1 RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Six

th Circuit Rul e 206

ELECTRO NIC CIT

ATION: 2003 FED App . 0295P (6th C ir.) File Name: 03a02 95p.06



### UNITED STATES COURT OF APPEALS

FOR THE SIXT H CIR CUIT

_________________

E LECTRICAL W ORKERS P ENSI ON T RUS T F UND OF L OCAL U

NION #58, IBEW, et al., Plaintiffs-

Appellant s,

v.

G ARY ’ S E LECTRIC S ERVICE C OMPANY , Defendant-Appellee. X

- - - -

> , - - - - - - N No. 01-1864

Appeal from the United States District Court for the E astern D istrict of Michiga n at Detr oit. No. 98-74631—Anna Diggs Tay lor, District Judge.
Argued: January

30, 2003
Decided and Filed: August 18, 2003

Befor e: BATCH

ELDER, MOORE, a

nd CLA Y, Circui t Judges.

_________________ COUNSEL

ARGUED: Mark Granz o tto, Royal Oak, Michiga n, for Appellant

. W illiam L. Hooth, COX, HODGMAN & 2 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

GIARMARCO, Troy, Michig an, for Appellee. ON BRI EF: SheldonM. Meizlish, Detroit, Michigan, Rolland R. O’Hare, SA CHS, NUN N, K ATE S, KAD US HIN , O’HARE
, HELVESTON

& WALDMAN, Detroit, Michig an, for Appellan t. William L. Hooth, Ryan L ee Perry , COX, HODGMAN& GIARMARCO, Troy , Michigan, for Appellee.

_________________

OPINION

_________________ KAREN NELSON M OOR E, Circuit Judge. Th

is dispute originated

when Defendant-Appellee Gar y’s Electric

Service Company (“Gary ’s Electric”) violated a collective bargaining agreement’s ( “CBA”) fringe bene fit provisions and then fail ed to honor a

request for information f

rom Plainti ffsAppellan ts Electric al Worker ’s Pension Trust Fund of Local Union#58, International

Brotherhood of Electrical Workers, et al. (“the Fund s”) regarding the perf ormance of Gary ’s Electr ic ’s representational duties. The Funds first filed a grievancewith

the Labor-Management Committee (“LMC”) based on Gary’ s Electric’s failu re to pay fringe benefit s, request i n g that the LMC enter an arbitra tion award ordering Gary ’s Electric to file past-due reports, pay past-due contribu tions, and ther

eafter file and pay c ontributions as they became due. Aft

e rthe LMC entered the awa rd, the Funds filed an action in district court to s ecure G ary ’s E lec tric’s compliance with the terms of the a ward. Up on the Fu nds’ motion, the district court

granted summary

judgment in favor of the Funds. When Gar

y’ s Electr ic appealed, the appeal was consolidated

with a Na

tional L abor Re lati ons Board (“NLRB ”) petition seeking enforcement of an NL RB order finding that Gar

y’ s Electr ic enga ged in unfair labor

practic es. A panel of this court affirmed the district court’sdecision and enforced the NLRB order. See Elec. Workers Local 58No. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 3

1 The secon d let

ter of as sent , s ign ed by P ip ia as G ary’s Ele ctric’s presid ent, took effect on July 29 , 198 8 and stated th at it would rema in effecti ve until terminated by Gary’s Elect ric supplyi ng NEC A and the Union with writ ten no tice at leas t 150 days p rior to th e agre eme nt’s anniversary date. See Elec . Work ers Local 58 Pens ion Tr ust Fund , 227 F.3d at 650. Pension Trust Fund v. Gary’s Elec. Serv. Co. , 227 F.3d 646 (6th Cir. 2000).
Thereafter, the Funds brought contempt proceedings in the districtcourt agains t Gary ’s Elect ric and i ts owner, Russell Ga ry Pipia (“Pipia”), alleging that they continually violated the terms of t he arbitration award. The district court held a hearing and gr anted the contempt

p etition as to Gary’ s Electric but denied it as to Pipia. The district court explained that, am ong other re asons, Pipi a could not be held i n contempt beca use he was not an actual defendant in the action. The Funds then brought this appeal from the portion of the court’s order deny

ing the contempt petition

as to Pipia. We VACATE the decision of the district court and REMAND for addi

tional pro ceeding s consi ste nt with this opinion.

I. BACKGROUND
Gary’ s Electric, a Michigan corpor ation wholly owned by Pipia, was a small electricalservice company with prima

rily residential and

sm all -bu si nes s cu st om ers . In 1976, and again in1988, Gary’ s Electric signed a letter of assent authorizing the Southeastern Michigan Chapter of the National Electr ical Contrac tors Associa

tion (“NECA”) to be its representative for all business matters between NECA an d the International Brotherhoo dof E lectrical Workers’ Loc al Union #58 (“the Union”). 1 Throug

h its repr esentat ive, NECA , Gary ’s Elect

ric entered into a bind ing C BA with t he Union. Th is CBA required particip ating e

mploy ers to p ay

their emp loyees’ 4 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

2 The arbitrati on award spec ifically ord ered Ga ry’s Elec tric to r emedy its violatio n by: A. Submitting the f

ringe benefit

reports due to the da te of this decis ion as r equir ed by Arti cle VIII of that Ag reem ent, and B. Imm ediate ly paying the am ounts shown on t hose report s as due , includin g the liqu idated dam ages d ue ther eon , and

. . . D. Hereafter, fil ing all report s an d pa ying all fringe bene fit contributions on a ti mely bas is as requir ed by Article VIII. Joint Appendix (“J.A.”) at 16 (Compl., Ex. C, Award of the LMC ).

