Remember Joseph Rakofsky? He's the brand-new lawyer who thought it was prudent and appropriate to attempt, as his first trial, the defense of a man accused of murder. Havoc ensued. A federal judge granted Rakofsky's request to withdraw, which coincided with the defendant's request for a new lawyer, and granted a mistrial. In doing so the judge said that in the alternative he would have granted a new trial based on Rakofsky's incompetence:

I must say that even when I acquired [sic -- probably "inquired of"] Mr. Deaner [the defendant], I — as to whether or not, when the Court found out through opening, at least near end of the opening statement, which went on at some length for over an hour, that Mr. Rakofsky had never tried a case before. And, quite frankly, it was evident, in portions of the trial that I saw, that Mr. Rakofsky — put it this way: I was astonished that someone would purport to represent someone in a felony murder case who had never tried a case before and that local counsel, Mr. Grigsby, was complicit in this.

It appeared to the Court that there were theories out there defense theories out there, but the inability to execute those theories. It was apparent to Court that there was a — not a good grasp of legal principles and legal procedure of what was admissible and what was not admissible that inured, I think, to t detriment of Mr. Deaner. And had there been — If there had been a conviction in this case, based on what I had seen so far, I would have granted a motion for a new trial under 23.110.

So I am going to grant Mr. Deaner's request for new counsel. I believe both – it is a choice that he has knowingly and intelligently made and he understood that it's a waiver of his rights. Alternatively, I would find that they are based on my observation of the conduct of the trial manifest necessity. I believe that the performance was below what any reasonable perrson could expect in a murder trial.

And later in that hearing . . .

And I think that the – As I said, it became readily apparent that the performance was not up to par under any reasonable standard of competence under the Sixth Amendment.

This was widely reported, resulting in Rakofsky suing a ridiculous array of news outlets and lawbloggers, and stubbornly pursuing those claims in what became known as "Rakofsky versus the Internet."

Last week he lost — a judge granted motions to dismiss his case. That represented two major victories last week for Marc Randazza, who not only represented many lawbloggers in Rakofsky's case, but also crushed infamous copyright troll Righthaven on appeal. This will not make him any easier to live with.

Rakofsky's lead argument was that he was defamed because his detractors reported that a judge had declared a mistrial based on his incompetence, when in fact the judge had declared a mistrial based on the defendant's request and had only said that in the alternative he would have granted a mistrial based on Rakofsky's incompetence. The correct rejection of this argument is a good example of the substantial truth doctrine, also known as the "gist" or "sting of it" doctrine — the rule that says that a statement isn't defamatory if the main insulting thrust of it is true. So, if you accuse me of molesting squirrels in a public park, and I sue you for defamation on the grounds that my companion was a chipmunk and I was in the storm drain adjacent to the park, my defamation suit against you should not survive. (Unless, I suppose, we live in a community where squirrels are held in high esteem but chipmunks are generally despised.) Here, it was patently ridiculous for Rakofksy to maintain that the "mistrial resulting from incompetence" story was meaningfully misleading or false. The trial judge was brutally frank in his evaluation of Rakofsky's ability, and trial judges don't just go around letting defendants change lawyers mid-trial for no reason.

There are a few lessons to learn from this regrettable affair.

1. Our legal system is so broken that it can take years to resolve even the most patently vexatious, harassing, and incompetently prosecuted lawsuits like this one.

2. Rakofsky doubled down. Had he slunk away after his grave error in judgment, giving thanks that his rashness did not lead to someone being convicted, he might have learned the trade, become a competent lawyer, and overcome a brief flurry of bad publicity. Instead, he chose to file a vexatious lawsuit. Now he belongs to the ages. He will never, in the half a century he has left to him, live this down.

3. Yielding to censorious thuggery like Rakofsky's is harmful to your reputation. Cowardly and unprincipled University of St. Thomas School of Law, I'm looking at you. You yielded to a frivolous suit and taught your students and alumni a terrible lesson about being a lawyer and a citizen. You encouraged vexatious and speech-chilling litigation. Let your cringing suckitude be proclaimed throughout the land.

4. Judge Wright's photon torpedo salvo notwithstanding, most judges are reluctant to award sanctions even against conduct that richly deserves it. Here the judge declined to award sanctions against Rakofksy. I'm inclined to agree with Scott that Rakofsky's youth, inexperience, and nationwide humiliation probably stayed the judge's sanctioning hand.

5. If you want the law to be an instrument of self-actualization, start a blog. Law practice — the profession of providing services to clients who need you — is not your personal voyage of self-discovery and empowerment. If you practice as a lawyer, you owe it to your clients only to do the things you are competent to do. Embarking on the defense of a man accused of murder as your first trial is a moral and ethical outrage. Regrettably, the profession is barraged with eager voices telling us that attracting clients with puffery and keywords and Twitter accounts is the way to build a practice. Nobody's reminding us that you have an obligation to know what you're doing before you accept the client. Somebody should.

All of Popehat's Prenda coverage is collected here.

When last we left the Prenda Law team, it was reeling from a devastating sanctions order and referral for criminal investigation. Now, as predicted, defense attorneys across the country are filing that order in cases brought on behalf of Prenda Law clients.

This has already led to one comical result.

You may remember that Attorney Jacques Nazaire, representing Prenda Law entity AF Holdings in Georgia, filed an angry and rather bizarre opposition to a defendant's motion for sanctions there. Now, in response to that defendant filing Judge Wright's order — which is what Judge Wright clearly contemplated, and which involves informing the Georgia federal court of an order that is patently relevant to the proceedings — Jacques Nazaire has doubled down and flipped out.

In his objections to defendant Patel's filing of Judge Wright's order about Prenda and AF Holdings, Nazaire argues that the filing is late and not authorized by the local rules, because it is effectively a "sur-reply" – that is, a reply to a reply. That's what just about any lawyer would say; it's within the realm of reason.

But then:

9. While this Court may or may not agree with some of the issues presented in
the California case, unbeknownst to the defendant, the California case will not necessarily become a mandate on this Court. It is solely within the discretion of this Court to follow or not follow the decisions made in the California case.

10. The defendant should realize that California has different laws than
Georgia, a different Governor than Georgia; a different legislative body than Georgia, different business needs than Georgia and different views than Georgia and as such all of its decisions cannot serve as a mandate for Georgia.

11. For example the California Courts have legalized gay marriage. Perry v.
Schwarzenegger 704 F.Supp.2d 921 (N.D. Cal., 2010);Certified question, 628 F.3d 1191 (9th. Cir.); Answered 52 Cal.4th 1116 (2011) Affirmed, 671 F.3d 1052 (9th Cir.) Such a decision cannot serve as a mandate on Georgia Courts to legalize gay marriage as well.

Sure, Nazaire is trying to make a point that the decisions of a United States District Judge in one state do not dictate the decisions of a United States District Judge in another state. But he's doing it in a hilariously silly and inflammatory way. Moreover, the core argument is misleading: both cases are copyright cases premised in federal law, and Judge Wright's decision was premised in federal law. This isn't a case about California or Georgia state law.

Nazaire then proceeds to start throwing Prenda principals under the now battered and flat-tired bus, suggesting he shouldn't be sanctioned:

19. Defendant also argues that plaintiff’s counsel should have made reasonable inquiry of the signature. Prior to filing the document, the undersigned contacted Prenda Law to find out whether or not Mr. Cooper would be available to testify at trial but was advised that they could not locate Mr. Cooper. The undersigned was advised that Mark Lutz and Peter Hansmeier would be available to testify as witnesses. Had the undersigned realized that the Electronic Frontier Foundation was hanging with Mr. Cooper, he would have been able to track down Mr. Cooper and questioned him about the documents. It turns out that Mr. Cooper was a caretaker of one of the properties of a Prenda Law member and had left said property in August, 2012.

20. Therefore, even if the undersigned had placed a knife to the throats of each of Prenda’s members, none would have been able to give him Mr. Cooper’s contact information at the time on November 5, 2012 when Plaintiff commenced its law suit. It is certainly not the first time a company has lost contact with an agent (or alleged agent as stated).

I'm going to give Mr. Nazaire Internet Points for responding to Star Trek references with a "Hangin' With Mr. Cooper" reference that is far more subtle.

Nazaire is also infuriated that his opposing counsel submitted one of his emails:

32. Additionally, an email containing information that was sent by the undersigned, in strict confidence, to Mr. Chintella was presented as evidence in that California case by Mr. Chintella. Chintella went behind plaintiff’s counsel’s back without any notification and submitted the email contents as evidence in order to influence the California case; the same case that now he presents to this Court as a mandate; the same Georgia case from which he intends to profit.

Yeah, here's the thing: if you write something to opposing counsel, especially in a case like this, you should expect it can get filed in court if it's relevant.

Nazaire's filing is furious and more than a little manic.

Is this real life?

Hat tip to Fight Copyright Trolls, via Twitter.

As far as I've been able to tell through clever googling in my favorite search engine, the renowned and much beloved Pirate Resignation Letter was written by Chris Castle and delivered to James Bear (deceased), former managing partner of Knobbe, Martens, Olson & Bear, LLP.

After using the letter, Castle shared it with his friend, user "Otter Von Pop" of the (now defunct) BirdSunEye.com forum, and that user posted it on 17 October 2003 both as a forum post and as a Word doc attachment.

Later that morning, Chris Castle, posting as "The Bartender" confirmed the story and reported on the (first ever!) recipient's humorless (or brilliantly funny!) reply.

Harvested from the past and hosted right here on Popehat is that original forum thread:

Original Pirate Resignation Letter Thread

Enjoy this bit of net.history! And if you have anything to add about the people or circumstances, please share what you know in the comments.

UPDATE: There's a new pretender to the helm!

Last week we invited Cathy Gellis to guest-post her observations of a hearing in AF Holdings v. Navasca, a Prenda Law case. Today, she gets to guest-post the result: an order that may be the harbinger of how courts will treat Prenda Law and its associated Prendarasts. Cathy practices cyberlaw in the San Francisco Bay Area and maintains a blog at DigitalAgeDefense.org, exploring how criminal consequences have been attaching to technology use and development.

All of Popehat's Prenda coverage is collected here.

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Later this week it will be World Intellectual Property Day, the day that the World Intellectual Property Organization has selected for us to appreciate all that intellectual property has to offer us.

Might that include the welcome, and potentially expensive, come-uppance of those who have sought to unjustly abuse its laws for their own enrichment? We are speaking in this instance, of course, of Prenda Law and the latest news of its self-induced misadventures in the San Francisco federal court.

