M & C Corp v. Erwin Behr GMBH & Co , 289 F. App'x 927 ( 2008 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 08a0516n.06
Filed: August 21, 2008
No. 06-2344
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
M & C CORP., )
)
ON APPEAL FROM THE
Plaintiff-Appellee, )
UNITED STATES DISTRICT
)
COURT FOR THE EASTERN
v. )
DISTRICT OF MICHIGAN
)
ERWIN BEHR GMBH & CO., KG, )
)
OPINION
Defendant-Appellant. )
_______________________________________)
Before: GUY, MOORE, and GILMAN, Circuit Judges.
KAREN NELSON MOORE, Circuit Judge. Defendant-Appellant Erwin Behr GmbH &
Co., KG (“Behr”) appeals three post-judgment orders in an arbitration case that has spanned sixteen
years and involved four prior appearances before this court. Behr appeals an order awarding
litigation expenses and statutory penalties under Michigan law to Plaintiff-Appellee M & C
Corporation (“M&C”), an order finding Behr in contempt of court, and a discovery order. M&C has
filed a motion to dismiss Behr’s appeal, arguing that none of the orders challenged are appealable
final orders. For the reasons discussed below, we DENY M&C’s motion to dismiss the appeal, we
AFFIRM the contempt and discovery orders, but we AFFIRM in part and REVERSE in part the
order regarding litigation expenses and statutory penalties.
I. BACKGROUND
Although the procedural history of this case is lengthy and complex, the facts relevant to this
appeal can be summarized fairly briefly.1 In 1985, M&C entered a contract with Behr to act as the
exclusive sales agent for Behr in the United States and Canada for at least five years for the sale of
wood interior panels for General Motors’ luxury automobiles. The contract specified that Michigan
law governed the parties’ agreement and that any disputes arising in connection to the contract be
arbitrated under the Rules of the Court of Arbitration of the International Chamber of Commerce.
Behr terminated the agreement in 1991 but failed to pay M&C commissions it had earned for some
sales and client development work. The parties’ dispute eventually came before an arbitrator in
London, England, and on March 1, 1994, the arbitrator issued eleven awards,2 which the district
court confirmed, and this court affirmed. M &C Corp. v. Erwin Behr GmbH & Co., KG, 87 F.3d 844
(6th Cir. 1996) (Behr I).
One of the awards, Award Eight, concerned payment of future commissions on the sales of
certain orders, and the parties disputed which orders were included within the scope of that award.
The district court agreed with Behr that the award was ambiguous regarding on which “orders” M&C
deserved commissions, and the district court remanded the case to the arbitrator for clarification.
1
The last time this case appeared in our court, we summarized the relevant facts in somewhat
greater detail. See M & C Corp. v. Erwin Behr GmbH & Co., KG, 411 F.3d 749, 751-56 (6th Cir.
2005) (Behr IV) (withdrawn); 2005 WL 1413132. The facts summarized above come from our
opinion in Behr IV.
2
Several of the awards compelled Behr to pay M&C money. “The total amount of principal
payments required under these awards is $1,976,292.47, which was to be paid in full, irrespective
of any other judicial proceeding, by March 31, 1994 . . . . Behr did not make any payment on the
principal amount of any of these awards,” and, as the district court noted in February 1996, “[t]o
date, Erwin Behr has not complied with any of the awards.” M & C Corp. v. Erwin Behr GmbH &
Co., KG, 165 F.R.D. 65, 66 (E.D. Mich 1996).
2
We reversed that decision in M & C Corp. v. Erwin Behr GmbH & Co., KG, 143 F.3d 1033 (6th Cir.
1998) (Behr II). The parties continued to dispute the amount owed under the Eighth Award, and the
district court again remanded the case to the arbitrator for clarification. We reversed and remanded
again, requesting that the district court clarify the precise reason for its remand to the arbitrator.
M & C Corp. v. Erwin Behr GmbH & Co., KG, 326 F.3d 772 (6th Cir. 2003) (Behr III).
