The Honorable Joseph S. Van Bokkelen, United States 

District Judge for the Northern District of Indiana, sitting by

designation.

In the

United States Court of Appeals

For the Seventh Circuit

No. 08-4013

UNITED STATES SECURITIES AND

EXCHANGE COMMISSION,

Plaintiff-Appellee,

v.

JASON R. HYATT, et al., 

Defendants.

APPEAL OF:

BCI AIRCRAFT LEASING, INC., et al.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 1:08-cv-02224—George W. Lindberg, Judge.

ARGUED MAY 12, 2009—DECIDED SEPTEMBER 3, 2010 

Before POSNER and SYKES, Circuit Judges, and VAN

BOKKELEN, District Judge.


2 No. 08-4013

SYKES, Circuit Judge. Brian Hollnagel and BCI Aircraft

Leasing appeal the district court’s order holding them

in contempt and awarding attorney’s fees for their

failure to adequately respond to two subpoenas duces

tecum served on them by the Securities and Exchange

Commission (“SEC”) in connection with litigation

between the SEC and another party. The SEC initiated

the contempt proceeding via a motion for a rule to show

cause why Hollnagel and BCI should not be held in

contempt. The motion asked the court to: (1) order them

to fully comply with the subpoenas; and (2) order

them to show cause why they should not be held in

contempt for their past noncompliance. Accompanying

this motion was a notice setting a date and time for

a hearing at which the SEC said it would “present, and

seek a hearing date regarding” its request for a showcause order. Hollnagel and BCI interpreted the notice

and motion to mean that the initial hearing would be

entirely ministerial—that the court would issue a showcause order and set another date on which the merits of

the contempt issue would be heard. So they didn’t

show up.

When the case was called and Hollnagel and BCI

didn’t appear, the SEC skipped over the procedural

preliminaries and moved right to the main event: The

agency’s lawyers asked the court to find Hollnagel and

BCI in contempt. The court did so, ordered them to

fully comply with the subpoenas within two days, and

imposed a $1,000-a-day fine for any noncompliance

after that date. The court later rescinded the fine, but
No. 08-4013 3

left the contempt order in place and ordered Hollnagel

and BCI to pay the SEC’s attorney’s fees.

Hollnagel and BCI appealed, raising several procedural

challenges to the district court’s order. First, they

contend that a contempt order cannot issue for noncompliance with a nonparty subpoena duces tecum unless

the recipient of the subpoena is first ordered by the court

to comply. In the alternative they claim that the SEC’s

motion for a rule to show cause notified them only that

the SEC was seeking a show-cause order setting a future

hearing date on the contempt motion, not that the court

would immediately adjudicate whether they were in

contempt. Accelerating the process, they maintain, deprived them of notice and an opportunity to be heard.

We reject the first of these arguments. Rule 45(e) of the

Federal Rules of Civil Procedure specifically provides

that a person who fails “without adequate excuse to

obey [a] subpoena” may be held in contempt. The rule

does not require the court to first order compliance

before imposing the sanction of contempt, although

subsection (c) of the rule requires an intervening court

order if the recipient of the subpoena objects in writing

to the production of documents or things. Hollnagel and

BCI did not serve a written objection, so the SEC was

entitled to seek a contempt sanction. We agree, however,

with the alternative argument that the SEC’s notice and

motion for a rule to show cause did not provide sufficient notice that the district court would decide the

contempt issue at the initial hearing. The notice sought

only the issuance of a show-cause order and asked the
4 No. 08-4013

court to set a hearing at which the merits of the contempt issue would later be adjudicated. Accordingly,

we vacate the contempt order.

I. Background

In district-court litigation between the SEC and Hyatt

Johnson Capital, lawyers for the SEC issued two

subpoenas duces tecum to nonparties Brian Hollnagel and

BCI Aircraft Leasing (collectively “BCI”). The subpoenas

were issued in June and August 2008 and requested a

large number of documents related to the underlying

litigation. BCI received a two-week extension from the

SEC for the June subpoena and responded in July by

producing numerous documents on a CD. The SEC

thought the production was deficient because some of

the e-mails did not contain their original attachments

or had attachments that were not produced in their

native format. Twice the SEC requested that BCI cure the

deficiencies; each time BCI attempted to do so, the SEC’s

lawyers found problems with the production. After

receiving the August subpoena, BCI again asked the

SEC for two extra weeks to respond. The SEC rejected

this request on August 20, 2008—the due date set in the

subpoena—based on the continuing dispute over the

adequacy of BCI’s compliance with the June subpoena.

