Opinion
Civil Case No. 03-B-1127 (PAC).
March 15, 2004
ORDER
This case is before me on Plaintiff's (United States) Motion to Hold Defendants (Austin Gary Cooper, Martha E. Cooper and Taking Back America, now known as The Ten Foundation) in Contempt, filed on December 11, 2003, for violating the Permanent Injunction Order I entered on November 20, 2003 after entry of default against Defendants.
In response to my Order to Show Cause why they should not be held in contempt for violating the Permanent Injunction Order, Defendants filed a non-responsive document on January 5, 2004, in which they did not deny the allegations in Plaintiff's Motion to Hold Defendants in Contempt, but rather challenged the authority and jurisdiction of this Court and these proceedings.
A hearing was held on Plaintiff's motion, pursuant to my minute order dated February 4, 2004, on March 12, 2004 at 3:00 p.m., in Courtroom 1, at 901 19th Street, Denver, Colorado. The hearing commenced at 3:12 p.m., and ended at 3:50 p.m., during which Plaintiff presented evidence in the form of testimony and exhibits. Defendants did not appear, nor did anyone on their behalf.
After consideration of the motion and the case file, and the evidence presented on March 12, 2004, I GRANT Plaintiffs' Motion to Hold Defendants in Contempt.
I. LAW
To prevail in a civil contempt proceeding, the plaintiff has the burden of proving, by clear and convincing evidence, that: (1) a valid court order existed; (2) the defendant had knowledge of the order; and (3) the defendant disobeyed the order. Reliance Ins. Co. v. Mast Const. Co., 159 F.3d 1311, 1315 (10th Cir. 1998).
Sanctions for civil contempt may only be employed for either or both of two distinct remedial purposes — to compel or coerce obedience to a court order, and to compensate the contemnor's adversary for injuries resulting from the contemnor's noncompliance. O'Connor v. Midwest Pipe Fabrications, Inc., 972 F.2d 1204, 1209 (10th Cir. 1992). A district court has broad discretion in using its contempt power to require adherence to court orders. Id. ( quoting United States v. Riewe, 676 F.2d 418, 421 (10th Cir. 1982)).
II. FINDINGS OF FACT
1. As an initial matter, I note that all the findings of fact are established by clear and convincing evidence. I also take judicial notice of the Court's file in this case.
2. On November 19, 2003, I entered the Permanent Injunction Order at issue here, which was subsequently filed on November 20, 2003, and ordered as follows:
A. That defendants provide to the United States their complete customer list identifying the persons who have purchased either directly from them or from their associates distributors or related entities, their abusive tax plans, arrangements or programs;
B. Defendants Austin Gary and Martha E. Cooper must each file a sworn certificate of compliance each swearing that he/she has complied with this portion of the order within ten days from the date of the Permanent Injunction Order;
C. Defendants provide a copy of the Permanent Injunction Order, by first class mail or by e-mail if an address is unknown, to all individuals who have previously purchased their abusive tax shelter plans, arrangements or programs, including the expatriation/repatriation program;
D. Defendants will bear the costs of providing the copy of the Permanent Injunction Order to their customers. Defendants Austin Gary and Martha E. Cooper must each file a sworn certificate of compliance each swearing that he/she has complied with this portion of the order within ten days from the date of the Permanent Injunction Order;
E. Defendants and their representatives, agents, servants, employees, attorneys and those persons in active concert in participation with them, including their distributors:
(1) remove from their websites — including www.tbafoundation.com, www.tenfoundation.com, wwww.guardingtheten.com, and www.paral.org — all abusive tax scheme professional materials, false commercial speech and materials designed to incite others imminently to violate the law, including the tax laws;
(2) to display prominently on the first page of those websites a complete copy of the Permanent Injunction Order within ten days from the date of the order; and
(3) to maintain the purged websites with the Permanent Injunction Order prominently displayed until such time as this Court orders otherwise.
F. Defendant shall bear the costs associated with posting the Court's order and maintaining websites during this period. Defendants Austin Gary and Martha E. Cooper must each file a sworn certificate of compliance, each swearing that he/she has complied with this portion of the order within ten days from the date of the Permanent Injunction Order;
G. Plaintiff is permitted to engage in post-judgment discovery to ensure compliance with the permanent injunction order; and
H. This Court shall retain jurisdiction over Defendants' action for purposes of implementing and enforcing the Permanent Injunction Order and any additional orders necessary and appropriate to the public interest.
