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FAX-EXPRESS, INC. v. HALT

May 12, 1988

FAX-EXPRESS, INC., Plaintiff
v.
JOSEPH HALT d/b/a FAX EXPRESS OF CENTER CITY and FAX EXPRESS OF PHILADELPHIA, et al., Defendant



The opinion of the court was delivered by: NEWCOMER

 CLARENCE C. NEWCOMER, UNITED STATES DISTRICT JUDGE.

 Once again I have before me a motion by plaintiff to hold defendants *fn1" in contempt. After a review of the evidence presented at a hearing held on Thursday, May 12, 1988 at 9:00 a.m., I find the defendants in civil contempt of this court's orders of March 25, 1988, April 7, 1988 and April 19, 1988.

 A brief review of the courts' action in this case thus far would be helpful. On March 25, 1988, this court entered a temporary restraining order enjoining defendants and their agents from using the service marks "Fax Express", "FX Express", "F-X Express" where the hyphen is a fanciful "A", and/or the trade name "Fax Express." After a hearing in open court on April 4, 1988, this court entered a preliminary injunction on April 7, 1988. By order dated April 19, 1988, and again after a hearing in open court, this court issued an order holding defendants Attech Systems Corporation d/b/a Attech Fax Express ("Attech"), FX International, Inc., d/b/a Fax Express ("International") and their officers, agents and employees including Rider R. Lewis, II, in civil contempt. The civil contempt order of April 19, 1988 directed defendants to do the following:

 
(1) Defendants are required to inform all of its agents by letter that they must comply with the preliminary injunction entered by this court on April 7, 1988. A copy of this letter with a list of its recipients shall be provided to the court within five (5) days from the date of this order;
 
(2) Defendants shall provide the court with affidavits of compliance from the defendants and all of its agents within twenty (20) days from the date of this order;
 
(3) Defendants shall pay to the plaintiff $ 2000.00 per day for every day defendants violate the April 7, 1988 preliminary injunction beginning with the day following the date of this order;
 
(4) Defendants shall pay all of the plaintiff's costs and reasonable attorney fees incurred in the prosecution of this contempt order;
 
(5) Defendants shall pay all of the plaintiff's costs and reasonable attorney fees incurred in attending the March 30, 1988 deposition. *fn2"

 It is important to note that defendants have been provided with proper service and notice of each of the previously mentioned proceedings, and they have chosen not to enter an appearance or participate by way of any form of defense.

 At the request of plaintiff, this court entered an order on May 5, 1988, directing the defendants to show cause why they should not again be held in civil contempt. This order was served upon defendant by overnight mail on May 6, 1988. Once again a hearing was held in open court on May 12, at 9:00 a.m. without participation of defendants. *fn3" At this hearing, plaintiffs again offer the credible, clear and convincing evidence of Fax Express President Edward B. Klein and Fax Express Vice President and Chief Financial Officer Jerold I. Wagenheim. Mr. Klein testified that he has spoken to at least eight (8) of defendants' agents who are still identifying themselves as "Fax Express" agents since the court entered its contempt order of April 19, 1988. Similarly, Mr. Wagonheim identified at least fifteen (15) persons that he has spoken with since the courts order of April 19, 1988 who are identifying themselves as "Fax Express" agents and dealers. One agent, David Mortimer, told Mr. Klein that Mr. Rider Lewis had instructed him that it is all right to use the trade name Fax Express anywhere but Philadelphia, Pennsylvania.

 In addition, plaintiff continues to get calls from defendants' agents demanding refunds mistakenly under the belief that plaintiff is somehow associated with defendants' business. Equally alarming is the report filed with Dun & Bradstreet, Inc. listing defendants as a company named "Fax Express." (Plaintiff's Exhibit 4) Plaintiffs offered evidence indicating the potential falsity of certain information contained in the report that could severely jeopardize plaintiff's financial reputation if confusion between the companies occurs.

 In light of the evidence offered at the hearing and the complete lack of a bona fide effort to comply with the court's orders to date by defendants, I will once again hold defendants in civil contempt. The substantial evidence offered of more flagrant violations justifies the increased severity of the penalties.

 I previously stated the law on civil contempt in my April 19, 1988 order. Civil contempt is a separate remedy from criminal contempt. Civil contempt is remedial in nature and serves dual purposes. Courts use civil contempt both to coerce compliance with an order of the court and also to compensate the losses or damages sustained by reason of the noncompliance. McDonald's Corp. v. Victory Investments, 727 F.2d 82, 87 (3rd Cir. 1984); Calvin Klein Co. v. Fashion Industries, Inc., 221 U.S. P.Q. 81, 83 (D. N.J. 1982). To establish civil contempt plaintiff must prove the following elements by clear and convincing evidence: (a) that ...


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