All of my coverage of the Prenda Law saga is collected here.
After the April 2, 2013 hearing at which Prenda Law principals invoked their Fifth Amendment right to remain silent in response to Judge Wright's Order to Show Cause, Prenda's principals have been filing briefs setting forth their position. I previously described a quite good brief from attorneys for Prenda Law, Paul Duffy, and Angela Van Den Hemel, and a brief by attorneys for Paul Hansmeier.
This morning John Steele's brief appeared on PACER. (It may have been filed yesterday.) The brief is here. It is, by a considerable margin, the most truculent and blunt of the three filings. Steele repeats the same themes as his colleagues, and cites many of the same authorities, but does so more forcefully.
Jurisdiction and Limits On Judge Wright's Power Most of Steele's brief is concerned with limits on Judge Wright's sanction and contempt power and on his jurisdiction over Steele, some of which I discussed in my post on the tools available to Judge Wright. Steele's argument is that he wasn't counsel of record here, didn't engage in any conduct in this district, didn't sign or file anything in this district, that the evidence is insufficient to prove he directed any conduct in this district, and that Judge Wright lacks authority to sanction him for conduct in other districts. Steele also argues forcefully that Judge Wright has not accorded him sufficient due process to use sanctions or contempt power against him. The brief's review of the authorities explaining the limits of Judge Wright's various sanctions and contempt powers is thorough and strongly presented.
Like Hansmeier, in arguing that Judge Wright lacks power over him, Steele points the finger at Brett Gibbs, and argues that Gibb's testimony is inconsistent and inadequate to establish that Steele supervised or directed him:
Similarly, Prenda attorney Brett L. Gibbs’ testimony fails to support a finding of jurisdiction over Steele, as his testimony lacks specificity regarding Steele’s involvement in the subject cases or any California cases, and is otherwise inconsistent or contradicted by others. For example, although Gibbs claimed he was supervised by Steele and Hansmeier at Prenda Law, when pressed for specifics about the degree of supervision he received, Gibbs only offered that Steele and Hansmeier gave him authority to file certain cases here. See Dkt 108-5, at 77:8-24. Gibbs’ further testimony has revealed he had significant autonomy in handling the cases. See Dkt 108-5, at 77:25-78:4 (claiming Steele and Hansmeier “gave me certain parameters [pursuant to] which I could settle the case myself.”); see also Dkt 108-5, at 79:1-5 (regarding the decision to dismiss cases in this Court Gibbs noted: “As counsel of record here, I just kind of broke down like a cost benefit analysis of those cases. And they said, basically, go ahead and dismiss them.”); see also Dkt 58, at ¶5 (claiming Steele and Hansmeier provided him with “guidelines”).
Like his colleagues, Steele also argues that Judge Wright cannot draw adverse inferences from his invocation of the Fifth Amendment because Judge Wright initiated proceedings that were akin to contempt.
The Substance: Steele spends much less time on the substance of Judge Wright's inquiry. What time he spends is defiant and somewhat cavalier. Consider how he frames his response to the accusation that Prenda Law misappropriated the identity of Alan Cooper:
As both Gibbs and Prenda/Duffy/ Van Den Hemel noted in their Responses To The OSC, the Court is mistaken about the law in this regard; the signature of the assignee is irrelevant to the validity of the assignment, so long as the assignor signs. See Dkt 49, at 25:9-26:19; Dkt 108, at 11:24-12:9.; see also 17 U.S.C. 204(a). Lastly, the Court stated: “the Court will not idle while Plaintiff defrauds this institution.” Dkt 48, at 9:10-11. However, even if the Court were to discount the evidence submitted impugning Cooper’s credibility and blame Steele for this “fraud,” it hardly rises to the level of fraud upon the court recognized by the Ninth Circuit, i.e., “a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that are presented for adjudication.” In re Intermagnetics Am., Inc., 926 F.2d 912, 916 (9th Cir. 1991)
The argument that a forged signature by Cooper would be immaterial is familiar; the additional argument that it is not any big deal is new, and tactically questionable.
Arguing in court often means finding an effective way to tell a judge he or she is wrong. Usually this involves a certain level of finesse. Sometimes it doesn't:
Regarding any other alleged fraud the Court may consider, as Section III above makes clear, except in rare circumstances not present here, this Court is not empowered to sanction Steele or anyone else based on conduct occurring entirely outside of the subject cases and the Central District. Based on its prior statements, the Court may have erroneously felt otherwise before. Dkt 108-5, at 29:14-22 (over Gibbs’ counsel’s objection that the Court’s inquiry about non-Central District cases was “beyond the scope of the OSC,” and “not what this OSC is about,” the Court responded: “Well, it has become
about it. It has become about fraudulent filings in federal court” generally). [emphasis added]
Or consider this:
Although the Court has not specified the sanctionable misrepresentations it is referring to, the Court has apparently concluded such misrepresentations have occurred. See Dkt 86, at 1:28- 2:2 (“it appears that these persons, and their related entities, may have defrauded the Court through their acts and representations in these cases.”); Dkt 108-5, at 58:21-25 (wherein the Court implies officers of the court have knowingly made misrepresentations to the court). Disturbingly, the Court’s apparent conclusions about the relationships between the persons and entities named in the March 14, 2013 OSC wholly ignores evidence to the contrary Compare, e.g., Dkt. 69-1, pp. 21:18-2, 38:22-39:15, 40:8-12 (regarding who owns AF Holdings) with Dkt 108-5, at 114:5-8 (I do have the picture, and I know who the client is. We have talked about the client, and the client has been running everything. Yeah, I know who the client is”); see also Dkt 108-5at 19:15-18 (suggesting Prenda law is “controlled by Mr. Steele.”)[emphasis added]
Steele's other substantive arguments are now familiar: he asserts that the evidence is inadequate to show that he was involved in any part of the conduct of the litigation before Judge Wright and therefore cannot be subject to sanctions, and that the notice of the March 11, 2013 hearing was inadequate and that therefore he cannot be sanctioned for failure to appear. Steele, as his circumstances require, is mum about the actual ownership of the Prenda Law clients, or whether he has any financial interest in them.
The Battle and the War: John Steele's brief is not calculated to persuade Judge Wright. It's not even calculated to avoid antagonizing him. Rather, it's calculated to make a record for appeal. In fact, I suspect the brief is calculated at least in part to goad Judge Wright into issuing an overbroad order that is vulnerable when appealed to the Ninth Circuit.
Steele is playing a dangerous game, and one that is focused on his own short-term survival rather than any possible future viability of Prenda Law or its potential spinoffs. In an effort to attack the adequacy of the evidence in this case, he's attacked Brett Gibbs and left him holding the bag. That might be good battle-tactics, but it's problematical strategically — in the long term, I wonder what emails or other documents Gibbs might have that he can provide to courts or other authorities. Gibbs is well-represented, shouldn't take the fall for Prenda Law, and won't. Moreover, Steele's blunt and defiant response won't play well in front of any other court or tribunal across the country when Prenda Law defendants begin to seek sanctions or fees or investigations in those cases.
The wheels grind slowly. But they grind, my friends. They grind.
Last 5 posts by Ken White
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