In March 2004, the district court specified that “‘[t]he award is unclear insofar as the Court
cannot determine whether or not [a list appearing in the award] is the exclusive list of the products
on which commissions are due . . . [and] there is a continuing controversy over how long particular
parts are commissionable.’” Behr IV, 411 F.3d at 756 (quoting district court’s remand order). The
district court remanded the case to the original arbitrator “(1) to state the exact scope of the products
commissionable under the Eighth Award and (2) to state what payments, if any, are due to each party
from the other under the Eighth Award.” Id.
Behr appealed the district court’s March 2004 remand order, and, while that appeal was
pending in our court, the arbitrator held the hearing that the district court had ordered on April 11-13,
2005, in London. On April 28, 2005, we heard oral argument in Behr IV and filed our decision on
June 17, 2005. In Behr IV, we concluded that the Eighth Award was not ambiguous and, retaining
jurisdiction in the case, we solicited further filings regarding the amounts owed under the reading
of the award and contract adopted in our opinion.
The day after Behr IV, the arbitrator issued a letter clarifying the award, see Joint Appendix
(“J.A.”) at 286-91 (Arbitrator’s 2005 Letter), and on July 27, 2005, we withdrew and vacated our
opinion, J.A. at 393 (Sixth Circuit Order). We stated that “in view of the arbitrator’s clarification”
3
we granted the petition for rehearing, vacated our opinion, and remanded the case “to the district
court for enforcement proceedings in accordance with the arbitration award.” Id.
M&C filed a number of motions attempting to enforce the clarified award, and those motions
gave rise to the Orders at issue in this appeal. In particular, on September 14, 2006, the district court
issued an order granting M&C’s motion for assessment of litigation expenses and statutory penalties
under the Michigan Sales Representatives Commission Act (“MSRCA”), accepting the magistrate
judge’s report and recommendation (“R&R”). J.A. at 65-73 (Statutory Damages & Litigation Fees
Order). As noted in the magistrate judge’s R&R, as to statutory damages, the MSRCA provides that
a principal who “intentionally” fails to pay commissions when they are due must pay “an amount
equal to 2 times the amount of commissions due but not paid as required by this section or
$100,000.00, whichever is less.” MICH . COMP. LAWS § 600.2961(5)(b); J.A. at 305 (Statutory
Damages & Litigation Expenses R&R). The MSRCA also provides that “the court shall award to
the prevailing party reasonable attorney fees and court costs” and defines “prevailing party” as “a
party who wins on all the allegations of the complaint or on all of the responses to the complaint.”
MICH . COMP. LAWS §§ 600.2961(6), 600.2961(1)(c).
The district court also issued an order on September 14, 2006, granting M&C’s motion for
contempt, again accepting the magistrate judge’s R&R. J.A. at 74-83 (Contempt Order). The
contempt order was based on Behr’s violation of an earlier January 1996 order that placed Behr in
receivership in response to Behr’s efforts to obstruct and delay M&C from collecting the payments
that the arbitrator had awarded M&C in 1994.
On January 31, 1996, the district court stated that it would “impose a limited receivership
over any direct or indirect property interest held by Erwin Behr in Behr Industries [“BIC”] of Grand
4
Rapids, Michigan.” J.A. at 115 (Receivership Order at 18). On March 29, 1996, the district court
issued an Addendum to the Receivership Order, which contained the following language: “IT IS
FURTHER ORDERED that the defendant, Erwin Behr GmbH & Company, KG, its officers, agents,
servants, employees, attorneys . . . are enjoined from directly or indirectly transferring, receiving,
changing, encumbering, selling, removing, assigning or otherwise disposing of any assets and
property owned, controlled, or in possession of the defendant.” J.A. at 123. (Addendum to
Receivership Order). In 1996, Behr owned Erwin Behr Beteiligungs-GmbH (“Behr Beteiligungs”),
which owned Erwin Behr Automotive GmbH (“Behr Automotive”), which owned BIC. J.A. at 315
(Contempt R&R at 3); J.A. at 302 (Villwock Decl.).
