Rainbow School, Inc. v. Rainbow Early Education , 887 F.3d 610 ( 2018 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-1055
RAINBOW SCHOOL, INC.,
Plaintiff – Appellee,
v.
RAINBOW EARLY EDUCATION HOLDING LLC; REE SOUTHEAST, INC.,
Defendants – Appellants.
No. 17-1123
RAINBOW SCHOOL, INC.,
Plaintiff – Appellee,
v.
RAINBOW EARLY EDUCATION HOLDING LLC; REE SOUTHEAST, INC.,
Defendants – Appellants.
Appeals from the United States District Court for the Eastern District of North Carolina,
at Raleigh. Terrence W. Boyle, District Judge. (5:14-cv-00482-BO)
Argued: January 25, 2018 Decided: April 10, 2018
Before GREGORY, Chief Judge, and NIEMEYER and AGEE, Circuit Judges.
Affirmed in part and dismissed in part by published opinion. Judge Agee wrote the
opinion, in which Chief Judge Gregory and Judge Niemeyer concurred.
ARGUED: Carl Moeller Newman, CRANFILL, SUMNER & HARTZOG, LLP,
Raleigh, North Carolina, for Appellants. Susan Freya Olive, OLIVE & OLIVE, PA,
Durham, North Carolina, for Appellee. ON BRIEF: Pankaj K. Shere, Jaye E. Bingham-
Hinch, David G. Williams, CRANFILL, SUMNER & HARTZOG, LLP, Raleigh, North
Carolina, for Appellants. David L. McKenzie, OLIVE & OLIVE, PA, Durham, North
Carolina, for Appellee.
2
AGEE, Circuit Judge:
After finding that Rainbow Early Education Holding LLC (“Early Education”) had
violated the terms of a consent judgment and permanent injunction, the district court held
Early Education in contempt and awarded $60,000 to Rainbow School, Inc. (“the
School”), plus attorney’s fees and costs. When the School moved for additional relief
based on what it alleged to be continued and new violations of the injunction, the district
court deferred a final determination and ordered Early Education to pay for an audit to
assist in determining whether violations remained and could reasonably be cured. Early
Education appeals both decisions. For the reasons set out below, we affirm the district
court’s finding of contempt and award of sanctions, and dismiss for lack of jurisdiction
Early Education’s appeal from the order requiring it to undergo an audit.
I.
A.
The School has run a childcare facility—Rainbow School—in Fayetteville, North
Carolina, for over twenty years. In addition to using the word “rainbow” in its name, the
School uses rainbow imagery on its logo.
Early Education operates approximately 100 childcare facilities in several states,
including North Carolina. 1 In December 2014, Early Education opened a Fayetteville
1
Defendant REE Southeast, Inc., is affiliated with Early Education, and the two entities
can be treated as one for purposes of this appeal. References to “Early Education” thus
encompass both defendants.
3
branch near the School. It operated under the name “Rainbow Child Care Center” (“the
Fayetteville facility”), and, like the School, it also used rainbow imagery on its logo.
Within a few weeks of the Fayetteville facility’s opening, the School sued Early
Education in the United States District Court for the Eastern District of North Carolina
for common law trademark infringement; false advertising and false designation of origin
in violation of the Lanham Act; and unfair and deceptive trade practices in violation of
North Carolina law. Following discovery and the district court’s issuance of a
preliminary injunction against Early Education, the Parties entered into a settlement
agreement. The district court entered a consent judgment and permanent injunction
consistent with that agreement.
Under the terms of the consent judgment, Early Education did “not contest entry
of judgment . . . as though the allegations of trademark infringement had been proven at
trial.” J.A. 77. Early Education was enjoined from:
• “doing business as ‘Rainbow Child Care Center’ in the Fayetteville,
North Carolina metropolitan area”;
• “using the word ‘Rainbow’ in connection with their business in the
Fayetteville metropolitan area, including but not limited to use by them
of the word ‘Rainbow’ in connection with the provision of child care,
preschool, before-school, afterschool, and summer camp services in the
Fayetteville metropolitan area”;
• “using the web address . . . www.rainbowccc.com/fayetteville2
[(“prohibited /fayetteville2 address”)] or any other web address or
domain name using the word ‘rainbow’ in connection with any business
or services offered by them in the Fayetteville metropolitan area”;
• “using any rainbow design on any website or domain identifying or
advertising any business or services offered by them in the Fayetteville,
North Carolina metropolitan area, but this restriction . . . does not . . .
