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Sony/ATV Music Publishing LLC v. 172902 Ontario, Inc.

United States District Court, M.D. Tennessee, Nashville Division

December 22, 2016

SONY/ATV MUSIC PUBLISHING LLC, et al., Plaintiffs,
v.
1729172 ONTARIO, INC., et al., Defendants.

          Holmes, Magistrate Judge

          MEMORANDUM AND ORDER FOR CONTEMPT AND SANCTIONS AGAINST DEFENDANTS 1729172 ONTARIO, INC. AND GAI MARCOS

          KEVIN H. SHARP, UNITED STATES DISTRICT JUDGE.

         Plaintiffs filed a Motion for Order to Show Cause Why Defendants Should Not Be Held in Contempt and for Modification of the Order Granting Preliminary Injunction. (Docket No. 309). The Court will rule on Plaintiffs' Motion in a two-step process. This Memorandum and Order concerns finding 1729172 Ontario, Inc. and Gai Marcos (collectively, the “TriceraSoft Defendants”) in civil contempt for having violated the Preliminary Injunction (“Injunction”). A ruling on Plaintiffs' request to modify the Injunction is forthcoming.

         Having conducted a show-cause hearing on December 8, 2016, the Court finds and orders as follows:

         I. Procedural History

         On October 1, 2014, Plaintiffs filed this action against the TriceraSoft Defendants alleging copyright infringement and requesting injunctive relief. (Docket No. 1). Plaintiffs also filed their Application for Temporary Restraining Order and Preliminary Injunction. (Docket No. 2). On September 25, 2015, this Court entered an Order Granting Preliminary Injunction against the TriceraSoft Defendants, enjoining them from exploiting Plaintiffs' copyrighted compositions and requiring numerous affirmative acts on the part of the TriceraSoft Defendants to demonstrate compliance. (Docket No. 254).[1] The Tricerasoft Defendants appealed the Injunction, and the Injunction was affirmed in its entirety by the United States Court of Appeals for the Sixth Circuit. (Docket No. 430).

         On December 9, 2015, Plaintiffs filed a Motion for Order to Show Cause Why Defendants Should Not Be Held in Contempt and for Modification of the Order Granting Preliminary Injunction. (Docket No. 309). The TriceraSoft Defendants opposed that motion. The Court conducted a hearing on September 13, 2016, at which time the Court concluded that sufficient evidence existed in the record to require the TriceraSoft Defendants to appear and show cause why they should not be found in contempt of the Injunction. (Docket No. 506 at 21; Tr. 21:2-4).

         The TriceraSoft Defendants objected to moving forward with the hearing for a variety of reasons, one of which was their objection to the Court's proceeding with a show-cause hearing without first conducting a separate hearing on the Motion for Order to Show Cause. (Docket No. 544 at 5). Although the Court believed that it had sufficiently heard and ruled on the motion to show cause, in order to resolve that objection, during a phone conference on November 16, 2016 with the Court and all counsel (including the Tricerasoft Defendants' counsel), the Court scheduled another hearing on Plaintiffs' Motion for Order to Show Cause for December 5, 2016. (Docket No. 551). The Court then conducted the additional hearing as scheduled.

         Although the Court granted Defendant Marcos's request to appear at the December 5, 2016 hearing by telephone and supplied a telephone number for him to call, (Docket No. 587), Defendant Marcos failed to call the number supplied by the Court. Defendant 1729172 Ontario, Inc., also failed to appear. The Court waited an additional half hour past the appointed time in case Defendants were simply running late.

         The Court found that Plaintiffs had established that the TriceraSoft Defendants would be in violation of the Injunction if the credible declarations submitted in support of Plaintiffs' Motion for Order to Show Cause were accurate. The Court then ordered the TriceraSoft Defendants to appear on December 8, 2016 to show cause why they should not be held in contempt for violating the Injunction. (Docket No. 590).

         II. Finding Defendants in Contempt and Imposing Sanctions

         A. Legal Standard

         “[A]ll orders and judgments of courts must be complied with promptly[, ]” and failure to do so can result in a finding of contempt. Maness v. Meyers, 419 U.S. 449, 458 (1975). “[C]ourts have inherent power to enforce compliance with their lawful orders through civil contempt.” Shillitani v. United States, 384 U.S. 364, 370 (1966) (citing United States v. United Mine Workers of Am., 330 U.S. 258, 330-32 (1947)). “Although civil contempt may serve incidentally to vindicate the court's authority, its primary purposes are to compel obedience to a court order and compensate for injuries caused by noncompliance.” TWM Mfg. Co. v. Dura Corp., 722 F.2d 1261, 1273 (6th Cir. 1983) (citing McCrone v. United States, 307 U.S. 61, 64 (1939)). “The contemnor is not simply being punished for past behavior, but rather encouraged to shape its behavior to comply with the order based on the undesirability of suffering the sanction.” MGE UPS Sys., Inc. v. Titan Specialized Servs., Inc., No. 3:04-0231, 2006 WL 3524502, at *12 (M.D. Tenn. Dec. 6, 2006) (citation omitted).

         “[W]here the purpose is to make the defendant comply, the court[] . . . consider[s] the character and magnitude of the harm threatened by continued contumacy, and the probable effectiveness of any suggested sanction in bringing about the result desired.” United Mine Workers of Am., 330 U.S. at 304. “[A] court which has returned a conviction for contempt must, in fixing the amount of a fine to be imposed . . . as a means of securing future compliance, consider ...


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