Pearle Vision Inc v. Romm, Victor ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 07-2681
P EARLE V ISION, INC., a Delaware corporation, AND
P EARLE, INC., a Delaware corporation,
Plaintiffs-Appellees,
v.
V ICTOR R OMM , individually and d/b/a R OMM & C O ., INC.,
R OMM V ISION E NTERPRISES, INC., et al.,
Defendants-Appellants.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 04 C 4349—Joan Humphrey Lefkow, Judge.
____________
A RGUED JANUARY 23, 2008—D ECIDED S EPTEMBER 3, 2008
____________
Before M ANION, R OVNER, and E VANS, Circuit Judges.
M ANION, Circuit Judge. Pearle Vision, Inc. (“Pearle
Vision”) filed suit against Victor Romm and three of his
companies alleging violations of their franchise agree-
ments. The district court entered a preliminary injunction
directing Romm to make certain items, including patient
2 No. 07-2681
files, available to Pearle Vision. The district court eventu-
ally found that Romm was not complying with the in-
junction, and entered a $1,000 per day contempt sanction
to remain in effect until the items at issue were provided
to Pearle Vision. After finding that Romm never com-
plied with its order, the district court entered judgment
on the contempt in the amount of $321,000. Romm
appeals arguing that he was not given an opportunity
to purge the contempt, that the amount of the judgment
was excessive, and that the district court failed to exercise
the leniency normally afforded pro se litigants. We affirm.
I.
Romm is an optometrist who, until 2004, operated four
Pearle Vision stores pursuant to franchise agreements
he had entered into with Pearle Vision. On June 29, 2004,
Pearle Vision filed suit alleging that Romm had materially
defaulted under those agreements.1 Romm’s alleged
infractions included incorrectly charging customers or
charging them for services or products not received, poor
record keeping, and abandoning at least one store for
three or more days. Pearle Vision sought damages for
Romm’s violation of the franchise agreements, as well as
a permanent injunction prohibiting Romm from further
operating the stores and granting possession of them to
Pearle Vision.
1
In addition to suing Romm individually, Pearle Vision filed
suit against Romm doing business as Romm & Co., Inc., Romm
Vision Enterprises, Inc., and Eyes 2000, Ltd. For ease of dis-
cussion, we refer to the defendants collectively as “Romm.”
No. 07-2681 3
On August 13, 2004, Pearle Vision filed a motion for
a preliminary injunction asking the court to enjoin
Romm from further possessing or operating the stores,
using either the “Pearle” or “Pearle Vision” marks, or
competing with Pearle Vision within three miles of the
stores in question. The parties appeared for a hearing on
September 27, 2004.2 They informed the court that they
had come to an agreement where Romm would cease
operation and give up possession of the stores, and cease
using Pearle Vision’s marks. Two days later, however,
Pearle Vision filed an emergency motion for a prelim-
inary injunction in which it alleged that Romm was
observed after 9:00 p.m. on September 28, 2004, removing
boxes from one of the stores and loading them onto a
rental truck. Pearle Vision asserted that this violated
portions of the franchise agreement requiring Romm to
cooperate in an orderly change of management when
the agreements were terminated, as well as giving Pearle
Vision the right to purchase equipment present in
the stores. Pearle Vision also argued that Romm was
obligated under their agreement to give it copies of all
his patient records. Romm responded that he had moved
the items in question to a storage unit, and that he was
entitled to do so because Pearle Vision failed to exercise
its purchase right upon initiating termination procedures
in June 2004. On September 30, 2004, the court entered
an emergency preliminary injunction directing Romm to
make all of the store’s equipment available to Pearle
2
Romm was represented by counsel during all proceedings
except as noted below.
4 No. 07-2681
Vision, and further stating “that Pearle Vision shall have
the right to inspect and remove all patient charts and
records, including all records relating to optometric or
opthomologic services from the operations on the pre-
mises, and inspect any hard drive which may contain
any such information.”
On October 5, 2004, Pearle Vision filed the first of three
petitions for a rule to show cause alleging that Romm had
failed to comply with the September 30 injunction. Pearle
Vision alleged, among other things, that Romm had
failed to make available to Pearle Vision’s representative
all of his patient records. These allegations were later
verified by Franchise Manager Michael Maziarek who
testified at a hearing that the only patient records he
found at Romm’s storage unit were three Tupperware
trays containing records no more current than 1999.