3 During the pe nding app eal, G ary’s Ele ctric nei ther fi led a supersedeas bond nor stayed the judgm ent pen ding appeal. Thus, the dist rict court “ retai n[ed] jur isdi ction to enf orce [it s] judgment .” NLRB v. Cincinnati

Bronze, Inc. , 829 F.2d 58 5, 588 (6th Cir. 1987). fringe benefit s —

pension, vacation, un em pl oym en t, an nu it y, and medic al — into the

Funds.

OnAugust 4, 1 998, in accordance with the terms of the CBA, the Funds made a demand to the L MC for arbitration of their gr ievance, charging

that Gary’ s Electric failed to make its contrac tual pay

ments into t

he Funds and fail ed to submi

t the requi red fri nge benefit reports . A hear

ing bef ore the L MC

was set for August 20, 1998, and Gary ’s E lectric was given notice. On August 25, 1998, the LMC fo und Gary ’s Elect

ric guilty of the charges in the gr ievance and ordered Gary ’s Electric to pay the past- due fri nge benefit payme nts, produce the reports, an d make future pay ments when due. 2 An additional award

from the L

MC, also da

ted Aug ust 25, 1998, found Gary ’s Elect

ric gui lty o f failing

to secur e a sure ty bond as required by

the CBA.

Almo sttwo months late r, afte r Gary ’s Elect

ric fail ed to comply with the L

MC award s, the Fu

nds filed a compla int in districtcourt requesting that the c ourt enter a judgment enforcing the L

MC’s awards. On

May 18, 1999, the district court granted the Funds’ motion for summary judgment, and Gary ’s Elect

ric immed

iately filed an appeal. 3 A thre e-jud geNo. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 5

4 The NLRB ’s ge ner al c ou nsel br ough t charg es aga inst Ga ry’s Elec tric for

fai lur e to pr ovide inf

ormat ion r elev ant to t

he per formance of its repre sentatio nal du ties purs uant to Secti o ns 8(a)(5) and (1) of the National L abor Relations Act (“NLRA”). The ad ministrative law judge (“ALJ”) foun d Gary ’s Ele ctr ic gui lt y as cha rge d, a nd then th e NLRB affir med the ALJ’s decision. The NLR B eventually sought enf orcement of its orde r, and that actio n was c onso lidated with G ary’s Ele ctric’s appeal from summary

judgment i n the Fun ds’ cas e.

5 Ga ry’s Electr ic ceas ed funct ionin g as an el ectri cal se rvices company by No vem ber 1 999 , alt ho ugh Pipia and his secretary continued to work
up until Janu ary 20 00 in ord er to w in d up the b usiness’s affairs. Accord i ng to t

he Fun ds, Gary’ s Ele ctr ic we nt ou t of busi ness on November 13, 1999.

6 The Funds admit

that once these contempt proceedings began, Ga ry’s Elec tric submitted th e fri nge benefi t report s that earli er they were ordered to produce. These reports showed that between May 8, 19 98 and Octo ber 30 , 1999 , Gary’s Electric ow ed $2 47,80 3.82 to the Funds. panel of this court heard the consolidated appeal4 on August 4, 2000, and issued an opi nion o n September 25, 2000, enforc ing the N

LRB order an

d affirm ing the d istric t court’s grant of summary judgment for the Funds. See Elec. Workers Local 58 Pension Trust Fund , 227 F.3d at 649.

While Gary ’s Elect

ric’s ap peal wa s pending, 5 the Funds initiated conte mpt p roceed ings in district court a gainst Gary’ s Electric and Pipia fo r fail ing to adhere to the district court’s orders to pay past-due c ontributions, di sclose f ringe b enefit reports , adhere to the rules in the CBA for future contributions and reports, secure a sur ety bond, and pay the Funds their co sts and at

torney fees. 6 A No vem ber 23, 1999 order of the dis trict cou

rt tempor arily disposed o f the Fun

ds’ petition for con tempt by orderin g: (1) G ary ’s Elect

ric to p roduce, within one month, the fringe benefit reports fr o m June 1998 through the present date; and (2) Pipia to submit to

a deposition within two months. The district court postponed 6 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

7 In pre vious briefs to this court, Gary’s Electr ic reli ed on a September 29, 2000 distr ict co u rt or der deci ding tha t t he mot ion f

or conte mpt is moot beca

use th e court i ssued an order dismi ssi ng the cas e on Novembe r 23, 19 99. On October 19, 2000, th e dist rict court i ssued another ord er va cating the September 29, 2000 ord er which denied the moti on for co ntemp t as mo ot, and s tate d that the Sept ember order was “erroneously is sued.” J.A. at 5 (Docket #42).

8 Ga ry’s Electr ic event uall y produced the report s f or May 8, 1998 through October 30 , 1999. Neverthe less, t he y fail ed to produce any
repo rts for Novemb er a nd December 1999, even t hough, as t

he Fun ds al lege, Gary’s Elec tric still emplo yed electrical work ers during those months.

9 The Funds asse rt t

hat if the ti me peri od runs fr om the date of judgmen t up unti l November 13, 1999 when Gar

y’ s Ele ctr ic we nt ou t of business, then the amount owed by Gary’s Electric in fringe ben efits is “s ome a hundred se ven thousan d dollars .” J. A. at 136 (T r. of Mot. Hr’g). its rulings on the other issues contained in the Funds’ petition for cont empt.

