Opinion
Case No. 05-20470-CIV-UNGARO-BENAGES.
April 12, 2005
ORDER HOLDING DEFENDANT IN CONTEMPT OF THIS COURT'S ORDERS OF MARCH 11, 2005 AND MARCH 25, 2005
THIS CAUSE is before the Court upon Plaintiffs' Motion for an Order that Defendant Show Cause Why it Should Not be Held in Contempt, filed March 16, 2005 and Supplemental Memorandum, filed March 17, 2005. On March 21, 2005 the Court issued an Order Expediting Response, requiring Defendant to respond to Plaintiffs' motion no later than 12:00 p.m. on Tuesday, March 22, 2005. On March 22, 2005, Defendant filed its Response to which Plaintiffs replied on March 23, 2005. On March 31, 2005, this Court held an evidentiary hearing to determine whether Defendant should be held in contempt for failure to comply with this Court's March 25, 2005 Order Granting in Part Plaintiffs' Emergency Motion for Preliminary Injunction nunc pro tunc. On April 1, 2005, Plaintiffs filed their Memorandum in Support of Imposing Financial Sanctions Against Defendant to which Defendant responded on April 6, 2005. The parties then submitted Proposed Findings of Fact and Conclusions of Law on April 6, 2005. Additionally on April 6, 2005, in conjunction with its Response to Plaintiffs' Memorandum of Law in Support of Imposing Financial Sanctions Against Defendant, Defendant filed a Motion for Reconsideration of the Court's Ruling Finding Defendant in Contempt on March 31, 2005. Plaintiffs filed their response on April 7, 2005 to which Defendant replied on April 11, 2005.
Plaintiffs also seek an order from this Court "clarify[ing] the proper management of BTL." (Pls.' Memorandum of Law in Support of Imposing Financial Sanction, at 7.) Specifically, Plaintiffs move the Court to issue an order stating that Prosser is the Non-executive Chairman and Vondras is the Managing Director. Although Plaintiffs couch their argument as a motion for clarification, the Court notes that the positions of Non-executive Chairman and Managing Director were not raised or argued during the Court's Preliminary Injunction hearing. Therefore, the Court does not consider this issue a clarification of its Injunction Order, but rather finds that Plaintiffs may raise it through separate motion.
Having carefully listened to the evidence and having considered the motion, the pertinent portions of the record and being otherwise fully advised in the premises, the Court finds Defendant in Contempt of this Court's Order nunc pro tunc to March 29, 2005 for the reasons explained below.
BACKGROUND
On March 25, 2005, the Court entered its written Order Granting in Part Plaintiffs' Motion for Preliminary Injunction, nunc pro tunc for March 11, 2005. In addition to other relief, the Court enjoined the parties as follows:
(1) The four "C" directors placed into office on February 9, 2005 are removed.
(2) BT/ICC's two "C" directors appointed under Article 90(D)(i) are restored.
(3) BT/ICC's two "C" directors appointed under Article 90(D)(ii) are restored.
(4) BT/ICC's two directors appointed pursuant to Section 88(A) of BTL's Articles of Association ("Special Share Provision") shall remain in place. The GoB's two directors appointed pursuant to Section 90(B) and (C) of BTL'S Articles of Association ("`B' Directors") shall remain in place. Accordingly, BT/ICC shall have a total of six directors on the board of BTL and the GoB shall have a total of two directors.
(DE 80, at 43.) The Court's Order further stated that neither party would be permitted to remove any directors from the BTL board unless done so in accordance with BTL's Articles of Association. The practical effect of the Order was to restore a 6-2 board, whereby Plaintiffs controlled two "C" directors pursuant to Article 90(D)(i), two directors pursuant to Article 90(D)(ii) and two directors pursuant to Article 88(A), leaving Defendant in control of the two "B" directors pursuant to 90(B) and 90(C). Based on the evidence presented at the preliminary injunction hearing, this composition of the board should have had the corollary effect of placing Jeffrey Prosser back in position as Chairman of BTL.