When Maziarek asked Romm about the remaining
records, Romm stated that anything not in the unit was at
the stores. Maziarek visited the stores the following day,
but again did not find any records more current than 1999.
He did find file drawers labeled “2003” and “2004,” but
they were empty. At the hearing on Pearle Vision’s peti-
tion, the court told Romm that it appeared he had vio-
lated the court’s order and that he was going to be sanc-
tioned, but that the sanction would be reduced if he
complied by making the delivery to Pearle Vision in a
timely fashion. The district court issued an order on
October 6, 2004, directing Romm to show cause why he
should not be held in contempt of court, and further
directing him to deliver to Pearle Vision, by 2:00 p.m. that
day at a Pearle Vision store in South Elgin, the equip-
No. 07-2681 5
ment and records as set forth in its September 30 injunc-
tion.
Despite this clear direction, Romm failed to show up on
October 6, prompting Pearle Vision to file its second
petition the following day. The court issued another
order, this time directing Romm to make delivery of the
relevant items to Pearle Vision by 1:00 p.m. of that day, and
again directing Romm to show cause why he should not
be held in contempt of court. Romm was not present at
the hearing on the second petition, but the district court
judge informed his counsel, who was present, that there
was “undoubtedly” going to be a sanction imposed on
Romm for his conduct and that she was “shocked and
appalled” by Romm’s behavior.
On October 12, 2004, Pearle Vision filed its third petition
for a rule to show cause. Pearle Vision alleged that Romm
arrived as directed on October 7, but still failed to comply
fully with the court’s injunction. First, Pearle Vision
claimed that Romm had failed to return the total amount
of equipment that would have been present in fully
equipped stores, and provided an itemized list of what it
believed to be missing. More importantly, Pearle Vision
alleged that Romm had failed to produce all of the
patient records. It admitted that Romm delivered boxes
of patient records which were later determined to cover
the years following 1999. Romm also delivered three
personal computers, but they contained no patient data.
This was not unusual because Pearle Vision stated that
the normal set-up in its stores was to have personal
computer input terminals which relayed patient data to
6 No. 07-2681
a central server that stored the information. However,
Romm did not produce a server. Thus, there was no way
to verify that all the physical records had been turned
over. Pearle Vision claimed to be further aggrieved be-
cause computer utilization of the patient files facilitates
easier searches of their contents and status.
A hearing on the third petition was held on October 14,
2004. While the hearing was not completed that day, the
court believed it had sufficient information before it to
establish Romm’s non-compliance with its injunction
order. Therefore, on that same day, the court entered an
order sanctioning Romm at the rate of $1,000 per day until
such time as he complied with the court’s September 30
injunction order by producing the equipment and patient
records in question. The court further stated that the
sanction was subject to its ultimate findings after com-
pleting the hearing.
The court resumed the hearing on October 22, 2004, and
heard testimony from Romm, Maziarek, and a computer
analyst named Gary Wadhani, who had analyzed the
computers received from Romm to determine their con-
tents. Wadhani confirmed the allegations Pearle Vision
made earlier that there was no patient data contained
on the machines. Wadhani also testified that upon
starting the computers, they attempted to connect to a
server, and that they were therefore likely only work
stations meant to connect to the machine that actually
contained data. Romm testified that he did not want to
be in contempt of court, and that he had returned every-
thing he had to Pearle Vision. Moments later, however,
No. 07-2681 7
he testified that he had maintained patient information,
such as addresses, appointment dates, and prescription
information, on computers in his stores.
The court found that Wadhani’s testimony, as well as
Romm’s admission that he kept patient data on com-
puters, cast doubt on Romm’s assertion that he had
complied with the court’s order to deliver all patient
records to Pearle Vision.3 After noting its hope that the
sanction amount would not turn into an actual judgment,
the court expressed its belief that Romm was not in
compliance with the injunction order. It stated that Romm
had been given an opportunity to explain what hap-
pened to the data patient files and had failed to do so and
that the $1,000 per day sanction would remain in place
until Romm could establish compliance with the court’s
order.
