In the
United States Court of Appeals
For the Seventh Circuit
No. 08-4013
U NITED S TATES S ECURITIES AND
E XCHANGE C OMMISSION,
Plaintiff-Appellee,
v.
JASON R. H YATT, et al.,
Defendants.
A PPEAL OF:
BCI A IRCRAFT L EASING, INC., et al.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:08-cv-02224—George W. Lindberg, Judge.
A RGUED M AY 12, 2009—D ECIDED S EPTEMBER 3, 2010
Before P OSNER and SYKES, Circuit Judges, and V AN
B OKKELEN, District Judge.
The Honorable Joseph S. Van Bokkelen, United States
District Judge for the Northern District of Indiana, sitting by
designation.
2 No. 08-4013
S YKES, Circuit Judge. Brian Hollnagel and BCI Aircraft
Leasing appeal the district court’s order holding them
in contempt and awarding attorney’s fees for their
failure to adequately respond to two subpoenas duces
tecum served on them by the Securities and Exchange
Commission (“SEC”) in connection with litigation
between the SEC and another party. The SEC initiated
the contempt proceeding via a motion for a rule to show
cause why Hollnagel and BCI should not be held in
contempt. The motion asked the court to: (1) order them
to fully comply with the subpoenas; and (2) order
them to show cause why they should not be held in
contempt for their past noncompliance. Accompanying
this motion was a notice setting a date and time for
a hearing at which the SEC said it would “present, and
seek a hearing date regarding” its request for a show-
cause order. Hollnagel and BCI interpreted the notice
and motion to mean that the initial hearing would be
entirely ministerial—that the court would issue a show-
cause order and set another date on which the merits of
the contempt issue would be heard. So they didn’t
show up.
When the case was called and Hollnagel and BCI
didn’t appear, the SEC skipped over the procedural
preliminaries and moved right to the main event: The
agency’s lawyers asked the court to find Hollnagel and
BCI in contempt. The court did so, ordered them to
fully comply with the subpoenas within two days, and
imposed a $1,000-a-day fine for any noncompliance
after that date. The court later rescinded the fine, but
No. 08-4013 3
left the contempt order in place and ordered Hollnagel
and BCI to pay the SEC’s attorney’s fees.
Hollnagel and BCI appealed, raising several procedural
challenges to the district court’s order. First, they
contend that a contempt order cannot issue for noncom-
pliance with a nonparty subpoena duces tecum unless
the recipient of the subpoena is first ordered by the court
to comply. In the alternative they claim that the SEC’s
motion for a rule to show cause notified them only that
the SEC was seeking a show-cause order setting a future
hearing date on the contempt motion, not that the court
would immediately adjudicate whether they were in
contempt. Accelerating the process, they maintain, de-
prived them of notice and an opportunity to be heard.
We reject the first of these arguments. Rule 45(e) of the
Federal Rules of Civil Procedure specifically provides
that a person who fails “without adequate excuse to
obey [a] subpoena” may be held in contempt. The rule
does not require the court to first order compliance
before imposing the sanction of contempt, although
subsection (c) of the rule requires an intervening court
order if the recipient of the subpoena objects in writing
to the production of documents or things. Hollnagel and
BCI did not serve a written objection, so the SEC was
entitled to seek a contempt sanction. We agree, however,
with the alternative argument that the SEC’s notice and
motion for a rule to show cause did not provide suf-
ficient notice that the district court would decide the
contempt issue at the initial hearing. The notice sought
only the issuance of a show-cause order and asked the
4 No. 08-4013
court to set a hearing at which the merits of the con-
tempt issue would later be adjudicated. Accordingly,
we vacate the contempt order.
I. Background
In district-court litigation between the SEC and Hyatt
Johnson Capital, lawyers for the SEC issued two
subpoenas duces tecum to nonparties Brian Hollnagel and
BCI Aircraft Leasing (collectively “BCI”). The subpoenas
were issued in June and August 2008 and requested a
large number of documents related to the underlying
litigation. BCI received a two-week extension from the
SEC for the June subpoena and responded in July by
producing numerous documents on a CD. The SEC
thought the production was deficient because some of
the e-mails did not contain their original attachments
or had attachments that were not produced in their
native format. Twice the SEC requested that BCI cure the
deficiencies; each time BCI attempted to do so, the SEC’s
lawyers found problems with the production. After
receiving the August subpoena, BCI again asked the
SEC for two extra weeks to respond. The SEC rejected
this request on August 20, 2008—the due date set in the
subpoena—based on the continuing dispute over the
adequacy of BCI’s compliance with the June subpoena.
