Levine v. Comcoa Ltd.

HILL, Senior Circuit Judge, concurring, dubitante:
The court today affirms contempt sanctions against a lawyer
for doing what he knew the judge had ordered him not to do. I am
not attracted to this lawyer's conduct. The problem arose,
however, because the party who petitioned for and obtained the TRO
stood silent while the order inadvertently expired without
counselling the court of the requirements for its extension. One
would expect more from the agency appearing here. It has obtained
temporary restraint before.1 I am not pleased with the performance
of any of our cast of characters.
An ex parte temporary restraining order is an extreme remedy
to be used only with the utmost caution. Rule 65(b) of the Federal
Rules of Civil Procedure imposes strict restrictions on its scope
and specific time constraints for its duration:
Every temporary restraining order granted without notice
. . . shall expire by its terms within such time after
entry, not to exceed 10 days, as the court fixes, unless
within the time so fixed the order, for good cause shown,
is extended for a like period or unless the party against
whom the order is directed consents that it may be
extended for a longer period.2
Fed. R. Civ. P. 65(b).
1
An electronic search using only the words "Securities and
Exchange Commission" and "temporary restraining order" or "TRO"
yielded 11,541 cases. We are not suggesting that all these cases
are similar to the instant situation, nor are we implying we have
read each case. We would suggest that counsel representing the SEC
are likely to have explored the requirements for effective
extension of TROs from time to time.
2
The district court found that Grossman consented to the
extension of the TRO. The majority opinion, however, accepts
without comment Grossman's contention that he did not. I concur in
this conclusion and note that, if Grossman had consented to the
extension, the TRO would have remained an unappealable
interlocutory order. Fernandez-Roque v. Smith, 671 F.2d 426, 430
(11th Cir. 1982).
The importance of these restrictions was emphasized by the
Supreme Court in Granny Goose Foods, Inc. v. Brotherhood of
Teamsters & Auto Truck Drivers, Local No. 70, 415 U.S. 423 (1974).
In Granny Goose, a state court issued a temporary restraining order
to enjoin the local union from striking. Two days later, the case
was removed to federal court. The union moved to dissolve the
restraining order. After a hearing, the court denied the union's
motion. The union went on strike some months later. The district
court held the union in contempt for violating the TRO. The Ninth
Circuit reversed, and the Supreme Court affirmed the appellate
court.
The Court held that the union violated no order when it
resumed its strike because no order was in effect at that time.
The Court rejected the employer's argument that the district
court's hearing on the union's motion to dissolve the restraining
order was a hearing on a preliminary injunction, or that its order
denying the motion should be construed as a grant of a preliminary
injunction. Regardless of the district court's intent in the
hearing, the TRO did not survive the expiration of the Rule 65(b)
time limits because the district court did not follow the
appropriate procedure. The Supreme Court held:
Where a hearing on a preliminary injunction
has been held after issuance of a temporary
restraining order, and where the District
Court decides to grant the preliminary
injunction, the appropriate procedure is not
simply to continue in effect the temporary
restraining order, but rather to issue a
preliminary injunction, accompanied by the
necessary findings of fact and conclusions of
law.
2
415 U.S. at 443 (emphasis added); see also Hudson v. Barr, 3 F.3d
970, 975 (6th Cir. 1993) (indefinite continuation of TRO held
improper; government's consent to TRO, pending hearing on motion
for preliminary injunction, ended on day hearing was supposed to
occur); Fed. R. Civ. P. 52(a) (" . . . and in granting or refusing
interlocutory injunctions the court shall similarly set forth the
findings of fact and conclusions of law which constitute the
grounds of its action.").
Our panel's opinion today purports to accept Granny Goose but
characterizes its holding as ". . . where there has been no notice
to the parties and no hearing on the various factors involved in
considering a preliminary injunction, a TRO continued past the Rule
65 limit falls of its own weight." This interpretation reads out
of Rule 65(b) any requirement for consent to validate any extension
of a TRO beyond the twenty-day limit. See Connell v. Dulien Steel
Products, Inc., 240 F.2d 414, 417 (5th Cir. 1957). Under the
Rules, it is not just notice and a hearing that allows a TRO to
become a preliminary injunction, but findings of fact and
conclusions of law which adjudicate the property right involved
thereby satisfying due process.
Granny Goose also emphasizes the safeguards built into Rule 65
to prevent the serious penalties imposed when one is found to be in
contempt for violating court injunctions:
[O]ne basic principle built into Rule 65 is that those
against whom an injunction is issued should receive fair
and precisely drawn notice of what the injunction
actually prohibits.
* * * *
3
It would be inconsistent with this basic principle to
countenance procedures whereby parties against whom an
injunction is directed are left to guess about its
intended duration. Rule 65(b) provides that temporary
restraining orders expire by their own terms within 10
days of their issuance. Where a court intends to
supplant such an order with a preliminary injunction of
unlimited duration pending a final decision on the merits
or further order of the court, it should issue an order
clearly saying so. And where it has not done so, party
a
against whom a temporary restraining order has issued may
reasonably assume that the order has expired within the
time limits imposed by Rule 65(b).