On the afternoon of August 28, 2008—the Thursday

before Labor Day—the SEC filed a motion in the

district court seeking the issuance of a rule to show cause

why BCI should not be held in contempt for noncompliance with the subpoenas. The notice accompanying
No. 08-4013 5

the motion told BCI that the SEC would appear in the

district court at 9:30 a.m. on September 3, 2008 (the

Wednesday after Labor Day), and would “then and

there present, and seek a hearing date regarding” its motion for the issuance of a rule to show cause. The motion asked the court to: (1) order BCI to “fully and completely respond to the SEC’s subpoenas”; and (2) order

“BCI and Hollnagel to show cause why they should not

be held in contempt of court.” In a memorandum filed

in support of the motion, the SEC requested the same

relief. In the last paragraph of the memorandum, however, the SEC also asked the court to “find BCI and

Hollnagel in contempt” and award attorney’s fees.

BCI did not appear at the September 3 hearing. When

the case was called and BCI’s nonappearance was noted,

the SEC’s lawyers told the judge: “[W]e’re here today on

our contempt motion against BCI Aircraft Leasing and

Hollnagel for not complying with three [sic] subpoenas

issued to them.” They asked the court to order that “BCI

and Hollnagel make a complete and proper production” by

noon on September 5. They also asked the court to “find

BCI and Hollnagel in contempt for failing to respond

to these subpoenas completely” and proposed a fine of

$1,000 per day if complete production was not made by

the September 5 deadline. Finally, they asked the court

for an award of attorney’s fees. The court orally entered

these orders as requested. At the SEC’s suggestion, the

judge ordered the matter “continued” to September 10

to “report back on where we are.”

Later that same day, the court issued two conflicting

written orders purporting to record what transpired
6 No. 08-4013

during the morning hearing. The first, a summary

minute order, stated: “Hearing held and continued to

9/10/2008 at 9:00 a.m. Response due 9/5/2008 by noon

to plaintiff’s motion for order to show cause against

BCI . . . .” BCI says that it understood this as an order

directing it to submit a “show cause” response on the

contempt issue by the September 5 deadline and setting

a hearing on the matter at 9 a.m. on September 10. The

second order, prepared by the SEC and issued after the

minute order, was quite different. It made findings adjudicating BCI in contempt and ordered “full, proper, and

complete” compliance with the subpoenas by noon on

September 5. The order also imposed a fine of $1,000

for every day of noncompliance thereafter, “including

weekends and holidays.” Finally, this second order

awarded the SEC its “costs and reasonable attorney

fees” and directed the agency to file an appropriate fee

petition.

The next day, September 4, the district court entered a

docket entry striking the first of the written orders

entered on September 3. BCI immediately moved to

vacate the September 3 order finding it in contempt. BCI

argued first that the contempt motion was not properly

before the court on September 3. Based on the contents

of the notice accompanying the SEC’s August 28 motion,

BCI argued that the September 3 hearing was essentially only a scheduling hearing. BCI also attempted

to explain why it was not in contempt. On September 5,

in accordance with the terms of the by-now stricken

minute order, BCI filed a response to the SEC’s motion for

a rule to show cause. The court struck this response as
No. 08-4013 7

moot. Also on September 5, BCI sent another production

of subpoenaed documents to the SEC. The SEC considered this latest attempt at compliance deficient. During

the course of the next week, BCI sent two additional

productions attempting to address the asserted deficiencies.

On September 9, the district court denied BCI’s motion

to vacate the contempt order. The September 10 hearing

was continued to September 17, and on that date the

judge addressed whether BCI had complied with the

subpoenas as ordered. Concluding that BCI was making

a reasonable effort to comply, the judge continued the

hearing to October 1. BCI made yet another production

of documents several days later. Finally, at the October 1

hearing, the judge found that BCI had substantially

complied with the September 3 order to compel production and therefore rescinded the $1,000-per-day fine. The

court left the rest of the contempt order in place, however,

and required BCI to pay the SEC’s attorney’s fees. The

SEC submitted a bill for more than $33,000 in fees,

which the district court reduced to just under $6,000.

BCI appealed.

II. Discussion

Civil contempt is “a unique civil sanction because its

aim is both coercive and compensatory.” Prima Tek II, LLC

v. Klerk’s Plastic Indus., B.V., 525 F.3d 533, 542 (7th Cir.

