Court Opinion

ID: 9470399
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:05:18.92274+00
Date Added: 2024-06-11T17:41:53.054879
License: Public Domain

WALLACE, Circuit Judge,
concurring in part and dissenting in part:
I concur in the portion of the majority opinion affirming the award of expenses, including attorneys’ fees, incurred by Miller in its efforts to recover its missing confidential documents. I must dissent, however, from the portion of the majority’s *785opinion which holds that the contempt order is criminal and reverses the district judge’s order as an abuse of discretion.
The primary difference between civil and criminal contempt is the intended effect of the court’s order. United States v. Powers, 629 F.2d 619, 626-27 (9th Cir.1980); In re Dinnan, 625 F.2d 1146, 1149 (5th Cir.1980) (per curiam); Douglass v. First National Realty Corp., 548 F.2d 894, 897-98 (D.C.Cir. 1976). A civil contempt order is conditional, designed to enforce the court’s decree or to compensate for losses caused by noncompliance; criminal contempt is unconditional, designed to punish, vindicate the court’s authority, and deter others. Shillitani v. United States, 384 U.S. 364,368-70,86 S.Ct. 1531, 153A-35, 16 L.Ed.2d 622 (1966); United States v. United Mine Workers of America, 330 U.S. 258, 302-04, 67 S.Ct. 677, 700-01, 91 L.Ed. 884 (1947); United States v. Asay, 614 F.2d 655, 659 (9th Cir.1980).
The extensive analysis by the majority of the contempt order, its amendment, and the parties’ arguments is ample proof of the difficulty of the case before us and the closeness of the question which divides us. Giving the deference due the district court, see, e.g., Perfect Fit Industries, Inc. v. Acme Quilting Co., 673 F.2d 53, 57 (2d Cir. 1982), my interpretation differs from that of the majority and I conclude that the district court’s amended order of contempt is conditional and coercive.
The order provides that “[i]f all of defendant’s missing confidential documents are returned by plaintiffs or their attorneys to defendants within 90 days of the date of this Order, the Court may, upon motion by plaintiffs, consider a refund of such portion of the fine as the Court deems appropriate.” The language employed by the district judge provides flexibility in the event that some, but not all of the missing documents are returned. Notably, the language of the amended contempt order does not preclude the district judge from refunding the entire fine to Falstaff in the event of full compliance. Furthermore, any portion of the fine not refunded by the court upon full compliance, might well be employed to compensate Miller for damages incurred as a result of Falstaff’s failure to comply with the protective order. Miller expressly reserved the right to seek compensation.
Miller’s original and renewed motions for contempt also support the conclusion that the amended order is coercive. Miller urged the court to provide for refund of part of the fine at the discretion of the court “[a]s an incentive to have [the] documents returned .... ” Falstaff, in its memorandum in support of the motion to amend the contempt order, observed that “[i]n essence, the Court was constructing an order seeking to ‘coerce’ compliance with a court order upon pain of contempt for the failure to comply.” The amended order of contempt provided Falstaff with an opportunity to purge its failure to comply with the protective order and, therefore, is civil. See Douglass v. First National Realty Corp., supra, 543 F.2d at 898 (holding that a contempt order was criminal, in part because there was no opportunity for the defendant to purge himself and avoid paying the fine); United States v. Spectro Foods Corp., 544 F.2d 1175, 1182 (3d Cir.1976) (“The fact that a defendant can purge himself of the contempt and avoid the sanctions indicates that the purpose is coercive and the contempt order is civil.”) (footnote omitted).
The majority points to the fact that the district court required Falstaff to pay the fine to the court, rather than to Miller, as an indication that the fine constituted a criminal contempt sanction. Maj. op. at 779-780. The majority, in my view, fails to distinguish adequately the two different functions of civil contempt and consequently confuses the issue whether a sanction is coercive or compensatory with whether a sanction is civil or criminal. When the court intends to impose a coercive civil sanction, it is proper for the fine to be made payable to the court rather than a private party. See, e.g., Doyle v. London *786Guarantee & Accident Co., 204 U.S. 599, 605, 27 S.Ct. 313, 314, 51 L.Ed. 641 (1907) (holding that contempt order was civil and not subject to interlocutory review) (“while it is true that the fine imposed is not made payable to the opposite party, compliance with the order relieves from payment .... ”); In re Dinnan, supra, 625 F.2d at 1149 (“A coercive, nonpunitive fine payable to the clerk of the court is an appropriate tool in civil contempt cases.”) (collected cases); Raymor Ballroom Co. v. Buck, 110 F.2d 207, 210 (1st Cir.1940) (civil contempt order to pay fine to clerk of court who was directed to pay net amount of fine to judgment creditor affirmed). See generally United States v. United Mine Workers of America, supra, 330 U.S. at 304, 67 S.Ct. at 701. Indeed, paying the fine into the court, rather than turning over funds to a private party, provides an added safeguard to the contemnor who subsequently purges himself of liability for all or part of the fine. See generally Union of Professional Airmen v. Alaska Aeronautical Industries, Inc., 625 F.2d 881, 882 & n. 1 (9th Cir.1980) (dismissing appeal for lack of jurisdiction) (civil contemnor paid damages and attorneys’ fees into the court and requested the court to retain the money pending appeal of the contempt order); Winner Corp. v. H.A. Caesar & Co., 511 F.2d 1010, 1015 (6th Cir. 1975) (dicta) (coercive civil contempt fine, as contrasted with a compensatory civil contempt award, should not be paid to a private party). Thus, the majority improperly fails to defer to the discretion given district judges in fashioning sanctions. See Perfect Fit Industries, Inc. v. Acme Quilting Co., supra, 673 F.2d at 57 (district court has broad discretion to design a coercive contempt remedy that will bring about compliance); United States v. Westinghouse Electric Corp., 648 F.2d 642, 651 (9th Cir.1981) (choice of discovery sanctions left to discretion of district court).
