Quintanilla Vasquez v. Libre by Nexus, Inc.

1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 Case No. 17-cv-00755 CW 9 JUAN QUINTANILLA VASQUEZ, et al., 10 ORDER HOLDING OFFICERS AND Plaintiffs, PRINCIPALS OF DEFENDANT LIBRE BY 11 NEXUS, INC. IN CIVIL CONTEMPT AND v. IMPOSING CIVIL CONTEMPT SANCTIONS 12 LIBRE BY NEXUS, INC., (Re: Dkt. No. 232) 13 Defendant. 14 15 Now before the Court is Plaintiffs’ motion for an order holding the officers and principals 16 of Defendant Libre by Nexus, Inc. (LBN), namely Micheal Donovan, Evan Ajin, and Richard 17 Moore, in civil contempt and imposing civil contempt sanctions against them. Docket No. 232. 18 After Donovan, Ajin, and Moore failed to file a response to Plaintiffs’ motion, the Court issued an 19 order to show cause why civil contempt sanctions should not be imposed against them. The Court 20 ordered counsel for LBN to serve a copy of the order to show cause on Donovan, Ajin, and 21 Moore, and counsel for LBN confirmed that they did so. The deadline to file a response to the 22 Court’s order to show cause was December 27, 2022, and no response was filed. For the reasons 23 set forth below, and in light of the argument heard on January 19, 2023, the Court grants the 24 motion in part and denies it in part, holding Donovan, Ajin, and Moore in civil contempt of Court 25 and imposing sanctions as set forth below. 26 I. BACKGROUND 27 On February 8, 2021, the Court entered a Final Approval Order and Judgment, Docket No. 1 version of the settlement agreement was filed as Exhibit 1 to the Declaration of Jason Rathod, 2 Docket No. 143-1, and its terms were incorporated into the Final Approval Order and Judgment, 3 see generally Docket No. 184. In the Final Approval Order and Judgment, the Court ordered LBN 4 to take certain actions pursuant to the terms of the settlement agreement, which include the 5 following: 6 First, the Court ordered LBN to provide to the members of the settlement class and 7 subclasses, which are defined in the settlement agreement and the Final Approval Order and 8 Judgment, with the Settlement Amount1, which consists of consideration whose total monetary 9 value is $3,200,000. Docket No. 184 at 10-13; see also Docket No. 143-1 at ECF header pages 10 10-11. The Settlement Amount is comprised of the following components: 11 1. A Cash Settlement Fund of $750,000, to be distributed on a pro rata basis to the 12 members of the Former and Current Program Participant Payments Subclass and 13 Sponsor Payments Subclass. Docket No. 143-1 at ECF header page 11. The Court 14 required LBN to make payments toward the Cash Settlement Fund based on the 15 payment schedule set forth in the settlement agreement.2 Docket No. 184 at 10. 16 17 1 Capitalized terms are defined in, and have the same meaning as in, the settlement agreement. 18 2 Under the payment schedule set forth in the settlement agreement, see Docket No. 143-1 19 at ECF header pages 14-15, LBN was required to begin making payments on a weekly basis toward the $750,000 Cash Settlement Fund, the $40,000 in incentive awards, and the $800,000 20 award of attorneys’ fees and costs on December 1, 2021, if its quarterly revenues met certain thresholds relative to its quarterly revenues for 2019. Id. The amount of LBN’s weekly payments 21 would be determined starting on December 1, 2021, and on a quarterly basis thereafter, based on benchmarks comparing LBN’s current quarterly revenues with its revenues for the same quarter in 22 2019. Id. To the extent that LBN’s weekly payments under this payment schedule did not satisfy, by January 1, 2023, the cash amounts that LBN owed (i.e., the $750,000 Cash Settlement Fund, 23 the $40,000 in incentive awards, and the $800,000 award of attorneys’ fees and costs), then LBN would be required to pay the remainder in twelve equal monthly installments beginning on 24 January 20, 2023. Id. In response to a motion to enforce the settlement agreement that Plaintiffs filed in 2021, the Court, in an order filed on July 30, 2021, clarified the logistics of the payment 25 schedule and benchmarks set forth in the settlement agreement on the basis that doing so would help enforce and effectuate the settlement agreement. See Docket No. 203 at 8. In relevant part, 26 the Court ordered that the quarterly revenue comparisons for determining the amounts that LBN must pay on a weekly basis starting on December 1, 2021, shall be made based on financial 27 statements for LBN prepared by an external accountant and certified under penalty of perjury by 1 2. An incentive award to each of the four named plaintiffs of $10,000, for a total of 2 $40,000. Docket No. 143-1 at ECF header page 9. The Court required LBN to 3 make payments toward the incentive awards based on the payment schedule set 4 forth in the settlement agreement. Docket No. 184 at 13. 5 3. $800,000 in attorneys’ fees and costs to be paid into an escrow account established 6 by the settlement administrator, to be distributed to Class Counsel only after the 7 members of the Former and Current Program Participant Payments Subclass and 8 Sponsor Payments Subclass receive their Cash Settlement Fund distributions. 9 Docket No. 143-1 at ECF header page 26. The Court required LBN to pay these 10 fees based on the payment schedule set forth in the settlement agreement. Docket 11 No. 184 at 12-13. 12 4. $80,000 in costs of settlement administration, to be paid in accordance with the 13 terms of the settlement agreement. Docket No. 184 at 10. Under the terms of the 14 settlement agreement, LBN was required to make an initial deposit of these costs 15 within fourteen days of the date on which the Court granted preliminary approval 16 of the settlement agreement, and thereafter was required to make periodic payments 17 within thirty days of approval by Class Counsel and LBN’s counsel of an invoice 18 by the settlement administrator. See Docket No. 143-1 at ECF header page 14. 19 5. $1,530,000 for a Debt Relief Fund, which consists of credits that LBN must apply 20 to the accounts of members of the Current Program Participant Subclass on a pro 21 rata basis according to the terms of the settlement agreement. Docket No. 143-1 at 22 ECF header pages 13-14. The Court ordered LBN to apply these credits pursuant 23 to the terms of the settlement agreement, Docket No. 184 at 10-11, which, in turn, 24 required LBN to apply the credits within twenty days of the date on which the 25 Court granted final approval of the settlement agreement, Docket No. 143-1 at ECF 26 header page 15. 27 1 Second, the Court ordered LBN, pursuant to the terms of the settlement agreement, to 2 provide to members of the Current Program Participant Subclass additional monetary relief in the 3 form of: 4 1. Discounts of up to twenty percent with respect to monthly recurring fees based on 5 whether members of the Current Program Participant Subclass made consecutive 6 monthly payments as set forth in the settlement agreement (Consecutive Payment 7 Discount). See Docket No. 184 at 11; Docket No. 143-1 at ECF header pages 15- 8 16. The Consecutive Payment Discount was to be implemented by LBN by the 9 later of April 1, 2020, or within twenty days of the Final Settlement Approval Date. 10 See Docket No. 143-1 at ECF header page 17. 11 2. A reduction of monthly recurring program fees to $415 for each member of the 12 Current Program Participant Subclass who paid more than $420 per month and 13 made on-time and in-full payments according to the terms of the settlement 14 agreement (Timely and In Full Payment Discount). Docket No. 184 at 11; Docket 15 No. 143-1 at ECF header page 16. The Timely and In Full Payment Discount was 16 to be implemented by LBN by the later of April 1, 2020, or within twenty days of 17 the Final Settlement Approval Date. See Docket No. 143-1 at ECF header page 17. 18 3. A total payment cap for program payments made by members of the Current 19 Program Participant Subclass, excluding the initial payment and set-up fees, to an 20 amount not to exceed the face amount of the bond (Total Payment Cap). Docket 21 No. 184 at 11; Docket No. 143-1 at ECF header page 16. The Total Payment Cap 22 was to be applied to the accounts of Current Program Participant Subclass members 23 within twenty days of the date the Court granted preliminary approval of the 24 settlement agreement. See Docket No. 143-1 at ECF header pages 16-17. 25 Third, the Court ordered LBN, pursuant to the terms of the settlement agreement, to 26 provide the settlement class members with a variety of non-monetary benefits. See Docket No. 27 184 at 11-12; Docket No. 143-1 at ECF header pages 17-21. 1 Pursuant to the settlement agreement’s terms, this Court retained jurisdiction over the 2 action and the parties, including to enforce, interpret, and effectuate the settlement agreement and 3 the Court’s Final Approval Order and Judgment. Docket No. 184 at 13; Docket No. 143-1 at ECF 4 header page 32. 