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National Spiritual Assembly of the Bahá'ís of the United states of America Under the Hereditary Guardianship, Inc. v. National Spiritual Assembly of the Bahá'ís of the United States of America

November 23, 2010


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:64-cv-01878-Amy J. St. Eve, Judge.

The opinion of the court was delivered by: Sykes, Circuit Judge.


Before BAUER, MANION, and SYKES, Circuit Judges.

This appeal is from a civil-contempt proceeding alleging violations of an injunction entered more than four decades ago. The case is complicated not just by the passage of time but also because it arises in the context of a religious schism, and the individuals and groups against whom contempt sanctions are sought were not parties to the original litigation. The underlying suit was a trademark and property dispute between the American Bahá'í church-formally known as the National Spiritual Assembly of the Bahá'ís of the United States of America, Inc. ("National Spiritual Assembly")-and a dissident group incorporated in 1964 under the like-sounding name of the National Spiritual Assembly of the Bahá'ís of the United States of America Under the Hereditary Guardianship, Inc. ("Hereditary Guardianship"). In 1966 a district-court judge enjoined the Hereditary Guardianship from using the trademarked names and symbols of the National Spiritual Assembly. Within months the Hereditary Guardianship dissolved, and the dissenting faithful thereafter disagreed among themselves over issues of spiritual leadership and doctrine. This disagreement eventually produced a second schism. Over time the former followers of the Hereditary Guardianship established several new religious groups and a publishing firm, all operating in varying ways in the name of the Bahá'í faith.

Forty years later, the National Spiritual Assembly returned to the district court and asked for contempt sanctions against several of these groups and their princi-pals for allegedly violating the terms of the 1966 injunction.

This required proof that the alleged contemnors-all nonparties to the original lawsuit-were in privity with the Hereditary Guardianship and therefore bound by the injunction. In a comprehensive opinion, the district court rejected the privity claim and on this basis denied the contempt motion. In reaching this conclusion, the judge expressly declined to follow the approach to the privity question adopted by the First Circuit in G. & C. Merriam Co. v. Webster Dictionary Co., 639 F.2d 29 (1st Cir. 1980). The judge said that Merriam was in "silent tension" with Judge Learned Hand's venerable opinion in Alemite Manufacturing Corp. v. Staff,42 F.2d 832 (2d Cir. 1930).

We think these two important opinions can be reconciled. The common-law rule expounded in Alemite-essentially codified in Rule 65(d) of the Federal Rules of Civil Procedure-holds that an injunction is binding on the parties to the proceeding; their officers, agents, and employees (acting in that capacity); and nonparties with notice who are either "legally identified" with a party or who aid and abet a party's violation of the injunction. The "legal identity" component of this rule often operates to bind a party's successors and assigns, and sometimes other nonparties as well, but only when doing so is consistent with due process. As such, the "legal identity" justification for binding nonparties is limited to those who have notice of the injunction and are so closely identified in interest with the enjoined party that it is reasonable to conclude that their rights and interests were adjudicated in the original proceeding. In Merriam the First Circuit held that a former employee of an enjoined corporation had such a key role in the company and in the underlying litigation that he could be "legally identified" with the enjoined corporation and therefore held in contempt for using a newly formed company to circumvent the injunction. 639 F.2d at 39-40. This is a specific application of the "legal identity" category of nonparty contempt identified in Alemite; we do not read Merriam as inconsistent with Judge Hand's formulation.

Although the district court should have applied Merriam, the judge's findings are thorough enough to permit us to resolve the privity question without a remand. The respon-dent nonparty religious groups and their principals are not sufficiently identified in interest with the Hereditary Guardianship to permit a conclusion that they had their day in court back in 1966. We affirm.

I. Background

A. The Bahá'í Schism and the 1966 Injunction

The Bahá'í faith originated in Persia in 1844 with the teachings of the Báb, who foretold that God would soon reveal a prophet to the world. In 1863 Bahá'u'lláh, one of the Báb's followers, announced that he was this prophet and began several decades of spiritual teaching and writing. With Bahá'u'lláh's death in 1892, spiritual leadership passed to his eldest son, Abdu'l-Bahá. Abdu'l-Bahá died in 1921, and his eldest grandson, Shoghi Effendi, then led the faith as its Guardian. Effendi died unexpectedly in 1957 without having clearly designated a successor. Spiritual authority passed temporarily to the Hands of the Cause of God, a group of 27 Effendi-appointed spiritual leaders who stewarded the religion until 1963. At that point the Hands transferred supreme authority of the Bahá'í faith to the newly established Universal House of Justice in Haifa, Israel.

The National Spiritual Assembly, whose predecessor organization was formed in the United States in 1909, recognizes and accepts this described line of succession. Charles Mason Remey did not. Remey, one of Effendi's appointed Hands, proclaimed in 1960 that Effendi's spiritual authority had passed to him as the Second Guardian of the Faith. The other Hands rejected this claim, believing that Effendi was the first and last Guardian of the Faith, and they expelled Remey from their ranks. The National Spiritual Assembly likewise views Remey as a schismatic figure.

In 1962 Remey instructed his followers to establish the National Spiritual Assembly of the Bahá'ís of the United States Under the Hereditary Guardianship. The Hereditary Guardianship was incorporated in New Mexico in 1964, and it served as the coordinating body for an affiliation of individuals, groups, and local spiritual assemblies in the United States dedicated to Remey's Guardianship. The Hereditary Guardianship itself was comprised of nine "Members" who essentially acted as a board of directors and, at least initially, followed Remey's declarations and directives.*fn1

In the year of its incorporation, the Hereditary Guardian-ship commenced a civil action against the National Spiritual Assembly in federal court in the Northern District of Illinois. The Hereditary Guardianship claimed entitlement to the majestic Bahá'í House of Worship in Wilmette, Illinois, pictured here:

and also sued for all other properties and funds in the National Spiritual Assembly's possession. The National Spiritual Assembly in turn asserted counterclaims against the Hereditary Guardianship for trademark infringement and unfair competition, among other causes of action.

In a decision issued on June 28, 1966, Judge Richard Austin sided with the National Spiritual Assembly. Among other factual findings, Judge Austin found that Shoghi Effendi was the only Guardian of the Baha'i Faith, and there is no Guardian at the present time and has been none since 1957. The procedures followed by the Hands of the Cause and the succession of authority from Shoghi Effendi to The Universal House of Justice were in full accordance with the controlling documents and sacred writings and teachings of the Faith.

Nat'l Spiritual Assembly v. Nat'l Spiritual Assembly, No. 64 C 1878, 1966 WL 7641, at *2 (N.D. Ill. 1966). The judge also found that the National Spiritual Assembly "is the highest authority of the Baha'i Faith in the continental United States, and has been recognized and authorized as such by The Universal House of Justice and its predecessor supreme Baha'i Faith authorities." Id. at *3. On the basis of these and other findings of fact, Judge Austin concluded that "[t]here is only one Baha'i Faith," and that the National Spiritual Assembly is the "highest authority for the Faith in [the] continental United States and is entitled to exclusive use of the marks and symbols of the Faith." Id. at *11. The judge went on to hold that the National Spiritual Assembly owned valid trademarks in several specific Bahá'í symbols, names, and phrases-including a trademark in the word "Bahá'í"-all of which the Hereditary Guardianship had infringed. Judge Austin then entered the following injunction:

IT IS ORDERED, ADJUDGED AND DECREED that the counter-defendant, [the Hereditary Guardianship], its officers, agents, servants, employees, attorneys, and all persons in active concert or participation with them, including [affiliated local groups], and individuals, or any of them, be and they are hereby enjoined from using in their activities the designations "National Spiritual Assembly of the Baha'is of the United States of America Under the Hereditary Guardianship, Inc.," "Baha'i News Bureau," "Baha'i Round Robin," "Baha'i," trademark representations of the Baha'i House of Worship, the Arabic design "The Greatest Name," and any other designation which by colorable imitation or otherwise is likely to be mistaken for or confused with [the National Spiritual Assembly's] name or marks as indicated above or is likely to create the erroneous impression that [the Hereditary Guardianship's] religious activities, publications or doctrines originate with [the National Spiritual Assembly], and from otherwise competing unfairly with [the National Spiritual Assembly] or infringing [the National Spiritual Assembly's] rights.

