Judge Slams Prenda And Paul Duffy; Calls Them Out For Lying And 'Duplicitous Behavior'

from the not-going-well dept

Mon, Feb 3rd 2014 3:06pm — Mike Masnick

We recently wrote about Judge John Darrah in Northern Illinois agreeing to sanction Paul Duffy of Prenda Law for some of his egregious behavior in filing a defamation lawsuit against Paul Godfread, Alan Cooper and a bunch of internet commenters. Today, Darrah released his ruling explaining all of this, and to put it kindly, he's not buying what Duffy is selling. Even without needing to get into the lack of an actual defamation case there is here, the judge has multiple reasons for issuing sanctions and completely rips Duffy to shreds for not just the questionable filing of the lawsuit in the case, but the attempt to cover up -- by flat out lying to the court -- how ridiculous the whole thing was.

As you may or may not recall, Duffy tried to keep the case in state court by doing a little trick whereby they added Paul Hansmeier's law firm, Alpha Law Firm, in an amended complaint (which would keep the case in state court since both the defendants and one of the plaintiffs would all be in Minnesota). Yet, as it quickly came out, the amended complaint was done through questionable means -- by apparently misrepresenting information to the court clerk, who told the court that Prenda's lawyer had misled her. So that attempt to keep it in state court totally failed, but Duffy then (on top of that) lied about the situation to the federal court.

Judge Darrah points basically all of this out and rips Duffy to shreds in the ruling. A few choice quotes:

When pressed, at the remand hearing on August 14, 2013, Duffy, counsel for Prenda, admitted he “filed substantially the same motion in the Southern District.”.... As discussed above, when asked what the Southern District of Illinois said about the motion, Duffy stated to the Court: “They denied the motion. They indicated - - the Court indicated that on the four corners of the complaint, it stated that it was a Minnesota corporation. However, the complaint also states that its principal place of business is in Minnesota.” .... However, the record reflects that the Southern District of Illinois Court said nothing of the sort. Duffy had the opportunity to address this lie in his response to the Motion for Sanctions and did not. To fabricate what a federal judge said in a ruling before another court falls well outside the bounds of proper advocacy and demonstrates a serious disregard for the judicial process.

Following this duplicitous behavior before the Court, Duffy sought to withdraw the renewed motion for remand, generously explaining that the reason for the withdrawal was “due to the apparent confusion arising from [the] motion.”...

[....] Prenda, through its counsel, Paul Duffy, filed a response to the Motion for Sanctions. In it, they argue that “Defendants have made no showing that attorney Hoerner was aware that service had been accomplished at the time he attempted to file the amended complaint.” (Resp. to Motion for Sanctions at 10 (emphasis added).) Demonstrating Hoerner was aware that service had been accomplished is not necessary to determine the deception inherent in Hoerner’s affirmative (and false) representation to Kent that service had not been accomplished.

Indeed, rather than explain their conduct, they seek to attack the form and procedure by which Defendants filed their Motion for Sanctions. Prenda contends it is entitled to the safe harbor provision under Fed. R. Civ. P. 11(c)(2), which provides that a motion for sanctions may not be filed “if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service . . . .” Here, however, Prenda does nothing to explain or withdraw its assertions regarding what the Southern District of Illinois purportedly said about Alpha. Moreover, in its motion to withdraw the renewed motion for remand, Prenda continues to stand on its rejected assertions, insisting that “there was not diversity jurisdiction in this Court” and that Prenda “vehemently disagrees with representations made by Defendants . . . regarding its motion, but nevertheless due to the apparent confusion arising from Plaintiff’s motion, Plaintiff seeks to withdraw it.” .... The purpose of Rule 11 is to, in part, emphasize “the duty of candor by subjecting litigants to potential sanctions for insisting upon a position after it is no longer tenable.” Fed. R. Civ. P. 11 1993 Advisory Committee’s Notes (1993 Amendments) (emphasis added). Moreover, sanctions under Section 1927 and pursuant to the Court’s inherent authority are not subject to the safe harbor provision.

