Opinion
Case No. 8:02-cv-2052-T-23 MSS
September 25, 2003
ORDER
On August 19, 2003, United States Magistrate Judge Mary S. Scriven issued a report and recommendation (Doc. 67) on the plaintiff's motion to hold the defendants in contempt (Doc. 30) and the plaintiff's motion for a show cause order (Doc. 31). The plaintiff and the defendants have both filed objections to the report and recommendation (Docs. 68, 72). Upon consideration, the plaintiff's objections to the report and recommendation (Doc. 68) are sustained in part and overruled in part, the defendants' objections to the report and recommendation are overruled, and the report and recommendation is ADOPTED. Accordingly, the plaintiff's motion to hold the defendants in contempt is (Doc. 30) GRANTED IN PART and DENIED IN PART as discussed in the report and recommendation. The plaintiff's motion for a show cause order (Doc. 31) is DENIED AS MOOT. The Court sanctions the defendants as follows:
The Court adopts the findings in the report and recommendation. The Court overrules section A of the plaintiff's objections but sustains sections B, C, D, and E and modifies Judge Scriven's recommended sanctions slightly to align with these sustained objections.
As noted in the report and recommendation, "a finding of contempt or imposition of sanctions against [defendant Richard Cantwell] in his individual capacity is unwarranted." Accordingly, no sanctions are imposed against Cantwell.
1. The defendants are ordered to publish a copy of the preliminary injunction on the http://www.taxinformer.com website with no other accompanying commentary or explanatory statement.
2. The defendants are ordered to post a copy of this order (including the attached report and recommendation) on thehttp://www.taxinfonner.com website with no other accompanying commentary or explanatory statement.
3. The defendants shall be fined $5,000 per publication date if the defendants subsequently disseminate additional newsletters or updates violating the preliminary injunction by either United States Mail, facsimile, email, or other means.
4. The defendants are allowed a period of ten (10) days from the date of this order to terminate any and all automatic debits from client accounts in payment for products or services prohibited by the preliminary injunction.
5. The defendants shall produce to the plaintiff a strict accounting of any and all payments that have been received since December 19, 2002.
6. The defendants shall produce to the plaintiff within ten (10) days of the date of this order an affidavit stating, under oath and subject to penalty of perjury, that all payments (including automatic debits) have either been terminated or continued with the client's express, written consent for the limited purpose of funding the defendants' legal defense in this action.
7. The defendants are ordered to mail all of their clients a letter stating that the defendants are enjoined from continuing to accept payment for tax-related services. This letter should also notify the defendants' clients of the termination of their automatic monthly, debit payments and require express, written consent from any client that wishes to continue paying to fund the defendants' legal defense. The defendants should be required to do so within thirty ten (10) days of entry of the Court's final order of contempt.
8. The defendants should be required to disgorge and refund to their clients any and all payments received from clients on or after December 19, 2002, and before the effective date of the clients' written consent to continue making such payments toward the defendants' legal defense fund.
9. The defendants shall pay a daily fine of $5,000 for every day after the allowed ten (10) days that the defendants do not comply with the requirements set forth above.
10. The defendants are subject to coercive incarceration if, and only if, the $5,000 daily fine prescribed above exceeds $50,000 and further review is undertaken by the Court.
11. Pursuant to Rule 53, Federal Rules of Civil Procedure, the Court appoints Michael O'Leary of Trenam Kemker, 2700 Bank of America Plaza, 101 East Kennedy Boulevard, Tampa, FL, 33601, as Special Master, to ensure further compliance with the preliminary injunction. Mr. O'Leary shall audit the defendants' bank accounts (including all bank accounts that now exist as well as any that may be created in the name of any named defendant in this action, as well as any successor corporation or nominal entity, with the exception of Cantwell) for any irregularities or transactions that appear to violate the preliminary injunction and shall issue a monthly report to the Court and the parties in the event any improper transactions are revealed by the monthly audits. The plaintiff shall pay for the services of Mr. O'Leary. This payment shall be assessed as a cost in this action, to be paid by the non-prevailing party.
12. As a penalty for those violations of the preliminary injunction that are not continuing in nature, the defendants shall pay the costs incurred by the plaintiff in bringing the motion for contempt, exclusive of any costs incurred as a result of the continued evidentiary hearing. The plaintiff's application for costs, which is due October 10, 2003, shall include documentation supporting the amount sought. The defendants may file a response by October 24, 2003.