5 Since it entered the Final Approval Order and Judgment on February 8, 2021, the Court 6 has issued several orders in response to evidence presented by Plaintiffs that LBN has failed to 7 comply with the Final Approval Order and Judgment and the terms of the settlement agreement 8 incorporated therein. See Order of July 30, 2021, Docket No. 203; Order of November 12, 2021, 9 Docket No. 209; Order of January 12, 2022, Docket No. 216. In those orders (hereinafter, the 10 enforcement orders), the Court required LBN, among other things, to comply with these 11 obligations, to provide Class Counsel with declarations signed under penalty of perjury and 12 records sufficient to demonstrate its compliance with the same, and to respond to communications 13 from Class Counsel within one business day. Id. The Court also required LBN to pay the 14 attorneys’ fees that Plaintiffs incurred in bringing an enforcement motion in July 2021 15 ($34,142.60). Id. 16 On August 11, 2022, Plaintiffs moved for an order holding LBN in civil contempt and 17 imposing civil contempt sanctions on LBN. Docket No. 218. Plaintiffs argued that LBN had not 18 complied, or otherwise had not provided them with sufficient documentation to demonstrate its 19 compliance, with several key terms of the settlement agreement, the Final Approval Order and 20 Judgment that incorporates those terms, and the enforcement orders. Id. 21 On September 15, 2022, the Court held a hearing on Plaintiffs’ motion for an order holding 22 LBN in civil contempt. See Tr. of Hr’g, Docket No. 227. During that hearing, counsel for LBN, 23 John Shoreman, represented that Donovan, Moore, and Ajin, who attended the hearing, are LBN’s 24 “individual principals,” and Donovan, Moore, and Ajin did not dispute that characterization. See 25 id. at 3. During the hearing, the Court discussed the various violations of the Final Approval 26 Order and Judgment and the enforcement orders which formed the basis of Plaintiffs’ motion, as 27 well as the various civil contempt sanctions that the Court was considering imposing on LBN at 1 opportunity to make a statement if they wished to do so. Donovan and Ajin declined to make a 2 statement; Moore stated: “I look forward to working with Plaintiffs’ counsel to resolve these 3 issues.” See id. at 27. 4 On October 3, 2022, the Court issued an order granting in part and denying in part 5 Plaintiffs’ motion for an order holding LBN in civil contempt and imposing civil contempt 6 sanctions on LBN. Docket No. 224. The Court found that Plaintiffs had met their burden to show 7 that LBN had violated the Final Approval Order and Judgment and enforcement orders on 8 multiple occasions, by failing to make payments toward the cash amounts it owes under the 9 settlement agreement (which total $1,590,000 and are comprised of $750,000 for the Cash 10 Settlement Fund, $40,000 for incentive awards for the named plaintiffs, and $800,000 in 11 attorneys’ fees and costs for Class Counsel); by failing to pay the costs of settlement 12 administration that it still owes ($72,000); by failing to implement the discounts, caps, and credits 13 to members of the settlement class and subclasses required under the terms of the settlement 14 agreement; and by failing to pay the attorneys’ fees that Plaintiffs incurred in bringing an 15 enforcement motion in 2021 ($34,142.60). Id. at 7-24. The Court further found that LBN had not 16 pointed to any evidence showing that it took all reasonable steps within its power to comply with 17 the Court’s orders. The Court noted that Ajin, on behalf of LBN’s management team, had filed an 18 unsworn letter in which he attempted to justify LBN’s lack of compliance with the orders in 19 question on the ground that LBN had experienced a significant reduction in revenue as a result of 20 the pandemic and shifts in immigration policy. Id. at 6. The Court found that Ajin’s unsworn and 21 unsupported letter was insufficient to establish that LBN’s revenues had fallen below the 22 thresholds and benchmarks set forth in the settlement agreement’s payment schedule, such that 23 LBN could be excused from making payments under that schedule. Id. at 8-9. The Court further 24 held that this unsworn and unsupported letter fell short of the Court’s prior orders, which required 25 LBN to establish any alleged revenue reduction by way of financial statements prepared by an 26 external accountant and certified under penalty of perjury by LBN’s counsel. See id. 27 On the same date, October 3, 2022, the Court issued a separate order delineating the civil 1 1. To pay, within ten business days (October 17, 2022), the cash amounts it owes under 2 various terms of the settlement agreement, which total $1,590,000 and are comprised of 3 $750,000 for the Cash Settlement Fund, $40,000 for incentive awards for the named 4 plaintiffs, and $800,000 in attorneys’ fees and costs for Class Counsel. 5 2. To pay, within ten business days (October 17, 2022), the remainder of the $80,000 it owes 6 for the costs of settlement administration ($72,000) under the terms of the settlement 7 agreement, with interest to be calculated from August 14, 2021, to the present. 8 3. To pay, within ten business days (October 17, 2022), the $34,142.60 it owes for Plaintiffs’ 9 attorneys’ fees in connection with their 2021 motion to enforce the settlement agreement, 10 with interest to be calculated from July 30, 2021, to the present. 11 4. To provide Class Counsel business records and documents sufficient to show that LBN has 12 implemented the discounts, caps, and credits required under the terms of the settlement 13 agreement, namely, the Timely and In Full Payment Discount, the Consecutive Payment 14 Discount, the Total Payment Cap, and the Debt Relief Fund credits. The Court ordered 15 Class Counsel to identify fifty members of the Current Program Participant Subclass for 16 each category of discounts, caps, and credits who were eligible to receive and should have 17 received such discounts, caps, and credits. The Court further ordered LBN to provide to 18 Class Counsel, within five business days of Class Counsel’s identification of the fifty 19 subclass members for each type of discount, cap, and credit (October 18, 2022), billing 20 records and other documents sufficient to show that it has implemented the discounts, caps, 21 and credits in question, as well as the date of implementation. The Court further ordered 22 that the billing records and documents be accompanied by a declaration signed under 23 penalty of perjury by LBN’s principals that authenticates the records and documents and 24 attests to the truthfulness and accuracy of their contents. 25 5. To abstain from referring to any third-party collection agency any alleged debt owed by a 26 member of the Current Program Participant Subclass who was eligible to receive the 27 Timely and In Full Payment Discount, Consecutive Payment Discount, Total Payment 1 has demonstrated its compliance with the terms of the settlement agreement requiring it to 2 implement the discounts, caps, and credits in question. 3 6. To pay, within ten business days (October 17, 2022), $53,021.60 for the attorneys’ fees 4 that Plaintiffs incurred in connection with their August 2022 motion for an order holding 5 LBN in civil contempt and imposing civil contempt sanctions on LBN. 6 7. To pay, to the settlement administrator for the benefit of, and eventual distribution to, 7 members of the Former and Current Program Participant Payments Subclass and Sponsor 8 Payments Subclass, a coercive fine of $1,000 per day of continued noncompliance as to 9 each of the above directives. 10 On November 4, 2022, the Court issued an order requiring the parties to file a status report 11 addressing the status of LBN’s compliance with the Court’s October 3, 2022, orders and the 12 anticipated progress of the litigation. Docket No. 228. On November 14, 2022, each side filed a 13 status report. 14 In their status report, Plaintiffs represented that LBN had not paid the amounts the Court 15 ordered it to pay by October 17, 2022, in its orders of October 3, 2022, nor had it provided 16 Plaintiffs with the business records and documents sufficient to show that it has implemented each 17 of the various discounts, caps, and credits required under the terms of the settlement agreement. 