Life Techs. Corp. v. Govindaraj

• Citation: 931 F.3d 259
• Decision Date: 24 July 2019
• Docket Number: No. 16-1703,16-1703
• Parties: LIFE TECHNOLOGIES CORPORATION, a Delaware Corporation, Plaintiff - Appellee, v. Krishnamurthy GOVINDARAJ, Former President, Life Technologies Corporation, a Maryland Corporation, Party-in-Interest - Appellant, and Life Technologies Corporation, Montgomery County, Maryland, Defendant.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

931 F.3d 259

LIFE TECHNOLOGIES CORPORATION, a Delaware Corporation, Plaintiff - Appellee,

v. Krishnamurthy GOVINDARAJ, Former President, Life Technologies Corporation, a Maryland Corporation, Party-in-Interest - Appellant,andLife Technologies Corporation, Montgomery County, Maryland, Defendant.

No. 16-1703

United States Court of Appeals, Fourth Circuit.

Argued: March 21, 2019

Decided: July 24, 2019

Amended: August 7, 2019

ARGUED: Michael R. Williams, BUSH SEYFERTH & PAIGE PLLC, Kalamazoo, Michigan, for Appellant. Meghan Canty Murphey, THEODORA ORINGHER PC, Costa Mesa, California, for Appellee. ON BRIEF: Brittney D. Kohn, BUSH SEYFERTH & PAIGE PLLC, Troy, Michigan, for Appellant. Matthew D. Murphey, THEODORA ORINGHER PC, Costa Mesa, California, for Appellee.

Before AGEE, KEENAN, and QUATTLEBAUM, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published opinion. Judge Keenan wrote the opinion, in which Judge Agee and Judge Quattlebaum joined.

BARBARA MILANO KEENAN, Circuit Judge:

The plaintiff in this case, Life Technologies Corp., filed a complaint against another corporation of the same name (the defendant corporation, or the defendant), alleging trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. § 1125(a)(1)(A). The plaintiff obtained an injunction against the defendant corporation and its officers, including the corporation’s president, Dr. Krishnamurthy Govindaraj, who was not named as a defendant.¹ After entry of default judgment against the corporation and years of damages-related discovery, the district court awarded more than $1.7 million in damages, as well as more than $555,000 in attorneys’ fees, against both the defendant corporation and Govindaraj personally. In holding Govindaraj personally liable for the money judgment despite his status as a non-party, the district court emphasized Govindaraj’s position as an officer of the defendant corporation and his continuing attempts to obstruct the litigation "in defiance of orders of [the] court."

Upon our review, we conclude that the district court erred in entering judgment against Govindaraj personally when he was not named as a party or otherwise brought into the case by service of process. We additionally hold that the court did not abuse its discretion in finding Govindaraj in contempt of court. We therefore affirm in part, and vacate in part, the district court’s judgment. We remand the case for the court to determine whether any of the damages and fees award entered against Govindaraj is attributable to his contempt of court.

I.

In December 2010, plaintiff Life Technologies Corp., a Delaware corporation, filed a two-count complaint against the defendant, Life Technologies Corp., a Maryland corporation, alleging that the defendant corporation was infringing on the plaintiff’s registered trademark, "Life Technologies." Among other things, the plaintiff alleged that the defendant corporation, plaintiff’s competitor in the field of scientific products and services, improperly was using the "Life Technologies" mark as part of various internet domain names to market the defendant’s goods and services.

The plaintiff sought declaratory and injunctive relief, as well as treble damages under the Lanham Act, 15 U.S.C. § 1125(a)(1)(A). It is undisputed that the plaintiff did not name Govindaraj as a defendant, and did not refer to him in any allegations of the complaint.²

In March 2012, the district court entered default judgment against the defendant corporation. The court additionally held that Govindaraj had acted in bad faith during the litigation, observing that his statements on behalf of the defendant corporation were "laughably incorrect" and "absurd." The court entered an order enjoining the defendant corporation, and Govindaraj and his wife as corporate officers, from engaging in further activity infringing on the plaintiff’s registered trademark. The court also held that based on the defendant’s willful conduct, the case was "exceptional," entitling the plaintiff to payment of its costs and attorneys’ fees. The court directed that the plaintiff be awarded damages from the defendant corporation, including treble damages, in an amount to be determined following additional discovery in the case.³

Around the same time, Govindaraj dissolved the defendant corporation without notice to the corporation’s creditors. In the months that followed, Govindaraj violated the court’s injunction and continually attempted to obstruct the discovery process related to determining a damages award. Among other things, in violation of the discovery proceedings, Govindaraj transferred some internet domain names to foreign entities, made repeated false claims regarding the company’s finances, and refused to produce various documents.

