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08-4013 SEC v. Hyatt

By: dmc-admin//September 3, 2010//

08-4013 SEC v. Hyatt

By: dmc-admin//September 3, 2010//

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Civil Procedure
Contempt; due process

A court cannot find a party in contempt when the show-case notice only said that that the SEC was seeking a show-cause order, but not that the court would immediately adjudicate whether they were in contempt.

“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 sufficient 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 court to set a hearing at which the merits of the contempt issue would later be adjudicated. Accordingly, we vacate the contempt order.”

Vacated.

08-4013 SEC v. Hyatt

Appeal from the United States District Court for the Northern District of Illinois, Lindberg, J., Sykes, J.

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