4
restrict or prevent the use of the word ‘rainbow’ or a rainbow design on
the general corporate website.”
J.A. 77–78. In addition, Early Education agreed to
redirect their new website with respect to any connection to the main
corporate website for Rainbow Child Care Centers found at
www.rainbowccc.com [by] creating a stand-alone web page for the
[Fayetteville facility] and routing all links to www.rainbowccc.com through
a forwarding page so that the word “rainbow” will not appear on the stand-
alone web page for [the Fayetteville facility], even as a forwarding
tag. . . . [A]nd there shall not be any links from [Early Education’s] main
corporate website to the stand-alone web page for [the Fayetteville facility].
J.A. 78–79.
In addition, the settlement agreement—though not the consent judgment—
contained a liquidated damages clause setting out how the Parties would handle
violations of the injunction. The Parties agreed that a material breach of the permanent
injunction “could cause harm to” the School’s business. J.A. 186. If the School believed
Early Education was violating the injunction, the School was required to provide Early
Education with written notice. Early Education, in turn, had ten days following receipt of
the notice to cure the violation. If Early Education failed to cure the violation in that time,
or if it had committed four violations within one year, the School could “seek a court
order requiring compliance” with the injunction. J.A. 186. And if a court determined that
Early Education had violated the injunction and not cured it, then Early Education would
be “liable to [the School] for liquidated damages in the amount of $30,000.00, without
prejudice to such other remedies, if any, as may be available, including but not limited to
an award of attorneys’ fees.” J.A. 186–87. In agreeing to this liquidated damages
provision, the Parties acknowledged
5
that any damages to [the School] will be inherently difficult to ascertain
with certainty . . . . Given the Parties’ experience in the child care industry
and the nature of the losses that may result from a breach . . ., the Parties
agree[d] that this provision is not a penalty, but rather a reasonable measure
of damages.
J.A. 187.
B.
In May 2016, the School filed a contempt motion against Early Education in the
district court (“the First Motion”). It alleged multiple violations of the injunction
associated with the Fayetteville facility’s website, including the use of rainbow logos in
online photo galleries and the use of the word “rainbow” in “domain names, . . . links,
and . . . metatags used to drive traffic to” the site. J.A. 90. 2 It also pointed to a pop-up
page that appeared on the Fayetteville facility’s website, which asked users to allow Early
Education’s corporate website to track the user’s location. The School sought damages
and fees for the alleged violations.
Early Education filed a cursory response stating that it was not in violation of the
injunction, that any violations were inadvertent omissions and errors that had been timely
cured, and that the School had not been injured by any violations that had occurred.
In August 2016—before the district court ruled on the First Motion—the School
filed a second contempt motion (“the Second Motion”). This time, the School alleged that
Early Education was violating the injunction by keeping the prohibited /fayetteville2
2
“Metatags are HTML code intended to describe the contents of the web site,” and are
“not visible to Internet users.” Retail Servs., Inc. v. Freebies Publ’g, 364 F.3d 535, 541 n.1 (4th
Cir. 2004).
6
address “live” as a redirect page to the Fayetteville facility’s new stand-alone website.
The Second Motion also alleged Early Education violated the injunction by sending an
invitation to residents of the Fayetteville, North Carolina, metropolitan area that
advertised a “Rainbow Child Care Center” summer social event. The invitation
encouraged recipients to visit Early Education’s corporate website to learn where the
event would be held in their area.
Early Education filed a lengthier response to the Second Motion, denying that it
was in contempt and claiming that it had cured the alleged violations involving the
prohibited /fayetteville2 address. As for the summer social invitation, Early Education
explained that it had been inadvertently sent and did not violate the injunction because it
did not advertise or reference the Fayetteville facility.
At the conclusion of a hearing on August 30, the district court granted both
Motions. Pointing to the settlement agreement’s damages provision, the court awarded
$60,000 in liquidated damages, noting that it found multiple violations as alleged as part
of each Motion. The court also stated that it would award attorney’s fees, allowed the
School the opportunity to submit evidence as to the amount of those fees, and noted that a
written order would follow.
