Optronic Technologies, Inc., v. Ningbo Sunny Electronic Co., Ltd. et al, No. 5:2016cv06370 - Document 701 (N.D. Cal. 2020)
Court Description: ORDER GRANTING IN PART AND DENYING IN PART 645 MOTION FOR SANCTIONS. Signed by Judge Edward J. Davila on 7/2/2020. (ejdlc1S, COURT STAFF) (Filed on 7/2/2020)
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Optronic Technologies, Inc., v. Ningbo Sunny Electronic Co., Ltd. et al Doc. 701 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 OPTRONIC TECHNOLOGIES, INC, Case No. 5:16-cv-06370-EJD Plaintiff, 9 ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT v. United States District Court Northern District of California 10 11 NINGBO SUNNY ELECTRONIC CO., LTD., et al., 12 Defendants. 13 Re: Dkt. No. 645 Plaintiff Optronic Technologies, Inc. (“Orion”) moves this Court for an Order holding 14 Defendant Ningbo Sunny Electronic Co., Ltd.’s Chairman Wenjun “Peter” Ni, and Directors Yin 15 Yiping (“Mr. Yin”) and Dong Yong Xue (“Ms. Dong,” and together with Mr. Yin, the 16 “Directors”) in civil contempt for Ningbo Sunny’s failure to comply with this Court’s March 9, 17 2020 Order Re Motion for Order to Show Cause (Dkt. No. 598). The Court has considered the 18 parties’ papers and heard their oral arguments. For the reasons discussed below, the Court 19 GRANTS the motion in part and DENIES the motion in part. 20 21 I. Background The facts and history of this case are well known to the Court and the Parties, and the 22 Court recounts only the facts relevant to the present motion. On November 26, 2019, the jury 23 entered a verdict in Orion’s favor on all counts. On December 5, 2019, the Court entered a partial 24 judgment on Orion’s damages claims awarding Orion $50,400,000 after trebling. Dkt. No 518. 25 After the jury returned its verdict, Orion orally moved the Court for an order restraining 26 27 28 Ningbo Sunny from removing assets—specifically, accounts receivable—from the United States. Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 1 Dockets.Justia.com 1 Trial Tr. 2822. The Parties fully briefed the motion and the Court held a hearing on the matter. 2 Following the hearing, Ningbo Sunny filed a declaration from its President Peter Ni, dated 3 December 10, 2019, that stated, in relevant part, “Ningbo [Sunny] will not transfer any of its cash 4 or other assets located in the United States to a location outside of the United States other than in 5 the ordinary course of business while post-trial motions and appeals remain pending.” Dkt. No. 6 521-1 (the “Ni Declaration”). Relying on the Ni Declaration and Ningbo Sunny’s representations 7 at the hearing, he Court denied the First TRO Application. Dkt. No. 524. United States District Court Northern District of California 8 On January 6, 2020, Orion brought its second application for an order restraining Ningbo 9 Sunny from removing assets from the United States (the “Second TRO Application”). Dkt. No. 10 537. Ningbo Sunny opposed the motion arguing that Orion had not shown any need for the TRO 11 and emphasizing the Ni Declaration. Dkt. No. 548 at 6. The Court denied the Second TRO 12 Application finding that Orion had not shown more than speculation that Ningbo Sunny would 13 improperly remove assets from the United States. Dkt. No. 559 at 5. 14 In the course of post-judgment discovery, Orion learned that on January 1, 2020, Ningbo 15 Sunny had requested early payment from one of its co-conspirators, Celestron, and that the next 16 day, Celestron paid $4,184,057.70 to Ningbo Sunny’s account with the Agricultural Bank of 17 China. Dkt. No. 578-2, Borden Ex. 1. On February 13, 2020, Orion filed a motion for an Order to 18 Show Cause why Ningbo Sunny should not be sanctioned for falsely representing to the Court 19 under oath that Defendant would not transfer any assets outside of the U.S. except in the ordinary 20 course of business. Dkt. No. 578. 