Backertop Licensing LLC v. Canary Connect, Inc.
U.S. Court of Appeals for the Federal Circuit
Backertop Licensing LLC v. Canary Connect, Inc., 107 F.4th 1335 (Fed. Cir. 2024)
Backertop Licensing LLC v. Canary Connect, Inc.
Opinion
Case: 23-2367 Document: 51 Page: 1 Filed: 07/16/2024
United States Court of Appeals
for the Federal Circuit
______________________
BACKERTOP LICENSING LLC,
Plaintiff-Appellant
LORI LAPRAY,
Movant-Appellant
v.
CANARY CONNECT, INC.,
Defendant
-------------------------------------------------
BACKERTOP LICENSING LLC,
Plaintiff-Appellant
LORI LAPRAY,
Movant-Appellant
v.
AUGUST HOME, INC.,
Defendant
______________________
2023-2367, 2023-2368, 2024-1016, 2024-1017
______________________
Appeals from the United States District Court for the
District of Delaware in Nos. 1:22-cv-00572-CFC, 1:22-cv-
00573-CFC, Chief Judge Colm F. Connolly.
______________________
Case: 23-2367 Document: 51 Page: 2 Filed: 07/16/2024
2 BACKERTOP LICENSING LLC v. CANARY CONNECT, INC.
Decided: July 16, 2024
______________________
DAVID L. FINGER, Finger & Slanina LLC, Wilmington,
DE, argued for plaintiff-appellant and movant-appellant.
W. DAVID MAXWELL, Hogan Lovells US LLP, Washing-
ton, DC, argued for amicus curiae W. David Maxwell. Also
represented by PAGET CAROLINE BARRANCO, ABBY WALTER
GRAY.
______________________
Before PROST, HUGHES, and STOLL, Circuit Judges.
HUGHES, Circuit Judge.
Backertop Licensing LLC and Lori LaPray appeal the
U.S. District Court of Delaware’s sua sponte order requir-
ing Ms. LaPray to appear in-person before the District
Court for testimony regarding potential fraud on the court,
as well as the District Court’s order of monetary sanctions
against Ms. LaPray for subsequently failing to appear. Be-
cause these orders were within the District Court’s inher-
ent authority and were not abuses of discretion, we affirm
the District Court.
I
A
Over the past year and a half, the Chief Judge of the
District of Delaware has identified potential attorney and
party misconduct in dozens of related patent cases. See,
e.g., Nimitz Techs. LLC v. CNET Media, Inc., No. 21-1247,
2022 WL 17338396, at *10–12 (D. Del. Nov. 30, 2020); Backertop Licensing LLC v. Canary Connect, Inc., No. 22- 572 (D. Del. Apr. 28, 2022); Backertop Licensing LLC v. Au- gust Home, Inc., No. 22-573 (D. Del. Apr. 28, 2022). The plaintiffs in these cases are limited liability companies (plaintiff LLCs) that seem to be associated with IP Edge, a patent monetization firm, and Mavexar, an affiliated con- sulting shop. See, e.g., Nimitz,2022 WL 17338396
, at *10– Case: 23-2367 Document: 51 Page: 3 Filed: 07/16/2024 BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. 3 12. In the District Court’s detailed memorandum, it found that IP Edge and Mavexar appear to have created all of the plaintiff LLCs; recruited outside individuals to serve as their sole owners; assigned patents to the plaintiff LLCs for little or no consideration; retained the rights to the major- ity of royalties and settlement proceeds; and reported a complete assignment to the United States Patent and Trademark Office (PTO)—all without disclosing IP Edge’s ongoing rights in any patent-related proceedings. Seeid.
at *16–25. The District Court found that IP Edge and Mavexar then directed infringement litigation asserting those patents—including overseeing the attorneys and agreeing to settlements—with seemingly little to no input from the plaintiff LLCs’ owners.Id.
at *18–25.
The District Court developed concerns that this ar-
rangement may conceal from the court the real parties in
interest: IP Edge and Mavexar. Id. at *26; see also Fed. R.