In May 2005, while the case was pending in our court, Behr Beteiligungs sold its subsidiary
Behr Automotive, and its subsidiary BIC, to a German private equity firm; this transaction occurred
without any notice to M&C, the district court, our court, the arbitrator, or the court-appointed
receiver. J.A. at 315 (Contempt R&R at 3). Behr has not disclosed any of the terms or conditions
of the sale. Id. The magistrate judge found that “Defendants are in unequivocal contempt of this
Court’s order,” J.A. at 317 (Contempt R&R at 5), and the district court agreed, noting that “[s]ince
the confirmation of the arbitration award, M&C has had extreme difficulty in collecting the amount
due,” J.A. at 75 (Contempt Order at 2).
Finally, on September 14, 2006, the district court issued an order overruling Behr’s
objections to the magistrate judge’s order requiring Behr to produce a witness for deposition in
Detroit, Michigan. J.A. at 84-85 (Discovery Order). The magistrate judge’s amended discovery
order noted that “Plaintiff [M&C] obtained a money judgment against [Behr, and Behr] has since
frustrated the attempts of [M&C] and this Court to ascertain the nature and location of [Behr’s]
5
assets.” J.A. at 485-86 (Amended Discovery Order at 2-3). Although Behr’s counsel had claimed
that Behr was insolvent under German law and was under the control of an estate administrator who
lacked relevant personal knowledge and funds to travel to the United States, J.A. at 459-60
(Discovery Order at 1-2), the U.S. Bankruptcy Court for the Eastern District of Michigan denied
Behr’s application for recognition of a foreign bankruptcy proceeding. J.A. at 485 (Amended
Discovery Order at 2). Behr identified a representative willing to testify by phone from Germany,
but this individual was affiliated with Behr Automotive, not Behr. Appellant Br. at 52-53. The
magistrate judge found that this proposal did not comply with the discovery order, and the magistrate
judge amended the discovery order, requiring Behr to make a number of disclosures and to designate
and make available a witness for a deposition in Detroit. J.A. at 486 (Amended Discovery Order).
Behr timely appealed all three orders of the district court. In March 2007, M&C filed a
motion to dismiss Behr’s appeals for lack of jurisdiction, contending that none of the orders were
final, appealable orders. In April 2007, Behr filed a response, and M&C then filed a reply.
II. ANALYSIS
A. Statutory Damages and Litigation Expenses Order
M&C argues that we lack jurisdiction to review the district court’s order awarding M&C
statutory damages and litigation expenses because the order was not a final judgment, as it left
undetermined the amount that M&C was entitled to receive. Behr argues that the Arbitrator’s 2005
letter was a “new award” requiring confirmation before any enforcement proceeding. Neither
argument is convincing, and we address each in turn. Finally, Behr argues that the district court
improperly granted M&C’s motion for damages and expenses when no arbitrator had considered or
ruled on these claims, and we agree.
6
1. Jurisdiction
M&C contends that the district court’s Statutory Damages and Litigation Fees Order is not
an appealable final judgment because the district court did not award a precise amount of litigation
expenses, but remanded the issue to the magistrate judge for consideration after M&C produces
evidence of its expenses. See Appellee Br. at 29; see also Appellee’s Motion to Dismiss.3 As Behr
notes, however, the portion of the order awarding M&C statutory penalties is complete and final.
We have noted that “[a]s a practical matter, most post-judgment orders should be deemed final
because ‘there is often little prospect that further proceedings will occur to make them final.’”
United States v. One 1985 Chevrolet Corvette, 914 F.2d 804, 807 (6th Cir. 1990) (quoting United
States v. Washington, 761 F.2d 1404, 1406 (9th Cir. 1985)). In its order regarding statutory penalties
under the MSRCA, the district court fixed a specific amount, and only M&C’s collection of that
amount remains. We have held that “[u]nder the doctrine of pendent appellate jurisdiction . . . a
court of appeals may, in its discretion, ‘exercise jurisdiction over issues that are not independently
appealable when those issues are “inextricably intertwined” with matters over which the appellate
court properly and independently has jurisdiction.’” Farm Labor Org. Comm. v. Ohio State
Highway Patrol, 308 F.3d 523, 549 (6th Cir. 2002) (quoting Chambers v. Ohio Dep’t of Human
Servs., 145 F.3d 793, 797 (6th Cir. 1998)).