18 Docket No. 229. Plaintiffs represented that LBN provided them with partial records relating to its 19 implementation of the Debt Relief Fund, and that LBN had not provided them with any documents 20 or records showing its implementation of the Total Payment Cap, Timely and In Full Payment 21 Discount, and Consecutive Payment Discount. Id. Plaintiffs also stated that they intended to file a 22 supplemental motion for civil contempt sanctions against LBN’s principals, and for “an amended 23 judgment that includes Defendant’s principals,” by November 23, 2022. Id. 24 In its status report, LBN represented that it had sent a payment of $2,000 to the settlement 25 administrator and that it would be making weekly payments of $2,000 “until all payments are 26 completed.” Docket No. 230. LBN did not attach to its status report any evidence of this 27 purported $2,000 payment, and it did not specify which of the several payments it owes under the 1 also represented that, because of the “revenue losses” it has suffered as a result of the pandemic 2 and certain immigration enforcement activities, the $2,000 weekly amount was the “maximum 3 amount of money” that it could pay pursuant to the settlement agreement while continuing to 4 operate. Id. Although the Court required LBN in several of its prior orders to provide Plaintiffs 5 with financial statements prepared by an external accountant and certified under penalty of perjury 6 by counsel for LBN to substantiate any of its representations regarding its decreased revenues, see, 7 e.g., Docket No. 224 at 2 n.2, Docket No. 203 at 8, LBN did not attach any such statements to its 8 status report. LBN represented that it was “in the process of preparing financial documentation 9 that show” its revenues for the preceding five years, but it did not provide a date by which it 10 would file such documentation. Id. As of the date of this order, LBN has neither produced to 11 Plaintiffs nor filed on the docket any financial documentation prepared by an external accountant 12 and certified under penalty of perjury by counsel for LBN showing its revenues. 13 LBN also represented in its status report that it made a partial production of the documents 14 and records pertaining to the Debt Relief Fund that the Court ordered it to produce to Class 15 Counsel in its October 3, 2022, orders, and that it would complete its production of documents and 16 records relating to the Debt Relief Fund, as ordered by the Court, in two weeks. Id. at 2. It also 17 represented that it would “produce the remaining reports,” presumably those showing its 18 implementation of the remaining discounts, caps, and credits required under the settlement 19 agreement (i.e., Total Payment Cap, Timely and In Full Payment Discount, and Consecutive 20 Payment Discount), “on a rolling basis” with “complete production by January 30, 2023.” Id. 21 LBN represented that the delay in producing the documents and records the Court ordered it to 22 produce in its October 3, 2022, orders was caused by the fact that its records are not in an 23 “exportable format.” Id. The Court asked during the hearing held on January 19, 2023, whether 24 LBN had produced any additional documents and records since its initial partial production 25 relating to the Debt Relief Fund, and neither LBN, nor Donovan, Ajin, and Moore, responded that 26 LBN had made any subsequent productions. 27 On November 23, 2022, Plaintiffs moved for an order to hold the principals of LBN in 1 that LBN has failed to comply in all respects with the Court’s October 3, 2022, orders, and they 2 request that the Court hold Donovan, Ajin, and Moore in civil contempt for LBN’s noncompliance 3 with such orders, as well as the enforcement orders whose violations by LBN were the basis of the 4 Court’s imposition of civil contempt sanctions on LBN. Plaintiffs argue that Donovan, Ajin, and 5 Moore, as officers and principals of LBN, are legally identified with LBN, had notice of such 6 orders, and were the “architects of LBN’s” noncompliance with such orders. Id. Plaintiffs’ 7 counsel, Jason S. Rathod, filed a declaration in support of Plaintiffs’ motion, in which he testified 8 that LBN has failed to make any payments required under the Court’s October 3, 2022, orders, and 9 that LBN has failed to provide Class Counsel the documents and business records sufficient to 10 show that LBN has implemented each of the discounts, caps, and credits required under the 11 settlement agreement. Rathod Decl.. ¶¶ 4-5. Rathod testified that LBN has only provided Class 12 Counsel with documents and records for twenty-five out of fifty class members that Class Counsel 13 identified in connection with the Debt Relief Fund. Id. Plaintiffs request that the Court issue an 14 order requiring Donovan, Ajin, and Moore to pay the attorneys’ fees they incurred in filing the 15 present motion, the 2021 enforcement motion, and the August 2022 contempt motion with respect 16 to LBN; a $1,000 per-day fine for further noncompliance with the requirement that LBN provide 17 to Class Counsel documents sufficient to show its implementation of the discounts, caps, and 18 credits required under the settlement agreement; an order that Donovan, Ajin, and Moore be 19 immediately imprisoned; and “an amended judgment that includes the LBN Principals along with 20 LBN and makes clear that the LBN Principals are also obligated by the original February 8, 2021 21 Class Action Judgment in this Action,” such that Donovan, Ajin, and Moore are liable, on a joint 22 and several basis with LBN, for the amounts that LBN owes under the settlement agreement. See 23 Docket No. 232 at 1. 24 December 7, 2022, was the deadline for filing a response to Plaintiffs’ motion, and no 25 response was filed. 26 On December 12, 2022, the Court issued an order to show cause why civil contempt 27 sanctions should not be imposed on Donovan, Ajin, and Moore. Docket No. 236. The Court 1 by admissible evidence no later than December 27, 2022. Id. Additionally, the Court ordered 2 counsel for LBN to serve a copy of the Court’s order to show cause on Donovan, Ajin, and Moore 3 within one business day of the date of the order and to file a declaration attesting to that within 4 two business days thereafter. Id. 5 On December 14, 2022, Mr. Shoreman, counsel for LBN, filed a declaration that provides: 6 I, John M. Shoreman, counsel to Defendant Libre by Nexus, Inc. (“LBN”), pursuant to the Court’s Order to Show Cause of 7 December 12, 2022 [Dkt. 236] (the “Order”), hereby attest and declare under the penalties of perjury that on December 13, 2022, I 8 served a copy of the Order on Micheal Donovan, Evan Ajin and Richard Moore via e-mail. Please be advised that Richard Moore 9 is no longer an officer or director of LBN and owns no interest in the company. 10 11 Docket No. 237. Also on December 14, 2022, Kenneth E. Payson, counsel for LBN, filed a 12 declaration in which he testified that he sent a copy of the order to show cause to Donovan, Ajin, 13 and Moore at the email addresses that his law firm has on file and through which he and his law 14 firm have communicated with Donovan, Ajin, and Moore in the past. Docket No. 238. Mr. 15 Payson further declared that he copied on that email “LBN’s acting outside general counsel, 16 Michael Song of Feldmann Nagel Cantagio & Song PLLC, and LBN’s other counsel of record, 17 John Shoreman, Mohammed Aly, Mario Williams, Mary Donne Peters, and Michael Gorby at the 18 current email addresses in the Court’s online docket for those counsel of record.” Id. Mr. Payson 19 further declared that he “received an automated response to [his] email indicating Mr. Aly was no 20 longer reachable at his email address listed in the Court’s online docket” and “did not otherwise 21 receive any notification of unsuccessful delivery of [his] email referenced above.” Id. 22 On January 7, 2023, the Court issued an order requiring Plaintiffs to file a reply in support 23 of their motion for civil contempt sanctions by January 17, 2023. Docket. No. 239. The Court 24 tentatively found that Plaintiffs had made the requisite showing for the imposition of civil 25 contempt sanctions with respect to Donovan and Ajin, particularly given that Donovan and Ajin 26 had not filed any response to Plaintiffs’ motion or the Court’s order to show cause and had not 27 attempted to refute any of Plaintiffs’ arguments or evidence. Id. The Court ordered Plaintiffs to 1 director, or owner of LBN, on whether civil contempt sanctions can be imposed on him for the 2 violations of the Court’s orders addressed in Plaintiffs’ motion. The Court also ordered Plaintiffs 3 to cite supporting authority for their request for an amended judgment that would make Donovan, 4 Ajin, and Moore liable for LBN’s obligations under the settlement agreement. 