Civ. P. 17(a)(1) (“An action must be prosecuted in the name
of the real party in interest.”). The District Court was also
concerned whether “those real parties in interest perpe-
trated a fraud on the court by fraudulently conveying to a
shell LLC [the patents] and filing a fictitious patent assign-
ment with the PTO designed to shield those parties from
potential liability they would otherwise face in asserting
[the patents] in litigation.” Nimitz, 2022 WL 17338396, at *26. Further, the District Court noted that the plaintiff LLCs and their counsel may have violated local disclosure rules by failing to disclose IP Edge’s or Mavexar’s funding for the litigation.Id.
Finally, the District Court explained that plaintiff LLCs’ attorneys may have violated the Rules of Professional Conduct by filing, settling, and dismissing litigation at the direction of Mavexar, a non-legal consult- ing firm, without the informed consent of the plaintiff LLCs’ owners.Id.
at *13–18.
In November 2022, the District Court held evidentiary
hearings to gather more information about its concerns re-
garding the conduct of the parties. J.A. 1–2. After the hear-
ings, the District Court ordered the plaintiff LLCs and
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4 BACKERTOP LICENSING LLC v. CANARY CONNECT, INC.
their counsel to provide documents that indicated that pa-
tents had been transferred to shell LLCs. Id.One of the plaintiff LLCs challenged these inquiries in a petition for mandamus to this court. In re Nimitz Techs. LLC, No. 23- 103,2022 WL 17494845
, at *1 (Fed. Cir. Dec. 8, 2022). We denied the petition, confirming that the District Court has inherent authority to seek information related to the con- duct of the parties.Id.
at *2–3 (the District Court’s con- cerns “[a]ll are related to potential legal issues in the case, subject to the ‘principle of party presentation’ . . . or to as- pects of proper practice before the court, over which district courts have a range of authority preserved by the Federal Rules of Civil Procedure” (citing Fed. R. Civ. P. 83(b); Chambers v. NASCO, Inc.,501 U.S. 32
(1991))).
B
The cases involving Backertop Licensing LLC (Back-
ertop), and the orders that are the subject of this appeal,
are part of the District Court’s inquiry. Ms. LaPray is the
sole owner of Backertop. In 2022, Backertop filed at least
twelve patent infringement cases in federal district courts
in California, Colorado, New York, Texas, and Delaware.
See J.A. 14, 21 (collecting cases). Ms. LaPray is also the
managing member of six other LLCs that have filed at least
ninety-seven patent infringement cases in federal district
courts. See J.A. 17–20 (collecting cases as of July 2023). In
the Backertop cases, the District Court identified the same
pattern of potential misconduct seen in the other IP Edge-
linked and Mavexar-linked cases.
In March 2023, after this court denied the mandamus
petition challenging the production orders in In re Nimitz,
the District Court ordered Backertop, Ms. LaPray, and
their attorneys to produce documents and communications
relating to the District Court’s concerns regarding fraud on
the court. See J.A. 125–29; see also J.A. 3 (explaining that
the District Court refrained from issuing the document pro-
duction order in Backertop while the In re Nimitz manda-
mus petition was pending). The District Court also ordered
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BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. 5
Ms. LaPray to submit a declaration identifying “any and
all assets owned by Backertop.” J.A. 129.
In response, on April 3, 2023, Backertop moved to set
aside the document production order, arguing that it was
overly broad, sought privileged information, and exceeded
the District Court’s jurisdiction. See J.A. 4–5. Several
weeks later, pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii),
Backertop filed a joint stipulation of dismissal. J.A. 130.
Four days later, Backertop’s local counsel, Jimmy Chong,
filed a motion to withdraw as counsel, explaining that he
“[was] unable to effectively communicate with [Backertop]
in a manner consistent with good attorney-client rela-
tions.” J.A. 6. Backertop opposed his motion to withdraw.
Id.The same day, Backertop’s other attorney, Ronald Burns, emailed the District Court seeking to withdraw as counsel.Id.
Mr. Burns sent an email to the court, instead of filing on the docket, “due to the fact that [he could not] get a response from [his] local counsel,” Mr. Chong.Id.