The instant appeal began when the F unds reinitiated the deferred port i ons of the ir conte mpt petition again st both Gary’ s Electric and Pipia. 7 In their motion for rehear ing filed

onDecember 7, 2000, the Funds alleged that Gary’ s Electric, with total disregard for this court’s decision, chos e n ot to comply with the district

court’s judgment — it did not make delinquent

payments, produce

all the necessary

fringe benefit reports , 8 make pro spective pay ments as they bec ame due, or comply with the bond award. According to the affidavit of a Funds e mp loyee re sponsible for monitoring participating employ ers’ payments to the Funds, fr omt he district court’s judgment enforc ing th e LMC awards in May 1999 until October 30, 1999, f

ringe b enefit c ontribu tions owed by Gary’ s Electric

amounted to $75, 345.04. 9 In the motion, the Funds also alle ge that Pipia b egan to waste the

corpora te asserts in an effort to avoid making the court-re quired pay ments. According

to the Funds, Pipia starting “strippingNo. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 7

the corporation of its assets” after t he NL RB and the Funds initiated procee dings against it in lat e 1998 and early 1999. App ellants’ Br. at 8. The evidence supporting the F unds ’ position that

Pipia flagrantly

and deliberately

disregarded the

cour t’s jud gment includes: Pi pia more than tripl ing his Gary’ s Electric s alary within two y ears, Pipia’s receipt of large bonuses and loans from Gary ’s Electric, Pipia’s use of funds from a corporate account to purcha se a fur coat for his wife which he later

claimed as a bonus, and Pipia’s directives to pay in full ever

y creditor e

xcept for the debt owed the Funds.

At the motio n hearing, the Fu nds r equested that Pipia “be ordered to purge himself of contempt by requiring him to pay [to the Fund s] the sum of . . . a hundred thousand twelve dol lars [and] thirty

-eight cents, that being

the amoun

t o f indebted ness that accrued after [Pipia] was ordered to comply with the fringe be nefit pro visions of the Collective Bargaining Agreement.”J.A. at 141 (Tr. of Mot. Hr’g). Ultimately, the dist r ict court g ranted t he conte mpt petition with res

pect to Gary’ s Electric, but denied it without prejudice wi th respect to Pipia. The district court stated:

Iwill at this time enter an order finding the corporation incontempt of the order, the injunctive orde r of thiscourt because it f ailed to do what it was ordered to do. I am
una ble t o do that with Mr. Pipia because although y ou have told me many very reprehensible

things that he has don e, there are no proofs of that on this record and h e
was not a def

endant in this case and he was not ordered specific all y

to d o anything othe

r than give a deposition which he did do.

J.A. at 153 (Tr . of Mot. H r’g). The Funds now appe al f ro m the portion of the district court’s order deny ing the petition to hold Pipia i

n contempt. 8 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

II. ANALY SIS

A. Jurisdiction

The di strict court had jurisdiction pursuant to §301 of the Labor Manag ement Rel ations Act, as ame nded, 29 U .S.C. § 185, and §§ 502(g)(2) and 515 of the Employee Retire ment Inc ome Secur ity Act of 1974 (“ERI SA”). We have jurisdiction over this

timely appe al pursua

nt to 28 U.S. C. § 1291.

B. Standard of Review

A decision on a contempt pe tition is within the sound discr etionof

th e t ri al co ur t a nd th us is re vi ew ed on ly for a n abuseof discretion. Peppers

v. Barry , 873 F.2d

967, 968 ( 6th Cir. 1989) . “Abuse

of discr etion is defined

as a def inite and firmconvictionthat the trial court committed a clear error of judgment.” Bowling v. Pfizer, Inc. , 102 F.3 d 777, 780 ( 6th Cir. 1996) (qu

otati on omitted), cert. denied, 522 U.S. 906 (199 7). Under th

is standa rd, a dist rict cou rt’s dec ision is t o be afford ed “gr eat def erence ;” it “will

be disturbed only if the di strict court relied upon clearly erroneous findings of f

act , improper ly appl ie d the governing law, or used an e rroneous le gal standard.” Blue Cross & Blue Shield Mut. of Ohio v. Blue Cross &

Blue Shield Ass’n , 110 F.3d 318, 322 (6th Cir. 1997).

C. Conte mpt
1. Corpor ate Office rs Can Be Held in Contem pt

Whena court s eeks to e nforce its order or super vise its judgmen t, one weapon in its arsenal is contempt of court. See NLRB v. Cincinnati Bronze, Inc. , 829 F.2d 585, 588 (6th Cir. 1987). Recognizingthat the p ower “to punish for

contempt s” should no t b e u se d l ig ht ly, the Supreme Court has stated that this power “ is a ne cessar y and inte gr al part of theNo. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 9

independence of the judiciary, a nd is absolutely essent

ial t o the pe rfo rmance of the duties imposed on them by law. W i thoutit they

are mer e boards of arbitr

ation, whose judgmen ts and decree s would

be only advisory .” Gompers v. Buck’s Stov e &Range Co. , 221 U.S. 418, 450 (1911). Contemptproceedings enforce the message that

court orders and ju dgments are to be complied with in a prompt manner. Cincinnati

Br onz e , 829 F.2d

at 590. With

respect to civil contempt procee dings , “[j ]udicial sanctions . . . may, in a proper case, be employ

ed for either

or both of two

purposes ; to coerce the defendant into compliance w ith the c our t’s ord er, and to com

pensate the compl ainant f

or losse s sustained.” United Sta tes v. Un ited Min e Worker s of Am.
, 330 U.S. 258, 303-04 (1947).