3
The parties vigorously dispute whether an order finding liability for, but not determining the
amount of, attorney fees is final and appealable. M&C’s position appears correct: such an order
may not be appealable. See Loudermill v. Cleveland Bd. of Educ., 844 F.2d 304, 308 (6th Cir. 1988)
(noting prior holding “that while a judgment on the merits was a final judgment and could be
appealed when the amount of attorneys’ fees was undecided, such reasoning did not apply to a
splitting of the elements of attorneys’ fees”) (internal citation omitted). As explained in text above,
however, resolving this issue does not settle the matter because the district court’s award of statutory
damages under the MSRCA is a final order.
7
The district court’s Statutory Damages and Litigation Fees Order deals with two claims under
the MSRCA, and the order completely disposes of the statutory penalties claim. M&C concedes that
the statutory penalty aspect of the order is final and appealable but argues that we should not
consider the appeal essentially because of Behr’s history of delay and obstruction. Appellee’s
Motion to Dismiss at 18-19. Although we recognize that this litigation has a protracted history, we
nonetheless exercise our discretion to consider the issue of litigation expenses along with the
intertwined issue of the propriety of damages under the MSRCA.
2. The Need to Confirm the Arbitrator’s 2005 Clarification Letter
Behr argues that the Arbitrator’s 2005 Clarification Letter is a new award requiring judicial
confirmation under the FAA prior to enforcement. Appellant Br. at 31-36. Behr describes the letter
as a new award because the arbitrator held a hearing, considered new evidence, and determined a
specific amount of damages owed to M&C. We have previously held, however, that “the arbitrator
has the power . . . to go back and ‘clarify’ an ambiguous or incomplete portion of an award,” and that
is precisely what the arbitrator did in this case. Sterling China Co. v. Glass, Molders, Pottery,
Plastics & Allied Workers Local No. 24, 357 F.3d 546, 555 (6th Cir. 2004). The parties have
disputed the scope of the arbitrator’s original Eighth Award, which was a forward-looking order of
specific performance that commanded Behr to pay M&C commissions on the future sales of a class
of products. The parties’ dispute as to which products the arbitrator intended to include in this order
has exceeded a decade, and all the possible parts on which M&C might conceivably deserve a
commission were sold long ago. After the matter was finally remanded in 2005 to the original
arbitrator, he held a hearing and issued a letter clarifying the exact products he had meant to include
in the original award. Once the arbitrator identified those products using Behr’s own sales records,
8
as kept by the court-appointed receiver, J.A. at 290 (Arbitrator’s 2005 Clarification Letter at 5), the
matter of calculating the commissions owed to produce an award total was a simple, ministerial task.
Even the case law that Behr cites supports viewing the arbitrator’s letter as a clarification and
not a new award requiring confirmation. As the Seventh Circuit has explained, when determining
whether an arbitrator’s action is an award, courts should “go beyond a document’s heading and delve
into its substance and impact.” Publicis Commc’n v. True North Commc’ns, Inc., 206 F.3d 725, 729
(7th Cir. 2000); see also Appellant Br. at 32-36 (citing Publicis). The substance and impact of the
arbitrator’s 2005 letter, issued after a remand ordered by the district court, was merely to clarify the
scope of the original award, not to issue any new award to M&C. The original Eighth Award was
one of specific performance, and although the arbitrator held a hearing and heard new evidence, the
effect of the letter was merely to clarify and determine precisely what Behr should have paid M&C
under the original award.
We conclude that the arbitrator’s 2005 letter was merely a clarification of the original award
that did not require confirmation.