Mr. Burns explained that he had “started a new job” and “[could not] represent the plaintiff any longer.”Id.
On May 1, 2023, the District Court set a hearing for
June 8, 2023, “[t]o sort through [the] morass.” Id.Given Backertop’s opposition to its attorney’s motion to with- draw, and the apparent conflict between Mr. Chong and Mr. Burns, the District Court ordered Ms. LaPray, Mr. Chong, and Mr. Burns to attend the hearing in person.Id.
The District Court also denied Backertop’s motion to set
aside the production order, citing Supreme Court and
Third Circuit precedent confirming that voluntary dismis-
sal under Rule 41(a)(1) does not deprive the District Court
of jurisdiction to exercise its inherent powers. J.A. 4–5 (“It
makes no sense that a party could deprive a court of its
inherent powers simply by filing a notice (or stipulation) of
dismissal. To hold otherwise would render district courts
impotent to manage their cases in an orderly fashion and
would foster abuse of our judicial system by unethical liti-
gants and their attorneys.” (footnote and citation omitted)).
Case: 23-2367 Document: 51 Page: 6 Filed: 07/16/2024
6 BACKERTOP LICENSING LLC v. CANARY CONNECT, INC.
On May 9, 2023, Backertop produced allegedly respon-
sive documents to the District Court. See J.A. 132–33. Yet,
as the District Court later observed, several of the docu-
ments had clearly missing attachments or cover letters.
J.A. 190, 268. Moreover, the content of the ownership doc-
uments produced raised further questions relating to the
District Court’s concerns about potential attorney and
party misconduct. See, e.g., J.A. 268 (Chief Judge Connolly
questioning whether Ms. LaPray did, “in fact, sign the doc-
uments or authorize the signature of the documents con-
temporaneously with the date of the documents”); J.A. 216,
247 (discussing documents indicating that Mavexar re-
tained attorneys to assert a patent portfolio even before
Backertop was created, which suggest that Mavexar is the
principal behind the litigation). The District Court notified
the parties that it had “questions for Ms. LaPray about the
production[, which] require her physical presence in court”
to “assess her credibility.” J.A. 10. The District Court also
reiterated that it needed Ms. LaPray’s testimony to sort
through the attorneys’ motions to withdraw, which it found
“unusual to say the least.” Id.
Despite her previous attendance at a hearing in Dela-
ware on November 10, 2022, Ms. LaPray notified the Dis-
trict Court that she was unable to attend the June 8, 2023,
hearing in-person as ordered. Amicus Br. 12 1; J.A. 134–41.
Ms. LaPray stated that she had preexisting travel sched-
uled from June 8 to June 15, 2023. J.A. 138. She also stated
that she is a paralegal and had “a number of trials and
hearing[s] through the entire summer,” although she did
not specify dates, and that parental obligations continue to
make travel difficult. Id. Ms. LaPray stated that she could
1 Because Canary Connect, Inc. and August Home,
Inc., the original defendants, chose not to participate in lit-
igation after their joint stipulated dismissal with Back-
ertop, our court requested amicus curiae briefing from W.
David Maxwell of Hogan Lovells US LLP to represent the
Delaware District Court’s position on this matter.
Case: 23-2367 Document: 51 Page: 7 Filed: 07/16/2024
BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. 7
not travel to Delaware “in the foreseeable future” and re-
quested permission to appear telephonically. Id.
To accommodate Ms. LaPray’s specific conflict from
June 8 to June 15, 2023, the District Court set a new hear-
ing for July 20, 2023. J.A. 10. The District Court advised
the parties that if a hearing on that date “presents excep-
tional difficulties for Ms. LaPray,” she may submit “affida-
vits and supporting documentation demonstrating exactly
why that is the case and propose a range of alternative
dates.” Id.The District Court denied Ms. LaPray’s request to appear telephonically because “[c]redibility assessments are difficult to make over the phone.”Id.
Further, the Dis- trict Court stated that remote hearings are “the exception, not the rule.”Id.