[....] Grasping at straws, Prenda next asserts Defendants failed to serve their Rule 11 motion pursuant to Fed. R. Civ. P. 5 and that “Duffy has never consented in writing (or otherwise) to accept service of papers via electronic means.” ... This is clearly rebutted by the docket itself, which indicates that Duffy is an E-Filer of the Northern District of Illinois. “[S]ubject to the provisions of Fed. R. Civ. P. 5(b)(3), the Notice of Electronic Filing constitutes service under Fed. R. Civ. P. 5(b)(2)(D) . . . as to all E-Filers in a case assigned to ECF.” .... Therefore, whether or not Duffy realizes it, as an E-Filer, he has accepted service by electronic means.

[....] In a final act of audacity, Prenda, in response to Defendants’ Motion for Sanctions, contends that the “Court should award Prenda the fees it incurred in defending against Defendants’ patently frivolous motion.”

Needless to say, the court rules in favor of sanctions, noting Duffy's "unreasonable and vexatious conduct."

13cv4341 203 (PDF)13cv4341 203 (Text)

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Filed Under: john darrah, paul duffy, paul hansmeier, sanctions
Companies: alpha law firm, prenda, prenda law

57 Comments

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Baron von Robber, 3 Feb 2014 @ 3:22pm

Ah the sound of Prenda crunching under the wheel of Justice
Some more wheels (Criminal Federal Court for one)and alot more turns to come I hope.
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IP Lawyer, 3 Feb 2014 @ 3:29pm

Sanctions?

Jeez. What does it take to get disbarred in this country? Blowing a line off of the bench then shooting a juror?

These guys don't deserve to have licenses - that much goes without saying. They probably also deserve criminal indictment. I sincerely don't understand why these steps have not already been taken.
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S. T. Stone, 3 Feb 2014 @ 3:32pm

I kinda feel bad for the Prenda Legal Eagles.

Think about it for a moment: these guys worked their asses off to create an amazing work of fiction in the hopes of using it to generate a ton of revenue, and they only get bad reviews and legal entanglements in return.

How dare the courts slam these upstanding fiction writers for doing such a great job!
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Anonymous Coward, 3 Feb 2014 @ 3:36pm

and when will we read what the full awards against the 'Prenda boys' are?
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Anonymous Coward, 3 Feb 2014 @ 3:36pm

Wow
just wow. that stupidity beyond belief
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Anonymous Coward, 3 Feb 2014 @ 3:39pm

Re:
I was thinking the very same thing.

Every action these guys take screams "Lock me up and throw away the key." And yet, they are continuously stringing together one middle-finger-extended act after another. Isn't it time someone says ENOUGH and pulls the plug on them?
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Anonymous Coward, 3 Feb 2014 @ 3:42pm

It takes considerable time for the courts to wise up, especially when it is officers of the court that are the problem. Then it takes more time after it is realized to dot the i's and cross the t's.

That is surely what Judge Darrah has done. He has centered on the behavior that had worked so well as a distraction from the main issues early on in other courts. There is no longer room for doubt in the court's eyes.

This is Prenda getting hung out to dry and well they deserve it.
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Rikuo (profile), 3 Feb 2014 @ 3:43pm

Re:
If this doesn't make it into the funniest comments, then there is no hope for the human race.
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Namel3ss (profile), 3 Feb 2014 @ 3:46pm

This whole Prenda saga is like a giant Fuck You to the entire legal system. They're saying we can be complete douchebags to anyone and everyone, lie cheat & steal, and there ain't a goddamn thing you or anyone else can do about it.

Where in the blue fuck is the IRS when you actually NEED them?
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Anonymous Coward, 3 Feb 2014 @ 3:50pm

This is becoming less and less an indictment of Prenda and more and more an indictment of the various state bar associations, who still haven't applied any sanctions or disbarred anymore. Someone should have been disbarred by now, for Christ's sake.
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Jay (profile), 3 Feb 2014 @ 3:57pm

I have to say, I really like it when Prenda stuff comes up. On a bad day, it cheers me up, and on a good day, it's like a cherry on top of a freshly-made sundae.
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Anonymous Coward, 3 Feb 2014 @ 4:16pm

On the one hand, it's nice that the courts are catching on. On the other hand, what took them so long? They had to wait for a nice wagon to jump on?
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Anonymous Coward, 3 Feb 2014 @ 4:24pm

Re:
Given how many cases they are part of, I think it will take a long time before the last penalties are handed to them. Live by the court, die by the court and all that!
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James Burkhardt (profile), 3 Feb 2014 @ 4:29pm