On December 14, 2016, the district court issued its written order granting the First
and Second Motions (“December 14 order”). Rainbow Sch., Inc. v. Rainbow Early Educ.
Holding LLC, No. 5:14-CV-482-BO, 2016 WL 7243538 (E.D.N.C. Dec. 14, 2016). The
order identified four categories of violations by Early Education: (1) the photo gallery on
the Fayetteville facility’s new website contained multiple images depicting rainbows; (2)
7
the Fayetteville facility website used the word “rainbow” in multiple places (including
emails, links, the pop-up tracking request, and metatags); (3) the prohibited /fayetteville2
address was still in use; and (4) Early Education had invited Fayetteville area residents to
a summer social using the “rainbow” moniker. The district court then observed that the
School had been harmed, pointing out actual examples of confusion associated with the
violations. It also noted there was a presumption of harm resulting from trademark
infringement and pointed to the Parties’ settlement agreement contemplating this sort of
harm and agreeing to a liquidated damages amount for any violations of the injunction. In
sum, the district court concluded $60,000 was “a reasonable measure of damages, as
voluntarily agreed to by the [P]arties” and merited in light of the numerous violations the
court found pursuant to each Motion. Id. at *3. Lastly, it awarded the School $36,162.36
in attorney’s fees and costs.
Early Education noted a timely appeal, and the Court has jurisdiction pursuant to
28 U.S.C. § 1291. 3
3
This Court can hear an appeal from a finding of contempt when the finding is entered
after the order in the underlying action and the court has adjudicated the merits of the underlying
motions. See 28 U.S.C. § 1291 (stating the Court has jurisdiction over a district court’s final
decisions); see also Gelboim v. Bank of Am. Corp., 135 S. Ct. 897, 902 (2015) (noting a final
decision “ends the litigation on the merits and leaves nothing for the court to do but execute the
judgment” such that the “district court disassociates itself from [the] case” (internal quotation
marks omitted)); Consolidation Coal Co. v. Local 1702, United Mineworkers of Am., 683 F.2d
827, 830–31 (4th Cir. 1982) (observing that civil contempt orders are not usually appealable
because the issue can be raised “in an appeal of the underlying claim”). This Court has
jurisdiction over this appeal because the district court entered the finding of contempt after the
permanent injunction order and has resolved the merits of the First and Second Motions.
8
C.
After the hearing on the First and Second Motions, but before the district court
issued its December 14 order, the School filed a third contempt motion (“Third Motion”).
Among other things, the Third Motion asked the district court to appoint an auditor to
conduct a thorough review of Early Education’s operations to assess the extent of any
ongoing violations and the viability of further compliance with the injunction. The
School asserted Early Education continued to violate the injunction by, among other
things, promoting the Fayetteville facility on its corporate website, linking the prohibited
/fayetteville2 address to the main corporate website, and associating the Fayetteville
facility with rainbow imagery.
In a December 29 order, the district court granted the School’s request for an
audit, but deferred ruling on the remainder of the Third Motion (the “December 29
order”), explaining that it was
not convinced at this time that [Early Education has] willfully violated the
injunction for a third time or that a finding of contempt is again warranted.
The Court takes seriously [Early Education’s] argument that the remedies
[the School] seeks are impossible to provide because the violations cannot
be cured to [the School’s] satisfaction and [Early Education’s] contention
that good faith cooperation in curing violations of the injunction has been
subverted.
J.A. 653. To that end, the court invoked its broad discretion to craft an appropriate
remedy and ordered the appointment of a “temporary, independent auditor [to] help
resolve these questions and bring [Early Education’s] business activities into compliance
with the injunction to the extent that this can reasonably be accomplished.” J.A. 653–54.
The court ordered Early Education to pay the cost of the audit.
9
Early Education noted a timely appeal. We address the Court’s jurisdiction over
this interlocutory order below. 4
II.
