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Fundamental Admin Servc., LLC v. Anderson

United States District Court, District of Maryland

April 2, 2015

FUNDAMENTAL ADMIN. SERVS., LLC, Plaintiff
v.
KRISTI ANDERSON, Defendant

MEMORANDUM AND ORDER

JAMES K. BREDAR UNITED STATES DISTRICT JUDGE

I. Background

This case arose from Plaintiff Fundamental Administrative Services ("FAS"), LLC's concern that Defendant Kristi Anderson, former general counsel of FAS, was going to violate her ethical and fiduciary obligations not to disclose FAS's privileged and confidential information acquired by her during the course of her employment with FAS. (Compl., ECF No. 1; Mot. Temporary Restraining Order ("TRO") and Preliminary Injunction, ECF No. 2.) The Court granted a TRO (ECF No. 5), but later dissolved it and denied preliminary injunctive relief because it believed FAS's concerns focused upon proceedings in the bankruptcy court of the Middle District of Florida and because the Court concluded that determinations of privilege and confidentiality could and would be properly addressed in that court (Order 6/14/2013, ECF No. 13).

Roughly three months later, FAS came back to the Court with another motion for a TRO and a preliminary injunction, asserting a fresh violation of Anderson's duties to FAS based upon her filing a complaint against FAS in Maryland state court, which revealed much privileged and confidential information. (ECF No. 28.) The Court granted the TRO and, after a hearing, entered a preliminary injunction. (ECF Nos. 32, 41.) One of the provisions of the injunction mandated the following:

Defendant SHALL RETURN to FAS any document, whether in electronic or paper form, that Defendant obtained through her employment and representation of FAS and that is in her or her counsel's possession, custody, or control, EXCEPT FOR any document that pertains to Defendant's compensation or other benefit while employed with FAS.

(10/10/2013 Prelim. Inj. 4, ¶ 5.)

Shortly thereafter, Anderson filed a motion to alter or amend the preliminary injunction or, alternatively, for its clarification. (ECF No. 45.) Anderson did not, however, move for a stay of the injunction. In her motion brought pursuant to Federal Rule of Civil Procedure 59(e), Anderson asserted she was entitled to keep copies of all the documents in her possession because she had been FAS's in-house counsel, and she further asserted she was entitled to withhold certain unspecified documents on the basis of privilege and/or work product. She did not, concurrently with her limited production to FAS or with her Rule 59(e) motion, provide either to FAS or to the Court a privilege log that would permit determination of the legitimacy of her claim. Instead, she asserted she had a right to claim as her work product any FAS document that she had "culled" and retained in anticipation of litigation against FAS.

In three different productions in November and December 2013, Anderson provided 4, 586 pages of documents to FAS, withholding an unspecified number of unidentified documents. (PL's Mot. Order Show Cause 2.) In a "supplemental" Rule 59(e) motion, Anderson stated, "The only documents not otherwise in FAS' possession and control include her handwritten notes." (Def.'s Supp. Mot. Mem. 3, ECF No. 63.) Further, Anderson stated she "ha[d] in her possession . . . several copies of documents that she retained during the course of her employment at FAS that she retained specifically in anticipation of potential future litigation with FAS." (Id. 2, ¶ 5.) Briefing on Anderson's motions continued into March 2014 (ECF Nos. 55, 61, 63, 65, 66, 70, 71, 75, 78, 82, 83, 85), during which time FAS believed it had received at least copies of most of the documents in Anderson's possession (PL's Mot. Order Show Cause 3).

But based on Anderson's sudden production on March 21, 2014, in the Florida bankruptcy proceeding of 31, 000 additional pages, FAS filed its motion for an order to Anderson to show cause why she should not be held in contempt of the preliminary injunction (Mot. Order Show Cause 4-5), which the Court granted (ECF No. 122). It was necessary to postpone the contempt hearing twice, with the Court convening for this purpose on March 26 and 27, 2015.

II. Standard for Civil Contempt

A movant for civil contempt is required to establish by clear and convincing evidence the following four elements:

(1) the existence of a valid decree of which the alleged contemnor had actual or constructive knowledge; (2) ... that the decree was in the movant's "favor"; (3)... that the alleged contemnor by its conduct violated the terms of the decree, and had knowledge (at least constructive knowledge) of such violations; and (4) ... that [the] movant suffered harm as a result.

In re Grand Jury Subpoena (T-1I2), 597 F.3d 189, 202 (4th Cir. 2010) (alterations in original).

Courts may impose sanctions for civil contempt '"to coerce obedience to a court order or to compensate the complainant for losses sustained as a result of the contumacy.'" In re GeneralMotors Corp., 61 F.3d 256, 258 (4th Cir. 1995) (GMCorp. I) (quoting Connolly v. J.T. Ventures, 851 F.2d 930, 932 (7th Cir. 1988)). Civil ...


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