United States District Court, D. Maryland, Southern Division
NATIONAL BOARD FOR CERTIFICATION IN OCCUPATIONAL THERAPY, INC., Plaintiff,
JEFFREY M. SHANE, et al., Defendants.
MEMORANDUM OPINION AND ORDER
W. Grimm United States District Judge
National Board for Certification in Occupational Therapy,
Inc. (“NBCOT”) filed suit against Defendants
Jeffrey M. Shane d/b/a Pass the NBCOT LLC d/b/a Pass the OT
and Stephanie Shane d/b/a Pass the NBCOT LLC d/b/a Pass the
OT (together, “the Shanes”), alleging trademark
infringements, counterfeiting, copyright infringement, unfair
competition, and other violations of the Lanham Act, federal
copyright law, and common law, based on the Shanes' use
of NBCOT's name and test questions in the Shanes'
tutorial program (formerly called Pass the NBCOT, now called
Pass the OT) and related website. The parties entered into a
settlement agreement and filed a Joint Motion for Entry of
Stipulated Consent Judgment, ECF No. 17, which the Court
approved, entering a Final Judgment on Consent
(“Consent Decree”), ECF No. 18. The Consent
Decree permanently enjoined the Shanes from, inter
alia, “[u]sing, copying, displaying, distributing,
publicly performing, making derivative works from or
otherwise infringing NBCOT's Copyrighted Work, except as
either permitted under the doctrine of fair use or with
NBCOT's consent.” Consent Decree ¶ 4(c). It
To the extent Defendants have not already done so, Defendants
are directed to destroy all infringing test materials,
advertisements, labels, signs, prints, packages, wrappers,
receptacles and all other materials in their possession or
under their control that contained unauthorized uses of the
name or mark NBCOT, either alone or in combination with other
words, phrases or designs, and any confusingly similar name
or more or any other reproduction, counterfeit, copy or
colorable imitation of Plaintiff's certification marks
and trade names and all plates, molds, matrices, and other
means of making or duplicating the same.
Id. ¶ 6.
to the settlement agreement, if NBCOT saw any future
violations, it would let the Shanes know and give them ten
days to cure before coming to the Court for resolution.
Defs.' Resp. 8-9; Pl.'s Mem. 1, 4 n.1, ECF No. 19-1.
Specifically the settlement agreement provided:
In the event NBCOT discovers activity in the future by the
Shanes and/or PTOT that NBCOT deems an infringement of their
trademarks or copyrights, NBCOT shall provide written notice
to the Shanes and PTOT specifically identifying the
infringement with sufficient detail to allow the Shanes or
PTOT to cure and allow them ten (10) business days to cure
the infringement prior to taking any action against any or
all of them. For the avoidance of any doubt, if the Shanes
and/or PTOT cure the alleged infringement within ten (10)
business days, NBCOT will refrain from asserting any claim
against the Shanes and/or PTOT for damages or otherwise.
Defs.' Resp. 8-9. The parties have referred to
this as the “safe harbor” notice provision.
end of April, NBCOT filed a motion, ECF No. 19, for an order
to show cause why the Shanes should not be held in contempt
for violating the parties' settlement agreement and the
Court's Consent Decree “including by copying and
using a large number of NBCOT's copyrighted test
questions in Defendants' own Pass the OT test preparation
materials.” Pl.'s Mem. 1. NBCOT asks the Court to
“hold Defendants in civil contempt and award NBCOT its
reasonable costs and attorneys' fees in connection with
this motion.” Id. at 2. I issued a show cause
order, ECF No. 22, directing the Shanes to file a written
response (which they did, ECF No. 23) and NBCOT to file a
reply (which it did, ECF No. 24). The issue is now ripe for
resolution, and a hearing is not necessary. See Loc.
R. 105.6. Because NBCOT has not established contempt by clear
and convincing evidence, I will deny the motion.
Court has the authority to sanction an individual for failing
to follow the Court's order or decree. 18 U.S.C. §
401(3). Moreover, “[t]he case law is well established
that district courts have the inherent power to sanction
parties for certain bad faith conduct, even where there is no
particular procedural rule that affirmatively invests the
court with the power to sanction.” Strag v. Bd. of
Trs., Craven Cmty. Coll., 55 F.3d 943, 955 (4th Cir.