Inorder to

hold a litigant in con

tempt, the movant mus t produce clear and convincing evide n ce that shows that “he violated a defini te and spe cific or

der of the court r

eq uiring him to perform or refrain from perfor ming a particular act or acts with knowledge of thecourt’s order.” Cincinnati Bronze
, 829 F.2d at 591 (quotation and brackets omitted). Clear and convincingevidenc e is a

not a light burden

and should not be confused with the less stringent, proof by a preponderance of the evidence. See Conso l. Coal Co. v. Local Union No. 1784, United Mi ne W ork ers of Am. , 514 F.2d 763, 766 (6th Cir. 1975). Once the movant

establishes his prima facie case, the burden shifts to the contemnor who may de fend b y coming forward with evidence showing

that he is presently unable to comply with the court’s order. United States v. Rylander , 460 U.S. 752, 757 (1983) (“[w]here compliance is impossibl e , neither the moving

party nor the c ourt has an y r eason to proceed with the civil contempt action. It is settled, however, that in raisin g thi s defense, the defendant has a burde n of production.”). To meet this productionburden in this circ uit “a defenda nt must show

categ orically

and in det

ail why he

or she is unable to comply with the court’s order.” Rolex Watch U.S.A., Inc. v. Crowley , 74 F.3d 716, 720 (6th Cir. 1996) (quotationomitted). When evaluating a defendant’sfailure to 10 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

comply with a co urt o rder, we also consider whether the defendant “took all reasonable steps wi thi n [his] power to comply with the court’s orde r.” Peppers , 873 F.2d at 969.

Inthe present case, the Funds petitioned for a contempt order against both Gar

y’ s Electr ic and its principal officer and owner, Pipia. The district court granted the motion for Gary ’s Electric but denied the m otion for Pipia. The district court ident i fied three reasons for dismissing the contempt motion with respect to Pipia. First, the district court noted that Pip ia could not be hel d

in contempt because he was not a defendant inthe lawsuit. Second, the court focused on the terms of the origina l o rder and stated that the only act Pipia was specific ally

and indivi dually

ordere d to do was

to submit to

a deposition and that he complied in full. Third, the dis trict court reasoned that although the Funds identified Pipia’s many “reprehensible” acts, “there [were] no proofs of that on [the] record.” J.A. at 153 (Tr. of Mot. Hr’g). In or der to

revers e the distr

ict cour t, we must find that the district court abused its discre tion in that

it e ith er made clearly

erroneous findi ngs of fact, improperly applied the cont

rolli ng law, or used the incorre ct lega

l standar d in dismissing the petition as to Pipia. Blue Cross & Blue Shield Mut. of

Ohio , 110 F.3d at 322.

The Funds carry

the initial burden to show contempt. That is
, the Funds must come forward with clear and convinc ing evidence showing

that Pipia “

viola te[d] a defini

te and spe cific order of the court requiring him to perform or refrain fr om performing

a particu l ar act or acts with knowledge of the court’s order.” Cincinnati Bronze
, 829 F.2d at

591 (quotation omitted). Thus, an initial

issue we m

ust resolve is whether an unnamed party ca n be subject

to a court order, i.e. , whether a court’s order directed

to a corporation ever could reach out to bi nd a non-litigant, such as a corporate off icer. The ans we r is clear ly established in both t

his circu it and the Supreme Court.No. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 11

Many decades ago, in a case wherea corporate officer who failed to comply with a subpoena duce s t ecum wa s held in contempt, the Supreme Court stated:

A command t

o the corporation is in effect a command to thosewho are

officia lly responsible for the conduct of its affairs. If they , apprise d of the w rit d irected to the corporation, prevent compliance or fail to take appropr iate a ction within their power for the performance of the corp orate du

ty, they , no less than th e corpo ration itsel f, are guilty of disobedienc e, and may be punished for cont empt.

Wilson v. United States , 221 U.S. 361, 376 (1911) (noting that the corporation can be proceeded a gainst in its co rp orate capaci ty at the same time that

“[office rs] are pu nished in t

heir nat ur al capacities for failure to do what the law re quires of themas the representatives of the corpora tion.” (quotation omitted)). More recently , we have commented on the issue of holding a corporate president in contempt when an injunction is direct

ed solely to th e corpo ra ti on or co mp an y. SeeUnited States v. Hochs chi ld , 977 F.2d 208 (6th Cir. 1992), cert. denied, 506 U.S. 1067 (1993). In Hochsch ild, the defendant corporate officer argued that hewas not bound by the terms of t

he in jun cti on d ire cte d t o hi s co rpo rat io n. In support of his argument, the defendant relied on lang uage in the district c ourt’s or

der that imp lied that the district court may have la

cked jurisdict ion over h

im becau se he wa s not a named party in the action. Id. at 212. On appe al, we determined

that the injunction applied to the nonparty offic er inhi s c or po ra te ca pa ci ty. We arrived at this conclusion after

we juxtaposedthe two contr asting v iewpoints — the minor

ity viewsugges ting t

hat personal jurisdiction over a non-party for contempt only can be a

chieved through service of proce ss and the majority view allowing personal jurisdictionfor contempt

over officers or corporate employ ees if they ha

ve notice of the injunction and its contents. Id. (noting that “mor

e [cases ] have held that officers or employ

ees of c orporat

e and bus iness 12 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

10 We noted that acc ord ing to Fed eral R ule of Civil Procedure 65(d), injuncti ons are b inding on d efend ant co rpo rations ’ of ficers in the ir
corp orate capac itie s, so lon g as they h ave no tice. Ho chsc hild , 977 F. 2d at 211. entities are subject to in personam jurisdiction for purposes of contempt if they have notice

of the inj unc tion and its contents”); see also Ce

nt. States , Southea st and South west Areas Pension Fund v. Wintz Props., Inc. , 155 F.3d 868, 876 (7th Cir. 1998) (deciding that the company ’s preside nt and owner, a non-party

to the lawsuit, al so w as subject to the injunction when the court’s order was directed at the company and its offic ers); NLRB v. Se quoia Dist

. Cou ncil of Carpente rs, AFL-CIO , 568 F.2d 628, 633 (9th Cir. 1977) (“It

ca nhardly be a

rgued that the principal officers of a labo r union ar e not leg ally

identifie d with it, a

nd thus lia

ble in conte m ptfor disobeying

an order directed to the union.”). Heralding the major

ity v iew as the

law of thi s c ircuit, we reference da Second Circuit case quoting Judge L earned Hand: “ ‘a pers on who knowingly assists a d

efenda nt in violating an injunction subject s him self to civil as well as criminal procee dings for cont empt. This

is well settled law.’” Hochsch ild
, 977 F.2d a

t 2 12 (quot ing Backo v. Local 281, United Bhd. of Carpente

rs & Joiners , 438 F.2d 176, 180 (2d Cir. 1970), cert. den ied
, 404 U.S. 858 (1971) (quoting Alemite Mfg. Corp. v. Staff

