Another Court Tells Prenda To Pay Up On Attorneys Fees

from the adding-up dept

It looks like the bill for Prenda Law is going up. Yet another court has now awarded attorneys' fees, telling "AF Holdings" (one of Prenda's shell companies) to pay $9,425. Of course, since Prenda still tries to deny that it controls AF Holdings, I'm sure they'll try to avoid paying up. It would be extra amusing if they suggested Alan Cooper should pay up, since that's the name that was signed on various AF Holdings' filings, but which many people believe was really signed by John Steele. Of course, since that whole "faking the name" thing flopped, it's now been Mark Lutz -- former paralegal/lackey of John Steele -- who has been "named" as the boss of AF Holdings. So, it sounds like Lutz should pay this one... Now the question is how long does it take Lutz to realize that Steele, Hansmeier and Duffy will probably leave him hanging out to dry as well?

Filed Under: alan cooper, john steele, mark lutz, nick ranallo, paul duffy, paul hansmeier, prenda
Companies: af holdings, prenda, prenda law

First Hand Account Of Judicial Smackdown Of Prenda In Minnesota

from the a-bit-of-confusion dept

Yesterday we had a story about how a judge in Minnesota, Judge Ann Alton, angrily accused Paul Hansmeier of fraud in the lawsuit filed by Alan Cooper against Prenda. There was some confusion by the judge about whether Cooper and Godfread were in on the fraud too, which seems to have made the judge less open to possible damages against Prenda. Either way, without a court reporter, Matthew Sparby, who was in attendance, wrote up the following first-hand account of what happened in the court room. It's definitely disappointing to see that the judge made a few bad assumptions about Cooper/Godfread, but good to see that she knew that Prenda has been up to no good.

I am not an attorney. I attended today's hearing out of curiosity and convenience. I happened to have an appointment across the street from the Hennepin County Government Center today and decided that it would be interesting to see the wheels of justice in motion first hand. As such, it is important to note that these are the observations of a layperson.

As the session started, Judge Alton announced that there was no live court reporter and that there was an audio recording being made instead.

Two other cases were called first, and then the Judge called Cooper vs. Prenda. She began by saying, "This one gives me a lot of pause." Then the attorneys introduced themselves.

Paul Godfread was present representing Alan Cooper (who was not in attendance) and Paul Hansmeier was present representing Prenda, et al. He sat alone at the table and I don't believe any other Prenda principals were in attendance.

Judge Alton then started off by addressing Hansmeier saying that it would appear he had a bit of a conflict relating to some findings of law, "[an] order from a US District Court Judge sanctioning you for fraud, among other things." She went on to say, "I'm not sure I should hear you at all." She asked Hansmeier if Morgan Pietz had filed the list of Bar Associations to which the Prenda principals were admitted as well as whether Pietz had sent copies of Judge Wright's order to all of the other Judges presiding over Prenda cases. Hansmeier replied, "I believe he did, your honor."

Judge Alton was clearly agitated going into this. In reference to the Prenda business model she said, "This is fraud, clear and simple." She also said, "I will be reporting this to the Lawyers Board." In fact, she would make a similar comment at least one more time at the end of the hearing. Still addressing Hansmeier, she went on, "Your involvement in this case is a TRAVESTY!" She added impact (both figuratively and literally) to that point by slapping her hand on the bench.

If I closed my eyes, I could have very easily assumed I was watching an episode of Judge Judy at this point. Judge Alton's passion and inflection as she admonished Prenda's behavior was, quite frankly, a tremendous surprise to me as a non-attorney. My discussions with actual attorneys after the hearing confirmed the abnormality of the scene.

In an attempt to defend their activities, Hansmeier referenced the the actions of the RIAA and MPAA. Judge Alton was unimpressed. She told him, "That doesn't mean you become your own zealot!" Further berating Prenda's pattern of mailing threatening settlement letters to alleged copyright violators, Judge Alton said, "You are guilty of fraud every time you send one of these letters." Hansmeier then began to reference the Jammie Thomas-Rasset case. Again, the Judge wasn't interested, interrupting with a curt, "So what?"

Now things got a little bit confusing. The Judge called Paul Hansmeier a fraud. Then she said that Alan Cooper is a fraud and that Paul Godfread may be a fraud as well. I looked to the person sitting next to me and the look on his face showed the same confusion. Quite humbly, Godfread told Judge Alton that he took exception to being labeled a fraud. He tried to clarify the situation but his message didn't seem to get through. In fact, for much of the hearing, Judge Alton was under the impression that Judge Wright's order actually implicated Alan Cooper as a Prenda Principal. Luckily this comes up again later.

As Godfread was explaining Cooper's actual position in reference to Judge Wright's findings, Hansmeier objected. He complained that there was no evidence to support the findings and said that they weren't given the opportunity to cross examine Cooper during the sanctions hearing in Los Angeles.

Throughout the hearing, Judge Alton would frequently refer back to Judge Wright's sanctions order, reading portions of it both to herself and out loud to clarify various points including asking where "Nevis" is. Godfread said it was an island in the Caribbean, most commonly known as an offshore tax haven. While he was saying this, Hansmeier was shaking his head.

