Graves v. Kemsco Group, Inc.

864 F.2d 754, 1988 WL 137649
Court of Appeals for the Federal Circuit·Decided December 28, 1988·No. No. 88-1379·Published·Cited by 13 cases

Opinion

FRIEDMAN, Circuit Judge.

This is an appeal from a judgment of the United States District Court for the Northern District of Indiana, holding the appellants in civil contempt and assessing damages against them in favor of the appellees. Graves v. Kemsco Group, Inc., 676 F.Supp. 1417 (N.D.Ind.1988). The issues are whether the district court improperly determined the damages because (1) the appellees failed to prove their damages by clear and convincing evidence, and (2) the proof of damages, which consisted solely of testimony, was insufficient because it was uncorroborated by the appellees’ business records or other documentary evidence. We reject both of these contentions and affirm the judgment.

[755]*755I

On August 24, 1982, shortly before the scheduled trial of a suit by two of the appellants charging two of the appellees with infringing the appellants’ patent on a trash compactor, the district court granted the appellees’ motion for summary judgment declaring that a car crusher named the “Nutcracker,” manufactured by the ap-pellee Kemsco Group, Inc. (Kemsco), did not infringe the patent. The court entered the following injunction:

• That Plaintiffs’ agents, servants, confidants, attorneys and employees and all persons in active concert with them and each of them are enjoined from publishing, disseminating or issuing any statement and from committing any act or ommission [sic], directly or indirectly which would be reasonably calculated to indicate to the consuming public that said trash compactors disclosed in Exhibit B infringe any claim of United States Letters Patent No. 4,188,876 under 35 U.S.C. § 271(a) or (b) or (c).

Graves v. Kemsco Group, Inc., 676 F.Supp. 1411, 1413 (N.D.Ind.1987).

In November 1985, Kemsco filed a motion in the district court to hold Graves in contempt for failure to obey the August 24, 1982 order by placing advertisements which stated: “Any owner of a Nutcracker and or any machine presently owned by anyone that has purchased a Nutcracker since 1980 to present, is infringing Graves Body Crusher patent rights.” 676 F.Supp. at 1415. The district court found that this advertisement “clearly and flagrantly violates the Order entered August 24, 1982,” id. at 1417, and held Graves in civil contempt. We affirmed the civil contempt order. Graves v. Kemsco Group, Inc., 852 F.2d 1292 (Fed.Cir.1988).

Almost immediately after the first contempt order was entered, Kemsco charged Graves with further contempt.

A trial was held to assess damages in connection with the contempt finding and to determine whether Graves should be found in further contempt. Myron Brad-burn, the president and sole shareholder of the appellee Car-Go Corporation, testified regarding the damages his company had suffered as a result of the advertising; the court found this testimony credible. In addition, the deposition of the appellee H. Kent Murphy, former president of Kemsco, concerning his damages, was introduced.

Based on this evidence, the district court entered a judgment against the appellants in favor of Marvin Bradburn and Car-Go Corporation for $100,000 and in favor of H. Kent Murphy for $50,000. 676 F.Supp. at 1421. The court awarded costs and attorney fees of $125,882.58. Id. The court also found that Graves had committed the second contempt, as Kemsco had alleged, and referred the matter to the United States Attorney to determine whether Graves should be prosecuted for criminal contempt. Id.

II

A. Although this contempt proceeding arose out of a patent infringement suit, the damages issues before us are not unique to patent cases. In reviewing the damages award we therefore apply, as far as possible, the law of the regional circuit, here the Seventh, rather than the law of this circuit. See Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564, 1575 (Fed.Cir.1984).

B. Contrary to the appellants’ contention in their brief, the Seventh Circuit does not require that damages in a civil contempt proceeding be proved by clear and convincing evidence. It is only “violations of injunctive orders [which] must be proven by ‘clear and convincing’ evidence.” Shakman v. Democratic Org. of Cook County, 533 F.2d 344, 351 (7th Cir.), cert. denied, 429 U.S. 858, 97 S.Ct. 156, 50 L.Ed.2d 135 (1976).

C. Similarly, there is no requirement for documentary corroboration where the court’s determination is supported by credible testimony. The testimony upon which the district court based its award of damages in this case was competent evidence that supports the award, even though it was that of parties to the action. See Fed.R.Evid. 601.

[756]*7561. An award of damages in a civil contempt proceeding requires proof of both the fact of injury to the aggrieved party and the amount of damages the aggrieved party has suffered. Norstrom v. Wahl, 41 F.2d 910 (7th Cir.1930); Lichtenstein v. Lichtenstein, 425 F.2d 1111, 1113-14 (3d Cir.1970). Cf. Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 562, 51 S.Ct. 248, 250, 75 L.Ed. 544 (1931). The appellants do not contend that the district court’s finding that the appel-lees were damaged by the appellants’ advertisements is clearly erroneous. They challenge only the evidentiary basis for the amount of the damage award. They contend that the absence in evidence of the appellees’ books or records or other documentary evidence made the testimonial evidence insufficient to support the award.

Contempt damages, like other damages, “need not be calculated with mathematical precision.” Hoefferle Truck Sales, Inc. v. Divco-Wayne Corp., 523 F.2d 543, 553 (7th Cir.1975). All that is necessary is credible evidence sufficient to establish the amount of damages. Courts, no less than “juries[,] are allowed to act upon probable and inferential, as well as direct and positive proof.” Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264, 66 S.Ct. 574, 580, 90 L.Ed. 652 (1946), quoting from Story Parchment, 282 U.S. at 561-64, 51 S.Ct. at 250-51.

2. Here there was ample evidence to support the district court’s award. There was testimony regarding both lost sales and profits and the costs associated with remedying the damage caused by the advertisements.

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Graves v. Kemsco Group, Inc., 864 F.2d 754, 1988 WL 137649 (Fed. Cir. 1988).

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