To ensure compliance with its orders, a district court has the inherent authority to
hold parties in civil contempt. Shillitani v. United States, 384 U.S. 364, 370 (1966); see
Consolidation Coal Co. v. Local 1702, United Mineworkers of Am., 683 F.2d 827, 830
(4th Cir. 1982) (“[T]he essence of civil contempt is to coerce future behavior.”). That
power includes the ability to award damages and attorney’s fees to an aggrieved party.
Hutto v. Finney, 437 U.S. 678, 691 (1978) (“Civil contempt may . . . be punished by a
remedial fine, which compensates the party who won the injunction for the effects of his
opponent’s noncompliance.”). A party can be held in civil contempt when there is clear
and convincing evidence of four elements:
(1) the existence of a valid decree of which the alleged contemnor had
actual or constructive knowledge; (2) that the decree was in the movant’s
“favor”; (3) that the alleged contemnor by its conduct violated the terms of
the decree, and had knowledge (at least constructive knowledge) of such
violations; and (4) that the movant suffered harm as a result.
United States v. Ali, 874 F.3d 825, 831 (4th Cir. 2017) (quoting Ashcraft v. Conoco, Inc.,
218 F.3d 288, 301 (4th Cir. 2000)).
We review for abuse of discretion the district court’s decisions to hold Early
Education in contempt and to award damages and attorney’s fees to the School. See In re
4
The district court has stayed the audit and further proceedings relating to the Third
Motion pending this appeal.
10
Under Seal, 749 F.3d 276, 285 (4th Cir. 2014). “A district court abuses its discretion by
resting its decision on a clearly erroneous finding of a material fact, or by
misapprehending the law with respect to underlying issues in litigation.” Scott v. Family
Dollar Stores, Inc., 733 F.3d 105, 112 (4th Cir. 2013) (internal quotation marks omitted).
A.
With respect to the First and Second Motions, Early Education asserts the district
court abused its discretion in holding it in contempt. It does not dispute that the first two
elements of contempt are satisfied: the district court entered the consent order and
injunction in which Early Education admitted it should be treated as if it had committed
common law trademark infringement against the School. It does, however, challenge the
third and fourth elements. Specifically, Early Education contends that the district court
clearly erred in finding that its conduct violated the injunction. In addition, it argues that
the School was not harmed, and thus the district court should not have awarded the
School $60,000 in damages or $36,080 in attorney’s fees. We address each argument in
turn.
1.
Early Education first contends that the district court clearly erred by finding that it
knowingly violated the injunction and challenges each violation the district court
described in its December 14 order. But to affirm the district court’s ruling with respect
to both the First and Second Motions, we need only conclude that the court did not
clearly err in finding that Early Education violated the injunction in one of the ways
alleged in each motion. This is so because a single violation of the injunction is sufficient
11
to support a finding of contempt. See In re Under Seal, 749 F.3d at 293 (“When two
independent bases support a district court’s contempt order, it is enough for us to find that
one of those bases was appropriate.”). Having reviewed the record, we conclude the
district court did not clearly err in finding multiple violations of the injunction.
In the First Motion, the School asserted that Early Education violated the
injunction by using the word “rainbow” in multiple domain names, links, and metatags
associated with the Fayetteville facility’s stand-alone website. For example, the
Fayetteville facility website linked to email addresses that used the word “rainbow”; a
“Contact Us” link on the site redirected users to the main corporate website; a pop-up
screen on the Fayetteville facility’s site asked users to allow the main corporate website
to track their location; and the word “rainbow” appeared close to 180 times as a link or
tag on the Fayetteville facility website. In the face of this data, Early Education offered
general denials, stressing that the School was alleging “hyper-technical alleged violations
of the Court’s order,” J.A. 403, and asserting that any violations were inadvertent.
Moreover, Early Education’s Director of Communications noted that to address the
violations alleged by the School, he had only directed the website vendor to create a new
website for the Fayetteville facility and “remove all traces of the name ‘Rainbow’ and a
‘Rainbow design’ from” that website. J.A. 307.
