1 United States Court of Appeals,

Fifth Circuit.

No. 93-1936.

WESTERN WATER MANAGEMENT, INC., Plaintiff-Appellee,

v.

Charles P. BROWN, et al., Defendants-Appellants.

Dec. 15, 1994.

Appeal from the United States District Court for the Northern

District of Texas.

Before POLITZ, Chief Judge, GOLDBERG and DUHÉ, Circuit Judges.

DUHÉ, Circuit Judge:

After having been enjoined from manufacturing certain

products, Defend ants were found to be in contempt of that

injunction. After another finding of contempt and a modification

of the injunction, Defendants ask this Court to vacate the modified

injunction and both contempt orders or to vacate and remand for a

more specific injunctive order. For the following reasons, we

affirm the contempt o rders, vacate the modification to the

injunction, reinstate the Amended Injunction, and remand.

I. BACKGROUND

Western Water Management originally sued Chem Craft

Corporation and its officers, Charles Brown, Richard Hornack, and

J.B. Rivers, alleging a conspiracy to steal Western's formulas for

man ufacturing water treatment products. Western proved that

Defendants used formulas misappropriated from Western to make and

sell waste treatment products under the Chem Craft name. The court

issued a permanent injunction requiring Defendants to surrender all2

copies of Western's formulas (introduced at trial as "Exhibit 58")

and prohibiti ng Defendants from using or modifying Western's

formulas to manufacture any products. As amended and affirmed by

this Court, the injunction (the "Amended Injunction") provides as

follows:

IT IS, THEREFORE ORDERED that Defendants ... be and the

same hereby are ordered to return to Western Water Management

any and all copies of (1) Plaintiff's Trial Exhibit 58, the

listing of Western Water Management, Inc.'s chemical product

formulations, (2) Western Water formula No. 9715, and (3) any and all copies made therefrom....

... [Defendants] are directed forthwith to desist and

refrain from disclosing the co ntents of Plaintiff's Trial

Exhibit 58, the Western Water Management chemical product

f ormulations, or Western Water formula No. 9715 to any

individuals or entities ...;

... [Defendants] are restrained and enjoined from

utilizing the formulations contained on Plaintiff's trial

Exhibit 58, or Western Water formula No. 9715, or their

modifications of those formulations, in Defendants' trade or

business. This Order shall not preclude Defendants from

utilizing formulations based upon or d erived from other

sources, or from se lling single ingredient products or

dilutions of single ingredient products, unless those

dilutions are derived from Trial Exhibit 58.

7 R. at 1558-59.

Defendants formed a new entity known as Clearwater Industries,

which began selling products formulated in violation of the Amended

Injunction. Plaintiff moved for enforcement of the Amended

Injunction and for contempt. A magistrate judge found that

Clearwater was incorpor ated in an effort to hide Defendants'

continuing contemptuous formulation and sales of water-treatment

products, found Defendants in contempt, and recommended an order

for production of business documents showing Defendants' sales

revenues to determine the propriety of further monetary sanctions.1 Though a contempt decision is not final and appealable

until the appropriate sanction for contempt has been ordered,

Petroleos Mexicanos v. Crawford Enterprises, Inc., 826 F.2d 392,

398 (5th Cir.1987), the modification of the injunction which is

independently appealable makes the contempt order appealable as

well. 28 U.S.C. § 1292(a)(1) (jurisdiction over interlocutory

order modifying injunction); Mercury Motor Express, Inc. v.

Brinke, 475 F.2d 1086, 1091 (5th Cir.1973) (court with

interlocutory jurisdiction over injunctive order may decide other

aspects of the order).

3 The court ado pted the magistrate judge's recommendation in May

1992. Defendants moved for relief from and now appeal the May 1992

finding of contempt.