When we last left our heroes Paul Duffy had managed to appear in open court and yet somehow seemingly not directly inculpate himself in Prenda Law's affairs, at least no more than he had done so previously. He was there because Prenda Law is now running for the exits, seeking to dismiss AF Holdings' case against defendant Joe Navasca "without prejudice" — meaning, with the option to re-file. In this particular case it needed the court's permission to do so. As Judge Chen noted in his devasting-to-Prenda ruling today:

Under [Federal Rule of Civil Procedure] Rule 41, a plaintiff may voluntarily dismiss without a court order by filing a notice of dismissal before the defendant serves an answer or a motion for summary judgment. See Fed. R. Civ. P. 41(a)(1)(A). Here, because Mr. Navasca has filed an answer, see Docket No. 20 (answer), AF may dismiss only by an order of this Court and on terms that the Court considers proper. See Fed. R. Civ. P. 41(a)(2).

Prenda did get the order it sought to drop the case — but not on terms it asked for, and certainly not on terms it's going to like.

The judge is always Wright

The ruling began with a summary of the case thus far, a calm, methodical, and accurate recounting that serves to buttress Judge Chen's ultimate decision. Lest there be any doubt, he knew what had happened in Los Angeles. After first discussing how Prenda Law had apparently tried to stay discovery to prevent the (ultimately disastrous deposition of AF Holdings' representative), the court continued:

It is possible that AF was motivated to seek a stay of discovery not only to deprive Mr. Navasca of evidence to oppose AF’s anticipated motion to reconsider but also to prevent adverse information from being brought to light which could be used against it in a proceeding before Judge Wright of the Central District of California. Notably, on February 7 – i.e., the same day that AF filed its motion to stay – Judge Wright issued an order to show cause as to why sanctions should not be issued against AF’s counsel based on, inter alia, the Alan Cooper problem. (emphasis added, more on that later)

[As a wag on Twitter said, "the Alan Cooper Problem" would be an excellent name for a band. -- Ken]

The Judge Chen even noted in a footnote that Prenda Law asked for the stay that very evening. He then went on to note that "the day after Judge Wright’s order to show cause – or in the immediate days thereafter, AF and/or a related entity (Ingenuity 13) initiated voluntary dismissal of numerous copyright infringement cases that they had initiated in federal courts in California." For those cases Prenda Law was able to get out of them "without court intervention and without risk of liability for costs as the defendant had not answered or filed a motion for summary judgment.

But such a smooth escape was not an option here:

In the instant case, the Court finds that, if it were to dismiss AF’s action without prejudice, then Mr. Navasca would in fact suffer legal prejudice in that he would be deprived, at the very least, of the benefit of rulings favorable to him. In other words, the Court finds that AF is seeking to dismiss the case in order to avoid an adverse determination on the merits as well as the effect of other unfavorable, though not necessarily, dispositive rulings of this Court.

Judge Chen listed three examples of very real adverse rulings Prenda Law was facing, which I'll touch on in reverse order. One was that it was trying to avoid the consequences of the ruling requiring the undertaking (in other words, the ruling requiring them to post a bond to cover costs if it lost), like it had to face in the Trinh case. In that case Prenda Law's failure to make the undertaking allowed the defendant to move for an involuntary dismissal, thereby making it eligible for a fee award as a prevailing party. Given that Prenda Law really didn't want to pay for the undertaking in this, the Navasca case. Yet, as Judge Chen noted, Prenda was also unwilling to appeal the order requiring it to post the undertaking despite being given ample opportunity to. This case was therefore inevitably heading towards the same end as the Trinh one, a fate Prenda Law was now trying to dismiss itself out of in order to avoid.

Then there was the second example:

AF also risks an adverse determination on the merits as a result of the investigation that Judge Wright has been conducting in the cases before him in the Central District of California. As Mr. Navasca points out, it is telling that, the day after Judge Wright issued his order to show cause, AF and/or Ingenuity began to initiate voluntary dismissal of a number of cases that it had filed in California. If these cases had validity or if AF had a good chance of prevailing on the merits, then it is hard to imagine that it would give up all these cases.

And then there was the first example.

The Alan Cooper Problem

AF is likely to face an adverse determination on the merits because of its apparent inability to prove standing to assert its claim of copyright infringement. Throughout the proceedings before the Court, AF has never offered a declaration from its representative “Alan Cooper” showing that he was a signatory to the assignment document that purportedly transferred ownership of the copyrighted material at issue to AF.

The Alan Cooper problem is at the heart of Prenda Law's current troubles. Supposedly at some point, an actual copyright holder transferred its copyright to the purported AF Holdings. Had this all worked the way Prenda Law claimed, AF Holdings would now be in the position to fully enforce any rights that copyright entitled to it, just as the predecessor owner would have been. Prenda Law "has staked its position on the argument that the Copyright Act only requires proper authorization for assignment by the copyright transferror, not the transferee," Judge Chen summarized. And proper authorization by the transferor is, indeed, important; we saw what happened in the Righthaven cases when the transfer was improperly done (they ended up getting dismissed). But transferring the copyright is only the first step: it shows that someone has a copyright. It doesn't show that someone has standing to come into court to enforce it. Given that Prenda Law has been unable to substantiate who that someone is, all of these cases have become suspect on that basis. Judge Chen noted:

[I]t is telling that AF moved for a voluntary dismissal only two days after its 30(b)(6) deposition was taken, [that's referring to the ridiculous deposition of Paul Hansmeier as the representative of AF Holdings] during which problems related to its standing were explored and exposed by Mr. Navasca.

And the band of tiny violins played on

As to Prenda Law's arguments for why dismissal was not improper, the court was unimpressed. The complaints of spoliation (that is, destruction of evidence) were not compelling, and, indeed, Judge Chen noted the magistrate's earlier caution to Prenda Law that “allegations of spoliation are extremely serious” and that it should “review the facts very carefully before pursuing this avenue based solely on an eHow.com article. In particular, [AF] should review the expert declaration that Navasca filed with his letter brief, to fully understand the purpose and effect of CCleaner.” (emphasis added)

However, there is no evidence to suggest that AF did that or any other investigation into whether CCleaner would in fact irrevocably destroy electronic files. Furthermore, as the Court noted at the hearing, even if CCleaner did irrevocably destroy electronic files, that might actually work in AF’s favor; in other words, the stronger the evidence of improper spoliation, the better the chance AF stood of obtaining, e.g., an evidentiary sanction or adverse inference in its favor based on the spoliation.

As to the complaint that the undertaking made the case too expensive, the court was also unmoved. First, Prenda Law could have appealed the order but chose not to. It also could have tried to demonstrate its claimed poverty, but it didn't do that either. Instead it claimed the expense made the case not worth pursuing, to which Judge Chen declined to cry them the river they sought.

[T]o the extent AF suggests that it may be financially able to pay, but the bond is simply more than the value of the case, see Mot. at 2 (arguing that Plaintiff cannot “afford to tie up nearly $50,000 in capital simply in order to proceed with its claims against a single infringer”), it ignores the fact that a bond may be required in any given case in California (based on California specific law). As the plaintiff which initiated the action, AF knew at the outset that a bond might be required. A plaintiff cannot invoke the benefits of the judicial system without being prepared to satisfy its obligations as a litigant.

The court then noted that Prenda Law had tried the same move in the Magsumbol case, trying to withdraw the case before it could get hit with an undertaking requirement, an effort that was denied there too.

Alan Cooper's ghost

For all the aforementioned reasons, Prenda Law was granted its motion to dismiss, but with prejudice, thereby making the defendant, Mr. Navasca, a prevailing party able to pursue an award under the copyright statute for the fees he expended in having to defend himself in this case. However, although the ruling was issued today, April 23, it won't be entered (or put into effect) until April 29. That's because Prenda Law needs to do something first.

If you are just now tuning into coverage of this mess, Prenda Law's problem is that it sued ostensibly on behalf of an entity "AF Holdings," the entity that purportedly now owns the relevant copyright. But when called to account for who AF Holdings is, Prenda Law can't or won't do it, leading to the conclusion that it is none other than Prenda Law itself, which would at minimum violate court rules in bringing this litigation and may suggest even more wrongfulness given how it has obfuscated the ownership question. The Alan Cooper problem described above stems from certain paperwork allegedly "signed" by a Mr. Cooper that doesn't seem to exist, thereby creating a fundamental standing issue for all these cases, an which Judge Wright has diligently been exploring.

Ah, but Prenda Law has a workaround. See, AF Holdings is really owned by this trust, one apparently called "Salt Marsh." We learned from an angry, angry filing last week that "Salt Marsh" is arranged for the benefit of the as-of-yet hypothetical and unborn children of Mark Lutz, a former paralegal for Steele and Hansmeier. Who controls and speaks for Salt Marsh? That's not clear. But that didn't prevent Salt Marsh from having "signed" the ADR document earlier in this case. It was a pro forma filing, basically an attestation that each of the undersigned had read the court's rules about alternative dispute resolution (an option parties can often choose to pursue instead of full-on litigation). And it was signed by a "Salt Marsh," although one wonders how a non-human entity could possibly attest to reading anything. [Cathy is not a true geek and therefore doesn't know SHODAN. Forgive her. --Ken] There had to have been a human being behind that attestation. But whom?

That's what the court wants to know: Who actually signed?

Finally, the Court addresses Mr. Navasca’s request that it order AF to produce the original of an ADR certification that was e-filed by AF as Docket No. 8. The ADR certification that was e-filed does not contain any actual signature from an AF representative; rather, there is simply the following e-signature: “/s/ Salt Marsh, AF Holdings Owner.” Docket No. 8 (ADR certification). As Mr. Navasca points out, under the Civil Local Rules, AF’s counsel should have maintained a copy of the ADR certification containing the original signature as a part of its files. See Civ. L.R. 5-1(i)(3) (providing that, in the case of a Signatory who is not an ECF user, the actual filer of the document “shall maintain records . . . for subsequent production for the Court, if so ordered, or for inspection upon request by a party, until one year after the final resolution of the action (including appeal, if any)”). Because Mr. Navasca has asked the Court for relief encompassed by the Civil Local Rules, the Court grants the request. AF’s counsel is hereby ordered to produce the original of the ADR certification, containing the original signature of “Salt Marsh” by April 29, 2013. If AF’s current counsel does not have the original document, then it must contact former counsel to obtain the document. On April 29, AF’s current counsel shall also file a declaration with the Court, stating whether it was able to provide a copy of the original document and, if not, why not.

