Court Opinion

ID: 3052682
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:43:36.625799+00
Date Added: 2024-06-11T11:49:28.219367
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

KONINKLIJKE PHILIPS ELECTRONICS,        
N.V., a Netherlands corporation,
                  Plaintiff-Appellee,
                 v.
KXD TECHNOLOGY, INC.; ASTAR
ELECTRONICS, INC.; SHENZHEN KXD
MULTIMEDIA CO., LTD.; SHENZHEN
KAIXINDA ELECTRONICS CO. LTD.;
KXD DIGITAL ENTERTAINMENT,
LTD.; and JINGYI LUO, a/k/a JAMES             No. 07-15310
LUO,
            Defendants-Appellants,             D.C. No.
                                            CV-05-01532-RLH
                and                            OPINION
SUNGALE GROUP, INC.; SUNGALE
ELECTRONICS (SHENZHEN), LTD.;
AMOI ELECTRONICS, INC.; AMOI
ELECTRONICS CO., LTD.; AMOI
ELECTRONICS, LTD.; CHINA
ELECTRONICS CORPORATION;
AMOISONIC ELECTRONICS, INC.;
INTERNATIONAL NORCENT
TECHNOLOGY, INC.;
                                        

                            11201
11202        KONINKLIJKE PHILIPS v. KXD TECHNOLOGY

NORCENT HOLDINGS, INC.; SHANGHAI            
HONGSHENG TECHNOLOGY CO., LTD.;
SHENZHEN NEWLAND ELECTRONIC
INDUSTRY CO., LTD.; DESAY A&V
(USA) INC.; DESAY A&V SCIENCE
& TECHNOLOGY CO., LTD.; DESAY
HOLDINGS CO., LTD.; XORO
ELECTRONICS (SHANGHAI), LTD.;               
SHENZHEN XORO ELECTRONICS CO.,
LTD.; MAS ELECTRONIK AG
CORPORATION; and SHENZHEN
ORIENTAL DIGITAL TECHNOLOGY
CO., LTD.,
                      Defendants.
                                            
         Appeal from the United States District Court
                  for the District of Nevada
          Roger L. Hunt, District Judge, Presiding

                    Argued and Submitted
           June 13, 2008—San Francisco, California

                       Filed August 20, 2008

   Before: Mary M. Schroeder, John M. Walker, Jr.,* and
             N. Randy Smith, Circuit Judges.

                     Opinion by Judge Walker

   *The Honorable John M. Walker, Jr., Senior Circuit Judge for the
United States Court of Appeals for the Second Circuit, sitting by designa-
tion.
11204      KONINKLIJKE PHILIPS v. KXD TECHNOLOGY

                       COUNSEL

Anton N. Handal, at argument, and Pamela C. Chalk and
Gabriel G. Hedrick, on the briefs, Handal & Associates, San
Diego, California, for the defendants-appellants.

Jeffrey K. Joyner, at argument, and David C. Caplan and Jan
Jensen, on the briefs, Keats McFarland & Wilson LLP, Bev-
erly Hills, California, for the plaintiff-appellee.

                        OPINION

WALKER, Circuit Judge:

   Defendants-Appellants KXD Technology, Inc., Astar Elec-
tronics, Inc., Shenzen KXD Multimedia, Inc., Shenzhen Kaix-
            KONINKLIJKE PHILIPS v. KXD TECHNOLOGY          11205
inda Electronics Co., Ltd., KXD Digital Entertainment, Ltd.,
and Jingyi Luo, a/k/a James Luo, appeal from an order of the
United States District Court for the District of Nevada (Hunt,
J) imposing monetary sanctions for civil contempt. Because
we lack appellate jurisdiction, the appeal is dismissed.

I.   BACKGROUND

   Plaintiff-Appellee, Koninklijke Philips Electronics N.V.
(“Philips”) sued the above-named defendants, alleging that
they had infringed Philips’s registered trademark and had
knowingly offered counterfeited Philips goods for sale in the
United States. On January 5, 2006, the district court issued an
amended temporary restraining and seizure order that was
immediately served on the defendants at the Consumer Elec-
tronics Show in Las Vegas, Nevada. The following day,
because defendants’ principal place of business and ware-
house was in California, Philips sought and was granted a
temporary restraining and seizure order by the United States
District Court for the Central District of California. That order
was served at defendants’ California warehouse, where the
Marshals Service found and confiscated counterfeit products
bearing the Philips trademark.

