Update: On Tuesday, U.S. District Judge Otis Wright denied Prenda Law’s request to stay his sanctions order. He ordered Steele, Hansmeier, Duffy, Gibbs, AF Holdings, Ingenuity 13 and Prenda to explain why they failed to pay the fee award—or post a bond—by the deadline, which fell on Monday. He said he would impose a $1,000 per day penalty until either was provided.
Lawyers under sanction for fraudulently filing dozens of copyright infringement lawsuits against people accused of downloading pornographic films have filed an appeal, as the attorneys who represented them before the sanctioning judge have disappeared from the case.
U.S. District Judge Otis Wright in Los Angeles referred four lawyers associated with a Chicago law firm called Prenda Law Inc. to licensing authorities for possible misconduct and to federal prosecutors for possible criminal violations of the U.S. Racketeer Influenced and Corrupt Organizations Act. He concluded that John Steele, Paul Hansmeier, Paul Duffy and Brett Gibbs "suffer from a form of moral turpitude unbecoming of an officer of the court."
On Monday, Prenda Law filed a notice that it would appeal Wright’s sanctions order to the U.S. Court of Appeals for the Ninth Circuit. In an attached application to stay Wright’s order pending its appeal, Prenda Law argued that the judge, who "dropped an anvil on Prenda Law’s interests across the country," exceeded his authority and deprived Prenda of its due process rights.
"Here, violations of Prenda Law’s Due Process rights have been raised, as has been the court exceeding its inherent authority not only to impose punitive monetary sanctions, but also to hit Prenda Law where it hurts—in its other cases across the country, its reputation, and its business model," wrote Heather Rosing, a partner and head of the professional liability department at Klinedinst in San Diego, who represents Prenda.
Rosing noted that Wright’s May 6 sanctions order has been wielded against Prenda attorneys in its other cases. "Upholding Due Process means that a falsely accused perpetrator gets his or her day in court; it means that a single branch of government cannot become prosecutor, judge, jury, and warden," she wrote. "How the court conducted its…proceeding in the instant case has trumped any interest a John Doe infringer might have in remaining free of a Prenda Law settlement letter."
She did not return a call for comment.
All four sanctioned attorneys also have filed notices of appeal. Meanwhile, lawyers who represented them during the sanctions hearings have disappeared from the case:
• Hansmeier, who identified himself in a May 14 court filing as an attorney at Alpha Law Firm LLC in Minneapolis, wrote that his attorney, Phillip Baker, a partner at Baker, Keener & Nahra in Los Angeles, is no longer representing him.
• Gibbs, now identifying himself as a solo practitioner in Mill Valley, Calif., sought on May 15 to represent himself, replacing his attorneys Andrew Waxler, Barry Brodsky and Won Park of Waxler Carner Brodsky in El Segundo, Calif.
• Steele moved on May 16 to replace Timothy Halloran and Thomas Mazzucco, shareholders at Murphy Pearson Bradley & Feeney in San Francisco, with himself.
• Duffy and a Prenda Law paralegal, Angela Van Den Hemel, previously represented by Rosing and two other attorneys at the firm, sought on May 15 to represent themselves.
Meanwhile, per Wright’s request, Morgan Pietz of the Pietz Law Firm in Manhattan Beach, Calif., who represents a John Doe defendant who first alerted the judge to the fraud, filed a list of 50 pending cases filed by the Prenda Law attorneys or local counsel working on their behalf in various state and federal jurisdictions.
Wright’s order came six months after he raised concerns about cases before him filed by two companies, Ingenuity 13 LLC and A.F. Holdings LLC, represented by Prenda Law. The cases named "John Doe" defendants and sought subpoenas to identify the perpetrators.
Wright questioned Prenda’s practice of identifying alleged infringers with only an Internet protocol address. His concerns grew, he said, after he discovered that Gibbs, the lead attorney in the cases before him, may have stolen the identity of a Minnesota resident to validate a potentially sham client by holding him out as principal of Ingenuity and A.F. Holdings. On February 7, Wright issued an order to show cause why Gibbs should not be sanctioned.
He later expanded his order to include possible sanctions against Duffy, a principal of Prenda Law; Steele and Hansmeier, who were former law partners at Steele Hansmeier PLLC, the predecessor to Prenda Law; and Van Den Hemel.
