Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 1 of 33 Page ID #:740 1 2 3 4 5 6 Morgan E. Pietz (SBN 260629) THE PIETZ LAW FIRM 3770 Highland Ave., Ste. 206 Manhattan Beach, CA 90266 mpietz@pietzlawfirm.com Telephone: (310) 424-5557 Facsimile : (310) 546-5301 Attorney for Putative John Doe in 2:12-cv-08333-ODW-JC UNITED STATES DISTRICT COURT 7 CENTRAL DISTRICT OF CALIFORNIA 8 9 10 11 INGENUITY 13, LLC, a Limited Liability Company Organized Under the Laws of the Federation of Saint Kitts and Nevis, 12 Plaintiff, 13 14 15 16 17 18 v. JOHN DOE, Defendant. Case Number: 2:12-cv-08333-ODW-JC Case Assigned to: District Judge Otis D Wright, II Discovery Referred to: Magistrate Judge Jacqueline Chooljian PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF 19 20 21 22 23 24 25 26 27 28 -1- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 2 of 33 Page ID #:741 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS TABLE OF CONTENTS ...................................................................................................... 2 I. INTRODUCTION AND SUMMARY .............................................................................. 4 II. FACTUAL AND PROCEDURAL BACKGROUND...................................................... 6 (a) Procedural History of Prenda's Related AF Holdings and Ingenuity 13 Cases in the Central District of California ......................................................................... 6 (b) Factual Background on Prenda's Various Straw Men and Sham Entities......... 11 (1) Alan Cooper: John Steele's Former Caretaker; Victim of Identity Theft........11 (2) Mark Lutz: John Steele's Former Paralegal; Fraudulent Corporate Representative For Hire ...................................................................................12 (3) "Salt Marsh" a/k/a Anthony Saltmarsh: John Steele's Sister's Roommate (Boyfriend?) at Arizona Address Linked to Alan Cooper and Other Prenda Shell Entities; New Prenda Straw Man ...............................................13 (4) The Fraudulent Allen Mooney a/k/a "Alan Moay" a/k/a "Alan Mony" Verification in an Illinois Prenda Case ............................................................15 (5) Collusion Between Prenda and the "Defendant" in Minnesota Case ..............17 (6) Recent Rebranding of Prenda Law and Mr. Gibbs' New Career as "In House Counsel" for Various Prenda Shell Entities .........................................17 (7) Paul Duffy, John Steele and Paul Hansemier - Other Attorneys Who Share Responsibility with Mr. Gibbs for Overseeing Prenda's Fraudulent Litigation Scheme ............................................................................................18 III. ARGUMENT................................................................................................................. 21 (a) All of Prenda's Cases Before this Court are "Sham" Lawsuits Exempted from the Protections of the Noerr-Pennington Doctrine ............................................ 21 (1) The "Sham" Lawsuit Exceptions to the Noerr-Pennington Doctrine..............21 (2) Intentional Use of Forged Copyright Assignment Agreements in the AF Holdings Cases Deprive These Cases of Legitimacy ......................................23 (3) The Ingenuity 13 Cases--Indeed, all of Prenda's Cases--Qualify as "Sham" Litigation Because The Cases Are Brought for an Improper Purpose, Without Regard to the Merits ...........................................................24 (b) Given the Circumstances of These Cases, Prenda Routinely Fails to Comply with its Rule 11(b)(3) Obligations ..................................................................... 25 (1) Mr. Gibbs' Past Statements on the Rule 11 Implications of These Cases.......25 (2) "Inquiry Reasonable Under the Circumstances" .............................................26 (3) Other Examples of Prenda's Shoddy "Investigation"......................................27 (4) The "Snapshot" Theory of Copyright Infringement ........................................27 (c) There is No Excuse for Violating the Court's Discovery Order........................ 28 IV. CURSORY REBUTTAL TO MR. GIBBS' OSC RESPONSE.................................... 28 V. RELIEF REQUESTED .................................................................................................. 29 -2- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 3 of 33 Page ID #:742 1 2 3 4 5 (a) Substantial Monetary Sanction Against Prenda Law, Inc. in an Amount Sufficient to Have a Significant Deterrent Effect on a Repeat Bad Actor ........ 29 (b) Award of Attorneys Fees and Costs, as Compensatory Sanction, Payable by Mr. Brett Gibbs ......................................................................................................... 30 (c) Striking of the Complaint With Prejudice, and Specific Factual Findings........ 32 (d) Such Other Relief as the Court Deems Just and Proper .................................... 32 VI. CONCLUSION ............................................................................................................. 33 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 4 of 33 Page ID #:743 "Roman law criminalized calumnia (from which we get the word 'calumny'), which meant the support of fraudulent, groundless, or frivolous litigation for profit."1 1 2 I. INTRODUCTION AND SUMMARY Over the last two and a half years, attorneys associated with Prenda Law, Inc.2 3 4 have filed at least 348 lawsuits, against over 16,000 John Doe defendants. See 5 Declaration of Morgan E. Pietz re: Prenda Law, Inc., ?? 19-20 (ECF No. 40-1, filed 6 1/14/2013) ("Dec'l. re: Prenda Law"). According to the self-proclaimed pioneer of 7 Prenda's "copyright troll" business model, attorney John L. Steele, in so doing, 8 Prenda has made "a few million dollars."3 At best, these lawsuits are all 9 questionable--for all of the reasons previously explained by this Court. 10 What seems increasingly clear though is that Prenda, and its "of counsel" 11 here, Mr. Brett Gibbs, have crossed the Rubicon in these cases, by resorting to fraud, 12 which includes identity theft, sham offshore shell companies, and forged documents. 