   On March 14, 2006, the district court issued a preliminary
injunction that principally enjoined defendants from dealing
in any product that infringed Philips’s trademarks. The district
court also ordered defendants to file a report setting forth their
inventory of counterfeit Philips products by April 13, 2006
and a report describing in detail their compliance with the pre-
liminary injunction by May 15, 2006. Before these reports
were due, on April 10, 2006, the district court issued another
seizure order, which resulted in the confiscation of additional
counterfeit Philips products at locations controlled by the
defendants.

   By February of 2007, it became clear to the district court
that the defendants had no intention of complying with its
11206       KONINKLIJKE PHILIPS v. KXD TECHNOLOGY
orders. The district court noted that there was “abundant evi-
dence of the Defendants’ non-compliance and active viola-
tions of both the TRO and preliminary injunction.” In fact, the
defendants had failed to file any reports, required or other-
wise, showing that they had complied in any way with the dis-
trict court’s orders. This failure continued even after the
plaintiff moved for sanctions on October 11, 2006. At the
sanctions hearing, the district court granted plaintiff’s motion
for civil contempt sanctions, holding the defendants jointly
and severally liable to the plaintiff for: (1) $353,611.70 in
attorney’s fees; (2) $37,098.14 in seizure and storage costs;
(3) $1,284,090.00 in lost royalties; and (4) $10,000.00 per day
until the reports were filed. In addition, the court ordered
defendants to post a $2 million bond.

    The defendants now appeal the district court’s imposition
of sanctions. The plaintiff contends that such an interlocutory
appeal is impermissible and that we lack jurisdiction to hear
it.

II.   ANALYSIS

A.    Standard of Review

  We review questions of our own jurisdiction de novo. Tou-
majian v. Frailey, 135 F.3d 648, 652 (9th Cir. 1998).

B.    Civil vs. Criminal Contempt Orders

   [1] “The rule is settled in this Court that except in connec-
tion with an appeal from a final judgment or decree, a party
to a suit may not review upon appeal an order fining or
imprisoning him for the commission of a civil contempt.” Fox
v. Capital Co., 299 U.S. 105, 107 (1936); see also Bingman
v. Ward, 100 F.3d 653, 655 (9th Cir. 1996) (“It is clear that
we do not have jurisdiction to hear interlocutory appeals from
civil contempt orders entered against parties to litigation.”).
This court “do[es] have jurisdiction[, however,] to hear
            KONINKLIJKE PHILIPS v. KXD TECHNOLOGY          11207
appeals from criminal contempt orders because they are
appealable when entered.” Bingman, 100 F.3d at 655 (internal
quotation marks and citation omitted).

   Thus, to ascertain its jurisdiction, a court of appeals “must
decide whether the order before [it] [i]s one for civil contempt
or one for criminal contempt.” Id. As we have noted, the “dis-
tinction between the two forms of contempt lies in the
intended effect of the punishment imposed. The purpose of
civil contempt is coercive or compensatory, whereas the pur-
pose of criminal contempt is punitive.” United States v. Arm-
strong, 781 F.2d 700, 703 (9th Cir. 1986); see also Plastiras
v. Idell (In re Sequoia Auto Brokers Ltd.), 827 F.2d 1281,
1283 n.1 (9th Cir. 1987).

   [2] Although this explanation of the “dichotomy between
civil and criminal contempt is helpful, it is not quite com-
plete.” Bingman, 100 F.3d at 655. Often it is necessary to
explore other aspects of the contempt order to determine its
character. For example, the Supreme Court has found it useful
to ascertain to whom the fine is payable, suggesting that a fine
“is remedial when it is paid to the complainant, and punitive
when it is paid to the court.” Hicks ex rel. Feiock v. Feiock,
485 U.S. 624, 632 (1988); see also Bingman, 100 F.3d at 655.
Also instructive is whether the fine imposed is conditional in
nature. In this regard, the Supreme Court has stated that “[a]n
unconditional penalty is criminal in nature because it is solely
and exclusively punitive in character . . . . A conditional pen-
alty, by contrast, is civil because it is specifically designed to
compel the doing of some act.” Hicks, 485 U.S. at 633 (inter-
nal quotation marks and citation omitted).