The District Court sent a copy of its deci-
sion to Ms. LaPray’s employer because Backertop’s attor-
neys had indicated in their motions to withdraw that they
were not in contact with Ms. LaPray. See J.A. 17, 279–80.
Ms. LaPray and Backertop moved for reconsideration. See
J.A. 140–72. They again asserted that Ms. LaPray’s daily
family obligations would make travel to Delaware for a
hearing difficult and requested a videoconference hearing.
See J.A. 141.
In denying the motion, the District Court noted that it
was “sympathetic to the childcare burdens that business-
and court-related travel can impose on working parents,”
but observed that Ms. LaPray had voluntarily agreed “to
serve as the sole natural person affiliated with Backertop”
and to file “the dozen patent infringements suits . . . last
year in district courts across the country, including four
suits in Delaware.” J.A. 15. The District Court also denied
the request to participate by videoconference, explaining
that “[l]ive, in-person testimony remains the best means of
ascertaining the truth.” J.A. 14.
For the first time, Backertop also argued in its motion
for reconsideration that Federal Rule of Civil Procedure
45’s geographic limit precludes the District Court’s order
requiring Ms. LaPray to appear in Delaware. See J.A. 12–
13. After first noting that the argument had been forfeited
Case: 23-2367 Document: 51 Page: 8 Filed: 07/16/2024
8 BACKERTOP LICENSING LLC v. CANARY CONNECT, INC.
for failure to raise it earlier, the District Court rejected the
argument on the merits. Id.The District Court stated that its order to appear was based on its inherent powers, not FRCP 45. J.A. 13. And it further stated that FRCP 45 “has no bearing on the circumstances at hand,” because it only imposes geographic limits on subpoenas issued by an attor- ney or the clerk at a party’s request.Id.
The District Court
therefore concluded that FRCP 45 did not restrict its inher-
ent power to sua sponte order Ms. LaPray to appear. J.A.
13–14.
After Ms. LaPray refused to attend the July 20, 2023,
hearing, the District Court held a show cause hearing on
August 1, 2023, to provide Ms. LaPray with an opportunity
to show why she should not be held in civil contempt. See
J.A. 24. Ms. LaPray did not appear at that hearing. Id.Her attorney noted that Ms. LaPray would stand on her argu- ments made in her motion to dismiss the contempt proceed- ing,id.,
including the FRCP 45 argument, see Backertop
Licensing LLC v. Canary Connect, Inc., No. 22- 572, ECF
No. 54 at 9–10 (D. Del. July 28, 2023).
In another detailed memorandum, the District Court
rejected Ms. LaPray’s arguments. See J.A. 24–30. The Dis-
trict Court found Ms. LaPray in civil contempt of court and
imposed a fine of $200 per day until Ms. LaPray appeared
in-person in court. J.A. 30. Backertop and Ms. LaPray ap-
pealed the District Court’s orders, and—as the original op-
posing parties were dismissed from the case—our court
appointed amicus curiae counsel to represent the District
Court’s position. See Amicus Br. 1.
II
Because this appeal involves “procedural matters that
are not unique to patent issues,” we apply the law of the
regional circuit court—here, the Third Circuit. Wilson
Sporting Goods Co. v. Hillerich & Bradsby Co., 442 F.3d
1322, 1325–26 (Fed. Cir. 2006). The District Court’s exer- cise of its inherent power is reviewed for abuse of discre- tion. See Chambers,501 U.S. at 55
(“We review a court’s Case: 23-2367 Document: 51 Page: 9 Filed: 07/16/2024 BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. 9 imposition of sanctions under its inherent power for abuse of discretion.”); United States v. Wright,913 F.3d 364, 369
(3d Cir. 2019) (reviewing dismissal of an indictment “based on the Court’s inherent power for abuse of discretion”). Whether the District Court possesses a particular inherent power, however, is a question of law reviewed de novo. Hol- land v. New Jersey Dep’t of Corrs.,246 F.3d 267, 281
(3d
Cir. 2001).
Contempt orders are reviewed for abuse of discretion.
