This post examines an opinion the U.S. Court of Appeals for the 5th Circuit recently issued in a civil case: West
Management of Washington, Inc. v. Kattler, 2015 WL 178996 (2015). It begins by explaining that
[t]his appeal arises from a contempt
proceeding ancillary to the merits of the underlying case. Michael A. Moore,
the attorney for Dean Kattler, the defendant in the proceedings below, appeals
the imposition of sanctions following a finding that Moore was in civil contempt.
West Management of
Washington, Inc. v. Kattler, supra.
The “underlying case” was the result of Waste Management,
Inc.’s [“WM”] suing
Kattler, a former employee, for misappropriating confidential
business information, and for violating the terms of his employment agreement
by accepting a job with Emerald Services, Inc. (Emerald), an alleged WM
competitor.
Shortly after the onset of litigation,
WM sought a temporary restraining order (TRO) to enjoin Kattler from disclosing
WM's confidential information, and requiring Kattler to produce images of all
electronic devices that might contain such information. On December 12, 2012,
the district court issued a TRO directing Kattler to `produce to Waste
Management images of all electronic devices used by Kattler . . . except for
the electronic devices used and/or owned by Kattler at Emerald,’
and to `produce to a third-party forensics expert, to be agreed upon by the
Parties, images of all electronic devices used by Kattler . . . at
Emerald.’
Eight days later, the district court
issued a preliminary injunction that modified the TRO by requiring Kattler to
produce all personal devices to WM within two days (by December 22), and
expanded the definition of `personal devices’ to include all of Kattler's
devices, except those devices `provided to Mr. Kattler by Emerald.’ This
enlargement occurred despite the fact that the parties had discussed with the
court the importance of preventing the disclosure of attorney-client-privileged
information present on devices that were now to be produced directly to WM.
Because the order failed to address the
attorney-client-privilege concerns, Moore argued that Kattler should not be
compelled to produce certain devices. Moore also disputed, based on Kattler's
representations, the existence of a certain SanDisk-brand USB thumb drive
sought by WM. After it became clear Kattler would not produce those devices, WM
moved for a show-cause hearing as to why Kattler should not be held in
contempt. The district court granted this motion and ordered `that Defendant
appear for a hearing’ to be held on January 22, 2013.
West Management of
Washington, Inc. v. Kattler, supra (emphasis in the original).
At that hearing, one of the issues was whether Kattler was
required to produce his
iPad for inspection. Moore argued that
Kattler complied with the court's orders despite not producing the iPad because
it was a personal device and because it contained information protected by the
attorney-client privilege. The district court disagreed that the iPad could be
considered `personal’ under the preliminary injunction, and ordered that the
device be produced to WM. Notably, the court spoke in terms of the device
itself, rather than an image of its content.
The court recognized Moore's valid
privilege concerns and stated Kattler would not waive the privilege by
producing the iPad, but indicated Kattler still had to produce it. Moore also
represented to the court that Kattler could not produce the SanDisk thumb drive
WM was requesting because Kattler had never owned such a drive. The court
declined to hold Kattler in contempt but did issue an order requiring that all
parties comply with his orders, `whether written or pronounced from the Bench.’
West Management of
Washington, Inc. v. Kattler, supra.
After the hearing, Kattler told Moore that he
now recalled owning at least one
SanDisk thumb drive. Moore consulted a professional responsibility expert and,
on January 28, informed Kattler he would no longer serve as counsel.
West Management of
Washington, Inc. v. Kattler, supra.
Kattler, who was “now represented by new counsel,” then
produced the
image of the iPad to WM, but the image
contained no relevant information. The responsive documents were stored in a
restricted portion of the iPad's memory that was not included in the image
because that portion of the memory was technologically inaccessible at the time
the device was imaged.
WM demanded Kattler produce the iPad
itself so recently-developed `jailbreaking’ software could be used to access
the device's restricted memory. After Kattler refused to do so on grounds that
the restricted memory contained privileged information, WM filed a renewed
motion for Kattler to show cause as to why he should not be found in contempt
for refusing to produce the iPad itself. The district court granted this motion
and issued a notice of setting providing that a hearing would take place on
March 4. The notice stated only that a hearing was to be held to address docket entry `# 84, which was WM's show-cause motion. This motion listed Kattler
as the sole potential contemnor whose liability was to be addressed at the
hearing.
West Management of
Washington, Inc. v. Kattler, supra.