In August 1992 Western filed a second motion for contempt

alleging Defendants' continued use of pro prietary formulas and

failure to produce documents. In September 1993 the court granted

Western's second motion for contempt, denied Defendants' motion for

relief from the first contempt order, and sua sponte modified the

Amended Injunction (the "Modification"). The Modification deleted

that portion of the injunction which stated,

This Order shall not preclude Defendan ts from utilizing

formulations based upon or derived from other sources, or from

se lling single ingredient products or dilutions of single

ingredient products, unless those dilutions are derived from

Trial Exhibit 58.

11 R. 2737. From this September 1993 order and the May 1992

contempt order, Defendants appeal. 1

II. CONTEMPT FINDINGS

A. Specificity of the Injunction

Defendants first complain that the findings of contempt are

erroneous because the Amended Injunctio n is unenforceable. The

collateral attack on an injunction during contempt proceedings is2 Fed.R.Civ.P. 65(d) provides, "Every order granting an

injunction ... shall be specific in its terms; [and] shall

describe in reasonable detail, and not by reference to the

complaint or other document, the act or acts sought to be

restrained."

3 See Union Nacional de Trabajadores, 611 F.2d at 928 n. 1

(allowing no exception to the rule against collateral attacks

where the injunction has already been appealed).

4 prohibited if earlier review of the injunction was available. S ee

United States v. Ryan, 402 U.S. 530, 532 n. 4, 91 S.Ct. 1580, 1582

n. 4, 29 L.Ed. 2d 85 (1971); s ee also NLRB v. Union Nacional de

Trabajadores, 611 F.2d 926, 928 n. 1 (1st Cir.1979).

In their previous appeal, Defendants argued that the Amended

Injunction improperly imposed "an overbroad blanket prohibition"

against their use of Western's product formulas. Defendants claim

that despite their previous attack on the Amended Inj unction via

appeal, they may now in these contempt proceedi ngs collaterally

attack the Amended Injunction as vague or overbroad. 2 We disagree.

We see no reason to reopen consideration of the issue. 3

B. The First Contempt Order

In the first contempt order the court found that Defendants

failed to return all copies of Western's formulas and made formulas

copied from Weste rn in violation of the injunction. Defendants

moved for relief from this contempt order under Rule 60(b)(5) on

the basis of equitable reformation. Rule 60(b)(5) authorizes

relief from a final judgment or order when "it is no longer

equitable that the judgment should have prospective application."

In reviewing a request for relief under Rule 60(b)(5), "We are not

framing a decree. We are asking ourselves whether anything has5

happened that will justify us now in changing a decree." United

States v. Swift & Co., 286 U.S. 106, 119 , 52 S.Ct. 460, 464, 76

L.Ed. 999 (1932). Defendants have not met their burden of

establishing this equitable ground for relief. S ee id. ("The

inquiry ... is whether the changes are so important that dangers,

once substantial, have become attenuated to a shadow."); s ee also

11 Charles A. Wright & Arthur R. Miller, Federal Practice and

Procedure § 2863 (1973) ("It is clear that a strong showing is

required before an injunction or other prospective judgment will be

modified.").

C. The Second Contempt Order

Defendants contend that the second contempt order is based on

clearly erroneous findings or evidentiary errors. The court found,

contrary to D efendants' evidence at the second contempt hearing,

that certain formulas originated with Plaintiff rather than other

competitors in the industry. Defendants first complain of the

district judge's remark that Defendants did not argue bef ore the

ma gistrate judge that formulas were derived from other sources.

T he court considered the failure to present the argument earlier

only in making its credibility determ ination, not in refusing to

admit evidence. S ee Sept. 1993 contempt order, 11 R. 2727. Using

a belated assertion in making credibility determinations is not an

improper evidentiary ruling.

Defendants also assert error in the court's consideration of

rebuttal evidence of other sources, namely, Plaintiff's belatedly

submitted affidavits. After an evidentiary hearing, the court gave4 E.g., Exxon Corp. v. Texas Motor Exchange of Houston, Inc.,

628 F.2d 500, 503 (5th Cir.1980) (recognizing that an injunction

may be modified to impose more stringent requirements on the

defendant when the original purposes of the injunction are not

being fulfilled in any material respect).