5 On January 17, 2023, Plaintiffs filed a reply in support of their present motion. There, they 6 argue that Mr. Shoreman’s statement in his December 14, 2022, declaration that Moore is no 7 longer an officer, director, or owner of LBN is not evidence because it is “conspicuously not stated 8 under penalty of perjury.” Docket No. 241 at 2. Plaintiffs argue that, in contrast, the preceding 9 statement in Mr. Shoreman’s declaration was under penalty of perjury; it provides that Mr. 10 Shoreman “attest[s] and declare[s] under the penalties of perjury that on December 13, 2022, [he] 11 served a copy of the Order [to show cause] on Micheal Donovan, Evan Ajin and Richard Moore 12 via e-mail.” See Docket No. 237. Plaintiffs further contend that, even if Mr. Shoreman’s 13 statement regarding Moore’s role at LBN were under penalty of perjury, the Court should give it 14 no weight because Mr. Shoreman did not include any facts in his declaration to demonstrate that 15 he has personal knowledge of Moore’s status at LBN, nor did he attach any supporting 16 documentary evidence. Docket No. 241 at 2-3. Plaintiffs also argue that, even if it were the case 17 that Moore is no longer a de jure officer of LBN, they have pointed to evidence showing that he 18 was a de facto officer of LBN at all relevant times, as he had control over LBN’s ability to comply 19 with the Court’s orders. Id. at 3. Plaintiffs cited authorities, which they claim support their 20 request for an amended judgment that would make Donovan, Ajin, and Moore liable on a joint and 21 several basis with LBN for LBN’s obligations under the settlement agreement. 22 On January 19, 2023, a few hours before the hearing scheduled for the same date at 2:30 23 p.m., an application to appear pro hac vice was filed by Zachary Lawrence, who purported to 24 represent Donovan, Ajin, and Moore in that application. Docket No. 242. Mr. Lawrence 25 identified Joshua Matic as his local co-counsel. Civil Local Rule 11-3(a)(3) requires that the 26 designated local co-counsel in an application to appear pro hac vice be a member of the bar of the 27 United States District Court for the Northern District of California in good standing. Because 1 to appear pro hac vice without prejudice to re-filing once Mr. Lawrence can identify local co- 2 counsel who is a member of the bar of this Court in good standing. Docket No. 244. 3 A few minutes before the January 19, 2023, hearing began, the Court’s courtroom deputy 4 received an email from Donovan, in which he copied counsel for Plaintiffs and counsel for LBN, 5 as well as Zachary Lawrence and Joshua Matic. In his email, Donovan requested a fourteen-day 6 continuance of the proceedings relating to the present motion so that Mr. Lawrence and Mr. Matic 7 could attempt to satisfy the requirements of this district for making an appearance as counsel for 8 Donovan, Ajin, and Moore and could, thereafter, begin to assist Donovan, Ajin, and Moore in 9 bringing LBN into compliance with the Court’s orders. Donovan indicated that he, Ajin, and 10 Moore could not begin the process of bringing LBN into compliance with the Court’s orders until 11 they could obtain legal assistance, which Donovan represented they currently do not have. 12 During the hearing held on January 19, 2023, the Court denied Donovan’s last-minute 13 request for a continuance of the proceedings on the ground that Donovan, Ajin, and Moore had 14 had notice of the present motion since November 2022 and of the Court’s order to show cause 15 since December 13, 2022, and, therefore, they had had several weeks during which they could 16 have filed a response to the present motion or shown good cause for continuing the proceedings. 17 The Court also took into account Mr. Shoreman’s representation during the January 19, 2023, 18 hearing that LBN, as well as Donovan, Ajin, and Moore, receive legal advice from corporate 19 attorney Michael Song. Mr. Shoreman’s statements undermine the credibility of Donovan’s 20 statements in his email to the courtroom deputy prior to the hearing, and during the January 19, 21 2023, hearing, that LBN’s failure to comply with the Court’s orders is the result of a lack of legal 22 assistance. 23 II. LEGAL STANDARD 24 Civil contempt “consists of a party’s disobedience to a specific and definite court order by 25 failure to take all reasonable steps within the party’s power to comply.” Inst. of Cetacean Rsch. v. 26 Sea Shepherd Conservation Soc’y, 774 F.3d 935, 945 (9th Cir. 2014) (citation omitted). In a civil 27 contempt action, “[t]he moving party has the burden of showing by clear and convincing evidence 1 the contemnors to demonstrate why they were unable to comply.” Fed. Trade Comm’n v. 2 Enforma Nat. Prod., Inc., 362 F.3d 1204, 1211 (9th Cir. 2004) (citation and internal quotation 3 marks omitted). 4 “An order to a corporation binds those who are legally responsible for the conduct of its 5 affairs.” United States v. Laurins, 857 F.2d 529, 535 (9th Cir. 1988). Accordingly, a non-party 6 can be held in civil contempt for a corporate defendant’s violations of a court order where (1) the 7 non-party either aids and abets the defendant in violating the court order or is legally identified 8 with the defendant, and (2) the non-party has notice of the court order. See Peterson v. Highland 9 Music, Inc., 140 F.3d 1313, 1323-24 (9th Cir. 1998), as amended on denial of reh’g and reh’g en 10 banc (June 15, 1998) (“[T]o be held liable in contempt, it is necessary that a non-party respondent 11 must either abet the defendant [in violating the court’s order] or be legally identified with him, and 12 that the non-party have notice of the order[.]”) (internal citations and quotation marks omitted). 13 Remedies that (1) “coerce compliance with a court order” or (2) are “meant to compensate 14 the complainant for actual losses” fall within the scope of civil contempt sanctions. See Ahearn ex 15 rel. N.L.R.B. v. Int’l Longshore & Warehouse Union, Locals 21 & 4, 721 F.3d 1122, 1129 (9th 16 Cir. 2013) (“[A] sanction generally is civil if it coerces compliance with a court order or is a 17 remedial sanction meant to compensate the complainant for actual losses.”) (citation omitted). In 18 contrast with criminal contempt sanctions, “civil contempt sanctions, or those penalties designed 19 to compel future compliance with a court order, are considered to be coercive and avoidable 20 through obedience, and thus may be imposed in an ordinary civil proceeding upon notice and an 21 opportunity to be heard. Neither a jury trial nor proof beyond a reasonable doubt is required.” 22 Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 827 (1994). “[A]lthough the 23 district court generally must impose the minimum sanction necessary to secure compliance . . . the 24 district court retains discretion to establish appropriate sanctions[.]” United States v. Bright, 596 25 F.3d 683, 696 (9th Cir. 2010) (internal citations omitted). Where “the affidavits offered in support 26 of a finding of [civil] contempt are uncontroverted,” a district court is not required to hold an 27 evidentiary hearing. See Peterson, 140 F.3d at 1324 (“[W]here, as here, the affidavits offered in 1 support of a finding of contempt are uncontroverted, we have held that a district court’s decision 2 not to hold a full-blown evidentiary hearing does not violate due process.”). 3 III. DISCUSSION 4 As noted, Plaintiffs contend that LBN failed to comply with the Court’s orders of October 5 3, 2022, and they move for an order holding Donovan, Ajin, and Moore in civil contempt for 6 LBN’s violations of such orders, as well as LBN’s violations of prior orders that led to the Court’s 7 imposition of civil contempt sanctions on LBN on October 3, 2022 (hereinafter, collectively, the 8 orders at issue). Plaintiffs contend that Donovan, Ajin, and Moore can be held in civil contempt 9 for LBN’s violations of the orders at issue because they are legally identified with LBN and had 10 notice of the orders at issue. Plaintiffs supported their motion with the declaration of their 11 counsel, Jason S. Rathod, to which various exhibits are attached.3 See Docket No. 232-1. 12 Donovan, Ajin, and Moore did not file a response to Plaintiffs’ motion or to the Court’s 13 order to show cause of December 12, 2022. 14 For Donovan, Ajin, and Moore to be held in civil contempt for LBN’s violations of the 15 orders at issue, Plaintiffs first must establish that the orders at issue were violated by LBN. 16 Plaintiffs then must show that the elements of the Peterson test are satisfied. See Peterson, 140 17 F.3d at 1323-24 (holding that a non-party can be held in civil contempt for a corporate defendant’s 18 violations of a court order where (1) the non-party either aids and abets the defendant in violating 19 the court’s order or is legally identified with the defendant, and (2) the non-party has notice of the 20 court order). 21 22 23 24 3 Those exhibits are: declarations that Donovan and Ajin previously filed in this action, in 25 which Donovan and Ajin identified themselves as officers and principals of LBN; email threads in which Class Counsel corresponded with Donovan, Ajin, and Moore in connection with LBN’s 26 obligations under the settlement agreement and the Court’s orders; and LBN’s March 2021 Annual Report filed with the State of Virginia and signed by Donovan on March 20, 2021, which 27 states that Donovan is LBN’s President, Ajin is LBN’s Vice President, and Moore is LBN’s Vice 1 A. Whether LBN violated the orders at issue 2 Plaintiffs argue that LBN violated and continues to be in violation of the Court’s orders of 3 October 3, 2022, as well as prior orders that led to the Court’s imposition of civil contempt 4 sanctions on LBN on October 3, 2022. 