  Taking all of these considerations into account, the
Supreme Court has stated that:

    A contempt fine accordingly is considered civil and
    remedial if it either “coerce[s] the defendant into
    compliance with the court’s order, [or] . . . compen-
11208       KONINKLIJKE PHILIPS v. KXD TECHNOLOGY
     sate[s] the complainant for losses sustained.” Where
     a fine is not compensatory, it is civil only if the con-
     temnor is offered an opportunity to purge.

United Mine Workers v. Bagwell, 512 U.S. 821, 829 (1994)
(alteration and omission in original) (citation omitted). Thus,
an otherwise criminal contempt order (i.e., an order not
intended to be compensatory) will nevertheless be categorized
as civil, and thus not appealable on interlocutory review,
when the defendant is given an opportunity to comply with
the order before payment of the sanction becomes due.

C.   The Instant Contempt Order

   [3] The contempt order here is plainly civil under the above
test. The attorney’s fees, lost royalties, and storage costs were
assessed in order to compensate the plaintiff for losses sus-
tained. Furthermore, the per diem fine was not to be assessed
until fourteen days after the entry of the order, and the defen-
dants could avoid the fine by complying with the terms of the
injunction. Because the per diem fine allowed the defendants
the opportunity to purge the contempt before payment became
due, it was a civil sanction. We also note that the district court
was cognizant of the distinction between the two types of con-
tempts. Although the district court warned the defendants that
it “may desire to impose criminal sanctions next time,” it lim-
ited itself “this time to civil sanctions.” Appellant’s Excerpts
of R. at 356 (emphasis added).

   Moreover, the defendants make no argument that the con-
tempt order was not civil. Their sole argument is that a civil
contempt order is reviewable when it provides for payment of
the sanction on a “date certain” without providing the contem-
nor the opportunity to purge. The orders pertaining to attor-
ney’s fees, seizure and storage costs, and lost royalties fall
into this category. Supreme Court precedent, however, makes
clear that contempt orders that are compensatory are not
reviewable on interlocutory appeal; if a contempt order “com-
            KONINKLIJKE PHILIPS v. KXD TECHNOLOGY         11209
pensate[s] the complainant for losses sustained,” it “is consid-
ered civil,” and may only be reviewed upon final appeal.
Bingman, 100 F.3d at 656 (alteration in original). The defen-
dants attempt to glean their purported “date certain” exception
to the general rule of non-appealability from certain cases
that, while permitting immediate appeals, do not announce the
rule defendants urge upon this court. Each case is unique to
its circumstances and all are inapposite.

D.   Defendants’ Authorities

   Defendants argue that our opinion in Hoffman ex rel. NLRB
v. Beer Drivers & Salesmen’s Local Union No. 888, 536 F.2d
1268 (9th Cir. 1976), supports their contention that civil con-
tempt orders that provide for payment of a sanction on a date
certain, without providing the contemnor the opportunity to
purge the contempt, are revieweable on interlocutory appeal.
Hoffman, however, merely applies the Supreme Court’s test
in Bagwell and is no help to defendants. In Hoffman, there
was no dispute that the contempt order was not compensatory
and hence criminal. Indeed, there is no indication from the
opinion that the fines imposed possessed a compensatory
character. Thus, the Hoffman court proceeded directly to the
only controversy presented by the facts: whether the two con-
tempt orders at issue in the case offered the contemnor the
opportunity to purge the contempt. Any order that did so
would be deemed civil and not appealable; any order that did
not would be criminal and appealable.

