Court Opinion

ID: 43874
Source: CourtListenerOpinion
Date Created: 2010-04-25 22:01:47+00
Date Added: 2024-06-11T17:17:06.082147
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[DO NOT PUBLISH]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
                                   No. 04-15664                  JUNE 7, 2005
                               Non-Argument Calendar           THOMAS K. KAHN
                             ________________________              CLERK

                        D. C. Docket No. 02-00497-CV-JOF-1

TOM JAMES COMPANY,

                                                               Plaintiff-Counter-
                                                               Defendant-Appellee
                                                               Cross-Appellant,

                                          versus

WALTER LOUIE MORGAN, JR.,
Individually and
d.b.a. Benchmade Clothing of
Atlanta, a sole proprietorship, et al.,

                                                              Defendant-Appellant
                                                              Cross-Appellee.
                             ________________________

                    Appeals from the United States District Court
                        for the Northern District of Georgia
                          _________________________

                                     (June 7, 2005)

Before ANDERSON, BLACK and WILSON, Circuit Judges.

PER CURIAM:
      Defendant Walter Louie Morgan, Jr. (“Morgan”) seeks review of the district

court’s January 14, 2004, order of civil contempt, and its September 28, 2004,

order awarding attorney’s fees and costs to Plaintiff Tom James Co. (“Tom

James”). Tom James also appeals the district court’s September 28, 2004, order

awarding attorney’s fees and costs.

                                  I.Background

      Morgan is a former sales employee of Tom James Co., a men’s business and

business casual clothing retailer. Morgan worked for Tom James for

approximately fifteen years before he left the company to start his own business,

Benchmade Clothing of Atlanta. Since ending his employment with Tom James

Co., Morgan has contacted and made sales to customers whom he previously

serviced while employed by Tom James. As a result, on February 21, 2002, Tom

James sued Morgan for alleged violations of covenants not to compete and not to

disclose confidential information and trade secrets. In December of 2002, Tom

James and Morgan amicably resolved the suit by entering into a Settlement

Agreement and Release. Additionally, Morgan agreed and consented to an

injunction that was prepared and submitted to the court by Tom James. The

district court entered the injunction on December 20, 2002. Pursuant to the terms

of the injunction, Morgan was “enjoined, until December 12, 2004, from directly

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or indirectly soliciting, for the sale of clothing and wardrobe accessories of the sort

he sold for [Tom James], those customers of [Tom James] as to whom he was paid

a sales commission while employed by [Tom James], . . . [and is further enjoined]

from directly or indirectly selling such clothing and wardrobe accessories to any

such customers even in the absence of any solicitation.”

      In September 2003, Tom James, alleging that Morgan had violated the

injunction, filed a motion for criminal and civil contempt. Over several days in

November and December of 2003, the district court held an evidentiary hearing on

the motion. During the lengthy evidentiary hearing, the district court, citing Young

v. U.S. ex rel Vuitton et Fils, SA, 481 U.S. 787 (1987), suspended the criminal

contempt proceedings, and proceeded only with the civil contempt proceedings.

As evidence that Morgan violated the injunction, Tom James offered the testimony

of five men who originally were customers of Morgan when he was employed by

Tom James and had continued to be customers of Morgan after he terminated his

employment with Tom James.

      In its January 14, 2004, order (“contempt order”), the district court found

Morgan in civil contempt, ordered Morgan to pay nominal damages of $500.00

($100.00 per each of the five customer witnesses) plus attorney’s fees, and

declined to award compensatory damages or equitable relief to Tom James. In

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accordance with the terms of the contempt order, Tom James submitted a fee

petition in which it requested $115,375.20 in attorney’s fees and $26,917.86 in

costs. After reviewing the attorney’s fees and costs incurred, the district court

awarded Tom James $76,917.00 in attorney’s fees and $5,324.08 in costs.

                                    II.Discussion

       Morgan asserts that the district court’s finding of civil contempt constitutes

reversible error. Alternatively, Morgan claims that the district court awarded Tom

James an excessive amount of attorney’s fees and costs. Tom James, on the

contrary, argues that the amount of attorney’s fees and costs awarded was not

sufficient.

       A.     Civil Contempt

       “A finding of civil contempt must be based on clear and convincing

evidence that a court order was violated.” Jove Eng’g v. I.R.S., 92 F.3d 1539, 1545

(11th Cir. 1996) (citation and internal quotation omitted). This standard is more

exacting than the preponderance of the evidence standard, but does not require

proof beyond a reasonable doubt. See id.

