Next Shoe Drops For Prenda's Paul Hansmeier: Minnesota Law Board Seeks To Disbar Him

from the couldn't-happen-to-a-more-deserving-person dept

Well, well. In August, we saw that the Illinois Attorney Discipline Board finally decided to file a complaint against Team Prenda front man, John Steele. The complaint made it quite clear that the board had been spending a lot of time going through the fairly long list of questionable activities by Team Prenda in a variety of lawsuits across the country. If you somehow missed the Prenda saga, it was a group of copyright trolls who were shaking down lots and lots of individuals, to the point that they apparently decided to cut out the middleman, set up their own fake company, seed porn films themselves and then hide behind various "trusts" and offshore corporations. It was also pretty clear from the Illinois complaint that the board was planning to file a similar thing against the only "official" partner in Prenda, Paul Duffy... but Duffy had passed away just about a week before the complaint came out.

That left the third of the Prenda triumvirate, Paul Hansmeier, who had taken his skills for copyright trolling into a new business: ADA trolling of small businesses. Hansmeier would go around to small retail businesses in Minnesota and sue them for minor ADA violations, and just like with the Prenda scam, would demand a payout to drop the lawsuit. The whole thing was super scammy, leading small businesses who were just making ends meet to shut down in some cases. At the same time, Hansmeier has still been dealing with the aftermath of the various Prenda lawsuits where multiple judges around the country have demanded that he and Steele pay attorneys' fees for the people they sued on false pretenses. Hansmeier has been trying to avoid all of this by declaring bankruptcy. That hasn't been going all that well (more on that in a minute), but now he also has to deal with the possibility of being disbarred in Minnesota.

Yes, it looks like a similar disciplinary board to the one that went after Steele in Illinois, is now targeting Hansmeier in Minnesota. The Office of Lawyers Professional Responsibility has filed to take disciplinary action against Hansmeier, including the possibility of having him disbarred. The complaint goes through a number of reasons that Hansmeier deserves discipline and kicks off with the Spencer Merkel affair. If you don't recall, Merkel was one of the people sued by Team Prenda, who then revealed that he had originally agreed to take a dive in a Prenda lawsuit. Specifically, he had been caught in a Prenda trolling operation, and agreed to be sued and that he would cough up details (i.e., IP addresses/log files) as part of "discovery" in the lawsuit against him, and then the lawsuit would be dropped. It was a fairly transparent way for Prenda to get around the fact that courts had been blocking its discovery efforts in other cases. Just find a willing patsy who doesn't fight it, and get a new list of IP addresses to shake down. Except that Prenda screwed up, and sued him from a different company than promised and then went after him again later, leading him to reveal the whole thing.

Now, in the disciplinary action, the Minnesota Lawyers Professional Responsibility board reveals some more details of how Hansmeier actually recruited Merkel's lawyer, promising to get her another paying client in a different matter down the road as payment, and then setting up the whole operation. In other words, they have pretty detailed confirmation that the Merkel and his attorney had agreed to this deal... and then Hansmeier flat out lied in court after Merkel told the court about the deal:

At the January 25 hearing, respondent falsely state that there was no agreement with Merkel to settle the claims against him, stating:

I think it's very natural for a Defendant to want to say that this case is settled and there's no reason for it to continue. But again, if there's an agreement that he's going to be exonerated from liability, I would expect to see something in writing. I don't think I would -- well our client is [sic] not agreed to settle the matter I guess is the bottom line.

The filing against Hansmeier is filled with examples of him moving money around and misrepresenting finances over and over again. For example, as the Merkel case went south, Hansmeier first transferred $65,970 from his current firm "Alpha Law" to his new firm "Class Action Justice Institute" (which he later used for another similar type of sketchy shakedown game involving bogus class action lawsuits. Then he transferred another $80,000 from Alpha law to his personal bank account... and then shut down Alpha, telling the state that "there are no pending legal, administrative or arbitration proceedings by or against the limited liability company..." completely ignoring that Alpha was on the hook for attorneys' fees in the Merkel case.