3. The Award of Damages and Litigation Expenses under the MSRCA
Behr contends that the district court lacked the authority and jurisdiction to grant M&C’s
motion for damages and litigation expenses under the MSRCA. We agree.
As we noted in Behr I, the parties’ contract required them to submit disputes to arbitration.
Behr I, 87 F.3d at 846 (noting that the district court stayed proceedings on Behr’s breach of contract
suit and “ordered the parties to submit the dispute to arbitration as required by the contract”). To
receive damages, the MSRCA requires a showing that a defendant “intentionally failed to pay the
commission when due,” and the MSRCA provides litigation expenses only to a “prevailing party,”
9
which it defines as “a party who wins on all the allegations of the complaint or on all of the
responses to the complaint.” MICH . COMP. LAWS § 600.2961. In his 2005 letter, the arbitrator
specifically declined to consider the issues of damages and expenses, noting that although “M&C
also claim[s] attorney’s fees and costs[, t]hose are not a matter for me but for the US Courts in which
proceedings for enforcement have been brought.” J.A. at 288 (Arbitrator’s 2005 Letter at 3).
Nonetheless, we believe that the issues of whether Behr “intentionally failed to pay” commissions
to M&C and whether M&C qualifies as a “prevailing party” are questions that an arbitrator, not the
district court or magistrate judge, must answer given the parties’ contract requiring arbitration of
their disputes.
Behr made this argument to the district court, but the court summarily rejected it. The district
court stated Behr’s position as, “[i]n short, if the arbitrator did not make a ruling on statutory
penalties, Behr argues, this Court is unable to make a ruling.” J.A. at 69 (Statutory Damages and
Litigation Fees Order at 5). The district court labeled that objection “meritless,” explaining that “the
arbitrator did make a ruling on [M&C’s] entitlement to these additional expenses in his original
March 1, 1994 arbitration award,” in which “the arbitrator found that M&C was entitled to statutory
penalties.” Id. But, as Behr points out, the original arbitration award found that Behr “intentionally
failed” to pay commissions on sales that occurred between 1991, when Behr terminated the
agreement with M&C, and 1994, when the arbitration occurred. Appellant Br. at 21-26. In 2005,
M&C was seeking damages for Behr’s failure to pay commissions on sales that occurred after the
1994 arbitration and award. The arbitrator’s finding in 1994 regarding Behr’s conduct between 1991
and 1994 could not possibly be relevant to whether Behr “intentionally failed” to pay these later
10
commissions. Whether Behr intentionally failed to pay these later commissions is a new question
that an arbitrator, not the district court, should address in this first instance.4
The issue of M&C’s entitlement to litigation expenses was similarly improper for the district
court to decide. The arbitrator’s original 1994 award found that M&C was entitled to litigation
expenses as a prevailing party under the MSRCA, J.A. at 388-89 (Arbitration Award at 42-43)
(awarding M&C $335,793.47 in legal expenses because it “succeeded” on the vast majority of its
claims), but the arbitrator’s June 2005 letter expressly declined to consider whether M&C was
entitled to litigation expenses from litigating the scope of the Eighth Award. J.A. at 288
(Arbitrator’s 2005 Clarification Letter at 3). While the arbitrator’s 2005 letter did adopt a view of
the Eighth Award in line with M&C’s view of the award, the question of whether M&C is a
prevailing party—which determines any entitlement to litigation expenses—is a matter that an
arbitrator, not the district court, should determine.5
In sum, we AFFIRM the district court’s Statutory Damages and Litigation Fees Order insofar
as it determined that the arbitrator’s 2005 letter was merely a clarification of the original award that
did not require confirmation, but we REVERSE the remainder of the order because the court
4
Furthermore, given that the parties vigorously debated the scope of the Eighth Award for
years, with the district court and our court reaching varying interpretations of its meaning, we note
that Behr would seem to have a strong good-faith defense for its failure to pay M&C the
commissions. Indeed, in Behr IV, we initially agreed with Behr’s interpretation of the Eighth Award
and sought further submissions from the parties to determine whether Behr had already satisfied the
award or, in fact, overpaid M&C under Award Eight. Behr IV, 411 F.3d at 758, 761-62 (stating that
“[w]e agree with Behr” and noting expert’s calculation that Behr overpaid M&C).