On September 12, 2005, the district court entered sum-
mary judgment on the merits of the case in favor of Pearle
Vision in the amount of $325,521.99. The court also di-
rected Romm to show cause why $321,000 in sanctions
should not be added to the judgment. This was the amount
to which the $1,000 per day sanction had accumulated
between October 14, 2004, and September 1, 2005, the date
3
At the hearing, the parties still disputed whether Romm had
turned over all the equipment required by the injunction.
However, because Romm admitted that patient files were
maintained on computers, and these computer files were
nowhere to be found, the court based its decision to leave the
sanction in place on the patient records.
8 No. 07-2681
Pearle Vision’s motion for summary judgment was
granted. This amount was not set in stone, however, as
Romm was afforded the opportunity to file his individual
and corporate tax returns for the years 2002 through 2004
“[i]n order to ascertain the correct amount of the judg-
ment to be entered on this sanction.” Additionally, the
district court stated that if Romm provided Pearle Vision
with all of the patient records at issue within fourteen
days, the order imposing the $1,000 per day sanction
would be vacated.
Romm filed an affidavit on September 27, 2005, stating
that he wished to avail himself of the second option put
to him by the court regarding the patient records. He then
proceeded to make the same arguments he had made in
October 2004—that he had complied with the court’s
order by turning over all of the physical records, and
that he was not in possession of any electronic files stored
on computers or otherwise. At a hearing on October 6,
2005, the court said it would not revisit its earlier factual
finding that Romm was not in compliance because he
had failed to produce electronic patient files. The court
then spelled out for Romm that since he was admitting
an inability to produce the missing computer files, his
only remaining option was to file his tax returns, and
he was given another week within which to make that
filing. Romm decided on another option and filed
for bankruptcy on October 10, 2005. As a result, on
October 13, 2005, the district court dismissed the action
without prejudice and with leave to reinstate.
Following proceedings in the bankruptcy court, Pearle
Vision filed a motion to reinstate proceedings and for an
No. 07-2681 9
entry of judgment on the contempt orders on April 11,
2007. Pearle Vision informed the court that while the
damages portion of the judgment had been discharged
by the bankruptcy court, that court believed the district
court was in a better position to determine whether
Romm’s contumacious conduct was willful and malicious,
and therefore nondischargeable pursuant to 11 U.S.C.
§ 523(a)(6).4 The parties appeared before the court for
a hearing on Pearle Vision’s motion on April 19, 2007.
For the first time in the course of the protracted proceed-
ings, Romm appeared before the court pro se.5 The dis-
trict court asked Pearle Vision if there was an amount
below $321,000 that it would accept in satisfaction of the
contempt amount, and Pearle Vision indicated that there
likely was if the court found that Romm’s conduct
had been willful and malicious, and therefore
nondischargeable. The district court stated its reluctance
to saddle Romm with the type of liability that would
“ruin his life,” and encouraged the parties to attempt to
settle the matter. The court also set the next hearing for
May 31, 2007. On May 1, 2007, the district court entered an
4
“A discharge under . . . this title does not discharge an
individual debtor from any debt . . . for willful and malicious
injury by the debtor to another entity or to the property of
another entity.”
5
The record shows that Romm was represented by two
different attorneys during the district court proceedings, and
Pearle Vision represented in its motion to reinstate that Romm
also retained two different attorneys during the bankruptcy
proceedings.
10 No. 07-2681
order directing Romm to produce to Pearle Vision’s
attorney his personal and any corporate tax returns for the
years 2004 through 2006, as well as other documents that
would inform Pearle Vision of his financial standing.
Romm was directed to make these filings on or before May
21, 2007.
The district court was informed that Romm attempted to
file certain documents with the clerk’s office on May 21,
2007, in response to the court’s May 1 order. The docu-
ments included a copy of the court’s order, a handwritten
note stating that Romm had no bank accounts, interest
in real property, or interest in any business, a completed
in forma pauperis application, and an unsigned copy of
Romm’s 2005 tax returns. The clerk’s office did not accept
these documents because they contained no case caption.
Romm filed no documents with Pearle Vision’s counsel as
he had been directed to do. Romm also failed to appear at
the May 31, 2007, hearing. The court offered a final oppor-
tunity to Romm in an order entered the same day. Romm
was directed to withdraw the documents from the
clerk’s office, serve them on defense counsel, complete
compliance with the court’s May 1 order, and to appear
for a hearing on June 12, 2007. Romm did none of these
things, and took no further action below.