5 Class Counsel Jason S. Rathod testified in his declaration that LBN is in violation of the 6 Court’s orders of October 3, 2022, because (1) LBN has not paid the cash amounts it owes under 7 the settlement agreement ($1,590,000 total), even though the Court ordered LBN to pay them by 8 October 17, 2022; (2) LBN has not paid the costs of settlement administration that it still owes 9 under the settlement agreement ($72,000 with interest to be calculated from August 14, 2021, to 10 the present),4 even though the Court ordered LBN to pay them by October 17, 2022; (3) LBN has 11 not paid the attorneys’ fees that Plaintiffs incurred in bringing prior motions (namely, $34,142.60 12 with interest to be calculated from July 30, 2021, to the present for Plaintiffs’ 2021 motion to 13 enforce the settlement agreement, and $53,021.60 for Plaintiffs’ August 2022 motion to hold LBN 14 in civil contempt and for an order imposing civil contempt sanctions on LBN), which the Court 15 ordered LBN to pay by October 17, 2022; and (4) LBN has not paid the $1,000 per-day coercive 16 fine for each day of noncompliance with each directive set forth in the Court’s orders of October 17 3, 2022, which total $174,000 as of November 22, 2022, see Rathod Decl. ¶ 2, Docket No. 232-1. 18 Mr. Rathod also testified in his declaration that LBN is in violation of the Court’s October 3, 19 2022, orders because LBN failed to provide Class Counsel the documents and business records 20 sufficient to show that LBN has implemented each of the discounts, caps, and credits required 21 under the settlement agreement, which LBN was required to do by October 18, 2022. Mr. Rathod 22 declares that LBN has provided Class Counsel with documents and records for only twenty-five 23 out of fifty class members that Class Counsel identified in connection with the Debt Relief Fund, 24 25 4 As noted above, LBN represented in its November 14, 2022, status report that it paid 26 $2,000 toward the costs of settlement administration that it owes, but it filed no evidence to support that representation. In light of LBN’s failure to proffer any evidence to demonstrate that 27 it, in fact, made a $2,000 payment to the settlement administrator, the Court finds that LBN has 1 and that LBN has not produced any documents for any of the other discounts, caps, and credits 2 that it is supposed to implement. Id. ¶¶ 4-5. 3 Because Donovan, Ajin, and Moore have not filed any evidence to contradict the 4 declaration of Jason S. Rathod with respect to the alleged violations of the orders of October 3, 5 2022, despite the Court’s order to show cause ordering them to do so, the Court may treat as true 6 the facts set forth in that declaration. See Peterson, 140 F.3d at 1324 (“A trial court may in a 7 contempt proceeding narrow the issues by requiring that affidavits on file be controverted by 8 counter-affidavits and may thereafter treat as true the facts set forth in uncontroverted affidavits.”). 9 The uncontroverted facts in the Rathod declaration establish LBN’s noncompliance with the 10 Court’s October 3, 2022, orders; accordingly, the burden shifts to LBN to show that it took all 11 reasonable steps to comply with such orders. Inst. of Cetacean Rsch., 774 F.3d at 945. Neither 12 LBN nor Donovan, Ajin, and Moore have filed any evidence showing that LBN took all 13 reasonable steps to comply with the Court’s October 3, 2022, orders.5 Accordingly, the Court 14 finds that LBN violated and continues to be in violation of the Court’s October 3, 2022, orders. 15 Plaintiffs also argue that this Court found in its orders of October 3, 2022, that LBN 16 violated other orders issued prior to October 3, 2021, on multiple occasions; such violations were 17 the basis for this Court’s imposition of civil contempt sanctions on LBN on October 3, 2022. The 18 Court agrees with Plaintiffs and incorporates here by reference its findings in its October 3, 2022, 19 orders that LBN violated the Final Approval Order and Judgment and the enforcement orders of 20 July and November 2021, and January 2022, on multiple occasions, and that LBN failed to show 21 that it took all reasonable steps to comply with its obligations under such orders. See generally 22 Docket Nos. 224, 225. 23 24 5 As noted above, LBN’s status report of November 14, 2022, states that LBN’s 25 purportedly reduced revenues prevent it from complying with the Court’s orders of October 3, 2022, but LBN did not attach any financial statements or other evidence on which the Court could 26 find that the state of its revenues make it impossible for it to comply with the Court’s orders. The Court has ordered LBN on multiple occasions to produce to Class Counsel financial statements 27 generated by an external accountant and signed by LBN counsel under penalty of perjury showing 1 In sum, the Court finds that Plaintiffs have shown that LBN violated and continues to be in 2 violation of the Court’s orders of October 3, 2022, as well as prior orders that led to the Court’s 3 imposition of civil contempt sanctions on LBN on October 3, 2022. 4 B. Whether Donovan, Ajin, and Moore can be held in civil contempt for LBN’s violations of the orders at issue 5 6 As noted, under Peterson, a non-party can be held in civil contempt for a corporate 7 defendant’s violations of a court order where (1) the non-party either aids and abets the defendant 8 in violating the court order or is legally identified with the defendant, and (2) the non-party has 9 notice of the court order. See 140 F.3d at 1323-24. 10 Plaintiffs contend that the first prong of the Peterson test is met because Donovan, Ajin, 11 and Moore are “legally identified” with LBN. A non-party is legally identified with a defendant 12 corporate entity and is, therefore, bound by orders issued to the defendant corporate entity where 13 there is evidence that the non-party was “responsible for the conduct of [the defendant corporate 14 entity’s] affairs,” such as where there is evidence that the non-party was a de facto or de jure 15 officer of the defendant corporate entity. See Laurins, 857 F.2d at 535 (“De facto as well as de 16 jure officers are responsible for enabling a corporation to comply with orders directed to it.”); 17 N.L.R.B. v. Sequoia Dist. Council of Carpenters, AFL-CIO, 568 F.2d 628, 633 & n.11 (9th Cir. 18 1977) (holding that non-parties were “legally identified” with a defendant corporate entity (a 19 union) and were bound by orders issued to that defendant corporate entity because they served as 20 the entity’s “principal officers,” as they were “Executive Secretary” and “Business Agent/District 21 Manager,” respectively). 22 Here, Plaintiffs have pointed to evidence showing that Donovan and Ajin are officers and 23 principals of LBN and have had, at all relevant times, control over LBN’s compliance with the 24 orders at issue. Donovan and Ajin filed declarations in this action in which they testified that they 25 are, respectively, LBN’s Chief Executive Officer and controlling principal and LBN’s Corporate 26 Secretary and principal, and in which they made representations indicating that they have control 27 over LBN’s compliance with the Court’s orders and settlement agreement. See, e.g., Docket No. 1 he is “the Chief Executive Officer and controlling principal of defendant Libre by Nexus, Inc.” 2 and made representations as to the actions that LBN would take to comply with the settlement 3 agreement and the Court’s orders); Docket No. 213 (declaration by Evan Ajin executed on 4 November 29, 2021, in which he represented that he is the “Corporate Secretary and a principal of 5 defendant Libre by Nexus, Inc.” and made representations as to the actions that LBN would take 6 to comply with the settlement agreement and Court’s orders, which he is “personally involved in 7 supervising”). Plaintiffs also point to the transcript of the hearing held on September 15, 2022, 8 before the undersigned. During that hearing, Mr. Shoreman identified Donovan, Ajin, and Moore 9 as LBN’s “individual principals,” and none of them disputed Mr. Shoreman’s characterization. 10 See Tr. of Hr’g at 3, Docket No. 227. Plaintiffs also point to the fact that Donovan executed the 11 settlement agreement on behalf of LBN, Docket No. 143-1 at ECF header page 38, and to email 12 correspondence between Class Counsel and Ajin in which Ajin made representations to Class 13 Counsel on behalf of LBN indicating that he had control over LBN’s compliance with the 14 settlement agreement and the Court’s orders. See Rathod Decl. ¶¶ 4, 14 & Ex. 1, 7. Based on the 15 foregoing, which Donovan and Ajin have not disputed, the Court finds that Donovan and Ajin are 16 “legally identified” with LBN and were bound by each of the orders at issue. This satisfies the 17 first prong of the Peterson test with respect to Donovan and Ajin. See Sequoia, 568 F.2d at 633 & 18 n.11; Laurins, 857 F.2d at 535. 