On March 17, 2005, deputy secretary of BTL, Herbert Sampson, acting on the orders of Prosser, sent a letter, via fax and federal express, to the secretary of BTL, Wilman Black, instructing him to issue a notice to BTL's board of directors ("the restored board of directors") that a board meeting of BTL would be held on March 29, 2005. (Pls.' Ex. 7.) Mr. Sampson also directed Black to secure BTL's books, records, seals and materials and deliver them to the restored directors at the meeting. (Pls.' Ex. 7.) Sampson subsequently called Black in the afternoon on March 17, 2005 to confirm that he received the letter and would comply with Sampson's instructions. (Direct Testimony of Herbert Sampson, March 31, 2005, at 65.) During their conversation, Black informed Sampson that he had secured BTL's books, records, seals and materials, but that he could not notify BTL's restored board of directors of the March 29, 2005 meeting or deliver to them BTL's books, records, seals and materials. (Direct Testimony of Herbert Sampson, March 31, 2005, at 65-66.) In response, on March 21, 2005, Sampson sent a notice to each director of BTL's restored board of directors, via e-mail, fax and federal express, informing them that a board meeting would be held on March 29, 2005. (Direct Testimony of Herbert Sampson, March 31, 2005, at 74; Pls.' Ex. 6.)
The "restored board of directors" is the board defined by this Court's March 25, 2005 Order consisting of Plaintiffs' two directors appointed under Article 88(a), Plaintiffs' four "C" directors appointed under Article 90(D)(i) and 90(D)(ii) and Defendant's two "B" directors appointed under Article 90(B).
That same day, Defendant, acting together with the other minority "C" shareholders, purportedly removed the existing four "C" directors of BTL that were previously restored by the Court's March 11 Order. (Pls.' Ex. 9.) Furthermore, Defendant together with the minority "C" purportedly, pursuant to Article 90(D)(i), appointed four new "C" directors in their place. (Pls.' Ex. 9.) No notice of these actions was given to Sampson or to Plaintiffs' directors restored by this Court's Order. (Direct Testimony of Herbert Sampson, March 31, 2005, at 76; Direct Testimony of Bobby Lubana, March 31, 2005, at 49.) Additionally, on March 21, 2005, Defendant purportedly replaced the two "B" directors that it appointed on February 9, 2005 with two new "B" directors. (Pls.' Ex. 33.) Again, no notice was given to inform Plaintiffs' directors of this action. (Direct Testimony of Herbert Sampson, March 31, 2005, at 75; Direct Testimony of Bobby Lubana, March 31, 2005, at 52.)
This Court's March 25, 2005 Order makes clear that Defendant, in agreement with the other minority "C" shareholders, only had the power to remove Plaintiffs' two directors appointed under Article 90(D)(i) because they did not hold the Special Share.
Then, on March 22, 2005, Defendant sold 4,000,000 of the "B" shares and 1,531,278 of the "C" shares that it had seized from Plaintiffs under the Share Pledge Agreement to E-COM Ltd. ("E-COM"). (Pls.' Ex. 21; Direct Testimony of Bobby Lubana, March 31, 2005, at 59-60.) This transaction left Defendant holding 10,292,173 "C" shares and 3,520,000 "B" shares, totaling 28% of the "C" shares, 44% of the "B" shares and 37% of the issued share capital of BTL.
Subsequently, on March 23, 2005, this Court orally reaffirmed its March 11 Order and informed the parties again that Plaintiffs controlled, at a minimum, four directors on BTL's board depending on the actions taken by Defendant and the other minority shareholders. The Court further confirmed that a party could only remove the "C" directors appointed under article 90(D)(ii) by holding both the special share and "C" shares equal to or greater than 37.5% of the issued share capital of BTL. That same day, the Prime Minister of Belize, Said Musa, issued a press release stating that Defendant held three directorships on the board of BTL and that E-COM, with its block of shares purchased from the Defendant, held three directorships on the board of BTL. Additionally on March 23, 2005, Black, at the direction of Defendant, issued a certificate memorializing the Defendant's actions on March 21, 2005, removing the "C" directors which had previously been restored by the Court and appointing four new directors in their place. (Pls.' Ex. 9.)
