FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
UTAH (D.C. No. 2:13-CR-00413-DB-BCW-2)
on the briefs:[*]
Stephen R. McCaughey, Attorney at Law, Salt Lake City, Utah,
W. Huber, United States Attorney, District of Utah; Jason R.
Burt, Assistant United States Attorney, Salt Lake City, Utah,
BRISCOE, MATHESON and PHILLIPS, Circuit Judges.
BRISCOE, Circuit Judge.
Donald Bowers was previously involved in a civil trade secret
misappropriation case that was litigated in the United States
District Court for the District of Utah. During the course of
that litigation, Bowers willfully and repeatedly violated a
permanent injunction issued by the district court presiding
over the case, and also refused to purge himself of civil
contempt. His actions resulted in findings of civil contempt
against him, judgments against him for the plaintiff's
attorneys' fees, and, ultimately, a criminal referral to
the United States Attorney for the District of Utah. A
federal grand jury subsequently indicted Bowers on two counts
of contempt, in violation of 18 U.S.C. § 401(3). The
case proceeded to trial, where a jury found Bowers guilty of
both counts. Bowers was sentenced to a term of imprisonment
of fifteen months, to be followed by a thirty-six month term
of supervised release. He was also directed, as a condition
of supervised release, to make monthly payments on the
outstanding amount owed by him to the plaintiff in the
underlying civil case.
now appeals, arguing that the district court erred in (1)
imposing a special condition of supervised release requiring
him to make monthly payments on the outstanding judgments
owed to the plaintiff in the civil case, (2) denying his
motion for disclosure of the criminal referral, and (3)
sentencing him to a term of imprisonment that exceeded six
months. Exercising jurisdiction pursuant to 28 U.S.C. §
1291, we affirm in all respects.
criminal case has roots in an earlier civil case,
ClearOne Communications, Inc. v. Bowers,
643 F.3d 735 (10th Cir. 2011) (Bowers I). The
complete factual and procedural history of that civil case is
detailed in Bowers I and will not be repeated here.
Instead, we proceed to outline only the facts necessary to
understand how the criminal charges arose against Bowers.
filing of ClearOne's lawsuit against the WideBand
early 2007, ClearOne Communications, Inc. (ClearOne) filed
suit in Utah state court seeking relief for alleged
misappropriation of its trade secrets. Those trade secrets,
which ClearOne put to use in audio teleconferencing
equipment, "allegedly included an acoustic echo
cancellation algorithm and sub-algorithms, in both source and
object code form, nicknamed the Honeybee Code."
ClearOne Commc'ns, Inc. v. Bowers, 651 F.3d
1200, 1203 n.1 (10th Cir. 2011) (Bowers II).
Ultimately named as defendants in the suit were WideBand
Solutions, Inc. (WideBand), which was a Massachusetts
corporation, and Andrew Chiang, Jun Yang, and Lonny Bowers
(hereinafter Lonny), all of whom served as officers of
WideBand. Collectively, these defendants will be referred to
as the WideBand defendants. ClearOne's lawsuit also named
two additional corporations: Versatile DSP, Inc., and Biamp
Systems (Biamp). "Chiang, Yang and WideBand removed the
case to federal district court [in Utah] on the basis of
diversity jurisdiction."Bowers I, 643 F.3d at
Bowers' initial involvement in the lawsuit
defendant in the instant case, Bowers, is the father of
Lonny. After ClearOne initiated its lawsuit against the
WideBand defendants, Bowers began "loaning money to the
WideBand defendants to pay a portion of the legal fees they
were incurring." Bowers II, 651 F.3d at 1203.
Further, in June 2008, "Bowers and a Georgia-based
company he founded called WideBand Solutions, Inc. (WideBand
Georgia), entered into an agreement with" the WideBand
defendants "pursuant to which WideBand would transfer
its assets to WideBand Georgia." Id.
"ClearOne, upon learning of the asset transfer
agreement, filed a motion for a temporary restraining order
(TRO) and preliminary injunction to prevent any transfer of
its alleged trade secrets." Id. at 1204.
district court held a hearing on ClearOne's motion on
June 18, 2008, during which attorney Randolph Frails appeared
by telephone as the legal representative for . . .
Bowers." Id. "Frails represented during
the hearing that the language of the asset transfer agreement
excluded the trade secrets that the WideBand defendants had
purportedly misappropriated from ClearOne." Id.
"Nevertheless, the district court ordered Frails and . .
. Bowers to provide counsel for ClearOne and the WideBand
defendants with copies of the asset transfer agreement."
"June 19, 2008, ClearOne filed a renewed motion for a
TRO and preliminary injunction alleging that, contrary to
Frails' representations, the terms of the asset transfer
agreement included WideBand's intellectual property, most
notably the Honeybee Code." Id. "ClearOne
that same day also filed with the district court a separate
lawsuit against WideBand Georgia and . . . Bowers alleging
fraudulent transfer." Id. (citing ClearOne
Commc'ns, Inc. v. WideBand Sols., Inc., No.
2:08-CV-00474-TS (D. Utah June 19, 2008)).
26, 2008, the district court held a hearing "to address
the asset transfer agreement." Id. "Frails
again appeared by telephone on behalf of . . . Bowers and
WideBand Georgia." Id. "During the
hearing, the district court issued a TRO prohibiting the
WideBand defendants from transferring the Honeybee
Code." Id. The district court also, as part of
its TRO, "expressly prohibited the transfer of any
related items, including all of the various codes that Yang
had allegedly derived from the Honeybee Code while working
for WideBand, and it directed the WideBand defendants to make
a full disclosure and production of all documents relating to
the asset transfer agreement." Id.