19 With respect to Moore, Plaintiffs point to a March 2021 annual report filed by LBN with 20 the State of Virginia, which states that Moore was LBN’s Vice President and Executive Director at 21 the time of that report’s filing. See Rathod Decl. ¶ 12 & Ex. 5. Plaintiffs also point to email 22 correspondence in which Ajin and Moore made representations to Class Counsel in 2021 23 indicating that Moore had control over LBN’s ability to comply with the settlement agreement and 24 the Court’s orders. See, e.g., Rathod Decl. ¶ 14 & Ex. 7 (email chain from September and October 25 2021 in which Moore stated to Class Counsel that he was taking actions to facilitate LBN’s 26 compliance with the settlement agreement and the Court’s orders, and in which Moore was 27 identified by Ajin as a person with authority to resolve disputes on behalf of LBN as to LBN’s 1 transcript of the hearing held on September 15, 2022, before the undersigned, during which Mr. 2 Shoreman identified Moore as one of LBN’s “individual principals.” See Tr. of Hr’g at 3, Docket 3 No. 227. Moore did not dispute that characterization during the hearing; to the contrary, Moore 4 made a statement that implied that he had responsibility for the conduct of LBN’s affairs in the 5 context of LBN’s compliance with the Court’s orders, namely “I look forward to working with 6 Plaintiffs’ counsel to resolve these issues.” See id. at 27. During the hearing held on January 19, 7 2023, Moore stated that he negotiated with Plaintiffs, on behalf of LBN, with respect to disputes 8 as to LBN’s compliance with the Court’s orders, and he did not dispute that he continues to have 9 responsibility for the conduct of LBN’s affairs in the context of LBN’s compliance with the 10 Court’s orders. Based on the foregoing, the Court finds that Moore is “legally identified” with 11 LBN and was bound by each of the orders at issue. This satisfies the first prong of the Peterson 12 test with respect to Moore. See Sequoia, 568 F.2d at 633 & n.11; Laurins, 857 F.2d at 535. 13 Mr. Shoreman’s unsupported statement in a declaration he filed on December 14, 2022, 14 that Moore is “no longer an officer or director of LBN and owns no interest in the company,” see 15 Docket No. 237, does not alter this conclusion. The Court gives no weight to Mr. Shoreman’s 16 statement regarding Moore because it is not clearly under penalty of perjury, and because 17 Mr. Shoreman did not provide a factual basis in his declaration showing that he has personal 18 knowledge of Moore’s status at LBN. Additionally, Mr. Shoreman’s statement contradicts LBN’s 19 March 2021 filing with the State of Virginia. Mr. Shoreman did not attach to his declaration any 20 documents filed by LBN with the State of Virginia showing that Moore is no longer an officer, 21 director, or owner of LBN. 22 The second prong of the Peterson test requires that the non-party had notice of the orders 23 that the defendant corporate entity violated. Peterson, 140 F.3d at 1323-24. Where, as here, the 24 non-parties who are the subject of a motion for civil contempt sanctions are legally identified with 25 a defendant corporate entity, the non-parties are deemed to have had notice of the orders that the 26 defendant violated as of the date the orders were served on the defendant’s attorney. See Sequoia, 27 568 F.2d at 633 (holding that, “[w]hen the order was served on [a union’s] attorney, the [union] 1 identified with it, because “[a] command to a corporation is in effect a command to those who are 2 officially responsible for the conduct of its affairs”). Evidence of actual notice is not required 3 unless the non-parties subject to a motion for civil contempt sanctions are not “legally identified” 4 with the defendant corporate entity that violated the order in question.6 See id. (“Those not 5 identified with a party, but in active concert or participation with him, are bound only with actual 6 notice.”). Here, each of the orders at issue was served electronically on LBN’s attorneys via ECF 7 at the same time that the orders were posted on the docket. See Civil L.R. 5-1(g) (providing that, 8 upon the posting of an order in ECF, the ECF system will send to the registered attorneys for all 9 parties in the case a Notice of Electronic Filing, which constitutes service on the receiving party). 10 Accordingly, Donovan, Ajin, and Moore, as persons legally identified with LBN at all relevant 11 times, had notice of the orders of October 3, 2022, and the enforcement orders, as of the date they 12 were posted on the docket. See Sequoia, 568 F.2d at 633. That is sufficient to satisfy the second 13 prong of the Peterson test with respect to Donovan, Ajin, and Moore. 14 In light of the foregoing, the Court finds and concludes that Donovan, Ajin, and Moore can 15 be held in civil contempt under Peterson for LBN’s violations of the orders of October 3, 2022, 16 and the enforcement orders of July and November 2021 and January 2022. 17 18 19 20 6 Although evidence of actual notice is not required in light of the Court’s finding that Donovan, Ajin, and Moore were legally identified with LBN at all relevant times, the record 21 contains evidence indicating that Donovan, Ajin, and Moore had actual notice of the orders at issue. For example, Plaintiffs filed email correspondence that was sent to and received by 22 Donovan, Ajin, and Moore, on the one hand, and Class Counsel, on the other hand, in which LBN’s obligations under the enforcement orders and settlement agreement were discussed. See, 23 e.g., Rathod Decl. ¶¶ 4, 14 & Ex. 1, 7. Further, as discussed above, Donovan and Ajin filed declarations discussing LBN’s obligations under the enforcement orders and settlement 24 agreement. See, e.g., Docket Nos. 210, 213. Additionally, Donovan, Ajin, and Moore attended the September 15, 2022, hearing, during which LBN’s obligations under, and violations of, the 25 enforcement orders were discussed at length, as were the coercive and remedial civil contempt sanctions that the Court was considering imposing on LBN, which were later described in more 26 detail in its orders of October 3, 2022. See generally Docket No. 227. Further, counsel for LBN declared that they emailed to Donovan, Ajin, and Moore a copy of the Court’s order to show cause 27 of December 12, 2022, which referred to the orders at issue. The foregoing is sufficient to find C. Appropriateness of civil contempt sanctions requested by Plaintiffs 1 2 The Court next examines whether the sanctions that Plaintiffs request fall within the scope 3 of civil contempt sanctions. As noted, remedies that (1) “coerce compliance with a court order” or 4 (2) are “meant to compensate the complainant for actual losses” fall within the scope of civil 5 contempt sanctions. See Ahearn, 721 F.3d at 1129. 6 Plaintiffs request that the Court impose civil contempt sanctions on Donovan, Ajin, and 7 Moore in the form of an order requiring them to pay immediately, on a joint and several basis: 8 1. the attorneys’ fees that Plaintiffs incurred for the present motion for civil contempt 9 sanctions against Donovan, Ajin, and Moore, which total $74,952.00, with a $1,000 10 per-day fine for each day of noncompliance; 11 2. the attorneys’ fees that Plaintiffs incurred for the enforcement motion they brought in 12 2021, namely $34,142.60, with interest from July 30, 2021, to the present, and a $1,000 13 per-day fine for each day of noncompliance after October 17, 2022; 14 3. Plaintiffs’ attorneys’ fees for the motion for civil contempt sanctions they brought in 15 August 2022, namely $53,021.60, with interest from October 17, 2022, to the present, 16 and a $1,000 per-day fine for each day of noncompliance after October 17, 2022; 17 4. a $1,000 per-day fine for each day of noncompliance after October 18, 2022, for a 18 failure to provide to Class Counsel documents sufficient to show LBN’s 19 implementation of the discounts, caps, and credits required under the settlement 20 agreement; 21 5. an order that Donovan, Ajin, and Moore be immediately imprisoned until they and 22 LBN have purged their contempt of court; 23 6. “$1,590,000 for the parties’ class action settlement,” with a $1,000 per-day fine for 24 each day of noncompliance after October 17, 2022; and 25 7. $72,000, which are the costs of settlement administration that LBN still owes under the 26 terms of the settlement agreement, with a $1,000 per-day fine for each day of 27 noncompliance after October 17, 2022. 1 See Proposed Order, Docket No. 232-3. Plaintiffs’ request in connection with items 6 and 7, 2 above, is in the form of “an amended judgment that includes the LBN Principals along with LBN 3 and makes clear that the LBN Principals are also obligated by the original February 8, 2021 Class 4 Action Judgment in this Action[.]” See Docket No. 232 at 1. 