415 U.S. at 444-45 (emphasis added)(footnote omitted).
No case is cited to us in which the imposition of contempt for
violation of an indefinitely-extended TRO has been upheld.
Nevertheless, we hold today that "[f]or Grossman just to disregard
the district court's order based on his personal belief that it was
invalid, is conduct that warrants a determination of contempt." I
do not concur in this, but I do not view it as a basis for the
judgment. The opinion seems to say that, notwithstanding Granny
Goose, it was not "reasonable" for Grossman to assume that the TRO
had expired as Rule 65(b) prescribes.3
3
I believe that this conclusion denies Grossman the benefit
of that to which he is entitled under Granny Goose. Rule 65(b) is
clear that no TRO may be extended beyond the twenty days without
the consent of the party restrained. On May 27, 1994, after the
expiration of twenty calendar days, Grossman requested the return
of some of his client's funds from the Receiver who had custody of
them. The Receiver disagreed about the calculation of time,
stating that the time would expire on June 1. On June 3, Grossman
inquired of the district court whether a preliminary injunction had
issued. The staff advised that no order had been issued. On June
6, Grossman again inquired of the Clerk of Court and of the
district court's chambers whether any injunction had issued.
Informed that no order had issued nor was any order forthcoming,
Grossman transferred his client's retainer from a trust fund to
Grossman's law firm operating account in partial payment of his
fees. As far as the record reveals, Grossman did what Rule 65(b)
permitted him to do, and as his client instructed him to do with
4
This holding is based upon Sampson v. Murray , 415 U.S. 61
(1974). In Sampson, a government employee sought a temporary
injunction against her dismissal from employment as a probationary
employee. The district court granted a temporary restraining
order. Later, after an adversary hearing at which the government
declined to produce the discharging official as a witness to
testify as to the reasons for the dismissal, the district court
ordered the temporary restraint continued until the witness
appeared. In considering the issue of appellate jurisdiction over
the order the Supreme Court wrote:
A district court, if it were able to shield its orders
from appellate review merely by designating them as
temporary restraining orders, rather than as preliminary
injunctions would have virtually unlimited authority over
the parties in an injunctive proceeding. In this case,
where an adversary hearing has been held, and the court's
basis for issuing the order strongly challenged,
classification of the potentially unlimited order as a
temporary restraining order seems particularly
unjustified. Therefore, we view the order at issue here
as a preliminary injunction.
Id. at 87-88.
An order extending a TRO beyond the statutory twenty-day
limit, therefore, is treated as a preliminary injunction. One
might well conclude that the conversion of an indefinitely-extended
TRO into a preliminary injunction would be for purposes of appeal
only, conferring jurisdiction on the court of appeals for the sole
purpose of voiding the invalidly extended TRO.4
the client's funds.
4
As noted earlier, until today there has never been a case
affirming sanctions for contempt for violation of an
indefinitely-extended TRO.
5
This was exactly the approach of the Court of Appeals for the
District of Columbia Circuit in National Mediation Bd. v. Air Line
Pilots Association, Int., 323 F.2d 305 (D.C. Cir. 1963). In that
pre-Sampson case, the Court of Appeals held that an order extending
a TRO beyond the twenty days allowed by Rule 65(b) is tantamount to
the grant of a preliminary injunction, thus conferring jurisdiction
on the court of appeals. The court further held, however, that
since the restraining order was not supported by findings of fact
and conclusions of law as required by Rule 55(a), it was not a
valid preliminary injunction and remanded the case to the district
court with directions to dissolve the void order. Id. at 305-06.5
This result was later endorsed by Justice Marshall in his
dissent in Sampson. In Sampson, the Supreme Court went beyond the
mere exercise of appellate jurisdiction and considered the merits
of the application for a preliminary injunction. This appeared to
be a significant extension to Justice Marshall who wrote:
It is suggested that if an indefinitely extended
temporary restraining order remained unappealable, the
District Court would have virtually unlimited authority
5
An earlier approach adopted by two circuits upon finding
that temporary restraining orders had expired by virtue of the Rule
65(b) limitations, was to hold that there was no existing order to
review and dismiss the appeals as moot. Benitez v. Anciani, 127
F.2d 121 (1st Cir. 1942), cert. denied, 317 U.S. 699 (1943) and
Southard & Co. v. Salinger, 117 F.2d 194 (7th Cir. 1941).
Subsequent courts have distinguished these cases where, as here, a
district court has ordered an indefinite extension of the TRO. See
Pan American World Airways, Inc. v. Flight Engineers' Int'l Ass'n,
306 F.2d 840, 842 (2d Cir. 1962)
("In the present case, because the district judge extended the
order beyond the twenty day period, we consider that the temporary
restraining order became an appealable preliminary injunction.").