United States v. Sarbello, 985 F.2d 716, 727(3d Cir. 1993). An abuse of discretion requires either “an error of law or a clearly erroneous judgment or finding of fact.”Id.
Con- tempt findings must be based on clear and convincing evi- dence.Id.
As the Third Circuit has explained, “when an order is
appealable, and one foregoes the appeal, he may not raise
the validity of the order at a subsequent contempt trial.”
United States v. Pearce, 792 F.2d 397, 400(3d Cir. 1986); see also Maggio v. Zeitz,333 U.S. 56, 68
(1948) (“[W]hen completed and terminated in a final order, [the order] be- comes res judicata and not subject to collateral attack in the contempt proceedings.”). In contrast, when the under- lying order is interlocutory and non-appealable, there is no concern with giving litigants a second bite at the apple. The order’s validity may therefore be raised during contempt proceedings. Pearce,792 F.2d at 400
.
Here, the District Court’s order to appear was interloc-
utory and non-appealable. See Micro Motion Inc. v. Exac
Corp., 876 F.2d 1574, 1576(Fed. Cir. 1989) (citing Alexan- der v. United States,201 U.S. 117
, 121–22 (1906) (“The
nonappealability of orders requiring the production of evi-
dence from witnesses has long been established.”)); see also
id. at 1577 (collecting cases from other circuits).
Because civil contempt orders are interlocutory, par-
ties may not appeal civil contempt orders “except incident
to an appeal from a judgment otherwise appealable.” Hal-
derman v. Pennhurst State Sch. & Hosp., 673 F.2d 628, 636 Case: 23-2367 Document: 51 Page: 10 Filed: 07/16/2024 10 BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. (3d Cir. 1982); see also Constr. Drilling, Inc. v. Chusid,90 F. App’x 630, 632
(3d Cir. 2004). For non-parties, however, the rule is different: “[N]on-party witnesses who are held in contempt may immediately appeal the contempt order.” Wallace v. Kmart Corp.,687 F.3d 86, 89
(3d Cir. 2012); see also Alexander,201 U.S. at 121
(1906) (“Let the court go farther, and punish the witness for contempt of its order— then arrives a right of review.”) (cleaned up); In re Flat Glass Antitrust Litig.,288 F.3d 83, 87
(3d Cir. 2002) (“An
adjudication of contempt . . . provides the finality neces-
sary to initiate an appeal.”).
Here, Ms. LaPray—as an officer of Backertop—is best
characterized as a non-party for purposes of appealability.
The Third Circuit has indicated that an officer of a party is
generally considered a non-party. See E. Maico Distribs.,
Inc. v. Maico-Fahrzeugfabrik, G.m.b.H, 658 F.2d 944, 949(3d Cir. 1981) (“In civil contempt proceedings or Rule 37(b) sanctions against a non-party, even against an attorney to or an officer of a party, an appeal generally need not wait until final judgment in the case as a whole.”). The Ninth Circuit agrees. See, e.g., David v. Hooker, Ltd.,560 F.2d 412, 417
(9th Cir. 1977) (“[T]his court . . . rejected the con- tention that, in determining the finality of judgments for appeal, officers of corporate defendants must be considered as parties.”). The civil contempt order against Ms. LaPray gives her as much of a “distinct and severable interest”— facing personal fines—as any other non-party witness per- mitted to appeal. United States v. Sciarra,851 F.2d 621, 628
(3d Cir. 1988).
Therefore, we may review the District Court’s order to
appear in the context of Ms. LaPray’s appeal from the Dis-
trict Court’s contempt order. 2
2 Although the District Court found that Backertop
forfeited its FRCP 45 argument, it nonetheless addressed
the argument on the merits. J.A. 12–13. We decline to find
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BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. 11
III
A
We hold that the District Court’s order requiring
Ms. LaPray to appear at an in-person hearing falls
squarely within its inherent powers. Contrary to Appel-
lants’ arguments, the District Court’s order did not conflict
with FRCP 45, because that Rule does not limit the geo-
graphical range of a court’s ability to sua sponte issue an
order to appear.