But the injunction plainly required Early Education to also stop using the word
“rainbow” in connection with the Fayetteville facility. And its internet content provisions
specifically required the new stand-alone Fayetteville facility website to be independent
from the main corporate website “so that the word ‘rainbow’ will not appear on the
12
stand-alone web page for Fayetteville Child Care Center, even as a forwarding tag. Any
such links connecting to the main corporate website for Rainbow Child Care Centers
shall connect only to information about Defendants’ programs, curricula, and corporate
policies.” J.A. 78–79 (emphases added). Given the undisputed existence of these
violations and their scope, the district court did not clearly err in concluding that the
violations had occurred and had not been adequately corrected. Nor did it clearly err in
finding Early Education responsible for knowing the contents of its own website for
purposes of establishing the requisite knowledge of the violations.
The district court also did not clearly err in finding that Early Education violated
the injunction by inviting Fayetteville metropolitan area residents to the summer social.
Notably, Early Education cannot dispute that the mailer in fact solicited Fayetteville area
residents, that it advertised “Rainbow Child Care Centers,” contained a rainbow image,
and directed residents to the corporate website to locate the “nearest school.” See J.A.
245. Instead, it argues it did not violate the injunction because the mailer did not
specifically identify the Fayetteville facility and any violation was inadvertent. That
position ignores that Early Education directly solicited Fayetteville residents. The
injunction prohibited Early Education from “doing business as ‘Rainbow Child Care
Center’” in that region, and it prohibited it from using the word “rainbow” and rainbow
imagery “in connection with their business in the Fayetteville metropolitan area.” J.A.
77–78. That language is broader than Early Education contends, and the district court did
not clearly err in determining that the invitation violated the injunction.
13
The district court thus did not clearly err in finding that Early Education had
violated the injunction as to each of the Motions.
2.
Next, Early Education challenges the district court’s determination that Early
Education’s violations harmed the School. The district court relied on two grounds: first,
that “[h]arm is presumed to result from trademark infringement,” and second, that the
parties had “expressly contemplated that harm would result from a violation of [the]
consent injunction” and agreed to liquidated damages. Rainbow Sch., 2016 WL 7243538,
at *3.
Early Education’s argument lacks merit for the simple reason that it is bound by
the settlement agreement wherein it consented to judgment being entered “as though the
allegations of trademark infringement had been proven at trial.” J.A. 77. That prior
judgment includes a finding that Early Education’s conduct—the very conduct it was
enjoined from engaging in thereafter—harmed the School. See Scotts Co. v. United
Indus., 315 F.3d 264, 273 (4th Cir. 2002) (discussing the irreparable harm component of
trademark infringement cases, which flows from an established likelihood of confusion
and mark dilution). Although the settlement agreement’s liquidated damages provision
was not specifically incorporated into the consent judgment and permanent injunction, it
nonetheless provided the district court with relevant information concerning the parties’
agreement in the event Early Education violated the injunction. In the settlement
agreement, Early Education recognized that its violation of any of the provisions of the
injunction “could cause harm to [the School’s] business,” and that the School could “seek
14
a court order requiring compliance with the permanent injunction” should Early
Education fail to cure any violations after receiving notice and an opportunity to cure.
J.A. 186. That is exactly what the School did here. Early Education further agreed that if
a court found that it had violated “any of the requirements of the permanent
injunction . . . and ha[d] failed to cure the violation within the time frames provided[,]
then [it would be] liable to [the School] for liquidated damages in the amount of
$30,000.00.” J.A. 186 (emphasis added). By its own terms, this provision provided a
factual foundation for the district court to conclude that violations of the injunction
proved sufficient likelihood of harm to the School for purposes of compelling Early
Education’s compliance. And, as discussed, coercing compliance is the precise objective
of a civil contempt order. Contrary to Early Education’s argument, the district court did
not relieve the School of its burden of proving harm. Instead, it simply held Early
Education to its own agreement.
Because we reject Early Education’s two arguments contesting the finding of
contempt, we conclude the district court did not abuse its discretion in holding Early
Education in contempt based on its violations of the permanent injunction.
3.
Apart from the finding of contempt, Early Education also challenges the district
court’s award of $60,000 in damages to the School. Consistent with the discretion
afforded to courts to hold parties in contempt in the first instance, district courts also
enjoy wide latitude in imposing an award that is both compensatory and incentivizing.
