AngioDynamics, Inc. v. Biolitec AG

• Decision Date: 06 May 2016
• Docket Number: No. 15–1645.,15–1645.
• Citation: 823 F.3d 1
• Parties: ANGIODYNAMICS, INC., Plaintiff, Appellee, v. BIOLITEC AG; Biomed Technology Holdings, Ltd. ; and Wolfgang Neuberger, Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

823 F.3d 1

ANGIODYNAMICS, INC., Plaintiff, Appellee

v.BIOLITEC AG; Biomed Technology Holdings, Ltd. ; and Wolfgang Neuberger, Defendants, Appellants.

No. 15–1645.

United States Court of Appeals, First Circuit.

May 6, 2016.

Edward Griffith, with whom The Griffith Firm, Michael K. Callan, and Doherty, Wallace, Pillsbury & Murphy, P.C., were on brief, for appellants.

William E. Reynolds, with whom Nixon Peabody LLP was on brief, for appellee.

Before LYNCH, STAHL, and BARRON, Circuit Judges.

STAHL

, Circuit Judge.

Defendants, who violated a preliminary injunction, appealed the resulting civil contempt order entered by the district court. The contempt order included a civil arrest warrant and an escalating fines provision. Defendants persisted in their defiance as the unpaid coercive fines continued to accumulate. We affirmed the contempt order and remanded “only to direct the district court to amend the sanction order so that the fines cease to accrue at some total amount.” AngioDynamics, Inc. v. Biolitec AG (Biolitec II), 780 F.3d 420, 428 (1st Cir.)

, cert. denied, ––– U.S. ––––, 136 S.Ct. 535, 193 L.Ed.2d 427 (2015).

The district court dutifully followed our instructions, and Defendants promptly appealed the revised contempt order. In this appeal, Defendants argue that the underlying preliminary injunction expired by its own terms and so the district court can no longer coerce compliance with it. Because Defendants failed to raise this argument at any time prior to the present appeal, we DENY the appeal.

I. Facts & Background

One does not need to venture far back into our catalogue of decisions to find a recitation of facts for this case. This is Defendants' fourth appeal. See AngioDynamics, Inc. v. Biolitec AG (Biolitec I), 711 F.3d 248 (1st Cir.2013)

; Biolitec II, 780 F.3d 420 (1st Cir.2015) ; AngioDynamics, Inc. v. Biolitec AG (Biolitec III), 780 F.3d 429 (1st Cir.2015). For the convenience of the reader, however, we take a moment to trace the travel of the case.

In 2012, AngioDynamics, Inc. (“ADI” or “Plaintiff”) obtained a $23 million judgment in New York against Biolitec, Inc. (“BI”) based on an indemnification clause in an agreement between the two entities. Biolitec I, 711 F.3d at 250

. Plaintiff sought to secure payment on that judgment by bringing suit against BI's President and CEO, Wolfgang Neuberger, and its corporate parents, Biomed Technology Holdings (“Biomed”) and Biolitec AG (“BAG”) (collectively, “Defendants”), which, according to Plaintiff, had looted BI of over $18 million in assets in order to render it judgment-proof. Biolitec III, 780 F.3d at 432. As it turns out, this would be but the first in a series of attempts to evade payment to ADI and to elude the power of the courts.

During discovery, Defendants refused to produce documents and key witnesses, including Neuberger. Id. at 432–33

. More importantly, Plaintiff soon learned that BAG, based in Germany, intended to effectuate a downstream merger with its Austrian subsidiary. Id. at 433. This, Defendants conceded, would transfer BAG's assets to Austria, precluding ADI from enforcing its judgment. Biolitec I, 711 F.3d at 252.

On September 13, 2012, the district court issued a preliminary injunction barring Defendants from carrying out the merger. On December 14, 2012, the district court denied Defendants' motion for reconsideration. Id. at 250

. Defendants appealed the preliminary injunction to this Court, which affirmed on April 1, 2013. Id. at 252. While that appeal was pending, however, Defendants decided to go forward with the merger anyway in direct violation of the injunction. Id. at 250 n. 1. Defendants effectuated the merger on March 15, 2013, despite repeated assurances to the district court that they would comply with the order. AngioDynamics, Inc. v. Biolitec AG, 946 F.Supp.2d 205, 211–12 (D.Mass.2013).

Plaintiff, understandably, moved for the district court to hold Defendants in contempt. Id. at 211

. In response, the district court ordered Neuberger to appear in person at an April 10, 2013 hearing to show cause why he should not be held in civil or criminal contempt. Id. at 212. Neuberger defied that order as well, notifying the district court that he would not attend the show-cause hearing. Id.