(emphasis added)

Like a con artist who's taken a few too many marks with his shell game, Prenda Law is being compelled by the court to reveal how its magic has worked. We'll see in a few days what it will say.

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Ken's postscript: Thanks to Cathy for following up on her observations of the Navasca case. This order is a body blow to Prenda Law. Judge Chen — who recently awarded substantial attorney fees against the infamous Charles Carreon in a case in which Cathy is co-counsel [edited: oops, no it wasn't -- that was a different judge] — is openly suggesting that Prenda's conduct suggests malfeasance and evasion of potential negative rulings. He invited Navasca to file a separate motion for fees, and this order strongly suggests that he will grant such a motion. Judge Chen's dismissal of Prenda's "it doesn't matter if Cooper's signature is forged" argument suggests that he suspects that Prenda's entire litigation strategy is premised on fraud — that Prenda has manufactured the dispute, and that AF Holdings is merely a front for Prenda Law lawyers. Finally, Judge Chen's order that Paul Duffy produce the original "Salt Marsh" signature presents a conundrum for Duffy. Brett Gibbs was Prenda's counsel in this case at the time when Prenda Law filed this case, and probably is the one with direct knowledge of the document purportedly electronically signed by Salt Marsh. Gibbs and Duffy are not currently on very friendly terms. If asked, what will Gibbs say? What can Duffy say under oath, in a declaration, about the Salt Marsh signature without digging himself deeper into this situation? It's bad, very bad, for Prenda — and like the transcript of the hearing before Judge Wright at which Prenda took the Fifth, you can expect attorneys across the country to file this order in Prenda Law's surviving cases.

All of my coverage of the Prenda Law saga is collected here.

When it comes to getting angry in federal court, perhaps I should not throw the first stone. After all, just a few days ago a federal judge was moved to tell me "Mr. White, calm down, you aren't arguing to a jury." [The result was nonetheless quite satisfactory, thank you.] And I rely upon partners and associates to tone my written work down. (A memorable example: "The SEC's proposed jury instructions find no support in the law or the facts of the case" is acceptable, "The jury instructions are not a vehicle for the SEC's attorneys to work out their self-esteem issues" is not.)

Nevertheless, I will offer this advice: don't file angry.

Attorney Jacques Nazaire, local counsel for Prenda Law putative client AF Holdings, has done just that down in Georgia. The result is not pretty.

I previously wrote about how Mr. Patel, a defendant in an AF Holdings case in federal court in Georgia, sought sanctions in response to AF Holdings' dismissal of the case. Jacques Nazaire has filed a very angry response and cross-motion for sanctions, together with Exhibit A, =Exhibit B, and Exhibit C. As we shall see, one of those is an extremely ill-considered declaration from mysterious Prenda Law figure Mark Lutz.

Many of Mr. Nazaire's arguments are now familiar: he says that there's nothing wrong with undisclosed attorney interests in plaintiff entities so long as the judge is not presented with a conflict of interest, and he repeats the now-familiar argument that it doesn't really matter if Alan Cooper's signature was forged on a copyright assignment.

But he also makes some interesting new arguments.

Underpants Gnome Logic

If I may briefly summarize a key component of Mr. Nazaire's argument:

1. We had a highly meritorious case against Mr. Patel.
2. Moreover, he defaulted, and that default should have stuck.
3. Plus he's made admissions that show he's liable.
4. ???
5. So we've dismissed the case with prejudice, and there's nothing to see here, other than to note how strong our case was.

Well okay then.

How Dare You Say I'm Brett Gibbs' Lackey!

Amongst other things, Mr. Nazaire is very irritated at the suggestion that he was taking orders from Prenda Law figure Brett Gibbs, and wants you to know that he is his own man, exercising his own judgment:

From what has been put forth, Brett Gibbs is a fairly new attorney much like Defendant’s counsel. The undersigned, on the other hand, has over 16 years experience practicing law, has settled over millions of dollars worth of cases, including state and federal cases and has also served in Afghanistan as a Foreign Claims Commissioner, settling foreign claims in a war zone.

The undersigned would not assign Brett Gibbs to negotiate a left turn with his vehicle, let alone a settlement on behalf of a client, regardless of whether the case was venued in Georgia, California or Afghanistan. While Gibbs may be a pleasant young man, to assert that Plaintiff’s attorney takes orders from Brett Gibbs is absurd and laughable.

I'm sure Mr. Nazaire is very highly qualified. After all, as Fight Copyright Trolls points out, only a highly-qualified lawyer would advertise on Craigslist to make court appearances at $125 a pop. Craigslist is widely respected as the best place to find an experienced litigator, a gently-used futon, or someone to dress up like Herman Goering and poop on you.

That aside, Mr. Nazaire's argument that he's not taking orders from anybody is an odd strategic choice under these circumstances. I appreciate his choice not to blame problems on Brett Gibbs. I appreciate the creativity of pulling Brett Gibbs out from under the bus in order to tell him that he sucks. But I'm not sure about the full-throated "I'm in charge but there's nothing to see here" approach by a local counsel at this point, once Prenda Law's principals have taken the Fifth. Has Mr. Nazaire truly slaked his thirst with the Prenda Kool-Aid? Or is he very politely sparing Mssrs. Steele, Hansmeier, and Duffy the bother of throwing him under a bus, as they have rather unconvincingly done to Brett Gibbs? How very collegial.

EFFFFFFFF! From Hell's Heart I Stab At Thee!

Mr. Nazaire, like many Prendateers, is very upset with the Electronic Frontier Foundation. He accuses Mr. Patel's lawyer of being associated with EFF, which he describes like it's some kind of terrorist group:

One other important fact for the Court to consider is Chintella’s role as a panel attorney for the Electronic Frontier Foundation (“EFF”). (See https://www.eff.org/issues/file-sharing/subpoena-defense). The overriding mission of the EFF has been to shield the Internet from effective regulation—“defending it from the intrusion of territorial government.” Jack L. Goldsmith & Tim Wu, Who Controls the Internet?: Illusions of a Borderless World 18 (2006). This mission relies on undermining effective enforcement of intellectual property rights. Purporting to speak on behalf of “cyberspace,” a co-founder of EFF (who presently serves on its board of directors) has warned the “Governments of the Industrial World” that “[y]our legal concepts of property, expression, identity, movement, and context do not apply to us.” John Perry Barlow, A Declaration of the Independence of Cyberspace (Feb. 8, 1996), available at https://projects.eff.org/~barlow/Declaration-Final.html (as of April 17, 2013).

The EFF is a left wing organization which has some of the same goals as the anti-government group “Anonymous” as well as the terrorist group “Wikileaks”.

It is amusing, in a dark way, that Prenda Law and its local counsel continue to portray themselves as the righteous defenders of intellectual property rights. Were that so, you might find support from them amongst attorneys and organizations in the business of bittorrent litigation and other pursuits of online pirates. You won't. At most, you'll find consternation that the Prenda Law enterprise has inflicted a grave wound upon the credibility of online piracy litigation across the United States.

Mr. Nazaire further accuses the EFF of witness tampering — excuse me, witness "tempering" — because he hears they paid for Alan Cooper's travel to and from Los Angeles. He demands:

4) An order requiring Defendant’s counsel, who is a member of the Electronic Frontier Foundation (EFF) to disclose the total amount of monetary benefits received by Alan Cooper from the EFF and its members, agents, colleagues and followers. Should the case not be dismissed, an order scheduling a hearing into possible witness tempering [sic] by the EFF.

Mr. Nazaire explains:

Additionally, it is reported on the internet that Mitch Stoltz, a staff attorney with the EFF has stated that EFF took care of Cooper’s travel arrangements to testify in a California case. As such, any statements made by Mr. Cooper should be suspect. There is no evidence to suggest that Mr. Cooper has worked an honest day in his life. Rather, it appears that Mr. Cooper has spent his lifetime depending on the kindness of others. Logic dictates that the more Mr. Cooper testifies against those opposed to the EFF, the longer he is allowed to travel from state to state.

There are several things you should note about this argument.

First, notice the alacrity with which Mr. Nazaire traipses from "Mr. Patel's claims are speculation not supported by evidence" to "it is reported on the internet."

Second, remember the context. Alan Cooper didn't travel to Los Angeles for kicks. He didn't travel as a voluntary witness to support allies. He went because United States District Judge Otis D. Wright II ordered him to appear. There seems to be no dispute that he's a man of modest means. His testimony made it clear that he finds the whole experience confounding and terrifying. The evidence suggests he was repeatedly threatened with legal ruin by the slick, entirely vile John Steele. Plus, despite Mr. Nazaire's insinuation, there is no indication he's gone anywhere else to testify, let alone been paid by the EFF to do so. Under the circumstances, the EFF funding an involuntary witnesses' travel — an involuntary witness who may be the victim of identity fraud — is a mitzvah. I leave it to reader to assess the relative character of the EFF for doing it and Mr. Nazaire for attacking it.

Third, consider where Mr. Nazaire's comments leave us with respect to Prenda Law's position on Alan Cooper: even if you take everything they say at face value (a prospect that exhausts the world's bounteous supply of drooling credulity), it means that AF Holdings chose, as an officer or representative to sign its crucial legal documents, a man who has not "worked an honest day in his life" and is mentally ill and dangerous. Nevertheless, they would have you believe, you should accept AF Holdings as a legitimate enterprise and the lawyers conducting litigation on its behalf as trustworthy. How appealing does that sound to you?

I Did It For The Lutz

Responding to accusations that AF Holdings is a front for Prenda Lawyers, Mr. Nazaire supplies an undated affidavit from Prenda Law paralegal Mark Lutz. Mr. Lutz swears that a trust called "Salt Marsh" owns AF Holdings, and that the beneficiaries of "Salt Marsh" are Mr. Lutz's hypothetical and yet-unborn future children. (Damn you, Prenda, for making me refresh my memory of the horror that is the Rule Against Perpetuities!)

You may recall that Paul Hansmeier — offered by Prenda Law as AF Holdings' witness most knowledgeable about its origins and ownership — was unable to explain the nature or beneficiaries of the trust.

