MATTER OF GRAND JURY SUBPOENA OF JUNE 12, 1986

• Decision Date: 15 June 1988
• Docket Number: Civ. No. N-86-2126.
• Citation: 690 F. Supp. 1451
• Parties: In the Matter of the GRAND JURY SUBPOENA OF JUNE 12, 1986.
• Court: U.S. District Court — District of Maryland

690 F. Supp. 1451

In the Matter of the GRAND JURY SUBPOENA OF JUNE 12, 1986.

Civ. No. N-86-2126.

United States District Court, D. Maryland.

June 15, 1988.

Jerald J. Oppel, Kevin A. Dunne, and Ober, Kaler, Grimes & Shriver, Baltimore, Md., for Corporation.

Anita Johnson, Office of Consumer Litigation, Dept. of Justice, Washington, D.C., and Breckinridge L. Willcox, U.S. Atty. and Max Lauten, Esquire, Asst. U.S. Atty., Baltimore, Md., for Government.

MEMORANDUM

NORTHROP, Senior District Judge.

I.

On November 20, 1987, this Court held a certain corporation (the Corporation) in contempt for failing to comply with an Order issued October 3, 1986. The October Order directed the Corporation to begin producing documents sought by a Grand Jury subpoena issued June 12, 1986 in connection with the Grand Jury's investigation of illegal practices in the manufacture of prescription drugs. Contempt was entered after over a year of litigation by the government in this Court and others. Even after the entry of judgment against it, the Corporation elected not to produce the materials requested, but rather to pursue its petition for certiorari in the United States Supreme Court. That petition was denied on February 22, 1988 (citation omitted). Since then, the Court has held three hearings¹ in an effort to secure complete production of documents requested almost two years ago. At the second of those proceedings, held March 29, 1988, the Court ordered the government to prepare a memorandum detailing the compensatory damages it has incurred in prosecuting the contempt. That request for relief is now pending before the Court. The Corporation opposes the government's motion.

After reviewing the parties' pleadings, the Court finds that no hearing is necessary. Local Rule 6. For the reasons that follow, the government's motion is granted in part.

II.

A. Civil Contempt

The principle that civil contempt sanctions may be awarded to compensate an aggrieved litigant is not a new one. In United States v. United Mine Workers, 330 U.S. 258, 302, 67 S.Ct. 677, 700, 91 L.Ed. 884 (1947), the Supreme Court stated:

Judicial sanctions in civil contempt proceedings may in a proper case be employed for either or both of two purposes: to coerce the defendant into compliance with the court's order, and to compensate the complainant for losses sustained. Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 448-49, 31 S.Ct. 492, 501, 55 L.Ed. 797 (1911). Where compensation is intended, a fine is imposed payable to the complainant. Such fine must of course be based upon evidence of the complainant's actual loss, and his right as a civil litigant, to the compensatory fine is dependent upon the outcome of the basic controversy. (Emphasis added).

Thus, a compensatory sanction is not imposed to vindicate the court's authority or to punish the contemnor, but rather serves to make reparation to the injured party, restoring that party to the position it would have held had the court's order been obeyed. Vuitton et Fils v. Carousel Handbags, 592 F.2d 126, 130 (2nd Cir.1979).² Such fines have been likened to a tort judgment caused by wrongful conduct. Thompson v. Cleland, 782 F.2d 719, 722 (7th Cir.1986); Vuitton et Fils, supra, 592 F.2d at 130; Parker v. United States, 153 F.2d 66, 70 (1st Cir.1946). Once the complainant demonstrates actual losses stemming from the contumacious behavior, the Court is not free to exercise its discretion and withhold an order awarding compensatory damages. Thompson, supra, 782 F.2d at 722; G. & C. Merriam Co. v. Webster Dictionary Co., Inc., 639 F.2d 29, 41 (1st Cir.1980); Vuitton et Fils, supra, 592 F.2d at 130; Yanish v. Barber, 232 F.2d 939, 946 (9th Cir.1956); Parker, supra, 153 F.2d at 70; Waterman Co. v. Standard Drug Co., 202 F. 167, 172 (6th Cir.1913). There is but one caveat to that rule. A remedial award of attorney's fees and costs is committed to the sound discretion of the district court.³

It follows from this that the Corporation's citation to this Circuit's decision in Wilson v. Volkswagen of America, Inc., 561 F.2d 494 (4th Cir.1977), cert. denied, 434 U.S. 1020, 98 S.Ct. 744, 54 L.Ed.2d 768 (1978) is unhelpful. The factors relevant to that case—one not involving a request for compensatory civil damages—are simply not applicable here. Furthermore, as the government points out, there is ample authority in this jurisdiction for the remedial award it seeks. Carbon Fuel Co. v. United Mine Workers of America, supra, 517 F.2d at 1349; Folk v. Wallace Business Forms, Inc., supra, 394 F.2d at 244.⁴ That the government proved by clear and convincing evidence that the Corporation violated the Court's October 3, 1986 Order is not disputed. That the Corporation had no legal basis for doing so was, in the Court's judgment, never seriously in question. In any event, the Corporation's good faith in resisting the subpoena based upon its view of the prevailing case law determines neither the fact nor the level of civil contempt. Cook v. Ochsner Foundation Hospital, supra, 559 F.2d at 272 ("Because damages assessed in civil contempt are oftentimes compensatory ... the mental state of the violater should not determine the level of compensation due."); Matter of Trinity Industries, Inc., supra, 674 F.Supp. at 339. The Court finds particularly persuasive the reasoning of the Ninth Circuit in Donovan v. Burlington Northern, Inc., supra. In that case, the Ninth Circuit reversed a district court decision refusing to consider a remedial award of attorney fees to the Secretary of Labor. The lower court based its determination upon the Corporation's good faith legal argument in declining to comply with an administrative search warrant. The Ninth Circuit stated:

The company knew at all pertinent times that a warrant authorizing the search had been issued. True the validity of the warrant's breath remained uncertain in fact until this court determined the issue. In law, however, that determination fixed its validity in all respects at the time of its issuance. See Donovan v. Burlington Northern, Inc., 694 F.2d 1213, 1216 (9th Cir.1982), cert. denied, 463 U.S. 1207, 103 S.Ct. 3538, 77 L.Ed.2d 1388 (1983). Were this not so, the government could never be reimbursed for the expenses incurred in enforcing a warrant determined to be valid only after an appeal. Resistance to a valid warrant need not be without financial risk even in a free society. Id. at 683-84 (emphasis added).

Those principles obtain here. The only real issue is whether the government has demonstrated by clear and convincing evidence actual losses entitling it to a compensatory award. The Court is satisfied that it has.

B. Attorney Fees

Substantial precedent supports an award of attorney fees and costs to the government in circumstances like these. Id.; Donovan v. Hackney, Inc., 769 F.2d 650 (10th Cir.1985), cert. denied, 475 U.S. 1081, 106 S.Ct. 1458, 89 L.Ed.2d 715 (1986); Donovan v. Enterprise Foundry, Inc., 751 F.2d 30 (1st Cir.1984); Commodity Futures Trading Commission v. Premex, Inc., supra; Northside Realty Assocs. Inc. v. United States, 605 F.2d 1348, 1356 n. 23 (5th Cir.1979); NLRB v. Johnson Manuf. Co. of Lubbock, 511 F.2d 153, 158 (5th Cir.1975); United States v. Far East Suppliers, 682 F.Supp. 1215, 1216 (S.D.Fla. 1988); Matter of Trinity Industries, supra, 674 F.Supp. at 339; Matter of St. Charles Manuf. Co., 663 F.Supp. 310 (N.D. Ill.1987). Those fees and costs are limited to "the efforts expended that were necessary to secure the contemptor's sic compliance with the court's order and to obtain compensation for damages done." United States v. Far East Suppliers, supra, 682 F.Supp. at 1216; Thompson v. Johnson, 410 F.Supp. 633, 643 (E.D.Pa.1976), aff'd, 556 F.2d 568 (3d Cir.1977). That is, "compensatory civil contempt `includes losses flowing from noncompliance and expenses reasonably and necessarily incurred in the attempt to enforce compliance.'" Matter of Trinity Industries, Inc., supra, 674 F.Supp. at 339 (quoting Norman Bridge Drug Co. v. Banner, 529 F.2d 822, 827 (5th Cir.1976)); accord Rickard v. Auto Publisher, Inc., 735 F.2d 450, 458 (11th Cir. 1984). The decision as to the amount of fees falls within the equitable discretion of the Court. Sizzler Family Steak Houses v. Western Sizzlin Steak, 793 F.2d 1529, 1534-35, reh'g denied, 797 F.2d 982 (11th Cir.1986); Cook v. Ochsner Foundation Hospital, supra, 559 F.2d at 272-73. An award of fees and costs is independent of any other civil contempt sanction imposed. United States v. Far East Suppliers, Inc., supra, 682 F.Supp. at 1216; cf. Commodity Futures Trading Commission v. Premex, Inc., supra, 655 F.2d at 785.

1. Fees and Costs Requested From November 10, 1988-May 11, 1988

A review of the government's request confirms that it seeks fees and costs incurred in prosecuting the contempt. Those expenses would necessarily include fees generated from the commencement of the contempt action until complete compliance with the Court's orders. Based on the government's motion and affidavits, the relevant figures are these:

                Attorneys' Fees
                Anita Johnson
                November 1986-November 1987    145 hours   @ $64.51/hr
                December 1987-March 8, 1988     50 hours   @ $64.51/hr
                March 8, 1988-May 11, 1988      86 hours   @ $64.51/hr
                Total:                         281 hours
                Agent Time
                J. Donald Sherry
                March 8, 1988                    2 hours   @ $38.00/hr
                April 8, 1988                   16 hours   @ $38.00/hr
                April 29, 1988                   2 hours   @ $38.00/hr
                May 11, 1988                    48 hours   @ $38.00/hr.
                Total:                          70 hours
                Travel
                March 8, 1988 hearing                $41.20
                March 29, 1988 hearing               $41.30
                April 29, 1988 hearing               $80.00
                Total:                              $162.50
                

In this Circuit, the twelve factors to be considered in evaluating the reasonableness of attorney fees are:

(1) the time and labor involved; (2) the novelty and difficulty of the

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