The Judge continued to review the various exhibits filed with the case and Paul Hansmeier again raised the issue of not having been given the opportunity to cross examine Alan Cooper in L.A. Judge Alton glared at him saying, "That, right now, does not concern me."

She then turned her attention to Godfread saying, "You're not going to get any damages out of me. I don't give damages when everyone is a fraud." Again, she appeared to be under the impression that Alan Cooper was complicit in Prenda's actions. Godfread repeated his earlier assertions that Cooper was merely a caretaker for John Steele's property in Minnesota. The Judge then said, "Mr. Steele worked for Prenda Law which is running these phony lawsuits."

After reading further into Judge Wright's findings, Judge Alton finally identified the portion that clearly separated Alan Cooper from Prenda's actions and identified him as a victim of their fraud rather than a willing participant.

Unfortunately, this new realization didn't seem to alter Judge Alton's stance on refusing to grant any damages. Godfread decided to approach it from a different angle, though. In lieu of damages, he suggested that Judge Alton order Prenda to return all of the settlement money it had received over the course of its campaign. Judge Alton rejected that suggestion saying that it wouldn't be possible unless, via discovery or other means, they are able to determine how much money that actually is.

The Judge then took a moment to reiterate that Prenda's methods of threatening people are not allowed before moving on to the topic of service. This is, after all, a Default Hearing. Hansmeier repeated the assertion that Prenda never received service of the complaint. The judge looked through the folder in front of her and suggested that Godfread may not have properly served Prenda. She asked Godfread if he served them through publication. He said that he didn't, but told her that, as shown in his Affidavit of Service, he sent the complaint and the interrogatories via certified mail and provided a receipt from the US Postal Service showing that it was received by Prenda on March 18th. He also refers to the fact that Prenda DID respond to the interrogatories, so how can they claim they never received service of the rest of it? Judge Alton then said, "That will satisfy me."

Hansmeier then claims that Duffy received only the interrogatories and not the complaint, and that Godfread's receipt doesn't prove that the complaint was sent in that envelope. The Judge responded with, "Mr. Duffy's credibility is not good and he's not here."

Judge Alton then asked Godfread about other facts such as whether they have proof that Prenda was keeping the settlement money. Godfread said that Hansmeier himself admitted as much. Hansmeier responded saying, "That is categorically false."

The Judge then asked if Cooper had actually testified to the fact that he did not authorize the use of his name in the AF Holdings cases. Godfread confirmed that Cooper did testify to that. Then, talking to Godfread, Judge Alton said, "I can't find a conspiracy to harm him. I believe you but I can't find it."

She then made her order. She ordered that Prenda and its principals immediately cease using Alan Cooper's name, "and that's all. That's as far as I'll go."

In parting, she addressed Paul Hansmeier, once again saying, "I believe you to be in violation of a whole lot of rules." She then repeated her earlier statement that she was forwarding the case folder to the Lawyers Board.

And that was the end. Judge Alton then called a recess before the next case.

After leaving the courtroom, I sat down with another observer for a cup of coffee as we discussed how strange the hearing was. A few minutes later, Paul Godfread walked up and we chatted for a while about how the hearing had unfolded in such an unexpected way. He understandably lamented the lack of a damage award. When I told him that following all of this over the last several months has been educational, he expressed a fear of it being a poor source of education given how atypical these proceedings have been.

Still, I'm glad that I was able to attend today and I would encourage other members of the laity like myself to make an effort to observe these kinds of proceedings themselves. It was a truly fascinating experience.

Filed Under: alan cooper, ann alton, fraud, john steele, minnesota, paul godfread, paul hansmeier
Companies: prenda, prenda law

Angry Judge Tells Prenda To Stop Falsifying Alan Cooper's Signature; Calls It Fraud

from the another-failure dept

Looks like Prenda continues to have problems in court. In the lawsuit in Minnesota that Alan Cooper brought against Prenda and John Steele for fraudulent use of his name, it appears that Judge Ann Alton made fairly quick work of getting the whole thing off of her docket. Someone going by the twitter handle "J.P. Baggins" was in attendance, and says that the judge ordered Prenda to stop using Alan Cooper's name and brought the case to a close. There won't be any damages awarded, but it seems clear that the judge was not at all happy with Prenda. She referred to Paul Hansmeier, appearing for Prenda Law, as acting in a way that is "not appropriate for an attorney" while also claiming that what they had done was "fraud, pure and simple." She also told him that she believed him "to be in violation of a whole lot of rules" and she'll be reporting him to the lawyer's board (just one more to pile on, I guess).

Another person in the courtroom, Matthew Sparby noted that the judge was a bit confused at the beginning, apparently misreading Judge Otis Wright's infamous order to also implicate Cooper as well, and while that was eventually cleared up by Cooper's lawyer, Paul Godfread, Sparby thinks that may be why no damages were awarded.

She apparently also closed by telling Hansmeier to "never EVER send" fraudulent letters "EVER again" and noted that she was "offended this case is here" before abruptly ending the whole thing. Seems like another bad day for Prenda.

