Opinion
Civil Action No.: 3:14-CV-00292-GCM
2022-09-12
ELECTRIC GUARD DOG, LLC, a Delaware Limited Liability Company, Plaintiff, v. FENCE HAWK, INC., a Florida Corporation, Fence Guardian, Inc., a Florida Corporation, and Intelligent Fencing Systems, Inc., a Florida Corporation, Defendants.
John William Forneris, Spencer Wiles, Julian Hugh Wright, Jr., Robinson, Bradshaw & Hinson, P.A., Charlotte, NC, for Plaintiff. Colin Elliot Scott, Jeffrey Brandt Kuykendal, McAngus, Goudelock & Courie, LLC, Charlotte, NC, for Defendants. Fence Hawk, Inc., Pro Se. Fence Guardian, Inc., Pro Se. Intelligent Fencing Systems Inc., Pro Se.
John William Forneris, Spencer Wiles, Julian Hugh Wright, Jr., Robinson, Bradshaw & Hinson, P.A., Charlotte, NC, for Plaintiff. Colin Elliot Scott, Jeffrey Brandt Kuykendal, McAngus, Goudelock & Courie, LLC, Charlotte, NC, for Defendants. Fence Hawk, Inc., Pro Se. Fence Guardian, Inc., Pro Se. Intelligent Fencing Systems Inc., Pro Se.
ORDER FINDING CIVIL CONTEMPT
Graham C. Mullen, United States District Judge
This matter is before the Court on the motion of Plaintiff Amarok LLC ("Amarok") (formerly known as Electric Guard Dog, LLC) to hold Defendants Fence Hawk, Inc., Fence Guardian, Inc., and Intelligent Fencing Systems, Inc. (collectively, the "Defendants"), as well as Dale R. Barnes ("Barnes") and the Defendants' and Barnes' affiliated company, Electric Fence Monitor, LLC ("EFM") in civil contempt of this Court's January 7, 2015 Consent Injunction and Final Judgment (the "Consent Injunction"). The Court held a hearing on this motion on August 29, 2022. Julian H. Wright, Jr. appeared for Amarok. Mr. Barnes appeared pro se on his own behalf. No counsel appeared for the corporate Defendants or EFM. Based on the pleadings, filings, evidence, and arguments submitted by the parties, the Court makes the following findings of fact and conclusions of law in support of the Court's determination that Defendants, Barnes, and EFM are in civil contempt of the Consent Injunction.
FINDINGS OF FACT
1. Amarok filed this action in 2014. Amarok alleged that the Defendants, along with their owner Barnes, had engaged in a variety of unfair competitive activities, including trademark violations, false advertising, and misrepresentations about Amarok's business and business practices to potential and actual customers in the perimeter security fencing market.
2. Amarok and the Defendants entered into a settlement agreement in late 2014 that included monetary payment from Defendants to Amarok as well as the entry of the Consent Injunction.
8. Among other provisions, the Consent Injunction provides that it is "binding upon the parties hereto, their officers, agents, servants, and employees, and upon those in active concert or participation with them who receive actual notice in any manner of this Consent Injunction . . . , including without limitation, Dale Barnes . . . ."
4. The Consent Injunction also prevents Defendants and those in active concert or participation with them from making "any false statement in any advertisement, solicitation, communication or otherwise, regardless of the media, about [Amarok] or [Amarok's] contractual relationships with its clients, including, but not limited to . . . [a]ny statement to the effect that [Amarok's] customers will save a substantially certain sum of money by terminating such customer's contract with [Amarok]."
5. The Consent Injunction also provides that its prohibitions "shall include references to any 'rental' company, any 'rental fence' company or any other similarly ambiguous references to [Amarok] or which would potentially identify [Amarok] by implication in markets and localities in which [Amarok] operates."
6. On or about May 10, 2022, Barnes on behalf of EFM sent a solicitation letter to Amarok customer Copart (the "May 10 Letter"). At the time of sending this letter, Barnes and EFM, along with the Defendants, had actual and constructive notice of the Consent Injunction and its terms.
7. In the May 10 Letter, Barnes and EFM made multiple false statements concerning Amarok and its business. For example, the letter tells Copart that it purportedly "is overpaying hundreds of thousands of dollars for your security fencing." The letter disparages the rental fence model used by Amarok in its business. The letter purports to tell Copart that it will save money by switching its perimeter security fence business to EFM and its Fence Hawk products.
8. The letter includes references to a perimeter security fence business that is identifiable as Amarok. It references a "fence rental business in the Carolinas" and a "giant[ ] of the industry," both of which are references to Amarok. The letter also falsely claims that Amarok is "peddling" "elaborate BS" as part of selling its services and providing perimeter security systems.
9. The May 10 Letter contains multiple false statements, including false statements that violate the terms of the Consent Injunction.
10. Upon learning of Barnes' and EFM's letter to its customer, Amarok through its counsel wrote a warning and notice letter to the Defendants, Barnes, and EFM on or about May 23, 2022 (the "May 23 Letter"). This letter from Amarok's counsel satisfied the Consent Injunction's provision that Amarok had to provide "notice of [any] violation" to Barnes at a designated email address at least three (3) days prior to filing and serving any motion seeking relief for an alleged violation of the Consent Injunction. Defendants, Barnes, and EFM never responded to Amarok's counsel's May 23 Letter and never availed themselves of the opportunity to cure the violations of the Consent Injunction identified in the letter.
11. The May 10 Letter damaged Amarok's relationship with its customer and tarnished Amarok's reputation in the perimeter security fence business. The May 10 Letter harmed Amarok financially in these ways.
