Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-02-03622/USCOURTS-ca8-02-03622-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 02-3622

___________

Chicago Truck Drivers, Helpers & *

Warehouse Workers Union Pension *

Fund; Fred Boudreau, trustee of *

Chicago Truck Drivers, Helpers and *

Warehouse Workers Union Pension *

Fund; Jack Stewart; William H. *

Carpenter, the present trustees; *

John Broderick, *

*

Plaintiffs - Appellees, *

*

v. * Appeal from the United States

* District Court for the

Brotherhood Labor Leasing, a Missouri * Eastern District of Missouri.

corporation; MFI Leasing Company, *

a Missouri corporation; Falls City *

Industries, Inc., a Kentucky *

corporation; Middlewest Freightways, *

Inc., a Missouri corporation, *

*

Defendants, *

*

v. *

*

Steven M. Gula; William H. Behrens; *

Ann Gula, *

*

Contemnors, *

*

Dysart, Taylor, Lay, Cotter & *

McMonigle, P.C., *

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1

The Honorable David D. Noce, United States Magistrate Judge for the Eastern

District of Missouri, sitting with the consent of the parties under 28 U.S.C. § 636(c).

2

Employee Retirement Income Security Act of 1974 (as amended by the

Multiemployer Pension Plan Amendments Act of 1980), 29 U.S.C. §§ 1001–1461.

Under ERISA, an employer that withdraws from a multiemployer pension plan will

be liable to the plan for "the allocable amount of unfunded vested benefits." 29

U.S.C. § 1381(b)(1). 

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*

Contemnor - Appellant, *

*

Peter Gabriel Bender; Michael, Best & *

Friedrich, LLC; Lashly Baer, *

*

Contemnors. *

___________

Submitted: September 12, 2003

Filed: May 4, 2005 

___________

Before MORRIS SHEPPARD ARNOLD, BOWMAN, and MELLOY, Circuit Judges.

___________

BOWMAN, Circuit Judge.

The law firm of Dysart, Taylor, Lay, Cotter and McMonigle, P.C., appeals from

the order of the District Court1

 finding the firm in civil contempt of court and

imposing sanctions. We affirm.

In the underlying action that gave rise to the finding of contempt, Chicago

Truck Drivers, Helpers and Warehouse Workers Union Pension Fund and its trustees

(collectively, the Fund) sued several corporations owned by Steven Gula to collect

withdrawal liability payments under ERISA.2

 At one time during the relevant period,

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the corporations were represented by Dysart Taylor. On December 4, 1996, the

District Court entered summary judgment for the Fund, holding that the corporations

would "be required, within 60 days of the date of the judgment order issued herewith,

to pay to plaintiffs the interim payments demanded by the plaintiffs in the amended

demand." Chicago Truck Drivers Union Pension Fund v. Bhd. Labor Leasing, 950

F. Supp. 1454, 1471 (E.D. Mo. 1996). In accordance with the provisions of ERISA,

the court ordered that any further disputes between the parties would be "submitted

to an arbitrator." Id. On June 13, 1997, Dysart Taylor was granted leave to withdraw

from the case. On June 25, 1997, the District Court entered an amended judgment

against the corporations, which included awards to the Fund for delinquent and future

withdrawal liability, with dollar amounts noted and due dates specified, and awards

for attorney fees, costs, interest, and liquidated damages. Chicago Truck Drivers

Union Pension Fund v. Bhd. Labor Leasing, 974 F. Supp. 751, 756-57 (E.D. Mo.

1997).

In November 1998, the Fund sought to have the corporations and their officers

held in contempt for failure to pay any of the court-ordered judgments. The District

Court denied the Fund's petition. The Fund appealed and we remanded. Chicago

Truck Drivers Union Pension Fund v. Bhd. Labor Leasing, 207 F.3d 500 (8th Cir.

