ClearOne v. Chiang ( 2021 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT July 9, 2021
_________________________________
Christopher M. Wolpert
Clerk of Court
CLEARONE, INC., formerly ClearOne
Communications, Inc., a Utah corporation,
Plaintiff - Appellee,
v. Nos. 20-4105 & 20-4108
(D.C. No. 2:07-CV-00037-DN)
ANDREW CHIANG, an individual; (D. Utah)
JUN YANG, an individual; WIDEBAND
SOLUTIONS, a Massachusetts
corporation; BIAMP SYSTEMS,
an Oregon corporation; LONNY
BOWERS, an individual; VERSATILE
DSP, a Massachusetts corporation,
Defendants.
------------------------------
DONALD BOWERS,
Interested Party - Appellant,
DialHD,
Interested Party,
and
DAVID SULLIVAN,
Intervenor.
_________________________________
ORDER AND JUDGMENT*
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
_________________________________
Before TYMKOVICH, Chief Judge, BRISCOE and BACHARACH, Circuit Judges.
_________________________________
Donald Bowers appeals the district court’s renewal of a judgment against him
(No. 20-4105), and, through a separate notice of appeal, a district court order
compelling him to produce postjudgment discovery (No. 20-4108). We consolidated
these appeals for procedural purposes. We affirm the renewal of judgment and
dismiss Bowers’s challenge to the postjudgment discovery order for lack of
jurisdiction.
I. APPEAL NO. 20-4108
The background required to understand No. 20-4108 sets the stage for No.
20-4105, so we will address No. 20-4108 first.
A. Background & Procedural History
1. Early Proceedings & Bowers’s Contempt
Appellee ClearOne, Inc., is a Utah company in the business of tele- and
videoconferencing technology. The origins of its dispute with Bowers reach back to
the year 2000, when ClearOne purchased the assets of a Massachusetts company
developing similar technology. Some of the Massachusetts company’s principals and
engineers went on to form a new company to compete with ClearOne using assets
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
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they had sold to ClearOne, leading to a trade-secret lawsuit filed in Utah (and
removed to Utah federal district court) in 2007. The case went to trial the next year
and a jury found for ClearOne, awarding substantial damages. The district court then
permanently enjoined the defendants from the infringing conduct. We affirmed in all
respects. See ClearOne Commc’ns, Inc. v. Bowers, 643 F.3d 735 (10th Cir. 2011).
The “Bowers” named in ClearOne’s original lawsuit was Lonny Bowers, son
of the appellant here, Donald Bowers. ClearOne eventually discovered that Donald
Bowers was helping some of the named defendants to continue profiting from
ClearOne’s trade secrets. After various orders to show cause and associated
hearings, the district court expanded the permanent injunction to include Donald
Bowers, found him (and other defendants) in contempt, ordered him to pay
ClearOne’s attorneys’ fees incurred in pursuing contempt proceedings, required him
to demonstrate that he had purged himself of the contempt by a date certain, and
threatened incarceration as a punishment for failure to do so. When he did not timely
demonstrate that he had purged the contempt, the district court issued a bench
warrant for his arrest, leading to another appeal. We again affirmed in all respects.
See ClearOne Commc’ns, Inc. v. Bowers, 651 F.3d 1200 (10th Cir. 2011).
Meanwhile, Bowers managed to avoid arrest for a few years on his civil
contempt warrant because he lives in Georgia and the Federal Rules of Civil
Procedure generally do not allow civil contempt orders in diversity-jurisdiction cases
to be served outside of the state where issued. See Fed. R. Civ. P. 4.1(b). But the
United States eventually brought a criminal contempt prosecution and arrested
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Bowers on that charge in Georgia in 2013. He was convicted, served a prison
sentence, served additional time under the civil contempt warrant, and was finally
released in 2017 on condition that he submit to the District of Utah’s civil contempt
jurisdiction regardless of his residence. His release conditions further stated that he
“shall provide information about his financial status and until the judgments are
satisfied,” “shall respond to any written discovery or sit for a deposition as to his
financial condition at any time, and at ClearOne’s discretion,” and “shall not shield
or hide his income from ClearOne, or create any entities to avoid ClearOne’s
collection efforts.” R. at 430, ¶ 5. “Any violations of these listed conditions may
result in further contempt proceedings and incarceration.” R. at 431, ¶ 6.
