United States District Court, N.D. Texas, Dallas Division
ATLAS TRADING CONGLOMERATE INC. f/k/a DOLLAR PHONE ACCESS, INC., Plaintiff,
AT&T INC., et. al, Defendants. SOUTHWESTERN BELL TELEPHONE COMPANY, et al., Plaintiffs,
ATLAS TRADING CONGLOMERATE INC. f/k/a DOLLAR PHONE ACCESS, INC., Defendant.
MEMORANDUM OPINION AND ORDER
KINKEADE UNITED STATES DISTRICT JUDGE.
February 7, 2018 the Court held a contempt hearing as
recommended by Judge Stickney in his Findings, Conclusions
and Recommendations entered August 9, 2017. See Mag.
J. F. & R. (Doc. No. 328). After hearing from the parties
and individuals ordered to appear and carefully considering
the law, the Court finds Atlas and its officers and
representatives have demonstrated a pattern of violating the
Court's orders. Thus, the Court (1) holds Atlas Trading
Conglomerate, Inc. (“Atlas”), Edward N. Gewirtz,
Aaron Schulman, Moses Greenfield, Christopher Zambito, Asher
Gluck, Rachel Klein, and Jennifer Del Cielo in
contempt and finds these individuals joint and severally
liable for $100, 000, but this fine shall be
suspended until further order of the Court; (2)
GRANTS the motions to withdraw as to Neil
Ende, Susan Colman, John Price, Gwen Bhella, and Rob
Bogdanowicz; (3) REVOKES Edward N.
Gewirtz's admission pro hac vice to the Northern
District Court of Texas; (4) and ORDERS
Atlas to acquire local counsel no later than March 9,
2018, as stated in the hearing and in accordance
with Local Rule 83.10.
case arose from a dispute between Atlas and a group of local
telephone companies, BellSouth Telecommunications LLC,
Illinois Bell Telephone Company, Indiana Bell Telephone
Company Inc., Michigan Bell Telephone Company, Nevada Bell
Telephone Company, Pacific Bell Telephone Company,
Southwestern Bell Telephone Company, the Ohio Bell Telephone
Company, the Southern New England Telephone Company,
Wisconsin Bell Inc., AT&T Inc., and AT&T Services
Inc. (collectively “AT&T ILECs”). Atlas, a
prepaid calling card service, used AT&T ILECs'
services to help connect long distance calls using Direct
Inward Dialing (“DID”), which incurred
originating switched access charges. Atlas failed to pay
these monthly switched access charges to AT&T ILECs.
Atlas and AT&T ILECs entered a settlement agreement to
repay the charges, but Atlas failed to pay under the terms of
the settlement agreement. This lawsuit resulted from that
failure to comply with the settlement agreement. On October
5, 2016, this Court entered an opinion on AT&T ILECs'
motion for summary judgment finding Atlas breached the
enforceable settlement agreement and AT&T ILECs was
entitled to $885, 108.17, which continues to accrue interest
pursuant to the settlement agreement. Atlas Trading
Conglomerate Inc. v. AT&T Inc., Civ. Action No.
3:15-CV-0404-K, 2016 WL 5870857, *6 (N.D. Tex. Oct. 5, 2016)
(Kinkeade, J.)The Court also granted a permanent injunction
against Atlas for future payments under the terms of the
confidential settlement agreement. Id. at *7.
has repeatedly failed to comply with the Court's
injunction. In December 2016, AT&T ILECs filed a motion
for contempt for failure to pay bills in an attempt to get
Atlas to pay the seven bills AT&T ILECs sent Atlas
pursuant to the Court's injunction. Even after receiving
notice of the unpaid bills by way of AT&T ILECs'
motion for contempt, Atlas still did not pay the bills as
required by the Court's order. After the hearing on the
motion for contempt, Judge Stickney found Atlas
“‘clearly violated' the permanent
injunction” and held Atlas in contempt. See
Mag. J. F. & R. at 10 (Doc. No. 328). Pursuant to Judge
Stickney's recommendation, this Court ordered Atlas and
its corporate officers and representatives to appear for a
hearing to determine if they too should be held personally
liable for Atlas' violation of the Court's order.
ordered by the Court, all counsel who had entered an
appearance before the Court for Atlas attended the hearing,
including Edward N. Gewirtz, John Price, Gwen Bhella, Rob
Bogdanowicz, Neil Ende, and Susan Colman. Current and past
corporate representatives of Atlas also attended the hearing
as ordered, including Aaron Schulman, Moses Greenfield,
Christopher Zambito, Asher Gluck, Rachel Klein, and Jennifer
Del Cielo. Each individual had the opportunity to defend
themselves as to the contempt.
Motion for Contempt
courts have the power to punish for contempt to protect the
court's authority and ensure justice is carried out.
Hornbeck Offshore Servs. L.L.C. v. Salazar, 713 F.3d
787, 792 (5th Cir. 2013). Due process requires that the
individual charged with contempt receive adequate notice of
the charge so that the individual will “have a
reasonable opportunity to meet [the contempt charge] by way
of defense or explanation, have the right to be represented
by counsel, and have a chance to testify and call other
witnesses.” Waste Mgmt. of Wash., Inc. v.
Kattler, 776 F.3d 336, 339-40 (5th Cir. 2015).
may be held in civil contempt when it is established by clear
and convincing evidence “(1) that a court order was in
effect, (2) that the order required certain conduct by the
respondent, and (3) that the respondent failed to comply with
the court's order.” Lyn-Lea Travel Corp. v.
Amer. Airlines, Inc., 283 F.3d 282, 291 (5th Cir. 2002).
