Federal Appeals Court throws out contempt order against NC lawyer

The 4th US Circuit Court of Appeals has vacated a federal judge’s contempt order against a North Carolina lawyer involved in a multinational intellectual property dispute.

US District Judge Martin Reidinger had issued a civil contempt order against Pressly Millen in December 2024. Millen often represents Democratic individuals and organizations in court. His wife, Siobhan Millen, is a Democratic member of the North Carolina State Board of Elections.

“On the merits, we conclude that the district court abused its discretion in finding the attorney in civil contempt when the moving party failed to produce evidence that it had been harmed by the attorney’s alleged noncompliance with a prior court order,” Senior Judge Barbara Milano Keenan wrote Friday for a unanimous three-judge 4th Circuit panel. “On this narrow ground, we vacate the attorney’s contempt adjudication.”

The legal action started in March 2021, when North Carolina-based software company dmarcian Inc., or dInc, filed a federal suit against its former business partner, Dutch-based DMARC Advisor BV, or dBV. After the initial court filing in North Carolina, dBV filed suit against dInc in a Dutch court. The dispute involved conflicting claims about which litigation started first.

More than three years into the dispute, Reidinger held both dBV and Millen in civil contempt. The judge ruled that the company and attorney had failed to file a court statement required by one of his earlier orders. The statement would have addressed the dispute about which court action started first.

“The court noted that ‘Millen’s improper actions constitute[d] one small slice of the overall obstruction,’” Keenan wrote. “Nonetheless, the court imposed against Millen a separate sanction, the temporary suspension of his admission to the Bar of the Western District of North Carolina.”

“This sanction prevents Millen from representing clients or submitting filings in any federal court in that jurisdiction,” Keenan explained. “The district court held that Millen’s sanction would conclude upon the completion of the North Carolina case, or, earlier, by Millen submitting a new affidavit to the Dutch court ‘correcting the misstatements and omissions’ and apologizing to the Dutch court.”

Millen appealed the contempt order.

“For purposes of our analysis, we focus on Millen’s assertion that the district court abused its discretion in holding him in civil contempt because the evidence did not show that his alleged noncompliance with the correction order caused harm to dInc,” Keenan explained.

The opposing party, dInc, responded that if Millen had filed the required statement, dBV’s Dutch attorney “would have been precluded from continuing to assert … erroneous arguments that delayed the Dutch court’s imposition of a stay,” Keenan wrote. “dInc also generally contends that Millen’s failure to file the separate statement delayed the trial in the North Carolina case and caused dInc additional legal expenses in seeking a stay in the Dutch court.”

“We disagree with dInc’s position and conclude that the district court abused its discretion in imposing the sanction on Millen,” the 4th Circuit order continued.

“In the present case, the sanction imposed on Millen did not promote compliance with a court order or ensure that dInc be compensated for any harm it sustained as a result of Millen’s failure to comply with the correction order,” Keenan wrote. “Instead, the extreme sanction imposed by the district court, barring Millen from practicing law in federal courts in the Western District of North Carolina while the case remained pending, was overtly punitive and was not remedial in any respect.”

“Before exercising its discretion to impose civil contempt sanctions, a court must consider the potential harm from continued noncompliance, the efficacy of the sanction, and the burden on the contemnor,” Keenan explained. “Here, the district court did not conduct such an analysis or require supporting evidence but summarily concluded that Millen’s failure to file the separate statement caused dInc to incur expense related to delays in both the North Carolina case and the Dutch case.”

“Notably, dInc did not present any evidence, nor did the district court find, that Millen’s submission of the separate statement would have resulted in a more favorable or timelier outcome in the Dutch court,” Keenan added.

“Finally, we observe that the sanction imposed on Millen was severe in its potential economic and reputational costs, particularly given the district court’s characterization of Millen’s ‘improper actions’ as being ‘one small slice’ of dBV’s contemptuous conduct,” Keenan wrote. “The district court did not explain its rationale for temporarily barring Millen from practicing law in the Western District of North Carolina, or why this specific sanction was necessary to ensure compliance with the correction order.”

“Thus, despite the district court’s statement that the sanction was not punitive, the sanction effectively penalized Millen’s past conduct rather than addressed future compliance with the correction order,” she added.

“So, in the absence of clear and convincing evidence of harm to dInc from Millen’s alleged violation of the correction order, the court’s coercive sanction lacked any justification,” Keenan wrote.

Judges Harvie Wilkinson and James Wynn joined Keenan’s opinion.

“Federal Appeals Court throws out contempt order against NC lawyer” was originally published on www.carolinajournal.com.