2. Discovery Requests
The events leading to this most recent appeal began with an October 2019
letter from ClearOne to Bowers requesting that Bowers disclose, among other things,
documents showing all sources of income for himself and his wife. Bowers
responded with a letter of his own asserting that he had discharged his obligations to
ClearOne, or, if he had not, then any further collection proceedings must take place
in Georgia.
Given Bowers’s response letter, ClearOne moved for an order to show cause
why he should not be held in contempt of his release conditions. Bowers opposed,
but separately filed a notice with the district court stating that he had now answered
ClearOne’s discovery requests and produced everything in his power to produce. He
further stated that his only income was his Social Security benefit.
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The district court held a hearing during which ClearOne withdrew its motion
in light of Bowers’s recent production. ClearOne instead requested that the district
court admonish Bowers. The district court ordered ClearOne to submit a
supplemental brief about that request.
ClearOne submitted a supplemental brief with a proposed order, which the
district court adopted. The order is captioned an “order of admonishment,” R. at 656
(capitalization normalized), and affirms that Bowers’s civil release conditions (such
as cooperating with ClearOne’s discovery requests) remain in force until the
judgments against him expire or are satisfied. It also warns that “if [Bowers]
commits any future violations of the orders of this Court, he may be found in
contempt and incarcerated, and the Court may refer any future misconduct or
contempt to the United States Attorney for criminal prosecution.” R. at 660, ¶ 18
(emphasis omitted).
The final paragraph of the admonishment order departs from general
admonishment and compels certain discovery: “[T]he Court orders Donald Bowers to
produce to ClearOne all statements from January 1, 2017, to the present, for any
account into which any of his social security benefits have been deposited from
January 1, 2017, to the present.” Id. ¶ 19 (emphasis omitted). A footnote explains
that, despite Bowers’s claim that his Social Security benefit is his only income, “he
has not provided statements for the account(s) into which his social security benefits
are deposited.” Id. ¶ 19 n.14.
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Bowers timely appealed from this order. He also sought a stay pending appeal
from the district court, asserting that his Social Security benefit is deposited into his
wife’s bank account, which “is not a joint account,” and he “does not have, and never
had, access to [that] account.” Suppl. R. at 92. The district court denied the motion,
reasoning as follows:
Bowers asserts that he is threatened with irreparable harm
in being ordered to produce, under threat of incarceration,
banking records belonging to a third party. That is true.
But Bowers represents that he has placed his only asset
(Social Security funds) in the account of a third party, so it
is not unreasonable to require him to produce the records
associated with that account, particularly since the third
party is his wife.
Id. at 98.
B. Analysis
Bowers argues that the admonishment order contains numerous flaws,
including its requirement that he produce records to which (he says) he does not have
access. ClearOne asserts, however, that this court does not have jurisdiction to
review that order because the district court has not held Bowers in contempt for
disobeying.
The admonishment order is, in effect, an order compelling postjudgment
discovery under Federal Rule of Civil Procedure 69(a)(2). Our circuit has no
published authority answering whether the compelled party may immediately appeal
such an order. The consensus among our sister circuits is that the order is not
appealable until the district court finds the compelled party in contempt for
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disobedience. See Cent. States, Se. & Sw. Areas Pension Fund v. Express Freight
Lines, Inc., 971 F.2d 5, 6 (7th Cir. 1992); Richmark Corp. v. Timber Falling
Consultants, Inc., 937 F.2d 1444, 1449 (9th Cir. 1991); Rouse Constr. Int’l, Inc. v.
Rouse Constr. Corp., 680 F.2d 743, 745–46 (11th Cir. 1982); Childs v. Kaplan,
467 F.2d 628, 629–30 (8th Cir. 1972); United States v. Fabric Garment Co., 383 F.2d
984, 984 (2d Cir. 1967). These decisions persuade us, so we agree with ClearOne
that we lack jurisdiction over Bowers’s appeal of the admonishment order.