   Analyzing the orders, the Hoffman court deemed one civil
and the other criminal based on its determination that, as to
the latter, “[t]he fines assessed were ordered to be paid within
30 days without any permission to otherwise purge the con-
tempt.” Id. at 1273. Thus, Hoffman simply stands for the
familiar proposition, set forth in Bagwell, that contempt
orders that would otherwise be deemed criminal (because
there is no dispute that the order lacks a compensatory charac-
11210       KONINKLIJKE PHILIPS v. KXD TECHNOLOGY
ter) will be deemed civil when the contemnor is offered an
opportunity to purge the contempt before payment is due.

   Defendants also cite cases from outside the Ninth Circuit to
support their argument. However, none of them warrants a
finding of jurisdiction in this case. In Howard Johnson Co. v.
Khimani, 892 F.2d 1512, 1515 (11th Cir. 1990), a case
involving the defendant’s violation of an injunction in a trade-
mark suit, the court found that the civil contempt order, which
was indisputably compensatory, fell within an exception to
the general rule that civil contempt orders are not reviewable
on interlocutory appeal. The court stated that such an excep-
tion exists in Eleventh Circuit jurisprudence for those civil
contempt orders “in which a fine or penalty is imposed within
a time certain that may not be avoided by some other form of
compliance [i.e., purged].” Id. (internal quotation marks and
citation omitted).

   [4] While, to be sure, Howard Johnson lends support to
defendants’ argument in this case, the exception that it
announces does not exist under Ninth Circuit law. In this cir-
cuit, there are two ways in which a contempt order may be
deemed civil and thus not appealable on interlocutory review:
(1) if the sanction imposed compensates the plaintiff for
losses sustained; or (2) if the sanction allows for the contem-
nor to purge the contempt before payment is due. See Bing-
man, 100 F.3d at 655-56 (discussing Bagwell). There is no
exception under Ninth Circuit law that permits a compensa-
tory, and thereby civil, sanction to be reviewable on interlocu-
tory appeal simply because the sanction fails to allow the
contemnor to purge the contempt before payment is due on a
date certain.

   Were we to create the exception defendants urge, it would
contravene the Supreme Court’s decision in Fox, in which the
Court found a $10,000 compensatory sanction to be unre-
viewable on interlocutory appeal. See 299 U.S. at 108. Here,
as in Fox, the defendants “do[ ] not question the compensa-
            KONINKLIJKE PHILIPS v. KXD TECHNOLOGY           11211
tory or civil quality” of the sanction. Id. Moreover, the
$10,000 sanction in Fox “was imposed unconditionally” and
thus could not be purged. Id. In contrast to the defendants’
contention in the instant case, the sanction’s unconditional
nature in Fox did not mandate a finding of interlocutory
appellate jurisdiction. The Court found it “very plain . . . that
the assessment was made in a genuine endeavor to reimburse
[the plaintiff] for the damages occasioned by obstruction and
delay.” Id. at 108-09. The Court held that the sanction “re-
tained from first to last its unitary quality” as a civil sanction.
Id. at 109. Under Fox, therefore, the unconditional nature of
a compensatory sanction does not render it reviewable on
interlocutory appeal. See id. Because Howard Johnson is out
of step with the Supreme Court’s holding in Fox and its rea-
soning in Bagwell, we decline to follow it.

   The remaining authorities that defendants cite in support of
their contention are distinguishable because there was no
compensatory character to the sanctions, and the policy con-
siderations present in those cases are not implicated by the
facts here. In New York Telephone Co. v. Communications
Workers, 445 F.2d 39 (2d Cir. 1971), a union was found to be
in violation of a restraining order that prohibited the union
from striking. After finding that the union should be held in
civil contempt, the district court ordered fines to be imposed,
gradually and in increasing amounts, as long as the strike con-
tinued. Id. at 44. After the district court entered several more
orders of civil contempt imposing fines in accordance with its
schedule, the strike ended. The union then appealed the vari-
ous contempt orders to the Second Circuit. However, a final
judgment had technically not been entered in the case. The
plaintiffs argued that the circuit lacked jurisdiction to hear the
appeal because the fines were for civil contempt and the
appeal was interlocutory. The Second Circuit disagreed
because the fines’ “[e]xecution issued immediately” and the
“defendants thus faced immediate and perhaps irreparable
loss.” Id. at 45.
11212       KONINKLIJKE PHILIPS v. KXD TECHNOLOGY
   Defendants contend that this holding applies equally here
because the sanctions imposed against them were likewise
immediate and afforded no opportunity to purge. The Second
Circuit, however, in New York Telephone never addressed
whether the fines imposed were compensatory. Indeed, the
fines were imposed according to the district court’s gradual
schedule; nothing in the opinion indicates that they were fixed
to approximate the plaintiffs’ losses. Moreover and critical to
its determination, the New York Telephone court “doubt[ed]
that anything further remain[ed] of the . . . action.” Id.
Because it was unlikely that further actions would be taken by
the plaintiff in the case, the court found that “intervention by
way of appeal runs no risk of disrupting the orderly course of
proceedings below.” Id. The court concluded “that the policy
considerations which have led courts to deny immediate
review to civil contempt orders [we]re absent.” Id.