2008). The coercive aspect of the remedy is not at issue

here. To prevail on a request for a contempt finding,
8 No. 08-4013

the moving party must establish by clear and convincing

evidence that (1) a court order sets forth an unambiguous

command; (2) the alleged contemnor violated that command; (3) the violation was significant, meaning the

alleged contemnor did not substantially comply with

the order; and (4) the alleged contemnor failed to make

a reasonable and diligent effort to comply. Id.

BCI argues that a subpoena duces tecum issued by an

attorney is not a court order and therefore the district

court could not hold BCI in contempt simply for failing

to comply with the SEC’s subpoenas. The first element of

contempt requires the moving party to “ ‘point to a decree

from the court which set[s] forth in specific detail an

unequivocal command which the party in contempt

violated.’ ” Stotler & Co. v. Able, 870 F.2d 1158, 1163 (7th

Cir. 1989) (quoting Ferrell v. Pierce, 785 F.2d 1372, 1378

(7th Cir. 1986)). BCI contends that this prerequisite

was not met here because the subpoenas issued by the

SEC’s attorneys were not court orders. BCI claims that

before adjudicating the contempt motion, the district

court first had to issue an order compelling compliance

with the SEC’s subpoenas.

This argument runs into difficulty under certain provisions in the procedural rules applicable to discovery

subpoenas. Rule 45(a) of the Federal Rules of Civil Procedure explains that a civil subpoena may issue in one of

two ways. The clerk of the court may issue a subpoena

“signed but otherwise in blank,” which is then completed

by the requesting party. FED. R. CIV. P. 45(a)(3). Alternatively, an attorney may also “issue and sign a subpoena
No. 08-4013 9

as an officer of . . . a court in which the attorney is authorized to practice; or . . . a court for a district where a

deposition is to be taken or production to be made, if the

attorney is authorized to practice in the court where

the action is pending.” Id.

Rule 45(e) speaks directly to the power of the district

court to hold the recipient of a subpoena in contempt:

“The issuing court may hold in contempt a person who,

having been served, fails without adequate excuse to

obey the subpoena.” FED. R. CIV. P. 45(e). The contempt

provision in subsection (e) does not distinguish between

subpoenas issued with some court involvement—those

issued in blank by the court clerk and completed by the

party who requests it—and those issued without any

court involvement at all by an attorney as an officer of

the court. Instead, subsection (e) of Rule 45 broadly refers

to the contempt power of the “issuing court,” which

implies that all discovery subpoenas are contemptsanctionable orders of the court whether issued in blank

by the clerk or by an attorney as an officer of the court.

The Advisory Committee Notes confirm this reading of

the rule. The commentary explains that “[a]lthough the

subpoena is in a sense the command of the attorney

who completes the form, defiance of a subpoena is nevertheless an act in defiance of a court order and exposes

the defiant witness to contempt sanctions.” FED. R. CIV. P.

45(a)(2) advisory committee’s note (1991 amend.). Nothing

in Rule 45 or the accompanying commentary purports

to limit the contempt power to subpoenas issued with

more direct district court involvement or to require
10 No. 08-4013

an intervening court order when the subpoena is issued

by an attorney.

There is limited appellate caselaw on this issue, but that

which exists supports this understanding. See Pennwalt

Corp. v. Durand-Wayland, Inc., 708 F.2d 492, 494 n.5 (9th

Cir. 1983) (“a subpoena duces tecum is itself a court

order, and noncompliance may warrant contempt sanctions,” but noting that when the person subpoenaed

objects in writing, “the party seeking discovery must

obtain a court order directing compliance” before contempt will be available); Fisher v. Marubeni Cotton Corp.,

526 F.2d 1338, 1341-42 (8th Cir. 1975) (explaining the

distinction between Rule 37 sanctions for failure of a

party to comply with a discovery request and Rule 45

sanctions for failure of a nonparty to comply with a

discovery subpoena). Accordingly, we reject BCI’s argument that a subpoena issued under Rule 45(a)(3) by an

attorney as an officer of the court is not itself a court

order subject to contempt sanctions if disobeyed.

