Dual-Deck Video Cassette Recorder Antitrust Litigation, In re

Decision Date02 December 1993
Docket NumberDUAL-DECK,GO-VIDE,INC,No. 92-15967,92-15967
Citation10 F.3d 693
Parties1993-2 Trade Cases P 70,431, 27 Fed.R.Serv.3d 465 In reVIDEO CASSETTE RECORDER ANTITRUST LITIGATION., an Arizona Corporation, Plaintiff-Appellant, v. The MOTION PICTURE ASSOCIATION OF AMERICA, Victor Company of Japan, Ltd., Sony Corporation, et al., Defendants, and Matsushita Electrical Industrial Co., Ltd., Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Joseph M. Alioto, The Law Firm of Joseph M. Alioto, San Francisco, CA, Daniel R. Shulman, Gray, Plant, Mooty, Mooty & Bennett, Minneapolis, MN, for plaintiff-appellant.

Debra J. Pearlstein, A. Paul Victor, and Jay N. Fastow, Weil Gotshal & Manges, New York City, for defendant-appellee.

Appeal from the United States District Court for the District of Arizona.

Before: ALARCON, LEAVY and KLEINFELD, Circuit Judges.

KLEINFELD, Circuit Judge:

The district court held Go-Video in contempt for using discovery from its earlier lawsuit to support a later lawsuit, in violation of a protective order. We reverse.

I. Facts

Go-Video sued Matsushita and other defendants for antitrust violations in 1987. As is common now in business litigation, the parties signed a stipulation for a very broad protective order prohibiting use of disclosure of material obtained in discovery. The stipulation approved by order consists of ten single spaced pages plus signatures, and limits use of materials obtained in discovery to the action in which the order was issued.

All information produced in discovery, including, but not limited to, "Confidential Information" shall be used solely in the preparation for trial and/or trial of this action, shall not be used at any time for any other purpose whatsoever and shall not be disclosed to or made accessible to any person who is not a party to this action and/or a "Qualified Person."

During discovery, Go-Video obtained information which it claimed would show other antitrust violations in addition to those already alleged in its second amended complaint. After the court denied Go-Video leave to amend its complaint to include the new claims, Go-Video filed a second lawsuit in January of 1990.

Three acts were the basis for the contempt order. First, in the 1990 complaint, Go-Video averred that the defendants had entered into agreements "described more fully in the 'statement of specific facts relied upon by Go-Video, Inc., in opposition to motions of defendants for summary judgment on antitrust issues' " in the first Go-Video action. Second, in the 1990 case, Go-Video moved for an order prohibiting destruction of evidence, and under seal referenced discovery from the 1987 case. Third, Go-Video made a discovery request in the 1990 case, which referred to discovery obtained in the 1987 case.

The defendants have not claimed that Go-Video disclosed confidential information. They make no claim that the stated purposes of the order were violated, 1 or that any competitor or anyone else learned anything inappropriate from Go-Video's use of discovery. The contempt was based on a violation of the term of the order prohibiting any use "whatsoever" of information obtained in discovery except for preparation and trial of "this action."

II. Analysis

We have jurisdiction to decide this matter pursuant to 28 U.S.C. Sec. 1291, because the order of civil contempt was a "final decision." In re Crystal Palace Gambling Hall, Inc., 817 F.2d 1361, 1363 (9th Cir.1987). We review a district court's contempt order for abuse of discretion. Diamontiney v. Borg, 918 F.2d 793, 795 (9th Cir.1990).

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," and there is no good faith exception to the requirement of obedience to a court order. Crystal Palace, 817 F.2d at 1365. But 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].' " Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 689 F.2d 885, 889 (9th Cir.1982) (quoting Rinehart v. Brewer, 483 F.Supp. 165, 171 (S.D.Iowa 1980). "Substantial compliance" with the court order is a defense to civil contempt, and is not vitiated by "a few technical violations" where every reasonable effort has been made to comply. Id. at 891; see also General Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1378-79 (9th Cir.1986).

The party alleging civil contempt must demonstrate that the alleged contemnor violated the court's order by "clear and convincing evidence," not merely a preponderance of the evidence. Vertex, 689 F.2d at 889. Our review, though, is limited by the abuse of discretion standard, and we will not reverse unless we have a definite and firm conviction that the district court committed a clear error of judgment after weighing the relevant factors. Crystal Palace, 817 F.2d at 1364.

This set of rules is easy to articulate but difficult to apply. We must determine, under a restrained standard of review, whether the district court could properly determine (1) that Go-Video violated the court order, (2) beyond substantial compliance, (3) not based on a good faith and reasonable interpretation of the order, (4) by clear and convincing evidence.

Go-Video committed three technical violations of the order by using the discovery from the first lawsuit to advance the second. But the defendant failed to prove by clear and convincing evidence that under a good faith, reasonable interpretation of the protective order, Go-Video did not...

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