5
Because we conclude that M&C may not receive litigation expenses prior to an arbitrator’s
finding that M&C is entitled to them, we do not address the parties’ dispute regarding whether the
cost of the court-appointed receiver may be recovered as a “court cost” under MICH . COMP. LAWS
§ 600.2961(6).
11
improperly usurped the role of the arbitrator in determining whether M&C was entitled to damages
and litigation expenses under the MSRCA.
B. Contempt Order
1. Standard of Review
“This Court reviews a district court’s finding of contempt for an abuse of discretion.” Liberte
Capital Group, LLC v. Capwill, 462 F.3d 543, 550 (6th Cir. 2006). “An abuse of discretion exists
where the district court relied upon clearly erroneous findings of fact or applied an incorrect legal
standard [and t]his Court will reverse only if it is left with a firm and definite conviction that a
mistake has been made.” Id. (internal citation omitted).
“The movant in a civil contempt proceeding bears the burden of proving by clear and
convincing evidence that the respondent ‘violated a definite and specific order of the court requiring
him to perform or refrain from performing a particular act or acts with knowledge of the court’s
order.’” Id. (quoting Glover v. Johnson, 934 F.2d 703, 707 (6th Cir. 1991)). “This Court requires
that the prior order be ‘clear and unambiguous’ to support a finding of contempt.” Id. at 550-51
(quoting Grace v. Ctr. for Auto Safety, 72 F.3d 1236, 1241 (6th Cir. 1996)). We must resolve
ambiguities “in favor of the party charged with contempt.” Id. at 551.
2. Jurisdiction
M&C argues that we lack jurisdiction to hear an appeal of a contempt order, citing Joy &
Middlebelt Sunoco, Inc. v. Fusion Oil, Inc., 179 F. App’x 301, 303 (6th Cir. 2006), for the
proposition that “a civil contempt order . . . is not considered a final order in this Circuit.” In Fusion
Oil, however, we next immediately quoted McAlpin v. Lexington 76 Auto Truck Stop, Inc., 229 F.3d
491, 500 (6th Cir. 2000), in which we stated that “a ‘judgment of civil contempt is not [itself] a final
12
decree,’ and therefore is not appealable in the absence of a final judgment.” McAlpin, 229 F.3d at
500 (alteration in original, emphasis added) (quoting Blaylock v. Cheker Oil Co., 547 F.2d 962, 965
(6th Cir. 1976)); see also United States v. Conces, 507 F.3d 1028, 1037 n.7 (6th Cir. 2007) (citing
McAlpin and stating that “the post-judgment contempt order entered by the district court in this case
is considered final and reviewable”). This appeal involves a final judgment, and, as we noted in
McAlpin, the policy of preventing piecemeal litigation is served when a final judgment exists
because the concern that the appeal of the contempt order represents an interlocutory order is not
present. Id.
M&C misreads Fusion Oil and McAlpin, and both cases demonstrate that we have
jurisdiction in this case to hear Behr’s appeal of the district court’s order finding it in contempt.
3. Analysis
Behr challenges the contempt order on the ground that the wording in the original orders was
ambiguous and did not cover the transaction in question. We disagree, and accordingly we
AFFIRM the contempt order.
As stated above, on January 31, 1996, the district court stated that it would “impose a limited
receivership over any direct or indirect property interest held by Erwin Behr in Behr Industries [BIC]
of Grand Rapids, Michigan.” J.A. at 115 (Receivership Order at 18). On March 29, 1996, the
district court issued an Addendum to the Receivership Order, which contained the following
language: “IT IS FURTHER ORDERED that the defendant, Erwin Behr GmbH & Company, KG,
its officers, agents, servants, employees, attorneys . . . are enjoined from directly or indirectly
transferring, receiving, changing, encumbering, selling, removing, assigning or otherwise disposing
13
of any assets and property owned, controlled, or in possession of the defendant.” J.A. at 123.