See Consolidation Coal, 683 F.2d at 829 (“Although a fine for civil contempt does have a
15
compensatory aspect to it, the fines are designed primarily to coerce behavior. To give a
court the power to issue injunctive relief without the power to fine those individuals who
disobey the court order is to give a court the power to grant a remedy without effective
means to enforce it.”). Although the district court could have used other measures to
calculate an appropriate award for Early Education’s violations, it chose the most natural:
the Parties’ settlement agreement. There, the Parties agreed that if a court determined
Early Education had violated “any of the requirements” of the injunction and failed to
cure the violations, Early Education would be “liable to [the School] for liquidated
damages in the amount of $30,000.00.” J.A. 186 (emphasis added).
The district court found that Early Education committed multiple violations of the
injunction, a finding that was not clearly erroneous. Given that the settlement agreement
contemplates that Early Education would be liable in the amount of $30,000 for any
violation of the injunction, it follows that the district court did not abuse its discretion in
deciding to award $60,000 upon finding at least two separate violations. That amount
both compensates the School for its damages, which the Parties recognized would “be
inherently difficult to ascertain with certainty, particularly as those damages relate to [the
School’s] reputation and current and future customer relationships,” J.A. 187, and
incentivizes Early Education’s prompt compliance with the injunction. As the School
recognized during oral argument, there would be a limit to awarding $30,000 per
violation, but that is not what the district court did, nor is it what the School sought. At
this juncture, it is sufficient for us to conclude the district court did not abuse its
discretion in awarding $60,000 based on the record before it.
16
4.
Early Education also argues that the district court abused its discretion in awarding
more than $36,000 in attorney’s fees because the School did not submit adequate
documentation to support such an award. Specifically, Early Education contends that the
School’s supporting documentation improperly “lumped” together tasks, making it
impossible to determine how much time was spent on various tasks. Early Education’s
sole legal support for its argument is a district court decision awarding a lower amount of
fees than requested because the firm “lumped” several tasks under a single entry without
identifying the length of each task. See JP ex rel. Peterson v. Cty. Sch. Bd. of Hanover
Cty., 641 F. Supp. 2d 499, 519 (E.D. Va. 2009).
The School sought over $46,000 in fees, which the district court concluded was an
unreasonable amount. It noted that the School’s lead attorney admitted the amount was
based on a higher hourly rate than she usually charged and which included a penalty
assessed to clients who did not consistently make payments. Based on its familiarity with
the region’s customary hourly rates, the district court first adjusted the hourly rates for
the attorneys and paralegals who worked on the case. The district court then reviewed the
evidence supporting the number of hours billed and the work performed, finding that the
number was “reasonable” and “sufficient[ly] particulari[zed].” J.A. 628. Last, the court
noted the nature and extent of the litigation necessary to stop Early Education’s “willful
violations of court orders.” J.A. 628. It concluded these factors supported the fee award.
District courts have “considerable discretion” in awarding attorney’s fees, and we
“must not overturn an award . . . unless it is clearly wrong.” Colonial Williamsburg
17
Found. v. Kittinger Co., 38 F.3d 133, 138 (4th Cir. 1994). In arriving at an appropriate
award, the district court must determine “the time and labor expended and the customary
fees for like work” and then “consider whether to adjust the fee on the basis of other
factors, briefly explaining any adjustment.” Id.
We have reviewed the record and conclude the district court’s fee award was not
based on clearly incorrect evidence concerning the nature of the work performed. To be
sure, this Court has previously cautioned against generalized billing that inadequately
describes the tasks performed within each block of time for which a party seeks fees. See,
e.g., Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 179–80 (4th Cir. 1994). But
the explanations supporting the School’s fee award do not contain the sort of problematic
vagueness and generalities that engender the concern that a fee award lacks adequate
support. Notably, Early Education faults the School for submitting initial submissions
with lumped tasks but overlooks that the School supplemented its responses below.
Moreover, in many cases, Early Education criticizes entries that contain more than one
task without considering that the additional descriptions are just that—added information
about a single, overarching task. This practice is far removed from the sort of vague entry
that lumps “clerical tasks with tasks requiring attorney judgment,” which concerned the
district court in Peterson. See 641 F. Supp. 2d at 519. On this record, we cannot conclude
that the district court abused its discretion in determining the School’s fee award.