Then there's the whole Monyet, LLC saga, that has been discussed before. Monyet was a trust set up by and controlled by Hansmeier, though he continually insisted he had no control over it or gave just weird nonsensical answers about it. It appears that he even lied about Monyet under oath:

On June 30, 2014, respondent testified under oath at a judgment debtor's examination before the district court. When asked about a May 3, 2011, $75,000 check from Alpha Law Firm to Monyet, LLC, respondent testified as follows:

Q. Do you know what Monyet, LLC, is?

A. It's presumably a limited liability company.

Q. I see you're the signatory to the check and you're also the signatory on the back of the check. You don't know what Monyet, LLC is?

A. To the best of my recollection, the Monyet, LLC entity is simply an account associated with estate planning but I don't know -- the reason. I can't tell you how it operates within the whole estate planning scheme is because I did not set up the estate planning myself that's something that's well beyond my expertise. * * * A. I mean yeah and that's my testimony that Monyet distributions were made for estate planning purposes not for Alpha Law Firm.

Q. Whose estate planning then?

A. It's just setting up a trust for well now my son I guess he would be the beneficiary of it.

On July 2, 2014, respondent again testified under oath at a judgment debtor's examination regarding Monyet, LLC, as follows:

Q. And it's [Monyet, LLC] a limited liability company organized in the State of Delaware, is that correct?

A. I don't know where it's organized. I don't know if that's correct or incorrect.

Q. Well who set up Monyet, LLC?

A. An attorney.

Q. On whose behalf?

A. It -- I'm not aware of the circumstances of on whose behalf it was.

Q. Was it at your direction?

A. I'm trying to be precise here because I've botched this once before. The way I would describe it to be most precise and hopefully most accurate, is that it was set up as a part of the trust and estates planning and that's how I describe it.

Q. Trust and estates planning for whom?

A. I guess I would describe it as my family.

Q. And who makes up your family? * * * A. Okay. Well my family consists of me, my wife and my baby son.

Q. Do you know where this money is located?

A. I do not.

Q. Well how would you ever as benficiary of this money ever get any of it?

A. I don't think I could get any of it.

That last line is kind of important. Because, the board notes, Hansmeier himself is identified as the manager of Monyet, LLC on the operating agreement for the trust. Later, Hansmeier himself set up a brokerage trading account at Scottrade for Monyet, listing himself as the manager. He later did the same with TCF Bank. And then there's the fact that not long before the hearing where he stated all of the above, Hansmeier was actively moving money around with Monyet.

On June 28, 2013, respondent transferred $10,000 from Monyet to Livewire Holdings, LLC, a company in which he was an investor.

From May 2013 through at least May 2014, respondent signed at least 19 authorizations directing Scottrade to make wire transfers from the Monyet, LLC account to various entities totaling $590,033.50.

It then lists out those transfers, including a bunch to his other firm listed above "Class Justice" and a bunch to his wife, including the largest single transfer of $175,000 on November 22, 2013. It's pretty incredible to argue that you barely even know what the trust is for, where it's set up, or who's in charge of it when you're the one managing it and shifting money around with it all the time. It's especially incredible to do that multiple times while under oath. But, that's Paul Hansmeier for you.

From there, the complaint discusses more sketchy behavior by Hansmeier in the Lightspeed case. Once again, it involves Hansmeier trying to dance out of being in trouble by lying under oath. In this case, it involved the efforts seeking attorneys fees against him in the Lightspeed case, where Hansmeier insisted that he had not been notified of the motions against him, claiming that he was working for Alpha Law Firm rather than Prenda. The judge called him on it, noting that it was clear that he worked with Prenda, and Hansmeier insisted that he did not and had never made an appearance for Prenda. The complaint then goes on to list a whole bunch of documents that Hansmeier had signed, claiming to work for Prenda Law.

Also: "From December 2011 through February 2012, respondent issued and signed checks drawn totaling more than $41,000 on the Alpha account that were used to pay Prenda's payroll obligations." So, yeah.

And also:

From December 2011 through June 2012, Prenda paid at least $350,107.20 directly to respondent. From March 2012 through November 2012, Prenda paid at least $1,011,000 to Under the Bridge Consulting, a company in which respondent had a 50% ownership interest. Under the Bridge Consulting, in turn, paid to respondent at least $480,000 of funds paid to them by Prenda.