Let's sum up, then, what we know about Mark Lutz, and by extension AF Holdings. Mr. Lutz has been identified as a former paralegal for Steele & Hansmeier, a predecessor to Prenda Law. He showed up in court as a "corporate representative" of another Prenda Law entity, Sunlust, resulting in this thoroughly embarrassing exchange:

THE COURT: Mr. Lutz, you're under oath, you have to give truthful answers or you face penalties of perjury. Do you understand that?
MR. LUTZ: Yes.
THE COURT: What is your position with Sunlust?
MR. LUTZ: I'm a representative of them.
THE COURT: What does that mean?
MR. LUTZ: Corporate representative.
THE COURT: What does that mean?
MR. LUTZ: They asked me to appear on various matters throughout the country.
THE COURT: Are you an officer of the company?
MR. LUTZ: I'm not, no.
THE COURT: Are you authorized to bind the company to any legal contracts?
MR. LUTZ: I am not.
THE COURT: Are you salaried?
MR. LUTZ: No, 1099.
THE COURT: So you are a 1099 contracted entity and you just go around and sit in a Court and represent yourself to be the corporate representative of the company?
MR. LUTZ: Yes.
THE COURT: Mr. Torres, did you know this was Mr. Lutz's position, a paid corporate representative?
MR. TORRES: No, Your Honor, I did not.
THE COURT: Who is the president of Sunlust?
MR. LUTZ: I'm unaware.
THE COURT: Who is the vice president?
MR. LUTZ: I'm unaware
THE COURT: Who is the secretary?
MR. LUTZ: I have no idea.
THE COURT: Who owns Sunlust?
MR. LUTZ: I do not know.
THE COURT: Who signs your checks?
MR. LUTZ: I believe somebody in the accounting department.
THE COURT: What is their name?
MR. LUTZ: To be honest with you, I can't read the signature.
THE COURT: Where is the accounting department located?
MR. LUTZ: I'm sorry?
THE COURT: Where is the accounting department located?
MR. LUTZ: I've received checks from California.
THE COURT: How much are you paid monthly to be the corporate representative?
MR. LUTZ: Again, it depends on my appearances, the number of appearances that I do.
THE COURT: How much were you paid last month?
MR. LUTZ: Approximately $1,000.

Moreover, Paul Hansmeier — acting as AF Holdings' most knowledgeable person (not, it would seem, a particularly high bar) testified that Lutz is the CEO or "manager" of AF Holdings, but is not paid anything for that position, and despite being AF Holdings' sole employee, has arranged for Alan Cooper (whom Prenda Law now says is a crazy violent ne'er do well) to sign copyright assignments on behalf of AF Holdings, because Mark Lutz is a busy man:

Well, it would be speculation as
to why AF Holdings took one action or another. I would
say that, for example, you know, Mr. Lutz is an
individual. There are a certain number hours in a day
and for him to accomplish everything he's going to
accomplish in any given day, or for anyone in any
capacity in any business, you rely on third parties to
aid you to accomplish various tasks.

Meanwhile, Mark Lutz — who showed up at a hearing before Judge Wright without counsel, and apparently showed up as a corporate representative in a court in Florida dressed like he was going shrimping afterwards — may or may not have children in the future, and if he does, those children will be the beneficiaries of the trust that owns AF Holdings, which, we are assured, is a perfectly legitimate business conducting good-faith copyright litigation to protect its interests in movies. Those movies, by the way, have never yielded any money except through litigation, and that litigation has only yielded money to the Prenda Law lawyers and their related "experts."

Nonetheless, Mr. Nazaire will have you believe, it is outrageous and sanctionable for Mr. Patel to seek sanctions and ask the Georgia federal court to conclude an inquiry into whether Prenda Law and AF Holdings have concealed the true ownership of AF Holdings.

Gentle readers: draw your own conclusions.

Sure, What The Hell, Let's Bring In Booking Photo Extortion Too

Showing the sharp wit and unerring eye for palatable arguments that characterizes his entire brief, Mr. Nazaire also launches a personal attack on Mr. Patel's lawyer Blair Chintella. In a salvo that I'm sure the judge will find pertinent and not at all gratuitous, Mr. Nazaire asserts that Mr. Chintella is pursuing his own interests rather than the interests of his client, and asserts that Mr. Chintella has an unreasoning grudge against John Steele (the same John Steele Mr. Nazaire suggests is entirely irrelevant to this case):

Mr. Chintella perhaps believes that Mr. Steele has spread Chintella’s mug shot, from a 2011 DUI arrest, across the Internet. However, Mr. Chintella’s mug shot was circulated by infamous websites that post mug shots from public arrest records and demand monetary payment for their removal (www.bustedmugshots.com and www.justmugshots.com). Nevertheless, Plaintiff believes that Chintella’s acrimony towards Steele is important context for the Court to consider when reviewing Defendant’s motion, which seeks, inter alia, substantial relief against Steele, even though Steele is not a party or attorney involved in this case. Plaintiff’s attorney has a copy of the mugshot and can provide the same to the Court if so requested.

Truly Mr. Nazaire's distaste for "extortion" is touching.

Mr. Chintella may be mildly and temporarily embarrassed that a 2011 DUI arrest has been emphasized in a pleading in federal court. I suspect, however, that transitory and mild embarrassment will pale compared to the impact Mr. Nazaire's connection to this matter will have on his reputation. Potential local counsel for Prenda Law or the Prendateers, take note.

Patrick Frey, also known as Patterico, has been living under the cloud of a frivolous, censorious, and thoroughly contemptible SLAPP suit seeking to chill his First Amendment rights.

Today he won.

Background

Since last year it's been my privilege to work alongside the formidable Ron Coleman to defend Patrick pro bono against the federal lawsuit Nadia Naffe filed.

Ron and I filed motions seeking to dismiss Nafe's original federal complaint. In December United States District Court Judge George Wu granted our motion to dismiss, but without prejudice — that is, he gave Naffe once chance to amend to see if she could state a valid claim.

We moved to dismiss her amended complaint on a variety of theories. Today we won. Judge Wu's tentative ruling with the meat of his decision is here, and his order of today confirming his tentative is here.

The Issues and The Ruling

I'm not going to explain the legal issues at length. I attached all the pleadings from the first round of briefing before, and the pleadings this time are below. If you want to get a sense of the case, I recommend reading our anti-SLAPP motion, our Motion to Dismiss under Rule 12(b)(6), and Judge Wu's order.

In brief: Naffe sued Frey for a violation of civil rights by the state under 28 U.S.C. Section 1983 (on the frankly ridiculous and disingenuous theory that he blogs as a Deputy District Attorney rather than as a private citizen), invasion of privacy through public disclosure (because Frey published on his blog deposition transcripts that were available in public court records online), false light invasion of privacy, defamation, intentional infliction of emotional distress, and negligence. In her amended complaint she sued the County of Los Angeles on a theory of negligent supervision. She originally sued Patrick's wife for no discernible reason, and sued the former District Attorney of the County; this time it was just Patrick and the County. She had two theories of why she could be in federal court: because there was a federal question (her Section 1983 claim) and because there was diversity of citizenship (she's in Massachusetts, Frey's in California; diversity requires different states and at least $75,000 in damages).

We filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) (which argues, essentially, that even if everything in the complaint were true, she hasn't described a legal wrong), an anti-SLAPP motion under California law (arguing that her state law claims were attempts to censor speech, and that she could not succeed on them), a motion to dismiss her state law claims under Rule 12(b)(1) (arguing that she can't show $75,000 in damages, as is required for federal diversity jurisdiction, so there's no jurisdiction over the state law claims if her Section 1983 claim fails), and a motion to force her to post a bond under California law (in California, you can make a plaintiff from another state post a bond to cover costs if you win).

Federal judges tend to be conservative with jurisdiction: that is, they take only cases they must, and address only issues they must. Judge Wu ruled that (1) Naffe can't succeed on her Section 1983 claim — her only federal claim — because she didn't state facts showing that Patrick was a state actor when he was blogging as "Patterico", and (2) he wouldn't exercise jurisdiction over the state law claims, because Naffe failed to show that she suffered at least $75,000 in damages, as required for diversity jurisdiction. Based on those rulings, the judge didn't need to reach the anti-SLAPP motion or the bond motion.

The Result

The result: the Section 1983 civil rights claim is dismissed with prejudice, meaning Naffe can't re-file it. The state law claims are dismissed, but Naffe could re-file them in state court if she wanted. If she does we will file an anti-SLAPP motion there as well — and a motion for sanctions against both her and her attorneys. Naffe has already filed a notice of appeal, suggesting she may pursue an appeal in the Ninth Circuit rather than re-filing in state court. Bring it.

The Conduct of the Case

One of the most frustrating things about the case was that Naffe and her attorneys misrepresented the content of relevant blog and Twitter posts to the Court to suggest that Patrick was purporting to blog in his official capacity as a Deputy District Attorney, when in fact the documents showed the exact opposite. The best summary of what I mean is at pages 9-11 of this brief and page 2-3 of this brief. Even though we made that point very strongly, Naffe — tellingly — did not respond at all in her opposition briefs. It's rather unusual not to answer an accusation that you've attempted to mislead a federal judge Judge Wu noticed it as well. We didn't raise the issue of sanctions, but he did on his own. In footnote 5 he noted:

In paragraph 39 of the FAC [First Amended Complaint] Plaintiff quotes Frey as saying the following: "You owe [O'Keefe] @gamesokeefeiii a retraction. A big one. You'd better issue it promptly. [A threat made as a Deputy District Attorney]." FAC 39. The Court may consider the text of Frey's actual statement in connection with a Rule 12(b)(6) challenge. See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006), Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001.). Notwithstanding Plaintiff's use of quotation marks, the language "[A threat made as a Deputy District Attorney]" does not appear in Frey's actual comment. See Frey Decl. (Docket No. 40), Exh. KK, at 266. The Court would consider issuing sanctions against Plaintiff and/or her attorneys for the contents of paragraph 39. [emphasis added]

And there's footnote 7. Noting that Frey wrote a tweet saying "My first task is learning what criminal statutes, if any, you have admitted violating," Judge Wu wrote:

In her Opposition brief, Plaintiff characterizes this as "Frey issu[ing] a direct threat against Ms. Naffe with Frey stating that he intended to investigate Ms. Naffe for possible criminal misconduct." Docket No. 53, at 11:18-21. Again, sanctions may very well be in play for Plaintiff's (and/or her counsel's) willingness to play fast-and-loose with the language that is actually at issue here. [Emphasis added]

Though Judge Wu did not ultimately award sanctions, I look forward to quoting those words on appeal or in a state court motion for sanctions if Naffe re-files there.