13 The AF Holdings cases are all founded upon forgeries. In each AF Holdings 14 case before this Court, attached as "Exhibit A" to the complaint is a forged copyright 15 assignment agreement supposedly signed by "Alan Cooper." This fact transforms 16 each of these cases into fraudulent, sham litigation, and possibly renders Prenda a 17 criminal conspiracy. Further, as detailed, infra, "Alan Cooper" is not the only bogus 18 "client" name Prenda has used in its court filings; it appears there are other straw 19 20 21 22 23 24 25 26 27 1 Anthony J. Seebok, The Inauthentic Claim, 64 VAND. L. REV. 61 at p. 75 (2011); citing Max Radin, Maintenance by Champerty, 24 CAL. L. REV. 48, 59-60 (1936). Vestiges of this sentiment survive in California, in the form of the seldom-enforced criminal prohibition on "barratry". Cal. Pen. Code ?? 158-159. 2 Prenda Law, Inc. was formerly known as Steele Hansemier, PLLC (a Chicago divorce law firm). Since the name "Prenda" has lately become somewhat toxic, the lawyers behind this scheme are now using several aliases, including: "Anti-Piracy Law Group, LLC" (Prenda's newest successor entity, organized in Illinois); "Alpha Law Firm, LLC" (Mr. Paul Hansemeier's firm, organized in Minnesota) and "Livewire Holdings, LLC" (a newer affiliate listing a business address that is a UPS store with private mailbox and package services in Washington, D.C.). 3 28 See http://www.forbes.com/sites/kashmirhill/2012/10/15/how-porn-copyright-lawyer-john-steelejustifies-his-pursuit-of-sometimes-innocent-porn-pirates/ -4- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 5 of 33 Page ID #:744 1 men (with various connections to John Steele) out there. There is new evidence of 2 Prenda submitting a fraudulent and unarguably false "client" verification in a case in 3 Illinois, and disturbing revelations regarding collusion between Prenda and a 4 "defendant" who agreed to stipulate to ISP subpoenas in another case in Minnesota. Aside from the pattern of fraud with respect to every instance where people 5 6 connected to Prenda's "clients" had to be identified to a court, there is another 7 deeply troubling pattern in this litigation. Mr. Gibbs has repeatedly represented to 8 various courts that, in his view, the mere fact that a person happens to pay the 9 Internet bill is not sufficient, by itself, to establish a good faith factual basis for an 10 allegation that this person is the John Doe defendant in a case like this. Dec'l. re: 11 Prenda Law, ?? 21-22. Mr. Gibbs has previously conceded--indeed, he was 12 specifically warned on this exact point by Jude Seeborg--that under the 13 circumstances of these cases, further "investigation" is required to name somebody 14 in a complaint, to comply with Rule 11(b)(3). Id. Contrary to these several 15 representations, and in defiance of specific warnings, in several instances Mr. Gibbs 16 has apparently gone ahead and publicly named people as defendants (or tried to do 17 so), without conducting the requisite objectively reasonable additional investigation. 18 The bad faith inherent in 'shooting first, and identifying targets later,'4 is 19 substantially compounded given that: (i) these cases are calculated to embarrass 20 (because the content at issue is pornography); (ii) Prenda makes a point of publicly 21 shaming named defendants on its website, as a warning to others; and (iii) most 22 cases are dismissed without prejudice at the first hint of trouble. The whole 23 enterprise borders on bad faith, at the very least. Further, as detailed, infra, the 24 Wagar and Denton cases are not the only examples of Prenda's shoddy 25 "investigations"; undersigned counsel is aware of at least three other, similar cases 26 27 28 4 Boy Racer, Inc. v. Does 1-22, No. 11 C 2984, Slip Op. (N.D. Ill. May 9, 2011) (Shadur, J.) (Court "rejected attorney [John] Steele's effort to shoot first and identify his targets later," and made clear that suits against a "passel of 'Does'" would not succeed). -5- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 6 of 33 Page ID #:745 1 where Mr. Gibbs similarly named a defendant recklessly (or tried to), leaving it to 2 defendants to prove their innocence based on a lax interpretation of Rule 11(b)(3). Finally, there is simply no excuse for violating the Court's orders to cease 3 4 discovery efforts. Mr. Gibbs proffered explanation is that he interpreted the Court's 5 OSC staying discovery as allowing continued "informal" discovery. According to 6 Mr. Gibbs' response to the instant OSC,5 7 "Mr. Gibbs believed and interpreted the October 19, 2012 8 Orders as only precluding him from engaging in any 9 formal discovery efforts such as pressuring the ISPs to 10 respond to the subpoenas that had been served and 11 precluding him from serving any additional subpoenas. 12 (Gibbs Decl. ? 20)." ECF No. 49, at 9:20-22. 13 Yet as confirmed by at least one ISP--AT&T--notwithstanding this representation, 14 Prenda did in fact "pressur[e] the ISPs to respond to the subpoenas" notwithstanding 15 Mr. Gibbs's interpretation of the stay order. Dec'l. of Bart Huffman; Dec'l. of 16 Camille D. Kerr.6 The pressure may have been applied from Mr. Duffy's office in 17 Chicago, but the bottom line is that even under Mr. Gibb's current interpretation of 18 the stay order, is was violated, more than once, in at least one case. Id. II. FACTUAL AND PROCEDURAL BACKGROUND 19 20 (a) Procedural History of Prenda's Related AF Holdings and Ingenuity 13 21 Cases in the Central District of California 22 On July 2, 2012, Mr. Brett Gibbs, who lists himself on the pleadings as "of 23 Counsel" to Prenda Law, Inc.,7 began filing multiple actions in the Central District 24 5 25 26 Undersigned counsel had about an hour to review Mr. Gibbs response to the OSC prior to filing this document. 6 27 Concurrently filed herewith. 7 28 In reality, Mr. Gibbs appears act as a functional Chief Operating Officer for Prenda Law. There is evidence that Mr. Gibbs hires Prenda's "local counsel." Dec'l. re: Prenda Law, Exhibit L, p. -6- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 7 of 33 Page ID #:746 1 of California on behalf of AF Holdings, LLC and Ingenuity 13, LLC. By September 2 of 2012, the grand total was 45 cases filed by Mr. Gibbs on behalf of these two 3 entities, each against a single "John Doe" defendant identified only by IP address. 4 All of the AF Holdings cases in this district were transferred to Judge Wright 5 as related cases, pursuant to Section 3.1 of General Order 08-05, on October 4, 2012. 