2000). We concluded that the District Court had made some errors in ruling on the

Fund's petition and so it was an abuse of the court's discretion to deny the contempt

petition. In remanding, we also said this in a footnote: "The suggestion that the

Appellees' attorneys advised them to pay their legal fees in lieu of making courtordered payments, if true, is troubling. But we have no occasion to consider the

question [of whether prior counsel might be held in contempt] on this record because

the Fund only sought a contempt sanction against the Appellees and Gula, not their

lawyers." Id. at 507 n.7.

On remand, the Fund amended the petition to name the corporations' and

officers' attorneys as additional alleged contemnors. The District Court held a

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Steven Gula has not appealed.

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hearing on the petition and determined that Steven Gula and Dysart Taylor acted in

contempt of the court's orders.3

 Chicago Truck Drivers Union Pension Fund v. Bhd.

Labor Leasing, 230 F. Supp. 2d 963, 970 (E.D. Mo. 2002). According to the court,

the law firm aided and abetted Gula's failure to pay the Fund. The court agreed with

the Fund's assertion that attorneys at Dysart Taylor were aware that the corporations'

assets were not sufficient to pay both the Fund and other creditors, including Dysart

Taylor, and nevertheless advised Gula to pay the others first. As a sanction, the

District Court ordered Dysart Taylor to pay the Fund the amount that it had received

in payment from the corporations, $12,855.55. Dysart Taylor appeals. "We review

the district court's decision to enter a civil contempt order for abuse of discretion,

reviewing its factual findings for clear error." Jake's, Ltd. v. City of Coates, 356 F.3d

896, 899 (8th Cir. 2004).

Dysart Taylor first asserts that the firm cannot be held in contempt of the

December 1996 order because it was neither a final order nor an injunction and it

could not be construed as an injunction. We disagree. In our most recent prior

opinion in this litigation, when speaking of the amended order of June 1997, we noted

that although it "was not labeled an injunction, it looked like one: it compelled the

[corporations'] affirmative, prospective obedience with it." Chicago Truck Drivers,

207 F.3d at 507. The December order was no different. Dysart Taylor's argument

that the order lacked the necessary specificity is unavailing. The order is not

"unintelligible," nor does its "command . . . def[y] comprehension." Int'l

Longshoremen's Ass'n, Local 1291 v. Philadelphia Marine Trade Ass'n, 389 U.S. 64,

76 (1967). While the December 1996 order could have been written with more detail

(as it ultimately was in June 1997), it nevertheless put the corporations on notice of

what they should do and when they should do it: "to pay to plaintiffs the interim

payments demanded by the plaintiffs in the amended demand" and to do so "within

60 days of the date of the judgment order issued herewith." Chicago Truck Drivers,

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950 F. Supp. at 1471. In any event, the attorneys knew that Gula's corporations were

on shaky ground financially and were responsible for substantial interim withdrawal

payments. And they should have known, if they did not, that advising Gula to pay

other bills (including Dysart Taylor's own bills) before paying the Fund was the same

as advising Gula to disregard the order. We conclude that Dysart Taylor was

complicit in "a violation of a court order by one who fully understands its meaning

but chooses to ignore its mandate." Int'l Longshoremen's Ass'n, 389 U.S. at 76. 

As for finality, the fact that the Fund sought to amend the order to increase the

amount owed by adding on interest, attorney fees, and other costs did not relieve the

corporations of responsibility to make the interim payments while they waited for the

district court to rule on the motion. An injunction need not be a final and appealable

order to be enforceable. And even if this were not an injunction, "[w]ithdrawal

liability shall be payable in accordance with the schedule set forth by the plan

sponsor . . . beginning no later than 60 days after the date of the demand

notwithstanding any request for review or appeal of determinations of the amount of

such liability or of the schedule." 29 U.S.C. § 1399(c)(2) (emphasis added). The

corporations thus have arguably had an obligation to pay withdrawal liability from

sixty days following the time of the Fund's first demand, and that obligation was not

changed but only reiterated when the District Court entered its order in December