Filed Under: alan cooper, ann alton, falsified signature, john steele, minnesota, paul duffy, paul godfread, paul hansmeier
Companies: af holdings, ingenuity 13, prenda, prenda law

Hangin' With Mr. Cooper: Prenda's Fight Against Alan Cooper Flailing Badly

from the that-would-be-illogical dept

Prenda: the gift that keeps on giving. Late last week there was some movement in the ongoing fight directly involving Alan Cooper and Prenda. If you don't recall, Alan Cooper -- who was a caretaker for one of John Steele's homes -- claimed that Steele put Alan Cooper's name and signature on various documents, such as those suggesting that he was the person behind shell companies AF Holdings and Ingenuity 13 (two of the shell companies that Judge Otis Wright found were actually controlled by Prenda's principles, including John Steele, Paul Hansmeier and Paul Duffy). Prenda tried to handwave this issue away, but also refused to answer any basic questions about it. In response, Cooper sued both Steele and Prenda (remember this, it'll come up again).

In response, Prenda as a company, and Paul Duffy and John Steele as individuals, all sued Cooper (and his lawyer and anonymous internet commenters) for defamation in state courts in Illinois and Florida. Steele dropped the Florida suit (we believe due to a pretty big procedurial screwup), and the two cases in Illinois were removed to federal court. About this time, Steele called Cooper and left voicemails that are clearly bullying/intimidation attempts. It is, of course, a big legal no-no to directly contact someone (rather than their lawyer) who is suing you while litigation is ongoing, but Steele tried to get around this in the voicemail by claiming the call was not about Cooper's lawsuit against Steele (where Cooper was represented), but Steele's lawsuit against Cooper. Since he was also suing Cooper's lawyer, he knew that the same lawyer was unlikely to be able to defend Cooper in the same case, and in fact some filings in the case suggest that this point was made to his lawyer. Among the voicemails was this one:

Alan, this is John Steele again.

You have not responded or contacted me regarding litigation you're involved in. I know you've been served with a third lawsuit. And there are more coming. Don't worry about that.

Well, obviously, if I don't hear from you, I'm going to start filing for certain default motions and start getting relief that way.

I can assure you that just ignoring legal matters, it's not going to go away. I can guarantee you, I'm not going away.

So I highly recommend you at least, you know, follow the rules.... otherwise your life is going to get really complicated.

Cooper and his lawyer, Paul Godfread, then filed counterclaims in the two remaining defamation cases (one from Prenda and one from Paul Duffy who supposedly runs Prenda). Then Paul Hansmeier (named as one of the Prenda principles by Judge Wright), now representing Paul Duffy and Prenda, argued that the defamation case should never have been removed to federal court from state court, because his own law firm in Minnesota was added as a plaintiff in an amended complaint and you can't get "diversity" needed to remove from state to federal court if two opposing parties are in the same state. As we noted at the time, it seemed like adding Hansmeier's Alpha Law firm was a complete sham, because nothing in the amended complaint involved any defamatory statements towards Alpha Law firm.

Phew. So that catches you up to last week. A few interesting things then took place last week. First, on Monday, in the original case that Cooper had filed against Prenda and John Steele in Minnesota, Godfread asked the court for a default judgment because Prenda/John Steele had never replied. Note that Steels has been insisting that Cooper's claims are bogus and that this would all come out in court. If that were true, you'd think that he would have bothered to respond to the damn lawsuit. Also ironic: note above how Steele claimed he would go after Cooper for default. Godfread also points out that Steele and Prenda clearly knew about the case because of the lawsuits they had filed in response. So, they ask the court for a default ruling... and ask for the $4,641,000 that they estimate Steele and Prenda made via lawsuits using Alan Cooper's name.

That very same day, Prenda and Steele finally filed a response (as found by John Henry). The response is basically "we deny everything possible." Of course, as pointed out by Z.Y.U., Minnesota Law (MN R. Civ. P. 12.01) requires an answer within 20 days after service, and we're way, way outside of that.

Leaving that particular case aside for the moment, and jumping back to the Defamation case that Duffy and Prenda had filed back against Cooper and Godfread (where they amusingly and ridiculously claim that lawsuit over identity fraud was "completely unrelated"), Cooper and Godfread have hit back at Prenda's weak attempt to move it back to state court. They're both represented by Erin Russell and Jason Sweet -- two lawyers who have been fighting the good fight against Prenda for a while now. When Hansmeier first filed that attempt, we noted that Prenda's history of being less than forthcoming in its filing made me wonder if it was being somewhat misleading with that filing -- and I would reserve judgment until the inevitable reply was filed. And, yes, it suggests less than full honesty from Hansmeier.

First, it makes a strong case (as I had suggested) that Hansmeier's firm, Alpha Law Firm, was added for no other reason than to try to keep the case in state court and out of federal court. But, even more importantly, it points out that Prenda apparently mislead the court in getting the amended complaint filed. That's because to amend the complaint, Prenda would first need to ask the court for leave to amend, which it did not. Even worse, the lawyer representing Prenda, Kevin Hoerner, apparently convinced the court clerk that there was no need to take that important step because (he claimed) the defendants (Cooper and Godfread) had not yet been served. Except (1) they had and (2) Prenda knew they had because John Steele called Godfread hours after they had been served (and days before this "amended" complaint was filed) and left the following voicemail:

“Mr. Godfrey. This is John Steele calling. I understand that you just got served. So, I do need to know if you are going to be representing Mr. Cooper in this suit as well. Obviously there is a conflict of interest that I can see but obviously I’m going to have to defer that decision about whether you are going to represent your co-defendant to you. Uhm and I leave the question as to the other suits that are coming your way in the next few days, I’ll just wait until you actually get served before I bringing those up, but at least on this issue, this suit, I do need to know if I may contact Mr. Cooper directly or if I will be working through you. All right. Thank you.”