(Addendum to Receivership Order).
Behr’s challenge to the contempt order hinges on arguing that because the words “directly
or indirectly” modify the list of verbs beginning with “transferring,” and do not modify the phrase
“any assets and property owned, controlled, or in possession of the defendant,” the Addendum to the
Receivership Order did not clearly reach Behr’s “indirect” property interest in BIC, a subsidiary
corporation several levels below Behr. Even resolving any possible ambiguities in favor of the party
charged with contempt, this argument lacks any merit. As the district court noted in its contempt
order, the “January 31, 1996 receivership order . . . noted that Behr may be holding and concealing
assets through a chain of affiliates, including BIC.” J.A. at 78 (Contempt Order at 5). Further,
although Behr expends much effort arguing that, under doctrines of corporate law, a parent company
does not “own” legally distinct subsidiary corporations, Behr ignores that the Addendum also
prohibited Behr from transferring or disposing of “any assets and property . . . controlled” by it. J.A.
at 123 (Addendum to Receivership Order) (emphasis added). A corporation that owns 100% of the
shares of another corporation, or chain of corporations, “controls” those corporations in any
meaningful sense of the word. Most importantly, the Receivership Order made specific reference
to BIC. J.A. at 115 (Receivership Order at 18).
Given that the Order’s operative language included the word “controlled” and that the Order
specifically referred to BIC, we hold that the district court did not abuse its discretion in finding Behr
in contempt.
14
C. Discovery Order
1. Standard of Review
“[I]t is well established that the scope of discovery is within the sound discretion of the trial
court.” Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1240 (6th Cir. 1981).
2. Jurisdiction
M&C argues that we lack jurisdiction over Behr’s appeal of the district court’s discovery
order because “post-judgment orders granting discovery, such as those relating to judgment debtors
‘are not considered final judgments and may be appealed only after the issuance of a contempt order
for failure to comply.’” Piratello v. Philips Elecs. N. Am. Corp., 360 F.3d 506, 509 (5th Cir. 2004)
(quoting Richmark Corp. v. Timber Falling Consultants, Inc., 937 F.2d 1444, 1449 (9th Cir. 1991));
see also Appellee Br. at 31-32 (citing Piratello and Richmark along with cases from the Seventh and
Eleventh Circuits). M&C also notes that the Seventh Circuit has observed that when a “judge orders
discovery, the person ordered to produce, if desperate for an immediate appeal, can disobey the order
and appeal the resulting judgment for criminal contempt.” Cent. States, Se. & Sw. Areas Pension
Fund v. Express Freight Lines, Inc., 971 F.2d 5, 6 (7th Cir. 1992).
Behr counters with two arguments: that a contempt order is present in this case, and that
M&C misreads Judge Posner’s opinion in Express Freight Lines. See Appellant Resp. to Mot. to
Dismiss at 9-11. We agree with Behr’s second argument that M&C misreads Judge Posner’s opinion
in Express Freight Lines and that his reasoning would support holding that jurisdiction exists over
Behr’s appeal in this case. Appellant Resp. to Mot. to Dismiss at 10.
Behr highlights the following language from Express Freight Lines:
15
A contested collection proceeding will end in a judgment or a series of
judgments granting supplementary relief to the plaintiff. The judgment that
concludes the collection proceeding is the judgment from which the defendant can
appeal. In doing so he can of course bring before the appellate court any
interlocutory orders of which he complains that have not become moot, including an
order granting his adversary postjudgment discovery. But that order is not appealable
until then.
Express Freight Lines, 971 F.2d at 6 (internal citations omitted); see also Appellant Reply Br. at 5-6;
Appellant Resp. to Mot. to Dismiss at 10. We have previously cited Express Freight Lines regarding
a related point. United States v. Worthy, No. 97-4459, 1998 WL 898840, at *1 (6th Cir. Dec. 17,
1998) (per curiam order) (stating that “the district court’s order denying Worthy’s discovery motion
was a final judgment” and citing Express Freight Lines).