So, yeah. The claim that Hansmeier has nothing to do with Prenda... and claiming so under oath... perhaps not so smart. Later in the filing, in discussing another case, it notes similar games concerning Hansmeier pretending to have no role with Prenda.

Q. Did you ever work for Prenda Law, Inc.?

A. No.

Q. You were never attorney of record with Prenda Law, Inc.? You were never of counsel there?

A. I guess I'd have to go back over the various appearances that I filed. I don't recall anything specifically. Does that mean that there's not one on record somewhere, I can't say with exact certainty. * * * Q. So Steele Hansmeier was formally dissolved and then as soon as you dissolved Steele Hansmeier, did you at that point work for Prenda Law at all?

A. Not as an employee, no.

Q. In what capacity?

A. Part of my role -- I guess I had no formal affiliation with Prenda Law. I don't believe I can point to any specific affiliation. Part of it we wanted to aid Prenda Law in transitioning from, you know, Steele Hansmeier operating the cases and whatnot. Prenda Law was appearing in a lot of the cases, so there's a natural, you know, kind of aid them, help them facilitate the transfer.

Q. So who was responsible for handling the financial aspect of the transition?

A. I believe Mr. Steele would have been in charge of managing -- the handling of funds.

As the filing notes, this was "false and misleading."

Meanwhile, the Minneapolis Star Tribune, who first publicized this new development, also reports on the fact that Hansmeier's attempt to hide in bankruptcy isn't going so well either:

As Hansmeier’s creditors closed in, he filed for bankruptcy protection seeking to reorganize more than $1.5 million in debts, taxes and court sanctions. He has asked the federal bankruptcy court to let him restructure his debts so that he can move on with his life.

Neither his creditors nor the bankruptcy trustee think that should happen. They filed more than 500 pages of documents late last week objecting to his plan, arguing that Hansmeier filed for bankruptcy protection “in bad faith.”

U.S. Bankruptcy Trustee Daniel McDermott characterizes Hansemeier’s financial disclosures as incomplete and misleading. McDermott alleges that Hansmeier made fraudulent transfers of assets to his wife, Padraigin Browne, and that they’re selling their condo in The Carlyle, a downtown Minneapolis luxury high rise, without court approval.

A few years ago, concerning Hansmeier's partner in crime, John Steele, I noted that he reminded me of people who incorrectly think that they're smarter than everyone else, and that they can just talk their way out of their own actions when they're caught trying to "outsmart the system." It would appear that Hansmeier is in that same camp. No wonder they paired up.

Filed Under: discipline, john steele, minnesota, minnesota bar, paul duffy, paul hansmeier, spencer merkel
Companies: alpha law, alpha law firm, class action justice institute, lightspeed, prenda, prenda law

Prenda Loses Again: Minnesota Appeals Court Upholds Sanctions

from the we're-waiting-for-the-truth-to-come-out dept

Almost exactly a year ago, we wrote about Team Prenda being ordered to pay another $64k in attorneys' fees in one of its many cases. This one involved Prenda, along with Paul Hansmeier's "Alpha Law Firm" and local Minnesota lawyer Michael Dugas supposedly representing a company named Guava, suing a bunch of folks in Minnesota state court. The case had taken quite a twist when defendant Spencer Merkel revealed how he'd made a deal to take a dive in the case. That is, he'd been hit with a standard Prenda threat letter concerning "Hard Drive Productions" content, and when he told them he couldn't pay, someone from Prenda made a "deal" with him in which he'd get sued, and would agree to give up hit Bittorrent logs during discovery and then have the case dismissed. Team Prenda needed the logs to find more people to shake down, and most likely wanted to use the case as an "example" that it was okay for them to get logs through these very, very questionable lawsuits.

Except, somewhere along the way the court noticed that it was a bogus lawsuit, and that resulted in the order to pay $64k. Team Prenda appealed, and... have lost again as the Minnesota state court of appeals has, like nearly every other court, seen right through the Prenda scam.