1996. See, e.g., Trs. of Plumbers & Pipefitters Nat'l Pension Fund v. MAR-LEN,

Inc., 30 F.3d 621, 626 (5th Cir. 1994) ("[A] reviewing court merely determines

whether the pension plan's claim is nonfrivolous and colorable. If the claim for

withdrawal liability is colorable, the employer must make interim payments while it

contests the underlying liability." (footnote omitted)); Bd. of Trs. of Trucking

Employees Welfare Fund, Inc. v. Centra, 983 F.2d 495, 507–08 (3d Cir. 1992) ("The

pay now, dispute later principle . . . is well established . . . . [P]ayments must be made

whether the underlying dispute is resolved through arbitration or by a federal court.").

The corporations' failure to make interim payments was a violation of federal law

beginning as early as sixty days after the Fund first made its demand, and ultimately

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came to be a violation of a federal court order as well. In these circumstances, we do

not think it was error for the District Court to entertain a motion for civil contempt

based on violation of the court's December 1996 order implementing the Fund's

demand.

Dysart Taylor also challenges the District Court's fact-finding on the value of

the corporate assets that were available in December 1996 and June 1997 (when the

court issued the interim payment orders) and what the law firm knew about that

situation; the sufficiency of the evidence supporting the court's findings concerning

Dysart Taylor's advice about which entities the corporations should pay first; and the

court's failure to find that Dysart Taylor acted in bad faith before the court imposed

sanctions for contempt. We conclude that the District Court cited sufficient

documentary and testamonial evidence to support the facts as the court found them.

See Chicago Truck Drivers, 230 F. Supp. 2d at 967–68 (E.D. Mo. 2002). Moreover,

the court had the advantage of being in a position to evaluate the credibility of

witnesses and their live testimony. Having conducted our own careful review of the

record, we cannot say that the court clearly erred in finding the facts as it did and

concluding that the evidence was sufficient to find Dysart Taylor in contempt.

Further, we agree that the law firm's bad faith vel non is immaterial to the court's

finding of contempt in this case.

Finally, Dysart Taylor challenges the court's determination that it was in

contempt of the June 25, 1997, order when the firm had been granted leave to

withdraw as counsel twelve days before that. Again, we see no error. The District

Court did not fashion the contempt order or the sanction with reference to the two

orders, that is, specifying one amount for violating the 1996 order and another for

violating the 1997 order. Instead, the court found Dysart Taylor in contempt for

failing to advise Gula to use the corporations' remaining assets to pay its withdrawal

liability, which liability was set out in the order filed in December 1996 when the firm

was actively representing the corporations. The results of Dysart Taylor's contempt

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was ongoing—the corporations paid the law firm and others, to the exclusion of the

Fund, until their assets were exhausted and they were unable to comply with the

court's orders.

Because we cannot say that the District Court abused its discretion in finding

Dysart Taylor in civil contempt of court and in ordering sanctions, we affirm.

MELLOY, Circuit Judge, dissenting.

I respectfully dissent from the majority opinion. I believe that the lawyers in

this case are being penalized for doing what lawyers do. That is, they give advice to

clients, sometimes clients who are in financial distress, and get paid for that advice.

The district court, and now the majority, have held that doing so may subject the

lawyer to civil contempt and the payment of substantial damages. I believe that such

a holding puts at peril any attorney who represents financially distressed clients. 

In order to fully address my concerns, I think it is important to set forth a

chronology of significant events in this case. The Chicago Truck Drivers, Helpers

and Warehouse Workers Union (Independent) Pension Fund (the “Fund”) and its

trustees brought suit against four trucking companies owned by Steven Gula to

collect interim payments for withdrawal liability under ERISA. Appellant Dysart

Taylor represented the trucking companies during part of that underlying action that

gave rise to the finding of contempt. 