6 AF Holdings, LLC v. John Doe, 12-cv-5709-ODW, ECF No. 7, 10/4/12. Shortly 7 thereafter, Judge Wright issued an Order to Show Cause in the related AF Holdings 8 cases. AF Holdings, LLC v. John Doe, 12-cv-5709-ODW, ECF No. 9, 10/19/12 (the 9 "AF Holdings OSC re: Early Discovery"). The order required Prenda to explain 10 "how it would proceed to uncover the identity of the actual infringer once it has 11 obtained subscriber information--given that the actual infringer may be a person 12 entirely unrelated to the subscriber--while also considering how to minimize 13 harassment and embarrassment of innocent citizens." AF Holdings OSC re: Early 14 Discovery, pp. 2-3 (emphasis added). Plaintiff submitted a response on November 15 1, 2012, which did not go into great detail. 16 On November 28, 2012, after being engaged by the client just before the 17 subpoena return deadline, undersigned counsel, on behalf of the putative John Doe 18 defendant in Ingenuity 13, LLC v. John Doe, C.D. Cal. No. 12-cv-8333, filed an ex 19 parte application for a stay of the subpoena return date. ECF No. 13. This ex parte 20 application was granted, nunc pro tunc, by Magistrate Judge Walsh on December 3, 21 22 23 24 25 26 27 28 132:23-24; 134:9-10; 138:15-17 (Prenda's former local counsel in Florida, while being questioned by Judge Scriven of Florida, states "Well, Mr. Gibbs apparently is a principal at Prenda Law, to my understanding"). There is also evidence that Mr. Gibbs' email address "blgibbs@wefightpiracy.com" is used as the email of record on Prenda pleadings all over the country. Dec'l. re: Prenda Law, ? 12, Exhibit C (pleading filed in Nebraska by local counsel there, but using "blgibbs@wefightpiracy.com" as the email address for counsel of record). See Dec'l. of Morgan E. Pietz re: Prenda Law, Inc. ?? 8, 12, Exhibit N, p. 132, li. 23-24. (All page references to the Exhibits to the Dec'l. of Morgan E. Pietz re: Prenda Law, Inc. are to the continuous pagination on the bottom right). -7- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 8 of 33 Page ID #:747 1 2013, extending the subpoena return deadline in 12-cv-8333 until December 29, 2 2012. ECF No. 16. 3 On December 3, 2012, undersigned counsel filed a Notice of Related Cases 4 identifying the multiple Ingenuity 13 cases filed by Prenda in this district as related 5 to the AF Holdings cases already assigned to Judge Wright. AF Holdings, LLC v. 6 John Doe, 12-cv-5709-ODW, ECF No. 11. This notice pointed out a number of 7 similarities between the Ingenuity 13 and AF Holdings cases, and also mentioned, 8 for the first time, the evidence suggesting a possible misappropriation of the identity 9 of one Alan Cooper of Minnesota. Id. Shortly thereafter, undersigned counsel, on 10 behalf of a different client in the Northern District of California, also filed a similar 11 "administrative motion to relate cases" in the AF Holdings and Ingenuity 13 cases in 12 the Northern District. See AF Holdings, LLC v. John Doe, N.D. Cal. No. 4:12-cv- 13 02049-PJH, ECF No. 40, 12/13/12. 14 On December 17, 2012, Mr. Gibbs filed three sanctions motions against 15 undersigned counsel. One sanctions motion was filed here in 12-cv-8333, at ECF 16 No. 22. Another sanctions motion was filed here in 12-cv-5709 at ECF No. 15, 17 which was somewhat inexplicable given that undersigned counsel had not appeared 18 in that action (other than to file the Notice of Related Cases). Stranger still, in the 19 Northern District, a sanctions motion was filed in the low-numbered case, 4:12-cv- 20 2049-PJH at ECF No. 42, not in the case where undersigned counsel had actually 21 appeared on behalf of a client (i.e., in Ingenuity 13, LLC v. John Doe, N.D. Cal. No. 22 3:12-cv-4976-JSW). Notably, none of these sanctions motions asserted that any of 23 the allegations about Alan Cooper were incorrect. Plaintiff's arguments (that 24 attempting to relate cases together for coordination constituted a vexatious 25 multiplication of legal proceedings) were frivolous, and all of the sanctions motions 26 were denied. 27 28 On December 18, 2012, undersigned counsel, on behalf of the putative John Doe defendant in Ingenuity 13, LLC v. John Doe, C.D. Cal. No. 12-cv-8333, filed a -8- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 9 of 33 Page ID #:748 1 second ex parte application seeking a further stay of the subpoena return date, and 2 also seeking leave to propound limited early discovery to explore the apparent Alan 3 Cooper fraud. ECF No. 23. 4 On December 19, 2012, all of the Ingenuity 13 cases pending in the Central 5 District were also transferred to Judge Wright as related cases, per General Order 6 08-05. Ingenuity 13, LLC v. John Doe, C.D. Cal. No. 12-cv-8333, ECF No. 24. 7 On December 20, 2012, the Court issued minute orders in each of the 8 Ingenuity 13 cases that essentially adopted in the Ingenuity 13 cases the procedure 9 already put in place in the AF Holdings OSC re: Early Discovery. Prior orders 10 authorizing subpoenas were vacated, and Mr. Gibbs was ordered to do further 11 explain how a list of ISP subscribers would be used to identify actual infringing 12 John Doe defendants, prior to being given the keys to discovery. See Ingenuity 13, 13 LLC v. John Doe, C.D. Cal. No. 12-cv-8333, ECF No. 28, 12/20/12. 14 Also on December 20, 2012, for some of the older AF Holdings cases, which 15 had been filed over 120-days earlier, the Court issued an Order to Show Cause re: 16 Lack of Service. AF Holdings, LLC v. John Doe, 12-cv-5709-ODW, ECF No. 16. 17 Plaintiff responded to this order on the Rule 4(m) issue in at least a few of the cases, 18 on December 27, 2012. See, e.g., id. at ECF No. 18. 19 On December 26, 2012, the Court granted undersigned's ex parte application 20 (ECF No. 23) seeking leave to propound limited written discovery exploring the 21 Alan Cooper issue. ECF No. 32. That order set a 14-day window in which to 22 propound the requested written discovery. Id. 23 On December 31, 2012, plaintiff filed disqualification motions in most (if not 24 all) of the related cases pending before Judge Wright. E.g., Ingenuity 13, No. 12-cv- 25 8333 at ECF No. 37. Undersigned counsel filed a comprehensive reply to the 26 disqualification motion on January 14, 2013. ECF No. 40. On January 15, 2013, the 27 disqualification motion was denied by Judge Fitzgerald. 28 -9- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 10 of 33 Page ID #:749 1 On January 4, 2013, undersigned counsel did indeed serve, via overnight mail, 2 the Court-authorized written discovery delving into the Alan Cooper issue. 3 Supplemental Dec'l. of Morgan E. Pietz ("Supp. Dec'l.") ? 6. 4 About a week before the Alan Cooper discovery responses were due in the 12- 5 cv-8333 action, on the evening of January 28, 2013, Mr. Gibbs began voluntarily 6 dismissing all of the related AF Holdings and Ingenuity 13 cases in the Central 7 District of California--all without prejudice. 