That's the call I mentioned earlier in which Steele was making sure that Godfread wouldn't represent Cooper in this particular case, which Steele seems to think made it okay for him to reach out directly to Cooper. So, Prenda knew that the defendants had been served, and told the court they had not in order to file an amended complaint, where the amendment appears to be solely to add a sham plaintiff in the same state as Cooper and Godfread to block them from removing it to federal court. Oh, and did we mention that Hansmeier's filing to move the case back to state court was filed well past the deadline to make such a filing?

As I said, Prenda is the gift that just keeps giving.

In another filing, Russell and Sweet, representing Cooper and Godfread, also hit back at Prenda's attempt to dismiss their counterclaims. Here, the most interesting part is more evidence being filed that Steele pretended to be Cooper. In particular, they file a document from GoDaddy, showing what is clearly John Steele (it's using his email) registering various domains while claiming to be Alan Cooper. Just last week Steele demanded to see evidence that he faked Cooper's name. Well, there it is. That same document also shows that the domain was originally filed with Prenda's address in Chicago, but then was moved to what appears to be John Steele's sister's house in Phoenix. Oh, and also customer service records that show that John controlled the account.

And, just for good measure, there are a couple more filings showing that John Steele (and sometimes Paul Hansmeier) bought the various domain names used by Prenda Law (despite claiming that they had nothing to do with the firm) and that Steele continued to control that account (he called for customer service a few times) for quite some time, again contrary to Steele's public statements.

I fully expect to see Steele continue to tapdance around this, and maybe give a few more interviews to the press where he doesn't really answer the questions, but it would seem that reality has an unfortunate habit of eventually coming out. Given all of this, it would look like Cooper has a pretty strong change of winning his initial lawsuit against Prenda and Steele (though I doubt the $4 million is going to show up) and Prenda and Paul Duffy's nuisance defamation lawsuit in response is probably in trouble as well.

Oh, one more fun tidbit in the filings. I'd mentioned above the absolutely ridiculous statement in the lawsuits against Cooper and Godfread, that Cooper's lawsuit against Prenda was a totally "unrelated matter." Yet, the filing notes that not all of Prenda's lawyers were told not to admit the connection. They point out that in the infamous case in Georgia, where Prenda's local counsel Jacque Nazaire has tried to get the court to ignore Judge Wright's finding of fact because California recognizes gay marriage, Nazaire also flat out admits that the cases are connected. Sweet and Russell suggest: "Apparently, Atty. Nazaire did not receive Plaintiff’s memo to lie to the Court on this issue." Ouch. Oh, and there's a lot here, but extra credit goes to whoever finds where Russell and Sweet did a slightly subtle homage to Judge Wright's famous ruling.

Filed Under: alan cooper, defamation, john steele, paul duffy, paul godfread, paul hansmeier
Companies: prenda, prenda law

Prenda, Prenda, Prenda, Prenda, Prenda

from the with-apologies-to-the-brady-bunch dept

A whole series of events have happened in various Prenda cases around the country, and Ken at Popehat, once again, has the best summary around. I'll do this bullet-style, and suggest you go read his full post for the details.

• Paul Duffy is trying to dismiss the counterclaims filed against him in his defamation lawsuit against Alan Cooper, arguing that the counterclaims make no reference to him personally, but rather John Steele and Paul Hansmeier. Of course, if they were all working together, as an awful lot of evidence seems to suggest, that may be a problem for Duffy. The more hilarious issue is that Duffy claims that Cooper's lawsuit against Prenda (for allegedly falsifying his name on documents) is an "unrelated matter," rather than the whole freaking reason that Duffy is suing. Ken breaks down how incredibly stupid this statement is:

  Yeah, sure, Cooper's suit is "completely unrelated" — except that (1) it involves the same parties, (2) it concerns Prenda's operations, (3) it accuses Prenda of stealing Cooper's identity, which Prenda's and Duffy's complaints suggest is a defamatory statement, (4) John Steele used all three suits to threaten and intimidate Cooper as soon as Cooper filed his complaint, and (5) Prenda's and Duffy's complaints specifically identify the Cooper complaint as one of the forms of defamation they are suing over. This is not just a lie to a federal court. It's not even a plausible lie. It's a stupid, ineffectual, desperate lie.

• Ken explains the reasons why Cooper and Godfread decided to file using Minnesota's anti-SLAPP law, rather than Illinois's. As we had mentioned earlier, the case is in Illinois, so it took many of us by surprise that they were relying on Minnesota's anti-SLAPP law. However, Ken notes that since the key issue in an anti-SLAPP situation is that it forces the plaintiff to present their evidence early, this means that Duffy will be caught in a tough spot: responding with evidence would eviscerate the 5th Amendment protection he took in California.