Closing Thoughts

It's been an honor to represent Patrick pro bono. It's been a privilege to work with and learn from Ron Coleman. I appreciate the opportunity.

Observing commentary on the case has been . . . interesting. I'd divide the coverage into three camps. There are people who are supportive of Patrick, but whose coverage really doesn't delve into the legal issues. There are the vapid and dishonest partisan hacks who attack Patrick for political reasons, and who don't address the legal issues at all. There's the greasy, demi-literate, demented Hutt who wrote an extended quasi-sexual fantasy about a mob murdering Patrick and me. Fun!

There are many people out there who support free speech, so long as it's free speech they agree with. That's not really supporting free speech. It's nice that people on the right supported Patrick's free speech — I wish they all supported vigorous political speech from the left as well. I would also have been happier if more people on the left supported Patrick — or, at least, treated the stark free speech issues presented in the case seriously. I didn't defend Patrick because I always, or usually, or even often agree with him. He's to the right of me politically, and a prosecutor (and therefore reliably wrong on criminal justice issues), and I often disagree with him. I defended him because the First Amendment that lets him speak freely lets me speak as well. I defended him because malicious, frivolous, and politically motivated lawsuits aimed at censorship make it a little more dangerous for each of us to speak. I defended him pro bono because frivolous lawsuits can effectively censor people even when they eventually fail, because the expenses of lawsuits can be ruinous.

If you are happy with this result, and if you are happy that lawyers will represent people pro bono in free speech cases, I ask this favor: next time you have the chance, stand up for the free speech of someone whose views you despise. Speak up and fight back when someone advocates censorship. Respond to the Popehat Signal, or to any of the opportunities out there to support free speech — even speech that angers you. Even if you don't like this result, or you don't like Patrick's politics, or mine, I respectfully challenge you to review the free speech issues in the case. Think about them carefully and ask yourself: could I be accused of defamation and intentional infliction of emotional distress for vigorously challenging someone with whom I disagree?

Thank you.

Appendix: Documents From This Phase Of The Case

Operative Complaint

Nadia Naffe's First Amended Complaint

Patrick's Motions

Anti-SLAPP Motion

Motion To Dismiss Under FRCP 12(b)(6)

Motion to Dismiss For Lack of Jurisdiction Under FRCP 12(b)(1)

Motion For Bond

Declarations and Exhibits

Supplemental Declarations and Exhibits

Request for Judicial Notice

Naffe's Opposition Briefs

Opposition to Motion to Dismiss Under Rule 12(b)(6)

Opposition to Anti-SLAPP Motion

Opposition to Motion to Dismiss for Lack of Jurisdiction Under FRCP 12(b)(1)

Opposition to Request for Bond

Declaration of Nadia Naffe in Support of Opposition Briefs

Patrick's Reply Briefs

Reply In Support of Motion to Dismiss Under Rule 12(b)(6)

Reply in Support of Anti-SLAPP Motion

Reply in Support of Motion to Dismiss for Lack of Jurisdiction Under FRCP 12(b)(1)

Reply In Support of Motion for Bond

Judge Wu's Ruling

Tentative Ruling

Minute Order Confirming Tentative Ruling

All of my coverage of the Prenda Law saga is collected here.

The Prenda Law crew has been up to shenanigans for many months, and Ars Technica and Techdirt and Die Troll Die and Fight Copyright Trolls were all doing great work covering them long before I took notice. I was preoccupied by crucial legal issues like Bigfoot and ponies and thus-and-such until Prenda Law blundered into my core area of interest: bogus defamation suits calculated to silence critics.

My first post about Prenda explained how Prenda Law and its principals Paul Duffy and John Steele filed three defamation suits in three federal districts against Alan Cooper (the man who accuses Prenda of stealing his identity as a front man for fake plaintiff entities), Paul Godfread (Cooper's lawyer), and various unnamed John Does. I also reported when Alan Cooper seized the initiative and filed counterclaims against Prenda Law and Paul Duffy. Steele shrewdly dismissed his defamation suit in Florida before Cooper could counterclaim.

Today there were updates in the defamation cases — anti-SLAPP motions filed by Godfread and Coooper. In addition, Morgan Pietz — whose defense of John Doe defendants has led to Prenda's downfall — filed his promised supplemental brief before Judge Wright. Meanwhile, in Florida and Arizona and San Francisco, attorneys nip at Prenda's heels.

April is the cruelest month for Prenda. You might want to grab a sandwich; there's a lot going on, and this will take a while.

Continue Reading »

It's time for the Popehat Signal: a call for lawyers and citizens to assist a litigant in standing up against unprincipled censorship.

My friend and colleague Paul Alan Levy of Public Citizen — fresh off a free speech victory against the infamous Charles Carreon — has asked for assistance in Medina County, Ohio. This is a classic case where pro bono assistance can help thwart an unprincipled and censorious plaintiff's manipulation of the flaws in our judicial system.

The plaintiff in question is Med Express, a company that sells refurbished medical equipment on Ebay. They have sued Ebay and a South Carolina resident named Amy Nicholls. I will let Med Express' complaint speak for itself:

6. On February 12, lOB, Nicholls paid for the item and shipping via Pay Pal. Promptly after receiving Nicholls' payment, Med Express took the equipment to the Valley City post office. where it was weighed and shipped to Nicholls. Med Express paid the full amount of the shipping cost, but for some reason unknown to Med Express, the equipment was received by Nichols with $1.44 postage due.

7. When notified of the problem, Med Express immediately offered to reimburse Nicholls for the postage due amount. Despite this offer, and before giving Med Express a chance to reimburse her, Nicholls on February 26, 2013, apparently as a result of the $1.44 postage due, posted negative feedback and comments for the transaction on Ebay's website and gave Med Express low ratings in the Detailed Seller Ratings section of Ebay's Feedback Forum, resulting in an unfavorable feedback profile for Med Express. In so doing, Nicholls falsely and deliberately slandered the good name and reputation of Med Express.

You read that right — Med Express admits that Nicholls received a package from them postage due, and is suing her for complaining about it, suggesting that she should have just taken reimbursement and shut up. Med Express is seeking damages and an injunction forcing the removal of Nicholls' feedback. That feedback was, by Med Express' own description, true:

Order arrived with postage due with no communication from seller beforehand.

When Mr. Levy pointed out to James Amodio, attorney for Med Express, that true statements are protected by the First Amendment, Mr. Amodio responded with an open, contemptuous, and contemptible threat to abuse the legal system:

I contacted James Amodio, Med Express’s lawyer, to explain to him the many ways in which his lawsuit is untenable. He readily admitted that, as the complaint admits, everything that the customer had posted in her feedback was true; he did not deny that a statement has to be false to be actionable as defamation; but he just plain didn’t care. To the contrary, he told me that I could come up to Medina, Ohio, and argue whatever I might like, but that the case was going to continue unless the feedback was taken down or changed to positive. And he explained why his client was insisting on this change — he said that it sells exclusively over eBay, where a sufficient level of negative feedback can increase the cost of such sales as well as possibly driving away customers.

This is the ugly truth of the legal system: litigants and lawyers can manipulate it to impose huge expense on defendants no matter what the merits of their complaint. Censors can abuse the system to make true speech so expensive and risky that citizens will be silenced. Regrettably, Ohio does not have an anti-SLAPP statute, so Med Express and James Amodio can behave in this matter with relative impunity. If Ms. Nicholls has to incur ruinous legal expenses to vindicate her rights, the bad guys win, whatever the ultimate outcome of the case.

Unless, that is, you will help Amy Nicholls stand up — not for $1.44, but for the freedom to speak the truth without being abused by a broken legal system.

If you are an attorney practicing in Medina County, Ohio, please consider offering pro bono assistance. Mr. Levy will be coordinating assistance, and I can tell you from personal experience that it is a privilege to work with him. Help give Med Express and James Amodio the legal curb-stomping they so richly deserve. Justice, karma, and the esteem of free speech supporters everywhere will be your reward.

If you aren't an attorney, you can help, too. Med Express should not be permitted to act in this manner without consequence. The natural and probable consequence is widespread publication of their conduct. Help by publicizing the case on Facebook, Twitter, on your blog, on forums, and on every other venue available to you. Ask yourself — would you want to do business with a company that abuses the legal system to extract revenge against customers who leave truthful negative feedback?

Stand up for free speech.

Thanks.

Edited to add: "Med Express" is a mundane name; make sure you refer to and link to the correct one — this one, med_express_sales.

Edited again to add: Thanks to Prof. Reynolds of Instapundit for the link to this. It's possible Med Express didn't think this plan all the way through.

UPDATE WITH AWESOMENESS: I offer my profound respect and appreciation to Jeffrey M. Nye and Thomas G. Haren, who have answered the call. If their names sound familiar, it may be because they stepped up and represented a blogger pro bono just a few months ago. I understand that they will be stepping in to assist Ms. Nicholls pro bono. Moreover, I understand that multiple attorneys are now investigating whether Med Express has filed other defamation suits to silence negative feedback. I'll report when I hear more.

I've said this before: free speech depends on people like Jeff and Tom. Anti-SLAPP statutes are slowly proliferating across the country and more people are becoming educated about First Amendment rights. Ultimately, though, our broken legal system allows bullies to extort silence through the credible threat of stressful, expensive, uncertain litigation even when they have no valid claim. It takes lawyers like Jeff and Tom — and like a number of other good people who wrote me in response to the Popehat Signal — to push back against that problem. I'm just sitting on my ass blogging; Jeff and Tom are putting their skills and many hours of their valuable time on the line during a bad economy. I salute them, and if I ever have to recommend lawyers in Ohio, they will be at the top of my list.

All of my coverage of the saga of Charles Carreon, his threats against Matthew Inman of The Oatmeal, and his dispute with a satirical blogger are collected here.

When I write about prolonged bad behavior in the legal system, I often get angry comments from people who say "when will the system impose consequences on people who act this way?" Take heart, I respond. The wheels grind slowly, but they grind. "Bullshit," comes the response. "Prove it."

Very well. How about an order requiring Charles Carreon to pay $46,100.25 in attorney fees?

Charles Carreon became infamous when he rashly threatened Matthew Inman of The Oatmeal, leading to infamy and spectacle. Later he made very foolish and extravagant threats against a satirical blogger, leading to a declaratory relief action against him. He evaded service for a while, then capitulated in that case, but has been fighting over whether he should have to pay attorney fees.