8 9 Mr. Gibbs wrote undersigned counsel on January 29, 2013 stating "I will be entering my notice of withdrawal as counsel of record for Ingenuity13 and AF 10 Holdings in all cases filed in California. Mr. Paul Duffy will be substituting in as 11 counsel." Exhibit P. Subsequent to the email from Mr. Gibbs, Mr. Duffy did 12 substitute in as counsel in most of the Northern District of California AF Holdings 13 and Ingenuity 13 cases. Paul Duffy has previously represented himself to a Florida 14 court as Prenda's "sole principal." On February 6, 2013, Paul Duffy initiated an 15 attempt to meet and confer about this case, the 12-cv-8333 action, by sending an 16 email to undersigned counsel requesting to meet and confer about this case. Id. 17 Undersigned counsel and Mr. Duffy mutually agreed to have a meet and confer 18 telephone conference about this case (as well as about a few other matters) set for 19 11:30 a.m. on February 8, 2013. Id. 20 Around 8:30 a.m. on February 8, 2013, the Court entered the instant Order to 21 Show Cause re Sanctions on the ECF docket (ECF No. 48, dated February 7, 2013). 22 Mr. Duffy did not answer the phone when undersigned counsel attempted to call 23 him, as mutually agreed, at 11:30 a.m. on February 8. Instead, starting on the 24 afternoon on February 8, 2013, Mr. Duffy began dismissing the final cases left, 25 mainly in the Northern District of California, which Prenda had filed on behalf of 26 AF Holdings and Ingenuity 13. (The Central District cases were mostly dismissed 27 on January 28 and 29, 2013). As of the date hereof, every case in California that 28 Prenda could dismiss voluntarily, without paying prevailing party attorneys fees (in -10- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 11 of 33 Page ID #:750 1 other words, all cases except the ones where a defendant had answered), has now 2 been dismissed. Further, according to a PACER search conducted February 11, 3 2013, most, but not quite all, of the AF Holdings and Ingenuity 13 cases have now 4 been dismissed nationally, presumably most, if not all of them, without prejudice. 5 (b) Factual Background on Prenda's Various Straw Men and Sham Entities 6 (1) Alan Cooper: John Steele's Former Caretaker; Victim of Identity Theft 7 Most of the facts relating to Alan Cooper have already been explained, most 8 comprehensively in the Dec'l. re: Prenda Law submitted in support of the opposition 9 to the disqualification motion (ECF No. 40-1, at ?? 29-42). However, there are two new developments worth reporting: first, Alan 10 11 Cooper, through his attorney Paul Godfread, has filed a civil lawsuit against John 12 Steele, Prenda Law, and others alleging misappropriation of his identity. Exhibit Q. 13 Second, at a 30(b)(6) deposition of AF Holdings conducted by undersigned counsel 14 on February 19, 2013, a designated representative for AF Holdings blamed any 15 potential problems with the "Alan Cooper" signature on John Steele.8 According to 16 AF Holdings 30(b)(6) deponent Paul Hansemeier, AF Holdings' sole manager and 17 sole employee Mark Lutz directed John Steele (Mr. Lutz's former boss at Steele 18 Hanemeier PLLC) to obtain the signature, and Mr. Steele returned a signed 19 document. Prenda's unilateral, voluntary dismissal of this action, just prior to the 20 21 deadline for a response on the Alan Cooper-focused written discovery, is another 22 fact pointing to potential fraud, rather than some kind of benign coincidence 23 involving a second "Alan Cooper." Mr. Gibbs' response to the instant OSC says that 24 the complaint is not based on an invalid copyright assignment. Notably though, the 25 response does not deny that AF Holdings cases are based on a forgery. 26 27 8 28 Given that this deposition was conducted earlier today, in San Francisco, no transcript is yet available. -11- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 12 of 33 Page ID #:751 1 2 3 (2) Mark Lutz: John Steele's Former Paralegal; Fraudulent Corporate Representative For Hire The episode where Prenda attempted to perpetrate a fraud on the court, in 4 Sunlust Pictures, Inc. v. Tuan Nguyen, M.D. Fl. Case No. 8:12-CV-1685-T-35MAP, 5 by holding out John Steele's former paralegal, Mark Lutz, as a principal of Prenda's 6 "client" has also been previously explained. Dec'l. re: Prenda Law ?? 39-40, Exhibit 7 N (transcript of hearing where Judge Scriven invites sanctions motion for attempted 8 fraud on the Court). 9 However, there are new developments Sunlust case--more fraud. In an 10 attempt to minimize and explain away the first attempted fraud on the Court and 11 oppose a John Doe sanctions motion, Prenda apparently submitted what appears to 12 be a fraudulent declaration to the Court. Specifically, Prenda tried to explain the 13 absence of a true principal for the client, Sunlust Pictures, at the November 27 14 hearing by submitting a declaration explaining that the company's true principal, 15 "Daniel Webber" was out of the country at the time of the hearing. Sunlust Pictures, 16 Inc. v. Tuan Nguyen, M.D. Fl. Case No. 8:12-CV-1685-T-35MAP at ECF No. 40-2, 17 ? 5, 12/20/12 (original, sworn affidavit of "Daniel Webber" stating he was in India 18 on November 27, 2012). As defense counsel in Sunlust immediately pointed out, 19 there were two big problems with this story: first, Daniel Weber spells his name with 20 one 'b,' not two, and, second, his Twitter feed places him in Los Angeles, not India, 21 on November 27, 2012. Id. at ECF No. 46 (defendants second motions for 22 sanctions). Accordingly, after being notified of these inconsistencies by defense 23 counsel, on December 26, 2012, Prenda, through outside counsel specializing in 24 white collar criminal deense, filed a purported "corrected" version of the Daniel 25 Weber declaration, this time spelling Mr. Weber's name correctly, and, more 26 importantly, changing the key fact that he had actually been in Los Angeles on 27 November 27, 2011, not India. Id. at ECF No. 44-1, ? 