Amber Gascho v. Global Fitness Holdings, 875 F.3d 795

Background

Global Fitness settled a class-action suit, agreeing to pay $1.3M to class members, class counsel’s fees as ordered, and the claims administrator’s fees; only the class payment was placed in escrow.
Some class members objected and appealed; the Sixth Circuit affirmed and the Supreme Court denied certiorari, making the district-court approval final on March 21, 2017.
By the time the settlement became final, Global Fitness had sold its gyms and distributed roughly $10.4M to managers; two days before payment was due it notified the court it lacked funds.
Plaintiffs moved to hold Global Fitness and four managers in civil contempt for failing to pay counsel and the claims administrator; the district court found contempt and ordered payment (including interest).
The defendants appealed, arguing (1) the district court’s order was not "definite and specific" until appeals concluded and (2) impossibility/self-induced inability to pay. The Sixth Circuit reversed and remanded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a contempt finding may rest on the district court’s order approving the settlement before appeals are exhausted	Plaintiffs: The approval order required payment in accordance with the settlement; defendants should have conserved funds during appeal and can be held in contempt for nonpayment.	Defendants: The payment obligation was conditioned on the settlement being "fully and finally affirmed," so the court’s command was not definite and specific until appeals ended.	The court held the order was not definite and specific until final affirmance (March 21, 2017); contempt cannot be based on earlier contingent commands.
Whether defendants’ inability to pay after the order became effective was excused by impossibility	Plaintiffs: Defendants knowingly dissipated assets and cannot rely on impossibility.	Defendants: They lacked funds to comply; inability to pay excused contempt if not self-induced and if all reasonable steps were taken.	The court held the district court erred by considering pre-order conduct; on remand the court must assess post-March 21 conduct to determine impossibility and whether it was self-induced.
Whether contempt is an appropriate remedy for enforcing monetary awards here	Plaintiffs: Contempt is appropriate to enforce payment.	Defendants: A writ of execution, not contempt, is the proper remedy for money judgments.	The court held contempt is permissible under binding Sixth Circuit precedent (Gary’s Electric) for enforcing such obligations.
Whether non-party managers may be held in contempt and jointly/severally liable	Plaintiffs: Managers responsible for company conduct should be held accountable and jointly liable.	Defendants: Managers are non-parties and cannot be held personally liable or jointly/severally without individualized findings.	The court held managers can be subject to contempt if responsible and on notice, but the district court erred in imposing joint-and-several liability; on remand it must determine each manager’s individual culpability and the losses caused.

Key Cases Cited

Int’l Longshoremen’s Ass’n v. Phila. Marine Trade Ass’n, 389 U.S. 64 (U.S. 1967) (describing contempt power as a potent weapon and cautions on its use)
United States v. Wilson, 421 U.S. 309 (U.S. 1975) (courts must use the least possible power adequate when imposing contempt)
NLRB v. Cincinnati Bronze, Inc., 829 F.2d 585 (6th Cir. 1987) (civil contempt requires clear and convincing proof of knowing violation of a definite and specific order)
Elec. Workers Pension Trust Fund v. Gary’s Elec. Serv. Co., 340 F.3d 373 (6th Cir. 2003) (endorses contempt to enforce monetary obligations and addresses liability of corporate officers)
United States v. Rylander, 460 U.S. 752 (U.S. 1983) (impossibility defense to contempt requires showing inability to comply)
Downey v. Clauder, 30 F.3d 681 (6th Cir. 1994) (orders lacking a specified date or immediate command are not definite and specific for contempt)
NLRB v. Deena Artware, Inc., 261 F.2d 503 (6th Cir. 1958) (orders contingent on future events are not sufficiently definite to support contempt)