A party has established something by clear and convincing
evidence when it “produces in the mind of the trier of
fact a firm belief…so clear, direct and weighty and
convincing as to enable the fact finder to come to a clear
conviction without hesitancy, of the truth of precise facts
of the case.” Shafer v. Army & Air Force Exch.
Serv., 376 F.3d 386, 396 (5th Cir. 2004). To be held in
contempt for violating an injunction, the individual must
have received actual notice of the injunction and be (1) a
party, (2) a party's officers, agents, servants,
employees, or attorneys; or (3) “other persons who are
in active concert or participation with” a party or a
party's agents. Fed.R.Civ.P. 65(d)(2); see Whitcraft
v. Brown, 570 F.3d 268, 272 (5th Cir. 2009). The
individual charged with contempt need not have acted or
failed to act willfully so long as the individual
“actually failed to comply with the court's
order.” Am. Airlines, Inc. v. Army & Air Force
Exch. Serv., 376 F.3d 574, 581 (5th Cir. 2000).
“Good faith is irrelevant as a defense to a civil
contempt order.” Waffenshmidt v. MacKay, 763
F.3d 711, 726 (5th Cir. 1985).
Court properly finds by clear and convincing evidence that
Atlas and its officers are in contempt for violating the
Court's injunction. In Atlas Trading Conglomerate
Inc. v. AT&T Inc., the Court entered a judgment
against Atlas for $885, 108.17 plus court costs and
attorneys' fees and entered a permanent injunction
against Atlas requiring Atlas “to make future payments
under the confidential settlement agreement.” Atlas
Trading, 2016 WL 5870857 at *7. After the injunction was
in place, AT&T ILECs sent multiple bills to Atlas. Atlas
did not pay any of these bills as the injunction required.
Atlas has attempted to argue it did not receive these bills
despite the bills being mailed to the same address that
received over 150 bills from AT&T ILECs before the
injunction was entered. Alternatively, Atlas argued it was
not required to pay for the use of the DIDs as ordered by the
Court because Atlas had transferred the DIDs to Dollar Phone
Services, a separate entity under the same corporate parent,
in exchange for forgiveness of debt. Judge Stickney found
Atlas failed to overcome the presumption that Atlas received
these bills in the mail. See FCR 8-9. This Court
similarly finds Atlas' argument without merit and
unpersuasive. By failing to pay the monthly bills as required
by the Court's injunction, Atlas clearly violated the
Court's order. Thus, the Court holds Atlas in contempt
for violating a court order. See Lyn-Lea Travel
Corp., 283 F.3d at 291.
corporate officers, agents, and lead counsel Edward Gewirtz
are also held in contempt for violating the Court's
injunction. A corporation's officers and representatives
can be held in contempt for “failure to cause their
corporation…to comply with a court's order.”
Am. Airlines, Inc. v. Allied Pilots Ass'n, 53
F.Supp.2d 909, 941 (N.D. Tex. 1999); see Fed. R.
Civ. Pro. 65(d)(2). The following are corporate officers and
representatives of Atlas: Moses Greenfield, president of
Atlas' corporate parent; Aaron Schulman, formerly a
consultant and current Chief Restructuring Officer;
Christopher Zambito, former Vice President of Atlas; Asher
Gluck, President of Atlas when it was known as Dollar Phone
Access; Rachel Klein, former secretary for Atlas; and
Jennifer Del Cielo, former secretary for Atlas. Atlas and its
officers violated the court's injunction by failing to
make required monthly payments to AT&T ILECs as required
under the order. See Atlas Trading, 2016 WL 5870857
at *7. Atlas' officers and agents had actual notice of
the injunction. Thus, the Court holds Atlas and its officers
in contempt, including, Aaron Schulman, Moses Greenfield,
Christopher Zambito, Asher Gluck, Rachel Klein, Jennifer Del
Cielo, and Edward Gewirtz. See Am. Airlines, Inc.,
53 F.Supp.2d at 941; see also Lyn-Lea Travel Corp.,
283 F.3d at 291.
parties “join together to evade a judgment, they become
jointly and severally liable for the amount of damages
resulting from the contumacious conduct.” N.L.R.B.
v. Laborers' Int'l Union of N. Am. AFL-CIO, 882
F.2d 949, 955 (5th Cir. 1989). The purpose of civil contempt
is “(1) to coerce compliance with a court order or (2)
to compensate a party for losses sustained as a result of the
contemnor's actions.” Lyn-Lea Travel
Corp., 283 F.3d at 290-91. Imposing a fine is civil
contempt when the fine is remedial in nature and paid to the
complainant. 485 U.S. 624, 632. The Court holds Atlas and its
officers and agents in civil contempt because the fine shall
be paid to the complainant, AT&T ILECs, only if Atlas
continues to ignore the Court's injunction and fails to
make the required payments to AT&T ILECs. See
id. (The Supreme Court found a fine paid to the court
can also be remedial when the party held in contempt can
avoid paying the fine by performing as required by the
court's order). Having found Atlas, its officers, its
representatives, and its lead counsel in civil contempt, the
Court holds Atlas, Aaron Schulman, Moses Greenfield,
Christopher Zambito, Asher Gluck, Rachel Klein, Jennifer Del
Cielo, and Edward Gewirtz jointly and severally
liable for $100, 000 to be paid upon further order
of the Court if Atlas fails to comply with the Court's
injunction. See Id. Having found Edward Gewirtz in
contempt, the Court also REVOKES Edward
Gewirtz's admission pro hac vice.
Motions to Withdraw
the course of the hearing five attorneys representing Atlas
entered motions to withdraw as counsel, including local
counsel John Price. Because John Price has moved to North
Carolina, he can no longer act as local counsel in compliance
with Local Rule 83.10. Neil Ende and Susan Colman informed
the Court their relationship with Atlas ended in March of
2016. After careful consideration, the Court