5 ("corrected" affidavit stating 28 that "Daniel Weber" was actually in Los Angeles on November 27, 2012). -12- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 13 of 33 Page ID #:752 In short, Prenda has shown in Sunlust that when accused of fraud, it attempted 1 2 to explain its actions and avoid responsibility by making further (supposedly 3 inadvertent) misrepresentations. (3) 4 "Salt Marsh" a/k/a Anthony Saltmarsh: John Steele's Sister's 5 Roommate (Boyfriend?) at Arizona Address Linked to Alan Cooper 6 and Other Prenda Shell Entities; New Prenda Straw Man A closer and more sustained review of various past Prenda court filings has 7 8 revealed new facts suggesting that "Alan Cooper" is not the only straw man Prenda 9 has used, when pressed to identify individuals associated with Prenda's various 10 sham entities. Just as Alan Cooper was John Steele's former caretaker, and Mark 11 Lutz was John Steele's former paralegal, another purported "client" representative 12 with a personal connection to John Steele has also recently been discovered. In 13 various filings in the Northern District of California, when pressed to identify a 14 client contact on an ADR Certification, Prenda identified a person named "Salt 15 Marsh" as the "AF Holdings Owner." E.g., AF Holdings v. John Doe, N.D. Cal. No. 16 12-cv-2396-EMC, ECF No. 8, 7/20/12.9 Exhibit R. After the "Alan Cooper" revelations resulted in newfound scrutiny of Prenda 17 18 "client" contacts, Nicholas Ranallo, an attorney in Northern California did some 19 digging on "Salt Marsh," since that seems like a made up name. Mr. Ranallo 20 recently summarized his findings in a declaration. Exhibit S ("Ranallo Dec'l."). 21 This declaration by Mr. Ranallo was filed on February 11, 2013, in opposition to 22 Prenda's emergency motion to stay a pending 30(b)(6) deposition of AF Holdings. 23 The stay was denied, and the 30(b)(6) deposition of AF Holdings is currently set to 24 25 26 27 28 9 A similar ADR Certification, which is mandated in the Northern District of California by Local Rule 16-8(b), was filed in most if not all Prenda cases in the Northern District of California that progressed so far as service of process on a named defendant. However, per Mr. Ranallo, in Prenda's most recent ADR Certification, the new client -13- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 14 of 33 Page ID #:753 1 occur on February 19, 2013.10 This N.D. Cal. AF Holdings case, which is one where 2 the defendant responded to the complaint, is one of the very few AF Holdings or 3 Ingenuity 13 cases now left anywhere in the country. 4 Without going into all of the details, which are contained in the Ranallo 5 declaration, suffice it to say that although "Salt Marsh" appears to be a bogus name, 6 but there is a man named Anthony Saltmarsh, who has apparently shared several 7 residences with John Steele's Sister, Jayme C. Steele. Presumably then, the reputed 8 owner of AF Holdings, "Salt Marsh" is actually Anthony Saltmarsh, who is the live- 9 in boyfriend of John Steele's sister Jayme. Further, a residential address in Phoenix apparently co-occupied by Anthony 10 11 Saltmarsh and Jayme Steele has also been linked to several Prenda straw men and 12 sham entities, including Alan Cooper. Ranallo Dec'l. ?? 8-14. Prenda previously 13 represented VPR Internationale in various copyright infringement suits. Dec'l. re: 14 Prenda Law, ? 11. According to the Nevada Secretary of State, all officer positions 15 at VPR Inc. are held by "Alan Cooper," and the address given for Mr. Cooper in 16 each instance is 4532 East Villa Theresa Drive, Phoenix, AZ 85032. Ranallo Dec'l, 17 "Exhibit D." Similarly, an Internet search of that same address revealed what 18 appears to be an archived WHOIS record for an Internet domain name registration of 19 which lists "Alan Cooper" as the registrant, technical contact, and 20 administrative contact, but using johnlsteele@gmail.com as the email address of 21 record, and 4532 East Villa Theresa Drive, Phoneix, AZ 85032 as the mailing 22 address of record. Exhbit T. According to public database searches on Anthony 23 Saltmarsh and Jayme Steele, both of them resided at 4532 East Villa Theresa Drive, 24 Phoenix, AZ 85032. 25 26 27 28 10 Undersigned counsel recently appeared as co-counsel with Mr. Ranallo, in connection with the scheduled AF Holdings 30(b)(6) deposition. See AF Holdings v. John Doe, N.D. Cal. No. 12-cv2396-EMC, ECF No. 58, 2/14/13. -14- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 15 of 33 Page ID #:754 1 In short, it appears that Prenda/John Steele has used his sister's house as a 2 front for Prenda's litigation activities. The name "Alan Cooper," at least one Prenda 3 sham entity, VPR, Inc., and John Steele's personal email account are all linked to 4 this address. Further, it appears that John Steele has used his sister's apparent live- 5 in boyfriend Anthony Saltmarsh, or a misleading twist on his name (i.e., "Salt 6 Marsh") as the newest Prenda straw man. 7 8 9 (4) The Fraudulent Allen Mooney a/k/a "Alan Moay" a/k/a "Alan Mony" Verification in an Illinois Prenda Case A few days before the Alan Cooper revelations came to light, and just the 10 Sunlust hearing where the attempted fraud on the court occurred, Prenda file a 11 verified petition for presuit discovery in St. Clair County, Illinois on behalf of 12 "Guava, LLC," another offshore shell company. Guava, LLC v. Comcst, Circuit 13 Court of St. Clair Count, Illinois, No. 12-MR-417. This petition, (like a more 14 expansive version of a federal Rule 27 petition) invokes a rule of Illinois state 15 procedure to seek leave to subpoena IP address records from 330 Internet users, was 16 required to be verified by rule, and is purportedly verified by "Alan Moay." Exhibit 17 U. The petition also asserted, as a verified fact, that "venue is proper because at 18 least one of the Doe defendants resides in St. Clair County, Illinois. Further, 19 Comcast transacts business in St. Clair County, Illinois." 20 Defense counsel in that case, including the undersigned, ultimately picked up 21 on two problems with this petition: first, the verification is suspicious because "Alan 22 Moay" is a bogus name; there is no record of any such person with that name 23 existing in the United States. There are also other suspicious elements of the 24 verification: although it purports to be notarized, there is no notary name, seal or 25 registration number, and the font on the verification is different than the font on the 26 petition itself. Second, after Comcast ran the records through it database, it was 27 ultimately revealed that not a single one of the 330 IP addresses at issue were 28 actually linked to St. Clair County. This is because Comcast does not do business -15- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 16 of 33 Page ID #:755 1 there; Charter is the local franchised cable operator. The suit was brought in St. 2 Clair county, on the basis of demonstrably false venue and jurisdictional allegations, 3 solely as a matter of forum shopping. Exhibit U, ? 