Today a federal judge in the Northern District of California granted the motion for fees by the satirical blogger, granting $46,100.25 in fees to the blogger's attorneys, Paul Alan Levy of Public Citizen and attorney and blogger Cathy Gellis. They had been seeking a total of $77,765.25.

Judge United States District Judge Richard Seeborg's order awarding fees is devastating to Carreon. Judge Seeborg rejects Carreon's arguments one by one, and finds Carreon's litigation conduct rendered the case exceptional, justifying a partial award of fees under the Lanham Act:

While defendant’s threatened claims were not “exceptional” at the outset of this case, defendant’s actions throughout the litigation certainly transformed this case into an “exceptional” matter, deserving of an award of attorney fees. The Ninth Circuit has stated that “bad faith or other malicious conduct satisfies the exceptional circumstances requirement.” Boney, 127 F.3d at 827. Evidence supports a finding of malicious conduct during the course of this case. Defendant first went to great lengths, imposing unnecessary costs on plaintiff, to avoid service. Then, in response to this motion for attorney fees under the Lanham Act, defendant engaged in unnecessary, vexatious, and costly tactics in preparation of his opposition to the motion. The Ninth Circuit discourages major litigation with respect to attorney fees. See, e.g., Camacho, 523 F.3d at 981; Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“A request for attorney’s fees should not result in a second major litigation.”). Defendant’s serving of interrogatories and taking of plaintiff’s deposition amounted to a mini-trial on plaintiff’s motion for fees. Indeed, plaintiff incurred an additional $37,650.25 in fees and costs after his motion was filed. Despite this additional discovery, defendant has presented no evidence to support his initial contention that plaintiff’s attorney is on a mission to “turn Internet gripe sites into profit centers for him and
Public Citizen Law Group.” Doc. #45, at 4. Defendant has failed to show that his additional discovery efforts led to anything other than additional frustration for plaintiff and his attorneys. Accordingly, plaintiff’s efforts to respond to defendant’s litigation tactics merit the imposition of a fees award.

Judge Seeborg rejects Carreon's argument that the settlement precluded an award of attorneys fees. Carreon drafted his own offer of judgment. He could have made it clear that the offer precluded fees. He didn't.

Defendant cannot now escape the consequences of his inartful drafting.

Charles Carreon could have escaped with a much lower award, or no award at all. The court declined to award fees for the filing of the declaratory relief suit itself, or for the brief litigation of its substance, finding that Carreon's initial threats did not render the case exceptional under the Lanham Act. The bulk of this order — $37,650.25 — results from Carreon's bizarre discovery demands in response to the motion for fees itself, which the court described as "unnecessary, vexatious, and costly." Most of the rest of the order — $8,450 — results from Carreon's evasion of service. So, instead of facing a costs bill for a few thousand dollars at most, Charles Carreon is facing a bill for $46,100.25. Character is destiny.

There are consequences for bad behavior. They come slowly. But they do come.

Note: I was going to wait for Paul Alan Levy to write about this first, since it's his win based on his work. But Adam Steinbaugh and Mike Masnick scooped me.

Edited to add: Paul Alan Levy offers his thoughts, plus some very kind words for which I am grateful.

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.

All of my coverage of the Prenda Law saga is collected here.

Last night I talked about a new filing by Prenda Law, Paul Duffy, and Angela Van Den Hemel in response to Judge Wright's OSC.

Today, Prenda Law principal Paul Hansmeier has filed a brief. The brief is here, a supporting declaration from his attorney is here, Exhibit A is here, and Exhibit B is here.

Hansmeier's brief echoes the structure, and many of the arguments, of the longer and more detailed brief that Heather Rosing filed yesterday. In some cases it incorporates that brief by reference. The notable new points are these:

The Fifth Amendment Issue: Hansmeier expands on the argument that Judge Wright's OSC proceedings were akin to criminal proceedings, and that therefore Judge Wright may not draw negative inferences from Paul Hansmeier's invocation of his Fifth Amendment rights. Hansmeier adds some additional authorities to support that point.

Hey Brett Gibbs, Something's Wrong With the Underside of That Bus. Can You Go Check It Out For Me? Hansmeier's primary argument against sanctions is that he did not participate in this litigation or supervise conduct by Brett Gibbs, and that Gibbs' testimony to the contrary should not be accepted. Hansmeier says that Gibbs never claimed to be supervised by others "until threatened with sanctions," and that in a declaration filed in a matter in Florida (attached as Exhibit B) Gibbs described his job without mentioning any such supervision. Hansmeier asserts that he was not involved in the investigation or litigation of the matters before Judge Wright and therefore not responsible for what Brett Gibbs did. He attacks, for instance, Gibbs' testimony that Gibbs passed along Judge Wright's order staying discovery to Hansmeier:

Outside of Gibbs’ testimony, there is no evidence that Gibbs instructed Hansmeier to instruct Respondent Van Den Hemel to instruct Verizon to not comply with the subpoenas issued months before the court’s order to cease discovery efforts. Such an instruction would be incompatible with Gibbs’ earlier characterization of Hansmeier as a supervising attorney; supervisory relationships are typically a one way
street.

So: Hansmeier didn't supervise Gibbs, which you know because Gibbs didn't mention it before, and Gibbs didn't pass along Judge Wright's order to Hansmeier, because you wouldn't do that to a supervisor. Gotcha.

Alan Cooper Contains Multitudes: What does Paul Hansmeier have to say about Alan Cooper's claim that his identity was stolen? Hansmeier says there's no evidence he is involved in any such — well, I'll let him explain:

Further, there is no evidence that Hansmeier obtained or represented that the signatures on the assignments over the name Alan Cooper were those of John Steele’s former caretaker, who bears that same name and who provided testimony to the court.

If you're paying attention, you'll see that Paul Hansmeier just coyly evaded the question of whether the "Alan Cooper" of AF Holdings is, or is not, the Alan Cooper who testified. He merely points out that Alan Cooper testified that he didn't talk to Hansmeier, and that there's no other evidence that Hansmeier secured the Alan Cooper signatures.

Interest? What Interest? Paul Hansmeier argues that there is no evidence that he concealed any financial interests in the Prenda Law plaintiffs, and repeats the now-familiar argument that any such concealment would be immaterial anyway. He also offers this:

But, the only evidence given regarding the financial interests to AF Holdings is that it is a limited liability company formed by Aisha Sargeant in May 2011 and is wholly owned by a trust with no defined beneficiaries. (ECF 69-1, pp. 21:18-2, 38:22-39:15, 40:8-12.) There has been no evidence that Hansmeier has an ownership interest in either AF Holdings or Ingenuity 13.2

Note that Hansmeier is referring to his own incredible deposition which Judge Wright aptly characterized as showing "so much obstruction" that "it's obvious that someone has an awful lot to hide." Paul Hansmeier had been presented at that deposition by AF Holdings as that entity's most qualified witness about AF Holdings' affairs. Hansmeier is therefore complaining that the record of AF Holdings' ownership is inadequate because it is based only on Hansmeier's own testimony in his role as the best witness for AF Holdings. This is, perhaps, not the most viscerally appealing argument anybody ever made.

Hansmeier's brief is decent, wisely relying on points deftly made by Rosing. But that farcical deposition Hansmeier gave will remain the albatross around his neck. It was a damned foolish way to act, emblematic of a hubristic crew of merely modest ability who believed that they could do what they wanted with impunity. That did not prove to be the case.

All of my coverage of the Prenda Law saga is collected here.

Two Prenda posts in a day may seem gratuitous. But I go where PACER leads me.

Late today Heather Rosing — currently counsel for the entity Prenda Law, Prenda principal Paul Duffy, and paralegal Angela Van Den Hemel — filed a brief in response to Judge Wright's latest Order to Show Cause. You may recall that Judge Wright told her she could do so at the April 2, 2013 hearing.

In this post I will review the arguments in the brief and discuss their significance for the fortunes of Prenda Law and its principals. Let me begin with this: Rosing has filed the best brief I have seen from Penda's side during this whole wretched story. Briefs by Prenda's own lawyers responding to accusations of misconduct have been smug, angry, evasive, and self-righteous. Rosing's brief is professional. It makes colorable arguments, and supports them with authority where there is authority to be had. There's no perfect way to tell an angry federal judge he lacks jurisdiction; she strikes a tone that's firm but respectful. It's well written, well organized, and as comprehensive as prudence permits. This is good work.

But what does it say?

Continue Reading »

All of my coverage of the Prenda Law saga is collected here.

Last week I described how Prenda Law principals John Steele, Paul Hansmeier, and Paul Duffy asserted their Fifth Amendment right against self-incrimination rather than answer a federal judge's questions about Prenda Law's litigation campaign. I predicted that attorneys defending against Prenda Law cases would begin to use that assertion against Prenda. Behold: they have.

Continue Reading »

All of my coverage of Prenda Law is collected here.

Today the Prenda Law enterprise encountered an extinction-level event. Faced with a federal judge's demand that they explain their litigation conduct, Prenda Law's attorney principals — and one paralegal — invoked their right to remain silent under the Fifth Amendment to the United States Constitution. As a matter of individual prudence, that may have been the right decision. But for the nationwide Prenda Law enterprise, under whatever name or guise or glamour, it spelled doom.

Hail, Hail, The Gang's All Here

The crowd gathered early outside of the courtroom of United States District Judge Otis D. Wright II. As before, the spectators included journalists, former Prenda defendants and their lawyers, law clerks and externs, interested citizens, and Electronic Frontier Foundation activists. The little crowd went awkward-party-foul silent when a team of lawyers and nervous-looking men in suits filed into the courtroom. Some of us glanced at the chart that attorney Morgan Pietz created to see if we could match faces. We soon saw that we could. Bets regarding who would show up in response to Judge Wright's Order to Show Cause were won and lost with some good-natured cursing.

A swarm of attorneys quickly checked in with the court clerk and took their places. On one side, attorneys Morgan Pietz and Nicholas Ranallo looked calm. They had boxes of materials they wouldn't need, and notes they wouldn't have to consult. On the other side of the room, eight attorneys prepared to answer Judge Wright's questions, mostly for naught. In the gallery, Brett Gibbs — unhappy witness at the last hearing before Judge Wright — sat looking sallow and grim. Paul and Peter, the Hansmeier brothers, sat together, looking ridiculously young and out-of-place. Paul Hansmeier's face was beefy-red. John Steele looked conspicuously slick and immaculate in an impeccable suit, like a corporate executive in a bad Robocop sequel. Paul Duffy, Mark Lutz, and Angela Van Den Hemel stared straight ahead.

