Court Opinion

ID: 6940862
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:03:00.708392+00
Date Added: 2024-06-11T16:07:41.291603
License: Public Domain

ESCHBACH, Circuit Judge,
concurring.
I agree with the court that we must vacate the district court’s order denying Rockwell’s motion for a rule to show cause and remand this matter for further proceedings. I write separately to note two errors of law made by the district court and to emphasize the factual findings that must be made upon remand. First, the court erred by holding that Tensor could not be “in privity” with DEV because Tensor acquired through a bankruptcy auction all of DEVs assets, except those covered by the injunctions. Second, the district court erred by holding that Yamagata could not be bound by the injunction because he was not personally enjoined and because DEV was no longer in existence.
I.
The district court held that Tensor could not be “in privity” with DEV, and therefore could not be subject to the injunction, because it acquired DEVs assets through a bankruptcy auction. The district court stated that “[tjhere is no privity between two companies when one purchases the assets of another through an independent third party.” The district court focused on whether Tensor legitimately acquired any of the tainted assets. The district court stated that the analysis for a successor in interest is “inapposite here because Tensor did not purchase any of the assets that were at issue in the DEV litigation.” The district court’s reasoning ignores the allegations made by Rockwell. It is irrelevant that Tensor purchased untainted assets through an independent third party. Rockwell alleges that Tensor also acquired tainted assets that were the subject of the injunctions through other channels, unrelated to the bankruptcy auction. The fact that Tensor acquired some DEV assets through a bankruptcy auction does not extinguish privity where Tensor has acquired the tainted DEV assets through other channels. DEV cannot “launder” the tainted assets by their acquisition of untainted assets.
Tensor may be subject to the injunction under either of two scenarios. First, if Tensor acquired the enjoined property for the purposes of evading the judgment, Tensor may be subject to the injunction. Walling v. Reuter, 321 U.S. 671, 673-74, 64 S.Ct. 826, 827-28, 88 L.Ed. 1001 (1944); Panther Pumps & Equipment v. Hydrocraft, Inc., 566 F.2d 8, 24-25 (7th Cir.1977), cert. denied, 435 U.S. 1013, 98 S.Ct. 1887, 56 L.Ed.2d 395 (1978). Second, if Tensor had knowledge of the court order and acquired the enjoined property through aiders and abettors who were subject to the injunction, then Tensor may be subject to the injunction. Regal Knitwear Co. v. NLRB, 324 U.S. 9,13-14, 65 S.Ct. 478, 480-81, 89 L.Ed. 661 (1945); Stot-ler & Co. v. Able, 870 F.2d 1158, 1164 (7th Cir.1989).
II.
The district court noted that a third party who is not a successor in interest may still be held in contempt of an injunction if the third party acts in concert with an enjoined party. The district court erred, however, in holding *922that Tensor could not be an aider and abettor because “Yamagata was never personally enjoined” and because “DEV is no longer in existence.”
First, an injunction against a corporation extends to the corporation’s officers and em-' ployees. Fed.R.Civ.P. 65(d). We recently stated: “An order issued to a corporation is identical to an order issued to its officers, for incorporeal abstractions act through agents.” Reich v. Sea Sprite Boat Co., Inc., 50 F.3d 413, 417 (7th Cir.1995) (holding that the president of a corporation is bound by an injunction against the corporation itself). Yamagata is subject to the injunction because he was President and a director of DEV. We must reject Yamagata’s argument that he could not act in his capacity as an agent of DEV because DEV was subject to the injunction. The logic of this argument is circular. Any action taken to violate the injunction would be a violation of the fiduciary duty and would be outside the scope of his agency. Yamagata cannot be protected from liability for committing a wrongful act by virtue of the fact that the act was wrongful.
Second, Yamagata finds no quarter in the fact that DEV is no longer in existence. An injunction enforceable by contempt proceedings against the corporation, its agents and officers “survives the dissolution of the corporate defendant.” Walling v. Reuter, 321 U.S. at 674, 64 S.Ct. at 828 (holding that injunction survives dissolution of corporation and is enforceable against persons bound thereby including corporation’s officers and agents).
Rockwell has alleged that Yamagata retained and used Rockwell trade secrets that he first acquired while he was an officer of DEV. Rockwell has, also alleged that Yamagata ensured DEV’S defiance of the injunctions by virtue of his failure to return Rockwell's trade secrets and his direct or indirect transfer of trade secrets to Tensor. Rockwell points out that such actions occurred even though Yamagata had an obligation as a DEV officer to insure that he and DEV complied with the terms of the injunctions. If Yamagata retained Rockwell trade secrets that he first acquired while he was an officer of DEV, then he may be subject to the injunction and Tensor may be subject to the injunction for acting in concert with an enjoined party.