On its face, FRCP 45 only applies to a party or attor-
ney’s efforts to subpoena a person required to attend a trial,
hearing, or deposition within a 100-mile radius. It states:
(a) IN GENERAL[ . . . ]
(3) Issued by Whom. The clerk must issue a
subpoena, signed but otherwise in blank, to
a party who requests it. That party must
complete it before service. An attorney also
may issue and sign a subpoena if the attor-
ney is authorized to practice in the issuing
court. [ . . . ]
Fed. R. Civ. P. 45(a)(3). Elsewhere, FRCP 45 confirms that
“[a] party or attorney” is “responsible for issuing and serv-
ing a subpoena” under the Rule. Fed. R. Civ. P. 45(d)(1). It
is therefore up to “[a] party or attorney” to “take reasonable
steps to avoid imposing undue burden or expense on a per-
son subject to the subpoena.” Id.Nowhere does FRCP 45 mention the court’s own orders to appear, issued without a forfeiture and instead exercise our discretion to rule on the merits. See In re Imerys Talc Am., Inc.,38 F.4th 361
, 373 (3d Cir. 2022) (“[T]he waiver rule is one of discretion rather than jurisdiction, and we may overlook waiver where, as here, the public interest is better served by addressing [an argument] than by ignoring it.”) (internal punctuation and citations omitted). Case: 23-2367 Document: 51 Page: 12 Filed: 07/16/2024 12 BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. request from a party or attorney. Given this silence, the District Court’s sua sponte order compelling Ms. LaPray to appear is not “contrary to any express grant of or limitation on the district court’s power contained in a rule or statute.” Dietz v. Bouldin,579 U.S. 40
, 45–46 (2016).
Indeed, many of FRCP 45’s requirements would be il-
logical if applied to a court’s own orders. For instance, a
court would be required to “impose an appropriate sanc-
tion” on itself should the court fail to “take reasonable steps
to avoid imposing undue burden or expense on a person
subject to the subpoena.” Fed. R. Civ. P. 45(d)(1). FRCP
45(a)(2) also requires that the subpoena “must issue from
the court where the action is pending”—a self-evident re-
quirement, if applied to a court’s own order to compel ap-
pearance. And while federal agencies are explicitly exempt
from the FRCP 45 requirement to “tender[] the fees for 1
day’s attendance and the mileage allowed by law” when
serving a subpoena, federal courts would be required to pay
those fees. Fed. R. Civ. P. 45(b)(1). Reading FRCP 45 as a
whole, we conclude that none of these requirements apply
to a court’s own order compelling a witness to appear. As a
result, neither do the geographic limitations in FRCP
45(c)(1), contrary to Appellants’ arguments. We hold that
FRCP 45 governs party- and attorney-initiated subpoenas
only.
The absence of an express limit on sua sponte court or-
ders in FRCP 45 alone is dispositive. See Dietz, 579 U.S. at
45–46. The distinction between party-initiated subpoenas
and sua sponte court orders is also consistent with the his-
torical context of FRCP 45. Since its inception, FRCP 45—
which has always included a geographic limit—has ex-
pressly applied to subpoenas that parties requested and
served without initial court oversight. See Rule of Civil Pro-
cedure for the District Courts of the United States 45(a),
1934 Edition U.S.C. Supplement 5 874 (1939) (“The clerk
shall issue a subpoena . . . signed and sealed but otherwise
in blank, to a party requesting it, who shall fill it in before
service.”), 45(e)(1) (“A subpoena requiring the attendance
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BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. 13
of a witness . . . may be served at any place within the dis-
trict, or at any place without the district that is within 100
miles . . . .”).
