Argument Recap

Four cases argued this month attracted amicus briefs. One was Backertop Licensing LLC v. Canary Connect Inc. In it, the Federal Circuit is reviewing a determination by the District of Delaware that an out-of-state non-party was in contempt of court for disregarding an order requiring her to testify at a hearing. Judges Prost, Hughes, and Stoll heard the argument. This is our argument recap.

David L. Finger argued for Backertop Licensing LLC and Lori LaPray. Finger began by explaining that “LaPray was held in contempt of court by the district court for failing to obey an order [that] would require her to travel from Texas to Delaware to testify in an investigation the district Court was undertaking.” Finger argued a “fundamental principle” of a constitutional limitation on subpoena power under Federal Rule of Civil Procedure 45 is that, “in the absence of a statute or minimum contacts, the court may not compel the presence of someone who lives outside the court’s geographic boundaries.” According to Finger, the district court’s order contradicts this principle.

One judge asked if it is his position that there is no inherent authority that the court might have used beyond Rule 45. Finger indicated the court has inherent power in other areas, but, he continued, “if it is contrary to a statute, to the constitution, or to a rule, then the inherent authority is limited as prescribed by the limitations.” A judge asked whether the district court’s inherent “authority is abrogated” by Rule 45, “which is silent on any other inherent authority” the court might have. Finger responded by arguing the rule is “specifically restrictive” and provides “what is required to bring an out-of-state party to another state.” The judge, however, suggested the rule is limited to “when the parties are seeking subpoena authority.” 

One judge asked if Finger agreed “there would have to be some explicit limitation on the [district] court’s authority” for his client to prevail. He agreed, arguing Rule 45 provides that limitation. Another judge interjected, stating that his argument is “problematic” because Rule 45 applies to “parties seeking to get subpoenas from the court” and is not directed at the court itself. This judge continued, indicating the Supreme Court has held that Federal Rule of Civil Procedure 11, which deals explicitly with “limits on the court’s authority to award sanctions,” leaves “an area for inherent powers that’s not incompatible” with Rule 45. This judge asked why a rule that does not directly address the court’s inherent authority could exclude it. Finger responded that the argument accepts the conclusion that Rule 45 applies only to “lawyer issues,” when the rule does not explicitly limit its application in that way.

The judge then asked whether, if the Federal Circuit finds that “Rule 45 does not apply, and the court has inherent authority,” Finger has any other argument. Finger responded by arguing the “geographic limitation is simply a due process issue.” The judge, in response, proposed that due process “requires minimum contacts to sue a party” in relation to venue, not subpoenas. The judge suggested Backertop gets to choose which court it files in given that it sued the defendant,” but LaPray “is Backertop’s owner” and the cases addressing venue were not persuading him that the same principles apply to subpoenas. Finger suggested the Supreme Court’s precedent “speaks to the sovereignty of independent states and the limitations on courts’ authority outside their geographic boundaries.” He maintained “it doesn’t make any sense” to apply these limitations to personal jurisdiction but not to courts’ ability to issue subpoenas. He argued that, while venue principles have never been explicitly applied to witnesses, courts have also never rejected their application to witnesses. 

David Maxwell, court-appointed amicus curiae counsel, began by contending that “the district court had ample authority to order Ms. LaPray, who is the sole owner and officer of an entity that filed multiple cases in Delaware, to appear at a hearing to address serious concerns about potential fraud on the court and other misconduct ” One judge interjected, asking Maxwell to discuss how the Federal Circuit’s ability to review an interlocutory order of the district court is based on “dubbing [LaPray] a non-party” when she is the sole owner of the party. Maxwell responded by arguing the Third Circuit has held that, “even if it’s an officer of a party, for purposes of assessing” whether that person would have the right to an interlocutory appeal, the court “consider[s] them a non-party.” 

The argument turned to the district court’s inherent authority. A judge asked whether the court’s authority should be “subject to a reasonableness test.” Maxwell agreed, stating that, even if the district court has an inherent power, exercising that power “has to be a reasonable exercise to confront the problems before the court.” He suggested there could be an “abuse of discretion review of that reasonableness,” which would include a review of the reasonableness of use of a court’s inherent powers “to order a witness to appear.” A judge asked if, hypothetically, this reasonableness test would be applicable to the circumstance where a witness was “ready and able to be videotaped” but the judge did not articulate reasoning for requiring physical presence. Maxwell agreed, asserting the district court analyzed this circumstance and found that, in this case, the court required the witness’s presence to assess her credibility. He contended “the district court was well within the bounds of reasonableness under these circumstances.” He conceded, however, that, in a different case, requiring a witness to appear in person when a video conference would be sufficient could “cross the line.” One judge asked if the same reasonableness analysis applies to the contempt order. Maxwell agreed. 

The judges asked Maxwell to address the Federal Circuit’s jurisdiction. Maxwell asserted that, because the witness is a non-party held in contempt and the order was interlocutory, “there is an immediate right to appeal, and you can evaluate the underlying order in the context of the appeal.” One judge asked Maxwell to speculate as to “how this [case] goes forward.” Maxwell indicated that, if the court affirms the order, he hopes “LePray will show up to court.” If she continues to refuse, however, Maxwell maintained it would be up to the district court to decide whether “it is necessary to finish” the court’s inquiry and whether to stop the fine from continuing to accrue. A judge then asked what the final judgment would be in this case, considering that the case on the merits has been dismissed. Maxwell argued similar cases have been referred to the Patent and Trademark Office “for fraud” and “to the state bar associations for potential disciplinary action.” 

One judge returned to the idea of applying a reasonableness test. This judge asked whether this test would allow the Federal Circuit to review “whether the investigation itself is excessive.” Maxwell agreed that may be reviewed. He argued, however, that while due process limits “the court’s inherent authority,” the appellant did not raise that argument below and the witness consented to personal jurisdiction by appearing at a previous proceeding in the case. Another judge asked how “the reasonableness limitation on inherent authority coincides with due process.” Maxwell responded by arguing they are separate analyses. 

In rebuttal, Finger cited precedent indicating “courts cannot use their inherent power to compel witnesses to appear when the witness is outside the court’s subpoena power.” One judge interjected, however, noting the case is distinguishable because the court issued a subpoena “on behalf of the party” and not “sua sponte.” Continuing, Finger argued that one appearance by the witness was not a waiver for “all time.” 

We will continue monitoring this case and report on developments.