Opinion
No. C 15-04963 WHA
02-18-2016
THOMAS E. PEREZ, Secretary of Labor, United States Department of Labor, Plaintiff, v. i2a TECHNOLOGIES, INC., a California Corporation, VICTOR BATINOVICH, an individual, Defendants.
ORDER GRANTING SECRETARY OF LABOR'S MOTION TO INCARCERATE DEFENDANT VICTOR BATINOVICH FOR FAILING TO PURGE DEFENDANTS' CIVIL CONTEMPT
INTRODUCTION
In this wage-and-hour action, a prior order held defendants in civil contempt for failing to comply with a temporary restraining order and subsequent preliminary injunction. The Secretary of Labor now moves for a bench warrant to arrest and incarcerate one defendant until defendants purge themselves of civil contempt. For the reasons stated below, the motion of the Secretary of Labor is GRANTED.
STATEMENT
The facts of this case have been detailed in a prior order (Dkt. No. 27). Briefly, defendants i2a Technologies, Inc., and Victor Batinovich, CEO, majority shareholder, and member of the board of directors of i2a, failed to pay their employees' wages for work relating to the manufacture of semiconductors. On October 28, 2015, plaintiff Thomas E. Perez, Secretary of Labor of the United States Department of Labor, moved for a temporary restraining order enjoining defendants from failing to pay their employees' wages, from shipping or selling goods manufactured by employees that had not been paid, and from discouraging employees from pursuing their rights under the Fair Labor Standards Act (Dkt. No. 3). The Court ordered the Secretary to serve defendants with the summons, complaint, motion for a temporary restraining order, and all supporting declarations and gave defendants an opportunity to oppose the motion (Dkt. No. 9). The Secretary served both defendants by overnight delivery to i2a's headquarters (Dkt. No. 10). Defendants did not respond. After a hearing at which defendants did not appear, the Court granted the Secretary's motion for a temporary restraining order, and issued an order to show cause why a preliminary injunction should not issue (Dkt. No. 12).
Plaintiffs served the temporary restraining order and order to show cause on defendants by hand delivering it to Andrew Batinovich, Victor's adult son, at i2a's headquarters and by mailing the order to i2a's headquarters (Dkt. Nos. 14-15). Additionally, Attorney Rose Darling, counsel for the Secretary, spoke with Victor Batinovich on the phone regarding the preliminary injunction hearing. Defendants did not file a response brief.
On November 17, the Court held a hearing on the Secretary's request for a preliminary injunction. Approximately fifteen minutes after the hearing began, Victor Batinovich appeared. Attorney Darling personally served Batinovich with the temporary restraining order and order to show cause why a preliminary injunction should not issue.
Batinovich stated that although he remained the owner of i2a, he had been absent from the company as of July 28 while he sought a buyer for the company. The Court heard sworn testimony from several employees of i2a, which confirmed that Batinovich had largely abandoned the company and that Frederick Solomon, the vice president of engineering at i2a had taken over some of the day-to-day responsibilities at i2a, although Batinovich retained responsibility over payroll (id. at 25-35).
The Court converted the temporary restraining order into a preliminary injunction and ordered Batinovich to appear at a hearing on December 1 to show cause why he and i2a should not be held in contempt for violating the temporary restraining order by failing to pay his employees. The Court admonished Batinovich that he should retain counsel three times and warned that he could face liens on his car or his home and that he could face jail time. Batinovich provided the address of i2a's headquarters as the location at which he could be served until such time that he retained counsel. Batinovich stated he would pick up any messages at that location (id. at 40-51).
Batinovich did not file a response to the order to show cause, but he did appear at the hearing on December 1. The Secretary presented evidence that Batinovich and i2a had failed to pay wages to its employees totaling $56,470.42 from the date the temporary restraining order took effect until November 17 when Batinovich instructed i2a's employees to stop working. The Secretary also presented evidence that Batinovich could be held personally liable as an employer under the FLSA. Batinovich offered no evidence to dispute the Secretary's evidence but claimed he lacked funds to pay the outstanding wages.