On March 24, 2005, Black notified Prosser that the "the two appointed `B' directors have informed me that they will be unable to attend the Meeting . . . scheduled for March 29, 2005 in which case the meeting would be inquorate." (Pls.' Ex. 16.) Therefore, Black stated, the meeting had been moved to April 4, 2005. (Pls.' Ex. 16.)
On March 25, 2005, the Court issued a written Order nunc pro tunc to March 11, 2005 ordering that the four "C" directors of BTL that Defendant placed into office on February 9, 2005 were removed, that Plaintiffs' two "C" directors appointed under Article 90(D)(i) of BTL's Articles of Association were restored, that Plaintiffs' two "C" directors appointed under Article 90(D)(ii) were restored, that Plaintiffs' two directors appointed before February 9, 2005 pursuant to Article 88(a) and that Defendant's two "B" directors appointed on February 9, 2005 pursuant to Article 90(B) would remain in place on the board, and that neither party would be able to remove these directors unless in accordance with BTL's Articles of Association. (DE 80, at 43.)
On March 28, 2005, Prosser sent a letter to the Prime Minister requesting affirmation of Defendant's compliance with the Court's March 25, 2005 Order by 5:00 PM on March 29, 2005. (Pls.' Ex. 1.) Defendant did not respond to this letter. (Direct Testimony of Bobby Lubana, March 31, 2005, at 47.) Then, On March 29, 2005, John Vondras, BTL's prior managing director before Defendant removed him on February 9, 2005, instructed Aguilar at BTL to change BTL's website to list the board of directors as defined by this Court's Order and to list Vondras as managing director of BTL. (Direct Testimony of Bobby Lubana, March 31, 2005, at 58-59.) Aguilar stated that he could not fulfill Vondras' request without authorization from Defendant. (Direct Testimony of Bobby Lubana, March 31, 2005, at 59.)
On March 29, 2005, Prosser attempted to convene a meeting of the BTL board. (Direct Testimony of Bobby Lubana, March 31, 2005, at 47.) The directors in attendance consisted of three of Plaintiffs' "C" directors appointed under Article 90(D)(i) and 90(D)(ii), Plaintiffs' two directors appointed under Article 88(A) and Billy Musa, one of Defendant's "B" Directors appointed on February 9, 2005 and purportedly removed by Defendant on March 21, 2005. (Pls.' Ex. 2.) During the meeting Musa stated that Deputy Minister Ralph Fonseca had verbally informed him that Defendant had removed him as a "B" director and therefore Musa formally resigned as a "B" Director. (Pls.' Ex. 2.) Further, during the meeting the board suspended Black from his position as Secretary of BTL and Aguilar as CEO of BTL.
On March 29, 2005, Defendant filed a petition with the Belizean Supreme Court seeking a contrary interpretation of Article 90, and in particular Article 90(D)(ii), than made by this Court in its Order of March 11, 2005 and affirmed on March 25, 2005. Then, on March 30, 2005 the Solicitor General of Belize, Elson Kaseke, requested that Black give notice of an April 4, 2005 board meeting to Plaintiffs' 90(D)(ii) "C" directors and stated that the Defendant "is of the view that until such time as the said Article 90(D)(ii) Directors are removed from the Board of directors as required by and in accordance with Belizean law including the Articles of Association . . . the said directors are and remain members of the BTL Board of Directors, with the result that Belize Telecom/ICC will have four Directors on the Board, while the Government and its associates will have four Directors on the Board." (Pls.' Ex. 29.)
Thereafter, on March 31, 2005, at the contempt hearing, Defendant's counsel affirmed that Defendant now recognized the Court's Order and intended to proceed with a board meeting in accordance with that order on April 4, 2005. (Transcript of Contempt Hearing, at 103.)