       We review the district court’s determination of civil contempt for abuse of

discretion. Howard Johnson Co., Inc. v. Khimani, 892 F.2d 1512, 1516 (11th

Cir.1990) (citing Afro-American Patrolmen's League v. City of Atlanta, 817 F.2d

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719, 723 (11th Cir.1987)). “A district court abuses its discretion when it

misconstrues its proper role, ignores or misunderstands the relevant evidence, and

bases its decision upon considerations having little factual support.” Arlook v. S.

Lichtenberg & Co., Inc., 952 F.2d 367, 374 (11th Cir.1992). Morgan argues

numerous grounds on which we should find that the district court abused its

discretion in finding him in civil contempt.

             1.    The Injunction

      Morgan first argues that the December 20, 2002, injunction is unenforceable

because it is vague, ambiguous, and overly broad. Rule 65 of the Federal Rules of

Civil Procedure requires that an injunction be “specific in terms” and describe “in

reasonable detail the acts sought to be restrained.” Nevertheless, we “do not set

aside injunctions under Rule 65(d) unless they are so vague that they have no

reasonably specific meaning.” Planetary Motion, Inc. v. Techsplosion, Inc., 261

F.3d 1188, 1203 (11th Cir. 2001) (internal quotations omitted). In other words,

“the inquiry should be whether the parties subject to the injunctive order

understood their obligations under the order.” Williams v. City of Dothan, Ala.,

818 F.2d 755, 761 (11th Cir. 1987).

      Morgan asserts that the injunction did not explain with specificity what

actions were enjoined, and is broader in scope than the relief Tom James originally

                                          5
requested in the complaint. We note, however, that Morgan voluntarily agreed to

be bound by the terms of the injunction as part of the settlement agreement

negotiated to amicably resolve the suit Tom James filed against Morgan. In return,

Tom James agreed to dismiss with prejudice its claims against Morgan. Moreover,

Morgan was represented by counsel in this bargained for exchange. At no point

prior to the contempt proceeding did Morgan complain to the court about the

adequacy of the terms of the injunction or seek to have it modified. Accordingly,

at this point, any objection to the specific terms of the injunction is deemed

waived. See Combs v. Ryan’s Cole Co., Inc., 785 F.2d 970, 979 (11th Cir. 1986).

      Nevertheless, even if Morgan had not waived his objections to the

injunction, the injunction is not vague, ambiguous, or overly broad. Pursuant to

the terms of the injunction, Morgan was prohibited for a period of approximately

two years from selling “clothing and wardrobe accessories of the sort he sold”

while employed by Tom James to the customers to whom he sold while employed

by Tom James. Morgan worked at Tom James for over fourteen years and was

familiar with the clothing sold by that company such that he should understand his

obligations under the injunction. Further, the relief resulting from the injunction

does not exceed the scope of the relief requested in the complaint. Nonetheless,

even if it did, the voluntary injunction is enforceable. See Local No. 93, Int’l Ass’n

                                           6
of Firefighters v. City of Cleveland, 478 U.S. 501, 525-26 (1986) (court may issue

an agreed upon injunction providing for broader relief than available pursuant to

the terms of the complaint so long as the agreement is “within the general scope of

the case made by the pleadings” and does not “conflict[] with or violate[] the

statute upon which the complaint was based”). Since the injunction was not vague,

ambiguous, or overly broad, we will not reverse the district court’s order of civil

contempt on these grounds.

             2.     Exclusion of Evidence

      Morgan appeals the district court’s exclusion of the testimony of two of his

experts and evidence regarding the differences between the clothing that he sold

while at Tom James and after leaving Tom James. Rather than permit the experts

to testify, the district court permitted Morgan to submit a written proffer of their

testimony. For these evidentiary rulings to be reversible, Morgan must not only

show that the error was an abuse of the district court’s discretion, but also that he

was prejudiced by the omission. See Brochu v. City of Riviera Beach, 304 F.3d

1144, 1155 (11th Cir. 2002). Morgan has shown neither. Thus, we will not

reverse the district court on these evidentiary rulings.

             3.     Sufficiency of the Evidence

      Morgan asserts that Tom James failed to prove with clear and convincing

                                           7
evidence that the clothing Morgan sold after December 20, 2002, violated the

terms of the injunction. Specifically, Morgan alleges that Tom James should have

admitted samples of the clothing at issue into evidence during its case in chief.

Notably, any alleged failure on the part of Tom James was cured when Morgan

himself entered samples of the clothing sold by him as well as clothing sold by

Tom James into evidence during his defense. Moreover, the district court had the

benefit of voluminous testimony, including that of Tom James’s former customers.

Based on this testimony and other evidence, the district court did not abuse its

discretion in finding that Tom James had proven a violation of the injunction with

clear and convincing evidence.