After that hearing, the U.S. District Court Judge found both
Kattler and Moore
in contempt on grounds that they: (1)
misled the court as to the existence of a SanDisk-brand USB thumb drive, (2)
failed to produce an image of Kattler's iPad, and (3) failed to produce the
iPad device itself. Moore contends on appeal that, while he was aware he might
be the subject of a future contempt hearing, he was not provided with adequate
notice that a contempt finding could be entered against him after the
show-cause hearing. He further argues that . . . he did not aid or abet any
attempt to mislead the court as to the existence of the thumb drive, and that
his failure to comply with the court's orders concerning the iPad is excusable
because he was attempting to assert the attorney-client privilege.
West Management of
Washington, Inc. v. Kattler, supra. So Moore claimed “he was not afforded
procedural due process and that the district court abused its discretion by
finding him in contempt.” West Management of Washington, Inc. v.
Kattler, supra.
The Court of Appeals began its analysis of Moore’s due
process argument by noting that
[i]n general, due process requires `that
one charged with contempt of court be advised of the charges against him, have
a reasonable opportunity to meet them by way of defense or explanation, have
the right to be represented by counsel, and have a chance to testify and call
other witnesses.’ A `narrow exception’ to these requirements exists when a
litigant engages in courtroom conduct that `disturbs the court's business.’ Under
this exception, the court may issue a sanction without notice when `all of the
essential elements of the misconduct are under the eye of the court, are
actually observed by the court, and where immediate punishment is essential to
prevent “demoralization of the court's authority . . . before the public.”’
West Management of
Washington, Inc. v. Kattler, supra.
As Wikipedia explains, the first type of contempt is known as “indirect
contempt” and the “disturbs the court’s business” type of contempt is known as
“direct contempt.”
The court goes on to explain that Moore’s “allegedly
contumacious conduct” occurred
outside the courtroom. While his
conduct was discussed at the second show-cause hearing, the district court did
not find him in contempt based on any disruptive behavior occurring at that
particular proceeding. Therefore, the district court's contempt finding cannot
stand if Moore was not afforded adequate notice.
West Management of
Washington, Inc. v. Kattler, supra.
The Court of Appeals then pointed out that adequate notice
typically takes the form of a
show-cause order and a notice of hearing identifying each litigant who might be
held in contempt. But, rather
than issue a show-cause order naming Moore and Kattler as alleged contemnors,
the court published a notice of an evidentiary hearing to address WM's `Motion
for Hearing—# 84.’
Docket entry # 84 referred to WM's
request that `Defendant Dean Kattler should again be ordered to show cause as
to why he is not in contempt of the Court's orders.’ This notice did not signal
to Moore that he could be found in contempt because it identified Kattler alone
as the party whose contempt liability was to be adjudicated. We therefore
vacate the contempt order as it pertains to Moore.
West Management of
Washington, Inc. v. Kattler, supra.
It also found that the U.S. District Court Judge abused his
discretion by finding Moore
in contempt. `A party commits contempt
when he violates a definite and specific order of the court requiring him to
perform or refrain from performing a particular act or acts with knowledge of
the court's order.’ To hold a party in civil contempt, the court must find such
a violation by clear and convincing evidence. Evidence is clear and
convincing if it `produces in the mind of the trier of fact a firm belief . . .
so clear, direct and weighty and convincing as to enable the fact finder to
come to a clear conviction, without hesitancy, of the truth of precise facts of
the case.’ . . .
The district court found Moore in
contempt on grounds that he: (1) crafted his response to the Court in a manner
to lead the Court to believe that a certain SanDisk-brand USB thumb drive did
not exist, (2) failed to timely produce an image of Kattler's iPad, and (3)
failed to produce the iPad itself in violation of the judge's oral directive at
the first show-cause hearing. We address each of these grounds.
West Management of
Washington, Inc. v. Kattler, supra.
As to the first issue, the court explained that in the
December 20, 2012 preliminary injunction, the
district court ordered Kattler and
Moore to produce to WM images of all personal electronic devices within two
days. The SanDisk thumb drive was a personal electronic device, and Moore, with
knowledge of the court's order, failed to produce it by December 22. Therefore,
the prima facie elements of contempt were present.
But an alleged contemnor may defend
against a prima facie showing of contempt by demonstrating a present inability
to comply with a court order. The record reveals Kattler misled
Moore as to the existence of the thumb drive and, as a consequence, Moore was unaware
the thumb drive existed until after the first show-cause hearing. Prior to and
during the first show-cause hearing, Kattler repeatedly denied to Moore that he
had used any other electronic devices to download WM documents besides a
certain Western Digital hard drive and a generic (non-SanDisk) thumb drive.