  But here's the beauty of this situation for Cooper and Godfread — the anti-SLAPP statute forces Duffy and Prenda to come forward with actual evidence establishing that they might win. To do that, they have to come forward with evidence that the statements that they are complaining about are false. But those statements are about exactly the things that Steele and Hansmeier and Duffy took the Fifth rather than address. Duffy and Prenda can't carry their burden unless they reverse the decision to take the Fifth. Ultimately, Cooper's and Godfread's narrower argument is elegant and well-suited to the circumstances. It's not always the right strategy to make every possible argument.

  That "narrower" argument he's talking about is the (slightly surprising) decision by Cooper and Godfread not to point out that many of the statements that Duffy and Prenda are claiming defamatory are either insults or statements of opinion, rather than fact, and thus not subject to defamation. Instead of going down that road, they're focused on forcing Duffy's hand. We noted earlier that Cooper and Godfread had called Prenda's bluff. That may have been premature. Now they're really calling the bluff, and Duffy's going to have to show his cards.
  
  
• Back in the main showdown case in California, we had already pointed out that (over the objections of Team Prenda), Judge Otis Wright had allowed lawyer Morgan Pietz (representing some of those sued by Prenda) to file more evidence. And he's done so. White summarizes the situation nicely.

  Pietz can be excused for sounding a bit triumphant after the attorneys opposing him took the Fifth rather than address the questions he raised. He leads by pointing out that although John Steele claims there is no evidence that he has any ownership interest in Prenda Law's clients, Steele's own attorneys previously told the Florida State Bar the opposite — and a Prenda law local counsel also said that Steele had an interest in AF Holdings. Pietz attacks the credibility of Brent Berry, the real estate agent who claimed that Alan Cooper was in on the scheme and is violent and mentally ill. Pietz points out that Berry is Steele's agent and just sold a house for him in February. Pietz also points out that Berry signed the declaration in February, but Prenda law oddly withheld it until after the hearings before Judge Wright. Finally, Pietz echoes what everyone has been saying — Berry's testimony might suggest that Cooper knew his name was being used, but if accepted it proves that Cooper was a mere shill for the Prenda Law attorneys who actually controlled the plaintiff entities. Pietz also offers rebuttals to the Prenda lawyers' other arguments — he argues that Judge Wright's powers allow him to award attorney fees as sanctions based on the record before him, and he offers the declaration of a technical expert to rebut Prenda's arguments that its investigation of downloaders was reasonable and sufficient.

  Given Judge Wright's clear questions about Prenda's actions, I would imagine that this extra fodder isn't going to be particularly helpful to John Steele, Paul Duffy and Paul Hansmeier.
  
  
• And that's not all. Ken also has updates on a few other Prenda cases around the nation where people are hitting back at all things Prenda. Go check out his post for all the details.

Ken also points out that Judge Wright's response to all of this could come "any day," so stay tuned.

Filed Under: alan cooper, defamation, john steele, morgan pietz, otis wright, paul duffy, paul godfread, paul hansmeier
Companies: 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

John Steele To Court: You Have No Evidence That I've Done Anything Wrong

from the oh-yeah? dept

And, the next filing in the big Prenda showdown has been filed, and it's John Steele's response to the Order to Show Cause (OSC) for why he shouldn't be sanctioned for a variety of misdeeds. Not surprisingly, Steele builds on the previous filings from Paul Hansmeier and from Paul Duffy and Prenda Law. But the crux of his argument: "Judge, you've got nothing on me. There's no evidence I did anything wrong."

Ridiculously, he argues that there's no jurisdiction over him, because despite Brett Gibbs' detailed testimony of how Steele (and Hansmeier) basically ran the entire litigation campaign, that Gibbs' testimony: "lacks specificity regarding Steele's involvement in the subject cases or any California cases, and is otherwise inconsistent or contradicted by others." Amazingly, in support of this, he points to lawyer Jason Sweet's "Perry Mason moment" during the March 11th hearing, in which Sweet noted that Gibbs had claimed to be counsel for AF Holdings. This is really throwing Gibbs under the bus. Sweet's statements were not meant as an exoneration of Steele or Hansmeier (by any means), but rather to show that Gibbs wasn't completely a puppet, but a willing participant in a scheme that was mostly managed by Steele and Hansmeier. Steele goes on to take other Gibbs' comments completely out of context to pretend that Steele had nothing to do with the case (or other cases).

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.");

First of all, that is not the "only" thing Gibbs "offered." He also noted that Steele had the ability to use his email address and made it pretty clear that Steele was calling the shots. As for the "certain parameters" claim, that was Gibbs noting that Steele and Hansmeier gave Gibbs very limited autonomy within the context of controlling pretty much everything else. That's so obvious from the context that it's almost amazing Steele would try to bullshit a judge who clearly knows better.

On various other points, Steele dumps the blame on Gibbs (and a little on Hansmeier). And then we get to the Alan Cooper question. On that point, everyone has been consistent: Steele was the guy who got Cooper's signature. So how does Steele try to avoid being blamed for "fraud on the court" over that? First, he repeats the statement made by others that Cooper's signature is meaningless, since the copyright holder wanted to assign the copyrights, no matter who signed on behalf of AF Holdings. And then he completely avoids the question of whether or not he faked Cooper's signature, by saying, basically, it doesn't matter because it's not a sanctionable offense anyway (what....?) and then takes a dig at Cooper's "credibility." Uh, yeah.