It does not follow, however, that a contempt motion

for disobedience of a nonparty subpoena should be

treated in exactly the same way as a contempt motion

for violation of another kind of court order. As the commentary to Rule 45(e) explains:

In at least some circumstances, a non-party might

be guilty of contempt for refusing to obey a subpoena

even though the subpoena manifestly overreaches

the appropriate limits of the subpoena power. But,

because the command of the subpoena is not in
No. 08-4013 11

fact one uttered by a judicial officer, contempt

should be very sparingly applied when the non-party

witness has been overborne by a party or attorney.

FED. R. CIV. P. 45(e) advisory committee’s note (1991

amend.) (citation omitted). Rule 45 also contains

important provisions to protect the recipient of a subpoena from undue burden or expense, invasion of a

privilege, or disclosure of protected material. See FED. R.

CIV. P. 45(c). For example, under Rule 45(c), intervening

court involvement is required prior to initiation of contempt proceedings if the recipient of the subpoena

serves a written objection on the party or attorney designated in the subpoena. FED. R. CIV. P. 45(c)(2)(B). On

receipt of such an objection, the party serving the subpoena “may move the issuing court for an order compelling production or inspection,” and the production or

inspection “may be required only as directed in the

order.” FED. R. CIV. P. 45(c)(2)(B)(i)(ii). Also, Rule 45(c)(3)

describes the circumstances under which the court must

or may quash or modify a subpoena. See FED. R. CIV. P.

45(c)(3). These provisions suggest at a minimum that

contempt motions for noncompliance with a discovery

subpoena should be entertained with special attention

to the procedural and substantive rights of the nonparty

witness.

Here, BCI did not serve a written objection or move

to quash or modify the subpoenas. The SEC therefore

was not required to first obtain a court order compelling

compliance with its subpoenas before initiating contempt proceedings. As a general matter, however, the
12 No. 08-4013

more prudent practice for the court is to issue such an

order before entertaining a motion for contempt. See

9A CHARLES ALAN WRIGHT & ARTHUR R. MILLER,

FEDERAL PRACTICE AND PROCEDURE § 2465 (3d ed. 2008)

(“The district judge normally will preface a contempt

citation with an order directing either compliance

with the subpoena or a showing of an excuse for the

noncompliance.”). The problem here is not that the

SEC could not move for contempt without an intervening court order compelling compliance; the problem

is that the notice and motion did not provide adequate notice that the SEC would ask for a finding

of contempt at the initial hearing on the motion for a

rule to show cause.

Due process requires that a person facing contempt

sanctions be given adequate notice and fair opportunity

to be heard in civil contempt proceedings. See, e.g., Autotech

Techs. LP v. Integral Research & Dev. Corp., 499 F.3d 737, 746-

47 (7th Cir. 2007). This minimally includes a requirement that “notice be given of the time and place of hearing” on the propriety of a contempt order. Am. Fletcher

Mortg. Co. v. Bass, 688 F.2d 513, 519 (7th Cir. 1982); 9A

CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL

PRACTICE AND PROCEDURE § 2465 (3d ed. 2008) (“[D]ue

process does require that any civil contemnor be given

certain basic procedural protections before being subject

to any sanction: adequate notice and an opportunity

to be heard at a meaningful time and in a meaningful

manner.”). In this context, “the focus must be on notifying the alleged contemnor, rather than on the
No. 08-4013 13

formalities of notification procedures.” Autotech Techs.,

499 F.3d at 748.

It is undisputed that BCI was on notice that the SEC

was charging it with contumacious noncompliance

with the subpoenas; that much was clear from the

SEC’s motion. BCI argues more particularly that it

did not have sufficient notice that the district court

would be asked to decide whether a contempt order

should be issued at the September 3 hearing. Based on the

specific contents of the notice and motion, we agree.

No doubt it was unwise for BCI to consider its presence

at the September 3 hearing to be optional. But the SEC’s

use of the procedural device of a “motion for a rule to

show cause” gave BCI notice only that the court would

be asked to issue a show-cause order on that date, not

that it would immediately take up the merits of the contempt issue. The motion for a rule to show cause was

an unnecessary extra layer of process, but its use here

effectively postponed the adjudication of the alleged

contempt until after the court issued the requested showcause order.

Show-cause motions historically served two purposes:

First, the motion was a way to bring matters to the

district court more speedily than other methods of presentment prior to the Federal Rules of Civil Procedure.

See 5 CHARLES ALAN WRIGHT & ARTHUR R. MILLER,

FEDERAL PRACTICE AND PROCEDURE § 1195 (3d ed. 2004).

