Court Opinion

ID: 68088
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:28:55+00
Date Added: 2024-06-11T17:21:05.081792
License: Public Domain

[DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                                                                FILED
                       _______________________        U.S. COURT OF APPEALS
                                                        ELEVENTH CIRCUIT
                       Nos. 08-13724 & 08-14716             JULY 21, 2009
                       _______________________           THOMAS K. KAHN
                                                               CLERK
                 D.C. Docket No. 06-01752-CV-2-WMA

E. A. RENFROE & COMPANY, INC.,

                                                     Plaintiff-Appellee,

                                  versus

CORI RIGSBY MORAN, et al.,

                                                    Defendants,
RICHARD F. SCRUGGS,
THE SCRUGGS LAW FIRM, P.A.,

                                                     Non-Party-Appellants.

                        _____________________

               Appeals from the United States District Court
                  for the Northern District of Alabama
                        _____________________

                              (July 21, 2009)
Before DUBINA, Chief Judge, EDMONDSON and HILL, Circuit Judges.

PER CURIAM:

      Richard F. Scruggs and The Scruggs Law Firm, P.A. (“Scruggs”) appeal the

district court’s order imposing compensatory sanctions for civil contempt.

Scruggs claims that he is not subject to the jurisdiction of the district court in this

case, and urges us to vacate the civil contempt order and award of monetary

sanctions.

                                           I.

      Cori Rigsby and Kerri Rigsby worked for E.A. Renfroe & Company

(“Renfroe”), a firm that performs claims-adjusting services for State Farm

Insurance Company (“State Farm”). In early 2006, the Rigsbys approached

attorney Richard F. Scruggs with documents they had obtained from the Renfroe

firm that allegedly showed that State Farm was fraudulently denying coverage to

its insureds in the wake of Hurricane Katrina. In late 2006, Renfroe filed the

action, E.A. Renfroe & Company, Inc. v. Cori Rigsby and Kerri Rigsby, Civ.

Action No. 06-AR-1752-S, demanding the return of the documents (“the Renfroe

case”). Scruggs was not and has never been a party to that case, nor has he

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represented any party in that case.

      In December of 2006, the district court in the Renfroe case issued a

preliminary mandatory injunction ordering the Rigsbys to return the documents to

the Renfroe firm. It is undisputed that, at the time the injunction issued, the

Rigsbys did not possess copies of the documents.

      Scruggs learned of the injunction on Friday, December 8, 2006. Shortly

thereafter, Mississippi Attorney General Jim Hood requested that Scruggs send

Hood the set of the State Farm documents Scruggs had obtained from the Rigsbys

to avoid disclosure to Renfroe. On December 12, 2006, Scruggs sent Hood his set

of the Rigsbys’ documents.

      On June 15, 2007, the district court entered an order in which it found that

the Rigsbys did not have possession of the documents at the time the injunction

issued, leading it to conclude that they were not guilty of violating the injunction.

The court, however, found that Scruggs had shown a “brazen disregard of the

court’s preliminary injunction” by delivering his copy of the documents to

Attorney General Hood, and that such conduct “is precisely the type of conduct

that criminal contempt sanctions were designed to address.” The district court

announced in the same order that “the court will formally request that an attorney

for the government prosecute Scruggs [for criminal] contempt for his delivery of

                                          3
the documents to Hood.”

       After review, the United States Attorney for the Northern District of

Alabama declined to prosecute Scruggs, so, pursuant to Rule 42, Fed. R. Crim. P.,

the district court appointed special prosecutors, recused itself from further

proceedings and the prosecution went forward. By order dated February 29, 2008,

the district court appointed to conduct Scruggs’ criminal proceedings dismissed

the charges, holding, inter alia, that the Renfroe district court did not have

jurisdiction over Scruggs to hold him in contempt.

