Dunlap felt the prohibitions in Zeller's contract and in particular the prohibition against employment with a competitor anywhere in the continental United States were unreasonable and too restrictive. Therefore, Dunlap proceeded to arrange employment for Zeller based on the assumption that a court would agree with his interpretation of the contract.
This was done by establishing Union Rubber Company (hereinafter Union), an Ohio Corporation, as a wholly-owned subsidiary of Consolidated. Zeller was made president of Union which had one other employee. Union was formed on June 17, 1983, two weeks after Zeller left the employ of Randustrial. Union sells products which are competitive with Randustrial and Consolidated. Zeller was directed not to sell in five states where he had recently represented Randustrial and was directed not to sell to any customer that he had business with or knowledge of as an employee of Randustrial. Nevertheless, approximately twelve (12) sales were made to Randustrial customers with a total value of $1,000.00 to $1,500.00.
Reviewing the above set of facts and circumstances, in light of our decision that the consent order should not be rescinded or modified at this time, we find ample evidence to conclude that Dunlap has violated the consent order. The violation has occurred by Dunlap's indirect inducement of Zeller to breach his sales representative agreement with Randustrial. In making the decision, we are not ruling that Zeller has violated his contract with Randustrial. Although the contract is before us for review, Mr. Zeller is not a party to this lawsuit. We are simply deciding that Dunlap, by forming a corporation to allow Zeller to compete with Randustrial, has violated Paragraph 4(a) of the consent order in that he (Dunlap) has indirectly induced a former employee of Randustrial to act as a sales agent to Dunlap. Although Zeller may be the president of Union, it is undisputed that he sells products in direct competition with Randustrial and has done so within one (1) year of his termination of employment with Randustrial.
Remedy for Contempt of Consent Order
We now must decide what damages and/or further relief inures to Randustrial as a result of the violation by Dunlap of this court's consent order.
The plaintiff seeks compensatory damages, attorneys' fees and an order that defendant come into compliance with the court's order of May 19, 1966. As compensatory damages plaintiff wishes this court to impose liquidated damages against Dunlap as provided for in Zeller's contract with Randustrial. We do not consider this to be a proper measure of damages. Although Dunlap may have had knowledge of the provisions of Zeller's contract providing for damages for breach of said contract, we feel the only compensatory damages proven were the result of sales to Randustrial customers in the range of $1,000.00-$1,500.00. Accordingly, an appropriate order will be entered awarding said compensatory damages.
With respect to attorneys' fees, the court in a contempt proceeding may, in its discretion, award expenses, costs and fees to plaintiff. Lichtenstein v. Lichtenstein, 425 F.2d 1111, 1113 (3rd Cir. 1970). Furthermore, the award is limited to the reasonable fees incurred by the party seeking relief and a basis for the award of said fees must appear in the record. Lichtenstein, supra at 1114 citing Schauffler v. United Ass'n of Journeymen, 246 F.2d 867 (3rd Cir. 1957).
The evidence in the record is the testimony of William A. Randorf, president and chief executive officer of Randustrial. Mr. Randorf testified that he reviewed statements for legal fees as part of his responsibilities for Randustrial. Statements of attorneys' fees were presented as exhibits and Mr. Randorf testified he approved these statements for payment as being reasonable. However, we cannot avoid the fact that Mr. Randorf is a biased witness. Had an attorney who had experience in similar cases testified with respect to the reasonableness of the statements, we would not be reluctant in awarding the fees in full. We, therefore, shall grant plaintiff a part of the $15,000 plus fees which are sought. An appropriate order will be entered.
Having found the defendant in contempt of this court's consent order of May 19, 1966, an order will be entered requiring the defendant to come into compliance with said order.
The above shall constitute this court's findings of fact and conclusions of law pursuant to Rule 52, Fed.R.Civ.P.