   Here, the policy considerations that favor denying immedi-
ate review are present. The civil sanctions that were imposed
are part of an ongoing litigation in which the defendants have
refused to comply with the district court’s orders. If defen-
dants’ past course of conduct is any indication, additional
future sanctions are likely. “To be effective, judicial adminis-
tration must not be leaden-footed.” Cobbledick v. United
States, 309 U.S. 323, 325 (1940). A case’s “momentum
[should not] be arrested by permitting separate reviews.” Id.
Recognizing interlocutory jurisdiction here would run afoul of
these considerations.

   The defendants’ reliance on Drummond Co. v. District 20,
United Mine Workers, 598 F.2d 381 (5th Cir. 1979), is unper-
suasive for the same reasons. That case also involved a labor
dispute between a union and employer in which the union was
found to be in contempt of an injunction barring the union
from striking. After the striking employees returned to work,
but before a final order was entered, the union appealed the
sanctions that imposed fines for civil contempt. Id. at 383.
The Fifth Circuit held that the order imposing civil sanctions
            KONINKLIJKE PHILIPS v. KXD TECHNOLOGY         11213
was appealable. Id. at 384. The court stated that “there [wa]s
no reason to refuse to consider the Union’s contempt chal-
lenges . . . [because] further proceedings [are] unlikely.” Id.
The court concluded that “review of the contempt orders [ran]
no risk of disrupting a continuing, orderly course of proceed-
ings below.” Id. By contrast, as we have explained, our
review of the district court’s order imposing civil sanctions
would directly interfere with the ongoing proceedings below
that are designed to bring difficult and defiant defendants to
heel. And like New York Telephone, Drummond does not sug-
gest that the character of the sanctions imposed was compen-
satory; the sanctions were in the form of fines, not payments
approximating the plaintiff’s losses. Drummond therefore is
distinguishable from Bagwell, which remains binding upon
us.

   Finally, to the extent that defendants could face irreparable
harm because the contempt order amounts to an executable
judgment that the plaintiff could use to levy on defendants’
assets, any harm that defendants face is entirely of their own
making and does not move us to create a new exception for
interlocutory review here. Defendants were afforded the
opportunity to immediately appeal the district court’s prelimi-
nary injunction but declined to do so. Therefore defendants
waived any challenge to the sanctions imposed based on the
underlying injunction. Furthermore, because the district
court’s sanction order imposed a bond in an amount approxi-
mating that of the sanctions imposed, the plaintiff would have
had little reason to execute a judgment based on the sanction
order had the defendants actually posted the $2 million bond
as ordered. It was the defendants’ choice to defy the district
court’s order, which in turn forced the plaintiff to seek secur-
ity in other ways.

  [5] Additionally, holding that a civil sanction is directly
appealable if it is immediately payable risks eviscerating the
fundamental rule that compensatory sanctions are civil and
not appealable on interlocutory review. Further, we note that
11214      KONINKLIJKE PHILIPS v. KXD TECHNOLOGY
defendants will have the opportunity to appeal the sanctions
imposed after a final judgment. In sum, we are not persuaded
that the defendants face irreparable harm and, in any event,
find that, because of defendants’ conduct, any risk of harm is
appropriately placed upon them.

III.    CONCLUSION

  The appeal is dismissed for lack of jurisdiction.

  DISMISSED.