In November 2012, the district court issued an order directing Govindaraj to show cause why he should not be held in contempt of court for violating the court’s injunction. At a show cause hearing held the next month, Govindaraj, represented by counsel, made his first formal appearance in the case as an interested party. After Govindaraj testified at the hearing, the district court sua sponte raised the question whether damages could be awarded against Govindaraj personally. When Govindaraj’s counsel inquired whether the court might pierce the corporate veil, the court responded that piercing the corporate veil "may be what’s necessary to effectuate the court’s judgment." At that time, the court held Govindaraj in contempt for violating the injunction order, but "with[e]ld the judgment as to the sanction to impose."

Govindaraj continued his obstructionist conduct during more than three additional years of discovery related to damages sustained by the plaintiff. In September 2014, the court again held Govindaraj in contempt for refusing to authorize the plaintiff access to certain email accounts as required by a prior court order. The court delayed imposition of sanctions until the court made a final determination regarding damages.

In late 2015, the plaintiff filed motions seeking damages for trademark infringement and for attorneys’ fees, asking the court to hold Govindaraj and his wife jointly and severally liable for those damages and fees along with the defendant corporation. During a hearing on the motions, the plaintiff asserted that although Govindaraj and his wife had not been named as defendants in the action, they were personally responsible as officers of the corporation for the defendant’s acts of infringement and, thus, could be held personally liable for an award of damages and attorneys’ fees.

The district court found that Govindaraj was "clearly ... the mastermind of th[e] corporate entity," had "fully participated in and fully understood what was going on" in the litigation, and had "attempted to thwart [the litigation] over and over again." Based on Govindaraj’s actions "in defiance of orders of [the] court," the district court imposed an award of damages and attorneys’ fees against Govindaraj personally. The plaintiff did not argue, and the court did not find, that piercing the corporate veil of the defendant corporation was warranted or that Govindaraj was an "alter ego" of that corporation. The court later entered an order holding Govindaraj and the defendant corporation jointly and severally liable for payment of treble damages in the total amount of $1,712,936.49.⁴ The court also awarded over $555,000 in attorneys’ fees and costs against both Govindaraj and the defendant corporation. Govindaraj now appeals.⁵

II.

Govindaraj argues that the district court violated his due process rights in entering a judgment against him for damages and attorneys’ fees when he was not named as a defendant in the action. He contends that because he was not a party in the case, he was unable to defend himself against individual liability as a corporate officer or as a putative alter ego of the defendant corporation.

In response, the plaintiff argues that Govindaraj was subject to personal liability, because he was directly responsible for the acts of trademark infringement committed by the defendant corporation. Additionally, the plaintiff asserts that Govindaraj was the alter ego of the defendant corporation, was on notice of the plaintiff’s allegations, and participated fully throughout the district court proceedings. Thus, the plaintiff submits that it was not required to name Govindaraj as a party given his well-known role in the activities of the defendant corporation. We disagree with the plaintiff’s arguments.

We review de novo the question of law whether the district court erred in entering judgment against a non-party to the litigation. See Sky Cable, LLC v. DIRECTV, Inc. , 886 F.3d 375, 391 (4th Cir. 2018) ; Wright v. North Carolina , 787 F.3d 256, 261 (4th Cir. 2015). Under well-established principles of due process, a person is not subject to a judgment entered in litigation in which he has not been named as a party or been "made a party by service of process." Ortiz v. Fibreboard Corp. , 527 U.S. 815, 846, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999) (citation omitted); Zenith Radio Corp. v. Hazeltine Research, Inc. , 395 U.S. 100, 110-12, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969). "[O]ne becomes a party officially, and is required to take action in that capacity, only upon service of a summons or other authority-asserting measure stating the time within which the party served must appear and defend." Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc. , 526 U.S. 344, 350, 119 S.Ct. 1322, 143 L.Ed.2d 448 (1999). Such service of process is fundamental to the imposition of any procedural restraint on a named defendant, and enables the court to exercise personal jurisdiction over him. Id. ; United States v. Perez , 752 F.3d 398, 406 (4th Cir. 2014) (citing Omni Capital Int’l, Ltd. v. Rudolf Wolff & Co. , 484 U.S. 97, 104, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987) ). By precluding entry of judgment against a...