We have carefully reviewed the record, and we conclude that the district court did not abuse its discretion in imposing attorney-fee sanctions against appellants. The district court found that appellants initiated and pursued this litigation in bad faith, that the only purpose of the litigation was “to harass and burden Non-Parties through obtaining IP addresses to pursue possible settlement rather than proceed with potentially embarrassing litigation regarding downloading pornographic movies.” This is an improper use of the judicial system.

As per usual, Team Prenda throws a lot of crap at the wall, hoping something will stick. None of it does. First, they claimed -- as they always do -- a failure of due process. The court brushes that aside and shows that there was plenty of due process, even if some of it could have been slightly clearer. Next, Team Prenda claims there's not enough evidence for "bad faith." The court has no problem rejecting that one quickly:

Although the record in this case was not fully developed because appellants voluntarily dismissed the underlying action before it could be considered on the merits, it includes sufficient evidence to support the district court’s finding. The evidence includes Merkel’s affidavit testimony that he received a letter from Prenda Law threatening suit on behalf of its client, Hard Drives; he made arrangements with someone named “Michael” or “Mike” at Prenda Law for an alternative settlement arrangement, including his consent to be sued in Minnesota; Prenda Law referred him to pro bono counsel; Hard Drives would dismiss the suit after Merkel provided his BitTorrent log; and he was surprised to be sued by Guava, rather than Hard Drives. The evidence also includes Morrison’s testimony that Merkel was referred to her by Hansmeier and Dugas; that she expected a lawsuit to be filed by Hard Drives, rather than Guava; and “[t]here’s been some bait and switch you might call it in this case.” And the evidence includes the facts that (a) despite repeated questioning by the district court regarding Guava’s corporate status, appellants failed to file a certificate of authority or provide any evidence regarding Guava’s incorporation, its officers, or its business operations, and (b) despite Merkel’s alleged involvement in a hacking conspiracy, appellants sought no discovery from Merkel during the pendency of the litigation. This evidence, taken together, amply supports the finding that appellants had no good-faith basis for this litigation....

Appellants assert that the district court erred by relying on the communications between Merkel and Prenda Law relating to claims by Hard Drives, arguing that there is no evidence of a connection to this action. But the district court found a connection, and there is evidence in the record to support that finding. “Michael” at Prenda Law offered to refer Merkel to Minnesota attorney, Morrison. Morrison testified that she received the referral from Hansmeier and Dugas; Hansmeier filed a notice of appearance identifying himself as “of counsel” to Prenda Law, and Dugas submitted a declaration in this matter identifying himself as the only “‘Mike or Michael’” at either Alpha Law Firm LLC or Prenda Law, Inc.” Dugas denied representing Hard Drives or being involved in the settlement agreement between Merkel and Hard Drives. But the district court rejected this assertion as incredible, and we will not disturb that credibility determination.

There's a funny bit where Team Prenda tries to claim that originally the court thought the case was brought in good faith, so the later bad faith determination shouldn't count. The appeals court is, again, not impressed:

We reject this argument as circular and unpersuasive. The district court’s initial determination that Guava demonstrated that the information it sought was relevant and material did not preclude it from later—on being made more fully informed of the facts—finding that appellants were acting in bad faith.

Team Prenda also protested the $64k amount. But, again, their arguments fall (mostly) flat. The court basically says the amount is enough, as is the requirement that the lawyers file a $10k bond before filing any more lawsuits, but there was one procedural issue, concerning filing a Minnesota "certificate of authority" that was improperly presented in the lower court ruling, so the appeals court fixes that. It's a meaningless issue, though.

Finally, Team Prenda argues that sanctions can't be applied because they had voluntarily dismissed the lawsuit already. No go:

Lastly, appellants assert that the district court was precluded from awarding sanctions after the action had been voluntarily dismissed, citing such a limitation in the district court’s authority [citing laws and caselaw that say] “motions for sanctions brought after the conclusion of the trial must be rejected precisely because the offending party is unable to withdraw the improper papers or otherwise rectify the situation”). But the district court’s inherent authority to impose sanctions is not so circumscribed. See, e.g., Brickwood Contractors, Inc. v. Datanet Eng'g, Inc., 369 F.3d 385, 389 n.2 (4th Cir. 2004) explaining that “failure to comply with the safe-harbor provisions would have no effect on the court’s authority to . . . impose sanctions within its inherent power”).