On the afternoon of August 28, 2008—the Thursday
before Labor Day—the SEC filed a motion in the
district court seeking the issuance of a rule to show cause
why BCI should not be held in contempt for noncom-
pliance with the subpoenas. The notice accompanying
No. 08-4013 5
the motion told BCI that the SEC would appear in the
district court at 9:30 a.m. on September 3, 2008 (the
Wednesday after Labor Day), and would “then and
there present, and seek a hearing date regarding” its mo-
tion for the issuance of a rule to show cause. The mo-
tion asked the court to: (1) order BCI to “fully and com-
pletely respond to the SEC’s subpoenas”; and (2) order
“BCI and Hollnagel to show cause why they should not
be held in contempt of court.” In a memorandum filed
in support of the motion, the SEC requested the same
relief. In the last paragraph of the memorandum, how-
ever, the SEC also asked the court to “find BCI and
Hollnagel in contempt” and award attorney’s fees.
BCI did not appear at the September 3 hearing. When
the case was called and BCI’s nonappearance was noted,
the SEC’s lawyers told the judge: “[W]e’re here today on
our contempt motion against BCI Aircraft Leasing and
Hollnagel for not complying with three [sic] subpoenas
issued to them.” They asked the court to order that “BCI
and Hollnagel make a complete and proper production” by
noon on September 5. They also asked the court to “find
BCI and Hollnagel in contempt for failing to respond
to these subpoenas completely” and proposed a fine of
$1,000 per day if complete production was not made by
the September 5 deadline. Finally, they asked the court
for an award of attorney’s fees. The court orally entered
these orders as requested. At the SEC’s suggestion, the
judge ordered the matter “continued” to September 10
to “report back on where we are.”
Later that same day, the court issued two conflicting
written orders purporting to record what transpired
6 No. 08-4013
during the morning hearing. The first, a summary
minute order, stated: “Hearing held and continued to
9/10/2008 at 9:00 a.m. Response due 9/5/2008 by noon
to plaintiff’s motion for order to show cause against
BCI . . . .” BCI says that it understood this as an order
directing it to submit a “show cause” response on the
contempt issue by the September 5 deadline and setting
a hearing on the matter at 9 a.m. on September 10. The
second order, prepared by the SEC and issued after the
minute order, was quite different. It made findings ad-
judicating BCI in contempt and ordered “full, proper, and
complete” compliance with the subpoenas by noon on
September 5. The order also imposed a fine of $1,000
for every day of noncompliance thereafter, “including
weekends and holidays.” Finally, this second order
awarded the SEC its “costs and reasonable attorney
fees” and directed the agency to file an appropriate fee
petition.
The next day, September 4, the district court entered a
docket entry striking the first of the written orders
entered on September 3. BCI immediately moved to
vacate the September 3 order finding it in contempt. BCI
argued first that the contempt motion was not properly
before the court on September 3. Based on the contents
of the notice accompanying the SEC’s August 28 motion,
BCI argued that the September 3 hearing was essen-
tially only a scheduling hearing. BCI also attempted
to explain why it was not in contempt. On September 5,
in accordance with the terms of the by-now stricken
minute order, BCI filed a response to the SEC’s motion for
a rule to show cause. The court struck this response as
No. 08-4013 7
moot. Also on September 5, BCI sent another production
of subpoenaed documents to the SEC. The SEC con-
sidered this latest attempt at compliance deficient. During
the course of the next week, BCI sent two additional
productions attempting to address the asserted deficien-
cies.
On September 9, the district court denied BCI’s motion
to vacate the contempt order. The September 10 hearing
was continued to September 17, and on that date the
judge addressed whether BCI had complied with the
subpoenas as ordered. Concluding that BCI was making
a reasonable effort to comply, the judge continued the
hearing to October 1. BCI made yet another production
of documents several days later. Finally, at the October 1
hearing, the judge found that BCI had substantially
complied with the September 3 order to compel produc-
tion and therefore rescinded the $1,000-per-day fine. The
court left the rest of the contempt order in place, however,
and required BCI to pay the SEC’s attorney’s fees. The
SEC submitted a bill for more than $33,000 in fees,
which the district court reduced to just under $6,000.
BCI appealed.
II. Discussion
Civil contempt is “a unique civil sanction because its
aim is both coercive and compensatory.” Prima Tek II, LLC
v. Klerk’s Plastic Indus., B.V., 525 F.3d 533, 542 (7th Cir.