6; see Exhibit V. When pressed on the bogus affiant "Alan Moay," Prenda changed its story. 4 5 Prenda's current story (as of 1:00 p.m. on February 18, 2013) is that the verification 6 does not say "Alan Moay" at all; rather, it says "Alan Mony." The problem with the 7 new story (aside from the fact the verification says Alan Moay) is that "Alan Mony" 8 is also a bogus name. Exhibit V. However, as noted in the attached reply brief filed recently by undersigned 9 10 counsel in St. Clair County, the name "Allan Mooney" is a name that has been 11 linked to Prenda previously. Id. According to the Minnesota Secretary of State, a 12 man named "Allan Mooney" was previously listed as the manager of MCGIP, LLC, 13 another shell company plaintiff on whose behalf Prenda has filed various federal 14 lawsuits. Id. The address for "Allan Mooney" on the MCGIP business entity detail 15 was care of Alpha Law Group, LLC, which is the newest firm of Prenda founder 16 Paul Hansemier. One "Alan Mooney" is also a current client of Alpha Law / Paul 17 Hansemeier, in Mooney v. Priceline.Com Incorporated et al., No. 12-cv- 02731- 18 DWF-JSM (D. Minn. Oct. 26, 2012). Id. In short, Prenda appears to have filed yet another bogus verification,11 this 19 20 time in state Court in Illinois. The purported affiant links Prenda's fraudulent 21 activities in Illinois to Mr. Paul Hansemeier of Minnesota, who was the other 22 original founder of Prenda (and whose brother Peter still signs all of the technical 23 declarations for Prenda). In response to this allegation of another fraudulent Prenda verification, Mr. 24 25 Gibbs retorts that 26 27 28 11 The original bogus pre-suit discovery verification, purportedly signed by "Alan Cooper," was filed by Mr. Gibbs in In the Matter of a Petition by Ingenuity 13, LLC, E.D. Cal. Case No. 11-mc0084-JAM-DAD, ECF No. 1. -16- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 17 of 33 Page ID #:756 1 (5) Collusion Between Prenda and the "Defendant" in Minnesota Case 2 Since Prenda has mainly stopped filing "swarm joinder" suits against multiple 3 Does, given the trouble that theory has run into in federal Courts, it has now resorted 4 to new tactics. One example of the new tactics are the state pre-suit discovery cases, 5 like Guava, LLC v. Comcast, in St. Clair County, discussed above. However, the other new tactic Prenda has employed is to make a back room 6 7 deal with a John Doe it has previously identified, whereby Prenda agrees not to 8 pursue that person, in exchange for which that person will agree to be named and 9 served, and stipulate to early discovery against a passel of "John Doe" co- 10 conspirators. Apparently, Prenda steers such people (one can imagine Prenda 11 chooses the people who are particularly worried about their cases) to certain 12 lawyers, and these lawyers then agree on behalf of the named lead defendant, to 13 stipulate to far-reaching discovery. Details of this kind of collusion (all in the name 14 of obtaining ISP subscriber information) are explained in the declaration from the 15 attorney for Spencer Merkel in Guava, LLC v. Merkel, a Minnesota suit seeking 16 discovery on Does all over the country. Exhibit W. (6) 17 Recent Rebranding of Prenda Law and Mr. Gibbs' New Career as "In House Counsel" for Various Prenda Shell Entities 18 Recently, Mr. Gibbs has substituted out of various Prenda cases as counsel of 19 20 record. Far from washing his hands of his involvement with Prenda though, and 21 trying to start anew, Mr. Gibbs has simply changed hats. Mr. Gibbs has recently 22 purported to be "in house counsel" for at least three different Prenda-related sham 23 entities.12 This new role for Mr. Gibbs only further supports the Court's suspicion 24 that Mr. Gibbs has a pecuniary interest in the Prenda shell companies. 25 26 27 28 12 According to the February 19, 2013 deposition of AF Holdings' 30(b)(6) deponent, Paul Hansemeier, the amended substitution of attorney form Mr. Gibbs filed in N.D. Cal. 12-cv-4221, at ECF No. 22 (filed 1/30/13), which identified Mr. Gibbs as "In-House Counsel, AF Holdings, LLC" is incorrect, and Mr. Gibbs is now, as of two weeks later, not in house counsel to AF Holdings. Incidentally, the same day that Mr. Gibbs filed the amended substitution of counsel in -17- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 18 of 33 Page ID #:757 (7) 1 Paul Duffy, John Steele and Paul Hansemier - Other Attorneys Who 2 Share Responsibility with Mr. Gibbs for Overseeing Prenda's 3 Fraudulent Litigation Scheme Mr. Gibbs surely bears a significant amount of responsibility for Prenda's 4 5 egregious actions, but he has not acted alone--the fraud here is systematic, and part 6 of a conspiracy involving several other lawyers and laypeople. 7 Attorney Paul A. Duffy proclaimed himself the "sole principal" of Prenda 8 Law last fall in a letter to the Court in the Sunlust case. Exhibit Y. Mr. Duffy is 9 admitted to the State Bar of California13 (although he primarily practices in Chicago; 10 in addition to California, Mr. Duffy is also admitted Illinois, Massachusetts and 11 Washington, DC)14, and has appeared as counsel for record for Prenda in various 12 Ingenuity 13 and AF Holdings cases in California. Exhibit Z. Moreover, Mr. Duffy 13 attempted to meet and confer with undersigned counsel about this case, 12-cv-8333, 14 indicating he is involved with this particular litigation now before this Court. 15 Exhibit P. Attorney John L. Steele, like Mr. Gibbs, also purports to merely be "of 16 17 counsel" to Prenda. Dec'l. re: Prenda Law, Exhibit D (Steele's April 20, 2012, entry 18 of appearance as "of counsel" to Prenda in DC case); but see Exhibit N, p. 139:5 19 (Steele tells Judge Scriven on November 27, 2012, "I'm not an attorney with any 20 law firm right now.") then see Supp'l Dec'l. ? 15 (After appearing at a February 13, 21 2013, hearing for Guava, LLC, Steele confirmed to several people that he is still 22 26 that action (1/30/13), he also sent out a letter to several hundred ISP subscribers identified in the St. Clair County Guava, LLC case identifying himself as "In-House Counsel, Guava LLC." Exhibit X. Finally, as noted below, Mr. Gibbs' special counsel in this action has also identified him in the instant OSC response as in-house counsel for Livewire Holdings, LLC, the purported new owner of AF Holdings (note the letterhead used to send out the Guava letter). ECF No. 49, fn 1. 