On December 4, 1996 the district court granted the Fund’s motion for summary

judgment. In granting the motion, the court found the defendants liable for the

withdrawal of interim payments under ERISA. The district court ordered the trucking

companies to begin making interim payments within sixty days. As the majority

notes, the Fund, not the defendant, then filed a motion to alter or amend the

judgement pursuant to Fed.R.Civ. Proc. 59(e).

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The court granted Dysart Taylor leave to withdraw from the case on June 13,

1997. On June 25, 1997 the district court entered an amended judgment against the

trucking companies. This amended order clarified the amount owed and the schedule

of payments. It required the trucking companies to pay past-due interim payments,

liquidated damages, attorneys’ fees and costs, interest, and to make quarterly

installments beginning August 1, 1997. 

The Fund did not receive any payments by November 1998. Accordingly, the

Fund moved to hold the corporate defendants and Steven Gula, the corporate

defendants’ sole officer and shareholder, in contempt. The district court denied the

motion and the Fund appealed. On March 24, 2000 we remanded the case after

concluding that the district court improperly placed the burden on the Fund to show

that the alleged contemnors’ inability to pay. Chicago Truck Drivers v. Brotherhood

Labor Leasing, 207 F.3d 500, 505 (8th Cir. 2000) Further, we stated that the Fund

was entitled to develop its case against Gula in spite of the fact that he was not named

in the prior payment orders. 

On remand the Fund filed an amended petition for contempt. The amended

petition joined all of the attorneys who had represented the corporate defendants as

alleged contemnors, including Dysart Taylor, and the corporate defendants.

Following a hearing the district court held that Steven Gula and Dysart Taylor acted

in contempt of the court’s directives. The district court found that Dysart Taylor was

aware that the corporations’ assets were insufficient to pay both the Fund and the

other creditors, including Dysart Taylor. It also found that the law firm provided

legal advice regarding whom to pay. In particular, the district court concluded that

Dysart Taylor aided and abetted Gula’s failure to pay the Fund. The district court

ordered Dysart Taylor to pay the Fund the amount it had received in payment from

the corporations.

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The Fund “bears the burden of proving facts warranting a civil contempt order

by clear and convincing evidence.” Indep. Fed’n of Flight Attendants v. Cooper, 134

F.3d 917, 920 (8th Cir. 1998). “The contempt power is a most potent weapon, and

therefore it must be carefully and precisely employed.” Mahers v. Hedgepeth, 32

F.3d 1273, 1275 (8th Cir. 1994). I do not believe the evidence in this case meets this

stringent standard.

When Dysart Taylor received the December 1996 order it was not clear that the

order constituted an appealable final injunction. The law firm was faced with

advising its client as to what to do. What was the effect of the Rule 59(e) motion?

Was the order final, given the filing of the motion to alter or amend? Was the order

appealable? Can other operating expenses be paid before payment of the withdrawal

liability? Should the company begin paying the judgment (assuming it was a final

judgment), appeal, attempt to settle, or file bankruptcy? Dysart Taylor ultimately

advised its client that it could pay other creditors and then pay the Fund with any

money remaining. Dysart Taylor’s receipt of payment for this representation is what

gives rise to this contempt proceeding.

Even if one assumes that Dysart Taylor should have realized the December

1996 order should have been construed as an injunction and gave poor advice, I do

not believe its actions rise to the level of aiding and abetting contempt. I part

company with the majority when it states that the law firm’s bad faith is immaterial

to the court’s finding of contempt. A law firm that gives legal advice in good faith

is not subject to contempt as an aider and abettor of its client. See In re Watts 190

U.S. 1, 29 (1903) (“In the ordinary case of advice to clients, if an attorney acts in

good faith and in the honest belief that his advice is well founded and in the just

interests of his client, he cannot be held liable for error in judgment.”); Maness v.

Meyers, 419 U.S. 449, 467 (1975) (holding that an attorney is not subject to contempt

for good faith legal advice regarding the Fifth Amendment).

