Risky Business: Consequences and solutions for companies facing court orders.
Apple, Inc. is in the news this week for defying a federal magistrate judge’s order to help the FBI crack password protection on a cell phone. With one of the world’s largest corporations facing possible contempt of court charges, smaller companies should consider the consequences if they were to ignore a court order and how to avoid ever needing to do so. Refusing to obey an order issued by a judge, as Apple has done so far, is known as indirect contempt of court. Companies and their leaders can face both civil and criminal consequences for contempt of federal court, and those consequences can arise in both civil and criminal cases.[2] Generally, civil contempt is intended to coerce compliance with a court order, while criminal contempt is intended to punish for disobedience, although case law on the topic muddies the distinction.[3] The bottom line: ignoring a court order could lead a company to be fined or its leaders could be jailed for contempt.
Apple stands defiant believing that refusing to disclose information for one person is a small price to pay for protecting millions of Americans’ privacy interests. But Apple has the deep pockets and stable of lawyers to make that stand. In the end, absent the considerable resources of a company like Apple, the risk for your company in disobeying a court order may be significant.
If your company isn’t ready to take a stand for privacy rights, planning ahead is a necessity. Begin with an analysis of your company’s risk and assess what types of information or actions it could be required to disclose. A good point of reference is how others in its industry handle sensitive information and compliance with court orders. If your company receives or requires sensitive information from clients or consumers, consider using contractual provisions that allow disclosure of information if required by law or court order.
— By Julia Damron, Esq., Barnes Law
Julia Damron is an associate attorney with Barnes Law, licensed to practice law in California.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] Gershman, Jacob, “From the Telegraph to the iPhone: A Short History of Corporate Defiance”, February 18, 2016,
[2] 18 U.S.C. §§401-403.
[3] Androphy, Joel M. and Byers, Keith A., Federal Contempt of Court, http://www.bafirm.com/publication/federal-contempt-of-court/.