UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
                    

N0S. 93-3314 and 93-3333
                    

            ROBIN WOODS INC., a Pennsylvania Corporation         
v.

ROBIN F. WOODS, an individual
ALEXANDER DOLL COMPANY, a New York corporation
PITTSBURGH SEED FUND

          ROBIN F. WOODS and THE ALEXANDER DOLL COMPANY,
Appellants 

                    

On Appeal From the United States District Court
For the Western District of Pennsylvania 
(D.C. Civil Action No. 91-02186)
                   

Argued January 12, 1994

BEFORE:  STAPLETON, COWEN and ALITO, Circuit Judges 

(Opinion Filed July 6, 1994)

                    
	

Bela A. Karlowitz
Robert X. Medonis (Argued)
Karlowitz & Cromer
Suite 800, USX Tower
Pittsburgh, PA  15219

Attorneys for Appellee

Gary A. Rosen (Argued)
Hangley, Connolly, Epstein, Chicco,
Foxman & Ewing
1515 Market Street
9th Floor
Philadelphia, PA  19102

Attorneys for Appellants
Robin F. Woods and
The Alexander Doll Company

                    

OPINION OF THE COURT

                    


STAPLETON, Circuit Judge:
	The district court sanctioned appellants for 
violating a preliminary injunction.  Appellants dispute both 
the finding of contempt and the appropriateness of the 
sanctions imposed.  We agree with the district court that 
appellants failed to comply with the preliminary injunction, 
but we find that one of the sanctions the district court 
imposed is inappropriate.  We thus will affirm in part and 
reverse in part.   

I.
	In 1983, Robin F. Woods ("Mrs. Woods") founded 
Robin Woods, Inc. ("RWI"), a doll manufacturer.  RWI's dolls 
were popular and rapid growth ensued.  Mrs. Woods obtained 
capital to finance RWI's expansion by selling most of her 
holdings in RWI to investors, among which was the Pittsburgh 
Seed Fund ("the Seed Fund").  The Seed Fund required Mrs. 
Woods to enter into a written employment agreement and a 
non-competition/non-disclosure agreement with RWI, as well 
as to assign her copyrights to RWI. 
	Even though RWI's sales continued to increase 
throughout the 1980s, the company never turned a profit.  
Unhappy with RWI's financial performance, the Seed Fund in 
1990 instructed its representatives on RWI's board to remove 
Mrs. Woods from her management role but to continue to 
employ her as a doll designer.  Following Mrs. Woods' 
demotion, RWI's product line was also altered and new 
distribution channels were created. The Seed Fund's changes 
proved catastrophic, leading RWI to the verge of bankruptcy.  
Mrs. Woods offered to return as CEO to try to save RWI, but 
the Seed Fund rebuffed her.  Mrs. Woods resigned from RWI on 
December 6, 1991, to go to work for one of RWI's 
competitors, the Alexander Doll Company ("Alexander").
	RWI filed suit against Mrs. Woods and Alexander on 
December 24, 1991, alleging Lanham Act violations, injury to 
business reputation, breach of contract, breach of fiduciary 
duty, tortious interference, breach of employment contract, 
and unfair competition.  RWI also sought a preliminary 
injunction to bar Mrs. Woods from employment with Alexander 
or from using the name "Robin Woods" in connection with the 
design, manufacture, and sale of dolls.  
	After hearing four days of testimony, a magistrate 
recommended that Mrs. Woods be enjoined from involvement in 
the collectible doll industry.  The district court's 
preliminary injunction expanded the magistrate's 
restrictions on Mrs. Woods by limiting use of her name:
1.  Defendants [Mrs. Woods and 
Alexander]     . . . are enjoined from 
characterizing, promoting or advertising 
either orally or in writing, that any 
dolls manufactured by Alexander Doll 
Company for which Robin F. Woods 
provides any services 
. . . 
(g) are signed or otherwise 
identified with Robin F. 
Woods.
. . . 
5.  Defendants . . . are enjoined from 
designating or identifying any specific 
dolls manufactured by any company, 
including but not limited to Alexander 
Doll Company, for which Robin F. Woods 
provided services.
. . . 
8.  Defendants . . . are enjoined from 
identifying Robin F. Woods as having 
provided any services for any dolls 
manufactured by any company, including 
but not limited to the Alexander Doll 
Company, such as on the product, product 
tag, box, or in connection with any 
advertising or promotion of the dolls.
	  