On June 14, 2007, the district court entered its final
memorandum opinion, providing a thorough recounting
of the proceedings, and stating that it found no basis
upon which it could discharge its earlier orders to show
cause. The court restated its finding that Romm had
failed to turn over all of the patient files as it had directed
No. 07-2681 11
him to do despite admitting that patient files were kept
in electronic form on computers in his stores. The court
concluded that Romm had willfully failed to turn over
the files and had willfully disregarded the court’s order,
and entered judgment against him and in favor of Pearle
Vision in the full sanction amount of $321,000. Romm
appeals.
II.
On appeal, Romm argues that he was not provided a full
opportunity to purge the contempt by the means set
forth in the court’s September 12, 2005, order, that the
district court’s sanction award was excessive and unrelated
to Pearle Vision’s damages, and that he was not provided
the leniency due a pro se litigator. For Romm to be held in
civil contempt, “he must have violated an order that sets
forth in specific detail an unequivocal command from the
court.” United States v. Dowell, 257 F.3d 694, 699 (7th Cir.
2001). The court’s power to enforce its order by civil
contempt “rests in its inherent limited authority to en-
force compliance with court orders and ensure judicial
proceedings are conducted in an orderly manner.” Id. Such
sanctions “are properly imposed for two reasons: to
compel compliance with the court order and to com-
pensate the complainant for losses caused by contemptu-
ous actions.” Tranzact Techs., Inc. v. 1Source Worldsite, 406
F.3d 851, 855 (7th Cir. 2005). We will not reverse the
district court’s imposition of civil contempt sanctions
unless the court abused its discretion. Dowell, 257 F.3d
at 699.
12 No. 07-2681
Romm’s first argument regards the district court’s
September 12, 2005, order in which it directed Romm to
either produce the patient records at issue or file his tax
returns for determination of a correct judgment amount.
Romm argues that the district court disregarded his
efforts to comply with this order and purge his contempt.
In support, he relies on his September 27, 2005, affidavit,
in which he stated that he
did not take [the] computers or [the electronic] records.
All of the computers from the three stores were either
left in the stores or removed to a storage shed. Pearle
Vision was given full access to the three (3) stores and
the storage shed where those computers were located.
The electronic patient records were stored to whatever
extent, within those computers for Pearle Vision’s
review.
Romm argues that this statement is “critical” because it
contradicts the testimony received by the court in October
2004. We do not see the significance of this argument.
Romm, in essence, attempted to reargue findings made by
the court almost a year before he filed his affidavit, namely
that he was not being forthright about his possession of
patient computer files, and that he had violated the court’s
order by not making these files available to Pearle Vision.
The contents of Romm’s affidavit were not as novel as he
now argues because it was his position at least since the
October 22, 2004, hearing that he was no longer in posses-
sion of any computer containing patient files. The court
found against Romm then, and he provided no reason
for the court to revisit that finding. Notably, Romm did
No. 07-2681 13
not move for reconsideration of the court’s earlier finding,
and it is doubtful such a motion would have been granted.
See Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251
(7th Cir. 1987) (noting that the “limited function” of
motions for reconsideration is “to correct manifest errors
of law or fact or to present newly discovered evidence”)
(quotation omitted).
Furthermore, the court’s finding was not based solely on
Romm’s admission that the computer files existed, and
therefore could not be undercut merely by Romm’s affida-
vit. In October 2004, the court expressly relied on
Maziarek’s testimony that patient information was nor-
mally stored on computers in the Pearle Vision stores he
managed, and Wadhani’s testimony that the computers
recovered from Romm were searching for a server with
which to connect. We do not believe the district court
abused its discretion in making this finding in October
2004, nor in declining to revisit it when presented with
Romm’s affidavit. See In re Grand Jury Proceedings of Decem-
ber, 1989 (Freligh), 903 F.2d 1167, 1170 (7th Cir. 1990)
(noting that the district court’s findings in contempt
proceedings are only disturbed when they are an abuse
of discretion or clearly erroneous).
That being the case, we believe that if anything pre-
vented Romm from purging his contempt under the
September 12, 2005, order, it was his own insistence on
continuing to argue that he had no files to produce, and
disregarding the other option made available to him by
the court. The district court’s order presented him with
two options—produce the files or submit his tax returns.