2008). The coercive aspect of the remedy is not at issue
here. To prevail on a request for a contempt finding,
8 No. 08-4013
the moving party must establish by clear and convincing
evidence that (1) a court order sets forth an unambiguous
command; (2) the alleged contemnor violated that com-
mand; (3) the violation was significant, meaning the
alleged contemnor did not substantially comply with
the order; and (4) the alleged contemnor failed to make
a reasonable and diligent effort to comply. Id.
BCI argues that a subpoena duces tecum issued by an
attorney is not a court order and therefore the district
court could not hold BCI in contempt simply for failing
to comply with the SEC’s subpoenas. The first element of
contempt requires the moving party to “ ‘point to a decree
from the court which set[s] forth in specific detail an
unequivocal command which the party in contempt
violated.’ ” Stotler & Co. v. Able, 870 F.2d 1158, 1163 (7th
Cir. 1989) (quoting Ferrell v. Pierce, 785 F.2d 1372, 1378
(7th Cir. 1986)). BCI contends that this prerequisite
was not met here because the subpoenas issued by the
SEC’s attorneys were not court orders. BCI claims that
before adjudicating the contempt motion, the district
court first had to issue an order compelling compliance
with the SEC’s subpoenas.
This argument runs into difficulty under certain provi-
sions in the procedural rules applicable to discovery
subpoenas. Rule 45(a) of the Federal Rules of Civil Pro-
cedure explains that a civil subpoena may issue in one of
two ways. The clerk of the court may issue a subpoena
“signed but otherwise in blank,” which is then completed
by the requesting party. FED. R. C IV. P. 45(a)(3). Alterna-
tively, an attorney may also “issue and sign a subpoena
No. 08-4013 9
as an officer of . . . a court in which the attorney is autho-
rized to practice; or . . . a court for a district where a
deposition is to be taken or production to be made, if the
attorney is authorized to practice in the court where
the action is pending.” Id.
Rule 45(e) speaks directly to the power of the district
court to hold the recipient of a subpoena in contempt:
“The issuing court may hold in contempt a person who,
having been served, fails without adequate excuse to
obey the subpoena.” FED. R. C IV. P. 45(e). The contempt
provision in subsection (e) does not distinguish between
subpoenas issued with some court involvement—those
issued in blank by the court clerk and completed by the
party who requests it—and those issued without any
court involvement at all by an attorney as an officer of
the court. Instead, subsection (e) of Rule 45 broadly refers
to the contempt power of the “issuing court,” which
implies that all discovery subpoenas are contempt-
sanctionable orders of the court whether issued in blank
by the clerk or by an attorney as an officer of the court.
The Advisory Committee Notes confirm this reading of
the rule. The commentary explains that “[a]lthough the
subpoena is in a sense the command of the attorney
who completes the form, defiance of a subpoena is never-
theless an act in defiance of a court order and exposes
the defiant witness to contempt sanctions.” FED. R. C IV. P.
45(a)(2) advisory committee’s note (1991 amend.). Nothing
in Rule 45 or the accompanying commentary purports
to limit the contempt power to subpoenas issued with
more direct district court involvement or to require
10 No. 08-4013
an intervening court order when the subpoena is issued
by an attorney.
There is limited appellate caselaw on this issue, but that
which exists supports this understanding. See Pennwalt
Corp. v. Durand-Wayland, Inc., 708 F.2d 492, 494 n.5 (9th
Cir. 1983) (“a subpoena duces tecum is itself a court
order, and noncompliance may warrant contempt sanc-
tions,” but noting that when the person subpoenaed
objects in writing, “the party seeking discovery must
obtain a court order directing compliance” before con-
tempt will be available); Fisher v. Marubeni Cotton Corp.,
526 F.2d 1338, 1341-42 (8th Cir. 1975) (explaining the
distinction between Rule 37 sanctions for failure of a
party to comply with a discovery request and Rule 45
sanctions for failure of a nonparty to comply with a
discovery subpoena). Accordingly, we reject BCI’s argu-
ment that a subpoena issued under Rule 45(a)(3) by an
attorney as an officer of the court is not itself a court
order subject to contempt sanctions if disobeyed.
It does not follow, however, that a contempt motion
for disobedience of a nonparty subpoena should be
treated in exactly the same way as a contempt motion
for violation of another kind of court order. As the com-
mentary to Rule 45(e) explains:
In at least some circumstances, a non-party might
be guilty of contempt for refusing to obey a subpoena
even though the subpoena manifestly overreaches
the appropriate limits of the subpoena power. But,
because the command of the subpoena is not in
No. 08-4013 11
fact one uttered by a judicial officer, contempt
should be very sparingly applied when the non-party
witness has been overborne by a party or attorney.