, 42 F.2d 832 (2d Cir. 1930))). Ul ti ma te ly, we determined that the de fendan t officer was “bound by the injunction

. . . because of his relationship to the corporation.” Id. 10

Other ci rc ui ts ha ve re as on ed si mi la rl y. The Eighth Ci rcuit in Chicago Truck Drivers v. Bh d. Labor Leasing , 207 F.3d 500 (8th Cir. 2000), was faced with a ca se strikin

gly similar t o the one presented on this appeal. I n Chicago Truck Driver s , a union pension fund and its trustees sued corporations for inter im pay ments of w

ithdrawa l liability under ERISA. Id. at 503. The district court granted summaryNo. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 13

ju dgment in the union pension fund’s favor and ordered the

commen cem ent

of payments. See id. Amended judgmen ts followed, ordering further paymen ts but “[b]oth the initial and amended judgments contained no reference to eithe r [the corpora tions’ sole officer and shareholder] specifically or the [corporation s’ ] officers or other agents g enerically .” Id. Whenthe unionpension fund never received any of the courtordered payments, the fund filed a motion for

co ntempt againstboth the corporations and thei r sole owner and shareholder in his personal capacity

. Id. The unionpension fund rested its case after it presented evidenc e that no pay ments had been made although the pay ments were due and that at the time

the pay ments bec ame due, the corp orate entities ha d t he re so ur ce s t o p ay. See id. at 504. The district court denied the motion for contempt stating that the union p e nsionfund failed “to produce evidence suff icient for a finding that the d

efenda nts have ass et s for making the judgment debt pay

ments but did not do so.” Id.

Onappeal, the Eighth Circuit remanded the case to the districtcourt, stating that the distri ct court ab used its discretionby

shifting the burden to the union pen sion fund t o show th at the corporation had the present ability to pay and by failing to make a

ny s pecific finding s as to whe

th er th e defendant office r committe d acts tha

t m ight support a contempt finding against him pe rsonally

. Id. at 5 08. In addition, the court of appeals instructed thedistrict court on remand to make specific findings with respect to whether the parties satisfied their burdens. Id. at 505. The court furth er noted that although “ a contempt finding against the [corporations likely] would [not] serve any usef ul purpose, since it appears they

no longer have any

assets,” the union pensionfund “is entitled to further development of the record concerning

the dissipa tion o f the [corporations’] assets, and

anexpress finding from the court that the[corpora tions] have satisfied their burden on an inability-to- comply defense .” Id. at 505-06. 14 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

11 Rule 65(d) provides that an injunction or a restraining o rder bind s: “the parties to the action, their officers, agents, servants, emp loyees, and
attorne ys, and . . . t

hose persons in active concert or part icipation w it h them who receive actual noti ce of the order b y persona l s ervi ce or otherwise.” Fed. R. Civ. P. 65(d). The Eighth Circuit noted

that although the Supreme Court in R ylander stated that a “present inability to comply” i s a defense to civil contemp t, som e circuits have refined that statement r equ iring that an alleged contemnor, a sserting inability to pay , establish “(1) that they were unable to

co mp ly, explaining why ca tegorically

and in det ail; (2) that their inability to comply

was not self-induced; and (3) that they ma d e in good faith all reasonable effor ts to comply.” Chicago Truck Dri

vers , 207 F.3d

at 506 (quotations omitted). Regard ing the assertion that the defendant officer could b e held in contempt ind ivi dually, the Eighth Circuit compa red the case befo re it to injuncti ons under Feder al Rule of Civil Procedure 65(d). 11 B ecause the Supre

me Court lib erally applied R ul e 65(d) to any

“‘equitable decree compelling obedience under the threat of contempt’” including “not only injunctions . . . butalso ‘enforcement orders and aff irmative decrees,’”the Eigh

th Circuit d

etermine d that a c orporat e officer can be bound

by a court’ s payment orders even when the “orders [mak e ] no specific reference to him.” Chicago Truck Drivers
, 207 F.3d at 50 7 (quo ting Int’l Longshoremen’s Ass’n v. Philadelphia Marine Trade Ass’n
, 389 U.S. 64, 75- 76 (1967) ). Thus, while a district court’s order setting a pay schedule ma y o r m ay n ot be cla ssified a s an injunction, it nevertheless can be treated as one when “it compe l[s] . . . affirmative, prospective obedience with it.” Id.

Inthe case be fore us, the distri ct court ’s order only referred to Gary’ s Electric and did not mention its agents, officers, or

owners at all

. But, as is

evident f rom the Supreme Cour

t in Wilson and our

o pinion in Hochsch ild , whethe r or not Pip ia

was a named

defendant in the order, or even mentioned at all,No. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 15

12 In his testimo ny, Pip ia uses ign oran ce as a n excu se for his fail ure to pay the co ntributio ns. He states: “I just w asn’t aware that I h ad to pay it. I thoug ht we we re in co urt. We were f igh ti ng this out, and I didn ’t — I was not going to join t he union, and rather t

han pay that ki nd of mo ney, I would just close t

he business down.” J.A. at 202 (Pipia Dep.). is notcontrolling. See Wilson , 221 U.S. at 376 ; Hochsch ild
, 977 F.2d at 212. Pipia, as an off icer of the corporation and the one responsible for the corporation’s affa irs, was subject to the court’s order just as the corporation itself was. See Chicago Truc k Driv ers , 207 F.3d at 508. B ecause