Second, the granting of a show-cause motion provided

notice to the nonmoving party of what he must do to

avoid some other court action, such as the issuance of an
14 No. 08-4013

injunction or writ. Id. A show-cause motion essentially

asks a district court to issue an order requiring the

nonmovant to show the court by a certain date why

the court should not take some other action—here, the

imposition of a contempt sanction. In other words,

the show-cause order satisfies the due-process notice requirement by giving the nonmoving party notice of

his opportunity to respond before the substantive

request for relief is entertained. See Mercer v. Mitchell,

908 F.2d 763, 766-68 (11th Cir. 1990).

The Federal Rules of Civil Procedure declined to incorporate this burdensome procedure into the modern

procedural code. Instead, a Rule 6(c) notice of hearing

and a Rule 7(b) motion stating the grounds for the

relief and specifying the actual relief sought suffice to

provide due-process notice to the nonmoving party

prior to entry of a court order. FED. R. CIV. P. 7(b).

Under Rule 6(c)(1)(C), the district court may, ex parte

and for cause, shorten the normal notice period. Judge

Clark—one of the principal drafters of the Federal Rules

of Civil Procedure—long ago explained the procedural

shift away from show-cause orders:

An unnecessary appearance of irregularity was

given the proceedings below by the fact that formal

orders to show cause, signed by a judge, were procured, whereas simple notices of motions would

have been preferable. The new Federal Rules of Civil

Procedure attempt to limit to a minimum these unnecessary formalities which take up the time of

judges and add nothing of value to the proceedings.
No. 08-4013 15

Here the order to show cause on the motion to quash

was simply a somewhat peremptory notice of

motion, as the judge below pointed out. Since such

orders to show cause serve only to confuse, judges

might well decline to sign them except when really

required by or justified under binding rules of procedure.

Application of Tracy, 106 F.2d 96, 98 (2d Cir. 1939) (Clark, J.,

concurring). Accordingly, the Federal Rules of Civil

Procedure have simplified motion practice and largely

eliminated the need to seek show-cause orders. Civil

contempt proceedings may be initiated by notice and

motion.

Despite its obsolescence, litigants regularly ask courts

to issue show-cause orders in civil contempt proceedings, perhaps because the federal rules for criminal

contempt provide that a court must give notice of contempt proceedings “in open court, in an order to show

cause, or in an arrest order.” See FED. R. CRIM. P. 42(a)(1)

(emphasis added). Regardless of the motivation, when

a party initiates a civil contempt proceeding via a

motion for a rule to show cause, we see no reason why

it should not be given its historical and literal meaning

for notice purposes: that the moving party is asking

only for a preliminary order directing the alleged

contemnor to show cause why the court should not

find him in contempt. District courts in this circuit apparently regularly treat show-cause motions as distinct

from other motions under the Federal Rules of Civil

Procedure. See, e.g., Sommerfield v. City of Chicago, 252 F.R.D.
16 No. 08-4013

See also Commodity Futures Trading Comm’n v. Velazquez, No. 04 1

C 5853, 2007 WL 1673218, at *2 (N.D. Ill. June 6, 2007) (“[T]he

Motion to Issue a Rule to Show Cause why Mr. Velazquez

should not be held in civil contempt . . . does not appear to be

a dispositive motion. The idea of a show cause motion is to

hold a hearing, at which the factfinder will ultimately

evaluate whether a finding of contempt . . . is appropriate on

the evidence and facts presented.”); Bds. of Trs. of the Bricklayers

Local 74 v. Vorkapic, No. 01 C 1048, 2001 WL 649501, at *1 n.1

(N.D. Ill. June 8, 2001) (“We impliedly granted the plaintiffs’

[show-cause] motion prior to conducting the evidentiary

hearing, which all parties understood to be a hearing on

whether or not the defendants were in violation of the preliminary injunction.”); Cent. States, Se. & Sw. Areas Health &

Welfare & Pension Funds v. Transcon Lines, No. 90 C 1853, 1993

U.S. Dist. LEXIS 12427 (N.D. Ill. Sept. 7, 1993).