Not With A Whimper, But A Bang

At a few minutes past the hour the door to chambers slammed open and Judge Wright marched out and took the bench. Before he sat he strode back and forth once behind his chair, surveying the gallery and running his tongue over his teeth. Then he sat, and called the case. Attorneys announced their appearances — Brett Gibbs, Paul Hansmeier, John Steele, Paul Duffy, Angela Van Den Hemel, and Prenda Law all had counsel, but Peter Hansmeier and Mark Lutz did not. When Paul Hansmeier's attorney announced Mr. Hansmeier was present, Judge Wright asked where he was. Paul Hansmeier stood. "Front row," ordered Judge Wright, stabbing a finger at the first row of benches behind Hansmeier's attorney. John Steele received the same treatment, and sat next to Hansmeier. One of the attorneys pointed out that Peter Hansmeier and Mark Lutz were present but not represented. "Welcome, sir," Judge Wright said to Peter Hansmeier, not entirely convincingly. "Is there an Alan Cooper — any Alan Cooper present?" asked Judge Wright, referring to allegations that Prenda Law had stolen the identity of a Minnesota caretaker to serve as an officer of dummy clients. No such person was present.

Judge Wright wasted no time. He announced that he was "pleasantly surprised" that the people he had summoned had arrived. "It should be clear this court's focus has shifted dramatically from litigation of intellectual property rights to attorney misconduct — such misconduct as brings discredit to the profession," he began sternly. "I have questions for those present — including Mr. Steele. Mr. Steele can choose to answer those questions, or not."

Steele's attorney rose and said, in light of the "concerns" that Judge Wright had raised at the March 11 hearing, and "serious allegations" made by Judge Wright, Mr. Steele would be invoking his Fifth Amendment right to decline to answer questions. I expected a murmur in the courtroom, but there was a silence like after a thunderclap. "The word fraud was used," said Steele's lawyer. "It should have been," shot back Judge Wright. Steele's lawyer gamely continued, saying that Steele was also precluded from answering by the attorney-client privilege. "You think there is a difference between these clients and Mr. Steele?" demanded Judge Wright, referring to allegations that the Prenda Law plaintiffs were mere dummy entities concealing attorney interests in the cases. Steele's lawyer said there was a real difference, but Judge Wright was clearly unconvinced. He made it clear, though, that Steele didn't have to answer questions. "He doesn't have to answer if he thinks it may incriminate him," said Judge Wright. "I'm not saying that the answers would incriminate him," protested Steele's lawyer, thus muddying the question of whether his client was entitled to take the Fifth, "but you leave my client with no choice."

Judge Wright grew steadily and visibly more outraged. "I want to know if some of my conjecture is accurate — and the only way to know is to have the principals here and ask them questions. This is an opportunity for them to protect themselves," he said. But Steele's lawyer confirmed his client would exercise his right to remain silent. Attorneys for Paul Hansmeier, Paul Duffy, and Angela Van Den Hemel confirmed their clients, too, would invoke their rights to remain silent. Judge Wright did not — unless I missed it — confirm whether Peter Hansmeier or Mark Lutz would answer questions.

An Opportunity To Be Heard

Heather Rosing, appearing for Paul Duffy, Angela Van Den Hemel, and Prenda Law, rose and asked Judge Wright for an opportunity to present "about a half hour" of argument on the points in his Order to Show Cause. Look: when you are a lawyer, representing a client, you have to stand up. You have to hold your ground even in the face of a furious federal judge. When a judge is yelling at you, however unsettling it is, you have to hold fast and remember you are there to represent the interests of your client against the terrible power of the court. Heather Rosing stood up, and has my admiration, whatever I think of her clients.

Judge Wright was uninterested in hearing legal argument, as opposed to testimony or evidence. "My clients have a right to a reasonable opportunity to be heard," Ms. Rosing protested. "Excuse me?" thundered Judge Wright, probably thinking — not unreasonably — that Ms. Rosing's clients could have filed briefs in advance to address any legal arguments they had, and that Ms. Rosing's clients have been evading questions for months. Judge Wright began to count off the questions he wanted answered. "I'm looking for facts," he said. He wanted to know who directs Prenda Law's litigation efforts, who makes its decisions, whether there is another Alan Cooper, and what happens with the money Prenda Law makes from settlements. Ms. Rosing answered (wisely, and properly) that she could not personally testify to those things. Why, Judge Wright demanded, did Prenda Law conceal its attorneys' financial interest in the cases? "There's no evidence that they have an interest," Ms. Rosing protested. "Excuse me?" Judge Wright boomed even louder. Were there windows, they would have rattled. "Have you read Paul Hansmeier's deposition?" he demanded, referring to the bizarre deposition in which Paul Hansmeier failed to explain Prenda Law's shadowy owners or flow of funds. "I have," Ms. Rosing said, but stood her ground.

Ms. Rosing suggested that she might file a brief addressing her arguments. "Do so," said Judge Wright acidly. "We're done," he said abruptly, and stormed off the bench. The whole hearing took about fifteen minutes.

Death Comes For Prenda Law

The significance of today's hearing cannot be overstated.

Yesterday I wrote about the tools Judge Wright had at his disposal to sanction or otherwise punish Prenda Law's principals. It appears to me he likely won't invoke his contempt power, but the other remedies — his inherent sanctions power, and referrals to state bars and to the U.S. Attorney's Office for criminal investigation — remain available. I expect a detailed written order.

By invoking their Fifth Amendment rights, Prenda Law principals John Steele, Paul Hansmeier, Paul Duffy, and paralegal Angela Van Den Hemel have avoided incriminating themselves. In light of the evidence adduced — evidence that Prenda Law may have created sham entities to conceal its lawyers' interest in litigation, and may have misled courts across the country — that was very likely the smart thing to do. I might have advised it myself if I were representing them. With respect to their individual exposure to potential criminal consequences, it stops things from getting worse, which is often an attorney's first task.

I'm a criminal defense attorney. I cherish and support the Fifth Amendment. Its invocation here was completely lawful. But its invocation will have catastrophic consequences for the Prenda Law enterprise, which cannot possibly continue. When they appeared today, John Steele, Paul Hansmeier, and Paul Duffy were not merely individuals facing the overwhelming power of the state. They were also officers of the court and, according to the testimony of Brett Gibbs, the very attorneys who directed nationwide litigation for the Prenda Law enterprise. Judge Wright ordered them to answer for the conduct of that enterprise in his court, as he had the right and power to do. Their invocation of their Fifth Amendment rights in the face of that order is utterly unprecedented in my experience as a lawyer. In effect, the responsible lawyers for a law firm conducting litigation before a court have refused to explain that litigation to the court on the grounds that doing so could expose them to criminal prosecution.

However well grounded in the individual rights of Steele, Hansmeier, and Duffy, the invocation eviscerates their credibility as lawyers and the credibility of Prenda Law as an enterprise in every court across the country. I expect that defense attorneys will file notice of if in every state and federal case Prenda Law has brought, through whatever guise or cutout. The message will be stark: the attorneys directing this litigation just took the Fifth rather than answer another judge's questions about their conduct in this litigation campaign. I expect federal and state judges across the country will take notice and begin their own inquiries. Moreover, Prenda's lawyers may face adverse consequences from the invocation in Alan Cooper's counterclaim against them. A defendant's exercise of the right to remain silent can't be used against him or her in a criminal case, but it often can in a civil case.

Some inquiries will come quite quickly. In the Northern District of California, where Prenda Law's Paul Duffy is fighting Morgan Pietz's demand for attorney fees in a case Prenda Law tried to dismiss, Paul Duffy has asked to appear by telephone, but Judge Edward Chen has rejected the request and ordered Duffy to appear in person on April 18, 2013. Duffy will once again have to decide whether to assert his Fifth Amendment rights. Moreover, he likely now has an irreconcilable conflict with his putative client. He may seek to withdraw before April 18.

The consequences for the individuals behind Prenda Law may arrive slowly — particularly by the standards of Twitter and anxious blogs. But they will come — and they may come from many directions at once.

Prenda Law may still be standing. But it's dead.

All of our coverage of Prenda Law is collected here.

Prenda-watchers know that United States District Court Judge Otis D. Wright II has ordered multiple Prenda Law lawyers and clients to appear before him on April 2, 2013. As a reminder, Judge Wright's order required these people and entities to appear for the following purposes:

Thus, the Court amends its February 7, 2013 Order to Show Cause (ECF No. 48) to include sanctions against the persons and entities in subparagraphs a–m below:

a) John Steele, of Steele Hansmeier PLLC, Prenda Law, Inc., and/or Livewire Holdings LLC;

b) Paul Hansmeier, of Steele Hansmeier PLLC and/or Livewire Holdings LLC;

c) Paul Duffy, of Prenda Law, Inc.;

d) Angela Van Den Hemel, of Prenda Law, Inc.;

e) Mark Lutz, of Prenda Law, Inc., AF Holdings LLC and/or Ingenuity 13 LLC;

f) Alan Cooper, of AF Holdings LLC;

g) Peter Hansemeier, of 6881 Forensics, LLC;

h) Prenda Law, Inc.;

i) Livewire Holdings LLC;

j) Steele Hansmeier PLLC;

k) AF Holdings LLC;

l) Ingenuity 13 LLC; and

m) 6881 Forensics, LLC.

These persons and entities are ORDERED to appear on March 29, 2013, at 10:30 a.m., ¹ TO SHOW CAUSE for the following:

1) Why they should not be sanctioned for their participation, direction, and execution of the acts described in the Court’s February 7, 2013 Order to Show Cause;

2) Why they should not be sanctioned for failing to notify the Court of all parties that have a financial interest in the outcome of litigation;

3) Why they should not be sanctioned for defrauding the Court by misrepresenting the nature and relationship of the individuals and entities in subparagraphs a–m above;

4) Why John Steele and Paul Hansmeier should not be sanctioned for failing to make a pro hac vice appearance before the Court, given their involvement as “senior attorneys” in the cases; and

5) Why the individuals in subparagraphs a–g above should not be sanctioned for contravening the Court’s March 5, 2013 Order (ECF No. 66) and failing to appear on March 11, 2013.

Judge Wright's order refers back to his February 7, 2013 Order to Show Cause. That order described the conduct that concerned him and included this ominous warning:

Based on the evidence presented at the March 11, 2013 hearing, the Court will consider whether sanctions are appropriate, and if so, determine the proper punishment. This may include a monetary fine, incarceration, or other sanctions sufficient to deter future misconduct. Failure by Mr. Gibbs to appear will result in the automatic imposition of sanctions along with the immediate issuance of a bench warrant for contempt.