	Mrs. Woods consulted counsel to determine what 
work she could do at Alexander and still comply with the 
preliminary injunction.  Counsel told her that she could 
design play dolls (but not collectible dolls) if she used a 
nom de plume (but not her name).  Mrs. Woods took the name 
Alice Darling and began to create a new line of play dolls 
for Alexander called "Let's Play Dolls."  
	An announcement of Mrs. Woods' new role was 
prepared for distribution in doll industry magazines, 
letters to retailers, and trade show posters.  The 
announcement stated:
ALEXANDER DOLL COMPANY 
is pleased to announce that
MRS. ROBIN F. WOODS*
[Photograph]
is exclusively associated with the
LET'S PLAY DOLLS
division of the Alexander Doll Company
and will be creating dolls
for play under the name
ALICE DARLING

*Mrs. Woods was formerly associated with 
Robin Woods, Inc. (RWI).  Mrs. Woods 
resigned from RWI in December 1991.  A 
federal court, on February 7, 1992, 
preliminarily ruled that RWI owns the 
trade name "Robin Woods" and that Mrs. 
Woods may not use her name to identify 
any dolls which she designs. 
Accordingly, Mrs. Woods has assumed a 
new trade name "Alice Darling" to 
identify the dolls she designs for the 
Alexander Doll Company.


	RWI filed a motion for contempt sanctions, arguing 
that the preliminary injunction forbade Mrs. Woods' 
involvement with Alexander and Let's Play Dolls.  After 
discovery and a four-day hearing, the district court 
rejected most of RWI's contentions, finding only one 
violation of the preliminary injunction: dissemination of 
the Alice Darling announcement.  The district court awarded 
RWI $107,000 in damages, which reflected the time and 
expense RWI's management incurred preparing for the contempt 
proceeding.  Attorneys' fees of $68,707.52 were also 
awarded. Mrs. Woods and Alexander now appeal.    
	The district court had jurisdiction over RWI's 
claims under 28 U.S.C.  1338 and 28 U.S.C.  1367.  This 
court has appellate jurisdiction pursuant to 28 U.S.C.  
1291.  See United States Steel Corp. v. Fraternal Ass'n of 
Steel Haulers, 601 F.2d 1269, 1272 (3d Cir. 1979).

II.
	The district court found that Mrs. Woods and 
Alexander did not respect the injunction in three ways.  
First, "[d]efendants promoted and advertised that dolls 
manufactured by Alexander were designed by Mrs. Woods by 
identifying 'Alice Darling' as Mrs. Woods and as the 
designer of 'Let's Play Dolls.'"  Robin Woods, Inc. v. 
Woods, 815 F. Supp. 856, 868 (W.D. Pa. 1992).  This, the 
district court said, violated paragraph one of the 
injunction which forbids "promoting or advertising . . . 
dolls manufactured by Alexander . . . which . . . are . . . 
identified with Robin F. Woods."  Second, "[d]efendants, by 
their promotional campaign, designated or identified 
specific dolls manufactured by Alexander for which Mrs. 
Woods provided services."  Id.  This, the district court 
said, violated paragraph five of the injunction which 
forbids "designating or identifying any specific dolls . . . 
for which Robin F. Woods provided services."  Third, 
"[d]efendants identified Mrs. Woods as having provided 
services for the dolls of the 'Let's Play Dolls' line . . . 
in . . . promotion of the doll."  Id.  This, the district 
court said, violated paragraph eight of the injunction which 
forbids defendants from "identifying Robin F. Woods as 
having provided any services for any dolls manufactured by . 
. . Alexander . . . in connection with . . . promotion of 
the doll."  Id.
	Mrs. Woods and Alexander attack the district 
court's ruling, noting that civil contempt must be proved by 
clear and convincing evidence; where there is ground to 
doubt the wrongfulness of the conduct, they insist, there is 
no contempt. They further claim that they acted in good 
faith, with the advice of counsel, and without an intent to 
arrogate RWI's goodwill. Finally, they contend that their 
use of "Robin Woods" was arguably outside the scope of a 
vague injunction and consistent with the purpose of the 
injunction and that this substantial compliance with the 
injunction renders the finding of contempt inappropriate.  
We find these arguments unpersuasive.  
	Contempt, as Mrs. Woods and Alexander correctly 
note, must be proved by clear and convincing evidence:
The plaintiff has a heavy burden to show 
a defendant guilty of civil contempt.  
It must be done by "clear and convincing 
evidence," and where there is ground to 
doubt the wrongfulness of the conduct, 
he should not be adjudged in contempt.