Pipia either “prevent[ed] compliance or fa il[ed] to take

appropr iate actionwithin [his] power for the perf ormance of the corporate duty,”the district c ourt had t he author ity t o hold Pipia

in contempt

. Wilson , 221 U.S. at 376 . The Fun ds only needed to show tha

t Gary ’s Elect

ric did not comply

with the district court’s judgmen

t in order to meet their burden. That said, the Funds met their initial burden for a contempt findingagainst Pipia when the y pr esented to the dis trict court the previous order of the court affirming the L MC awards and

Pipia’s own deposition testimony admit ting that he knew of the court’s order ye t failed t o ob serve it. 12 See, e.g.
, Chicago Truck Dr ivers
, 207 F.3d at 505 (“Here, it is undisputed that [the corpora tions] have not made a

ny pay ments pursuant to the court’s order. At

that point, the burde

n should have shif ted to [the co rporati ons] to show an inability to comply .”). The Funds presented clear and convincing evidence — undisputed, even — that Pipia, the sole owner and officer of Gary’ s Electric, “with knowledge of the cour t’s order,” chose to violate the court’s order by n ot making the required contributions to the Funds. Cincinnati Bronze , 829 F.2d at 591 (quotation omitted). Moreover, the district court’s order

was in eff

ectbecause Gary ’s Electric did not file a supersedeas bond and

because Gary ’s Electric did not obtain

a stay of the dis trict cou

rt’s judg ment pend

ing app eal. Thu s, because Pipia is bound by thedistrict court’s order directed at Gary’ s Electric and because the Fun ds present ed evidence that 16 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

13 To the exte nt that Chica go Tru ck Drive rs sugge sts that t he defendant offi cer could not be held l iable f or an amount equivalent to the underlying delinq uent p ayme nts bec ause h e was n ever su ed in h is indiv idual capa city , we disa gree. B ecau se on e of the p urpo ses of civ il
conte mpt is to compensate a c omplainant for i ts l osses, we note t hat Pip ia

can be fined in an am ount e quiva lent to the original judgment. The dist rict court s hould consi der to what extent P ipia deliberately caused the underlying judgment to remain u npaid and should sanctio n acc ord ingly. no pay ments had been made although the pay ments were due, t he district court improperly dismissed the petition to h ol d Pipia in contempt.

Once the Funds establish their prima facie case, the bur den of production shifts to Pipia, who may defe nd against an order of conte mpt by producin g evide nce to show that he i s pre sently unable to comply with the court’ s order. Se e Rylander
, 460 U.S. at

757. Ho we ve r, as we st at ed pr ev io us ly,

some courts have narrowed Rylander by requiring

either that the contemnor prove in grea t detail his inability to pay, show that he did not cau se the inability, or prove that he

unsucce ss fully

attempted compliance in good faith. See Chicago Truck Dri

vers , 207 F.3d

at 50 6. Wepreviously have required a contemnor to show

“categorically

and in detail why he or she is unable to comply w ith the court’s order.” Rolex Watch U.S.A., Inc. , 74 F.3d at 720. We also h ave evaluated whether the defendant “took all reasonable stepswithin [his] power to comply

with the court’s order.” Peppers , 873 F.2d at 969. Until now, however, we have never decided whether

we embrace the refinement on Rylander that re quires the contemnor

to show tha

t his prese

nt inabilit y to comply

is not his own faul

t or the re sult

of self-induced inability. Nor have

we decided previously

whether we would sanction the wrongdoer. Today we c

hoose to follow the lead of the Eigh th Circuit and hold that the Rylander “pr esentinability

to

co mp ly” d ef

ense to civil contempt requires that the contemnor

show that he is not responsible for the present i nab ility to pa y. 13 If the contem nor cann ot make th

isNo. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 17

showi ng, then the Rylander defense is unavai lable. Th

us, taking our cues from the Supreme Cou rt in Rylander and Wils on , we dete

rmine tha t if a cor porate o fficer

avoids a court’s order to the corporation by failing to take a ction or attempt compliance, “the

y, n o less than the corporation itself,

are guilty of disobedienc e, and may be punished for contempt.” Wilson , 221 U.S. at 376. Moreover, we hold that because a civil contempt rul ing either attem pts to coe rce
co mpliance or compe

nsate the complainant for lo sses, it i s fully appropr iate to impose judicial sanctions on the non party corpora te officer. See Unite

d Mine W orkers
, 330 U.S. at 303- 04.
Turningthen to the instant case, Pipia clearly did not meet his burden of production. As the Funds point out, Pip ia testified in his deposition that he did n ot abide by the judgment because he did no t t hink Gary’s Ele ctric was contractually

obligated to do so. I

nteresti ngly and witho

ut a court order , ho wever, Pipia paid off nearly all Gary’ s Electric’s other creditors approximately $541,100 be tw een May 17, 1999 and December 31, 1999. J.A. at 139-40 (Tr. of Mot. Hr’g). Moreover, ac cording to the Funds, Gary ’s Electric had gross receipts of $1,800,000 in 1999, the year the company closed its doors. Even ass

uming tha

t all of Pipia’s actions were taken in good faith and not to avoid pay ing the Funds, Pipia’s de cision to p ay all other creditors and refusal to pay the Funds an yth ing at a ll is ample evidence from which the district court cou l d conclud e that Pipia

did not tak

e “all

reaso n ablesteps” to

ensure G ary ’s Elect

ric’s compliance

with the court order. See Pep

pers , 873 F.2d at 96 9 . In addition, Pipia’s testimony

that the c ompany’s aff

airs had wound up shortly after the contempt hearing — pre sumably attempting to imply a lack

of expenda

ble funds — is hardl

y sufficie nt to show “categorically

and in det

ail” why Pipia is una

ble to 18 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

14 In his deposi ti on testi mony, Pipia indicates t hat business operati ons ceased on Ja nu ar y 2 000 an d h e t he n l iq ui dat ed G a r y’s Electric’s assets. Although his t esti mony indi cates that Gary’s Elect ric st il l ow es s ome money to the b ank, o wes taxes to t he state, and no longer has any

acco unts receiv ables , it is not at al l cl ear ina categor ical and detai led way that Ga ry’s Electr ic was unable to comply with t he court’s order when the order w as i ssu ed.