LEGAL STANDARD
Federal courts have the power to enforce an injunction, if necessary, through contempt proceedings. Riccard v. Prudential Ins. Co., 307 F.3d 1277, 1296 (11th Cir. 2002) (citing Doe v. Bush, 261 F.3d 1037, 1064 (11th Cir. 2001)). Courts impose fines on a contemnor to both vindicate its legal authority to enter its original order and to compel the contemnor to conform its actions with the order. International Union UMWA v. Bagwell, 512 U.S. 821, 828 (1994). Civil contempt sanctions are designed to compel future compliance with a court order and for the benefit of the complainant. To enter civil contempt sanctions, a court must find by clear and convincing evidence that: (1) the allegedly violated order was valid and lawful; (2) the order was clear and unambiguous; and (3) the alleged violator had the ability to comply with the order." Riccard v. Prudential Ins. Co., 307 F.3d 1277, 1296 (11th Cir. 2002) (citing McGregor v. Chierico, 206 F.3d 1378, 1383 (11th Cir. 2000). Once the moving party demonstrates these elements, the burden shifts to the alleged contemnor to demonstrate an inability to comply with the court's order. Howard Johnson Co. v. Khimani, 892 F.2d 1512 (11th Cir. 1990) (citing United States v. Hayes, 722 F.2d 723, 725 (11th Cir. 1984)). If the court makes a finding of contempt, it is common to permit the contemnor to purge itself of further sanctions through compliance with the court's order. United States v. McCorkle, 321 F.3d 1292, 1298 (11th Cir. 2003).
ANALYSIS
The Court's analysis will focus first on the specific contempt factors enumerated in Riccard. Next, the Court will consider Defendant's specific contemptuous conduct. Finally, the Court will determine the appropriate sanctions for Defendant's contempt.
Plaintiffs have demonstrated that the first factor enumerated in Riccard, that the order be valid and lawful, is met by clear and convincing evidence. This Court announced its intention to enter its Injunction orally on March 11, 2005 and subsequently entered it in writing on March 25, 2005. The Court's Order was valid and lawful at the time it was entered and continues to be in effect.
The Court also finds that the second Riccard factor, that the order be clear and unambiguous, has been demonstrated by clear and convincing evidence. The Court's Order stated clearly that Defendant's four "C" directors were removed and Plaintiffs' four "C" directors were restored. The Court stated that Defendant's two "B" directors remained on the board and Plaintiffs' two directors appointed under Article 88(A) also remained. The Court further ordered that no directors were to be removed from the board unless done so in accordance with BTL's Articles of Association. The clear and unambiguous effect of the Order was to permit a board meeting to be held with a board of directors that reflected this Court's Injunction Order.
Finally, the Court concludes that Plaintiffs have demonstrated the third Riccard factor, that Defendant had the ability to comply with the Court's Order. At the time the Court's Order was entered, Defendant controlled a majority of the shares of BTL. Defendant controlled and still controls the officers who are exercising managerial control over BTL. Furthermore, the two "B" directors placed into office on February 9, 2005 and purportedly replaced on March 21, 2005 are controlled by Defendant. Therefore, the Court concludes that Plaintiffs have shown by clear and convincing evidence that Defendant had the ability to comply with this Court's Order.
Defendant's Contemptuous Actions
Defendant's actions since this Court announced its intention to enter an injunction on March 11, 2005 evidence a complete disregard for the Court's Order and reveal Defendant's conscious decision to undermine its effect. Specifically, the Court finds Defendant in contempt of its Order because Defendant never acknowledged or reconstituted the 6-2 board of directors and because Defendant willfully concealed from Plaintiffs the identity of its "B" and "C" directors in order to prevent Plaintiffs from holding a board meeting consistent with the Court's Injunction Order. One of the stated purposes of this Court's Injunction was to promote stability in BTL and allow the company to be managed within the bounds of BTL's Articles of Association while the parties awaited a trial on the merits. It seems clear that Defendant has done its best to frustrate that purpose. First, Plaintiffs attempted to call a board meeting for March 29, 2005 by instructing Black to send out notice to the restored board on March 17, 2005. Black refused and it appears to the Court that his refusal was based on Defendant's orders. In response, Plaintiffs sent out a notice to the restored board on March 21, 2005 that a meeting would be held on March 29, 2005. The Court notes that this was the last day in which a valid notice could be sent out to hold the meeting on March 29, 2005 because BTL's Articles of Association require seven days notice. (Direct Testimony of Herbert Sampson, March 31, 2005, at 66.) The same day, Defendant purportedly replaced Plaintiffs' four "C" directors restored by this Court's Order. While the Court will give Defendant the benefit of the doubt that it misunderstood its Court's March 11, 2005 Order, such a misunderstanding does not excuse Defendant's failure to notify Plaintiffs of the purported replacement. It seems clear to the Court that Defendant took this action to prevent the effect of this Court's Order, restoration of a 6-2 board, from ever materializing.