12. On June 17, 2022, Amarok filed its Plaintiff's Motion for Order to Show Cause and for Civil Content and supporting materials.
13. On July 21, 2022, this Court entered its Order to Show Cause setting the August 29 hearing and advising the Defendants and EFM that they would need to retain counsel for the show cause hearing and that failure to do so might result in findings of civil contempt. See Eagle Assocs. v. Bank of Montreal, 926 F.2d 1305, 1310 (2d Cir. 1991) ("The court was confronted by a recalcitrant party who failed to comply with [the court's] order to obtain counsel."). At the August 29 hearing, Defendants, Barnes, and EFM were ordered that they "shall show cause why they should not be held in civil contempt."
14. Defendants and EFM never retained legal counsel. No legal counsel ever entered an appearance on behalf of Defendants or EFM. Mr. Barnes appeared at the August 29 hearing and represented only himself.
CONCLUSIONS OF LAW
15. To establish civil contempt, Amarok must prove: "(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." Ashcraft v. Conoco, Inc., 218 F.3d 288, 301 (4th Cir. 2000) (citing other cases).
16. Here, the Consent Injunction is a valid decree.
17. The Consent Injunction was in Amarok's favor because it exclusively prohibited Defendants, Barnes, and those acting in concert with them, like EFM, from engaging in a variety of conduct that could be harmful to Amarok.
18. Defendants, Barnes, and EFM violated the terms of the Consent Injunction, and they had knowledge, at least constructive knowledge, of such violations.
19. Amarok suffered harm as a result of these violations of the Consent Injunction.
20. None of the Defendants, nor Barnes, nor EFM met their burden of producing any evidence excusing their violations of the Consent Injunction.
21. Defendants and EFM made no appearance at the August 29 hearing because they failed to secure counsel to represent them. Rowland v. Cal. Men's Colony, 506 U.S. 194, 201-02, 113 S.Ct. 716, 121 L.Ed.2d 656 (1993) ("It has been the law for the better part of two centuries . . . that a corporation may appear in the federal courts only through licensed counsel."). Accordingly, Defendants and EFM have made no showing that they should not be held in civil contempt.
22. Barnes' explanations and argument to the Court provided no valid reasons or legal justifications for his violations of the Consent Injunction. Accordingly, Barnes has made no showing why he should not be held in civil contempt.
23. The Court finds the Defendants, Barnes, and EFM in civil contempt of the Consent Injunction.
24. After consideration and upon the exercise of its discretion, the Court concludes that an appropriate sanction for the Defendants, Barnes, and EFM, jointly and severally, is the lump sum payment to Amarok of $5,000. Defendants, Barnes, and EFM, however, also will have the opportunity to purge their contempt and avoid paying the $5,000 to Amarok if they meet the specific conditions provided herein.
WHEREFORE, IT IS HEREBY ORDERED as follows:
25. Within twenty-one (21) days of the August 29 hearing in this matter, or on or before September 19, 2022, Defendants, Barnes, and EFM will send to Copart a letter, the form of which is attached hereto as Exhibit A, acknowledging and correcting the false statements in the May 10 letter. The form of the letter in Exhibit A has been approved by Amarok as being satisfactory to purge the contempt found herein.
26. If, however, the contempt is not purged as provided herein by September 19, 2022, then Defendants, Barnes and EFM, jointly and severally must pay to Amarok no later than September 22, 2022 the amount of $5,000.
27. Should Defendants Barnes, and EFM fail to comply with this Order, this Court is prepared to enter another order finding Defendants, Barnes, and EFM in civil contempt again, and such a finding - absent extreme extenuating circumstances of the Court is not currently aware - would almost certainly include more severe financial penalties and the payment of Amarok's attorneys' fees, which are not being awarded at this time.
SO ORDERED.
Exhibit A
[ELECTRIC FENCE MONITOR, LLC LETTERHEAD]
September ___, 2022
VIA EMAIL & FIRST CLASS MAIL
Mr. Greg DePasquale Copart 14185 Dallas Parkway, Suite 400 Dallas, TX 75254
Greg.depasquale@copart.com
Re: Apology for and Retraction of my May 10, 2022 Letter and Negative Statements about AMAROK LLC Dear Mr. DePasquale:
My name is Dale R. Barnes. I own and run Electric Fence Monitor, LLC. Previously, I owned and ran electric fence companies Fence Hawk, Inc.; Fence Guardian, Inc.; and Intelligent Fencing Systems, Inc.
On or about May 10, 2022, I sent you a letter on behalf of Electric Fence Monitor, LLC. My letter claimed that you and Copart could save hundreds of thousands of dollars if you purchased your security fencing from my company instead of remaining in a relationship with a company that was identifiable as AMAROK in my letter. Specifically, I referred to AMAROK as the "fence rental business in the Carolinas" and one of the "two giants of the industry." In my letter, I made false and misleading statements about AMAROK, its business, and the effectiveness of its perimeter security systems. For those statements, I apologize.
I am not aware of the specifics of Copart's business arrangements with AMAROK. I do not know if a different system, including the one I offer, could in fact save Copart any money or perform better than an AMAROK fence. I also wrongfully suggested that AMAROK uses unfair marketing and billing techniques as part of its business. Those comments were wrong and unfair.
I hope that Copart's business relationship with AMAROK will prove beneficial for both companies. If at some time you ever would want to consider a different perimeter security fence system, I would be happy to attempt to talk with you. I appreciate, however, that my May 10 letter was not the appropriate way to initiate such a discussion and I apologize for that.
Thank you for your time.
Sincerely,
Dale R. Barnes
Electric Fence Monitor, LLC