Seventh Avenue, Inc. v. Shaf International, Inc.

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 18-1829
SEVENTH AVENUE, INC.,
Plaintiff-Appellee,
v.
SHAF INTERNATIONAL, INC.,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 2:16-cv-325 — Pamela Pepper, Judge.
____________________
ARGUED OCTOBER 29, 2018 — DECIDED NOVEMBER 30, 2018
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Before BAUER, EASTERBROOK, and SCUDDER, Circuit Judges.
SCUDDER, Circuit Judge. We review a district court’s deci-
sion to hold a corporation in contempt of a consent judg-
ment when its outside counsel failed to respond to a motion
alleging a violation of the judgment and to appear at a hear-
ing on the motion. All of this was unfortunate and avoida-
ble—the product of a communication breakdown between
the company’s local counsel and national counsel and a lack
of attention to email notifications from the district court of
2 No. 18-1829
the contempt motion, briefing schedule, and hearing date.
We cannot say the district court abused its discretion in en-
tering the contempt order and requiring the company to pay
its adversary’s fees and costs.
I
The facts are straightforward. Shaf International is a New
Jersey company that sells leather jackets and other apparel.
Seventh Avenue is a Wisconsin-based catalog merchandiser
that sells clothing protected by a trademark. After a dispute
arose over Shaf’s alleged infringement of Seventh Avenue’s
trademark, the parties entered into a consent agreement that
prohibited Shaf from making, selling, or distributing any
infringing goods. Several months later, in January 2017,
Seventh Avenue discovered what it saw as continuing
infringement by Shaf and filed a motion seeking to hold Shaf
in contempt of the consent agreement.
Shaf was represented in the district court by local counsel
from Milwaukee. The attorney received an email notification
(from the district court’s electronic docketing system) of
Seventh Avenue’s motion upon its filing on January 17, 2017.
The notice informed Shaf that its response was due January
24. When Shaf failed to respond, the district court scheduled
a hearing for February 14. But nobody for Shaf showed up at
the hearing. The district court then issued an order granting
Seventh Avenue’s motion, holding Shaf in contempt and re-
quiring the company to pay Seventh Avenue’s fees and costs.
The court also ordered Shaf to explain its unresponsiveness.
The contempt order caught Shaf’s attention and prompt-
ed its local counsel to file a motion to reconsider. Shaf’s
submissions explained that the company failed to respond or
No. 18-1829 3
appear because its local counsel was traveling international-
ly at the time Seventh Avenue filed its motion for contempt.
Even though local counsel returned to work five days before
Shaf’s written response was due and 26 days before the
scheduled hearing, it took him several weeks to catch-up on
his email. He missed seeing the district court’s notices of
Seventh Avenue’s motion and the briefing and hearing
schedule until all response dates had passed. Shaf’s request
for reconsideration also pointed to a communication break-
down between local counsel and the company’s national
trademark counsel. Local counsel believed national counsel
would attend to any ongoing needs in the case; national
counsel apparently had a different understanding; and this
right-hand, left-hand confusion resulted in nobody respond-
ing to the court’s briefing deadline or showing up at the
hearing.
The district court denied the motion to reconsider its pri-
or order. Seventh Avenue’s counsel then supplemented its
original petition for fees to reflect additional expenses asso-
ciated with the contempt proceeding. The district court ulti-
mately awarded Seventh Avenue $34,905 in fees and costs.
The final award reflected downward adjustments the district
court found were warranted based upon its review of the
hours worked by Seventh Avenue’s outside and in-house
counsel.
II
A
We review the district court’s contempt order and related
denial of Shaf’s motion to reconsider only for abuse of dis-
cretion. See Blockowicz v. Williams, 630 F.3d 563, 567 (7th Cir.
4 No. 18-1829
2010) (contempt); Highland Ins. Co. v. Lewis Rail Serv. Co., 10
F.3d 1247, 1249 (7th Cir. 1993) (motion to reconsider). Abuse
of discretion is a highly deferential standard of review and
we will conclude an abuse occurred “only when no reasona-
ble person could take the view adopted by the trial court.”
Lynch v. City of Milwaukee, 747 F.2d 423, 426 (7th Cir. 1984).
The course the district court charted was reasonable in
the circumstances. Presented with a motion alleging that
Shaf had violated the consent agreement, the court sought
Shaf’s response. When Shaf failed to respond, the court
effectively provided a second chance by scheduling a hear-
ing, only then to see nobody show up on the company’s be-
half. The court’s patience ran out and found expression in
the contempt order. It is hard to call the court’s reaction an
abuse of discretion. See United States v. Dowell, 257 F.3d 694,
699 (7th Cir. 2001) (explaining that contempt is an appropri-
ate action when a party “violate[s] an order that sets forth in
specific detail an unequivocal command from the court”).
Shaf posits that its eventual response, albeit delayed,
should relieve it of any contempt sanction. While the de-
layed response was surely better than not responding at all,
the district court acted well within its discretion to find that
Shaf’s initial unresponsiveness warranted a sanction. We al-
so do not see how, as Shaf would have it, the company’s
good faith efforts to avoid infringing on Seventh Avenue’s
trademark should absolve it of the sanction. Shaf could have
put its merits position on the alleged infringement before the
district court by responding timely to Seventh Avenue’s mo-
tion or by attending the scheduled hearing. To these failures,
good faith provides no immunity from sanction. Deadlines
matter. Nor, of course, can communication breakdowns
No. 18-1829 5
serve to exempt outside counsel—or here its client—from
“compliance with the rules, or from the penalties for failing
to do so.” Pretzel & Stouffer, Chartered v. Imperial Adjusters,
Inc., 28 F.3d 42, 45 (7th Cir. 1994).
B
We also see no abuse of discretion in the district court’s
award of fees and costs to Seventh Avenue. On this score, we
are guided by the reality that, “[b]y virtue of its familiarity
with the litigation, the district court certainly is in a better
position than we to determine the number of hours that
were reasonably expended.” McNabola v. Chicago Transit
Auth., 10 F.3d 501, 519 (7th Cir. 1993). After a careful, line-by-
line consideration of Seventh Avenue’s legal bills, the district
court adjusted downward by 11 hours the overall time in-
corporated into the award against Shaf. In doing so, it cred-
ited particular concerns expressed by Shaf in response to
Seventh Avenue’s petition. Specifically, the district court
trimmed seven hours of billed time from Seventh Avenue’s
outside counsel, finding the time redundant of work per-
formed by other attorneys and not necessary to the prosecu-
tion of the alleged trademark infringement. As for Seventh
Avenue’s in-house attorney, the district court, while finding
the overall work necessary and appropriate, determined cer-
tain activities could have been accomplished by a paralegal
and therefore deducted four hours of billed time. We see
nothing unreasonable with these adjustments.
Finally, the district court did not overstep in finding that
the hourly fees charged by Seventh Avenue were reasonable.
To support this finding, the court relied in part on a third-
party declaration from a Wisconsin attorney familiar with
trademark infringement litigation who observed that the
6 No. 18-1829
hourly rates charged by Seventh Avenue’s counsel were
aligned with market rates. See Johnson v. GDF, Inc., 668 F.3d
927, 933 (7th Cir. 2012). It was on this basis and diligence
that the district court entered its award of $34,905 in fees and
costs. None of this rises to the level of an abuse of discretion.
We AFFIRM.