Plaintiffs also urge the Court to find Defendant in contempt because of public statements made by Defendant's representatives and Defendant's failure to change BTL's website to reflect the names of the restored board of directors. The Court is unfamiliar with the comparable First Amendment law in Belize and has found no authority granting it the power to silence a party's public statements made in a foreign country. However, the significance of these public statements is that they confirm to the Court, until recently, that Defendant had failed to acknowledge or comply with this Court's Order. Similarly, the Court does not find Defendant's failure to change BTL's website contemptuous, however, it too reflects Defendant's continued refusal to acknowledge this Court's Order.
Defendant claims that this removal was based on its misunderstanding of the Court's March 11, 2005 Order and that it now realizes that only Plaintiffs' two directors appointed under 90(D)(i) could be removed by Defendant and the other minority shareholders.
On March 21, 2005, Defendant also removed its two "B" directors. While it appears this removal was proper under BTL's Articles of Association, Defendant again failed to notify Plaintiffs of this replacement. The only notification received by Plaintiffs on the record is the letter from Black to Prosser on March 24, 2005 notifying him that "the two appointed "B" Directors" will be unable to attend." (Pls.' Ex. 16.) However, Defendant failed to reveal the identity of the "B" directors and it appears to the Court that this letter falls in line with Defendant's actions to disrupt Plaintiffs' attempt to hold a board meeting on March 29, 2005.
Plaintiffs urge the Court to find Defendant in contempt for failing to recognize a 6-2, Plaintiffs controlled board, instead of a 4-4 split board. The Court recognizes that its Injunction Order envisioned a 6-2 board, but also recognizes the reality that Defendant can and purportedly has removed two of Plaintiffs' 90(D)(i) directors, thereby making the board 4-4. In light of this, the Court concludes that future arguments over whether the board should be 4-4 or 6-2 are semantical. Accordingly, the Court finds that Defendant can comply with this Court's Order if it recognizes and acts to constitute a 4-4 board meeting.
Defendant argues that it changed its "C" and "B" directors not to frustrate Plaintiffs' attempt to hold a board meeting, but rather in response to the sale of its shares to E-COM. (Transcript of Contempt Hearing, March 31, 2005, at 103.) The Court is unpersuaded by Defendant's argument. The E-COM transaction took place on March 22, 2005. (Pls.' Ex. 22.) Defendant's purported removal of its "C" and "B" directors took place on March 21, 2005. (Pls.' Ex. 9; Ex. 21.) Therefore, Defendant's argument that these directors were removed and new ones appointed in response to the E-COM transaction or at the will of other minority shareholders runs contrary to the record before the Court. On March 21, 2005, only Defendant had the power under BTL's Articles of Association to remove the two "B" directors. (BTL's Articles of Association, Arts. 90(B) and 90(C).) Likewise, no minority shareholder had the power to remove Plaintiffs' two "C" directors under Article 90(D)(i) without approval from Defendant. (BTL's Articles of Association, Art. 90(D)(i).) Defendant's removal of the "B" and "C" directors before complying with the Court's Order and its deliberate attempt to hide the identities of these directors in order to prevent the March 29, 2005 board meeting are additional examples of Defendant's contempt of this Court's Order and Defendant's attempt to blame this removal on minority shareholders, who at the time had no power to remove these directors, is unavailing.