21 On March 9, 2020, the Court issued the Order Re Motion for Order to Show Cause levying 22 certain sanctions against Defendant Ningbo Sunny. Dkt. No. 598 (the “Sanctions Order”). In the 23 Sanctions Order, the Court found that Ningbo Sunny had acted in bad faith by submitting the Ni 24 Declaration, which falsely stated that Ningbo Sunny would not transfer assets out of the country 25 and by affirmatively relying on that declaration to oppose Orion’s first and second applications for 26 a TRO, despite knowing that its conduct had contradicted the Ni Declaration. The Court further 27 28 Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 2 1 found that Ningbo Sunny had attempted to conceal its misconduct by failing to produce the emails 2 evidencing the transaction. Among other sanctions, the Court ordered Ningbo Sunny to pay Orion 3 the $4,184,057 that it had received from Celestron as well as the attorneys’ fees and costs incurred 4 by Orion in connection with the motion for an order to show cause. The Court further ordered 5 Ningbo Sunny to provide a declaration by March 16, 2020 describing the actions it took to ensure 6 compliance with post-judgment discovery. United States District Court Northern District of California 7 On March 16, 2020, Ningbo Sunny filed a Notice Regarding Court’s Order Re Motion for 8 Order to Show Cause. Dkt. No. 611 (the “Notice”). The Notice stated that “[a]ccording to 9 Ningbo Sunny’s Chinese counsel James Zou, Ningbo Sunny will not submit a declaration.” 10 Quoting Mr. Zou, the Notice asserted that Ningbo Sunny had not acted in bad faith, that Ningbo 11 Sunny cannot pay Orion the $4 million because it “returned significant amount of money to its 12 bank,” that the Agricultural Bank of China would have sued Ningbo Sunny had it not repaid an 13 outstanding loan using the money Celestron transferred, and that no one was available to make the 14 Court’s requested declaration. 15 On April 23, 2020 Orion filed the present motion for civil contempt against non-parties 16 Mr. Ni, Ms. Dong, and Mr. Yin. Dkt. No 645 (the “Contempt Motion”). Orion seeks to hold Mr. 17 Ni and the Directors personally liable for the $4,184,057 owed to Orion pursuant to the Sanctions 18 Order. The Contempt Motion further seeks to hold Mr. Ni and the Directors liable for the full 19 $50,400,000 judgment as an additional coercive sanction, and requests $19,142.50 in fees and 20 costs for bringing the Contempt Motion. After the Contempt Motion was filed, prior counsel to 21 Ningbo Sunny filed an administrative motion to enlarge the time for opposing the motion in order 22 to allow Mr. Ni and the Directors time to obtain independent counsel. Dkt. No. 652. In support of 23 that motion, Ningbo Sunny filed the Declaration of Leo Caseria, in which Mr. Caseria stated, in 24 relevant part, that the Contempt Motion had been provided to Mr. Ni and Ningbo Sunny’s Chinese 25 Counsel James Zou. Dkt. No. 652-1 (the “Caseria Decl.”) at ¶ 3. 26 27 28 Mr. Ni and the Directors filed separate oppositions to the Contempt Motion. Dkt. Nos. 670 Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 3 1 (“Ni Opposition”), 671 (“Directors Opposition”). According to both oppositions, Ningbo Sunny 2 paid Orion’s attorneys’ fees and costs as ordered in the Court’s May 11 Order Granting 3 Application for Attorneys’ Fees and Costs pursuant to the Sanctions Order. See Ni Opp., p. 4; 4 Directors Opp. p. 4. The Oppositions further state that on or about May 23, 3030, Mr. Yin and 5 Ms. Dong resigned from their positions as directors on Ningbo Sunny’s board. Id. 6 United States District Court Northern District of California 7 II. Legal Standard District courts have the inherent power to enforce their orders through civil contempt. 8 Spallone v. United States, 493 U.S. 265, 276 (1990); Cal. Dep’t of Soc. Servs. v. Leavitt, 523 F.3d 9 1025, 1033 (9th Cir. 2008). “Civil contempt . . . consists of a party’s disobedience to a specific 10 and definite court order by failure to take all reasonable steps within the party’s power to 11 comply.” Inst. of Cetacean Research v. Sea Shepherd Conservation Soc’y, 774 F.3d 935, 945 (9th 12 Cir. 2014) (citing In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th 13 Cir. 1993)); see also In re Crystal Palace Gambling Hall, Inc., 817 F.2d 1361, 1365 (9th Cir. 14 1987) (“A person fails to act as ordered by the court when he fails to take all the reasonable steps 15 within his power to insure compliance with the court’s order.”) (citation, quotation marks, and 16 alterations omitted). “The contempt ‘need not be willful,’ and there is no good faith exception to 17 the requirement of obedience to a court order.” In re Dual-Deck Video, 10 F.3d at 695 (citing In 18 re Crystal Palace, 817 F.2d at 1365). 