3. On December 11, 2003, Plaintiff filed its motion to hold Defendants in contempt of the Permanent Injunction Order. On February 4, 2004, this Court set a hearing on the motion for entry of contempt for Friday, March 12, 2004, at 3:00 p.m., Courtroom 1, 901 19th Street, Denver, Colorado. The order setting this hearing was served by the clerk of this Court by depositing the same in the United States mail, postage prepaid, to: Austin Gary Cooper and Martha E. Cooper at 861 West County Road 66E, Ft. Collins, Colorado 80524, and Taking Back America, 295 East 29th Street, # 240, Loveland, Colorado 80538.
4. The Permanent Injunction Order was likewise served on November 20, 2003. Defendants clearly have received the Permanent Injunction Order and have notice of it, as evidenced by attachment of a red-lined copy of that order with their filing to this court on November 7, 2003, as Exhibit K
5. The Order to Show Cause was issued, on motion of the Plaintiff, on December 15, 2003, ordering Defendant to respond as to why they should not be held in contempt for violating the November 20, 2003 Permanent Injunction Order. The Order to Show Cause was likewise served upon the Defendants by deposit in the mail, as outlined above, on December 15, 2003.
6. The Defendants have failed to comply in any respect whatsoever with the Permanent Injunction Order entered November 20, 2003 and continue to the present date in violation of this Permanent Injunction Order.
7. Defendants have the ability to comply with the Permanent Injunctive Order. This ability is manifest by Plaintiff's Exhibits 1, 2 and 3, which reflect the ongoing posting of Defendants abusive tax scheme on their websites. Moreover, there has been no showing by Defendants of any inability to comply with the Permanent Injunction Order.
III. CONCLUSIONS OF LAW
1. This Court has continuing jurisdiction to enforce compliance with the November 20, 2003 Permanent Injunction Order.
2. As a matter of law, the contempt remedy sought by the Plaintiff to enforce the provisions of the Permanent Injunction Order is civil in nature and not criminal.
3. For these Defendants to be held in contempt it must be shown that: a valid order existed; the Defendants have knowledge of the order; and the Defendants disobeyed the order. The evidence presented establishes that the Permanent Injunction Order is valid, that Defendants had knowledge of the order, and that Defendants had disobeyed and continued to disobey the order.
4. This Court has broad discretion to fashion contempt sanctions. However, this broad discretion is bounded by entry of a civil coercive order that is limited to the means necessary to ensure compliance with the Permanent Injunction Order. Such considerations include the character and magnitude of the harm threatened by continued noncompliance, and the probable effectiveness of any suggested sanction to bring Defendants into compliance with the Permanent Injunction Order. Such sanctions may include a coercive daily fine, a compensatory fine, attorney fees and costs, and — at the extreme — coercive incarceration.
5. Defendants are not only in violation of the provisions of the Permanent Injunction Order, but their continued noncompliance indeed threatens the very foundations of this Nation's lawful tax system. It is difficult, if not impossible to quantify that, but it is patent in its serious effect.
6. Plaintiff requests a daily fine of $1,000 per day while Defendants are in contempt of the order. Such a daily coercive fine is appropriate.
7. Plaintiff further requests that the fine increase to $5,000 per day after 11 days of noncompliance. I agree that such an escalating compensatory sanction is appropriate.
8. Plaintiff suggests that when compensatory sanctions reach $50,000, coercive incarceration would be appropriate. In this respect I note that coercive incarceration implicates the Sixth Amendment right to counsel and Fifth Amendment due process concerns. As a result, it appears appropriate to me to order that upon failure to come into compliance with the Permanent Injunction Order, at such point that the coercive monetary sanctions reach the $50,000 limit, that the same be made known to the Court by Plaintiff's counsel, in which event the Court would issue its own citation directing that Defendants appear in person to show cause why they should not be incarcerated civilly until such time as they comply with the provisions of the Permanent Injunction Order.
Therefore, I warn Defendants that failure to comply with the Permanent Injunction Order and after monetary sanctions reach $50,000, will result in the issuance of such a citation, and the further warning that upon being found to be in continued contempt of the Court for failure to comply with the Permanent Injunction Order may result in Defendants' civil incarceration, until such time as they comply with the provisions of the Permanent Injunction Order.