The Court stated: "First, with an invalid assignment, Plaintiff has no standing in these cases." Dkt 48, at 9:8. Apparently re-articulating the same concern, the Court added: "Second, by bringing these cases, Plaintiff's conduct can be considered vexatious, as these cases were filed for a facially improper purpose." Dkt 48, at 9:9-10. 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 Courtm 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).

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.

I'm sorry, but if anyone believes that the evidence to date impugns Cooper's credibility more than Steele's credibility, they haven't been paying attention. At all.

On the question of hiding the ownership of various shell companies, Steele, amazingly, argues that "the evidence" shows that the Court is wrong to suggest that the folks from Team Prenda own/control the various shell companies:

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.")

However, Steele cannot be sanctioned for any of these alleged misrepresentations made to this Court regarding the relationships among the parties and entities named in the Court’s March 14 OSC because Steele has taken no actions nor made any representations to this Court of any kind, nor is there any evidence before this Court that he acted or was otherwise involved in anyone else's alleged misrepresentations to this Court.

This part strikes as the most incredible part of it all. The entire purpose of the April 2 hearing was to answer questions about this very point. And Steele chose not to respond to any questions. And now, in this filing, he's basically claiming "nope, I had nothing to do with it" without presenting any evidence to the contrary. Incredible.

I get the feeling that Judge Wright is not going to react well to this particular filing, which (like Hansmeier's before it) makes statements that clearly are at odds with what nearly all of the evidence has suggested is happening, without providing any actual evidence to support their claims.

Meanwhile, despite not being willing to talk to the court, Steele apparently has no problem talking to some in the press, and has told Xbiz that he "never even heard of the case" until two months ago. That seems rather difficult to believe given Gibbs' statements concerning Steele's involvement in his cases. I would imagine that someone involved in the case will quickly make Judge Wright of Steele's sudden willingness to "talk" and the details of his statements.

Filed Under: alan cooper, brett gibbs, evidence, john steele, otis wright, paul hansmeier, sanctions
Companies: prenda, prenda law

Paul Hansmeier: Who Me? I Did Nothing... Everything You're Accusing Prenda Of Was Done By Someone Else

from the leave-me-out-of-this dept

Paul Hansmeier has now filed his response in the big Prenda showdown case, and the short version might simply be described as "You've got nothing on me, judge!" Basically, he explains that each of the things the judge has complained about has nothing to do with himself, and more or less throws Brett Gibbs under the bus, saying that Gibbs was the attorney on the case, and thus anything that went wrong was Gibbs' deal.

Respondent Hansmeier was not a party to proceedings outside of the April 2, 2013 proceeding, where no evidence was presented. There is simply no tie between Hansmeier and the issues raised within the court’s order to show case. And the court should limit the inferences that it draws about Hansmeier’s culpability for the actions of a third-party attorney, like Gibbs, who was neither employed nor supervised by Hansmeier in connection with this matter

He further tries to get out of the whole Alan Cooper issue by again noting that he, Paul Hansmeier, had nothing to do with Alan Cooper or in getting Alan Cooper to sign on as a representative of the various shell companies. This is a little bit of throwing Steele under the bus, though not as far as he throws Gibbs. Also, he tiptoes around the question of whether or not the Alan Cooper who showed up in court is "Alan Cooper" who was a corporate representative of the shells. Such tapdancing is unlikely to go over well with an angry judge who already thinks you're bullshitting him.

Basically, Hansmeier tries to present himself as just some random guy whom the court dragged into this case based on nothing. Given how much evidence has been presented suggesting that Hansmeier was deeply involved in these cases, including statements from Gibbs about how he was something of a puppet for Steele and Hansmeier, this isn't likely to go over well. Because Hansmeier insists that he had nothing to do with Gibbs, it might be helpful to go back to Gibbs' testimony from March 11th.

Q And who did you understand were the decision makers of Steele Hansmeier?

A John Steele and Paul Hansmeier.

Q When you were an of counsel to Steele Hansmeier, who supervised you?

A John Steele and Paul Hansmeier.

Q Did you have periodic meetings while at Steele Hansmeier to discuss cases?

A Yes, we did.

Q And were those weekly meetings?

A Yes. Sometimes they would be sending the schedule, but, yes, mostly weekly meetings.

Q Who participated in those meetings?

A John and Paul would call me, and they would hold a weekly meeting.

[....]

Q And were you supervised at Prenda Law?

A Yes, I was.

Q Who were you supervised by?

A Paul Hansmeier and John Steele.

Q Were you supervised by Paul Duffy?

A No.

Q And when you say supervised, could you just describe what you mean by that? How did they supervise you?

A Sure. You know, they essentially were the ones that would initiate cases. By that, I mean, they would tell me they wanted to file certain cases in California, for instance, and they would instruct me to go ahead and file those. And they would give me the authority to do so. I would be told what cases we are looking at and how many cases we are talking about, and then I would file the cases. And they would give me general guidelines on what to do and sometimes the cases would be settled by John as was pointed out earlier, and sometimes they gave me certain parameters which I could settle the case myself.

Q Did you ever talk to anybody that you understood to be the client, AF Holdings?

A No. The communications were solely through Paul Hansmeier and John Steele.

Q Did you ever talk to anybody who said they were affiliated with Ingenuity 13?

