United States District Court, D. Maryland
VICTOR STANLEY, INC. Plaintiff
CREATIVE PIPE, INC., et al. Defendants
MEMORANDUM AND ORDER RE: SANCTIONS/CONTEMPT
J. Garbis United States District Judge.
Court has before it the Certification of Civil Contempt [ECF
No. 733] issued by Magistrate Judge Sullivan and the
materials submitted relating thereto.
Court has held a hearing, heard evidence and had the benefit
of the arguments of counsel. The Court has made its factual
findings set forth herein based on its evaluation of the
evidence and the reasonable inferences drawn therefrom.
Victor Stanley Inc. (“VSI”) has, since 1962, been
manufacturing and selling site furnishings with a reputation
for producing high quality merchandize. Beginning in or about
2004, Defendant Mark Pappas (“Pappas”) and his
company, Defendant Creative Pipe, Inc. (“CPI”)
competed with VSI, producing and selling similar (sometimes
identical) products under the trade name
“Fuvista.” In 2006, VSI filed the instant law suit,
asserting various claims against Pappas and CPI that were
ultimately “boiled down” to claims based upon
copyright infringement, unfair competition, false
advertising, and design patent infringement.
course of litigating the instant case, Defendants Pappas and
CPI engaged in a massive degree of spoliation of evidence
detailed in Victor Stanley, Inc. v. Creative Pipe,
Inc., 269 F.R.D. 497 (D. Md. 2010). As stated
Through four years of discovery, during which Defendant Mark
Pappas, President of Defendant CPI, had actual knowledge of
his duty to preserve relevant information, Defendants delayed
their electronically stored information (“ESI”)
production; deleted, destroyed, and otherwise failed to
preserve evidence; and repeatedly misrepresented the
completeness of their discovery production to opposing
counsel and the Court.
Id. at 499-500.
Memorandum, Order and Recommendation [ECF No. 377),
then-Magistrate Judge Grimm recommended that Defendants be
ordered to pay monetary sanctions equivalent to
attorneys' fees and costs caused by Defendants'
spoliation. By the Order Re: Sanctions Motion [ECF No. 381],
the Court adopted the decision, awarding VSI attorneys'
fees and costs in an amount to be determined and a default
judgment as to liability on the copyright infringement claim.
In the Memorandum and Order issued January 24, 2011 [ECF No.
448], then-Magistrate Judge Grimm determined the total due
for fees and costs to be $1, 049, 850.04. On June 24, 2011,
the said Memorandum and Order was adopted as the decision of
the Court. Memorandum and Order Re: Sanction Award, ECF No.
February 24, 2011, the Court completed a six-day bench trial
on Plaintiff's claims. On September 30, 2011, the Court
issued the Memorandum of Decision [ECF No. 480], awarding VSI
damages totaling $2, 454, 931.10 with judgment interest and
costs. The Amended and Final Judgment Order [ECF No. 488] was
issued November 4, 2011. On December 30, 2013, the Court
issued the Order Re: Attorney Fees [ECF No. 665] awarding VSI
$748, 334.72 of legal fees and expenses to be paid by
Defendants Pappas and VSI that were included in the
Supplemental Judgment Order [ECF No. 666]. Hence, the total
of damages, costs, legal fees, and sanctions to which
Defendants have been held liable to VSI is in excess of $4,
did not proceed in good faith in regard to their obligations
to VSI. They failed to make the required payments, or any
payments at all, and proceeded to take actions to obstruct
the ability of VSI to effect collection of the judgment
obligations. Their actions led to the issuance of a warrant
to arrest Pappas [ECF No. 521] from which Pappas fled to
Belize. Pappas was arrested in Belize by Belizean police and
was returned to the United States on August 6, 2012. He was
then taken into custody in Houston, Texas by the United
States Marshal and brought to the District of Maryland to
show cause why he and CPI should not be held in contempt for
failure to comply with Court Orders.
August 17, 2012, Pappas was released from custody by this
Court subject to conditions that included a schedule for
Defendants to make certain payments. Order Releasing Mark T.
Pappas With Conditions [ECF No. 563]. Defendants Pappas and
CPI did not comply with the conditions and, on December 19,
2013, were held liable for a further award of attorneys'
fees by virtue of their actions to avoid payment to VSI of
the sanctions award. See Order Re: Attorney Fees
Related to Violations of Sanctions [ECF No. 664].
underlying motions upon which the currently-alleged contempt
is based relate to discovery and payment obligations. These
(1) The February 8, 2012 Order [ECF No. 538] issued by
then-Magistrate Judge Grimm requiring Defendants to produce
“all responsive documents in their possession, custody
or control” in connection with VSI's First Request
for Production of Documents to CPI, and to “answer all
interrogatories completely and not evasively, ”
(2) The November 20, 2014 Order [ECF No. 686] issued by
Magistrate Judge Sullivan requiring Defendants to produce
“full and complete answers to all of the
interrogatories propounded in [VSI's] Third Request for
Production of Documents, ” and
(3) The April 20, 2016 Order [ECF No. 722] of Magistrate
Judge Sullivan requiring Plaintiffs to pay Plaintiff $1, 281,
315.91 by May 23, 2016.
Defendants had not complied with the first two of these
Orders, on February 23, 2015, VSI filed a Motion for
Sanctions and Finding of Contempt for Failure to Comply With
the Court's Orders of February 8, 2012 and November 20,
2014 [ECF No. 687].
April 20, 2016, Magistrate Judge Sullivan issued his
Memorandum Opinion [ECF No. 721] regarding Defendants'
failure to comply and the harm caused to VSI as a result of
the compliance failures. Magistrate Judge Sullivan held that
Defendants had failed to comply with the Orders at issue in
several respects and found that monetary sanctions of $1,
232.993.97, and an award of costs of $48, 321.94, was
appropriate. Memorandum Opinion [ECF No. 721] at 27. The
Magistrate Judge required the total of $1, 281, 315.91 to be
paid by May 23, 2016 and certified as paid by a status report
filed by May 31, 2016. Id. at 28. The Magistrate
Judge stated: “If the parties report that Defendants
have failed to make the required payment in full, the Court
will certify this fact to the district judge in this case for
a civil contempt inquiry pursuant to 28 U.S.C. §
joint status report filed May 23, 2016 [ECF No. 728], the
parties stated that the payments had not been paid and that
the Defendants intended to appeal the Order imposing the
payment obligation [ECF No. 721]. Defendants did not,
however, file an appeal from the Order of April 20, 2016.
24, 2016, VSI filed Plaintiff's Request For Certification
[ECF No. 729] requesting the Magistrate Judge to certify to
the district judge that the Defendants had committed various
acts that constitute civil contempt. See 28 U.S.C.
11, 2016, Magistrate Judge Sullivan issued the Certification
of Civil Contempt [ECF No. 733], stating:
the undersigned finds that civil contempt proceedings are
warranted, and respectfully recommends that Defendants be
directed to appear on a date certain before the Honorable
Marvin J. Garbis, Senior United States District Judge, to
show cause why they should not be found in contempt of Court
for failing to comply with this Court's orders of
February 8, 2012, November 20, 2014, and April 20, 2016.
Id. at 3.
December 20, 2016, the district court issued the Show Cause