       Subsequently, by order dated June 5, 2008, the Renfroe court decided that it

did have jurisdiction over Scruggs and adjudicated both the Rigsbys and Scruggs

in civil contempt for their failure to “comply immediately and fully [with the

injunction].”1 It is this order that we review now.2

       1
         In its June 15, 2007, order, the district court held that it had jurisdiction over Scruggs
because he was “an attorney” for the Rigsbys, although Scruggs was never the attorney of record
for the Rigsbys in the Renfroe case. In its June 5, 2008, order, the court asserted its jurisdiction
over Scruggs on a theory of aiding and abetting.
       2
         The district court certified its June 5, 2008, order for interlocutory review, stating that it
was “not otherwise appealable.” This prompted Scruggs to file in this court not only an appeal
styled In re Richard Scruggs and the Scruggs Law Firm, P.A., Case No. 08-13724, but also a
Petition to Appeal Pursuant to 28 U.S.C. § 1292(b), which this court granted by order dated
August 21, 2008. Pursuant to this permission, Scruggs filed an interlocutory appeal in the
Renfroe case, [Appellate] Case No. 08-14716. These cases were consolidated by this court and
we asked the parties to brief the issue of whether the district court’s contempt order was final and
appealable. Having now determined that it was because “an adjudication of civil contempt is
final and appealable as to a non-party who would be unable to appeal from the final decision on
the merits [of the Renfroe case],” we dismiss as improvidently granted the interlocutory appeal,

                                                   4
                                                 II.

       Scruggs claims that the judgment of contempt must be vacated because the

district court did not have jurisdiction over him and, therefore, the court had no

authority to enter the judgment. We agree.

       The undisputed facts are that Scruggs was not a party to the Renfroe lawsuit.

Nor was he an attorney-of-record, nor did he make any appearance in, the Renfroe

case. Since it is axiomatic that courts may only enjoin parties before the court,

unless Scruggs falls within one of the narrowly-defined exceptions to this axiom,

he was not bound by the Renfroe injunction. See Scott v. Donald,165 U.S. 107,

117 (1897); Infant Formula Antitrust Litigation, MDL 878 v. Abbott Laboratories,

72 F.3d 842, 842-43 (11th Cir. 1995). “Courts of equity have long observed the

general rule that a court may not enter an injunction against a person who has not

been made a party to the case before it.” Additive Controls & Measurement

Systems, Inc. v. Flowdata, Inc., 96 F.3d 1390, 1394 (Fed. Cir. 1996).

Case No. 08-14716. See Southern Ry. Co. v. Langham, 403 F.2d 119, 124 (5th Cir. 1968).
        Renfroe’s suggestion of mootness by virtue of Scruggs’ satisfaction of the June 5, 2008,
contempt judgment is unavailing. See County of Dakota v. Glidden, 113 U.S. 222, 224-25
(1885); Graddick v. Newman, 453 U.S. 928, 945 n.1 (1981) (Rehnquist, J., concurring). The
satisfaction of a joint and several liability does not moot the appeal of the debtor satisfying the
judgment. See United States v. Balint, 201 F.3d 928 (7th Cir. 2000) (citing Corley v. Rosewood
Care Center, Inc., 142 F.3d 1041, 1058 (7th Cir. 1998)) (“Payment of the sanction does not moot
the appeal because the appellate court can fashion effective relief to the appellant by ordering that
the sum paid in satisfaction of the sanction be returned”). See also Union of Prof’s Airmen v.
Alaska Aeronautical Indus., Inc., 625 F.2d 881, 883 (9th Cir. 1980).

                                                 5
      If the district court was without the authority to enjoin Scruggs, it was

without the authority to hold him in contempt. The Supreme Court has long held

that in contempt proceedings, “the Judiciary is sanctioning conduct that violates

specific duties imposed by the court itself, arising directly from the parties’

participation in judicial proceedings.” Young v. United States ex rel. Vuitton et

Fils S.A., 481 U.S. 787, 800 (1987). Therefore, “[a] court’s authority is inherently

limited . . . by the nature of the judicial power, for the court has jurisdiction in a

contempt proceeding only over those particular persons whose legal obligations

result from their earlier participation in proceedings before the court.” Id. at 800

n.10. As Scruggs was not a party to the Renfroe litigation, he was not subject to

its injunction and the district court was without the authority to hold him in

contempt for violating it, unless there is some exception applicable to this case.

      The most prominent exception to this rule is found in the common law

doctrine “that defendants may not nullify a decree by carrying out prohibited acts

through aiders and abettors, although they were not parties to the original

proceeding.” See Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14 (1945). Rule 65(d)

of the Federal Rules of Civil Procedure codifies this rule by making clear that an

injunction is binding upon “the parties to the action, their officers, agents,

servants, employees, and attorneys, and upon those persons in active concert or

                                            6
participation with them.” Id. at 13-14.