F ED. R. C IV. P. 45(e) advisory committee’s note (1991
amend.) (citation omitted). Rule 45 also contains
important provisions to protect the recipient of a sub-
poena from undue burden or expense, invasion of a
privilege, or disclosure of protected material. See F ED. R.
C IV. P. 45(c). For example, under Rule 45(c), intervening
court involvement is required prior to initiation of con-
tempt proceedings if the recipient of the subpoena
serves a written objection on the party or attorney desig-
nated in the subpoena. F ED. R. C IV. P. 45(c)(2)(B). On
receipt of such an objection, the party serving the sub-
poena “may move the issuing court for an order compel-
ling production or inspection,” and the production or
inspection “may be required only as directed in the
order.” FED. R. C IV. P. 45(c)(2)(B)(i)(ii). Also, Rule 45(c)(3)
describes the circumstances under which the court must
or may quash or modify a subpoena. See F ED. R. C IV. P.
45(c)(3). These provisions suggest at a minimum that
contempt motions for noncompliance with a discovery
subpoena should be entertained with special attention
to the procedural and substantive rights of the nonparty
witness.
Here, BCI did not serve a written objection or move
to quash or modify the subpoenas. The SEC therefore
was not required to first obtain a court order compelling
compliance with its subpoenas before initiating con-
tempt proceedings. As a general matter, however, the
12 No. 08-4013
more prudent practice for the court is to issue such an
order before entertaining a motion for contempt. See
9A C HARLES A LAN W RIGHT & A RTHUR R. M ILLER,
F EDERAL P RACTICE AND P ROCEDURE § 2465 (3d ed. 2008)
(“The district judge normally will preface a contempt
citation with an order directing either compliance
with the subpoena or a showing of an excuse for the
noncompliance.”). The problem here is not that the
SEC could not move for contempt without an inter-
vening court order compelling compliance; the problem
is that the notice and motion did not provide ade-
quate notice that the SEC would ask for a finding
of contempt at the initial hearing on the motion for a
rule to show cause.
Due process requires that a person facing contempt
sanctions be given adequate notice and fair opportunity
to be heard in civil contempt proceedings. See, e.g., Autotech
Techs. LP v. Integral Research & Dev. Corp., 499 F.3d 737, 746-
47 (7th Cir. 2007). This minimally includes a require-
ment that “notice be given of the time and place of hear-
ing” on the propriety of a contempt order. Am. Fletcher
Mortg. Co. v. Bass, 688 F.2d 513, 519 (7th Cir. 1982); 9A
C HARLES A LAN W RIGHT & A RTHUR R. M ILLER, FEDERAL
P RACTICE AND P ROCEDURE § 2465 (3d ed. 2008) (“[D]ue
process does require that any civil contemnor be given
certain basic procedural protections before being subject
to any sanction: adequate notice and an opportunity
to be heard at a meaningful time and in a meaningful
manner.”). In this context, “the focus must be on noti-
fying the alleged contemnor, rather than on the
No. 08-4013 13
formalities of notification procedures.” Autotech Techs.,
499 F.3d at 748.
It is undisputed that BCI was on notice that the SEC
was charging it with contumacious noncompliance
with the subpoenas; that much was clear from the
SEC’s motion. BCI argues more particularly that it
did not have sufficient notice that the district court
would be asked to decide whether a contempt order
should be issued at the September 3 hearing. Based on the
specific contents of the notice and motion, we agree.
No doubt it was unwise for BCI to consider its presence
at the September 3 hearing to be optional. But the SEC’s
use of the procedural device of a “motion for a rule to
show cause” gave BCI notice only that the court would
be asked to issue a show-cause order on that date, not
that it would immediately take up the merits of the con-
tempt issue. The motion for a rule to show cause was
an unnecessary extra layer of process, but its use here
effectively postponed the adjudication of the alleged
contempt until after the court issued the requested show-
cause order.
Show-cause motions historically served two purposes:
First, the motion was a way to bring matters to the
district court more speedily than other methods of pre-
sentment prior to the Federal Rules of Civil Procedure.
See 5 C HARLES A LAN W RIGHT & A RTHUR R. M ILLER,
F EDERAL P RACTICE AND P ROCEDURE § 1195 (3d ed. 2004).