15 The rent went from $1,500 a m onth to $3,000 a mo nth.

16 At the mo tion he arin g , Gary’ s Elect ric’ s counselsugges ted th at Pip ia’s pay r ais e occur red beca

use bu sin ess sal es we nt u p fr om $1,200,00 0 to $1,900,00 0 that year.

1 7 Accor ding to a l ett er f rom Pipi a’s accoun tant , the Octobe r 1999 payroll did indicat e a $54,000 bonus for Pipi a; howe ver, $ 18,0 00 o f this
money was withheld taxes, and the remaining $36,000 was a charge to his loan account. Thus, Pipia received no net cash f rom this trans action. comply with the court’s order. 14 Rolex Watch U.S.A., Inc. , 74 F.3d at 720.

Becau se we have

decided that a showing of

clean ha nds is essential to the Rylander defense , we are

imp res sed even

more by Pipia’s attempts to drainthe corp orate r esource s to avoid satisfying

the cour t’s orde r. The fi rst example

cited by th e Funds is the doubling of Gary ’s Electric’s rent 15 tha t occurred after the Funds moved for summary judgment. The office space that Gary ’s Elect ric leased was owned by

one of Pipia’s other companies, KRP, and thus the increa s ed rent directly benefitted KRP at

the expense of Gary ’s Electric and its creditors. Another example of Pipia’s diversion of Gary ’s Electric’s assets was Pipia’s salary incre ase from $70,000, as indicated in his 1997 income tax return, to $220, 500 in 1999. 16 Additionally, Pipia receive d a $54,000 bonus in October 1999; 17 Gary’ s Electric ha d an outstanding $5,100 loanto Pipia in June 2000; and Pipia purchased a fur coat using funds from Gary ’s Elect ric’s trade- exch ange accountsreceiv ableaccoun

t which he

later do cumente d as a bonus

.No. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 19

Considering these events in the ir en ti re ty, we believe that the Funds are “e

ntitled to f

urther d evelopment o f the record regarding a possible contempt finding against [Pipia] personally.” Chicago Tru ck Drive rs , 207 F.3d at 506.

Insum, the districtcourt abused its discretion on numerous frontswh en i t denied t

he conte mpt petition for Pipia . First, the court’s

determination tha

t Pipia cou

ld not be he ld in contempt because he was not a defendant was an i mproper applicationof

controlling law. See gen erally Ho chschild , 977 F.2d at 212 (holdingthat a

corporate officer was bound by an injunction directed at the corporation). Secon d, beca use Pipia, the company ’s soleowner a nd offic er, was

responsi ble for the corporation’s compliance, he implicitly was ordered

to do more than mere ly submit to a deposition as the district court opi nion sug gests. See Wilson , 221 U.S. at 376. Third, the district c ourt cle arly

did not con sider pr

operly the burdens inthis case. See Chicago Truck Drivers, 207 F.3 d at 505 . In order to pr oceed on its motion for contempt, all the Funds needed to show wa s that Gar

y’ s Electr

ic did not p ay

th e ordered amounts. Thus, onc e Gary ’s Elect ric admitted t

hat it did not obey the

court’s order to make pay ments to the

Funds, the district court abused i ts d iscretion when it failed to shift the burden to

Pipia to show “cate gorica lly a nd in detail” why Gary’ s Electric could not pay

. Rol ex Watch U.S.A., Inc

. , 74 F.3d at 720. Mor

eover, b ased on to day ’s holding , Pipia als o will need to show that he was not th e cause of Gary ’s Electric’s in ab il it y t o pay. Fina lly, the district court made

erroneous findings of fact when it dismissed the contemp t petition with resp ect to Pipia stating that there were no proofs

onthe record of Pipia’s “reprehensible” acts. Pipia’s deposition testi mony provided sufficient e vidence from which the district court could have concluded that additio nal de ve lo pm en t o f t he re co rd wa s n ec es sa ry. Therefore, we instruct the district court to use the proper legaltests and make

specific finding s with res

pect towhether the parties satisfied

their respective burdens. I f Pipia is found 20 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

to be in cont

empt, it is u

p to the district court to “fashion an appropr iate sanction.” Chicago Tru ck Drive rs , 207 F.3d at 508

. Appropriate sanctions would aim to compensate t h e Funds for losses resultingfromPipia’s purposeful decisions to a void paying the

judgment and to eliminate Ga ry’ s Electric ’s resou

rces. 2. Contempt Is an Acceptable Form of Relief
Gary’ s Electric

argue s that con

tempt is not the proper relief for fai lur e to pay

a moneta

ry judgmen

t, and tha

t only garnishmen t, attachment, and execution are available as col l ectionremedies. We disagree with Gary ’s Electric’s classificat ion of this action as a collection action. In our opinion, the sanction of civil contem pt is more pro

perly considered

a compen satory

remedy and an e ncouragement to comply with court orders. As we stated above, the objective of any contempt determination is toenforce the message that

co urt or de rs an d j ud gm en ts ar e t o b e t ak en se ri ou sl y. Se e Cincinnati

Bronze , 829 F.2d at 590. Moreove r, jud icial sanctions can be u sed not onl y to coerce compliance, but a

lso to compensa

te th e complainant. See Unite d Mine W orkers
, 33 0 U.S. at 303 -04; see also 11A Charl es Alan Wr ight, Arthur R . Mil ler, & Mary