19 “Civil contempt sanctions . . . are employed for two purposes: to coerce the defendant into 20 compliance with the court’s order, and to compensate the complainant for losses sustained.” 21 Whittaker Corp. v. Execuair Corp., 953 F.2d 510, 517 (9th Cir. 1992) (citing United States v. 22 United Mine Workers of Am., 330 U.S. 258, 303-04 (1947)). “Generally, the minimum sanction 23 necessary to obtain compliance is to be imposed.” Id. (citations omitted). “Unlike the punitive 24 nature of criminal sanctions, civil sanctions are wholly remedial.” Id. (citation omitted). “A court 25 has wide latitude in determining whether there has been contemptuous defiance of its order.” 26 Gifford v. Heckler, 741 F.2d 263, 265–66 (9th Cir. 1984) (citing Neebars, Inc. v. Long Bar 27 28 Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 4 1 Grinding, Inc., 438 F.2d 47, 48 (9th Cir. 1971)). Trial courts also have power to award reasonable 2 attorneys’ fees and costs against the contemnor as a sanction for disobedience of its orders. Perry 3 v. O’Donnell, 759 F.2d 702, 705 (9th Cir. 1985). United States District Court Northern District of California 4 “It is well-settled that a court’s contempt power extends to non-parties who have notice of 5 the court’s order and the responsibility to comply with it.” United States v. Montgomery Glob. 6 Advisors V LLC, No. C-04-00733EDL, 2006 WL 950102, at *2 (N.D. Cal. Mar. 2, 2006) (citing 7 Chicago Truck Drivers v. Brotherhood Labor Leasing, 207 F.3d 500, 506-07 (8th Cir. 2000)); see 8 also Inst. of Cetacean Research, 774 F.3d at 949 (“It has long been settled law that a person with 9 notice of an injunction may be held in contempt for aiding and abetting a party in violating it.”). 10 In the Ninth Circuit, a non-party can be liable for contempt where the non-party has notice of the 11 order and (1) aids the party in violating the court order or (2) is legally identified with 12 him. Montgomery Glob. Advisors V LLC, 2006 WL 950102, at *2 (citing Peterson, 140 F.3d at 13 1323. “The party alleging civil contempt must demonstrate that the alleged contemnor violated 14 the court’s order by ‘clear and convincing evidence,’ not merely a preponderance of the 15 evidence.” In re Dual-Deck Video, 10 F.3d at 695 (citing Vertex Distrib., Inc. v. Falcon Foam 16 Plastics, Inc., 689 F.2d 885, 889 (9th Cir. 1982)). 17 The Federal Rules of Civil Procedure specifically “provide for enforcement of judgments 18 against non-parties in limited circumstances.” Peterson v. Highland Music, Inc., 140 F.3d 1313, 19 1323 (9th Cir.1998). Pursuant to Federal Rule of Civil Procedure 65(d), an injunction is “binding 20 only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and 21 upon those persons in active concert or participation with them who receive actual notice of the 22 order by personal service or otherwise.” Fed. R. Civ. P. 65(d). This is because “[a] command to a 23 corporation is in effect a command to those who are officially responsible for the conduct of its 24 affairs.” N.L.R.B. v. Sequoia Dist. Council of Carpenters, 568 F.2d 628, 633 (9th Cir. 1977). 25 III. Discussion 26 27 28 Orion argues that Mr. Ni and the Directors should be held in contempt for four reasons: Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 5 1 “(1) Chairman Ni perpetrated a fraud on this Court by submitting his false declaration; (2) 2 Chairman Ni aided and abetted Defendant’s violation of the [Sanctions] Order; (3) the Individual 3 Contemnors had the responsibility and power to take appropriate action; and (4) the Individual 4 Contemnors had actual knowledge of the [Sanctions] Order and judgment.” Motion, p. 6. 