Quinter v. Volkswagen of America, 676 F.2d 969, 974 (3d Cir. 
1982) (quoting Fox v. Capital Co., 96 F.2d 684, 686 (3d Cir. 
1938)).  In this case, however, there is no ground to doubt 
the wrongfulness of the conduct -- the injunction forbade 
identification of Mrs. Woods with Alexander's dolls in 
promotional materials and the Alice Darling announcement 
made such an identification.
	Contrary to Mrs. Woods' and Alexander's 
assertions, good faith is not a defense to civil contempt.  
We recently held in Harley-Davidson, Inc. v. Morris, 19 F.3d 
142, 148-49 (3d Cir. 1994), that "willfulness is not a 
necessary element of civil contempt," and, accordingly, that 
"evidence . . . regarding . . . good faith does not bar the 
conclusion . . . that [the defendant] acted in contempt."   
	Contemnors, as Mrs. Woods and Alexander correctly 
note, are sometimes excused when they violate vague court 
orders: there is a "longstanding salutary rule in contempt 
cases that ambiguities and omissions in orders redound to 
the benefit of the person charged with the contempt."  
Eavenson, Auchmuty & Greenwald v. Holtzman, 775 F.2d 535, 
544 (3d Cir. 1985).  This well established principle does 
not aid the appellants here, however.  While we too perceive 
some vagueness in paragraph 5 of the injunction, the 
prohibitions that paragraphs 1 and 8 were intended to impose 
seem crystal clear to us.  As paragraph 8 puts it:  
"Defendants . . . are enjoined from identifying Robin F. 
Woods as having provided any services for any dolls 
manufactured by . . . Alexander Doll Company . . . in 
connection with any 
. . . promotion of the dolls."
	Some courts, as Mrs. Woods and Alexander correctly 
note, have recognized a substantial compliance defense to 
contempt citations:
[S]ubstantial compliance with a court 
order is a defense to an action for 
civil contempt. . . . If a violating 
party has taken 'all reasonable steps' 
to comply with the court order, 
technical or inadvertent violations of 
the order will not support a finding of 
civil contempt.

General Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 
(9th Cir. 1986).  Even if this court were to recognize 
substantial compliance as a defense to contempt, however, it 
would not apply to Mrs. Woods and Alexander.  Although Mrs. 
Woods and Alexander acted in good faith and on the advice of 
counsel, see Robin Woods, Inc. 815 F. Supp. at 875, their 
violation was not technical or inadvertent -- they 
consciously chose to associate Mrs. Woods with dolls that 
Alexander would manufacture.  The district court's contempt 
citation thus must stand.        

III.
	Mrs. Woods and Alexander dispute the sanctions 
that the district court imposed on them, maintaining that it 
was an abuse of discretion to award RWI $68,505.72 in 
attorneys' fees and $107,000 in damages for the time and 
expense that RWI's management incurred in preparing for the 
contempt proceeding. "The standard of our review of a 
district court sanction for civil contempt is whether the 
district court abused its wide discretion in fashioning a 
remedy."  Delaware Valley Citizens' Council v. Pennsylvania, 
678 F.2d 470, 478 (3d Cir. 1982), cert. denied, 459 U.S. 969 
(1982).  

A.
	RWI sought attorneys' fees of $104,062.53 plus an 
expert witness fee of $11,976.00.  The district court 
awarded only $68,707.52, because "plaintiff was largely 
unsuccessful on its motion for contempt, sanctions, and 
attorneys' fees."  Mrs. Woods and Alexander maintain that 
attorneys' fees cannot be awarded to RWI because their 
conduct, even if contumacious, was not willful -- they acted 
in good faith on the advice of counsel without intent to 
harm RWI.  
	Sanctions for civil contempt serve two purposes:  
"to coerce the defendant into compliance with the court's 
order and to compensate for losses sustained by the 
disobedience." McDonald's Corp. v. Victory Investments, 727 
F.2d 82, 87 (3d Cir. 1984).  Compensatory awards seek to 
ensure that the innocent party receives the benefit of the 
injunction:
the Court will be guided by the 
principle that sanctions imposed after a 
finding of civil contempt to remedy past 
noncompliance with a decree are not to 
vindicate the court's authority but to 
make reparation to the injured party and 
restore the parties to the position they 
would have held had the injunction been 
obeyed.

