Waste Mgmt. of Wash., Inc. v. Kattler

• Decision Date: 14 January 2015
• Docket Number: No. 13–20356.,13–20356.
• Citation: 776 F.3d 336
• Parties: WASTE MANAGEMENT OF WASHINGTON, INCORPORATED, Plaintiff–Appellee, v. Dean KATTLER, et al., Defendants, Michael A. Moore, Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

776 F.3d 336

WASTE MANAGEMENT OF WASHINGTON, INCORPORATED, Plaintiff–Appellee

v. Dean KATTLER, et al., DefendantsMichael A. Moore, Appellant.

No. 13–20356.

United States Court of Appeals, Fifth Circuit.

Jan. 14, 2015.

Holly Harvel Williamson, Litigation Counsel, William Michael Reed, Hunton & Williams, L.L.P., Houston, TX, for Plaintiff–Appellee.

G. Luke Ashley, Thompson & Knight, L.L.P., Dallas, TX, for Appellant.

Appeal from the United States District Court for the Southern District of Texas.

Before JOLLY, HIGGINBOTHAM, and OWEN, Circuit Judges.

Opinion

PRISCILLA R. OWEN, Circuit Judge.

This 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. Moore contends that he was not afforded procedural due process and that the district court abused its discretion by finding him in contempt. We vacate the contempt finding and sanctions.

I

In the underlying litigation, Waste Management, Inc. (WM) sued 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.

At the 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.”

Following the hearing, Kattler informed 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.

Kattler, now represented by new counsel, 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 that 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.

Following this hearing, the district court 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, on the merits, 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.

II

“We review contempt findings for abuse of discretion, but ‘review is not perfunctory.’ ”¹ Facts will be accepted as true unless clearly erroneous, but questions of law concerning the contempt order are reviewed de novo.² A factual finding is “clearly erroneous only if, viewing the evidence in light of the record as a whole, we are left with the ‘definite and firm conviction that a mistake has been committed.’ ”³ Whether an alleged contemnor was afforded due process is a question of law we review de novo.⁴

III

In 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.”⁵ A “narrow exception” to these requirements exists when a litigant engages in courtroom conduct that “disturbs the court's business.”⁶ 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.’ ”⁷

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.

WM contends its pleadings provided Moore with sufficient notice he might be held in contempt at the second show-cause hearing. It argues this court's decisions in American Airlines, Inc. v. Allied Pilots Association⁸ and Alizadeh v. Safeway Stores, Inc.⁹ stand for the proposition that a movant's pleadings alone put all potential contemnors on notice that their liability could be adjudicated at a show-cause hearing, not just those named in the show-cause motion. We are not persuaded. In American Airlines, we concluded that the defendants had sufficient notice based on the opposing party's motion for contempt, “[c]ouple[d] with the district court's Show Cause Order, ” which individually named all parties whom the movant sought the court to hold in contempt.¹⁰ Similarly, in Alizadeh, we held that the imposition of attorneys' fees against the plaintiff “could not have come as a surprise” because the defendant had repeatedly requested such fees in its pleadings, and because the court itself had issued a “Joint Pretrial Order” which provided that the parties were to litigate at the hearing the issue of whether “Safeway [was] entitled to recover reasonable attorney's fees and costs from the Plaintiff.”¹¹

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.¹² 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.

IV

We also conclude that the district court abused its discretion by finding Moore in contempt. “A party commits contempt when he violates a definite and...