Clearent, LLC v. Nacion
4:18-cv-01857
E.D. Mo.Jun 17, 2019Background
- Clearent obtained a stipulated consent injunction (Jan 2, 2019) barring defendant Wing Leong from "directly or indirectly soliciting or contacting" customers listed on a confidential Prohibited Customers List and from "encourag[ing]" those customers to terminate Clearent until Oct. 23, 2021.
- Clearent alleges Leong solicited listed customers after leaving Clearent and steered them to CardPointe, a competitor.
- Court issued a show-cause order; Leong responded that customers contacted him first and he did not solicit them, sometimes attempting to decline business when approached.
- Clearent contends that Leong’s acceptance of customer-initiated transfers nevertheless constitutes "directly or indirectly" contacting or encouraging termination.
- The parties dispute whether the injunction clearly forbids passive acceptance of customers who initiate contact, and whether Clearent presented clear and convincing evidence of contempt.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Leong violated the injunction by allegedly procuring listed customers | Leong "directly or indirectly" contacted/encouraged customers to leave Clearent and therefore violated the order | Customers sought Leong on their own; Leong did not solicit or encourage departures | Denied — injunction ambiguous on customer-initiated contact; no clear contempt finding |
| Whether Clearent met burden of proof for civil contempt | Clearent says circumstantial evidence and improbability of customers knowing Leong left suffice | Leong’s testimony and lack of direct evidence create reasonable doubt | Denied — Clearent failed to prove violation by clear and convincing evidence; contempt inappropriate given ambiguity |
Key Cases Cited
- In re Reed, 888 F.3d 930 (8th Cir. 2018) (elements for civil contempt)
- Taggart v. Lorenzen, 139 S. Ct. 1795 (2019) (civil contempt requires explicit notice of prohibited conduct; avoid contempt where fair ground of doubt exists)
- Acosta v. La Piedad Corp., 894 F.3d 947 (8th Cir. 2018) (party seeking civil contempt bears burden of clear and convincing evidence)
- Int’l Longshoremen’s Ass’n v. Philadelphia Marine Trade Ass’n, 389 U.S. 64 (1967) (orders must be framed so those who must obey know what is required and forbidden)