Re:
because a judge can not unilaterally disbar a person. they do not have that power. the state/federal bar needs to do that. and that process is slow.
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Anonymous Coward, 3 Feb 2014 @ 4:47pm

Copyright enforcement's best and brightest; the heroes of out_of_the_blue, average_joe, Just Sayin' and darryl cleave their names in the glorious legacy of IP protection.
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Sunhawk (profile), 3 Feb 2014 @ 4:53pm

Re:
To be honest, I kinda feel that the judges are just trying to see just how deep Prenda's willing to dig.
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Sunhawk (profile), 3 Feb 2014 @ 4:56pm

Re:
Oh, the IRS has, I believe, already been forwarded some notes from (I believe) Judge Wright.
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That Anonymous Coward (profile), 3 Feb 2014 @ 5:21pm

Re:
I think they have been keeping the total on the wiki...
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That Anonymous Coward (profile), 3 Feb 2014 @ 5:23pm

Re: Re:
Judge Wright sent notes to lots of places, Other Judges have sent more notes....
And if IP address hits are to be believed they are looking at the massive amounts of data available online about the Pretendateers...
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That Anonymous Coward (profile), 3 Feb 2014 @ 5:26pm

The wheels on the justice go round and round, round and round, round and round. The wheels on the justice go round and round AND GRINDS THEM INTO A FINE POWDER REALLY SLOWLY!

Don't mind me one the one hand happy to see them sanctioned, YET AGAIN, on the other it saddens me that more thunderbolts have now rained down from the various courts with current and appeal cases before them.
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Anon E. Mous (profile), 3 Feb 2014 @ 5:50pm

The thing about the Prenda gang is that when they write motions or submit briefs to the court that are chock full of BS (to put it lightly) that they seem to believe everything they put in is fact.

Steele, Hansmeier and Duffy have for so long inserted fiction into their case filings that I don't think they can separate fiction and reality any further.

They all used to know where the line was on right and wrong within their profession, the problem is that the endless pursuit of cash whether made illegally or not has blurred the line for them.

There is no way any of the Prenda gang can say this is a one of occasion with regards to the pron suits. The Prenda gang has done this with the class action objection scheme, and the latest in the ADA scheme.

So the fact that they are all about going after settlement cash because their is very little risk and big reward means they won't stop, until they are rattling the bars in their cell.
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G Thompson (profile), 3 Feb 2014 @ 5:59pm

I'll just leave this here now.. expresses my sentiments better than anything else

http://25.media.tumblr.com/tumblr_l82ajkXpht1qzufnjo1_500.jpg
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That One Guy (profile), 3 Feb 2014 @ 6:33pm

Re:
If memory serves, prior to this latest award for fees, the amount they owe is something in the range of half a million in fees/fines so far.

Also, to the best of my knowledge, they have yet to pay so much as a single dollar of it, which shows just how toothless such sanctions/fines really are, assuming the ones being sanctioned are getting the high-court treatment, whether through money or connections(or in this case knowing the system).
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Anonymous Coward, 3 Feb 2014 @ 7:05pm

I am so glad that I switched from popcorn to peanuts for these stories.
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That Anonymous Coward (profile), 3 Feb 2014 @ 7:58pm

Re: Re:
nono I think Steele settled one of the smaller ones, and I think a CAND case they paid up on...
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That Anonymous Coward (profile), 3 Feb 2014 @ 8:00pm

Re:
Remember these are the same legal minds that gave us
- Any fraud on the court is moot now.
&
- Should ignore the CA ruling because Gay Marriage & Hackers.
&
- We didn't do this, and even if we did so what?
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CK20XX (profile), 3 Feb 2014 @ 8:34pm

Reminds me of some tabletop roleplaying sessions
Prenda Law seems to be bent on trying to win via metagaming and rules lawyering, thinking that they can get anything they want just by outsmarting the GM at his own game. But rule number 1 is: The GM is always right.
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Anonymous Coward, 3 Feb 2014 @ 9:05pm

They must be thinking that since they already made $two million working this scam, they might as well keep trying to milk it for as long as possible and hope there are even more suckers they can pull the wool over.
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Anonymous Coward, 3 Feb 2014 @ 9:07pm

Re:
You basically have to act like Jack Thompson acted, and even that took years.

