at 49-54, 34-39.) Having already
rejected both, the court declines to devote further time and ink to these arguments. The
court will, however, address defendant’s other two arguments: that the injunction is an
“obey-the-law” injunction and that an injunction is unwarranted. (See dkt. #237 at 9-11.)
Defendant’s arguments boil down to an assertion that the injunction is vague -- such that
it is not properly tailored to the facts of the case -- and overbroad -- such that it requires
Spectrum to “maintain sufficient systems, programs, and internal controls to ensure
compliance with the CPSA and the regulations enforced by the [Consumer Product Safety
Commission (‘CPSC’)]” (dkt. #235 at 1) and “implement appropriate improvements . . .
within 6 months” at which time, it “shall file with this court a notice indicating that
improvements have been implemented to avoid a repetition of the violations discussed” in
the court’s order (id. at 2). Spectrum asserts that it has already improved its compliance
procedures, such that it believes they “are sufficient to prevent any future reporting
violations or sales of recalled products” (dkt. #237 at 14), but expresses concern that the
reforms might not meet with the court’s or government’s approval, thereby inducing it to
undertake additional unnecessary measures to comply with the injunction (id.).
As the government correctly points out, Spectrum can seek clarification from the
court regarding compliance with the permanent injunction. (Dkt. #239 at 11; see also dkt.
#235 at 2.) The court will, however, address Spectrum’s request as if it were just such a

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motion. 1
In crafting the permanent injunction (see dkt. #235 at 1-2, dkt. #234 at 22-23), the
court intentionally attempted to avoid a detailed, point-by-point implementation guide,
such as that set forth in the government’s proposal (see dkt. #202-1 at 4-7). 2 In doing so,
the court recognized both that such detail may exceed that necessary to ensure compliance
with the CPSA and the CPSC’s regulations and that there is likely more than one way to
improve Spectrum’s compliance program. As a result, the court may have gone too far in
the opposite direction, falling short of what was required under Rule 65(d)(1)(B) & (C).
The court will, therefore, direct Spectrum to provide written notice within 21 days
detailing what specific improvements it has already made to its program to ensure
compliance with the CPSA and CPSC regulations. The government will then have 14 days
to indicate its agreement or identify any shortcomings and propose specific alternative
improvements. Enforcement of the remainder of the permanent injunction (dkt. #235 at
1-2) will be stayed until the court modifies its language.

Alternatively, the court has the authority under Fed. R. Civ. P. 59(e) and 60(b)(4) to amend or
grant relief from a judgment contrary to law or otherwise void.
1

As the government acknowledges, “[o]nly Spectrum, with its knowledge of company personnel,
practices, and capabilities, is in a position to formulate the details of [a robust CPSA compliance]
safety program.” (Dkt. #239 at 11.)
2

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ORDER
IT IS ORDERED that:
1) Defendant’s motion for a partial stay of the judgment pending appeal is
GRANTED IN PART AND DENIED IN PART.
2) The court will STAY without bond the failure to report portion of the civil
liability penalty pending appeal.
3) No later than December 4, 2017, defendant is to provide written notice to the
court of the specific improvements it has made to its compliance program. The
government may have until December 18, 2017, to respond regarding the
adequacy of these improvements as set forth above. The court will then
reconsider the sufficiency of the permanent injunction under Rule 65(d)(1)(B)
& (C), and modify it accordingly.
4) The permanent injunction, except ¶ B (dkt. #235 at 1-2), will be stayed until
further order of this court.
Entered this 13th day of November, 2017.
BY THE COURT:
/s/
__________________________________
WILLIAM M. CONLEY
District Judge

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