A Well, I mean, aside from Mark Lutz who is the CEO of Ingenuity 13, but aside from that, no. All my communications were straight through Paul Hansmeier and John Steele.

[....]

And whose decision was it to dismiss those cases?

A Ultimately, it was John Steele and Paul Hansmeier's decisions. We had talked about it. 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 because -- they said go ahead and dismiss them.

Q When the cases were filed, did you have a discussion with anybody about whether notice of interested parties should be filed?

A I did. Yeah.

Q And who did you have discussions with?

A Mostly Paul Hansmeier. Yes. Mostly Paul Hansmeier but sometimes John Steele, I guess. I don't know. It was a while ago I guess.

Given that, Hansmeier's filing here is less than believable. Either way, it looks clear that Hansmeier is trying to dump all the responsibility on others, mainly Gibbs, when Gibbs has already said that Hansmeier basically was his puppet master. At some point, you'd have to expect that Gibbs is going to realize he gains nothing by protecting Hansmeier and Steele any more.

Filed Under: alan cooper, brett gibbs, john steele, paul hansmeier
Companies: ingenuity 13, prenda, prenda law

Mutual 'Friend' Of John Steele And Alan Cooper Implies That Cooper Was 'Off His Meds' When Accusing Steele Of Identity Fraud

from the the-plot-thickens dept

A bunch of new filings in the main event Prenda case have added some new wrinkles to the ongoing soap opera. The documents were all filed by Heather Rosing, representing Prenda Law, Paul Duffy (officially Prenda's only principal) and Angela Van Den Hemel (a paralegal at Prenda). She is not representing John Steele or Paul Hansmeier, who many have alleged are the real masterminds behind the Prenda scheme (Rosing did briefly represent both of them as well, but that was only in pushing back against appearing at the original March 11th hearing). However, the document that will undoubtedly bet the most attention is the one that Rosing filed as a bizarre character attack on Alan Cooper. It's a declaration from a "mutual friend" of John Steele and Alan Cooper suggesting that Alan Cooper has mental problems and that he was "off his meds" when he made the accusations against Steele. You can't make this stuff up (well, I can't...). The declaration is full of hearsay, but basically Brent Berry, who claims he introduced Cooper and Steele, suggests very strongly that Cooper is not right in the head, and does crazy things when not properly on medication.

Beginning in late 2011, Alan began exhibiting unusual behavior on various occasions when I was visiting the property. Alan began acting erratic, frequently threatening to hurt others.

On several occasions, Alan bragged that "If I pissed him off, they would never find my body, just like the others"

Due to Alan's strange behavior, I began to minimize my contacts with him unless others were around. Although I still consider Alan a very good person and a friend to this day, on some days he acted like a completely different person and extremely agitated. I later found out from Alan that the days he had acted very unusual were the ones in which he had not taken certain antipsychotic medication his doctor had prescribed.

[....]

Almost immediately I became aware that Alan's mental state had further deteriorated and felt very uncomfortable to be alone around him.

On approximately August 13th of 2012, I went to Mr. Steele's property to prepare it for a potential buyer. My girlfriend was with me on this trip. Alan came out of his cabin and was clearly in an extremely agitated state. Before I could even speak with him, he began threatening to hurt me. Due to the manner in which made the threats were made, his comments about past violence, I felt in fear for my life.

I immediately called John Steele and told him what happened and that I could not show the property under these conditions. I contacted the Aitkin County police department to report what had happened. Due to Mr. Steele's request, I did not follow through with filing charges.

Alan has sent me a variety of bizarre text messages, accurate copies of which are attached in Exhibit A hereto. In these text messages, Alan threatened to shoot me, indicated that he was removing wood from Mr. Steele's property, explained that he had some mental disorder(s), and apologized for his bizarre behavior.

Although Alan requested in his texts that I go to his doctor that was treating him for his mental illness.

Alan indicated that if I entered the property he would shoot me. Although Alan stated he would only shoot me in the foot, I felt out of an abundance of caution not to trust his assurance that he would only shoot me in a non-critical part of my body.

The full filing (linked above and embedded below, also shows these text message exchanges, poorly photographed. Here's just one of them. Frankly, reading the texts, they don't sound quite as bad ad Berry suggests they are. And the statements clearly lack context, and appear to involve a lot of other discussions not shown in the screenshots. Most importantly, they seem to have absolutely nothing to do with Steele, Prenda, AF Holdings or anything like that.

In the same filing, Berry states that in hanging out with Steele and Cooper, he was involved in many conversations with them -- and while he doesn't seem to have full details, he suggests that Cooper was knowingly helping Steele out on various legal projects, including a "porn company."

On several dates, I had occasion to be present when Mr. Steele and Alan would speak about various matters. Normally this occurred while we were sitting around campfire located between the two cabins.

Alan and Mr. Steele seemed to have a very good realtionship and Alan would routinely ask John how he wished he could help Mr. Steele for all the things Mr. Steele did for Alan, such as allowing him to live on the property for free.

It was clear from their conversations and references to Mr. Steele's legal work that Alan was involved working with Mr. Steele. Alan did not seem upset about this relationship, and in fact often made jokes about not having to worry about ever buying beer again due to his assisting Mr. Steele.

I remember Mr. Steele at various times asking Alan to assist him with certain paperwork and I never saw Alan objecting to this assistance.