Bowers counters, however, that the admonishment order might as well be a
contempt order because it “is simply a trap for contempt awaiting failure of an
impossible task.” Aplt. Reply Br. at 5. It is not clear this changes the jurisdictional
calculus. Regardless, “[a] district court has broad discretion in using its contempt
power to require adherence to court orders.” United States v. Riewe, 676 F.2d 418,
421 (10th Cir. 1982). We will not assume ex ante that the district court will exercise
that broad discretion in any particular manner.
Bowers offers us no other jurisdictional basis for his attacks on the
admonishment order. Accordingly, we dismiss No. 20-4108 for lack of jurisdiction.
II. APPEAL NO. 20-4105
As the parties litigated the issues leading to the admonishment order, they
simultaneously litigated a separate matter regarding renewal of judgment. That
matter is before us in No. 20-4105.
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A. Background & Procedural History
As noted above, the district court entered judgment against Bowers to
compensate ClearOne for the attorneys’ fees it incurred in contempt proceedings.
The district court entered that judgment on April 21, 2010, and awarded ClearOne
approximately $57,000. Bowers appealed the April 2010 judgment and we affirmed.
See ClearOne, 643 F.3d at 778–81.
On December 8, 2011, the district court entered judgment for additional
contempt-related fees. The December 2011 judgment awarded ClearOne $22,743.88
against Bowers individually and $184,506.52 against Bowers and his co-contemnors
jointly and severally. Bowers appealed the judgment and we also affirmed. See
ClearOne Commc’ns, Inc. v. Bowers, 509 F. App’x 798, 803 (10th Cir. 2013).
In Utah, money judgments generally remain enforceable for eight years. Utah
Code Ann. § 78B-5-202(1); see also Fed. R. Civ. P. 69(a)(1) (“The procedure on
execution [of a money judgment]—and in proceedings supplementary to and in aid of
judgment or execution—must accord with the procedure of the state where the court
is located . . . .”). But Utah law also allows a judgment to be renewed for eight more
years if the judgment creditor files a motion to that effect before the original eight
years expires. See Utah Code Ann. §§ 78B-6-1802(2), 78B-6-1804.
Apparently ClearOne let its April 2010 judgment expire. But shortly before
the eight-year anniversary of its December 2011 judgment, ClearOne moved for an
additional eight years on that judgment. The renewal motion included a description
of moneys recovered so far on its various judgments, not just the December 2011
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judgment. As relevant to the arguments we must address below, ClearOne
represented as follows:
1. In February 2012, it settled with defendant Andrew Chiang for less than
the total of the individual judgments against him, so no amount of that
settlement had been applied to any joint and several judgment.
2. In April 2012, it received $6,095.30 from the bankruptcy trustee in a
bankruptcy matter Bowers filed in the middle of contempt proceedings.
ClearOne applied that amount to the April 2010 judgment.
3. Between April 2018 and August 2019, it received various smaller
payments from Bowers personally, totaling $1,400. It applied those
payments to the portion of the December 2011 judgment running against
Bowers individually.
4. No payment had been made on the joint and several portion of the
December 2011 judgment.
ClearOne accordingly requested that the renewed December 2011 judgment subtract
$1,400 from the individual award against Bowers, and that the joint and several
award be renewed in full against all co-contemnors except Chiang (given his
settlement).
Over Bowers’s opposition, the district court granted ClearOne’s motion and
renewed the judgment on the terms requested. Bowers filed a Federal Rule of Civil
Procedure 59(e) motion to reconsider. The district court denied that motion, and
Bowers filed a notice of appeal.
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B. Analysis
1. Joint and Several Liability vs. Proportionate Fault
Bowers asserts that Utah has abolished joint and several liability and now
requires proportionate fault, so the joint and several portion of the renewed judgment
must be vacated and apportioned among Bowers and his co-contemnors. We rejected
this argument in Bowers’s original appeal from the December 2011 judgment: “Utah
law does not apply—the contempt award was grounded in the district court’s inherent
power to enforce its orders, not in Utah law.” ClearOne, 509 F. App’x at 803. The
district court did not err in rejecting this argument again. Indeed, it would have been
error to rule otherwise. See Huffman v. Saul Holdings Ltd. P’ship, 262 F.3d 1128,
1132 (10th Cir. 2001) (“[T]he mandate rule[] provides that a district court must
comply strictly with the mandate rendered by the reviewing court.” (internal
quotation marks omitted)).
