Warshaw Group Inc. v. Materialink LLC
- John Cronan
- 1:23-cv-01916
- U.S. District Court · Southern District of New York
- 6
In Warshaw Group v. Materialink, Judge Cronan held Materialink in contempt and imposed a new daily fine for ignoring court orders.
Materialink LLC was held in contempt and subjected to a $1,000 daily coercive fine. James Smith was not held in contempt at this time but was warned that future contempt sanctions, including a fine or imprisonment, could be imposed. Warshaw Group was directed to complete additional service and may seek fees, costs, and further sanctions.
What happened
Warshaw Group had won a judgment against Materialink and served it with a subpoena seeking information needed to collect that judgment. Materialink did not answer the subpoena or pay earlier fines, and neither Materialink nor James Smith responded to the court’s order to explain why they should not be held in contempt.
The court held Materialink in contempt because its orders were clear, Materialink knowingly disobeyed them, and it made no reasonable effort to comply. The court imposed a $1,000 daily fine beginning July 8, 2025, ending September 6, 2025, or earlier if Materialink answered the subpoena. The court did not hold Smith in contempt at this time and reserved the possibility of doing so later.
Judge John P. Cronan also directed Warshaw Group to serve the subpoena and relevant orders again on Materialink and Smith, and reserved the court’s authority to award Warshaw Group appropriate fees and costs.
The detailed version
- Warshaw Group Inc. v. Materialink LLC · No. 1:23-cv-01916
- John Cronan
- June 24, 2025
Background
The court had entered a default judgment against Materialink LLC in September 2023. Warshaw Group then served an information subpoena on Materialink’s registered agent, James Smith. Materialink did not respond. On June 3, 2024, the court ordered Materialink to provide full and complete responses to the subpoena, denied Warshaw Group’s request to hold Materialink in contempt as premature, and warned that Materialink could be held in contempt for disobeying the order.
Materialink continued not to respond. On November 14, 2024, the court held Materialink in contempt and imposed staged daily fines: $300 per day beginning November 21, 2024, and $600 per day beginning December 15, 2024, through February 12, 2025, or until Materialink responded. Materialink did not respond and did not pay any part of those fines.
Warshaw Group later asked the court to hold Materialink and Smith in contempt, including by imprisoning Smith until Materialink complied. The court ordered both to explain why they should not be held in contempt. Neither responded.
Contempt Finding Against Materialink
Civil contempt may be imposed when a court order is clear and unambiguous, the violation is proven clearly and convincingly, and the alleged contemnor has not made a reasonable effort to comply. The court found all three conditions satisfied. Its June 3, November 14, and May 20 orders gave clear instructions; Materialink knowingly disregarded them; and Materialink neither answered the subpoena, paid the earlier fine, nor responded to the order to show cause.
The court also noted that Materialink appeared to have deleted an email address previously used by Warshaw Group, which potentially indicated an effort to avoid the court’s orders. Materialink’s continued noncompliance threatened Warshaw Group’s ability to collect its judgment.
New Sanction
The court imposed an increased coercive fine intended to compel Materialink to comply. Materialink must pay $1,000 per day beginning July 8, 2025, fourteen days after the order. The fine ends on the sooner of September 6, 2025, or the date Materialink responds to the information subpoena. The court found this monetary sanction was the least severe sanction adequate to secure compliance with the June 3 and November 14 orders.
Ruling Regarding Smith
The court declined at this time to hold Smith in contempt. Although Smith appeared to be Materialink’s registered agent, President, and chief executive officer, Warshaw Group had not presented evidence showing that Smith had the ability to make Materialink comply with the court’s orders. The court warned that Smith could later be held in contempt, fined, or imprisoned if the court found that he had the power to cause compliance and failed to take appropriate action.
Additional Orders
Warshaw Group may file a new request for sanctions after September 6, 2025, if it seeks further coercive sanctions. The court again reserved jurisdiction to award appropriate fees and costs incurred because of Materialink’s failure to answer the subpoena.
The court directed Warshaw Group to serve the information subpoena and this order on Materialink by first-class mail and email no later than June 25, 2025, and to serve the order, subpoena, and earlier orders personally on Smith no later than July 1, 2025. Warshaw Group also had to file proof of service after completing those steps.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.