On at least one occasion. I recall Alan asking John, "How's my porn company doing?"

It is not difficult to see where Steele is trying to go with this. He's working on a character attack against Cooper, arguing that he's mentally ill and "off his meds" while also suggesting that he was a willing participant in Steele's legal activities. It would be interesting to see if there's any other evidence to support this, because at first glance this seems quite sketchy (even beyond the typos and odd sentence structure such as sentences that are not complete). Second, almost none of it is conclusive. It's all just vague hints and statements that present little actual evidence relevant to whether or not Cooper actually was helping out Steele. Vague claims of "this guy seems crazy and off his meds" seem unlikely to sway Judge Wright given everything else he's seen. Even if we take Berry at his word, it suggests that Steele put someone he knew to be unstable in charge of one of his key "companies."

Furthermore, the statements by Berry actually support the argument that Steele was really the guy behind the scheme, and that Cooper was a mere figurehead. The fact that he asks "How's my porn company doing?" and all of the references in which Berry claims Cooper is doing work for Steele, if true, could actually add more evidence to the claim that Steele was pulling all the strings and using Cooper.

While the other documents aren't quite as entertaining, they may have a greater impact. Rosing presents the "legal arguments" she wanted 25 minutes to make during the last hearing. It basically says the judge can't do very much, and even when he can "sanctions are not appropriate," because nothing was done wrong. Rosing also complains about the way the court is handling the case, including the fact that, during the first Prenda hearing, the judge allowed a lawyer in the crowd, Jason Sweet (who has fought Prenda multiple times), to speak up and make a point about how Brett Gibbs represented himself in the past. As our post by Ken White noted, this "Perry Mason" moment was highly unusual. The rest of the filing argues that nothing that was done is actually sanctionable activity, including pushing back against the claim that Gibbs did a bad jobs in determining if someone was likely guilty of infringement. As Ken White notes in his writeup about these filings a lot of this is irrelevant, since it only matters if Judge Wright relies on the things that Rosing objects to.

Rosing then moves further along the argument chain, noting that even if there are sanctionable activities "it wasn't us!" It's not quite throwing Steele and Hansmeier under the bus, but it comes close. There are also some procedural complaints about being summoned to California on short notice (along with the jurisdiction questions), but, really, the crux of the argument is that Prenda Law had no idea what was going on under its banner. They also challenge the point about Prenda's refusal to show the cases as related based on another ruling that said they weren't related. There may be some legitimate complaints in there, but the "we had no idea" argument probably won't be that helpful to Paul Duffy, seeing as he's officially the only principal of Prenda Law and has been clearly involved in many of the cases. I could see the court going easy on the paralegal, suggesting she was just dragged into this, but earlier evidence does suggest that she was involved in pushing AT&T and possibly other to fork over names, even the court had already said that Prenda had to put its subpoenas on hold.

Separately, Rosing shows how Duffy and Prenda have been dropping all the various Prenda related cases just to be safe, as an apparent sign of good faith or something.

All in all, Rosing may get a little somewhere with this filing, and may help her individual clients -- Paul Duffy, Andgela and Prenda itself as a corporate entity. But it's hardly a slam dunk, and should have little impact on John Steele or Paul Hansmeier who are represented separately. I'll be curious to see if anything else comes out of the Berry filing, which seems like a pure joke at this point.

Filed Under: alan cooper, angela van den hemel, brent berry, heather rosing, john steele, paul duffy
Companies: prenda, prenda law

Team Prenda Shows Up In Court, Pleads The Fifth... Angry Judge Ends Hearing In 12 Minutes

from the extinction-level-event dept

Well that happened much faster than expected. While Judge Otis Wright apparently had cleared his entire schedule today for the Prenda hearing, the actual hearing lasted all of 12 (count 'em) minutes, with Judge Wright declaring "we're done" before storming out. We'll have a more detailed writeup from Ken White, who was in the courtroom, shortly, but here's a quick summary of what happened. Unlike last time, everyone actually showed up (well, except for the imaginary Alan Cooper of AF Holdings who does not appear to exist) and promptly pleaded the fifth.

From various reports from inside the courtroom, it appears that the Judge asked various questions and was not at all pleased with the decision by Team Prenda to clam up, noting that he would "draw reasonable inferences" from the "facts as I know them." Judge Wright's attempts to find out more information to support or rebut the facts as he knows them apparently did not go well. He asked about Alan Cooper, and got not response. He asked about who made the decision to not disclose to the court Prenda's financial interests in the outcome, and was told by the lawyer representing Prenda that "there's no evidence" that this was the case, which only upset the judge more. He asked the lawyer if she had even read Hansmeier's deposition. It didn't take the judge long to decide this was a waste of time, and based on his statements, it appears he's convinced that Prenda was up to no good, and will rule accordingly.

That's the quick nuts and bolts. Ken White is busy at work on a deeper dive analysis, which we'll post when ready. His short summary on what to expect? "Holy shit" and that this is an "extinction-level event" for Prenda. Stay tuned for more...

Filed Under: alan cooper, brett gibbs, john steele, mark lutz, otis wright, paul hansmeier, paul duffy, peter hansmeier
Companies: af holdings, ingenuity 13, livewire holdings, prenda, prenda law