Appeal from the United States District Court for the District of New Jersey, Newark, D.C. Civil No. 84-0261.
Gibbons, Chief Judge, Weis and Aldisert, Circuit Judges.
These are appeals from an order of civil contempt and an order imposing attorneys' fees as a partial contempt sanction. We are confronted with the question whether, before he may be held in civil contempt, a bankruptcy reorganization trustee of a corporation must be given notice that he personally stands in jeopardy of being held in contempt, notwithstanding that he has actual knowledge of contempt proceedings instituted against the corporation he represents. Because we answer this question in the affirmative, we will reverse the contempt and attorneys' fees orders to the extent that they apply to appellant.
These appeals by J. A. M. Banning arise from facts developed in related appeals before this court. See Remington Rand Corp. v. Business Systems, Inc., 830 F.2d, (3d Cir. 1987); Remington Rand Corp. v. Amsterdam-Rotterdam Bank, F.2d , No. 86-5591 (3d Cir. Oct. **, 1987). We need not recount those facts in their entirety, but will set forth only adjudicative facts necessary to dispose of the present matters before us.
Appellant Banning, a Dutch citizen, was the trustee of Business Systems, Inc., B.V. (hereinafter BSI B.V.), a Dutch typewriter manufacturing company. He was appointed by a Dutch court as trustee of BSI B.V. because it was in "suspension of payments" in the Netherlands, the Dutch equivalent to reorganization under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 1101-1174. On September 6, 1984, the United States District Court for the District of New Jersey determined that BSI B.V. and its United States affiliate, BSI Office Equipment, Inc. (hereinafter BSI U.S.), were liable to the Remington Rand Corporation, a United States corporation, for misappropriating Remington's trade secrets in the know-how to produce an electric typewriter. By an order issued that same day, the district court imposed a constructive trust on certain of BSI B.V.'s assets in Holland. Remington later became dissatisfied with the degree of BSI B.V.'s and BSI U.S.'s compliance with that order.
On Remington's application, the district court issued on October 15, 1984, an order to BSI B.V. and BSI U.S. commanding them "to show cause why a citation of contempt should not be entered, against defendants for failure to comply with this Court's Order of September 6, 1984 . . . ." App. at 1624-25. Banning was not mentioned by name or by title in the order to show cause. Nevertheless, on January 21, 1985, the district court held Banning in contempt of the September 6 order. On February 6, 1985, the district court ordered that a warrant be issued for Banning's arrest and that he be held liable with BSI B.V. for attorneys' fees incurred by Remington in seeking to enforce the September 6 order. Banning appeals from the district court's final judgment entered on July 9, 1986, and challenges the contempt citation. He also appeals from the district court's order of September 24, 1986, that held Banning and BSI B.V. liable to Remington for $86,685.20 in attorneys' fees.
Banning and amicus, the Government of the Kingdom of the Netherlands, raise a panoply of defenses to the contempt order. We need not address them all, however, for we consider the failure to name Banning as a respondent in the order to show cause to be dispositive of his appeals. Banning contends that, because he was not named in the district court's order to show cause or otherwise informed that he was a potential contemnor of the September 6 order, he was denied due process under the fourteenth amendment to the United States Constitution. We agree. Because this question involves the application and interpretation of legal precepts, our standard of review is plenary. United State v. Adams, 759 F.2d 1099, 1106 (3d Cir.), cert. denied,474 U.S. 906, 106 S. Ct. 275, 88 L. Ed. 2d 236 (1985).
Preliminarily, we observe that although the district court characterized Banning's contempt as civil in nature, we must make an independent determination of that issue. Pittsburgh-Des Moines Steel v. United Steelworkers, 633 F.2d 302, 311 (3d Cir. 1980). After examining the record, we are convinced that Banning was indeed held in civil contempt. The contempt proceedings were instituted by Remington, they were not captioned or conducted separately from the underlying action, and the sanctions imposed were designed ...