5 First, the Court finds that the attorneys’ fees that Plaintiffs request for the work that Class 6 Counsel performed in connection with the present motion (item 1, above) are an appropriate 7 remedial civil contempt sanction with respect to Donovan, Ajin, and Moore. See Perry v. 8 O’Donnell, 759 F.2d 702, 705 (9th Cir. 1985) (holding that a district court has discretion “to 9 analyze each contempt case individually and decide whether an award of fees and expenses is 10 appropriate as a remedial measure” and that a finding of “willful” disobedience with a court order 11 is not required for a district court to award fees and costs as a remedial measure in civil contempt 12 proceedings). Plaintiffs have demonstrated that Donovan, Ajin, and Moore, as officers and 13 principals of LBN at all relevant times, were bound by, and had control over LBN’s ability to 14 comply with, the Court’s orders of October 3, 2022, the violations of which necessitated the filing 15 of the present motion. The Court finds that the lodestar that Plaintiffs have requested, namely 16 $74,9527, is fair and reasonable in light of the results that Class Counsel obtained in the context of 17 the present motion, the quality of the representation, the contingent nature of their compensation, 18 and the fact that Class Counsel’s payment will be delayed until members of the settlement classes 19 receive their compensation under the terms of the settlement agreement. Donovan, Ajin, and 20 21 7 Annick Persinger, who is counsel for Plaintiffs, declares that the $74,952 that Plaintiffs request in attorneys’ fees for the present motion is the product of 101.4 hours that Class Counsel 22 spent collectively on the present motion, billed at a rate of $829 per hour based on the Laffey Matrix for the work of Annick Persinger (37.2 hours, for a lodestar of $30,838.80), Jason Rathod 23 (7.3 hours, for a lodestar of $6,051.70), and Jesse Newark (27.4 hours, for a lodestar of $22,714.60), and at the rate of $508 per hour based on the Laffey Matrix for the work of Cameron 24 Partovi (29.5 hours, for a lodestar of $14,986). Persinger Decl. ¶¶ 2-4, Docket No. 232-2. The Laffey Matrix is “a widely recognized compilation of attorney and paralegal rates based on 25 various levels of experience” upon which courts, including those in this district, routinely rely to determine the reasonableness of attorney hourly rates. See Theme Promotions, Inc. v. News Am. 26 Mktg. FSI, Inc., 731 F. Supp. 2d 937, 948 (N.D. Cal. 2010). The Court finds that the requested hourly rates of $829 and $508 are reasonable in light of the Laffey Matrix and Class Counsel’s 27 experience and the fact that LBN, Donovan, Ajin, and Moore did not object to the requested 1 Moore did not challenge the reasonableness of Class Counsel’s requested hours or hourly rates 2 and they, therefore, waived any objections to the same. See id. at 706 (finding that party held in 3 civil contempt waived objections to reasonableness of requested attorneys’ fees and costs because 4 it “failed to challenge the reasonableness of the amount of the fee award requested before the 5 district court”). The Court will order that Donovan, Ajin, and Moore pay these fees, on a joint and 6 several basis, within ten business days of the date of this order. 7 Second, the Court finds that the attorneys’ fees that Plaintiffs incurred for the work that 8 Class Counsel performed in connection with the enforcement motion they brought in 2021 9 ($34,142.60 with interest from July 30, 2021, to the present) (item 2, above), and their August 10 2022 motion for an order holding LBN in civil contempt ($53,021.60, with interest from October 11 17, 2022, to the present) (item 3, above), which LBN has not paid despite the Court’s October 3, 12 2022, orders, are an appropriate remedial civil contempt sanction against Donovan, Ajin, and 13 Moore, as Plaintiffs have demonstrated that Donovan, Ajin, and Moore, as officers and principals 14 of LBN at all relevant times, were bound by, and had control over LBN’s ability to comply with, 15 the enforcement orders of July and November 2021 and January 2022, the violations of which 16 necessitated the filing of those motions. See generally Docket No. 224 (finding LBN in violation 17 of orders issued in July 2021, November 2021, and January 2022). The Court will order that 18 Donovan, Ajin, and Moore pay these fees, with interest based on the dates indicated above, on a 19 joint and several basis with LBN, within ten business days of the date of this order. 20 Third, the Court finds that a $1,000 per-day fine for each day that Donovan, Ajin, and 21 Moore fail to pay the attorneys’ fees discussed above, starting from ten business days from the 22 date of this order, would be an appropriate coercive sanction. Donovan, Ajin, and Moore’s failure 23 to respond to Plaintiffs’ present motion or to the Court’s order to show cause does not prevent the 24 Court from imposing coercive monetary sanctions. See Richmark Corp. v. Timber Falling 25 Consultants, 959 F.2d 1468, 1481 (9th Cir. 1992) (holding that, while “the district court should 26 ordinarily take [the contemnor’s] financial position into account” before imposing coercive 27 monetary sanctions, the district court is not precluded from imposing coercive monetary sanctions 1 chooses not to disclose it”; in that case, the contemnor’s “failure to present any evidence on the 2 record may not be charged either against the [opposing party] or result in a holding that the district 3 court abused its discretion in imposing the sanction”) (citation and internal quotation marks 4 omitted). These coercive fines, which the Court finds will incentivize Donovan, Ajin, and Moore 5 to comply with the Court’s orders, shall be paid to the settlement administrator for the benefit of, 6 and eventual distribution to8, members of the Former and Current Program Participant Payments 7 Subclass and Sponsor Payments Subclass. 8 Fourth, the Court finds that a $1,000 per-day fine for each day after this order is filed that 9 LBN fails to provide, pursuant to the Court’s orders of October 3, 2022, documents and records to 10 Class Counsel sufficient to show LBN’s implementation of the discounts, caps, and credits 11 required under the settlement agreement (item 4, above), also would be an appropriate coercive 12 civil contempt sanction with respect to Donovan, Ajin, and Moore. The Court has found that these 13 individuals continue to be officers and principals of LBN and continue to have control over LBN’s 14 compliance with the Court’s orders of October 3, 2022, including the requirement in those orders 15 that LBN produce documents sufficient to show its implementation of the discounts, caps, and 16 credits in question. These fines, which the Court finds will incentivize Donovan, Ajin, and Moore 17 to bring LBN into compliance with the Court’s orders, shall be paid to the settlement administrator 18 for the benefit of, and eventual distribution to, members of the Former and Current Program 19 Participant Payments Subclass and Sponsor Payments Subclass. 20 Fifth, the Court declines, at this juncture, to issue an order that Donovan, Ajin, and Moore 21 be immediately imprisoned, as Plaintiffs request (item 5, above). 22 Finally, as noted, Plaintiffs request the entry of an amended judgment that makes 23 Donovan, Ajin, and Moore liable, on a joint and several basis with LBN, for the cash amounts that 24 LBN owes under the settlement agreement ($1,590,000), and the $72,000 for costs of settlement 25 26 8 The distribution of any fines collected by the settlement administrator for the benefit of members of the Former and Current Program Participant Payments Subclass and Sponsor 27 Payments Subclasses pursuant to this order shall be effectuated pursuant to the distribution plan 1 administration that LBN still owes under the settlement agreement (items 6 and 7, above). The 2 authorities that Plaintiffs cite in their opening brief do not support granting that request. Those 3 authorities provide that a new, separate judgment can be entered to facilitate the collection of civil 4 contempt sanctions imposed against a non-party. See Martin v. City of Barstow, No. 5 EDCV1302193ABSPX, 2015 WL 12743594, at *2 (C.D. Cal. Dec. 21, 2015) (ordering the entry 6 of a “separate judgment” against a non-party, namely counsel for plaintiffs, to facilitate the 7 collection of civil contempt sanctions imposed against that non-party); Leads Club, Inc. v. 8 Peterson, No. CIV. 05CV1717-J JMA, 2008 WL 186504, at *1 (S.D. Cal. Jan. 22, 2008) (ordering 9 the entry of a “new, separate judgment” against a non-party, namely counsel for plaintiff, to 10 facilitate the enforcement of a civil contempt order against that non-party and collection of civil 11 contempt sanctions imposed against that non-party). 