On April 11, 2013, the district court issued a coercive civil contempt order authorizing escalating, monthly fines against Defendants and an arrest warrant for Neuberger. Id. at 215–16

. The decision ordered Defendants to “return Biolitec AG to the status quo ante,” which Defendants conceded was possible, albeit through a process that would be “lengthy, burdensome, and onerous.” Id. at 214–15. The district court held that “fines and incarceration for civil contempt will continue until Defendants effectively restore the status quo existing prior to the violation of the court's order.” Id. at 216. After a few months, Defendants filed another round of motions to revoke the contempt order and vacate the underlying injunction, which the district court denied. Biolitec II, 780 F.3d at 424

. Defendants appealed.

While the contempt order and, once again, the injunction were pending appeal, Defendants persisted in stonewalling the district court. Not only did Defendants unequivocally state that they had no intention of complying with the contempt order, Defendants also disregarded the court's warnings that continued defiance of its orders could result in a default judgment. Biolitec III, 780 F.3d at 433, 436

. With few tools left at its disposal, the court eventually entered a default judgment as a sanction for violating its discovery orders and awarded ADI approximately $75 million in damages. Id. at 436. A default judgment entered on January 14, 2014, and a final judgment entered on March 18, 2014. Id. at 433. Again, defendants appealed.

On March 11, 2015, this Court issued decisions in two companion cases. In Biolitec II, we affirmed the district court's civil contempt sanctions as well as the district court's denial of Defendants' motion to vacate the preliminary injunction. 780 F.3d at 429

. We recognized, however, that Defendants' unyielding contumacy, paired with the accumulating fine model imposed by the district court, had resulted in a fine that “far exceed[ed] the amount of the original judgment ADI [was] attempting to collect.” Id. at 428. This was, admittedly, Defendants' own doing since the power to purge the contempt resided with—and continues to reside with—Defendants. Id. Regardless, we decided that the district court should amend its sanction order “so that the fines cease to accrue at some total amount,” and we remanded “for the sole purpose of directing the district court to take action with respect to the total accruing fine amount.” Id. at 428, 429. In Biolitec III, issued that very same day, we also affirmed the district court's decision to enter a default judgment against Defendants as a sanction for discovery violations and to award damages in the amount of approximately $75 million. 780 F.3d at 436–37.

On April 24, 2015, the district court complied with our instructions and revised the contempt order by adding a cap to Defendants' total contempt liability. The district court observed that we had “affirmed the [contempt] decision ... in all substantive respects” and “remand[ed] only for a clarification with regard to the total amount of the ultimate coercive fine.” The court “cap[ped] the fine Defendants will be liable for at a total amount of $70 million, or approximately three times the amount of Plaintiffs' original New York judgment against Defendant Biolitec, Inc.”

True to form, Defendants now appeal the district court's revised contempt order. Defendants point to the preliminary injunction, which states, “This Order shall be in effect until this Court enters a final judgment in this action.” Alleging that the preliminary injunction therefore “expired” on March 18, 2014, the date on which the district court entered a final judgment in favor of ADI, Defendants now claim that the district court was without authority to enter a “new” contempt decision on April 24, 2015 to coerce compliance with an “expired” order.

II. Analysis

Our decision starts and ends with Defendants' failure to raise the argument in their prior appeals. United States v. Arreguin, 735 F.3d 1168, 1178 (9th Cir.2013)

(“We need not and do not consider a new contention that could have been but was not raised on the prior appeal.”); In re Cellular 101, Inc., 539 F.3d 1150, 1155 (9th Cir.2008) (“By failing to raise the ... issue in the prior appeal, [the party] waived its right to assert the defense in subsequent proceedings.”). Simply put, Defendants' window of opportunity to make this argument closed with our twin decisions in Biolitec II and Biolitec III. As we stated in Biolitec III, “[w]e will not revisit legal rulings ‘explicitly or implicitly decided by an earlier appellate decision in the same case.’ ” 780 F.3d at 434

(emphasis added) (quoting Remexcel Managerial Consultants, Inc. v. Arlequin, 583 F.3d 45, 53 (1st Cir.2009) ). “[T]he law of the case doctrine forecloses reconsideration of issues that were decided—or that could have been decided —during prior proceedings.” United States v. Williams, 475 F.3d 468, 471 (2d Cir.2007) (emphasis added).

It is unclear whether the Defendants' failure to raise this argument in their prior appeals was the result of inadvertence or tactical reserve and procedural gamesmanship. Either way, we decline to address their challenge now. During Defendants' prior appeals, they simultaneously challenged the contempt order, the entry of default judgment, the final judgment award, and—again—the preliminary injunction itself. All of the ingredients for the present appeal were at hand, and yet Defendants declined to make their argument at that time. Perhaps, they opted to await our decisions and see how they fared, and when they realized that their original recipe had failed to impress, they used the very same ingredients to cook up a...