Opinion ID: 2520
Heading Depth: 2
Heading Rank: 1

Heading: Reduction of Judgment for Compensatory Damages

Text: As the District Court found, Motorola and Nokia have settled certain contractual claims with Telsim, acting through SDIF, and each plaintiff has received cash payments from Telsim that, together, exceed $1.2 billion. Plaintiffs have set off these amounts against their judgments, resulting in a pro tanto reduction in the amounts owed by the Individual Defendants, who still owe hundreds of millions in damages. Motorola Credit Corp., 2009 WL 819041, at , 2007 U.S. Dist. LEXIS 27377, at . The Uzans argue that [a] district court must reduce a judgment under ... Rule 60(b)(5) ... if the plaintiff's injury has been fully or partially satisfied by another judgment or settlement. Appellant's Br. at 25 (emphasis added). They further posit that plaintiffs' set-off is unreliable because there is a risk that plaintiffs will apply their settlement compensation to the punitive, instead of compensatory, portions of the judgment entered against the Uzans. The discretionary relief available under Rule 60(b) is equitable. See Fed. R.Civ.P. 60(b)(5) (stating that a court may relieve a party or its legal representative from a final judgment ... [where, inter alia, ] applying it prospectively is no longer equitable  (emphasis added)); 12 James Wm. Moore et al., Moore's Federal Practice § 60.22[5] (3d ed. 2008) (The relief provided by Rule 60(b) is equitable in nature and, in exercising its discretion under Rule 60(b), a court may always consider whether the moving party has acted equitably.) (collecting cases); 11 Charles A. Wright, Arthur R. Miller and Mary Kay Kane, Federal Practice and Procedure § 2857, at 255 (2d ed. 1995) (Equitable principles may be taken into account by a court in the exercise of its discretion under Rule 60(b).). The record before usand the record described in the ten published decisions predating this opinion, of which we take judicial notice, see, e.g., New York v. Operation Rescue Nat'l, 273 F.3d 184, 198 (2d Cir.2001) (taking judicial notice of factual findings in a related contempt proceeding)demonstrate that the Uzans have not acted equitably because they have not pursued their defense with clean hands, Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 814, 65 S.Ct. 993, 89 L.Ed. 1381 (1945) (stating that he who comes into equity must come with clean hands (internal quotation marks omitted)). See generally Shondel v. McDermott, 775 F.2d 859, 867-68 (7th Cir.1985) (Posner, J. ) (noting that the concept of clean hands originated in the moralistic, rule-less, natural-law character of the equity jurisprudence created by the Lord Chancellors of England when the office was filled by clerics, and observing that [t]oday, `unclean hands' really just means that in equity as in law the plaintiff's fault, like the defendant's, may be relevant to the question of what if any remedy the plaintiff is entitled to). [3] Relying on their vast personal wealth, the Uzans have time and again deployed their lawyers to raise legal roadblocks to the enforcement of the judgment against them. They have persistently endeavored to evade the lawful jurisdiction of the District Court and undermine its careful and determined work. See, e.g., Motorola Credit Corp., 2009 WL 819041, at , 2007 U.S. Dist. LEXIS 27377, at  ([T]he Individual Defendants' willful failure to comply with this Court's order that they provide post-judgment discovery makes the arrest orders still applicable.); Uzan IX, 413 F.Supp.2d at 350 ([T]he individual defendants, despite repeated discovery orders, have refused to produce evidence of their financial situationevidence largely or exclusively in their control.); Uzan III, 274 F.Supp.2d at 491 (The defendants contemptuously refused to obey the Court's orders, in one case even breaking their sworn promise not to further eviscerate the collateral. The defendants also repeatedly reneged on promises to provide discovery ... and instructed their counsel not to reveal to this Court or the Court of Appeals secret steps they were taking in Turkey to obtain ex parte orders undercutting the prior orders of this Court.); id. at 494 (Moreover, defendants have repeatedly resisted, and gone into contempt of, this Court's orders to transfer the collateral (or its functional equivalent) to the registry of this Court so that it could be used to satisfy any judgment. They have also declined the proffered alternative of posting a bond in lieu of the collateral, preferring to remain in contempt.). [4] As counsel confirmed at oral argument, the Uzans remain in contempt of court for failure to comply with the District Court's orders that they transfer stock holdings to the Court's registry, and they remain subject to arrest should they set foot in the United States. See Motorola Credit Corp., 