Defendant also claims that, in light of the E-COM transaction, it is has no further ability to ensure a meeting of the BTL board because it is now only a minority shareholder. The Court is unpersuaded by this argument because it too is unsupported by the record. Defendant claims that it only controls one "B" director because of the E-COM transaction. As previously stated, the record reflects that Defendant replaced the two "B" directors before the E-COM transaction took place. Therefore, these two directors were both placed into office by Defendant. While it is true that Defendant no longer controls a majority of the "B" shares, neither does E-COM. Removal of these "B" directors can only be accomplished if E-COM combines with either Defendant or Plaintiffs to form a majority of the "B" shares. See BTL's Articles of Association, Arts. 90(B) and 90(C). Therefore, it seems clear to this Court that whether these directors are identified to Plaintiffs and whether they attend a board meeting is squarely within Defendant's control.
BTL has 8,000,000 "B" shares issued. After the E-COM transaction, E-COM holds 4,000,000 "B" shares, Defendant holds 3,520,000 "B" shares, and Plaintiffs hold 480,000 "B" shares.
The Court concludes that Defendant is in contempt of this Court's Order. Had Defendant made a good faith effort to comply with the Court's Order, it would have first acknowledged the 6-2 board, permitted a board meeting to be held, and then taken any actions to remove directors consistent with BTL's Articles of Association. Instead, Defendant chose to ignore the Court's Order, frustrated Plaintiffs' attempt hold a board meeting, and took actions to remove directors contrary to BTL's Articles of Association and this Court's Order. These actions evidence contempt of this Court's Order.
Defendant's Motion for Reconsideration
Defendant argues that the Court should reverse its finding of contempt because Defendant, in the late afternoon on March 23, 2005, faxed a notice to Prosser and Vondras stating that as of March 21, 2005 Defendant controlled six directors on the board and Plaintiffs controlled two. (Def.'s Mot. to Reconsider, Ex. A, B.) In the fax, Defendant specifically included the names of six directors it claimed it was entitled to as well as the names of Plaintiffs' two directors. (Def.'s Mot. to Reconsider, Ex. A, B.) Therefore, Defendant claims it should not be held in contempt of this Court's Order because Plaintiffs had notice of the change in "B" and "C" directors.
As a Preliminary matter, the Court notes that it found Defendant in contempt for refusing to acknowledge or reconstitute a 6-2 board of directors and Defendant's failure to provide notice to Plaintiffs of the change in directors only reinforces this finding. Therefore, even if Defendant's fax evidences notice to Plaintiffs, Defendants remain in contempt of this Court's Order for willfully obstructing Plaintiffs' attempt to reconstitute the board. Furthermore, Defendant allegedly faxed the notice late on March 23, 2005 and did so with the knowledge that the board meeting set for March 29, 2005 would be disrupted because BTL's Articles of Association require seven days notice to each director. Had Defendant intended to comply with this Court's Order, it could have waived the notice requirement for its directors or permitted Plaintiffs to hold the board meeting and waited to change its directors at that time. Instead, Defendant chose to send its notice after Plaintiffs had already called a board meeting. It seems clear to the Court that Defendant did so to prevent the board from being reconstituted.
Additionally, the Court is unpersuaded that Defendant's fax even amounts to a notice of its change in directors. Nothing in the fax states that Defendant actually took action to remove directors or to appoint new ones. Also, no contact information is listed for the "new" directors. This further demonstrates to the Court that Defendant's purpose was to obstruct Plaintiffs from reconstituting the board. Finally, and most striking, is the fact that the notice lists the board 6-2 with Defendant in control, completely contrary to this Court's Order. It seems logical that Plaintiffs assumed the notice to be a further confirmation of Defendant's disregard for this Court's Order rather than a proper change in directors. Therefore, the Court finds that Defendant's fax to Plaintiffs on March 23, 2005 further evidences Defendant's contempt of this Court's Order and is an insufficient basis for the Court to reverse its finding of contempt.