We therefore hold that a party may appeal a post-judgment order granting discovery when
the party is also appealing the collection judgment itself, as is the case here given that Behr is
appealing the district court’s final order regarding the assessment of statutory damages and litigation
expenses under the MSRCA. We proceed to discuss whether the district court abused its discretion
in granting M&C’s motion for discovery.
3. Analysis
In light of the history of this case, in which Behr has received numerous sanctions for its
tactics of delay and obstruction,6 and given what the magistrate judge termed Behr’s “unequivocal”
6
See M & C Corp. v. Erwin Behr GmbH & Co., KG, 34 F. Supp. 2d 543, 548, 545 (E.D.
Mich. 1999) (“not[ing] that the conduct of Erwin Behr throughout the pendency of these collection
proceedings has been deplorable” and that “[m]any of [M&C’s] valid discovery techniques have
been resisted by Erwin Behr, particularly the depositions of the [BIC] and Erwin Behr
representatives[,] . . . [which] is consistent with its prior attempts . . . to frustrate the development
of this case and delay the ultimate payment of its obligation”); see also M & C Corp. v. Erwin Behr
GmbH & Co., KG, 165 F.R.D. 65, 67 (E.D. Mich. 1996) (describing Behr’s attitude as “disgraceful,”
its “calculated strategy to delay payment of this judgment,” and its “blatant lack of respect for the
authority of this nation’s judicial process”).
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violation of the district court’s Receivership and Addendum orders, the district court did not abuse
its discretion in entering the discovery order in this case. In its 1996 Receivership Order, the district
court presciently observed that because “Behr has already demonstrated that its disclosures have not
been consistently accurate . . . there is a very real concern in this case that assets of a foreign
corporation, which might otherwise be used to satisfy this judgment, may be removed from the
jurisdiction of this court.” J.A. at 115 (Receivership Order at 18). For that reason, the district court
“impose[d] a limited receivership over any direct or indirect property interest held by Erwin Behr
in [BIC] of Grand Rapids, Michigan.” Id. In May 2005, while this case was pending before this
court, one of Behr’s subsidiaries, over which it had total control, sold off a subsidiary that owned
BIC in blatant violation of the district court’s order.
After M&C learned that Behr had sold BIC, M&C sought to depose a representative of Behr
regarding this transaction, and Behr has refused to designate any witness, claiming it has entered
bankruptcy in Germany. But as M&C notes, Behr has twice had its petitions for recognition of a
foreign bankruptcy proceeding dismissed. Appellee Br. at 60-61 (citing dismissals). Further, M&C
notes that although Behr contends that its German bankruptcy proceeding was filed in August 2005
and power over the company was vested in a person beyond its control, Appellant Br. at 50-51, Behr
was nonetheless able on October 13, 2005, to secure a sworn declaration from Klaus Villwock, who
stated that he was the former manager of Behr who could testify about various matters relating to
Behr for the purpose of challenging the contempt order. J.A. at 302-03 (Villwock Aff.); Appellee
Br. at 61-62.
In light of these facts, the district court’s statement that “[t]he Magistrate Judge did not err
in believing that there must be at least one person who can speak on behalf of Behr” was not an
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abuse of discretion. J.A. at 84 (Order Overruling Behr’s Objections to Magistrate Judge’s Discovery
Order); see also J.A. at 459-61 (Magistrate Judge’s Order Granting M&C’s Motion to Compel
Discovery).
In sum, we hold that we have jurisdiction to consider Behr’s appeal of the discovery order
alongside Behr’s appeal of the statutory damages and litigation expenses order and the contempt
order. We also hold that the district court did not abuse its discretion in ordering that Behr designate
an official for a deposition in the United States.
III. CONCLUSION
For the reasons discussed above, we DENY M&C’s motion to dismiss the appeal, we
AFFIRM the district court’s contempt and discovery orders, but we AFFIRM in part and
REVERSE in part the order regarding litigation expenses and statutory penalties.
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