Honor Plastic Industrial Co. v. Lollicup USA, Inc.

466 F. Supp. 2d 1217, 2006 U.S. Dist. LEXIS 92527, 2006 WL 3771007
Procedural entryThis page is a short order in Honor Plastic Industrial Co. v. Lollicup USA, Inc.. Read the opinion of the Court — 462 F. Supp. 2d 1122
District Court, E.D. California·Decided December 20, 2006·No. CIV-F-06-0707 AWI·Published

Opinion

ORDER FINDING DEFENDANT GUILTY OF CIVIL CONTEMPT FOR FAILURE TO COMPLY WITH COURT ORDERS

ISHII, District Judge.

The matter before the court is whether Defendant should be sanctioned for failing to comply with the court’s written temporary restraining order, issued on October 12, 2006. Doc. 49 and the court’s written preliminary injunction order, issued' on November 3, 2006. Doc. 79 A full evidentiary hearing on the matter was held on December 19, 2006.

I. History

Plaintiffs in the case are Honor Plastic Industrial Co., Ltd. and P & P International, Inc. (collectively “Plaintiffs”). Defendant is Lollicup USA, Inc. (“Lollicup”) which also operates under the fictitious business name of Honor USA, Inc. Alan Yu is the CEO/President of Lollicup. As this matter is tangential to the substantive case and those underlying facts have been covered in prior orders, a detailed history will be dispensed with. The court has changed the names used for the trademarks in question in the last two orders; all terminology in this order follows the definitions in the November 3, 2006 order granting a preliminary injunction. Doc. 79.

Plaintiffs filed a motion for a preliminary injunction seeking to enjoin Defendant from using the Trademarks (the Silhouette Mark, the Plain Mark, and the Word Mark). A hearing was held on October 10, 2006. By written order (signed on October 10, 2006 but not filed until October 12, 2006), the court granted a temporary restraining order enjoining use of the Silhouette Mark and Plain Mark only and setting a further hearing on the motion for preliminary injunction. Doc. 49. The second hearing was held on October 25, 2006. By written order signed and dated November 3, 20Q6, Lollicup was enjoined from using all three Trademarks and ordered to segregate all products in their possession which bore the Trademarks. Doc. 79. Further, Lollicup was enjoined from representing itself as Honor USA and from using the term “Honor” in any marketing or advertising. Regarding the www. honorusa.com website, Lollicup was or *1220 dered to stop using it unless the parties could come to a mutually agreeable solution. Lollicup was directed to file an affidavit by 4 PM November 15, 2006 specifying how Lollicup has complied with the preliminary injunction. The parties did not come to an agreement and Lollicup filed a motion to modify the preliminary injunction order. Lollicup’s motion was denied, and a modified injunction order that super-ceded the November 3, 2006 order was issued on December 19, 2006. Doc. 115

At the October 25, 2006 hearing, Plaintiffs raised the issue that Lollicup had not complied with the TRO. The court orally issued an order to show cause why Lollicup should not be sanctioned and set a briefing schedule and hearing on December 4, 2006. At the hearing on December 4, 2006, Lollicup elected to present testimony on the matter so an evidentiary hearing was scheduled for December 19, 2006.

Plaintiffs also alleged that Lollicup did not fully comply with the preliminary injunction. This order considers alleged violations of both the TRO and the preliminary injunction. The parties have filed various memos and declarations, not all of which are timely. Nevertheless, this order is based on all the filings and the testimony taken on December 19, 2006.

II. Legal Standard

Title 18 U.S.C. § 401 states, “A court of the United States shall have power to punish by fine or imprisonment, or both, at its discretion, such contempt of its authority, and none other, as — (1) Misbehavior of any person in its presence or so near thereto as to obstruct the administration of justice; (2) Misbehavior of any of its officers in their official transactions; (3) Disobedience or resistance to its lawful writ, process, order, rule, decree, or command.” Civil contempt is encompassed within this section. See Britton v. Co-op Banking Group, 916 F.2d 1405, 1409 n. 4 (9th Cir. 1990).

In one case, the Ninth Circuit overturned a trial court’s finding that a party committed civil contempt for failing to comply with a TRO on the basis that the trial court’s TRO was “improperly issued ex parte and failed to describe the prohibited conduct with specificity.” Reno Air Racing Ass’n v. McCord, 452 F.3d 1126, 1134 (9th Cir.2006). Nevertheless, the court determined that, “Civil contempt in this context consists of a party’s disobedience to a specific and definite court order by failure to take all reasonable steps within the party’s power to comply. The contempt need not be willful; however, a person should not be held in contempt if his action appears'to be based on a good faith and reasonable interpretation of the court’s order.” Reno Air Racing Ass ’n v. McCord, 452 F.3d 1126, 1130 (9th Cir. 2006), quotations omitted. “Whether contempt is civil or criminal depends on the intended effect of the penalty imposed. If the intent is remedial, or if the penalty is conditional in that it is meant to compel the defendant to act, the contempt is civil. If the intent is punitive and the penalty is unconditional, the contempt is criminal.” United States v. Laurins, 857 F.2d 529, 534 (9th Cir.1988). The U.S. Supreme Court has stated, “A contempt fine accordingly is considered civil and remedial if it either coerces the defendant into compliance with the court’s order, or compensates the complainant for losses sustained. Where a fine is not compensatory, it is civil only if the contemnor is afforded an opportunity to purge. Thus, a flat, unconditional fine totaling even as little as $ 50 announced after a finding of contempt is criminal if the contemnor has no subsequent opportunity to reduce or avoid the fine through compliance.” Int’l Union v. Bagwell, 512 U.S. 821, 829, 114 S.Ct. 2552, *1221 129 L.Ed.2d 642 (1994). “If the fine, or any portion of the fine, is coercive, it should be payable to the court. Moreover, in determining how large a coercive sanction should be the court should consider the character and magnitude of the harm threatened by continued contumacy, and the probable effectiveness of any suggested sanction.” General Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1380 (9th Cir. 1986), citations omitted.

“[C]ivil contempt sanctions, or those penalties designed to compel future compliance with a court order, are considered to be coercive and avoidable through obedience, and thus may be imposed in an ordinary civil proceeding upon notice and an opportunity to be heard. Neither a jury trial nor proof beyond a reasonable doubt is required.” Int’l Union v. Bagwell, 512 U.S. 821, 827, 114 S.Ct.

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Honor Plastic Industrial Co. v. Lollicup USA, Inc., 466 F. Supp. 2d 1217, 2006 U.S. Dist. LEXIS 92527, 2006 WL 3771007 (E.D. Cal. 2006).

466 F. Supp. 2d 1217 (Honor Plastic Industrial Co. v. Lollicup USA, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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