5 Because Orion’s allegations as to the Directors are different than the allegations as to Mr. Ni, the 6 Court address each separately below. 7 8 In order to hold the Directors in contempt, Orion must present clear and convincing 9 evidence that the Directors had notice of the Sanctions Order and either aided and abetted Ningbo 10 11 United States District Court Northern District of California A. The Directors Sunny’s violation of it or that they are legally identifiable with the company. With respect to the Directors’ notice of the Sanctions Order, Orion argues that it is “highly 12 likely Ms. [Dong] and Mr. [Yin] were aware” of Mr. Ni’s representations to this Court and of 13 Ningbo Sunny’s decision to ask Celestron for early payment. Motion, p. 7. Orion further argues 14 that the Directors must have known of Ningbo Sunny’s misconduct because the Sanctions Order 15 was served on Ningbo Sunny’s counsel of record, and because according to Ningbo Sunny’s 16 Chinese counsel, “many of Ningbo Sunny’s employees are aware of the judgment of this case.” 17 Dkt. No. 611 at 2:19-20. 18 As an initial matter, Orion’s argument that it is “highly likely” that the Directors were 19 aware of the Sanctions Order, even if true, does not rise to the level of clear and convincing 20 evidence of actual notice necessary to hold the Directors in contempt. In re Dual-Deck Video, 10 21 F.3d at 695. Likewise, the fact that Ningbo Sunny’s counsel was served with the Contempt 22 Motion and that other employees are aware of the judgment in this case does not clearly indicate 23 that the Directors had actual notice of the Sanctions Order. 24 Even if the Directors had sufficient notice, however, the Court finds that the facts 25 presented do not amount to clear and convincing evidence that the Directors aided and abetted the 26 violation of the Sanctions Order or were legally identifiable with Ningbo Sunny such that they 27 28 Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 6 1 may be held personally responsible for the company’s actions. Orion argues that the Directors 2 were likely involved in the Celestron transfer because testimony at trial showed that they 3 participated in “major decisions” at Ningbo Sunny. However, Orion offers no evidence to suggest 4 that requesting early payment from a customer constitutes a “major decision.” Moreover, as the 5 Directors point out in their Opposition, testimony at trial actually suggested that Ningbo Sunny’s 6 Deputy General Manager of Sales James Qiu, and not the board, typically handled tasks related to 7 client relationships. See Trial Tr. 412:5-16. Thus, the evidence does not indicate that the 8 Directors were involved in the Celestron transfer nor any of the misconduct that gave rise to the 9 Sanctions Order. United States District Court Northern District of California 10 Orion argues that even if the Directors did not participate in Ningbo Sunny’s misconduct, 11 they should still be held in contempt for failing to direct Ningbo Sunny to comply with the 12 Sanctions Order because they are legally identifiable with the company. A non-party is 13 considered legally identified with a corporate defendant for purposes of contempt when the non- 14 party has the ability to act on behalf of the defendant-entity. See Montgomery Global Advisors 15 LLC, 2006 WL 950102 at *2 (holding, in case where contempt order was directed solely to a 16 corporate defendant, that managing member could be held personally liable for defendant’s 17 contempt because he “had and continues to have the ability to act on behalf of that entity and is 18 therefore legally identified with it.”); Fid. Nat. Fin., Inc. v. Friedman, 76 Fed. R. Serv.3d 276 at 19 *13 (D. Ariz. 2010) (holding that nonparty was not “legally identified” with the party bound by 20 court order for contempt purposes because the plaintiff had not shown that the non-party was at 21 the very least either “legally responsible for the affairs of” the party bound or that he “had and 22 continues to have the ability to act on [his] behalf”). 