Accordingly, it is ORDERED that:
1. As of the date of this order, a coercive fine of $1,000 per day, to be paid to Plaintiff, through the Registry of the United States District Court for the District of Colorado, is imposed against DEFENDANT AUSTIN GARY COOPER, while he remains in noncompliance of the November 20, 2003 Permanent Injunction Order. On the 11th day that DEFENDANT AUSTIN GARY COOPER fails to pay the full daily fine due, and continues to remain in contempt of the November 20, 2003 Permanent Injunction Order, the coercive fine will be increased to $5,000 per day;
2. As of the date of this order, a coercive fine of $1,000 per day, to be paid to Plaintiff, through the Registry of the United States District Court for the District of Colorado, is imposed against DEFENDANT MARTHA E. COOPER, while she remains in noncompliance of the November 20, 2003 Permanent Injunction Order. On the 11th day that DEFENDANT MARTHA E. COOPER fails to pay the full daily fine due, and continues to remain in contempt of the November 20, 2003 Permanent Injunction Order, the coercive fine will be increased to $5,000 per day;
3. As of the date of this order, a coercive fine of $1,000 per day, to be paid to Plaintiff, through the Registry of the United States District Court for the District of Colorado, is imposed against DEFENDANT TAKING BACK AMERICA, now known as The Ten Foundation, while it remains in noncompliance of the November 20, 2003 Permanent Injunction Order. On the 11th day that TAKING BACK AMERICA, now known as The Ten Foundation, fails to pay the full daily fine due, and continues to remain in contempt of the November 20, 2003 Permanent Injunction Order, the coercive fine will be increased to $5,000 per day; and
4. When the unpaid coercive fines of any one of the Defendants total $50,000, the same be made known to the Court by Plaintiff's counsel, in which event the Court will issue its own citation directing that the non-complying Defendant appear in person to show cause why he or she should not be civilly incarcerated until such time as he or she complies with the provisions of the November 20, 2003 Permanent Injunction Order.
ORDER
There comes before the Court the Plaintiff United States of America's motion to strike the following documents filed by defendants:Date Title Dkt. Entry # 15 8/4/03 "Special Appearance; Second Civil Complaint . . . Criminal Complaint . . ." 19 10/30/03 "Special Appearance; Third Civil Complaint . . . Criminal Complaint . . ." 24 11/7/03 "Addendum to: Special Appearance . . ." 31 12/3/03 "Second Addendum to: Special Appearance . . ." 44 1/5/04 "Third Addendum and Amendment to: Special Appearance . . ." The Court finds that the above documents contain immaterial, impertinent and scandalous matter under Fed.R.Civ.P. 12(f), and are irrelevant to the issues in this law suit. Furthermore, the documents are not pleadings within the meaning of Fed.R.Civ.P. 7. Accordingly,IT IS ORDERED that the above documents are STRICKEN.
UNITED STATES' MOTION TO STRIKE DOCUMENTS FILED BY DEFENDANTS (Dkt. ## 15, 19, 24, 31 and 44)
The plaintiff, United States of America, moves the Court under Fed.R.Civ.P. 7 and 12(f) to strike the following documents filed by the defendants:Date Title Dkt. Entry # 15 8/4/03 "Special Appearance; Second Civil Complaint . . . Criminal Complaint . . ." 19 10/30/03 "Special Appearance; Third Civil Complaint . . . Criminal Complaint . . ." 24 11/7/03 "Addendum to: Special Appearance . . ." 31 12/3/03 "Second Addendum to: Special Appearance . . ." 44 1/5/04 "Third Addendum and Amendment to: Special Appearance . . ."Each of the above documents was filed by the defendants in response to a Government motion or a Court order. Each document contains scurrilous, immaterial, scandalous and impertinent matters. None of the documents is responsive to topics in this litigation, and serves only as a vehicle for the defendants to harass Government and other officials (including the officer of a credit union), or as a means of expressing the defendants' hysteria regarding this nation's laws. The documents are frivolous.
For example, dkt. # 15 was filed in response to the Government's motion to strike (dkt. # 12); dkt. # 19 was filed in lieu of defendants' appearing at the October 30 preliminary injunction hearing; dkt. # 24 was filed in response to the entry of the Preliminary Injunction Order and the clerk's entry of default; dkt. # 31 was filed in response to the entry of the Permanent Injunction Order; and dkt. # 44 was filed in response to the Government's motion for contempt.
As such, the Court should strike the documents. Otherwise, if the Court deems the documents some sort of counterclaim or third party complaint, the United States requests that the Court dismiss the defendants' claims for lack of subject matter or personal jurisdiction and failure to state a claim upon which relief can be granted.
A similar document filed by the defendants — dkt. # 11 — was stricken by Order entered October 21, 2003 (dkt. # 18). Also, the Court has stricken like documents filed by nonparties to this action. ( See, e.g., dkt. ## 35, 43, 46, 49 and 53.)
Undersigned counsel has unsuccessfully tried to reach defendants by telephone to confer regarding this motion.
A proposed order granting this motion is attached.