6 the parties the opportunity to make "further written submission" to

the court, and Western's affidavits from the competitors (attesting

that Defendants' use of their formulas was not permitted) followed.

These affidavits were cumulative to impeach the credibility of

Defendants' evidence suggesting new sources of formulas.

Considering t hat the affidavits were both cumulative and

uncontroverted, the court's consideration of the affidavits was not

an abuse of discretion. S ee Hoffman ex rel NLRB v. Beer Drivers &

Salesmen's Local Union No. 888, 536 F.2d 1268, 1277 (9th Cir.1976)

(uncontroverted affidavits may be treated as true).

Defendan ts also contend that the court clearly erred in

finding Defendants' nonco m pliance with the order to surrender

documents and in finding that they wrongfully used formula numbers

CC 1105 and CC 6190. These issues were decided as a matter of fact

by the court, and Defendants have not demonstrated th at such

findings are clearly erroneous.

III. MODIFICATION OF THE AMENDED INJUNCTION

Defendants also complain of the district court's sua sponte

modification of the Amended Injunction, tightening restrictions on

Defendants' actions without prior notice. Although a district

court retains jurisdiction to modify an injunction to the

defen dants' detriment under certain circumstances, 4 we find no

authority allowing such a modification to be made without notice.5 See Fed.R.Civ.P. 65(a) (forbidding issuance of preliminary

injunction without notice) and (b) (allowing for issuance of

temporary restraining order without notice only under exceptional

circumstances); see also Parker v. Ryan, 960 F.2d 543, 544 n. 1

(5th Cir.1992) (recognizing that Rule 65(a)'s notice requirement

is constitutionally required).

Notice requirements for permanent injunctions are also

stringent. See Nationwide Amusements, Inc. v. Nattin, 452

F.2d 651, 652 (5th Cir.1971) (requiring notice of court's

consolidation pursuant to Rule 65(a)(2) of the trial of

permanent injunction with the hearing of preliminary

injunction); Puerto Rican Farm Workers ex rel. Vidal v.

Eatmon, 427 F.2d 210, 210-11 (5th Cir.1970) (same); see

also United States v. Crusco, 464 F.2d 1060, 1062-63 (3d

Cir.1972) (holding that permanent injunction is not

available without notice to the adverse party).

7 Rule 65 provi des stringent notice requirements for issuance of

injunctive relief. 5

Though Defendants had requested relief from the injunction,

they were not on notice of the modification imposed on the court's

own motion. Not having notice of any broader scope of the hearing

than the notice they sent and Plaintiff's notice on the second

contempt motion, "they were therefore unprepared and not on notice

to oppose the [modified] injunction issued at that hearing."

Williams v. McKeithen, 939 F.2d 1100, 1005 (5th Cir.1991) (vacating

court's sua sponte issuance of second order injoining defendants at

hearing held on notice of defendants' motion to vacate first

injunction because of lack of notice of the court's i ntended

action); s ee also Spangler v. Pasadena City Bd. of Educ., 537 F.2d

1031, 1036 n. 8 (9th Cir.1976) (Wallace, J., dissenting) ("[E]ven

if the district court had power to modify the injunction sua

sponte, it could not do so without providing prior notice."). We

hold that the district court abused its discretion in modifying the8

Amended Injunction, because the Modification was not prec eded by

appropriate notice and an opportunity for hearing.

The Modification to the Amended Injunction is vacated, and the

Amended Injunction reinstated. The contempt orders are in all

other respects affirmed. The matter is remanded for such further

proceedings as necessary on the modification after due notice.

AFFIRMED IN PART; VACATED IN PART; Amended Injunction

REINSTATED; REMANDED.