As April 2 fast approaches, you might be asking yourself: what sorts of tools does Judge Wright have at his disposal if he finds that Prenda Law attorneys or clients have committed misconduct?

Judge Wright has many tools, and broad power, but that power is not unlimited. This post reviews some of the tools at his disposal.

Part I: Things Judge Wright Could Ask Others To Do

First up, as a federal judge, Judge Wright has vast influence over others who might take action against Prenda Law lawyers, principals, and entities.

State Bars: If Judge Wright believes that any attorney affiliated with Prenda Law has committed misconduct, he could refer the matter to the state bar of each state in which that attorney is admitted. State Bars tend to be underfunded, understaffed, and underpowered, at least compared to the ubiquity and mendacity of modern lawyers. There are too many reports of misconduct and too few people to investigate them. But referrals from judges tend to move to the front of the line. If Judge Wright makes a referral couched in the sort of blunt language he has uttered to date, he'll probably inspire immediate and vigorous State Bar investigations of the named lawyers. Such investigations can lead to state bar proceedings that might eventually result in probation, suspension, or disbarment.

United States District Court and Circuit Court Bars: Membership in a state bar doesn't automatically confer the right to appear in federal court in that state. Instead, most of the 94 federal judicial districts (including the United States District Court for the Central District of California, where Judge Wright sits) have their own process for admitting lawyers. So do the 12 circuits that hear appeals. Most of their courts have their own system for addressing attorney misconduct. You can be suspended or disbarred from the bar of a federal district or circuit even if you aren't disciplined by your state bar. For anyone whose practice focuses on federal court, that would be catastrophic. Local Rule 83-3 of the Central District of California, for instance, provides for a disciplinary process. If Judge Wright refers his conclusions to each district and circuit where the Prenda Law attorneys are admitted, they will probably face investigations of their conduct, and could face suspension or disbarment from practice before those courts.

United States Attorney's Office: Both Judge Wright's written orders and his comments during the March 11 hearing suggest he suspects that Prenda Law attorneys and principals are involved in fraud on the court — including, but not limited to, fraudulent misuse of Alan Cooper's identity and fraudulent misrepresentation of the true ownership and control of the Prenda plaintiff entities. Based on that conclusion, he could refer the case to the U.S. Attorney's Office — just 11 floors above him — for a criminal investigation. That would be as easy as picking up the phone and calling the Chief of the Criminal Division.

To be frank, the sort of fraud that Judge Wright apparently suspects — the sort of fraud that Prenda Law foes have alleged — is not the sort of fraud that would normally attract the attention of federal prosecutors. The resources of the U.S. Attorneys' Offices across the country are limited, and after 9/11 they've been diverted away from white collar crime in favor of terrorism, drugs, guns, gangs, and immigration — with occasional objectionable diversions into "computer fraud." The allegations against Prenda Law amount to penny-ante stuff compared to the high-dollar fraud that usually concerns federal prosecutors. But a direct referral from a federal judge carries very substantial weight. If Judge Wright refers the case, the U.S. Attorney's Office will allocate resources to start a grand jury investigation.

What would they investigate? Well, Judge Wright's orders and comments suggest that he is entertaining theories that Prenda Law attorneys (1) misappropriated Alan Cooper's identity, (2) created entities like AF Holdings and Ingenuity 13 to conceal their own financial interests in the cases they brought, and (3) lied to and concealed facts from both defendants and federal courts. Any investigation might focus on whether Prenda Law's attorneys engaged in conspiracy to violate federal law, false statements to the federal government, mail fraud, wire fraud, obstruction of justice, subornation of perjury, and — if the feds are in a particularly bring-out-the-gimp mood — money laundering. Moreover, unlike state bar and federal bar remedies — which by necessity only threaten consequences to lawyers — a criminal investigation could focus on non-lawyers like Mark Lutz and even on non-human entities like Prenda Law, AF Holdings, and Ingenuity 13. The feds are quite adept at flipping lower-level figures in an investigation against higher-ups. Some of the figures in this case seem ripe for that treatment.

So: merely by sending a letter or even picking up the phone, Judge Wright could easily generate state and federal bar investigations against Prenda Law's lawyers and a federal criminal investigation of everyone involved.

But Judge Wright has his own powers, too.

Part II: Things Judge Wright Could Do Himself

As a district court judge, Judge Wright has numerous tools with which he can address misconduct before him, including Rule 11 of the Federal Rules of Civil Procedure, federal statute, his inherent authority, local rules, and the contempt power. Each tool has its own limits.

Rule 11: Rule 11 of the Federal Rules of Civil Procedure requires that every pleading filed in federal court be signed by a lawyer. By signing, the lawyer is representing to the court that the document isn't filed for an improper purpose (like harassment or delay) and that its factual and legal allegations have an adequate basis. Whether claims in a document have an adequate basis is tested not based on the attorney's subjective intent, but on the objective reasonableness of the claims. A party may file a motion alleging a Rule 11 violation against another party (a regrettably involved process) or the judge may make an inquiry on his or her own initiative. A judge finding a Rule 11 violation may impose sanctions against attorneys or, in some cases, parties; those sanctions can be monetary or non-monetary, and can be designed to deter similar conduct.

However, Rule 11 has important limits. First, it applies only to documents filed by an attorney in federal court, not to out-of-court conduct. Second, under Rule 11(c)(5)(B), because Prenda dismissed this particular case before Judge Wright issued his February 7, 2013 Order to Show Cause, he can't impose monetary sanctions under Rule 11 — though he can impose monetary sanctions with other tools discussed below, and can impose them in any cases in which he issued his OSC before Prenda dismissed. Third, although Judge Wright can probably impose Rule 11 sanctions against Prenda Law attorneys and parties who did not sign documents filed in court but directed them to be filed (according to Brett Gibbs and Paul Hansmeier's testimony, that would include John Steele and Mark Lutz, for instance), the law on that point is a bit cloudy.

So: Rule 11 may not be the best tool for Judge Wright here.

Title 28, United States Code, Section 1927: 28 U.S.C. section 1927 gives federal judges another tool for imposing sanctions:

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.

This statute is even more limited than Rule 11. First, it only applies to conduct that prolongs litigation and increases the other side's attorney fees, not to pre-litigation conduct or conduct that doesn't have the effect of prolonging litigation. Second, courts are split on whether it applies to attorneys other than counsel of record in the case. Third, sanctions are limited to the amount of fees caused by the other wrongful conduct.

Inherent Authority: Federal judges have inherent authority to sanction bad faith conduct before them or violation of their orders. That authority extends to conduct that can be punished under Rule 11 or Section 1927, and beyond to other conduct. A judge's inherent authority is more flexible in that it isn't restricted by all of Rule 11's procedural limits (for instance, it can be wielded even after a plaintiff has dismissed a case) and less flexible in that it only applies to bad faith conduct — that is, conduct that not merely objectively unreasonable, but subjectively done with bad intent. Moreover, many courts have held that their inherent power can be used to sanction "fraud on the court" — the phrase Judge Wright has invoked repeatedly. A judge's inherent authority reaches beyond the lawyer appearing in court to lawyers or parties who direct the litigation, and can include conduct outside of court — though it can't include conduct in another district.

Judge Wright's inherent authority is probably the most flexible and effective tool he has.

Local Rules: Local Rules — rules enacted by the judges of a particular district — can also confer sanction power. For instance, Local Rule 83-7 permits sanctions for violations of the rules that apply to proceedings in the Central District of California where Judge Wright sits. Those local rules require, for instance, adherence to the California Rules of Professional Conduct. However, this power is somewhat limited — the local rules can't confer sanctions power broader than statutes and the Federal Rules of Civil Procedure allow, and a court must make a finding of intentional or grossly negligent violation of rules to support sanctions. Because the local rules incorporate the California Rules of Professional Conduct — including prohibitions on fraud — Rule 83-3 may be a useful tool.

Contempt Power: Federal judges also have the power to hold people in contempt — based both on their inherent power and on federal statute. Contempt can include fines or imprisonment. Contempt is complicated, and this is a very abbreviated description. Contempt is divided into two types — civil contempt and criminal contempt. Often, it's not perfectly clear whether a judge is invoking civil contempt or criminal contempt.

Civil contempt is an exercise of the contempt power intended to coerce (as when a judge threatens to fine someone $100 a day until they comply with an order) or to compensate (as when a judge holds a misbehaving party in contempt and orders them to pay the attorney fees incurred by the opposing party as a result of the misconduct). Criminal contempt, on the other hand, is an exercise of the power to punish or deter.

The contempt power isn't as broad as the sanctions power. Contempt coerces obedience to a court order or punishes disobedience; it doesn't address misconduct in the abstract. It requires proof of an unambiguous order and knowing disobedience of it. Here, if Judge Wright thinks that Prenda Law deliberately violated his discovery order by continuing to seek the identity of downloaders after he ordered them not to — or if he thinks they improperly defied his order to appear on March 11 — he might invoke the contempt power. But he couldn't invoke it, for instance, to punish what he sees as improper failure to disclose financial interests or notify the court of related cases.

Moreover, invocation of the contempt power requires more due process than invocation of the sanction power. A judge may summarily invoke the contempt power summarily for direct conduct that appears immediately before him or her — as in the case of an attorney who swears at the judge in court. Otherwise, the judge invoking criminal contempt power over indirect conduct outside of court must give notice, an independent prosecutor, notice of the charges, counsel, and the right to confront witnesses. Invocation of the civil contempt power for indirect conduct outside of court requires only notice and an opportunity to be heard — though in some cases, where extremely complex factfinding is necessary, it may require procedures more like criminal contempt.

I have dramatically oversimplified Judge Wright's contempt power. Suffice it to say that he could probably hold attorneys and parties in civil contempt at the April 2 hearing if he finds a knowing violation of one of his orders. He can't find them in criminal contempt without further proceedings.

Predictions?

How will Judge Wright wield these powers?

If I were a betting man, I'd bet that he won't make a ruling on April 2. Rather, I suspect he'll offer a carefully-worded order with findings of fact. If the participants in the April 2 hearing fail to answer his questions to his satisfaction, I think he will make referrals to state and federal bars. I suspect he'll also, at a minimum, sanction the Prenda Law attorneys under his inherent authority. Beyond that? I wouldn't guess.

Stay tuned.