Contempt Sanctions
As the Court has found Defendant in contempt, it must now determine the appropriate sanctions to compel compliance with this Court's Order and to compensate Plaintiffs for expenses incurred in pursuing their contempt motion. The Court has the power to award attorneys' fees and expenses as part of a civil contempt sanction. United States v. Far East Suppliers, Inc., 682 F.Supp. 1215, 1217 (S.D. Fla. 1988). The limit of a fees and cost award is the effort necessary to secure compliance with the Court's order and obtain compensation for damages. Abbott Laboratories v. Unlimited Beverages, Inc., 218 F.3d 1238, 1242 (11th Cir. 2000); see also Citronelle-Mobile Gathering, Inc. v. Watkins, 943 F.2d 1297, 1304 (11th Cir. 1991) ("The district court ha[s] numerous options, among them: a coercive daily fine, a compensatory fine, attorney's fees and expenses. . . ."); Far East Suppliers, 682 F.Supp. at 1216 ("In addition to attorney's fees, reasonably necessary expenses may also be recovered in a civil contempt proceeding."). To establish the proper amount, the Court must consider "the character and magnitude of the harm threatened by the continuing contumacy, the probable effectiveness of the suggested sanction in bringing about compliance, and the amount of the contemnor's financial resources and consequent seriousness of the burden to him." Trinity Industries, Inc., 876 F.2d at 1493-94.
The Court has found Defendant in contempt of this Court's Order because Defendant failed to acknowledge and reconstitute the board in accordance with this Court's Order and thereby prevented Plaintiffs from conducting a board meeting on March 29, 2005. The effect of Defendant's contempt renders this Court's injunction meaningless. The affairs of BTL remain in limbo, employees are confused as to who is in authority, and the public's confidence in BTL continues to fall. These consequences are exactly those that this Court's Injunction Order was designed to prevent. Therefore, the Court finds the magnitude of harm caused by Defendant's contemptuous conduct high.
The Court notes that Defendant is a sovereign government and therefore its financial resources are much larger than the average party before this Court. Consequently, the Court must impose a sanction relative to Defendant's resources in order to ensure compliance with this Court's Order. The Court concludes that a fine of $50,000 per day starting from March 29, 2005 is necessary to ensure compliance with the Court's Order. In light of the magnitude of Defendant's harm and the amount of Defendant's resources, the Court finds that $50,000 is not punitive in nature, but reasonable under the circumstances. Furthermore, this amount does not place a large burden on Defendant. The fine will terminate when Defendant reconstitutes the board in accordance with the Court's Orders and takes no further action, by itself or in concert with another, that contradicts this Court's Injunction Order. The Court cautions Defendant that it will have little tolerance in the future for seemingly innocuous actions that result in an obstruction of this Court's Order, such as Defendant's divesting themselves of further shareholdings with the knowledge that the new shareholders will seek to obstruct this Court's Injunction Order.
Once the board is reconstituted, Defendant can take whatever actions it wishes to replace or cause the replacement of directors so long as those actions are consistent with the requirements of BTL's Articles of Association as interpreted by this Court in its March 25, 2005 Order.
In addition to a per diem fine, the Court also finds that Plaintiffs are entitled to reasonable attorneys' fees and expenses caused by Defendant's contempt. However, the Court will not determine the amount at this time because Plaintiffs have not provided the Court with the necessary affidavits and evidence.
Finally, the Court recognizes that the practical effect of the its Injunction Order results in a 4-4 board. The Court originally required Plaintiffs to post a $1,500,000 bond because the effect of the Injunction at that time removed control of BTL from Defendant and placed it in the hands of Plaintiffs. As it now appears the BTL board is split 4-4, the Court concludes it is unnecessary to require Plaintiffs to continue to post the bond. Accordingly, it is hereby
ORDERED AND ADJUDGED that Defendant is in CONTEMPT of this Court's March 11, 2005 and March 25, 2005 Orders, nun pro tunc. Defendant is fined $50,000 per day beginning March 29, 2005 and shall continue to be fined until Defendant complies with the Court's Order and permits Plaintiffs to hold a board meeting consistent with the Court Injunction and BTL's Articles of Association. Defendant SHALL make payment to the Clerk of Court within ten days from the date of this Order. Defendant may purge this fine by permitting Plaintiffs to hold a BTL board meeting on April 18, 2005, consistent with this Order and the Court's Injunction Order. It is further
Plaintiffs filed a notice with the Court that a board meeting is scheduled for April 18, 2005.
ORDERED AND ADJUDGED that Plaintiffs' bond posted on Tuesday March 15, 2005 is REMITTED.
DONE AND ORDERED.