The ongoing saga between IP Edge LLC and Delaware Chief Judge Colm F. Connolly has reached the Federal Circuit once again. Since June, Judge Connolly has repeatedly ordered Lori LaPray, the owner of IP Edge-linked plaintiff Backertop Licensing LLC, to testify in person about an unusual situation involving the attempted withdrawal of its counsel. LaPray’s subsequent refusals to do so led him to find her in civil contempt of court, imposing a $200 per day fine until she complies with the order. Judge Connolly declined to stay that contempt order earlier this month, expressing skepticism that she would prevail on the merits on appeal. Now, LaPray has filed an emergency motion to stay those fines with the Federal Circuit, taking another pass at some of the same arguments previously rejected by Judge Connolly—including her contention that he lacks the authority to find her in contempt in the first place.

LaPray’s current predicament stems from IP Edge’s broader dispute with Judge Connolly over a pair of standing orders that he imposed in his courtroom in April 2022, requiring the wide-ranging disclosure of information on a party’s corporate control and third-party litigation funding. As RPX has extensively reported, Judge Connolly ordered several IP Edge plaintiffs—including Backertop—to produce reams of information about their ownership and legal representation after they initially failed to make sufficient disclosures under those new rules. These orders were prompted by Judge Connolly’s concerns over IP Edge’s historical business model: It has frequently hired individuals with no prior connection to patent monetization (such as LaPray, who otherwise works as a paralegal) as the owners/managers of its litigating LLCs in exchange for the promise of passive income from its litigation proceeds. That practice, per Judge Connolly, suggested that by assigning patents to those LLCs without disclosing connections to IP Edge and a related firm, MAVEXAR LLC, those two entities had perpetrated a fraud on the USPTO and/or the district court. Challenges to the propriety of those production orders failed, including a series of district court challenges rejected by Judge Connolly and a set of mandamus petitions rejected by the Federal Circuit.

Though LaPray appeared at a November 2022 evidentiary hearing before Judge Connolly, convened to assess Backertop’s compliance with the court’s standing orders, his lingering concerns over Backertop’s resulting production of documents—and the aforementioned situation with its counsel—led him to order a repeat appearance. This time LaPray declined to attend, asserting that personal and professional obligations would prevent her from making any in-person appearances “at any time in the foreseeable future”. An escalating back-and-forth ensued during which Judge Connolly held that her attendance was still required and sent materials regarding the case to her law firm employer, prompting LaPray and Backertop to lob extraordinary accusations of gender harassment at the court. Judge Connolly also expressed skepticism about the purported economic hardships cited by LaPray, noting the lack of documentation provided for those hardships—further observing in his August 21 contempt order that one day’s worth of the imposed $200 daily fine is just $100 less than the court-estimated cost of a one-day trip from Dallas (where LaPray lives) to Judge Connolly’s Delaware courtroom.

On October 3, Judge Connolly then declined to stay the imposition of those civil contempt fines, holding that LaPray had raised arguments that are procedurally barred and substantively wrong. The court also expressed doubt that her Federal Circuit appeal (filed in early September) would succeed on the merits, in part because her position on appeal—that limits supposedly placed on his inherent authority by procedural rules barred him from ordering her to appear, as detailed further below—would enable any individual to assert a “questionable” patent through a thinly capitalized “shell LLC” and engage in “fraudulent and sanctionable conduct through the course of those suits with impunity”.

LaPray Asks Federal Circuit to Stay the Fines

LaPray (via her replacement counsel, David Finger) filed her emergency motion to stay the imposition of fines with the Federal Circuit on October 26, seeking in the alternative to expedite the appeal. Perhaps unsurprisingly, LaPray disagreed with some of Judge Connolly’s analysis on the factors to be considered for such a motion: the likelihood of success on the merits of that appeal, risk of irreparable harm, potential injury to others, and any public interest in the decision.

LaPray asserted that she was likely to prevail on the merits based in large part on an argument that she has made multiple times (in various forms) throughout this litigation, as early as a motion for reconsideration filed in June: She argues that certain Supreme Court decisions establish that the court’s inherent power cannot run counter to a Federal Rule of Civil Procedure—here, Rule 45, as it pertains to limits on compelling the testimony of a party’s officer. LaPray revived this argument despite its explicit rejection by Judge Connolly, who held in July that under one of those very decisions cited by LaPray, the Supreme Court’s 1991 opinion in Chambers v. Nasco, a court’s inherent powers are explicitly not limited by such rules: “These powers are ‘governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases’” (emphasis by Judge Connolly).