So, once again, an appeal by Team Prenda falls totally and completely flat. And they need to pay up.

Filed Under: michael dugas, minnesota, paul hansmeier, spencer merkel
Companies: af holdings, alpha law firm, guava, hard drive productions, prenda, prenda law

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

from the not-going-well dept

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."

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

Team Prenda Ordered To Pay Yet Another $64k In Yet Another Case

from the it's-adding-up dept

The bill for Team Prenda to pay out to opposing attorneys keeps getting bigger. Over in Minnesota in Guava LLC v. Merkel, a case that had fallen off the radar for many, the judge has ordered Guava, local lawyer Michael Dugas and Paul Hansmeier's Alpha Law Firm to cough up $63,367.02 in attorneys' fees. If you don't recall, Spencer Merkel, the defendant in this case dropped quite a bombshell in this case back in January, in which he revealed that he had agreed to take a dive for Prenda. As his declaration noted:

Michael offered me a settlement deal. The deal consisted of the following parts:

a. I would agree to be sued.

b. Prenda would ask for, and I would provide, a copy of the bit-torrent log from my computer. The excuse for gathering this log is that it would corroborate the IP address evidence that they had already gathered through the use of Prenda's sottware.

c. Prenda would, upon receipt of the information, dismiss the case against me.

4. In discussion of the settlement, Michael stated that he did not know of any pro bono attorneys in Oregon, but could provide the name of an attorney who might take my case in Minnesota. Because I cannot afford to pay an attorney, I agreed to be sued in the state of Minnesota. I then retained my attorney, Trina Morrison, based on the information provided to me by Prenda Law.

In that same filing, he also notes that while he was making this deal all of the communication was from "Prenda" law, and he was surprised when it was Hansmeier's Alpha Law Firm that actually sued.

It would appear that the judge in this case, Tanya Bransford, has a pretty good understanding of the scam being pulled as well, because she also says anyone associated with these firms are no longer allowed to file these kinds of cases without first posting a $10,000 bond:

Plaintiff Guava LLC, Michael K. Dugas, Esq., Alpha Law Firm LLC and any of their agents, officers, directors, employees, representatives, affiliates, and successors, are hereby enjoined from filing any future civil action against the John Does or the ISPs, without first posting a bond with the Court in the amount of $10,000, or such other amount as the Court deems appropriate, and without first obtaining a certificate of authority from the Minnesota Secretary of State.

This is just the basic order in the case, though a full explanation is forthcoming. I imagine it will be a worthwhile read.

Filed Under: michael dugas, paul hansmeier, spencer merkel
Companies: alpha law firm, guava llc, prenda, prenda law

Paul Hansmeier Pops Up In Prenda Law Defamation Case, As Prenda Tries To Force It Back To State Court

from the twists-and-turns dept

Ah, the twists and turns of Prenda Law cases. While much of the focus has been on the big showdown in California, there are also the infamous defamation cases. As you may recall, three separate lawsuits were filed in state courts against Alan Cooper (John Steele's caretaker, who has accused Steele of identity fraud in signing his name to documents for various shell companies involved in Steele's copyright trolling operation), Paul Godfread, who is Cooper's lawyer, and a variety of anonymous internet bloggers and commenters. Two of the original lawsuits were filed in Illinois state court -- one with Prenda Law (the firm) as the plaintiff and another with Prenda's sole principal (or so they claim), Paul Duffy. Another was filed in Florida with John Steele as the plaintiff, though that one was quickly dropped by Steele himself (the rumor we've heard was that this was dropped after someone informed Steele of a fairly big procedural snafu concerning how defamation cases need to be filed in Florida).

As we noted, Cooper and Godfread quickly had the cases removed to federal court, which is a fairly common move. Defendants will often remove a case to federal court if they can, because generally speaking, federal courts have a lot more clear caselaw and precedent that the judges will follow, and (subjective statement here, but many agree with it) federal judges tend to just be better informed about the law and are somewhat less prone to wacky rulings. One common way to remove a case from state to federal court is by claiming "diversity," which is when the plaintiffs and defendants are in different states. That seemed like a no-brainer in this case, seeing as Cooper and Godfread are based in Minnesota, while Duffy and Prenda are in Illinois.