Second, the granting of a show-cause motion provided
notice to the nonmoving party of what he must do to
avoid some other court action, such as the issuance of an
14 No. 08-4013
injunction or writ. Id. A show-cause motion essentially
asks a district court to issue an order requiring the
nonmovant to show the court by a certain date why
the court should not take some other action—here, the
imposition of a contempt sanction. In other words,
the show-cause order satisfies the due-process notice re-
quirement by giving the nonmoving party notice of
his opportunity to respond before the substantive
request for relief is entertained. See Mercer v. Mitchell,
908 F.2d 763, 766-68 (11th Cir. 1990).
The Federal Rules of Civil Procedure declined to in-
corporate this burdensome procedure into the modern
procedural code. Instead, a Rule 6(c) notice of hearing
and a Rule 7(b) motion stating the grounds for the
relief and specifying the actual relief sought suffice to
provide due-process notice to the nonmoving party
prior to entry of a court order. F ED. R. C IV. P. 7(b).
Under Rule 6(c)(1)(C), the district court may, ex parte
and for cause, shorten the normal notice period. Judge
Clark—one of the principal drafters of the Federal Rules
of Civil Procedure—long ago explained the procedural
shift away from show-cause orders:
An unnecessary appearance of irregularity was
given the proceedings below by the fact that formal
orders to show cause, signed by a judge, were pro-
cured, whereas simple notices of motions would
have been preferable. The new Federal Rules of Civil
Procedure attempt to limit to a minimum these un-
necessary formalities which take up the time of
judges and add nothing of value to the proceedings.
No. 08-4013 15
Here the order to show cause on the motion to quash
was simply a somewhat peremptory notice of
motion, as the judge below pointed out. Since such
orders to show cause serve only to confuse, judges
might well decline to sign them except when really
required by or justified under binding rules of pro-
cedure.
Application of Tracy, 106 F.2d 96, 98 (2d Cir. 1939) (Clark, J.,
concurring). Accordingly, the Federal Rules of Civil
Procedure have simplified motion practice and largely
eliminated the need to seek show-cause orders. Civil
contempt proceedings may be initiated by notice and
motion.
Despite its obsolescence, litigants regularly ask courts
to issue show-cause orders in civil contempt pro-
ceedings, perhaps because the federal rules for criminal
contempt provide that a court must give notice of con-
tempt proceedings “in open court, in an order to show
cause, or in an arrest order.” See F ED. R. C RIM. P. 42(a)(1)
(emphasis added). Regardless of the motivation, when
a party initiates a civil contempt proceeding via a
motion for a rule to show cause, we see no reason why
it should not be given its historical and literal meaning
for notice purposes: that the moving party is asking
only for a preliminary order directing the alleged
contemnor to show cause why the court should not
find him in contempt. District courts in this circuit ap-
parently regularly treat show-cause motions as distinct
from other motions under the Federal Rules of Civil
Procedure. See, e.g., Sommerfield v. City of Chicago, 252 F.R.D.
16 No. 08-4013
407, 413 (N.D. Ill. 2008) (“The purpose of [a show-cause]
motion is to persuade the court that there should be a
hearing at which the factfinder will ultimately evaluate
whether a finding of contempt is appropriate on the
evidence presented.”).1
In certain limited circumstances, a district court may
treat a show-cause motion as a motion for an order on
the merits of the alleged contempt where doing so
would not cause prejudice—that is, when it would not
violate the alleged contemnor’s right to notice and an
opportunity to be heard. See 5 W RIGHT & M ILLER, FEDERAL
P RACTICE AND P ROCEDURE § 1195 (3d ed. 2004) (“[A]
request for a show cause order usually will be enter-
tained and treated as a motion, if doing so will not prejudice
1
See also Commodity Futures Trading Comm’n v. Velazquez, No. 04
C 5853, 2007 WL 1673218, at *2 (N.D. Ill. June 6, 2007) (“[T]he
Motion to Issue a Rule to Show Cause why Mr. Velazquez
should not be held in civil contempt . . . does not appear to be
a dispositive motion. The idea of a show cause motion is to
hold a hearing, at which the factfinder will ultimately
evaluate whether a finding of contempt . . . is appropriate on
the evidence and facts presented.”); Bds. of Trs. of the Bricklayers
Local 74 v. Vorkapic, No. 01 C 1048, 2001 WL 649501, at *1 n.1
(N.D. Ill. June 8, 2001) (“We impliedly granted the plaintiffs’
[show-cause] motion prior to conducting the evidentiary
hearing, which all parties understood to be a hearing on
whether or not the defendants were in violation of the pre-
liminary injunction.”); Cent. States, Se. & Sw. Areas Health &
Welfare & Pension Funds v. Transcon Lines, No. 90 C 1853, 1993
U.S. Dist. LEXIS 12427 (N.D. Ill. Sept. 7, 1993).