Kay Ka ne, Federal Practice and Procedu re§ 2960, at 372-73 (2d ed. 1995) (“A federal court’s discre tion includes the power to frame a sanction to fit the violation.”). Thus, the sanction of civil contempt may

include

a fine designed to compensate the Funds not only for the money th at Pi pi a s qu an de re d b ut al so fo r t he mo ne y Pipi a diverted from the Fu nd s and paid to other creditors. See general ly Uni ted Mine

Work ers , 330 U.S. at 303-04 (noting that judicial sanctions may be used to c ompen sat e a complainant

for losses and that they “must of course be based uponevidence of [the] complainant’s actua l lo ss”); Wrig ht, Miller, & Ka ne, supra § 2960, at 369-70 (“ [Relief in a

civil contempt proceeding] often tak es the form of a fine in the amount of the damage sustained by plaintiff .”) . Thus, because this contempt proceedi ng i s broug ht to compe

nsateNo. 01-1864 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. 21

18 Ga ry’s Electri c’s position also i s refuted by an anal ysis of the Supr eme Co urt’s decisio n in NLRB v. Deena A rtware, Inc. , 361 U.S. 398 (1960). Although this Supreme Co urt case did not specif ically address the quest ion raised by G ary’s Ele ctric, whe th e r contempt proceedings are
proper to enforce a mone y j udgme nt , t he c oncu rre nce in th e Sup reme Court opini on rev eals tha t con tempt proceedings are us ed to en force orders for ba ck pa y. See Deena Artware, Inc. , 36 1 U.S. at 412- 14 (Frankfurter, J., c oncurrin g) ( “It is equal ly appropri ate for the Courtof App eals, by decree enforcing the Board’s order, to place [an employer]
at the haz ard tha t if

an am ount is found to be owing , [con duc t design ed to defeat the back- pay or der] s ubsequ ent to t he de cree may be foun d to be
contuma cious. . . . Accordingly, the petition for con tempt sh ould h ave been sustained.”) ; see als o NLRB v. Deena A rtware, Inc. , 251 F. 2d 183, 186 (6th Cir. 1958) (“ In the absence of cont empt proc eedings , we do not find that juri sdiction is conferred upon us to order and supervise discovery proceedings in the appellate co urt for the purpo se of enf orcing a mo netary

awa rd runn ing in f

avor of a privat e indi vidual , even t hough the award has receiv ed its v itality from a prev ious d ecree of this Co urt.” (em pha sis added)). Because t her e is no material distinction between finding

con temp t for failure to com ply with an order t o provide employe es back
pay and for f

ailure to comply

with an order t o make past -du e fringe ben efit contributions, we see no justification for treating these two monetary award s differen tly u nder the law. Thus, we concl ude that Deena Artwa re provi des addi ti onal support for a determi nati on that
contem pt is an appro priate form o f relief in t hese circum stances. the Funds for lo s ses base d on Pipia’ s failure to comply

with the court’s order and not as a medium fo r collecting the underlying

judgmen

t, it is not a collection action but a compensatory

tool w hich exp res sly permits the use of monetary sanc

tions in this manner. 18

3. A Corporate Officer C an Be Held in C ont emp t Without P iercing the Corpor ate Veil
According

to Gary’s Ele ctric, because the Funds did not attempt to pi erce the corpor

ate veil a nd did not su

e Pipia in hi s i nd iv id ua l c ap ac it y, Pipia could never personally be held responsi ble for Gar

y’ s Ele c tric’s failure to make the fringebenefit contributions as ordered by the court. Gary ’s Electric also argue s that bec ause the Funds fa iled to submit specif

ic 22 Elec. W orkers Loc

al 58 Pens ion Trust Fund et al. v. Gary’s Elec. Serv. Co. No. 01-1864

p leadi ngs and proof of an alter-ego r elationship, Mich iga n lawdoes not permit the court to pierce the corporate veil and hold a corporate of

ficer li abl e fo r a c orp ora ti on’ s de bt . In support of Gary ’s Electric’s contention, Chicago Truck Drivers also suggests that the defendant cor porate o ffic er could not be lia

ble for the underl

yin g delinque

nt pay ments because he was never s ued in his individual capacity. 207 F.3d at 507-08.

Once again, Gary ’s Elect ric fail s to re cognize that the Funds are not r

equestin g that Pip ia

be liable for Gary ’s Electric’s delinquent fringe-ben e fit contributions, but rather the Funds request that Pipia be held in contempt. Chicago Truck Drivers expressly

provides that

the distri ct court

could “fashion an appro priate sanction” if the defendant officer was ulti m ately

found in contempt of court. 207 F.3d at 507-08. Thus, on remand, the district court could determin

e that a proper sanction wo uld

be to fine Pipia in an amount equivalent

to those funds that Pipia reasonably diver ted. See Chicago Truck Dri

vers , 207 F.3d at 505 (noting that “[w]here compensation

is intended, a fine is imposed, pa ya ble to complainant”) (quot ing United Mine W o rkers , 330 U.S. at 304). Fitting ly, the Fund s never a sked that Pipia be he ld persona lly responsi ble for the amount G ary ’s Elect r ic was ordered to pay , but rather th e Fu nds requested that Pipia be held accountabl e for his own deliberate disobedience of the

c ourt’ s order. Piercing the corporate ve il is unnecessary because the Funds are not a ttempting to hold Pipia

liablefor Gary ’s Elect

ric’s corporate

debts.

III. CONCL USION

Becau se the distri ct court abused it s discretion when it denied the Funds’ petition to hold Pipia in cont empt, we VACATE the district court’s decision and REMAND for additional proceedings consistent with this opinion.