2. Credit for Amounts Recovered
Bowers argues that, in at least two instances, ClearOne misapplied amounts it
had recovered from him.
First, as to the $6,095.30 ClearOne recovered from Bowers’s bankruptcy
proceeding, Bowers insists that ClearOne should have applied only 21% of it to the
April 2010 judgment, with the remaining 79% going to other judgments against him.
Bowers derives his 21% figure from the fact that the April 2010 judgment comprised
about 21% of ClearOne’s approved claim in the bankruptcy proceeding.
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Second, as to the settlement monies recovered from Chiang, Bowers says that
“a proportionate accounting of the [Chiang settlement] funds would be required [by
law],” Aplt. Opening Br. at 27, apparently meaning that some amount of the Chiang
settlement should reduce the joint and several portion of the December 2011
judgment.
Bowers cites no authority supporting either argument. Even more importantly,
he first advanced these theories in his reply in support of his Rule 59(e) motion.
“[W]hen a litigant fails to raise an issue below in a timely fashion and the court
below does not address the merits of the issue, the litigant has not preserved the issue
for appellate review.” FDIC v. Noel, 177 F.3d 911, 915 (10th Cir. 1999). Bowers
therefore waived these arguments and we do not consider them. See id. at 915–16
(holding that appellant had waived an argument advanced for the first time in a reply
brief in support of a motion to reconsider).1
3. Alleged Failure to Consider the Rule 59(e) Motion
Bowers’s final attack on renewal of judgment is an assertion that the district
court abused its discretion because it “never considered” the arguments advanced in
his Rule 59(e) motion. Aplt. Opening Br. at 28. We have reviewed the district
court’s Rule 59(e) order and find that it addresses all of Bowers’s arguments.
Bowers’s contention to the contrary is meritless.
1
In his appellate reply brief, Bowers advances a third argument that the
renewed judgment fails to account for all monies received from him. That argument
is waived because it does not appear in the opening brief. In re Motor Fuel
Temperature Sales Practices Litig., 872 F.3d 1094, 1112 n.5 (10th Cir. 2017).
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III. RECUSAL
Lastly, Bowers claims that the district judge should have recused himself
because his rulings show evidence of bias and favoritism. Bowers says he moved for
recusal in May 2014 and the district judge denied that motion in June 2014.
Apparently recognizing that the time to appeal from that denial has long since
expired, Bowers says that “[r]ecusal attempts . . . have proven to be futile and were
already exhausted.” Aplt. Opening Br. at 6. He further argues that the district
judge’s rulings since 2014 reinforce his claim of bias and favoritism.
We have no jurisdiction to review the district judge’s June 2014 order and
Bowers provides no authority (nor are we aware of any) holding that one recusal
motion is enough to preserve the issue in perpetuity. Moreover, to the extent Bowers
believes the district judge should have recused sua sponte sometime after June 2014,
we review only for plain error. See United States v. Kimball, 73 F.3d 269, 273
(10th Cir. 1995) (“Defense counsel neither filed a pleading nor moved for recusal
during trial. Therefore, we decide under a plain error standard whether the district
judge was so biased or reasonably appeared to be so biased that we should order
retrial with a different judge.”). But Bowers “fail[s] to argue for plain error and its
application on appeal,” which “surely marks the end of the road” for this argument.
Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1131 (10th Cir. 2011). For these
reasons, we do not reach Bowers’s claim that the district judge should have recused
himself.
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IV. CONCLUSION
We affirm No. 20-4105 and dismiss No. 20-4108 for lack of appellate
jurisdiction. We deny Bowers’s motion to supplement the record and his motion to
strike the court’s sua sponte supplementation of the record.
Entered for the Court
Timothy M. Tymkovich
Chief Judge
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