However, the latest filing in the case (as noticed by Raul, filed by Paul Duffy (yes, representing his own firm) claims that the case should be sent back to the state court. Here's where it gets tricky. The original complaint in the Prenda Law case, was filed on February 12th. However, on February 21st, Hansmeier notes that an amended complaint was filed, which also named Paul Hansmeier's own firm, Alpha Law Firm, as a plaintiff. While that complaint incorrectly claimed that Alpha Law Firm was organized under the laws of the State of Illinois it seems likely that was a sloppy copy-and-paste error in filing the amended complaint. Either way, the amended complaint correctly notes that Alpha Law Firm's principal place of business was in Minnesota.

This, Duffy argues, kills the diversity claim and means that the federal court has no jurisdiction. I am, of course, not a lawyer, and my expertise in the nuances of federal court jurisdiction is limited, but from my understanding of these things, this is a case where Duffy may be legally correct, though there's all sorts of sleaziness associated with this. The general rules for removing to federal court under diversity includes that no plaintiffs live/work in the same state as any defendants. If Alpha Law is in the same state as Cooper and Godfread (as they are), they can argue that there is no diversity, and a federal court very likely could agree. Of course, it's not difficult to speculate that some of the Team Prenda folks realized this after the initial filing, which is what inspired the decision to suddenly add Alpha as a plaintiff, solely for the point of killing the diversity claim. There are situations in which courts will claim that some parties have been added to a lawsuit as "nominally" or "fraudulently joined" defendants, solely for the purpose of avoiding a diversity claim. Perhaps Cooper and Godfread's lawyer can make that claim, but it's a crapshoot whether or not the court will buy it.

Of course, aiding the claim that this is a bogus addition solely to block a diversity claim is the fact that it is not explained anywhere in the amended filing, why Alpha Law was added as a plaintiff to the lawsuit. None of the statements quoted in the filing which the plaintiffs claim to be defamatory actually refer to Alpha Law. Hell, none of them even refer to Paul Hansmeier. The only Hansmeier mentioned is Peter, Paul's brother. Nearly all of the statements mention Prenda, not Alpha. Reading the amended complaint, it's not at all clear what Alpha Law is even complaining about, since the comments do not reference it.

There are other oddities here as well. The lawyer representing Cooper and Godfread, Erin Russell, never acknowledges Alpha as a plaintiff in any of her filings. Duffy's filing argues that this is a purposeful omission to hide this fact for the sake of getting diversity, and also claims that he emailed Russell the day her original Notice of Removal was filed to point her to the amended complaint. If this is true, then that could be seen to reflect poorly on Russell. Even if there are questionable motives behind adding Alpha, if the firm were legitimately added, Russell should have acknowledged that. That said, given how many times we've seen the crew of folks around Prenda make statements that were less than totally forthcoming about litigation they were involved in, I'll reserve judgment until we see more details and the inevitable reply from Russell.

Duffy even seeks legal fees in response to this, though that seems like a huge long shot.

It will be interesting to see what happens here, but there is a very real possibility that the judge might send this back to the state court for lack of diversity. Of course, while that's not ideal, it's hardly the end of the world. The case itself seems so weak, and there is so much other information now available concerning Prenda's actions, that I can't see the original case getting very far, even if it is stuck in a state court in Southern Illinois. On that note, Russell has already been trying to move the federal case from Southern Illinois to Northern Illinois arguing (quite reasonably) that no one involved in the case is from Southern Illinois at all, but Prenda/Duffy are based in Northern Illinois). It does make you wonder why the case was filed in st. Clair County in the first place -- other than that was also the state court that Prenda has used for some of its lawsuits. Still, this move reeks of playing legal games, for which Prenda is quite famous. It sometimes seems like there isn't a loophole they're unfamiliar with. In the long run, all this gamemanship isn't going to help them in the bigger cases concerning their conduct.

Filed Under: alan cooper, defamation, diversity, gamesmanship, jurisdiction, paul duffy, paul godfread, paul hansmeier, removal to federal court
Companies: alpha law firm, prenda, prenda law