407, 413 (N.D. Ill. 2008) (“The purpose of [a show-cause]

motion is to persuade the court that there should be a

hearing at which the factfinder will ultimately evaluate

whether a finding of contempt is appropriate on the

evidence presented.”).1

In certain limited circumstances, a district court may

treat a show-cause motion as a motion for an order on

the merits of the alleged contempt where doing so

would not cause prejudice—that is, when it would not

violate the alleged contemnor’s right to notice and an

opportunity to be heard. See 5 WRIGHT & MILLER, FEDERAL

PRACTICE AND PROCEDURE § 1195 (3d ed. 2004) (“[A]

request for a show cause order usually will be entertained and treated as a motion, if doing so will not prejudice
No. 08-4013 17

See also Am. Family Mut. Ins. v. Roth, No. 05 C 3839, 2007 WL 2

2377335, at *14 (N.D. Ill. Aug. 16, 2007) (treating show-cause

motion as a motion on the merits of contempt because “defendants have had ample notice of the claims against them and

have fully responded to [movant]’s theories, arguments, and

supporting evidence. Hence, there is no necessity for directing

[a show-cause order] . . . .”); Vorkapic, 2001 WL 649501, at *1 n.1

(“Although the parties’ subsequent briefs continue to be

styled as briefs in support or opposition to the Motion for

Issuance of an Order for Rule to Show Cause, they both argue

the ultimate question before the court—that is, whether the

defendants are indeed in contempt, not whether this court

should issue an order for rule to show cause.”); Orion Indus.,

Inc. v. Antenna Co., No. 87 C 6788, 1991 WL 70862, at *4 (N.D. Ill.

Apr. 27, 1991) (“[E]ven a cursory review of the briefs filed

and the court transcripts in this case, reveals that from the

moment the motion for a rule to show cause was first presented to Magistrate Judge Lefkow, the parties argued the

motion on the merits, and treated the motion like it was a

motion for an order finding the defendants in contempt of

court.”).

the opposing parties.” (emphasis added)); Sommerfield,

252 F.R.D. at 414 (“[T]he motion may properly be

viewed as a motion for contempt since it asked for a

finding of contempt and a miscellany of significant sanctions, the City has responded, and the matter has been

fully briefed by both sides. Thus, it is as though the rule

to show cause had been granted.”).2

The SEC argues that BCI should have been aware that

the September 3 hearing on the show-cause motion was

BCI’s only opportunity to argue the merits of the alleged
18 No. 08-4013

contempt. The SEC notes that it had previously filed a

similar motion in a different case before a different

judge in which BCI was then a named defendant, and

BCI responded to this motion by specifically addressing

the propriety of a contempt order. We are not persuaded.

BCI’s prior conduct in a different case before a different

judge in a case in which it was a party does not determine the adequacy of the notice provided in this case.

The notice at issue here told BCI that the relief

sought at the September 3 hearing would be limited to

the issuance of two orders: (1) an order compelling

BCI’s compliance with the subpoenas; and (2) an

order requiring BCI to show why it should not be held

in contempt.

The SEC also relies on a paragraph at the end of its

memorandum in support of its motion for a rule to

show cause in which it asked the court to find BCI in

contempt and award attorney’s fees. These requests for

substantive relief, however, were contained only in the

supporting memorandum—not in the notice and motion—and appeared only once and then only in the

final sentences of the memorandum. The bulk of the

memorandum discussed the grounds for the SEC’s request for an order compelling compliance with the subpoenas and its request for an order to show cause. The

memorandum was not enough to counteract the effect

of the SEC’s notice and motion, which put BCI on

notice that the SEC would seek only procedural relief at

the September 3 hearing.

Finally, the SEC contends that any failure of notice did

not prejudice BCI because BCI has never said how actual
No. 08-4013 19

notice would have helped it avoid a contempt finding.

The record does not support this argument. BCI filed a

motion to vacate the contempt order on September 4 and

argued that it had been making reasonable efforts to

comply with the subpoenas and therefore was not in

contempt. But the district judge denied the motion as

moot because he thought BCI had waived its opportunity to contest the contempt finding by failing to

show up at the September 3 hearing. As we have explained, although it was imprudent not to attend that

hearing, the SEC’s notice and motion failed to give

BCI notice that the agency would seek a contempt ruling

at that time. As such, there was no waiver on the merits

of the contempt issue. The district court never considered BCI’s claim that it had been making a goodfaith effort to comply with the subpoenas. Had it done

so, it might not have found BCI in contempt. See FED. R.

CIV. P. 45(e) (“The issuing court may hold in contempt

a person who, having been served, fails without adequate excuse to obey the subpoena.” (emphasis added)).

Treating the SEC’s procedural motion for rule

to show cause as a substantive motion for contempt

prejudiced BCI.

CONTEMPT ORDER VACATED

9-3-10