27 13 http://members.calbar.ca.gov/fal/Member/Detail/224159 28 14 http://www.wefightpiracy.com/paul-duffy.php 23 24 25 -18- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 19 of 33 Page ID #:758 1 currently "of counsel" to Prenda Law). However, together with Paul Hansemier, 2 Mr. Steele was the founder of Prenda's predecessor in interest, Steele Hansemier, 3 PLLC. Morover, as indicated, supra, in sections II(b)(1)-(3), Mr. Steele's 4 fingerprints are all over Prenda's various frauds. Almost every time Prenda has had 5 to identify a person connection to a "client" shell entity, the person Prenda has held 6 out to the world has been a current or former close associate of John Steele. Mr. 7 Steele indicates on his LinkedIn page that he "sold [his] client book to Prenda Law 8 in 2011," but in reality, Mr. Steele appears to remain heavily involved in Prenda. 9 Exhibit AA. For example, in the Forbes article (fn 3, supra) Mr. Steele brags about 10 Prenda litigation as if he is speaking about himself. Similarly, many lawyers who 11 deal with Prenda on a regular basis could testify to the fact that inquiries to Prenda 12 are routinely answered by Mr. Steele himself. 13 Attorney Paul L. Hansemeier is also one of the founders of this scheme, and 14 his latest firm, "Alpha Law Firm, LLC," appears to be nothing more than Prenda's 15 newest trade name in Minnesota.15 Like Prenda, the "Alpha Law Firm" also 16 represents the shell company "Guava, LLC" in CFAA / BitTorrent litigation. See 17 Guava, LLC v. Spencer Merkel, Hennepin County, Minnesota District Court No. 27- 18 CV-12-20976, Exhibit BB. Alpha Law's counsel of record in the Guava case, Mr. 19 Michael Dugas, was a former associate for Prenda Law. Exhibit CC. Admittedly, 20 Mr. Hansemeier has apparently made some attempts to try and distance himself from 21 Mr. Steele, and the Prenda name, at least on paper, by creating a new firm name for 22 himself. However, the continued involvement of Alpha Law in the Guava litigation, 23 as well as the role Mr. Hansemeier's client Allan Mooney may have played in the 24 bogus verification in the St. Clair County, Illinois Guava case (where Prenda is 25 26 27 28 15 At the February 19, 2013 30(b)(6) deposition of AF Holdings, Mr. Hansemeier testified that in cases his Alpha Law Firm settled for AF Holdings, the proceeds were paid and deposited into the Prenda trust account, not the Alpha Law Firm trust account. -19- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 20 of 33 Page ID #:759 1 counsel of record, not Alpha Law) suggests Mr. Hansemeier remains involved 2 behind the scenes. 3 Prenda also uses "local counsel" in many jurisdictions around the country. 4 With the possible exception of the Dugases in Minnesota, who may be involved in 5 management, many of these local attorneys appear to have ended up working with 6 Prenda by answering Craigslist ads, and may not comprehend what they are getting 7 themselves into. Since Mr. Gibbs is admitted in California, he has been counsel of 8 record in all of Prenda's California cases, since the early days of Steele Hansemeier 9 (excepting Paul Duffy's recent substitution for Mr. Gibbs in a handful of cases in the 10 11 Northern District of California). In terms of non-attorneys participating in Prenda's scheme, the top of the list 12 would be Paul Hansemeier's brother Peter Hansemeier, who has been Prenda's 13 "technical" expert since the early days of Steele Hansemeier. Close behind Peter 14 Hansemeier would be Mark Lutz, a man who wears many hats for Prenda. In 15 addition to being Mr. Steele's former paralegal, Mr. Lutz is a seasoned telephone 16 solicitor who helps pressure John Doe defendants into settling, and he is also 17 apparently a fraudulent corporate representative for hire, who is Prenda's go-to 18 person to identify as a "client" contact in initial disclosures. On its website, Mr. Lutz 19 is currently listed as a founder of Livewire Holdings, LLC, Prenda's newest affiliate, 20 which has an office at a UPS Store in Washington, DC. Also possibly involved in 21 this scheme, but to an unknown degree would be John Steele's sister Jayme C. 22 Steele, her co-habitant (boyfriend?) Anthony Saltmarsh, and Allan Mooney (Paul 23 Hansemier's client) who is perhaps the "Alan Mony" currently reputed to be the 24 principal of Guava, LLC. 25 26 In short, Mr. Gibbs has had lots of help in defrauding this Court; several other attorneys and laypeople connected to Prenda Law are also culpable. 27 28 -20- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 21 of 33 Page ID #:760 III. ARGUMENT 1 2 (a) All of Prenda's Cases Before this Court are "Sham" Lawsuits Exempted 3 from the Protections of the Noerr-Pennington Doctrine 4 If Prenda had an explanation for the "Alan Cooper" situation, other than 5 intentional fraud, it would have come out by now. Rather than rehash the 6 documentary evidence on a factual issue that will be addressed at the March 11 7 hearing, this section instead addresses the legal ramifications that flow from 8 confirmation of the Prenda's fraud. One important consequence of confirming that Prenda misappropriated Alan 9 10 Cooper's identity would be that Prenda and the lawyers associated with it would lose 11 any potential tort immunity under the Noerr-Pennington doctrine.16 Further, even 12 without forged documents in the copyright chain of title, Prenda's cases still qualify 13 as "sham" lawsuits. 14 (1) The "Sham" Lawsuit Exceptions to the Noerr-Pennington Doctrine 15 Often, plaintiffs can escape tort liability for filing questionable lawsuits by 16 relying on protections of the Noerr-Pennington doctrine, which is the federal 17 counterpart to state law litigation privileges. Essentially, the Noerr-Pennington 18 doctrine protects litigants from retaliatory countersuits when they are using the 19 courts to petition or influence the government (including by filing lawsuits), because 20 such activity is protected under the Petition Clause of the First Amendment to the 21 U.S. Constitution. See Eastern Railroad Presidents Conference v. Noerr Motor 22 Freight, Inc., 365 U.S. 127 (1961); United Mine Workers v. Pennington, 381 U.S. 23 657 (1965). 