LaPray also objected to Judge Connolly’s conclusion on this argument in his October 3 order, in which he ruled that “Rule 45(c) in no way limits a court’s inherent power to issue an order compelling the attendance of a party’s principals at a hearing” and found that her position would effective “nullify” the court’s inherent powers. This characterization amounted to a “policy judgment”, LaPray argued—without elaborating on the basis for such a statement. By making a “policy judgment”, LaPray contended, Judge Connolly had decided that his “goals transcended the will of Congress”, which had, she asserted, had made a “‘policy’ decision” through the creation of the Federal Rules; and the Supreme Court, which had made a series of decisions allegedly supporting her view that Judge Connolly had purportedly not referenced.

Even if the Federal Circuit were to disagree with this reading of Supreme Court precedent, LaPray continued, she further argued that it was proper for her to challenge the contempt order under the doctrine of “transparent invalidity . . . which permits an appellate court to consider the underlying order in a contempt proceeding, notwithstanding the fact that no valid challenge to it [sic] at the time”. This argument had also been previously rejected by Judge Connolly, who countered that under the Supreme Court’s 1948 decision in Maggio v. Zeitz, it was improper to relitigate the substantive merits of the underlying decision for which the party’s disobedience has led to a contempt order. This, LaPray here responded, improperly ignored a subsequent Supreme Court ruling from 1967, Walker v. Birmingham, that her brief characterized as “suggesting that a contemner might be allowed to challenge contempt citation [sic] on ground [sic] that underlying court order was ‘transparently invalid’”. “An Order which flatly contradicts decisions of the U.S. Supreme Court is clearly and transparently invalid”, LaPray insisted—distinguishing Maggio and the additional authority cited by Judge Connolly as involving “claims of contempt of final, not interlocutory, orders”. Whereas final judgment orders are “res judicata and not subject to collateral attack in the contempt proceedings” (quoting Maggio), the contempt order in this case is a “nonappealable interlocutory order”, the validity of which may be challenged, LaPray argued.

As for the factor contemplating whether the appellant will suffer irreparable harm, LaPray argues that she “faces a Hobson’s choice: either give up her right to be free from an unlawful court order and avoid further fines and sanctions, or live with the fear that, as the appeal proceeds through several months (absent expedition), the amount of the sanction will rise to an intolerable level if she loses the appeal”. That said, LaPray underscores that while she “maintains a strong convection [sic] that she will prevail, there are no guarantees”. Nor, per LaPray, is the “fact that, if successful, the sanction will go away . . . an adequate remedy for the fear and stress that she will suffer during this period”. The motion does not mention another possibility underscored by Judge Connolly in his October 3 order: that LaPray “need not suffer any injury—let alone an irreparable injury”—because civil contempt fines are coercive, and she “can purge her contempt and avoid paying the fine by simply appearing in court as ordered”. In contrast, LaPray and Judge Connolly both agreed that no third parties would be harmed by a stay, as contemplated by the third factor.

With respect to the fourth factor, whether the public interest would be harmed, LaPray insisted that “[t]he public has an interest in the government not exceeding the scope of its authority”. The cases cited in support apparently relate to somewhat different circumstances from the present dispute: LaPray quoted a decision from the District of Utah that enjoined a state court judge from proceeding with certain litigation while the district court addressed claims related to Native American sovereign immunity on remand from the Tenth Circuit. She further cited a Fourth Circuit ruling that a district court lacked the power to provide non-public criminal discovery materials used during the prosecution of one of the 9/11 coconspirators to the families of victims suing him in civil court. LaPray’s argument before Judge Connolly failed on different grounds based on a finding that her cited caselaw was inapposite: She had argued that a Third Circuit ruling (American Telephone & Telegraph v. Winback & Conserve Program) established that when the other factors are satisfied, the public interest will almost always satisfy the contemnor. The problem, per Judge Connolly, was that the Winback decision was “addressing a request for a preliminary injunction, not a request for a stay, and—critically—not a request for a stay of a civil contempt order. There was no ‘contemnor’ in Winback”. Rather, Judge Connolly countered simply that the “vital public interest” implicated here is, simply, “compliance with court orders”.

Time will tell if the Federal Circuit has more sympathy for LaPray’s predicament—or whether it shares Judge Connolly’s procedural and substantive concerns over her lack of such compliance.

For more background concerning the extraordinary twists and turns that led to LaPray’s defiance of Judge Connolly, see “Judge Connolly Asked to Stay Civil Contempt Order” (September 2023) and “$200 Per Day Civil Contempt Fines Still Adding Up” (October 2023).