An order issued following the hearing holding Batinovich personally liable for the unpaid wages as an employer under the FLSA. That order further held Batinovich and i2a in civil contempt as follows (Dkt. No. 27 at 8):
This order finds Victor Batinovich and i2a in civil contempt of the temporary restraining order dated November 3, 2015 and the preliminary injunction dated November 17, 2015 by reason of their failure to pay the payroll for the periods ending October 4, 2015, October 18, 2015, November 1, 2015, and November 15, 2015. Batinovich and i2a may purge this contempt by paying the outstanding $56,470.42 to their employees by DECEMBER 31. The Secretary may immediately begin discovery into Batinovich's personal financial circumstances, including taking records and taking the depositions of Batinovich, his spouse, and i2a. On JANUARY 1 or thereafter, the Court will then entertain a motion for further specific sanctions. Defendants are hereby ORDERED not to hide or dispose of their assets or income sources other than for ordinary living expenses.
The Secretary served Batinovich with a deposition notice and document request on December 4 by overnight mail to him at the address of i2a's headquarters. The notice required Batinovich to produce documents relating to his personal finances by December 11 and to appear for a deposition on December 17. Batinovich did not comply (Darling Decl. ¶ 4, Exh. A).
On December 8, the Secretary served Batinovich's wife, Ann, with a subpoena by taping it to the front door of the Batinovich's home while three cars sat in the driveway and several people remained inside but refused to answer the door. The notice required Ann Batinovich to produce documents relating to her personal finances by December 11 and to appear for a deposition on December 16. Ann Batinovich did not comply (id. ¶ 4, Exh. B).
Attorney Darling made several attempts to contact Victor and Ann Batinovich to no avail (id. ¶¶ 4-5).
On January 13, the Secretary filed a request for an order to show cause why Batinovich should not be incarcerated until he or i2a purge themselves of contempt (Dkt. No. 29). The Secretary's motion noted that an informant stated that Batinovich had sold i2a, though the paperwork had not been finalized (Pham Decl. ¶ 2). The Court issued an order to show cause on January 19 and scheduled a hearing for February 18. Batinovich's response was due on January 27.
The Court held a case management conference on January 28 at which both sides appeared. Batinovich stated that he had contacted the Department of Labor seeking clarification of the sum of money he would need to pay in order to settle the entire action, but he claims he did not receive a clear response. Batinovich stated that he had not been served with any deposition papers or any other papers in the action, but he admitted he had not been checking his mail at the i2a headquarters. The Court informed Batinovich that he needed to check his mail at that address and that he would be deemed to have notice of any documents mailed there.
The Court again admonished Batinovich to retain counsel and noted that he would need to pay $56,470.42, as indicated in the order holding him in contempt, in order to purge the contempt. The deadline for Batinovich to respond to the order to show cause regarding his incarceration was extended to February 4. Batinovich has not responded.
This order follows a brief from the Secretary and oral argument held on February 18 at which both sides appeared.
ANALYSIS
The order holding Batinovich in contempt clearly stated "Batinovich and i2a may purge this contempt by paying the outstanding $56,470.42 to their employees by DECEMBER 31." To date, neither Batinovich nor i2a has paid a penny of the outstanding wages, and accordingly, both defendants remain in contempt.
The purpose of civil contempt is to coerce compliance with the court's order rather than punish disobedience. Spallone v. United States, 493 U.S. 265, 280 (1990). Batinovich has squandered numerous opportunities to make his case on the merits or to show that he cannot pay the outstanding amount. This order finds that in order to coerce Batinovich's compliance with the temporary restraining order and subsequent preliminary injunction in this action, he must be incarcerated.
CONCLUSION
For the reasons stated above, it is hereby ORDERED as follows:
1. On MARCH 1, 2016, AT NOON or before, Victor Batinovich shall self-surrender to the United States Marshal Office at 450 Golden Gate Ave., San Francisco, 20th Floor, and the Marshal shall keep him in custody until further order of the Court. Once the Court determines that he has paid the $56,470.42 in outstanding wages, then it will either rescind this custody order or, if the payment is after March 1, order the Marshal to release him. The absence of any such rescission or modification means the custody order is in effect.
2. The only reasons the Court is not ordering Victor Batinovich into immediate custody are (i) to give him a brief further period to pay, and (ii) to give him an opportunity to initiate an appeal of this order. (However, this order will not be stayed while an appeal is pursued to conclusion. Any such stay will be up to the appellate judges.)
3. Failure to report to the Marshal on MARCH 1 AT NOON or before will result in a bench warrant for the arrest and detention of Victor Batinovich.
4. The foregoing is the least drastic remedy available to the Court to obtain compliance, many other lesser remedies have been exhausted.
IT IS SO ORDERED. Dated: February 18, 2016.
/s/_________
WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE