Citigroup Inc. v. Seade

Background

Citigroup moved to hold Luis Sebastian Sayeg Seade in civil contempt for violating the court’s earlier orders. On January 20, 2022, the court had granted Citigroup’s unopposed motion to compel arbitration, ordered Seade to participate in arbitration, and required him to withdraw claims in a Mexican case that fell within the parties’ arbitration agreements. The court also stayed the federal case except for matters including enforcement of the ordered relief and sanctions for noncompliance.

The court’s preliminary injunction required Seade, by February 3, 2022, to dismiss without prejudice claims in the Mexican case arising out of or related to whether benefits under certain plans applied. After Seade failed to do so, the court held him in contempt on February 28, 2022, and imposed escalating monetary sanctions through April 2, 2022, or until he complied. The contempt order also required him to immediately dismiss the specified claims and comply with the preliminary injunction.

Citigroup then sought further sanctions, asserting that Seade still had not withdrawn the claims and had violated both the preliminary injunction and the contempt order. The court stated that it was relying on the facts and legal standards discussed in its earlier orders, while briefly restating the contempt standard.

Civil Contempt

A party may be held in civil contempt when the moving party shows that the violated order was clear and unambiguous, the proof of noncompliance is clear and convincing, and the accused party did not make a diligent, reasonable effort to comply.

The court found all three requirements satisfied. It held that the preliminary injunction and contempt order were clear and unambiguous; that Seade’s failure to withdraw the required claims was clear and convincing proof of noncompliance; and that Seade had not diligently attempted to comply. The court also found that Seade had actively prosecuted the Mexican case after the contempt order, including appearing at a hearing and filing papers challenging his agreement to arbitrate. The court therefore concluded that Seade remained in civil contempt.

Coercive Sanction

Citigroup requested an increased fine of $20,000 per day, beginning three business days after entry of the new order and lasting until Seade complied or 30 days passed. The court instead imposed an additional fine of $15,000 per day for up to 30 days.

The court found that continued noncompliance caused Citigroup irreparable harm because it could be forced to litigate disputes that the court had ordered to arbitration. It also found that a higher daily fine had a realistic possibility of securing compliance and would not be punitive. In reaching that conclusion, the court relied on its findings concerning Seade’s financial resources, including his prior compensation, a termination payment of approximately $3.5 million, and his current position as chief executive officer of an asset-management firm that manages close to $2 billion in assets.

The additional fine was to begin on May 31, 2022, if Seade had not withdrawn the required claims by then. It would continue until he withdrew those claims or for 30 days, whichever came first. The court stated that, if the full additional period applied, the additional fine would total $450,000 and the total fine, including the $300,000 already assessed, would be $750,000.

Compensatory Sanctions

Citigroup also sought attorneys’ fees and costs for defending against Seade’s claims in the Mexican case after the contempt order and for bringing the further-sanctions motion. Compensatory sanctions are intended to reimburse actual losses to the injured party.

The court found that Seade’s contempt was willful because he had notice of the orders, had not sought to modify them, and had not made a good-faith effort to comply. The court granted Citigroup’s request for reasonable attorneys’ fees and costs for the specified work. It did not set the amount in this order. Instead, it required Citigroup to submit supporting documentation by June 6, 2022, allowed Seade to respond by June 20, 2022, and allowed Citigroup to reply by June 27, 2022.

Disposition

The court granted Citigroup’s motion to hold Seade in civil contempt. It ordered Seade to immediately dismiss without prejudice the specified claims in the Mexican case and comply with the other requirements of the preliminary injunction and contempt order. It imposed the additional $15,000 daily fine on the stated conditions and required Seade to reimburse Citigroup for the reasonable attorneys’ fees and costs covered by the order. The clerk was directed to close the motion at Docket Number 58.