Hudson Transit Lines, Inc. v. Freund, 509 F. Supp. 1172, 
1178 (E.D.N.Y. 1981).  
	Based on this understanding of the functions 
served by sanctions for civil contempt, we reject the notion 
that a finding of willfulness is a prerequisite to an award 
of attorneys' fees against the violator of an injunction.  
As the Court of Appeals for the Fifth Circuit explained in 
Cook v. Ochsner Found. Hosp., 559 F.2d 270, 272 (5th Cir. 
1977):  
It matters not whether the disobedience 
is willful[;] the cost of bringing the 
violation to the attention of the court 
is part of the damages suffered by the 
prevailing party and those costs would 
reduce any benefits gained by the 
prevailing party from the court's 
violated order.  Because damages 
assessed in civil contempt cases are 
oftentimes compensatory (instead of 
coercive) the mental state of the 
violator should not determine the level 
of compensation due.
	Only with an award of attorneys' fees can RWI be 
restored to the position it would have occupied had Mrs. 
Woods and Alexander complied with the district court's 
injunction. Accordingly, accepting both the district court's 
findings regarding good faith and advice of counsel and the 
appellants' assertion that they intended no harm to RWI, we 
find no basis for disturbing the award of attorneys' fees.

B.  
	The district court ordered Mrs. Woods and 
Alexander to pay RWI $107,000 as compensation for 
"management's time and expense in preparing for the contempt 
litigation."  Robin Woods, Inc., 815 F. Supp. at 875.  The 
court explained its decision in this way:  "A successful 
party proving contempt is entitled to recover, by way of 
civil fine, the expense of investigating the violation of 
the order [and] preparing for and conducting the contempt 
proceeding, in addition to attorneys' fees."  Id.  
	The $107,000 figure was based solely on the 
following testimony from RWI executive David Lamont:
	Q.  You said you spent some 
management time preparing for this 
hearing . . . . . Before coming here did 
you examin[e] the company's books and 
records to determine how much time was 
expended in preparing for this hearing 
today for the sanctions?
	A.  Yes, I did.
. . . 
	Q.  Let's go to how much time.  You 
said you studied the time and you are 
familiar with the cost of your time.  Is 
that correct?
	A.  Sure. . . . I look at my 
payroll records, sure.
	Q.  You are the chief financial 
officer of the company.  Is that 
correct?
	A.  Yes.
	Q.  Now, can you tell this court 
how much money was expended by the Robin 
Woods Company on management time, in-
house management time, in preparing for 
the sanctions hearing today?
 . . . 
	A.  Through the spring and summer, 
I kept track of the rough proportions of 
time that each of my key people were 
spending preparing for this case.  I 
tracked it on a month-by-month basis, 
and through October it adds up to about 
$107,000.

	Just as attorneys' fee awards are "remedial and 
designed to compensate complainants for losses incurred as a 
result of the contemnors' violations," Roe v. Operation 
Rescue, 919 F.2d 857, 869 (3d Cir. 1990), so too are awards 
to cover the other expenses involved in demonstrating 
violations.  NLRB v. Local 825, Int'l Union of Operating 
Eng'rs, AFL-CIO, 430 F.2d 1225, 1229 (3d Cir. 1970), cert. 
denied, 401 U.S. 976 (1971). Thus, there can be no doubt 
that the district court had the authority to order Mrs. 
Woods and Alexander to compensate RWI for the time and 
expense its management incurred in enforcing the district 
court's injunction.  
	Turning to the amount of the award, we note that 
the district court enjoys wide, but not unlimited, 
discretion in fashioning appropriate compensatory sanctions:    
The framing of sanctions for civil 
contempt is committed to the sound 
discretion of the trial court.  . . . 
But this discretion is not unlimited.  
Compensatory sanctions . . . must not 
exceed the actual loss suffered by the 
party that was wronged.
  
Elkin v. Fauver, 969 F.2d 48, 52 (3d Cir. 1992), cert. 
denied, 113 S. Ct. 473 (1992).  
	We believe the district court in this case stepped 
over the line that separates acceptable and unacceptable 
exercises of discretion.  It reduced its award of counsel 
fees to reflect RWI's limited success and then, without 
explanation, proceeded to award all of the other expenses 
incurred by RWI in connection with its contempt motion.  For 
this reason, on the basis of the record, the award of other 
expenses without an adjustment for the limited degree of 
RWI's success can only be characterized as arbitrary and we 
have no choice but to vacate it.[fn1] 

IV.
	We will reverse the judgment of the district court 
and remand with instructions to enter an order finding 
appellants in contempt and awarding attorneys' fees of 
$68,707.52.  We leave to the discretion of the district 
court whether to reopen the record and give further 
consideration to the application for expenses.  


Footnotes

[fn1] Because we thus find the award of expenses arbitrary, and because 
Mr. Lamont's testimony provides no basis for allocating expenses between 
successful and unsuccessful contentions, it is unnecessary for us to 
reach the issue of whether that testimony, given its conclusory nature, 
would otherwise provide sufficient support for an award.  We regard that 
issue as a very close one and express no opinion on it.