2009 WL 819041, at -3, 2007 U.S. Dist. LEXIS 27377, at -11. Despite their flat-out refusal to comply with the District Court's lawful orders, the Uzans now have the chutzpah to seek post-judgment, equitable relief from complying with those orders. [5] However, their conduct before this Court, and especially before the District Court, weighs heavily against granting the relief they seek. As the Supreme Court stated long ago, the clean hands doctrine is far more than a mere banality. It is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the defendant. Precision Instrument Mfg. Co., 324 U.S. at 814, 65 S.Ct. 993. We therefore conclude that the Uzans' utter disregard for the District Court's orders precludes the relief that they are seeking, and the District Court did not err in denying it. Our decision today does not conflict with our Court's prior holding that a plaintiff may not, as a matter of law, recover twice for the same injuries, see Singer v. Olympia Brewing Co., 878 F.2d 596, 600 (2d Cir.1989) ([W]hen a plaintiff receives a settlement from one defendant, a nonsettling defendant is entitled to a credit of the settlement amount against any judgment obtained by the plaintiff against the nonsettling defendant as long as both the settlement and judgment represent common damages.). In this case, the District Court assessed the risk of excessive recovery and determined that, in light of plaintiffs' assurances that they would not seek to recover from the Uzans the amount already recovered through SDIF, a formal modification of the judgment was unnecessary. Although we adhere to our rule against double recoveries, we also note that we have never held that judgment-debtors are entitled to an amended judgment each time their judgment is credited or set-off by a settling co-defendant. Accordingly, though we affirm the District Court's decision on the ground that the Uzans lack clean hands, we cannot say that the District Court's reasoning was legally erroneous or outside the range of permissible decisions, Sims, 534 F.3d at 132. In addition, today's decision does not conflict with our Court's previous observation that the clean hands doctrine might not apply where a Rule 60(b) motion is brought on the basis of a fraud on the court. See Martina Theatre Corp. v. Schine Chain Theatres, Inc., 278 F.2d 798, 801 (2d Cir.1960) (Friendly, J. ) (suggesting that [a] defrauded district court would have been empowered to take action sua sponte to expunge the judgment, and we would suppose that anyone, whether his hands were clean or dirty, could suggest that it do so). The application of any equitable doctrine will, quite naturally, depend on the circumstances presented, and we do not today hold that clean hands are the sine qua non of every Rule 60(b) motion. [6] The Uzans also posit that Motorola has wrongfully attempted to use its share of the Telsim settlement to offset both compensatory and punitive damages even though Telsim was not liable for punitive damages. In the Uzan's view, any set off should only apply to the District Court's award of compensatory damages, because those damages are shared by both the Uzans and Telsim. Motorola does not dispute that punitive damages were awarded against the Uzans and not against Telsim. See Uzan IX, 413 F.Supp.2d at 353 (awarding Motorola $ 1 billion in punitive damages from the individual defendants, jointly and severally (emphasis added)). Nonetheless, Motorola argues that it may apply its share of the settlement to the total amount of damages owed by the Uzansapproximately $3.1 billionbecause the Uzans hope to reduce [Motorola's] ability to recover abroad by reducing the amount of the compensatory award, and then placing their assets in jurisdictions where the enforcement of punitive damages is prohibited. Appellees' Br. 47. The District Court did not address the allocation of the settlement proceeds between compensatory and punitive damages, and it is unnecessary for us to do so in order to resolve this appeal. Nothing in the record indicates that the Uzans are even remotely close to full payment of compensatory damages. To the contrary, there is every indication that the Uzans have no interest in voluntarily paying any part of the judgment against them. The question of applying a set off to compensatory damages or punitive damages is therefore unripe for adjudication. We note, however, that should the Uzans attempt to use their settlement credit to frustrate the enforcement of punitive damages overseas, the District Court is well-equipped to order appropriate relief to protect its lawful judgment and jurisdiction. See Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500 F.3d 111, 113 (2d Cir.2007) (concluding that district courts maintain[] jurisdiction to protect ... federal judgments even after the money judgment... was satisfied). [7]