23 Other than Mr. Ni’s testimony that the board opines on “major decisions,” there is no clear 24 and convincing evidence that the Directors have the ability to control Ningbo Sunny or exert 25 influence over its compliance with this Court’s orders. The parties dispute whether the Directors 26 collectively own a controlling share of Ningbo Sunny and there is contradicting evidence in the 27 28 Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 7 1 record on this point. See Reply, p. 11; Dir. Opposition, p. 14. This disputed evidence is not clear 2 and convincing proof that the Directors are able to control the Ningbo Sunny, and thus, the Court 3 does not find that they are legally identifiable with the company. 4 Because the evidence is insufficient to show that the Directors aided and abetted the 5 violation of the Sanctions Order or that they are legally identifiable with Ningbo Sunny, the Court 6 need not address the Directors’ arguments regarding the jurisdiction of this Court or the 7 effectiveness of the requested sanctions. The Court DENIES the motion for contempt as to the 8 Directors. 9 United States District Court Northern District of California 10 B. Peter Ni Unlike the evidence against the Directors, the evidence as to Mr. Ni offers a far more 11 compelling argument that Mr. Ni had actual notice of the Sanctions Order and that he is legally 12 identifiable with the company sufficient to hold him in contempt for the company’s violation of 13 the Sanctions Order. 14 Mr. Ni was heavily involved in this case—he was deposed, he testified at trial, and he 15 submitted a post-judgment declaration, which the Court ultimately found to have been submitted 16 in bad faith. See Dkt. No. 521-1. Orion argues that Mr. Ni “must have known” about the 17 Celestron transfer because he testified that he personally had to approve all large orders and all 18 decisions about customer credit. Borden Decl. Ex. 2, Ni Deposition at 20:6-21. Not only was Mr. 19 Ni aware of and involved in Ningbo Sunny’s misconduct, the evidence also indicates that he was 20 aware of the resulting Sanctions Order. Ningbo Sunny’s prior counsel submitted a declaration 21 stating that “on April 24, 2020, undersigned counsel informed Ningbo Sunny that Orion had filed 22 a motion for civil contempt (Dkt. 645), and provided a copy of the motion to Peter Ni and its 23 outside Chinese counsel James Zou.” Caseria Decl. ¶3. The Caseria Declaration offers clear and 24 convincing evidence that Mr. Ni received the Contempt Motion. Even if Mr. Ni was not aware of 25 the Sanctions Order when it was issued on March 9, 2020, the Caseria Declaration indicates that 26 he became aware of it upon receipt of the Contempt Motion, which describes the Sanctions Order. 27 28 Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 8 United States District Court Northern District of California 1 In his Opposition, Mr. Ni concedes that he has notice of the Contempt Motion, but argues 2 that Orion failed to properly serve him with the Sanctions Order under Rule 4 of the Federal Rules 3 of Civil Procedure. Mr. Ni argues that because Orion did not formally serve him this Court lacks 4 jurisdiction to hold him in contempt. Orion argues that formal service under Rule 4 is unnecessary 5 because the Sanctions Order is binding on Mr. Ni under Rule 65(d). In support of his argument, 6 Mr. Ni cites AF Holdings LLC v. Navasca, No. 12-cv-2396 EMC, 2013 WL 5701104 (N.D. Cal. 7 Oct. 16, 2013). In AF Holdings, the Court held that it lacked jurisdiction to sanction two non- 8 party attorneys who were not properly served with the motion for sanctions, despite the fact that 9 the non-parties had actual notice of the motion. Id. at *8. However, AF Holdings involved a 10 motion for sanctions under 28 U.S.C. § 1927 and the Court’s inherent powers, rather than a 11 motion to hold a nonparty in contempt for violating a prior court order issued pursuant to Rule 12 65(d). Therefore, the court in that case did not have reason to address Rule 65(d), which this 13 Court finds applicable here. 14 Rule 65(d) expressly states that an injunctive order is binding upon “the parties to the 15 action, their officers, agents, servants, employees, and attorneys, and upon those persons in active 16 concert or participation with them who receive actual notice of the order by personal service or 17 otherwise.” Fed. R. Civ. P. 65(d) (emphasis added). The “or otherwise” at the end of Rule 65(d) 18 makes clear that personal service is not required to bind non-party officers of a corporation to a 19 court order, as long as the non-party has “actual notice” of the order. Thus, this Court agrees with 20 Orion that because Mr. Ni had actual notice of the Sanctions Order at least as of April 24, 2020, 21 the Court has jurisdiction to enforce the order against Mr. Ni under Rule 65(d), despite the fact 22 that he was not served pursuant to Rule 4. 23 Mr. Ni also cites Hilao v. Estate of Marcos, in support of his argument that Rule 4 service 24 was necessary here. 94 F.3d 539, 545 (9th Cir. 1996). At issue in Hilao was whether the district 25 court properly enjoined the Republic of the Philippines, a non-party to the suit, from entering into 26 agreements with the defendant. The plaintiff argued that the injunction was proper as to the 27 28 Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 9 1 Republic because the Republic was acting “in active concert or participation with” the defendant 2 under Rule 65(d). The Hilao Court reasoned that despite the fact that the Republic is bound by the 3 injunction under Rule 65(d), the district court would still need personal jurisdiction under the 4 Foreign Sovereign Immunities Act (“FSIA”) in order to enforce the injunction. Id. at 545. 5 Because no jurisdiction under the FSIA existed in that case, the injunction was futile and therefore 6 improper. Id. at 549. United States District Court Northern District of California 7 Unlike in Hilao, the non-parties in the present case are not foreign sovereigns. Whereas 8 “[t]he FSIA is the sole basis for jurisdiction over a foreign state,” no such limitation applies in this 9 case. Id. at 545. Moreover, there is no contention here that the Sanctions Order was improperly 10 issued, and Hilao does not suggest that a court is powerless to enforce a properly issued order 11 against the parties bound by that order under Rule 65(d). 12 The Court further finds that Mr. Ni is legally identifiable with Ningbo Sunny such that he 13 may be held in contempt for the company’s failure to comply with the Sanctions Order. Mr. Ni is 14 the President and general manager of Ningbo Sunny. The company represented to the Court that 15 his responsibilities include “management and oversight of the entire company.” Dkt. No. 620 at 2. 16 Mr. Ni further testified that he manages the “daily operations” of the company, approves all big 17 orders, and reviews decisions about customer credit. See Trial Tr. 412:5-22. 18 The Court finds that these representations from Mr. Ni and Ningbo Sunny provide clear 19 and convincing evidence that Mr. Ni exercises control over and has the ability to act on behalf of 20 the company such that he is legally identifiable with it for the purpose of holding him in contempt. 21 See Montgomery Global Advisors LLC, 2006 WL 950102 at *2; Sequoia Dist. Council of 22 Carpenters, 568 F.2d at 633 (“It can hardly be argued that the principal officers of a[n entity] are 23 not legally identified with it, and thus liable in contempt for disobeying an order directed to the 24 [entity].”). 25 26 27 28 Because Mr. Ni is legally identifiable with Ningbo Sunny and had actual notice of the Sanctions Order, the Court GRANTS Orion’s motion to hold Mr. Ni in contempt. Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 10 1 United States District Court Northern District of California 2 C. Ability to Comply “In a civil contempt proceeding such as this, of course, a defendant may assert a present 3 inability to comply with the order in question . . . It is settled, however, that in raising this defense, 4 the defendant has a burden of production.” United States v. Rylander, 460 U.S. 752, 757 (1983); 5 Stone v. City and County of San Francisco, 968 F.2d 850, 856 n.9 (9th Cir.1992) (once the party 6 alleging contempt has presented clear and convincing evidence that the alleged contemnor violated 7 a court order, “[t]he burden then shifts to the contemnors to demonstrate why they were unable to 8 comply.”). “To satisfy this burden the respondent must show ‘categorically and in detail’ why he 9 is unable to comply.” N.L.R.B. v. Trans Ocean Exp. Packing, Inc., 473 F.2d 612, 616 (9th Cir. 10 1973). The alleged contemnor “must show they took every reasonable step to comply.” Am. 11 Semiconductor, Inc. v. California Assignments LLC, No. 12-CV-06138-LHK, 2013 WL 5937968, 12 at *3 (N.D. Cal. Oct. 30, 2013). 13 Mr. Ni argues that Ningbo Sunny is not able to comply because the money it received from 14 Celestron has been transferred to Ningbo Sunny’s bank in satisfaction of a prior debt. None of 15 Mr. Ni, the Directors, or Ningbo Sunny have provided evidence to support this claim. The Court 16 is not convinced that such a transfer would alleviate Ningbo Sunny’s obligation to comply with 17 the Sanctions Order, but in any event, Mr. Ni has not met his burden of demonstrating that 18 compliance is impossible. Nor has Ningbo Sunny or any of the non-parties shown that they took 19 “reasonable steps to comply” with the order. 20 21 D. Appropriate Sanctions Sanctions for civil contempt are limited to “(1) compel or coerce obedience to a court 22 order, and/or (2) compensate the contemnor’s adversary for injuries resulting from the 23 contemnor’s noncompliance.” Ahearn ex rel. N.L.R.B. v. Int’l Longshore & Warehouse Union, 24 Locals 21 & 4, 721 F.3d 1122, 1131 (9th Cir. 2013). “Generally, the minimum sanction necessary 25 to obtain compliance is to be imposed.” Whittaker Corp., 953 F.2d at 517 (citing Spallone v. 26 United States, 493 U.S. 265, 280 (1990); Shillitani v. United States, 384 U.S. 364, 371 (1966)). 27 28 Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 11 United States District Court Northern District of California 1 Orion seeks to hold Mr. Ni personally liable for not only the $4.2 million at issue in the 2 Sanctions Order but also for the full judgment over approximately $52 million. Given Mr. Ni’s 3 involvement in the misconduct that gave rise to the Sanctions Order and his ability to control 4 Ningbo Sunny, the Court finds coercive sanctions appropriate. Orion has not shown that it is 5 necessary to hold Mr. Ni liable for the entire judgment in order to coerce Ningbo Sunny’s 6 compliance with the Sanctions Order. Rather, the Court finds it appropriate to hold Mr. Ni liable 7 for the $4.2 million that Ningbo Sunny owes Orion unless or until Ningbo Sunny fully complies 8 with the Sanctions Order. 9 Orion additionally seeks $19,142.50 for attorneys’ fees and costs incurred in bringing the 10 Contempt Motion. “An award of attorneys’ fees and costs is also an appropriate remedy for civil 11 contempt and is wholly independent of an award of compensatory damages.” Lovell v. Evergreen 12 Res., Inc., No. C-88-3467 DLJ, 1995 WL 761269, at *5 (N.D. Cal. Dec. 15, 1995). This Court has 13 recently approved Orion’s counsel’s rates (see Dkt. Nos. 629, 657) and finds that the hours 14 reportedly expended on the Contempt Motion are reasonable. Thus, the Court GRANTS Orion’s 15 requested attorneys’ fees and costs in the amount of $19,142.50. 16 IV. Conclusion 17 For the reasons stated above, the Court DENIES the motion as to Ms. Dong and Mr. Yin 18 and GRANTS the motion as to Mr. Ni. The Court ORDERS Mr. Ni to pay Orion a total of 19 $4,203,200.20, consisting of the $4,184,057.70 due under the Sanctions Order and $19,142.50 in 20 attorneys’ fees and costs. Mr. Ni’s obligation to pay Orion shall be purged upon Ningbo Sunny’s 21 full compliance with the Sanctions Order, including its payment of the same sum to Orion. 22 23 24 25 IT IS SO ORDERED. Dated: July 2, 2020 ______________________________________ EDWARD J. DAVILA United States District Judge 26 27 28 Case No.: 5:16-cv-06370-EJD ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS FOR CIVIL CONTEMPT 12
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