6
over the parties in an injunctive action. At the outset,
this cannot justify this Court's reaching the merits of
Mrs. Murray's claim for a preliminary injunction. Even
if the order entered by the District Court is appealable,
it should be appealable only for the purposes of holding
it invalid for failure to comply with Rule 52(a). This
was the precise course taken by the Court of Appeals for
the District of Columbia Circuit in National Mediation
Board, supra, on which the majority relies.
* * * *
Here, instead, we find the Supreme Court determining
that although the District Court had jurisdiction to
grant injunctive relief, the equities of Mrs. Murray's
case did not support a preliminary injunction, when
neither the District Court nor the Court of Appeals has
yet confronted the latter issue. I do not believe this
makes for sound law.
Sampson, 415 U.S. at 957 (footnote omitted).
I recognize that this reasoning was rejected by the Court in
Sampson. Justice Rehnquist, for the Court, wrote:
Our Brother Marshall, in his dissenting opinion,
nevertheless suggests that a district court can totally
or partially impede review of an indefinite injunctive
order by failing to make any findings of fact or
conclusions of law. It would seem to be a consequence of
this reasoning that an order which neglects to comply
with one rule may be saved from the normal appellate
review by its failure to comply with still another rule.
We do not find this logic convincing. Admittedly, the
District Court did not comply with Fed. Rule Civ. Proc.
52(a), but we do not think that we are thereby foreclosed
from examining the record to determine if sufficient
allegations or sufficient evidence supports the issuance
of injunctive relief.
Id. at 951 n. 58.
By reviewing the merits, the Supreme Court appears to have
held that the TRO cum preliminary injunction is a valid restraining
order. Otherwise, the review on the merits would be a mere
7
intellectual exercise which the Court is not wont to do.6 So, I am
instructed by the Court that the indefinite extension of a TRO not
only transforms the TRO into a preliminary injunction for purposes
of appeal, but also into a valid injunction.7
Clearly, some problems emerge. We uphold the contempt imposed
for violation of an expired TRO in this case at the expense of
making unclear the duration of emergency orders that deprive a
party of the free use of his or her property. This is not
appealing in a free society. Furthermore, we eviscerate the
protection afforded by Rule 65(b). If a TRO can metamorphose into
a preliminary injunction by the expiration of the very time limits
imposed as safeguards against the indefinite restraint over one's
6
Upon review of the merits, the Court analyzed whether
petitioner had adequately demonstrated the irreparable harm
necessary to secure injunctive relief, concluded that she had not
done so. Therefore, although valid, the Court found the TRO
unlawful in that it was incorrectly granted. The Court reversed
the decision of the court of appeals which had upheld the district
court's grant of the TRO.
7
This determination is part of what is required in order for
this court to uphold the contempt imposed upon Grossman in this
case. Unlike criminal contempt, civil contempt may be upheld only
if the disobeyed order was valid and lawful. Smith v. Sullivan,
611 F.2d 1050, 1052-54 (5th Cir. 1980).
Having been persuaded that the indefinitely extended TRO
becomes a valid preliminary injunction, the second step would be to
consider the injunction on the merits to determine whether it was
granted according to law, i.e., whether the applicant demonstrated
the requisite irreparable harm and inadequate legal remedies.
In this case, however, Grossman does not appear to challenge
the injunction on its merits, choosing to argue only that the TRO
was void after the expiration of the statutory time limits.
Therefore, my inquiry is limited to the validity of the order
disobeyed.
8
property, then Rule 65(b) provides no protection at all.8 As the
Second Circuit has observed:
It is because the remedy is so drastic and may have such
adverse consequences that the authority to issue
temporary restraining orders is carefully hedged in Rule
65(b) by protective provisions. And the most important
of these protective provisions is the limitation on the
time during which such an order can continue to be
effective.
Pan American World Airways, Inc. v. Flight Engineers' Int'l Ass'n,
306 F.2d 840, 843 (2d Cir. 1962) (holding, however, that a TRO
indefinitely extended by a district court becomes a preliminary
injunction so that it may be reviewed).
I confess to a temptation to conclude that Sampson is
overruled by Granny Goose, or that, at least, because the restraint
imposed in Sampson was found to be unlawful, the implications from
the merits review are dicta. I do not undertake, however, to limit
Supreme Court precedent. If our reading of Sampson is correct, it
requires that, for the first time, we affirm a contempt imposed for
violating a TRO extended beyond the statute's limit.
Not without doubt as to this conclusion, I CONCUR.
8
This approach does, however, have the virtue of easing the
burden on over-worked district judges. It appears that now they
may avoid the time-consuming chore of finding facts and making
conclusions of law, and simply allow the passage of time to
accomplish what many cases say they may not do--turn a TRO into a
preliminary injunction without going to this trouble.
9