Neither WM nor the district court cited any record evidence to the contrary.
West Management of
Washington, Inc. v. Kattler, supra.
The Court of Appeals therefore found that
[v]iewing the record as a whole, there
is abundant evidence that Kattler deceived Moore as to the existence of the
SanDisk thumb drive until late January and no evidence that Moore knew of its
existence until that time. We therefore conclude that the district court's
finding that Moore participated in an attempt to mislead the court as to the
existence of the SanDisk thumb drive is clearly erroneous. Accordingly, the
district court abused its discretion by finding Moore in contempt on this
ground.
West Management of
Washington, Inc. v. Kattler, supra.
Next, the court took up the District Court’s holding Moore
in contempt for “for violating its order to produce directly to WM an image of
Kattler's iPad.” West Management of
Washington, Inc. v. Kattler, supra.
It noted that in Maness v. Meyers,
419 U.S. 449 (1975), the Supreme Court held that someone whom a court has
ordered to produce information but producing the information could cause
“`irreparable injury’”, the person can “resist the order” but not be guilty of
contempt if he/she appeals the order and it is declared invalid on appeal. West
Management of Washington, Inc. v. Kattler, supra. The court also noted that it had applied the Maness rule to the attorney-client
privilege, so a claim of attorney-client privilege “can serve as a valid
defense to a finding of contempt.” West Management of Washington, Inc. v.
Kattler, supra.
It then applied these standards to the facts and issue in
this case, explaining that it
is clear that the iPad contained
privileged information. Indeed, at the December 18 preliminary-injunction
hearing the parties and the district court agreed upon a framework for
screening out such information. Further, the privilege was not waived; Moore
vigorously asserted it on behalf of Kattler at every opportunity. To the extent
Kattler himself may have shared one privileged e-mail with a third party, the
privilege was only waived with respect to that particular communication. Accordingly,
while Moore clearly failed to comply with the terms of the December 20
preliminary injunction by not producing the iPad image directly to WM by
December 22, this failure is excusable because the order required Moore to
violate the attorney-client privilege.
West Management of
Washington, Inc. v. Kattler, supra.
Finally, it took up Moore’s failure to produce the iPad,
explaining that
no contempt liability may attach if a
party does not violate a `definite and specific order of the court.’ Prior to
the first show-cause hearing, the parties only discussed producing images of
the devices, not the devices themselves. It was not until the first show-cause
hearing, when the parties were the applicability of the preliminary injunction
to the iPad, that they discussed production of the device itself. . . . After
the district judge determined the iPad was a personal device that should have
been produced to WM by December 22, Moore stated, `if you want that device
turned over directly to Waste Management, we'll do it tomorrow.’ The court
responded, `I think that's what the order said.’
The court was mistaken: the order
required Kattler to produce an image of the device only, not the device itself.
Several days later, after WM determined the image did not contain the relevant
information, WM moved to hold Kattler in contempt because he had failed to
produce the device itself in accordance with the court's alleged order from the
bench. But Moore was under the understandable impression that the only order in
place was to produce an image of the device. Therefore, given the degree of
confusion surrounding whether the district court ordered production of the
physical device, we conclude that Moore did not violate a definite and specific
order of the court.
West Management of
Washington, Inc. v. Kattler, supra.
The court goes on to point out that
even if the order had been definite and
specific, Moore would have been entitled to raise renewed concerns about the
presence of attorney-client-privileged-documents in the restricted portion of
the iPad's memory. Kattler routinely used the device to communicate
about litigation strategy with his attorney. Moore also did not waive the
defense in this context: the presence of attorney-client-privileged information
in the restricted portion of the iPad's memory was irrelevant until late
January of 2013 when it became clear that the image of the device was
insufficient.
Even if the privilege concern had been
relevant prior to that time, Moore would not have had occasion to raise it
because the privileged documents were technologically inaccessible until the
new jailbreaking software was developed in February of 2013. Therefore,
regardless of whether the court's order was definite and specific, the district
court abused its discretion by finding Moore in contempt because the order
required him to violate the attorney-client privilege.
West Management of Washington, Inc. v. Kattler, supra. The Court of Appeals therefore vacated the
contempt judgment against Moore. West Management of Washington, Inc. v.
Kattler, supra.
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