14 No. 07-2681
Romm chose the former, but then stated he had no files
to produce. He failed to make any attempt to submit his
financial information prior to filing bankruptcy, and the
attempt he made after the case was reinstated was woe-
fully inadequate.
On this point, we turn briefly to Romm’s argument that
the district court failed to afford him the leniency normally
given to pro se litigants. That courts are required to give
liberal construction to pro se pleadings is well established.
Kaba v. Stepp, 458 F.3d 678, 687 (7th Cir. 2006). However,
it is also well established that pro se litigants are not
excused from compliance with procedural rules. See McNeil
v. United States, 508 U.S. 106, 113 (1993) (noting that the
Supreme Court has “never suggested that procedural
rules in ordinary civil litigation should be interpreted so
as to excuse mistakes by those who proceed without
counsel”).
Romm’s repeated procedural violations, and not a lack of
lenience by the district court, were the reason that a
judgment for the full sanction amount was ultimately
entered against him. As the record demonstrates, much of
Romm’s contumacious behavior occurred while he was
represented by counsel. See nn. 2 and 5, supra. Once the
case was reinstated following bankruptcy proceedings,
Romm seems to have finally realized that rearguing the
computer files issue was not an option. However, his
attempt to produce his financial documents in response
to the court’s May 1, 2007, order was inadequate even by
pro se litigant standards. Romm’s production was incom-
plete, and he attempted to file the papers at the clerk’s
No. 07-2681 15
office instead of serving them on Pearle Vision’s counsel
as directed.6 The court did not leave Romm to his own
devices at this point, however. Instead, it issued an order
informing him that the documents would not be
accepted as filed, the reason for their rejection, and what
he should do next, namely, make a full production of the
responsive documents to Pearle Vision’s counsel. Leading
a pro se litigant through the steps he should follow by
piecemeal instructions can hardly be described as a lack
of leniency.
Furthermore, if Romm had any doubt about what he
should do, it could likely have been cleared up when he
appeared before the court. Unfortunately, Romm did not
appear at any hearings following the one held on April 19,
2007, even thought the May 31, 2007, hearing was sched-
uled in Romm’s presence at the April 19 hearing. The
record establishes that the district court treated Romm
fairly and repeatedly stated its desire that he not receive
a judgment against him for the full sanction of $1,000 per
day. A small level of cooperation from Romm, and cer-
tainly a level attainable by a pro se litigant, would have
resulted in a different outcome for him. However, Romm’s
6
Even if Romm had been directed to file the papers at the
clerk’s office, his inability or unwillingness to satisfy the basic
filing requirement of including a case caption is notable,
especially in light of how many pro se litigants fulfill this
basic requirement daily in courts across the country. Moreover,
Romm did not face some of the hurdles many pro se litigants
do, such as imprisonment. He is an optometrist who was free
to engage in the litigation to the best of his abilities.
16 No. 07-2681
failure to cooperate led to the entry of judgment in the
amount of $321,000. That judgment did not result from
the district court’s lack of deference for his pro se status.
Finally, regarding the judgment amount, Romm argues
that it is excessive and not related to Pearle Vision’s
damages. Our review of the record indicates that Romm
did not raise this argument before the district court. Romm
argued repeatedly that he should not have to pay the
sanction because he was not in possession of any com-
puter patient files. He never argued that the $1,000 per
day fine was unequal to Pearle Vision’s actual loss, unre-
lated to the magnitude of his contempt, or out of propor-
tion to his financial resources, which are our concerns
when reviewing a contempt amount. See United States v.
United Mine Workers of Am., 330 U.S. 258, 303-04 (1946).
Accordingly, this argument is waived. See Metzger v. Ill.
State Police, 519 F.3d 677, 681-82 (7th Cir. 2008).
III.
There was no basis for the district court to revisit its
earlier factual finding regarding Romm’s possession of the
computer patient files and his failure to turn them over.
Romm was therefore not denied an opportunity to purge
his contempt as set forth in the district court’s September
12, 2005, order. Additionally, the district court exhibited
sufficient deference to Romm’s pro se status when the
case was reinstated following the bankruptcy proceed-
ings. Finally, because Romm did not argue below that the
contempt amount was excessive, he waived the argument
No. 07-2681 17
and may not raise it here for the first time. Accordingly, the
judgment of the district court is A FFIRMED.
9-3-08