1995). Indeed, for almost two centuries, it has been
established that “[c]ertain implied powers must
necessarily result to our Courts of justice from the nature
of their institution . . . . because they are necessary to
the exercise of all others” and they enable courts
“to preserve [their] own existence and promote the end
and object of [their] creation.” United States v.
Hudson, 11 U.S. (7 Cranch) 32, 33-34 (1812); see
Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (quoting
Hudson, 11 U.S. (7 Cranch) at 34); Roadway Exp.,
Inc. v. Piper, 447 U.S. 752, 764 (1980) (same),
superseded on other grounds by statute as stated in
Morris v. Adams-Millis Corp., 758 F.2d 1352, 1357 n.7
(10th Cir. 1985). “This power is organic, without need
of a statute or rule for its definition, and it is necessary
to the exercise of all other powers.” United States
v. Shaffer Equip. Co., 11 F.3d 450, 462 (4th Cir. 1993).
Undergirding this authority “is the need to preserve
the integrity of the judicial process in order to retain
confidence that the process works to uncover the
truth.” Pension Comm. of Univ. of Montreal Pension
Plan v. Banc of Am. Sec., 685 F.Supp.2d 456, 465
(S.D.N.Y. 2010). Thus, “[d]ue to the very nature of the
court as an institution, it must and does have an inherent
power to impose order, respect, decorum, silence, and
compliance with lawful mandates.” Shaffer Equip.
Co., 11 F.3d at 461; see also Chambers, 501
U.S. at 43 (holding that trial courts are “vested, by
their very creation, with power to impose silence, respect,
and decorum, in their presence, and submission to their
lawful mandates”); Strag, 55 F.3d at 955
(quoting Chambers, 501 U.S. at 43).
the court has the “inherent power to control the
judicial process and litigation, a power that is necessary to
redress conduct which abuses the judicial process.”
Goodman v. Praxair Servs., Inc., 632 F.Supp.2d 494,
505 (D. Md. 2009) (quoting United Med. Supply Co. v.
United States, 77 Fed.Cl. 257, 263-64 (2007) (quoting
Chambers, 501 U.S. at 45-46)) (internal quotation
marks omitted); see also Adkins v. Wolever, 554 F.3d
650, 652 (6th Cir. 2009); Leon v. IDX Sys. Corp.,
464 F.3d 951, 958 (9th Cir. 2006); Flury v. Daimler
Chrysler Corp., 427 F.3d 939, 944 (11th Cir. 2005);
Silvestri v. Gen. Motors Corp., 271 F.3d 583, 590
(4th Cir. 2001); Victor Stanley, Inc. v. Creative Pipe,
Inc., 269 F.R.D. 497, 517-18 (D. Md. 2010); In re
NTL, Inc. Secs. Litig., 244 F.R.D. 179, 191 (S.D.N.Y.
2007); Thompson v. U.S. Dep't of Hous. & Urban
Dev., 219 F.R.D. 93, 100 (D. Md. 2003). The court's
inherent authority to sanction arises when a party
“abuses the process at a level that is utterly
inconsistent with the orderly administration of justice or
undermines the integrity of the process.” Shaffer
Equip. Co., 11 F.3d at 462. Pursuant to their inherent
authority, courts “may issue orders, punish for
contempt, vacate judgments obtained by fraud, conduct
investigations as necessary to exercise the power, bar
persons from the courtroom, assess attorney's fees, and
dismiss actions.” Id. at 461-62. They may
enforce “the observance of order, ” such as by
imposing fines or prison sentences for contempt.
Hudson, 11 U.S. (7 Cranch) at 34.
sanctions may be civil or criminal. Buffington v. Balt.
Cnty., 913 F.2d 113, 133-34 (4th Cir. 1990). It is civil
contempt “[w]hen the nature of the relief and the
purpose for which the contempt sanction is imposed is
remedial and intended to coerce the contemnor into compliance
with court orders, ” rather than to “vindicate
the authority of the court.” Victor
Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D.
497, 537 (D. Md. 2010). A fine is remedial when paid to the
opposing party, rather than to the court, although a fine
“payable to the court is also remedial when the
defendant can avoid paying the fine simply by performing the
affirmative act required by the court's order.”
Id. (quoting Buffington, 913 F.2d at
To establish civil contempt, each of the following elements
must be shown by clear and convincing evidence:
(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