Or mingling client funds and attorney funds, aka essentially embezzle from your client's funds. That's a lot harder to prove though, especially without a pissed off client to raise the issue.
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That Anonymous Coward (profile), 3 Feb 2014 @ 10:28pm

Re: Re:
Lutz testified on the stand in GAND that AF Holdings was never paid and was broke. He has moved onto another area and started a new trust... waiting for that shoe to drop.

This means every cent ever collected for the alleged client was never given to the client. There was no accounting of the funds and adds some credibility to the financials that Gibbs submitted to Judge Wrights court.

So Prenda is no more and magically penniless as the sanctions roll in. AF Holdings is broke. And all of the lawyers are trying to claim they had nothing to do with any of this.

There is much worse than comingling the clients funds into the business accounts.

Expect Lutz to get worried and make noise soon, they are trying to throw another local under the bus again and AFH is no longer represented in GAND and was told directly in person by the Judge they needed a lawyer when they return to continue the sanctions hearing. Who knows by then maybe they will find the original signed assignments no one is able to find.
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That Anonymous Coward (profile), 3 Feb 2014 @ 10:29pm

Re: Reminds me of some tabletop roleplaying sessions
they couldn't outsmart a bunch of 'kids' online, they have no chance against a Judge.
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CK20XX (profile), 3 Feb 2014 @ 11:21pm

Re: Re: Reminds me of some tabletop roleplaying sessions
Yeah, but I'm personally amazed at every technicality they've been trying to throw in the judges' path. They did it with moxie at first, but now it's become beyond desperate as they try to find any one procedural error that could get the cases against them dismissed.

It's like we're watching the explosion ending in The Stanley Parable play out. "Oh, dear me, what�s the matter, Stanley? Is it that you have no idea where you�re going or what you�re supposed to be doing right now? Or did you just assume when you saw that timer that something in this room was capable of turning it off? I mean, look at you, running from button to button, screen to screen, clicking on every little thing in this room! These numbered buttons! No! These colored ones! Or maybe this big, red button! Or this door! Everything! Anything! Something here will save me! Why would you think that, Stanley?"
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Anonymous Coward, 3 Feb 2014 @ 11:28pm

Re:
The wheels of justice grind glacially, but they do grind. You don't want these chuckefucks to get free on a technicality, do you?
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Anonymous Coward, 4 Feb 2014 @ 12:50am

Re:
"They're saying we can be complete douchebags to anyone and everyone, lie cheat & steal, and there ain't a goddamn thing you or anyone else can do about it."

So, they're the lawyer equivalent of the MPAA and RIAA when they push for new laws?
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David, 4 Feb 2014 @ 1:17am

So what?
As long as their whole scam operation pulls in more money than they expend, they are getting rewarded. And since rather few people are willing to go to court over this, they can run this "fuck you, judge" game for quite a while at a net benefit. The processing rate of sanctions means that they can give courts the finger for as long as they like and come out ahead.

The only thing that may stop them is jail time with barred outside communication. If you allow them to send letters, they will continue their business while living on the government's expense.

There are too many paying suckers for them to be ever required to stop just because of sanctions.
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Anonymous Coward, 4 Feb 2014 @ 4:50am

Re:
The wheels on the justice go round and round AND GRINDS THEM INTO A FINE POWDER REALLY SLOWLY!

As long as they are slower than Death's unbending sickle reaching everybody eventually, where is the point?

They will have died of old age after a long life spent in happiness before justice catches up.
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Dreddsnik, 4 Feb 2014 @ 5:05am

Re:
I'm afraid we will all be dead of old age before one thin dime cones worming it's way out of the pockets of these vermin.
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Anonymous Coward, 4 Feb 2014 @ 5:26am

Re:
The justice system is broken, Why lock up some educated wealthy crooks when it is easier to lock up poor, uneducated and misguided youth?
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Pragmatic, 4 Feb 2014 @ 5:31am

The Prenda boys are coming
The judge presents his summing
The whole damn farce unravels
But they continue travels
The wheels of justice turning
And AF Holdings burning
But Prenda keeps on wriggling
And that is why we're giggling...

With apologies to the Vengaboys. If I can't get it out of my head, neither shall you. Muahahahahaaa!
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Anonymous Coward, 4 Feb 2014 @ 8:21am

Re:
Disbarment typically takes 12 to 48 months, unless the attorney in question doesn't fight. Also, the early stages are usually confidential.

My money's on federal disbarment in fall 2014, with various state disbarments trickling in in 2015 and 2016.