No. 08-4013 17
the opposing parties.” (emphasis added)); Sommerfield,
252 F.R.D. at 414 (“[T]he motion may properly be
viewed as a motion for contempt since it asked for a
finding of contempt and a miscellany of significant sanc-
tions, the City has responded, and the matter has been
fully briefed by both sides. Thus, it is as though the rule
to show cause had been granted.”).2
The SEC argues that BCI should have been aware that
the September 3 hearing on the show-cause motion was
BCI’s only opportunity to argue the merits of the alleged
2
See also Am. Family Mut. Ins. v. Roth, No. 05 C 3839, 2007 WL
2377335, at *14 (N.D. Ill. Aug. 16, 2007) (treating show-cause
motion as a motion on the merits of contempt because “defen-
dants have had ample notice of the claims against them and
have fully responded to [movant]’s theories, arguments, and
supporting evidence. Hence, there is no necessity for directing
[a show-cause order] . . . .”); Vorkapic, 2001 WL 649501, at *1 n.1
(“Although the parties’ subsequent briefs continue to be
styled as briefs in support or opposition to the Motion for
Issuance of an Order for Rule to Show Cause, they both argue
the ultimate question before the court—that is, whether the
defendants are indeed in contempt, not whether this court
should issue an order for rule to show cause.”); Orion Indus.,
Inc. v. Antenna Co., No. 87 C 6788, 1991 WL 70862, at *4 (N.D. Ill.
Apr. 27, 1991) (“[E]ven a cursory review of the briefs filed
and the court transcripts in this case, reveals that from the
moment the motion for a rule to show cause was first pre-
sented to Magistrate Judge Lefkow, the parties argued the
motion on the merits, and treated the motion like it was a
motion for an order finding the defendants in contempt of
court.”).
18 No. 08-4013
contempt. The SEC notes that it had previously filed a
similar motion in a different case before a different
judge in which BCI was then a named defendant, and
BCI responded to this motion by specifically addressing
the propriety of a contempt order. We are not persuaded.
BCI’s prior conduct in a different case before a different
judge in a case in which it was a party does not deter-
mine the adequacy of the notice provided in this case.
The notice at issue here told BCI that the relief
sought at the September 3 hearing would be limited to
the issuance of two orders: (1) an order compelling
BCI’s compliance with the subpoenas; and (2) an
order requiring BCI to show why it should not be held
in contempt.
The SEC also relies on a paragraph at the end of its
memorandum in support of its motion for a rule to
show cause in which it asked the court to find BCI in
contempt and award attorney’s fees. These requests for
substantive relief, however, were contained only in the
supporting memorandum—not in the notice and mo-
tion—and appeared only once and then only in the
final sentences of the memorandum. The bulk of the
memorandum discussed the grounds for the SEC’s re-
quest for an order compelling compliance with the sub-
poenas and its request for an order to show cause. The
memorandum was not enough to counteract the effect
of the SEC’s notice and motion, which put BCI on
notice that the SEC would seek only procedural relief at
the September 3 hearing.
Finally, the SEC contends that any failure of notice did
not prejudice BCI because BCI has never said how actual
No. 08-4013 19
notice would have helped it avoid a contempt finding.
The record does not support this argument. BCI filed a
motion to vacate the contempt order on September 4 and
argued that it had been making reasonable efforts to
comply with the subpoenas and therefore was not in
contempt. But the district judge denied the motion as
moot because he thought BCI had waived its oppor-
tunity to contest the contempt finding by failing to
show up at the September 3 hearing. As we have ex-
plained, although it was imprudent not to attend that
hearing, the SEC’s notice and motion failed to give
BCI notice that the agency would seek a contempt ruling
at that time. As such, there was no waiver on the merits
of the contempt issue. The district court never con-
sidered BCI’s claim that it had been making a good-
faith effort to comply with the subpoenas. Had it done
so, it might not have found BCI in contempt. See F ED. R.
C IV. P. 45(e) (“The issuing court may hold in contempt
a person who, having been served, fails without ade-
quate excuse to obey the subpoena.” (emphasis added)).
Treating the SEC’s procedural motion for rule
to show cause as a substantive motion for contempt
prejudiced BCI.
C ONTEMPT O RDER V ACATED
9-3-10