****
For all these reasons, the district court did not abuse its discretion in holding Early
Education in contempt based on the conduct at issue in the School’s First and Second
18
Motions, or in awarding $60,000 to the School for those violations and $36,080 in
attorney’s fees. We therefore affirm the district court’s December 14, 2016 order. 5
B.
We next turn to Early Education’s challenge to the district court’s December 29,
2016, order deferring judgment on the School’s Third Motion for contempt, but ordering
Early Education to undergo an audit. The order is interlocutory, as the merits of the
Motion remain pending before the district court. See Gelboim v. Bank of Am. Corp., 135
S. Ct. 897, 902 (2015) (“A ‘final decision’ [under 28 U.S.C. § 1291] is one by which a
district court disassociates itself from a case.”). And, as a federal appellate court, we
“may exercise jurisdiction only over final orders and certain interlocutory and collateral
orders.” Goode v. Cent. Va. Legal Aid Soc’y, Inc., 807 F.3d 619, 623 (4th Cir. 2015)
(internal citation omitted). Unless the December 29 order falls under one of the
recognized exceptions to the final decision rule, we lack jurisdiction.
Early Education posits that we have jurisdiction under 28 U.S.C. § 1292(a)(1),
which allows the Court to consider interlocutory orders “granting, continuing, modifying,
refusing or dissolving injunctions, or refusing to dissolve or modify injunctions.” We
disagree. Although the December 29 order arises from a motion to compel enforcement
of an existing permanent injunction, it does not alter the already-existing injunction and
therefore does not grant, continue, modify, or dissolve the injunction.
5
Early Education has raised additional related arguments in favor of reversal, which we
have also reviewed and found to be meritless.
19
Early Education next posits that we have jurisdiction under the collateral order
doctrine or by means of pendent appellate jurisdiction. The collateral order doctrine
allows a party to immediately appeal non-final orders “because they are conclusive,
resolve important questions separate from the merits, and are effectively unreviewable on
appeal from the final judgment in the underlying action.” Rux v. Republic of Sudan, 461
F.3d 461, 475 (4th Cir. 2006) (internal quotation marks omitted). The issues Early
Education raises do not fall within this framework. Early Education asserts that it is being
forced to pay for an audit, but nothing in the district court’s order suggests that this initial
assessment is a final determination about which party will ultimately bear that expense.
As the School acknowledges, if the auditor determines there is no ongoing violation, the
district court is free to order the School to bear the audit’s cost as part of the final order.
And because we have concluded that the district court did not abuse its discretion in
previously holding Early Education in contempt, that foundation for proceedings on the
Third Motion is not in question. In sum, the December 29 order does not resolve matters
separate from the merits of whether Early Education remains in contempt (either because
of new or continuing violations), and the issues Early Education challenges now will be
reviewable on appeal from the court’s final judgment. As such, the collateral order
doctrine does not provide us with jurisdiction.
Pendent appellate jurisdiction is a “judicially-created, discretionary exception to
the final judgment requirement” that allows the Court to “retain the discretion to review
issues that are not otherwise subject to immediate appeal when such issues are so
interconnected with immediately appealable issues that they warrant concurrent review.”
20
Id. It is available only (1) when an issue is ‘inextricably intertwined’ with a question that
is the proper subject of an immediate appeal; or (2) when review of a jurisdictionally
insufficient issue is ‘necessary to ensure meaningful review’ of an immediately
appealable issue.” Id. We decline to exercise this discretionary jurisdiction here. The
question of whether Early Education should initially pay for an audit is neither
inextricably linked nor a necessary precursor to the issues presented in the appeal from
the district court’s prior order, which made a determination of contempt and had nothing
to do with paying for an audit.
Because we lack appellate jurisdiction over the December 29 order, we dismiss
that portion of Early Education’s appeal.
III.
For the reasons set out above, we affirm the district court’s December 14, 2016,
order finding Early Education in contempt for the violations set out in the School’s First
and Second Motions and awarding the School damages and attorney’s fees. We dismiss
for lack of jurisdiction Early Education’s appeal of the district court’s December 29,
2016, order relating to the Third Motion.
AFFIRMED IN PART
AND DISMISSED IN PART
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