Donovan v. Mazzola, 83-2456

• Decision Date: 28 May 1985
• Docket Number: No. 83-2456,83-2456
• Citation: 761 F.2d 1411
• Parties: 6 Employee Benefits Ca 1614 Raymond J. DONOVAN, Secretary of U.S. Department of Labor, Plaintiff-Appellee, v. Joseph P. MAZZOLA, Robert E. Buckley, Robert J. Costello, etc., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1411

761 F.2d 1411

6 Employee Benefits Ca 1614

Raymond J. DONOVAN, Secretary of U.S. Department of Labor Plaintiff-Appellee, v. Joseph P. MAZZOLA, Robert E. Buckley, Robert J. Costello etc., et al., Defendants-Appellants.

No. 83-2456.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 5, 1984.

Decided May 28, 1985.

Lawrence Alioto, San Francisco, Cal., for defendants-appellants.

Thomas L. Holzman, Dept. of Labor, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before FERGUSON and NELSON, Circuit Judges, and JAMESON, ^* District Judge.

NELSON, Circuit Judge:

The trustees of a labor pension fund were ordered in July 1982 to post an indemnity bond and make restitution of lost assets to the fund. Civil contempt orders issued in September 1982 on the indemnity bond, in January 1983 on the restitution bond, and in May 1983 on both bonds. After compliance, fines were assessed, based upon the September and January orders, at a hearing in August 1983.

This court previously affirmed both the July 1982 judgment on the merits and the

                September 1982 contempt sanction.   Donovan v. Mazzola, 716 F.2d 1226 (9th Cir.1983) (Donovan I ), cert. denied, --- U.S. ----, 104 S.Ct. 704, 79 L.Ed.2d 169 (1984).  The facts concerning the judgment on the merits are set forth in detail in that decision, id. at 1228-1231, and will not be repeated here.  We now consider the validity of the September 1983 order which assessed contempt fines based upon orders issued in September 1982 and January 1983.  We reverse and remand
                

FACTS AND PROCEDURAL BACKGROUND

This proceeding involves civil contempt orders following a judgment entered for the Secretary of Labor against fourteen present and former members of the Board of Trustees of the Pension Fund of Local 38 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry ("the trustees"). The trustees were held to have violated their fiduciary obligations under the Employees Retirement Security Act of 1974 ("ERISA"), 29 U.S.C. Sec. 1001 et seq. The judgment ordered the trustees to post an indemnity bond of $1 million and to make restitution to the pension fund of some $400,000 in lost assets. The judgment also provided for the appointment of an investment manager for the pension fund.

Under the judgment, the indemnity bond had to be posted by September 7, 1982 while the restitution money was due by October 7, 1982. On September 30, 1982, the district court held a hearing on the Government's motion to show cause why the trustees should not be held in contempt for their failure to post the indemnity bond. The court found the trustees in contempt and allowed them until November 1, 1982 to purge themselves; if the indemnity bond was not posted by that date, fines of $100 per day per trustee would begin to accrue on November 2. This contempt order was appealed on October 22, 1982, and was affirmed together with the final judgment. Donovan I, 716 F.2d at 1231, 1239-40.

Three hearings followed the September 30 order. After another motion to show cause, a contempt hearing was held in January concerning both the indemnity bond and the trustees' failure to make restitution, an obligation which had taken the form of a $600,000 supersedeas bond for restitution (the "restitution bond"). On January 13, 1983, the court found the trustees in contempt on the restitution bond, allowed them until February 13, 1983 to purge themselves, and ordered that otherwise fines would accrue at $100 per day per trustee starting on February 14, 1983. The court made clear that the restitution bond fines were to be in addition to the indemnity bond fines. The restitution bond was not filed by February 13. Unlike the September 30 order, this order was not appealed.

In May 1983 the court held a hearing on a motion to show cause why the trustees should not be imprisoned as a further coercive measure towards the posting of both the indemnity bond and the restitution bond. On May 9 the trustees were held to be continuing in civil contempt and were ordered jailed if both bonds were not filed by May 23. This order was not appealed.

The indemnity bond was posted on May 20, 1983 and on June 24, 1983 a bond securing the restitution requirement was filed. None of the trustees had been jailed, and the fines had not been assessed.