In 1991, FRCP 45 was amended to allow attorneys
themselves to issue a subpoena, again without initial court
oversight. See Notes of Advisory Comm. On Rules—1991
Amendment. Without upfront court supervision, and given
the high volume of subpoena practice in federal courts, it
makes sense that the Rules would impose bright-line rules
on the scope of party- and attorney-initiated subpoenas—
as well as specific mechanisms to hold parties and attor-
neys accountable. See id. (“[A]ccompanying the evolution of
this power of the lawyer as officer of the court is the devel-
opment of increased responsibility and liability for the mis-
use of this power.”); see also Fed. R. Civ. P. 45(d)(1) (party
or attorney must “take reasonable steps to avoid imposing
undue burden or expense” on subpoena recipients and face
sanctions if they fail to do so). These guardrails are in-
tended to protect non-parties before they have to incur the
time and expense of appearing to challenge a party- or at-
torney-initiated subpoena in court.
A court’s sua sponte order to appear does not raise the
same concerns as a subpoena initiated by the parties. Such
orders necessarily involve court oversight at the outset.
The court itself will know who is receiving the subpoena
and will have weighed the need for the testimony against
the potential burden on that person. It therefore is under-
standable that FRCP 45 only expressly addresses attorney-
and party-initiated subpoenas, leaving district courts with
discretion to manage their own orders to appear.
B
Turning to the District Court’s contempt order, Appel-
lants focus on an alleged conflict between the District
Court’s order to appear and FRCP 45. Backertop and
Ms. LaPray do not argue that the District Court’s order to
appear was otherwise unreasonable or an abuse of discre-
tion. Nor could they. The District Court’s order was a
Case: 23-2367 Document: 51 Page: 14 Filed: 07/16/2024
14 BACKERTOP LICENSING LLC v. CANARY CONNECT, INC.
“‘reasonable response to the problems and needs’ confront-
ing the court’s fair administration of justice.” Dietz, 579
U.S. at 45 (quoting Degen v. United States, 517 U.S. 820,
823–24 (1996)).
The District Court’s order to compel Ms. LaPray’s at-
tendance was an appropriate means to investigate poten-
tial misconduct involving Backertop, a corporate party of
which she is the sole representative. More specifically, the
District Court’s stated concerns include that Backertop
may have concealed certain third-party funding and the
real parties in interest, that those real parties in interest
may have perpetrated a fraud on the court, and that Back-
ertop’s counsel may have failed to comply with the Rules of
Professional Conduct. See J.A. 16. Backertop’s counsel’s
motions to withdraw and Backertop’s insufficient docu-
ment production only compounded the District Court’s con-
cerns. See J.A. 10.
In light of this, compelling Ms. LaPray’s attendance
was not an abuse of discretion of the District Court’s inher-
ent authority. The District Court stated that Ms. LaPray’s
attendance in person was required to assess her credibility
given (1) “the representations and positions of counsel and
Ms. LaPray” and their apparent lack of communication, es-
pecially in light of counsels’ motion to withdraw; and
(2) the District Court’s “questions for Ms. LaPray about
[Backertop’s document] production.” J.A. 10. As the Third
Circuit recognizes, it is particularly important to observe
witnesses in person when making credibility determina-
tions. See Dia v. Ashcroft, 353 F.3d 228, 252 n.23 (3d Cir.
2003). While another district court may have found that a
telephonic or videoconference hearing was sufficient, it was
reasonable for the District Court here to require in-person
testimony in furtherance of its authority to investigate at-
torney and party misconduct.
Moreover, the District Court had already rescheduled
the hearing once to accommodate Ms. LaPray’s preexisting
travel and expressed willingness to accommodate similar
specific conflicts, with proposed alternative dates. J.A. 10.
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BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. 15
Ms. LaPray never identified other specific conflicts, other
than continuing childcare obligations making travel at any
time difficult, nor did she propose alternative dates. In-
stead, she chose to move for reconsideration. See J.A. 140–
72. Under these circumstances, it was not an abuse of dis-
cretion to compel Ms. LaPray’s attendance at the July 20,
2023, hearing and hold her in civil contempt of the court
when she did not appear.
IV
We have considered Appellants’ remaining arguments
and find them unpersuasive. Because the District Court
was within its inherent authority to order Ms. LaPray to
appear before it to investigate fraud on the court, and the
order imposing monetary sanctions when she did not ap-
pear was not an abuse of discretion, we affirm.
AFFIRMED
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