Extending the Injunction Beyond the Defendant

Extending the Injunction:

The issuance of an injunction by a federal court is no small feat, as a Plaintiff must pass an exhaustive four-step test, namely: (1) that the plaintiff has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for the injury; (3) that the remedy in equity is warranted upon consideration of the balance of hardships between the plaintiff and defendant; and (4) that the permanent injunction being sought would not hurt public interest.See Weinberger v. Romero—Barcelo, 456 U.S. 305, 311–313, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982)Amoco Production Co. v. Gambell, 480 U.S. 531, 542, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987).

Yet, litigants who have overcome this hurdle often find that their work is still cut out for them, with defendants inadvertently or intentionally violating the injunctive order, and often in creative ways involving outside actors, newly formed entities, previously unidentified conspirators, etc. Luckily, litigants are not without options to enforce their hard-earned injunction on these bad actors, as “Courts do not sit for the idle ceremony of making orders and pronouncing judgments, the enforcement of which may be flouted, obstructed and violated with impunity, with no power in the tribunal to punish the offender.”Berry v. Midtown Service Corp., 104 F.2d 107, 110 (2d Cir. 1939).

Enter Rule 65(d)(2):

Federal Rule of Civil Procedure 65(d)Federal Rule of Civil Procedure 65(d).is derived from the common-law doctrine that a decree of injunction not only binds the party defendants, but also those identified with them in interest, in “privity” with them, represented by them, or subject to their control. In essence, “defendants may not nullify a decree by carrying out prohibited acts through aiders and abettors, although they were not parties to the original proceeding.”See Waffensckmidt v. Mackay, 763 F.2d at 717; Regal Knitwear Co. v. National Labor Relations Board, 324 U.S. 9, 14 (1945).

Federal Rule of Civil Procedure 65(d)(2) dictates that an injunction binds not only “(A) the parties,” but “(B) the parties’ officers, agents, servants, employees, and attorneys; and (C) other persons who are in active concert or participation with anyone described in Rule 65(d)(2)(A) or (B). Namely, an injunction binds not only parties, but also nonparties who act with the enjoined party.See Fed. R. Civ. P. 65(d); Ex Parte Lennon, 166 U.S. 548, 555 (1897); Waffensckmidt v. MacKay, 763 F.2d 711, 717 (5th Cir. 1985); McGraw-Edison Co. v. Preformed Line Products Co., 362 F.2d 339, 344 (9th Cir. 1966); and Alemite Mfg. Corp. v. Staff, 42 F.2d 832 (2d Cir. 1930).

Rule 65(d)(2) requires, however, that the enjoined individual or entity be given “actual notice of it by personal service or otherwise.” While “actual notice” is required to hold a person in contempt for violation of a Court’s order “plaintiffs are not required to adduce direct evidence that [the contemnor] had actual notice of the Court’s orders,” because “[s]uch proof is often unavailable.”Waffenschmidt, 763 F.2d at 525. As such, tangential showings of notice can suffice; for instance, referencing the Court’s order in pleadings can provide proof of actual notice.Nevada v. U.S. Dep’t of Labor, 321 F. Supp. 3d 709, 716 (E.D. Tex. 2018). Further, nonparties who are aware of a court’s order can still be bound even if they reside outside the court’s territorial jurisdiction and there no other contacts with the forum.See Waffenschmidt, 763 F.2d at 713.

The Court’s injunctive power under Rule 65(d) extends to those in privity with the enjoined party, including that defendant’s successor and assigns.See Bunnett & Co. v. Dores, A-15-CV-1104-LY-AWA, at *11 (W.D. Tex. Mar. 6, 2018); Power-One, Inc. v. Artesyn Techs., Inc., No. 05-CV-463, *10 (E.D. Tex. Apr. 11, 2008). The interpretation of Rule 65(d)(2)(C)’s language of “active concert or participation” has engendered two lines of cases in which parties not named in an injunction are bound thereby. First, an injunction may bind nonparties who are successors in interest to the parties named in the injunction with respect to the subject matter of the injunction.See Golden State Bottling Co., Inc. v. NLRB, 414 U.S. 168, 179-80 (1973). Second, parties otherwise outside an injunction’s coverage may subject themselves to its proscriptions should they aid or abet the named parties in a concerted attempt to subvert those proscriptions.See Regal Knitwear, 324 U.S. at 14; Chase Nat’l Bank v. City of Norwalk, 291 U.S. 431, 436-37 (1934); Alemite, 42 F.2d at 832-33; Waffenschmidt, 763 F.2d at 717. Attorneys would be wise to heed this rule, as they can be held liable for actions they committed on behalf of their clients which violated an injunction. These rules may also apply in somewhat hybrid fashion in a case where a successor corporation is formed essentially for the purpose of carrying on the enjoined activity.See Panthers Pumps Equip v. Hydrocraft, Inc., 566 F.2d 8, 24-25 (7th Cir. 1977), cert. denied, 435 U.S. 1013 (1978).

Courts have repeatedly ruled that interpretations of the “active concert or participation” language of Rule 65(d) “recognize that the objectives of an injunction may be thwarted by the conduct of the parties not specifically named in its text. The scope of the injunction has no rigid perimeter, and a court may modify an injunction to adapt to changed circumstances.”United States v. Swift Co., 286 U.S. 106, 114 (1932). See also Rockwell Graphic Systems, Inc. v. Dev Industries, Inc., 91 F.3d 914, 920 (7th Cir. 1996). The Supreme Court has held this is still the case when the injunction is entered by consent.See Swift, 286 U.S. at 114. In sum, a district court has considerable latitude in how it goes about enforcing its own decrees in a contempt proceeding. Where the Court is obligated to resolve material issues of fact raised by the party seeking a finding of contempt, an evidentiary hearing may be the appropriate mechanism for accomplishing this task.

Endnotes