"Plaintiffs have outmaneuvered the legal system," Wright wrote. "They’ve discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs. And they exploit this anomaly by accusing individuals of illegally downloading a single pornographic video. Then they offer to settle—for a sum calculated to be just below the cost of a bare-bones defense. For these individuals, resistance is futile; most reluctantly pay rather than have their names associated with illegally downloading porn."
Wright referred the attorneys to their respective state and federal bars; he also referred Duffy and Gibbs to the Central District of California’s Standing Committee on Discipline.
He awarded more than $80,000 in attorney fees and costs to Pietz and another lawyer who represents a John Doe defendant.
Klinedinst, which filed Prenda Law’s notice of appeal, at first sought to withdraw from representing the firm. Wright denied that request on May 17 until Prenda could come up with a new attorney.
In her attached application to stay Wright’s order, Klinedinst’s Rosing indicated what Prenda Law’s arguments would be on appeal. During an April 2 hearing, Steele, Duffy, Hansmeier and Van Den Hemel refused to answer the judge’s questions, citing their Fifth Amendment right against self-incrimination. In court documents, they cited Wright’s threat of "potential incarceration" in their decision to plead the Fifth.
"Specifically, the court informed Prenda Law and other similarly situated persons and entities that they were the targets of an investigation that could lead to incarceration and punitive sanctions, but thereafter treated the subsequent proceedings, if in name only, as civil proceedings," Rosing wrote. Such an inquiry, which prevented the Prenda attorneys from cross-examining witnesses, "undermines the public’s trust in our judicial system."
Hansmeier, who filed a notice of appeal on May 15, indicated similar arguments.
"Indeed, the Appellant merely received an estimated twelve-minute hearing at which the district court berated Appellant and other persons named in its order to show cause and then brusquely rejected Appellant’s counsel’s attempt to present arguments," he wrote. Additionally, he argued that Wright relied on Pietz, the opposing counsel, to submit evidence of fraud.
Hansmeier, a resident of Minneapolis who was denied an application to be admitted to practice before the Ninth Circuit on May 15, also sought to stay Wright’s order pending his appeal. "The imposing actions of the district court threaten to damage Appellant’s reputation in the legal community, in turn damaging his ability to attract clients and to represent them effectively in a manner that will be irremediable through the normal appellate process without a stay of execution," he wrote.
On Monday, the Ninth Circuit denied Hansmeier’s request.
Gibbs; Duffy, of Chicago; and Steele, of Miami Beach, Fla., each filed notices of appeal. Ingenuity 13 and AF Holdings filed notices of appeal that were signed by Mark Lutz as a "corporate officer." Wright had ordered Lutz to show up in court but declined to sanction him since he is not an attorney.
Meanwhile, Pietz on May 17 filed a list of Prenda Law cases—specifically, those being handled by Steele, Hansmeier, Duffy and Gibbs. In federal courts, the list includes cases in Arizona, California, Connecticut, the District of Columbia, Florida, Georgia, Illinois, Massachusetts, Michigan, Minnesota and Pennsylvania; the U.S. Court of Appeals for the District of Columbia Circuit; and the U.S. Court of Appeals for the Ninth Circuit. In state courts, he cited three cases in Minnesota, eight in Illinois, two in Florida and one in Pennsylvania.
He said Gibbs was licensed in California and had appeared in federal courts in the state’s four districts. Duffy was licensed in California, Illinois and Massachusetts and had appeared in federal courts in the first two states and in the District of Columbia. Hansmeier, licensed in Minnesota, had appeared in federal courts in that state and in Illinois and California. And Steele, licensed in Illinois, had appeared in federal courts in that state and in the District of Columbia.
The State Bar of California listed Gibbs, admitted in 2007, and Duffy, admitted in 2003, as attorneys with no records of discipline. Duffy has no record of public discipline in Illinois, where he was admitted in 1992, and in Massachusetts, where he was admitted in 1993 but is on inactive status.
Steele, admitted to practice in Illinois in 2007, and Hansmeier, admitted to practice in Minnesota in 2007, have no public records of discipline.
Contact Amanda Bronstad at firstname.lastname@example.org.