If the fine imposed on Falstaff contained elements of both criminal and civil contempt, I would agree that it should be viewed as criminal contempt for purposes of our review. See Nye v. United States, 313 U.S. 33, 42-43, 61 S.Ct. 810, 812-813, 85 L.Ed. 1172 (1941). Here, however, the fine is coercive and conditional; it contains no criminal aspects. Thus, it properly is reviewed as a civil contempt sanction. See Penfield Co. v. SEC, 330 U.S. 585, 591, 67 S.Ct. 918, 921, 91 L.Ed. 1117 (1947). As pointed out by the majority, civil contempt may have an incidental effect of vindicating the court’s authority. Such an incidental effect does not change the character of the civil sanction into a criminal sanction. Maj. op. at 778-779. Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 443, 31 S.Ct. 492, 498, 55 L.Ed. 797 (1911).
Two other points raised by the majority in conjunction with whether the amended order is one for criminal or for civil contempt deserve mention. First, the majority argues that Scott & Fetzer Co. v. Dile, 643 F.2d 670, 675 (9th Cir.1981) (Dile), shows that the contempt order is criminal even as amended. Maj. op. at 780. Contrary to the majority’s interpretation, Dile supports a finding that the amended order is for civil contempt. In Dile, as here, the district court’s amendment of the contempt order demonstrates that the court intended to impose a civil contempt sanction.
Second, the majority argues that Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947), precludes the conclusion that the amended order is for civil contempt. Maj. op. at 781-782. The case does cause some difficulty. There, the Supreme Court affirmed the appeals court’s reversal of a coercive civil contempt order against the defendants. As the majority emphasizes, the Supreme Court commented that it would be an “anomalous result” to hold a party in contempt “for failure to produce that which was in the possession of [its] counsel.” 329 U.S. at 505, 67 S.Ct. at 390. The Court’s comment, however, was made in determining which rule the party seeking discovery should have proceeded under and, thus, is dicta. Other cases support the proposition that a party is bound *787by the acts of his lawyer-agent. See, e.g., Link v. Wabash Railroad, 370 U.S. 626, 633-34, 82 S.Ct. 1386, 1390, 8 L.Ed.2d 734 (1962).
Even assuming that the Court’s comment is not dicta, Hickman v. Taylor does not necessarily preclude a finding that the district court properly entered a coercive civil contempt order against Falstaff. The district court’s order can be read to include an implied finding that Falstaff itself could comply with the protective order. The district judge was faced with what appears to be a situation analogous to the shell game. Each of the three possible holders denied present possession. Yet there was no evidence that the missing records no longer existed. Falstaff thus became one of the three suspects. The record reveals that many of the documents released by Miller to Falstaff’s counsel ended up in the custody of Falstaff’s president for several months. Although the documents known to have been in Falstaff’s possession were eventually returned to Miller, the record merely demonstrates that no one knows what happened to the remainder of the documents and that they too might have been sent to Falstaff. Further, the record shows that some of Miller’s documents may have been shipped to one of Falstaff’s breweries and that, despite assertions that any such records were kept in locked storage and were accessible only to Falstaff’s outside counsel, records were actually accessible to Falstaff personnel.
I interpret the amended contempt order as including an implied finding that it was possible for Falstaff to comply with the protective order. Even if a district judge’s factual finding is merely implied, we are bound by the clearly erroneous standard. See Cedar Creek Oil & Gas Co. v. Fidelity Gas Co., 249 F.2d 277, 281 (9th Cir.1957), cert. denied, 356 U.S. 932, 78 S.Ct. 775, 2 L.Ed.2d 763 (1958).
The district judge’s finding that it was possible for Falstaff to comply with the protective order is not clearly erroneous. A fair reading of the Adams affidavits is that further efforts by Miller to locate the documents would be futile. Falstaff, however, might well be able to locate the documents. Indeed, the record shows that prior searches by Falstaff’s counsel were somewhat less than thorough. Notably, Miller’s investigation did not reveal the fate of the missing documents, implying that the documents may still be in existence. The district judge was well within his bounds in imposing the fine as an incentive for Falstaff and its counsel to make greater efforts to find and return Miller’s documents.
I would also hold that Falstaff received sufficient due process. See United States v. Powers, supra, 629 F.2d at 624; United States v. Hawkins, 501 F.2d 1029, 1031 (9th Cir.), cert. denied, 419 U.S. 1079, 95 S.Ct. 668, 42 L.Ed.2d 674 (1974); cf. United States v. Westinghouse Electric Corp., supra, 648 F.2d at 651; United States v. Asay, supra, 614 F.2d at 659. Miller’s motions for contempt and imposition of sanctions gave Falstaff adequate notice. Falstaff waived a hearing and never requested any additional time to prepare a defense. See United States v. Powers, supra, 629 F.2d at 628.
I would affirm.