The Fourth Circuit Court of Appeals has vacated a civil contempt order against attorney Pressly Millen in the case Dmarcian, Inc. v. Pressly Millen, No. 25-1085. This decision affects Millen directly, as it overturns a ruling that temporarily barred him from practicing law in federal courts in North Carolina. The court found that the lower court had abused its discretion in finding Millen in contempt without sufficient evidence of harm.
The case originated when Dmarcian, Inc., a North Carolina-based software company, filed a lawsuit against its former business partner, DMARC Advisor BV, in March 2021. Dmarcian accused DMARC Advisor of copyright and trademark infringement, misappropriation of trade secrets, and other violations stemming from a broken business relationship. The dispute escalated as Dmarcian sought a preliminary injunction against DMARC Advisor, which the district court granted in May 2021.
As the case progressed, DMARC Advisor filed a related lawsuit in the Netherlands. In response, Dmarcian sought to prevent DMARC Advisor from continuing its Dutch litigation, arguing that the cases were intertwined. The district court ruled that while it would not stop the Dutch proceedings, DMARC Advisor had made significant misrepresentations to the Dutch court, prompting the court to issue a correction order requiring DMARC Advisor to clarify its statements.
Millen, who represented DMARC Advisor, was later held in civil contempt for failing to comply with the correction order. The district court imposed a monetary sanction of $400,000 against DMARC Advisor and temporarily suspended Millen's admission to the Bar of the Western District of North Carolina. Millen appealed this decision, arguing that the contempt ruling was unjustified.
The Fourth Circuit reviewed the appeal and first addressed whether it had jurisdiction to hear Millen's case. The court determined that because Millen was not a party to the underlying case, he could appeal the contempt order immediately, despite it being interlocutory in nature. The court noted that typically, contempt orders are not immediately appealable unless they are directed at nonparties.
On the merits, the Fourth Circuit found that the district court had abused its discretion in holding Millen in contempt. The court stated, "the moving party failed to produce evidence that it had been harmed by the attorney’s alleged noncompliance with a prior court order." The judges concluded that Dmarcian did not demonstrate that Millen's failure to file a separate statement caused any harm, which is necessary for a finding of civil contempt.
The ruling emphasized that civil contempt is meant to be remedial rather than punitive. The Fourth Circuit noted that the sanction imposed on Millen was more punitive than remedial, as it did not serve to correct any deficiency or compensate Dmarcian for losses. The court vacated the contempt order against Millen, stating that the district court had not provided sufficient justification for the severe sanction imposed.
This ruling has significant implications for Millen, who can now resume practicing law in federal courts in North Carolina. It also highlights the importance of evidence in contempt proceedings, particularly the requirement that a party must show harm resulting from a violation of a court order.
Looking ahead, it remains unclear if Dmarcian will pursue further action in this case or if there are related cases pending. The Fourth Circuit's decision may influence how similar cases are approached in the future, particularly in matters involving civil contempt and the standards of evidence required to support such findings.