      The “aider and abettor” exception to the general rule prohibiting binding

non-parties to an injunction is well-established. Id. See also United States v.

Barnette, 129 F.3d 1179, 1185 n. 10 (11th Cir. 1997). It is this exception that the

district court concluded applied to Scruggs, subjecting him to the injunction’s

mandate and authorizing the district court to penalize him for its violation.

      Although we understand the district court’s reasoning, we are compelled to

disagree with its conclusion. Based upon our review of the district court’s two

contempt orders in this case, we conclude that Scruggs was not shown to have

been an aider or abettor of the Rigsbys. Therefore, he is not subject to the

jurisdiction of the district court nor its judgment of civil contempt.

      First, it is clear from the earlier June 15, 2007, order that the district court

found as a matter of fact that the Rigsbys did not have possession of the

documents at the time their return to Renfroe was mandated. The district court

stated:

      But the fact remains that the Rigsbys themselves did not have
      possession of the documents on or after December 8, 2006, and this
      should preclude a jury finding that they knowingly or willfully
      violated the terms of the preliminary injunction.

      Furthermore, in the June 5, 2008, order, the court found that the Rigsbys –

                                           7
who “still had some stolen materials in their possession [at the time the injunction

issued] . . . quickly endeavored, if not with complete dedication or success, to

comply with the clear mandate of the injunction.” Their lawyer “promptly asked

Scruggs to honor the injunction by returning the stolen materials, and he instructed

the Rigsbys to deliver to Renfroe’s counsel all materials in their actual

possession.” Thus, the district court itself found that the Rigsbys did not have the

documents at the time the injunction issued, and asked Scruggs to comply with the

injunction and return his copy.

      Second, the district court held in its June 15, 2007, order that it was Scruggs

who violated the injunction by giving his copy of the documents to Attorney

General Hood. The district court made perfectly clear in this order that it

considered Scruggs the principal in the injunction’s violation, referring him to the

United States Attorney for prosecution for criminal contempt. The district court

said of the Rigsbys:

      They could be in criminal contempt only if held vicariously liable as
      agents or confederates of Scruggs. They certainly were not the brains
      of the injunction-avoidance schemes. After they gave the documents
      to Scruggs they were, in effect, controlled by him. (emphasis added)

Thus, the district court found as a matter of fact in its June 15 order that Scruggs

acted independently and on his own in delivering the documents to Attorney

                                          8
General Hood.3 It concluded that the Rigsbys “were not as clever as Scruggs

was.” They, unlike Scruggs, “quickly endeavored . . . to comply with the clear

mandate of the injunction.”

       The law is clear that a court may not enforce an injunction against a

nonparty “who act[s] independently” of the enjoined party. Regal Knitwear Co.,
324 U.S. at 13. “A nonparty who has acted independently of the enjoined

defendant will not be bound by the injunction.” Microsystems Software, Inc.

Scandinavia Online AB, 226 F.3d 35, 43 (1st Cir. 2000). Such independent

conduct by the non-party, as found by the district court to have occurred in this

case, does not constitute “aiding and abetting.” Since Scruggs did not aid and abet

the bound parties in the Renfroe lawsuit in a violation of the district court’s

injunction, he is not subject to the contempt jurisdiction of the district court.4

       Finally, in the interests of fairness to both the district court and Scruggs we

shall exercise our supervisory powers to direct that all remaining issues pertaining

to Scruggs in the Renfroe case should be assigned to a different district court

       3
        Indeed, the Rigsbys primary alleged contempt as detailed in the subsequent June 5th order
consisted of their failure to adequately demand return of the documents from Scruggs, an act he
could not possibly have aided and abetted.
       4
         Nor do we find any merit in the Renfroe’s theory that Scruggs fell within the district
court’s contempt jurisdiction because he represented the Rigsbys in related matters before other
courts.

                                                9
judge.

         Accordingly, for the foregoing reasons, the judgment of contempt against

Scruggs is hereby

         VACATED and REMANDED for further proceedings.

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