12 The authorities that Plaintiffs cite in their reply do not address the issue of amended 13 judgments. Those authorities provide that a court has discretion to determine the amount and 14 duration of civil contempt sanctions. See Lasar v. Ford Motor Co., 399 F.3d 1101, 1111-1112 15 (9th Cir. 2005) (holding that compensatory sanctions fall within the scope of civil contempt 16 sanctions and that a district court has discretion to fashion them); Whittaker Corp. v. Execuair 17 Corp., 953 F.2d 510, 516 (9th Cir. 1992) (same with respect with coercive civil contempt 18 sanctions). 19 Plaintiffs cite a Sixth Circuit opinion in their reply, namely Elec. Workers Pension Trust 20 Fund of Local Union #58, IBEW v. Gary’s Elec. Serv. Co., 340 F.3d 373, 383 n.13 (6th Cir. 2003) 21 (Gary’s Electric), for the proposition that “courts have authorized the specific sanctions requested 22 by Plaintiffs in similar circumstances.” See Reply at 5. There, the Sixth Circuit reversed a district 23 court’s denial of a request to hold the president and sole owner of a corporate defendant (Gary’s 24 Electric) in civil contempt for the corporate defendant’s failure to make payments to a union 25 pursuant to a court order enforcing a collective bargaining agreement (CBA). 340 F.3d at 376. 26 The parties’ dispute began in arbitration, during which the arbitrator found that Gary’s Electric 27 had failed to comply with its obligations under the CBA to pay for certain employees’ benefits, 1 Id. at 376-77. When Gary’s Electric failed to comply with the arbitrator’s order, the union filed an 2 action in federal court requesting that the district court enter a judgment enforcing the arbitrator’s 3 order. Id. The district court granted summary judgment in favor of the union, enforcing the 4 arbitrator’s order against Gary’s Electric and requiring the company to make payments pursuant to 5 the CBA. Id. While an appeal of the summary judgment order was pending, the union initiated 6 civil contempt proceedings against Gary’s Electric, as well as the company’s the sole owner and 7 president (Russell Pipia), for failing to make payments under the CBA as had been ordered by the 8 district court. Id. at 377. The union presented evidence that Pipia had wasted corporate assets to 9 avoid making the court-required payments. Id. The district court granted the contempt motion 10 with respect to Gary’s Electric but denied it with respect to Pipia on the basis that Pipia was not a 11 defendant in the action. Id. 12 The Sixth Circuit reversed, holding that the district court had the authority to hold Pipia in 13 civil contempt even if he was not a defendant in the action, because “Pipia, as an officer of the 14 corporation and the one responsible for the corporation’s affairs, was subject to the court’s order 15 just as the corporation itself was.” Id. at 382. Further, the Sixth Circuit adopted for the first time 16 a standard for defending against allegations of civil contempt that had previously been adopted by 17 the Eighth Circuit in Chicago Truck Drivers v. Bhd. Labor Leasing, 207 F.3d 500 (8th Cir. 2000), 18 which requires an alleged contemnor whose defense is a “present inability to comply” to show that 19 “he is not responsible for the present inability to pay.” Id. at 383. The Sixth Circuit remanded the 20 action for further proceedings in connection with the union’s contempt motion against Pipia, 21 reasoning that the union was “entitled to further development of the record regarding a possible 22 contempt finding against [Pipia] personally.” Id. at 384. The Sixth Circuit held that, on remand, 23 Pipia would need to show why Gary’s Electric could not pay the amounts it owed under the CBA 24 and would also “need to show that he was not the cause of Gary’s Electric’s inability to pay.” Id. 25 Plaintiffs specifically point to footnote 13 in Gary’s Electric. In that footnote, the Sixth 26 Circuit clarified its interpretation of Chicago Truck Drivers in the context of its discussion of the 27 civil contempt sanctions that the district court could impose against Pipia on remand; that footnote 1 To the extent that Chicago Truck Drivers suggests that the defendant officer could not be held liable for an amount equivalent to the 2 underlying delinquent payments because he was never sued in his individual capacity, we disagree. Because one of the purposes of 3 civil contempt is to compensate a complainant for its losses, we note that Pipia can be fined in an amount equivalent to the original 4 judgment. The district court should consider to what extent Pipia deliberately caused the underlying judgment to remain unpaid and 5 should sanction accordingly. 6 Id. at 383 n.13. 7 Nothing in Gary’s Electric suggests that a court may amend a judgment to make an officer 8 or owner of a defendant corporation liable for the amounts the defendant corporation owes in that 9 action. At best, footnote 13 suggests, in dicta, that the district court could, on remand, impose a 10 civil contempt sanction on the president and sole owner of Gary’s Electric that is “equivalent” to 11 the amount that Gary’s Electric owed under the judgment entered by the district court against the 12 company and which the company had failed to pay. This dicta does not support Plaintiffs’ request 13 for an amended judgment. 14 To the extent that Plaintiffs have converted their request for an amended judgment to a 15 request for an order imposing civil contempt sanctions on Donovan, Ajin, and Moore in an amount 16 “equivalent” to the amounts that LBN owes under the settlement agreement, the Court denies that 17 request without prejudice. If the other civil contempt sanctions that the Court imposes pursuant to 18 this order on Donovan, Ajin, and Moore, as discussed above, do not result in LBN’s payment of 19 the amounts it owes under the settlement agreement, or in its production of documents and records 20 showing that it has implemented the discounts, caps, and credits required under the settlement 21 agreement, then the Court will entertain a motion for further sanctions against LBN’s principals in 22 the amounts that LBN owes under the settlement agreement. In any such motion, Plaintiffs may 23 submit evidence indicating that LBN’s failure to pay the amounts it owes under the settlement 24 agreement was “deliberately caused” by LBN’s principals. See Gary’s Electric, 340 F.3d at 383 25 n.13. 26 The Court, therefore, declines to amend the judgment as Plaintiffs request, or to impose at 27 this juncture a civil contempt sanction on Donovan, Ajin, and Moore in an amount that is 1 The Court will, however, enter new, separate judgments to facilitate the collection of the 2 civil contempt sanctions that the Court imposed on October 3, 2022, on LBN, and the civil 3 contempt sanctions that the Court now imposes on Donovan, Ajin, and Moore. See Martin, 2015 4 WL 12743594, at *2; Leads Club, 2008 WL 186504, at *1. 5 Within seven days of the date of this order, Plaintiffs shall file a proposed judgment in 6 favor of Plaintiffs and against LBN for the civil contempt sanctions that the Court imposed on 7 LBN on October 3, 2022, and a proposed judgment in favor of Plaintiffs and against Donovan, 8 Ajin, and Moore for the civil contempt sanctions that the Court now imposes on them. The 9 proposed judgments shall be worded in a manner that will permit Plaintiffs to collect the civil 10 contempt sanctions and execute the judgments. In the proposed judgments, Plaintiffs shall, for the 11 interest that the Court has awarded them as a civil contempt sanction against LBN, Donovan, Ajin, 12 and Moore, calculate the interest owed by LBN, Donovan, Ajin, and Moore, respectively, to a date 13 certain9 and state in the proposed judgments that the interest amounts are as of that date. 14 Similarly, for the $1,000 per-day coercive fines that have accrued to date, Plaintiffs shall calculate 15 the fines owed by LBN, Donovan, Ajin, and Moore, respectively, to a date certain and state in the 16 proposed judgments that the fine amounts are as of that date. 17 IV. CONCLUSION 18 The Court GRANTS IN PART and DENIES IN PART Plaintiffs’ motion for an order 19 holding Donovan, Ajin, and Moore in civil contempt and imposing civil contempt sanctions 20 against them. The Court finds that Donovan, Ajin, and Moore are in contempt of Court for the 21 22 23 24 25 9 Interest, for the purpose of complying with this order, shall be calculated “at a rate equal 26 to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of the 27 judgment.” 28 U.S.C. § 1961(a). Interest shall be computed daily and shall be compounded ] reasons set forth in this order. The Court will issue a separate order delineating the civil contempt 2 || sanctions that the Court imposes on Donovan, Ajin, and Moore. 3 IT IS SO ORDERED. 5 || Dated: January 23, 2023 □ 6 CLAUDIA WILKEN United States District Judge 7 8 9 = 10 eo 12 A 14 vO 5 615 16 17 18 19 20 21 22 23 24 25 26 27 28