Yes, the process is too fucking slow. A lot of jurisdiction can run a murder trial faster than a disbarment.
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Anonymous Coward, 4 Feb 2014 @ 8:30am

Re: Reminds me of some tabletop roleplaying sessions
I think you're partially right about the "gamesmanship". More fundamentally, I think at least one of the Prenda players is a narcissistic sociopath who doesn't realize that successful lying requires a certain minimal level of trust, and with that trust gone, all lies are transparent. (And perhaps he doesn't see them as lies, but as plays in the game.)
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Anonymous Coward, 4 Feb 2014 @ 9:16am

Does anyone else get the feeling Prenda are just stalling for time and have something planned long-term?

Perhaps buying time to launder money or after the 300th insane lawsuit...actually plead not guilty by reason of insanity (after burying the suitcase of cash of course!)
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Steve Messina (profile), 4 Feb 2014 @ 12:02pm

Wait for the movie
Next move after the legal dust settles... Hollywood makes the Prenda story into a film. Then watch Duffy and the MPAA fight over the copyrights. Rock meets Hard Place.
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Anonymous Coward, 4 Feb 2014 @ 12:59pm

A new trust?
He has moved onto another area and started a new trust
Whoa, what?
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WDS (profile), 4 Feb 2014 @ 2:16pm

Re: Trust
While I'm sure "a new company in a new industry" means a new trust in some tax haven, I don't believe Lutz actually said that.
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THE MIGHTY DORMAMMU (profile), 4 Feb 2014 @ 5:32pm

Re: Re: Reminds me of some tabletop roleplaying sessions
I'd say more than one is a narcissistic sociopath.
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THE MIGHTY DORMAMMU (profile), 4 Feb 2014 @ 5:34pm

Re: Reminds me of some tabletop roleplaying sessions
When I used to run games at GenCon, there would always be at least one group that TPK'd halfway through the scenario and spent more time pointing the fingers at each other than trying to solve the posed challenges. The Prenda gang is a lot like that.
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THE MIGHTY DORMAMMU (profile), 4 Feb 2014 @ 5:37pm

Re: Re: Reminds me of some tabletop roleplaying sessions
Depends on the judge, some judges are dumber than the Prenda gang.
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That Anonymous Coward (profile), 4 Feb 2014 @ 6:04pm

Re: Re: Trust
2 live people in the courtroom reporting the same fact stated on the stand.
I trust them more than Pretenda.
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That Anonymous Coward (profile), 4 Feb 2014 @ 6:05pm

Re: Re:
maybe that is why I am on a mission to make them miserable for the rest of their days.
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That Anonymous Coward (profile), 4 Feb 2014 @ 6:09pm

Re: Re: Re: Reminds me of some tabletop roleplaying sessions
Several of them have opted to abdicate their responsibility to punish them, assuming an order from another court alerting other authorities should be enough.

When all is finally said and done, someone should walk back through the facts and point out each and every failure in the law, the legal profession, the judiciary and make changes.
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btrussell (profile), 5 Feb 2014 @ 2:18am

Re: Re:
They should be behind dis, dis, dis, dat and dis bar with his new roomy, Ben Dover.
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btrussell (profile), 5 Feb 2014 @ 2:20am

Re: Re: Re:
For lying to the court.

Most of us here would be.
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WDS (profile), 5 Feb 2014 @ 8:10am

Re: Re: Re: Trust
My point was those two live people reported that he said he was starting "A new company in a new industry" They did not report that he said he was starting a new trust. Like I said, it probably means he is starting a new trust, but he just said he was starting a new company, unless you are reading different reports than I read of FCT.
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WDS (profile), 5 Feb 2014 @ 8:27am

Re: Re: Re: Trust
If I am going to correct you for imprecision, I should correct myself as well. The statement as reported by both Oralia and Kat was "a new BUSINESS, in a new industry"
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THE MIGHTY DORMAMMU (profile), 10 Feb 2014 @ 7:25pm

$26K In Fees Sought
http://madisonrecord.com/issues/310-defamation/262786-defense-attorneys-seek-more-than-26k-in-fees-f rom-prenda-duffy
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Anonymous Coward, 22 Mar 2014 @ 9:40am

Shari is apparently still in the running for a job with CPD. What the heck? Shouldn't the fact that your husband has a chance of going to federal prison bar you from becoming a cop?
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