On August 25, 1983, the district court held a fine assessment hearing. From the bench, the judge stated a number of conclusions, later reflected in a judgment entered September 12, 1983. Because of the trustees' good faith efforts after May 10, any fines due on and after that date were remitted. Fines were assessed at $100 per trustee per day for contempt on the indemnity bond, however, and at the same rate for contempt on the restitution bond. On the indemnity bond, fines were ordered for 188 days, from November 2 through May 9, amounting to $18,800 for each of the thirteen trustees liable on that bond (one was not liable). In addition, the contempt fines on the restitution bond were assessed for 84 days, from February 14 through May 9, amounting to $8,400 for each of the fourteen The Donovan I decision, affirming the judgment on the merits and the September 30, 1982 contempt order, was first issued on August 23, 1983 and again, as amended (for typographical errors), on October 22, 1983. The mandate in Donovan I did not issue until January 17, 1984, having been stayed until the Supreme Court's disposition of the petition for writ of certiorari. The trustees' lawyer referred to Donovan I at the August 25 hearing, and the district judge mentioned the opinion in his September 12, 1983 order following the fine assessment hearing.

trustees. The trustees have appealed the order.

The fine assessment order which is here appealed, therefore, was issued before the appellate court had handed down the mandate in Donovan I, though the parties and the judge were aware of the appellate decision. The trustees' motion to stay the September 30, 1982 contempt order pending disposition of the Donovan I appeal had been denied, and the district judge apparently felt that he retained jurisdiction over the contempt order on the indemnity bond while an appeal of this order was pending before the appellate court.

ISSUES PRESENTED:

I. Indemnity Bond. Whether the district court had jurisdiction to quantify contempt sanctions assessed under its September 30, 1982 order while the appeal of that order was pending before this court in Donovan I.

II. Restitution Bond. A. Whether the January 1983 and May 1983 contempt orders concerning the restitution bond should be given res judicata effect.

B. Whether the district court abused its discretion in refusing to hear evidence, at the August hearing, of collective compliance efforts.

III. Whether the district court abused its discretion in refusing to hear evidence of individual impossibility defenses before imposing individual fines upon each of fourteen defendants for their failure to post the bonds under a joint and several obligation.

DISCUSSION

I. Indemnity Bond. District court's jurisdiction to quantify contempt sanctions assessed under its September 30, 1982 order while the appeal of that order was pending before this court in Donovan I.

The Ninth Circuit follows the general rule, with some exceptions, that the filing of a notice of appeal divests the district court of jurisdiction over the matters appealed. See, e.g., Miranda v. Southern Pacific Transportation Company, 710 F.2d 516, 519 (9th Cir.1983); Davis v. United States, 667 F.2d 822, 824 (9th Cir.1982). This rule has been recently applied to contempt orders. Shuffler v. Heritage Bank, 720 F.2d 1141, 1145 n. 1 (9th Cir.1983) (order quantifying sanction is void for lack of jurisdiction during pendency of appeal); Matter of Thorp, 655 F.2d 997, 999 (9th Cir.1981) (criminal contempt finding void because mandate from appellate decision on civil contempt on same issue had not yet issued). A 1976 case, however, stresses the exceptions to this rule in coercive civil contempt orders enforcing a labor injunction. Hoffman v. Beer Drivers and Salesmens' Local No. 888, 536 F.2d 1268, 1276-77 (9th Cir.1976). The Hoffman court held that:

in the kinds of cases where the court supervises a continuing course of conduct and where as new facts develop additional supervisory action by the court is required, an appeal from the supervisory order does not divest the district court of jurisdiction to continue its supervision, even though in the course of that supervision the court acts upon or modifies the order from which the appeal is taken.

Id. [emphasis added].

We must determine whether to follow Hoffman or Shuffler and Thorp in this case. In Thorp the court imposed fines and imprisonment to coerce a witness to respond, 655 F.2d at 999, and in Shuffler the court used fines to compel compliance with a money judgment and to compensate the prevailing party for delay. 720 F.2d at We conclude, therefore, that the district court lacked jurisdiction over the contempt order quantifying sanctions on the indemnity bond. Cf. Ruby v. Secretary of the Navy, 365 F.2d 385, 388-89 (9th Cir.1966) (when "a notice of appeal does not transfer jurisdiction to the court of appeals, then such jurisdiction must remain in the district court: it cannot float in the air"). The district court held hearings in January, May and August during the pendency of Donovan I, when the appellate court had jurisdiction over the indemnity contempt sanction and thereby deprived the district court of jurisdiction over that issue. Under Shuffler, the assessment of fines at the August 1983 hearing is therefore void to the extent it was based upon the September 30, 1982 order. See Shuffler, 720 F.2d at 1145 n. 1. The district court also lacked jurisdiction over the imprisonment sanction issued in May to the extent that it was based...