Consumer Financial Protection Bureau v. Howard Law, P.C., 671 F. App'x 954

The CFPB obtained a Permanent Injunction (June 18, 2015) against Morgan Drexen for unlawfully collecting advance fees from certain customers.
Attorneys (Howard Law, P.C., The Williamson Law Firm, LLP, Vincent D. Howard, Lawrence Williamson) were later subjected to a Clarification Order (July 6, 2015) and a Contempt Order (Oct. 9, 2015) binding them to the Permanent Injunction and finding them in contempt.
The district court’s orders treated the Attorneys as nonparties bound by the injunction, citing either “active concert or participation” with Morgan Drexen or that the Attorneys became a “disguised continuance” (successor) to Morgan Drexen.
The Ninth Circuit found the district court failed to clearly explain which legal theory (pre-injunction legal identity/acting in concert vs. post-injunction successor liability) supported binding the Attorneys under Fed. R. Civ. P. 65(d)(2).
The panel held the record did not support successor binding because the Permanent Injunction did not expressly bind successors and the record lacked findings that the Attorneys acquired Morgan Drexen’s assets after the injunction; pre-injunction legal-identity findings were not clearly made.
The court ruled contempt proceedings require an evidentiary hearing (oral testimony) to resolve whether the Attorneys were bound by the injunction and whether they violated it; reversed and remanded for more detailed findings and a hearing.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether district adequately explained why nonparties (Attorneys) were bound by the injunction	CFPB argued Attorneys were bound because they acted in concert with Morgan Drexen and later succeeded its business post-injunction	Attorneys argued they were not parties to the injunction and lacked notice; district gave insufficient basis	Reversed: district failed to state clear basis under Rule 65(d)(2); remand for detailed findings
Whether nonparties can be bound based on pre-injunction "acting in concert" or legal identity	CFPB emphasized successor status after Attorneys took over business	Attorneys contested any pre-injunction identity or control showing and lack of successor notice in injunction	Court held both theories possible but district did not clarify which applied; successor theory unsupported on record and injunction lacked successor notice
Whether contempt determination can proceed without live testimony/hearing	CFPB asserted contempt finding based on post-injunction conduct (successor acts) justified the contempt	Attorneys argued factual disputes required an evidentiary hearing and clearer findings	Court held civil contempt requires an evidentiary hearing under Rule 43(a); remand for hearing

Lumbermen’s Underwriting All. v. Can-Car, Inc., 645 F.2d 17 (9th Cir. 1980) (applicability of injunctions to nonparties and need for clear findings)
Swanson v. Levy, 509 F.2d 859 (9th Cir. 1975) (standard for court to state reasons for injunction-related decisions)
United States v. Baker, 641 F.2d 1311 (9th Cir. 1981) (injunction binds a nonparty only if it had actual notice)
NLRB v. Sequoia Dist. Council of Carpenters, AFL-CIO, 568 F.2d 628 (9th Cir. 1977) (nonparty bound if abetting enjoined party or legally identified)
Golden State Bottling Co. v. NLRB, 414 U.S. 168 (U.S. 1973) (successor liability can bind successors to prior injunctions)
Regal Knitwear Co. v. NLRB, 324 U.S. 9 (U.S. 1945) (pre-injunction conduct and control can establish legal identity)
FTC v. Enforma Nat. Prods., Inc., 362 F.3d 1204 (9th Cir. 2004) (need for detailed findings when extending injunction scope)
Pennwalt Corp. v. Durand-Wayland, Inc., 708 F.2d 492 (9th Cir. 1983) (civil contempt proceedings are trials favoring live testimony)