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The Seventh Circuit later found that failure to obey a court order to pay

ERISA withdrawal liability may be enforced by a contempt proceeding. Central

States, Southeast and Southwest Areas Pension Fund v. Wintz Properties, Inc., 155

F.3d 868, 873 (7th Cir. 1998). Our court also so held in the appeal of an earlier order

in this case. Chicago Truck Drivers, 207 F.3d at 505. However, both of those

decisions came well after the events that give rise to this contempt action.

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In late 1996 and early 1997 the issue of whether the interim order was, in fact,

an injunction was not at all clear. At the time the order was entered, even the

Magistrate Judge did not believe the order was an injunction as evidenced by his

failure to treat it as such in 1996. Although this court stated that the district court’s

June 25, 1997 order looked like an injunction even if it was not labeled one, it never

addressed whether the December 4, 1996 judgment could be construed as an

injunction. Chicago Truck Drivers, 207 F.3d at 507. Further, merely “looking” like

an injunction does not satisfy the clear and convincing evidence standard required to

make a finding of contempt.

Moreover, at the time of the entry of the December 1996 order, the case law

tended to suggest that the order was not an injunction. The only circuit authority on

the issue had found that such an interim order for payment of ERISA withdrawal

liability was not an injunction. The Seventh Circuit held in a case similar to the case

at bar, Trustees of the Chicago Truck Drivers, Helpers and Warehouse Workers

Union Pension Fund v. Central Transport, Inc., 935 F.2d 114, 117 (7th Cir. 1991),

that an interim order under ERISA requiring payments pending arbitration is not an

injunction.4

 Accordingly, it was not obvious that the order in this case was an

injunction. This uncertainty was exacerbated by the legitimate questions the

attorneys had regarding whether the order was a final order since the plaintiff filed

a timely motion to alter and amend the judgment pursuant to Fed. R. Civ. P. 59(e).

To that end, neither party appealed the judgment, likely due to doubt regarding

whether it was ripe for appeal. The Fund never tried to enforce the order. It only

started execution proceedings in November 1998, after the entry of the final order in

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June 1997. Accordingly, I firmly believe the movant fell far short of proving by clear

and convincing evidence that the defendant law firm aided and abetted a violation of

an injunction when the firm did not even realize that an injunction existed.

Even if there was an injunction in place, it is not impermissible to advise a

client regarding how to deal with an injunction order and to get paid for those

services. In this case, the attorneys had to review the terms of the injunction, confer

with their client, respond to the motion to alter and amend the judgment, and review

the available options given the fact that there was insufficient money to pay the

judgment. In light of the attorneys reasonable belief that the judgment was not an

injunction, much less a final injunction, the attorneys’ advice regarding how to deal

with the order was not sufficiently improper as to rise to the level of contempt.

Finally, I am troubled by the majority’s statements that the contempt finding

was predicated in part on the fact that, even if there was no injunction, the withdrawal

liability was a legal obligation of the company. Slip Opinion at 5. Again, attorneys

deal with legal obligations all the time, such as individuals who are delinquent in

paying their federal or states taxes, in default on their mortgage, or behind on their

credit card payments. Practically every person in a bankruptcy proceeding is

delinquent on paying a number of legal obligations. Under the majority’s ruling, a

lawyer advising a financially distressed client as to how to deal with competing legal

obligations is at risk of a contempt citation for providing such advice and receiving

payment for those services. As the petitioner correctly suggests, to expose attorneys

to a possible contempt in this situation will temper attorney advocacy and impede

clients’ ability to obtain advice when it is most needed. As the Supreme Court has

said in a criminal context:

If performance of a lawyer’s duty to advise a client that a privilege is

available exposes a lawyer to the threat of contempt for giving honest

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advice it is hardly debatable that some advocates may lose their zeal for

forthrightness and independence.

Maness, 419 U.S. at 466 (1975).

Accordingly, I respectfully dissent.

______________________________

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