      B.     Damages Award

      Ultimately, the district court awarded Tom James nominal damages in the

amount of $500.00, attorney’s fees in the amount of $76,917.00, and costs in the

amount of $5,324.08. Both Morgan and Tom James dispute this damages award.

      “[S]anctions in civil contempt proceedings may be employed for either or

both of two purposes: to coerce the defendant into compliance with the court’s

order, and to compensate the complainant for losses sustained.” Local 28, Sheet

Metal Workers’ Int’l Ass’n v. EEOC, 478 U.S. 421, 443, 106 S. Ct. 3019, 3033

(1986) (internal quotations omitted) (emphasis added). We give the district court

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broad discretion in fashioning sanctions for civil contempt. See Khimani, 892 F.2d

at 1519.

      Morgan argues that the district court’s award of attorney’s fees and costs

should be reversed because Tom James’ fee request is unreasonable. Specifically,

Morgan alleges that Tom James exercised poor billing judgment and maintained

improper and inaccurate billing records. We note that the district court has “wide

discretion” in awarding fees and costs. ACLU v. Barnes, 168 F.3d 423, 427 (11th

Cir. 1999). While we agree that Tom James’s billing records are not a good model

for filing a successful fee petition, we do not find that the amount of attorney’s fees

and costs, with the exception of investigative costs discussed infra, rises to the

level of reversible error.

      In its cross appeal, Tom James requests that we reverse the district court’s

award of attorney’s fees and remand so that the district court can award additional

damages. First, Tom James asserts that the district court erred in holding that lost

revenues and disgorgement of profits are not recoverable in civil contempt

proceeding. After reviewing the district court’s orders and the relevant portions of

the evidentiary hearing transcript, we disagree with Tom James’s assessment that

the district court misconstrued its power to award damages. At no point did the

district court state that lost revenue and disgorgement of profits were not

                                           9
recoverable as civil contempt sanctions. On the contrary, throughout the hearing,

the district court exhibited that it was fully aware of its discretion to award such

compensatory damages and equitable relief, but ultimately determined that Tom

James had not presented sufficient evidence to merit damages for lost revenues and

disgorgement of Morgan’s profits. This decision is well within the district court’s

wide discretion and does not constitute reversible error.

       Second, Tom James argues that it presented sufficient evidence that the

district court should have awarded lost profits due to Morgan’s violations of the

injunction. Again, such a determination of compensatory damages is within the

district court’s wide discretion. Having reviewed the evidence proffered by Tom

James, we will not disturb the district court’s denial of recovery for alleged lost

profits.

       Third, Tom James claims that the district court erred in disallowing

reimbursement for $16,966.50 in investigative expenses. Specifically, Tom James

asserts that the district court erred in its belief that Rule 54(d) and 28 U.S.C. §

1920 restricted its inherent authority to award expenses as a sanction for contempt

such that investigative fees were unrecoverable as a matter of law. We review de

novo a district court’s decision that it does not have the legal authority to award a

particular type of contempt sanction. See EEOC v. Guardian Pools, Inc., 828 F.2d

                                           10
1507, 1515 (11th Cir. 1987).

       In awarding costs as a sanction for contempt, the district court is not bound

by § 1920's list of costs that may be taxed pursuant to a final judgment. See

Sheila’s Shine Products, Inc. v. Sheila Shine, Inc, 486 F.2d 114, 130-31 (5th Cir.

1973).1 Instead, the district court, in its discretion, may exercise its “wide power . .

. to impose fines for disobedience to its orders.” Id. In this case, the district court

concluded that Tom James could not recover its investigative costs pursuant to

Rule 54(d) and § 1920. This narrow interpretation of its inherent power to sanction

was an error. Of course, implicit in the district court’s inherent power to award

contempt sanctions is also the district court’s inherent power to decline to award

reimbursement for these investigative expenses to Tom James. Thus, we vacate

the denial of investigative expenses and remand to the district court so that it may

exercise its inherent power and broad discretion with an understanding that it is not

restricted by Rule 54(d) and § 1920.

                                      III.Conclusion

       We have carefully and thoroughly reviewed the record, the hearing

transcripts, the briefs of the parties, and the two relevant orders of the district court.

       1
        In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we adopted as
binding precedent all decisions of the former Fifth Circuit handed down prior to October 1,
1981.

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With the exception of the denial based on Rule 54(d) and § 1920 of recovery for

investigative expenses, we find no reversible error, and affirm the orders of the

district court. As to the denial of investigative expenses, we vacate that portion of

the district court’s September 28, 2004, order and remand to the district court for

the limited purpose of considering the propriety of awarding these expenses to

Tom James.

      AFFIRMED IN PART; VACATED AND REMANDED IN PART.

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