Id. at *12.

Remey acquiesced in the injunction, and he forbade the Hereditary Guardianship and its followers from pursuing reconsideration or appeal "regardless of consequences." A few months later, in December 1966, the Hereditary Guardianship ceased all activities and dissolved. Remey eventually reconstituted his church and changed his title to the "First Guardian of the Abha Faith."

B. The Current Dispute

In 2006 the National Spiritual Assembly returned to court seeking contempt sanctions against five religious organizations and individuals-all remnants of the Hereditary Guardianship but nonparties to the original litigation-for allegedly violating the 1966 injunction. The National Spiritual Assembly contended that the alleged contemnors were in privity with the Hereditary Guardianship and therefore bound by the injunction. The named respondents can be classified into two groups. The first includes Joel Marangella, Frank Schlatter, and the Provisional National Bahá'í Council of the United States, Inc. The second includes the Second International Bahá'í Council d/b/a Bahá'ís Under the Provisions of the Covenant ("Second International Council") and Bahá'í Publishers Under the Provisions of the Covenant ("Bahá'í Publishers"). We offer a brief description of each.

1. The First Group of Alleged Nonparty Contemnors

Joel Marangella was the president of a council that functioned essentially as a liaison between Remey and the Hereditary Guardianship. While not a board member of the Hereditary Guardianship, Marangella was actively involved in the organization and participated in some aspects of the underlying litigation, basically as a trusted assistant to Remey. A few years after the Hereditary Guardianship dissolved, Marangella split with Remey and forced a second schism. He proclaimed himself to be Remey's appointed Third Guardian of the Bahá'í Faith. Remey disputed Marangella's claim; he had already announced that upon his death, Donald Harvey was to succeed him as the next Guardian. Remey and Marangella thus parted ways. Starting in 1970, Marangella organized a succession of religious assemblies dedicated to his Guardianship. The first, the National Bureau of the Orthodox Bahá'í Faith ("National Bureau"), was established in New York as an unincorporated body. In 1972 Marangella moved the National Bureau to New Mexico and later changed its name to the Mother Bahá'í Council, which was incorporated under the laws of New Mexico in 1978. In 2000 the Mother Bahá'í Council changed its name to the Provisional National Bahá'í Council of the United States, Inc. ("Provisional National Council").

Franklin Schlatter was a founding board member and officer of the Hereditary Guardianship. He appears to have been involved with the Hereditary Guardianship's activities to a considerable degree and was part of the board that voted to sue the National Spiritual Assembly. W hen the Remey-Marangella schism occurred, Schlatter followed Marangella and served as secretary of the Provisional National Council (and its predecessors) from 1978 through 2001. In 1997 Marangella appointed Schlatter as a Hand of the Cause of God to assist and act on his behalf.

The Provisional National Council governs all believers within the United States who recognize Marangella as the Third Guardian, much like Hereditary Guardianship governed those who recognized Remey as the Second Guardian. Marangella personally appoints all Provisional National Council board members and reviews and approves all decisions relating to the organization's activities and affairs.

2. The Second Group of Alleged Nonparty Contemnors

The Second International Council and Bahá'í Publishers were created by Dr. Leland Jensen, who signed the incorporation papers for the Hereditary Guardianship and served as a board member from April 1963 to May 1964. In 1964, however, Jensen lost reelection to the board, and he thereafter disassociated himself from any formal governance role in the Hereditary Guardianship. Accordingly, he was not a board member when the Hereditary Guardianship sued the National Spiritual Assembly, nor did he have any role in the litigation. Dr. Jensen continued to follow Remey's ...

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