July 10, 2008, the district court, prompted by another TRO
motion filed by ClearOne, held a . . . hearing concerning the
asset transfer agreement." Id. Frails appeared
by telephone on behalf of Bowers and WideBand Georgia, and
stated that the asset purchase agreement had been rescinded
because Bowers "felt that he was buying nothing."
Id. (internal quotation marks omitted). "Frails
argued that ClearOne's TRO motion was moot because no
assets had been transferred and the asset transfer agreement
had been rescinded." Id. The district court,
relying on Frails' representations, "denied
ClearOne's TRO motion as moot." Id.
October 2008, the district court granted . . . Bowers'
motion to dismiss ClearOne's case against him and
WideBand Georgia without prejudice on the basis that the
claims, all of which concerned the purportedly rescinded
asset transfer agreement, were moot." Id. at
trial of ClearOne's case against the WideBand
case against the WideBand defendants ultimately proceeded to
trial in October 2008. "After hearing eleven days of
evidence, the jury returned a special verdict finding in
favor of ClearOne on each of its claims against the
defendants." Bowers I, 643 F.3d at 745. The
verdict included substantial compensatory damages against all
of the defendants, as well as punitive damages against Chiang
and Yang. Id. (detailing the damages award).
Bowers' reemergence in the case
January 16, 2009, ClearOne filed a motion for an order to
show cause why the WideBand defendants and . . . Bowers
should not be held in contempt of the district court's
June 26, 2008 TRO." Bowers II, 651 F.3d at
1205. In support of its motion, ClearOne alleged that on
November 6, 2008, the day after the jury returned its verdict
in ClearOne's case against the WideBand defendants,
Bowers filed a statement in Massachusetts purporting to
perfect a security interest in all of WideBand's assets,
including all of its software and intellectual property,
pursuant to Article 9 of the Uniform Commercial Code.
January 26, 2009, the district court issued an order to show
cause directing the WideBand defendants and . . . Bowers to
appear before the court on February 10, 2009, and show cause
why they should not be held in contempt for the reasons
alleged in ClearOne's motion." Id. Although
the evidence indicated that Bowers was properly served with
the district court's show cause order, he "failed to
appear at the February 10, 2009 show cause hearing."
February 24, 2009, the district court issued a written order
concluding that Bowers was effectively subject to the
district court's June 26, 2008 TRO because he had acted
in concert or participation with the WideBand defendants.
Id. The district court also found that on November
6, 2008, Bowers had filed a UCC statement in Massachusetts
listing WideBand as a debtor and describing the relevant
collateral as all of WideBand's assets, including its
intellectual property. Id. Despite these findings
and conclusions, however, the district court
"'continued' the issue of whether Bowers should
be held in contempt of the district court's June 26, 2008
TRO, and directed Bowers to appear in person before the court
on March 13, 2009, 'to show cause why [he] should not be
held in contempt for violating the June 26, 2008
Order.'" Id. (citation omitted). "On
March 5, 2009, the district court vacated its February 24,
2009 show cause order and ordered that a show cause hearing
regarding . . . Bowers would be rescheduled at a future
April 9, 2009, the district court issued a permanent
injunction against all of the defendants." Bowers
I, 643 F.3d at 745. The injunction permanently enjoined
the WideBand defendants from disclosing, using or
transferring in any way ClearOne's trade secret Honeybee
Code, as well as "product development documentation for
the Honeybee Code or any other documentation that reveal[ed]
the contents of the Honeybee Code." Id.
(internal quotation marks omitted). The injunction also
prohibited the WideBand defendants from marketing, selling,
manufacturing, developing, modifying, duplicating,
transporting or delivering any technology that contained the
Honeybee Code or any product that was substantially derived
from the Honeybee Code. Id. at 745-46.
contempt proceedings against Donald Bowers
April 28, 2009, the district court issued an order
rescheduling for June 3, 2009, the show cause hearing
regarding . . . Bowers." Bowers II, 651 F.3d at
1206. "In its order, the district court directed both .
. . Bowers and . . . Frails to appear and testify by
telephone at the June 3, 2009 hearing." Id.
Both men "appeared by telephone at the June 3, 2009
hearing." Id. At the conclusion of the hearing,
the district court "took the matter of . . . Bowers'
contempt under advisement." Id.
months later, on September 3, 2009, the district court issued
a memorandum decision and order of contempt based on the
evidence presented at the June 3, 2009 show cause hearing.
Id. at 1207. The district court specifically found
"Bowers in contempt for the post-verdict act of filing a
UCC financing statement encumbering WideBand's assets, as
well as for failing to appear at the February 10, 2009
contempt hearing." Id. "Based on these
findings, the district court directed . . . Bowers to take
actions to assure the court that he had removed any
encumbrances he had placed on WideBand's assets and to
pay ClearOne's attorneys' fees and costs associated
with the contempt proceedings against him." Id.
September 17, 2009, . . . Bowers filed a personal Chapter 7
bankruptcy petition in Georgia." Id. "The
automatic stay entered in connection with the filing of that
bankruptcy petition prevented ClearOne from collecting on the
contempt judgment for fees and costs and prevented, for a
period of time, the district court's consideration of