24 However, there is a general exception to the Noerr-Pennington doctrine for 25 "sham" lawsuits. See California Motor Transport Co. v. Trucking Unlimited, 404 26 U.S. 508, 511 (1972). In an appeal from a Ninth Circuit copyright infringement 27 16 28 This pre-assumes that the Noerr Pennington doctrine, which was originally aimed at antitrust injury, is applicable to lawsuits seeking redress for copyright infringement. -21- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 22 of 33 Page ID #:761 1 case, the U.S. Supreme Court established a two-part test for sham lawsuits. Prof'l 2 Real Estate Investors v. Columbia Pictures Indus., 508 U.S. 49 (1993). First, a sham 3 lawsuit is one that is so "objectively baseless" that "no reasonable litigant could 4 realistically expect success on the merits." Id. at 60. If the first part of the test is 5 met, courts should then examine the plaintiff's subjective motivation, and in so 6 doing, "the court should focus on whether the baseless suit conceals 'an attempt to 7 interfere directly' with the business relationships of a competitor." Id. 8 Since Prof'l Real Estate, the "sham" lawsuit exception to the Noerr- 9 Pennington doctrine has been extended beyond "objectively baseless" lawsuits to 10 include fraudulent lawsuits. Although the U.S. Supreme Court has not explicitly 11 reached the fraud exception to the Noerr-Pennington doctrine, it did leave open the 12 possibility for such a rule (seemingly on purpose) in Prof'l Real Estate. Id. at fn 6 13 (the Court "need not decide here whether and, if so, to what extent Noerr permits the 14 imposition of antitrust liability for a litigants fraud or other misrepresentations.") 15 Several Courts of Appeal,17 including the Ninth Circuit, have picked up on this 16 dicta, and explicitly endorsed a fraudulent litigation exception to the Noerr- 17 Pennington doctrine. In Kottle v. Northwest Kidney Ctrs., 146 F. 3d 1056, 1060 (9th 18 Cir. 1998) the Ninth Circuit explained that where the litigation behavior at issue 19 "consists of making intentional misrepresentations to the court, litigation can be a 20 sham if 'a party's knowing fraud upon, or its intentional misrepresentations to, the 21 court deprive the litigation of its legitimacy." Id. quoting Liberty Lake Inv., Inc. v. 22 Magnuson, 12 F.3d 155, 158 (9th Cir. 1993); see also Clipper Exxpress v. Rocky 23 Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1260 (9th Cir. 1980). In Kaiser Foundation Health Plan, Inc. v. Abbott Laboratories, Inc., 552 F. 3d 24 25 26 27 28 1033 (9th Cir. 2009), the Ninth Circuit further explained that there are essentially 17 Mercatus Group, LLC v. Lake Forest Hosp., 641 F. 3d 834, 842 (7th Cir. 2011); Whelan v. Abell, 48 F. 3d 1247, 1254-55 (D.C. Cir. 1995); Potters Medical Center v. City Hosp. Ass'n., 800 F.2d 568, 580 (6th Cir. 1986); Ottensmeyer v. Chesapeake & Potomac Tel. Co. of Md., 756 F.2d 986, 994 (4th Cir. 1985); Israel v. Baxter Labs., Inc., 466 F.2d 272, 278 (D.C. Cir. 1972) -22- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 23 of 33 Page ID #:762 1 three different kinds of "sham" lawsuits that are not immunized by Noerr- 2 Pennington: (i) "where the lawsuit is objectively baseless and the defendant's motive 3 in bringing it was unlawful"; (ii) "where the conduct involves a series of lawsuits 4 brought pursuant to a policy of starting legal proceedings without regard to the 5 merits and for an unlawful purpose,"; and (iii) "if the allegedly unlawful conduct 6 consists of making intentional misrepresentations to the court, litigation can be 7 deemed a sham if a party's knowing fraud upon, or its intentional misrepresentations 8 to, the court deprive the litigation of its legitimacy." Id. at 1045; quoting Sosa v. 9 DIRECTV, Inc., 437 F.3d 923, 938 (9th Cir. 2006) (citations and internal quotation 10 marks omitted). 11 (2) Intentional Use of Forged Copyright Assignment Agreements in the AF Holdings Cases Deprive These Cases of Legitimacy 12 The AF Holdings cases before this Court are the most obvious "sham" 13 14 lawsuits, because each case is founded upon a forged copyright assignment 15 agreement, purportedly executed for AF Holdings by "Alan Cooper."18 In each AF 16 Holdings case, Prenda's standing and ability to bring the suit in the first place is 17 essentially void ab initio. If Mr. Gibbs argues that he did not know the document 18 was forged when he signed the complaint that does not get him or Prenda off the 19 hook; someone at Prenda (i.e., the person who forged Alan Cooper's signature) was 20 attempting to deceive the Court.19 In short, with respect to the forged copyright 21 18 23 The Ingenuity 13 cases instead attach a Copyright Office printout indicating that the movies at issue were works made for hire for Ingenuity 13, LLC. See, e.g., Ingenuity 13, LLC v. John Doe, C.D. Cal. No. 12-cv-8333, ECF No. 1, p. 14. 24 19 22 25 26 27 28 The motive for all of Prenda's fraud appears to be an attempt to hide the fact that Prenda and/or the lawyers associated with it have essentially become their own clients, by taking a direct pecuniary interest in the outcome of the litigation, through the use of the offshore shell companies. That motive means that the failure to identify the Prenda lawyers as people with a pecuniary interest in the outcome of the litigation in accord with Local Rule 7.1-1 would also be separately sanctionable, per L.R. 83-3. See, Righthaven, LLC v. Democractic Underground, LLC, D. Nev. No. 10-cv-1356, ECF No. 137, 7/15/11 (imposing $5,000 monetary sanction for failure to disclose party with pecuniary interest in litigation per Local Rule 7.1). -23- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 24 of 33 Page ID #:763 1 assignment agreements, Prenda's fraud was intentional, and it goes straight to the 2 heart of the legitimacy of each of the AF Holdings cases, all of which are rendered 3 "sham" lawsuits by the forgery. See Kaiser Foundation, supra, 552 F. 3d at 1045; 4 Sosa, 437 F.3d at 938; Kottle, 146 F. 3d at 1060. 5 (3) The Ingenuity 13 Cases--Indeed, all of Prenda's Cases--Qualify as 6 "Sham" Litigation Because The Cases Are Brought for an Improper 7 Purpose, Without Regard to the Merits 8 9 The following definition of the second kind of fraudulent "sham" lawsuit perfectly describes Prenda's entire business model: "a series of lawsuits brought 10 pursuant to a policy of starting legal proceedings without regard to the merits and for 11 an unlawful purpose." See Kaiser Foundation, supra, 552 F. 3d at 1045. 12 Imagine for a moment what might constitute hard proof of a "policy" of 13 "starting legal proceedings without regard to the merits." In considering this 14 question, the Court need look no farther than Exhibit F to the Dec'l. re: Prenda Law, 15 which is the status report filed by Mr. Gibbs on February 24, 2012, admitting that 16 during the previous year and a half, he and Prenda had filed 118 mass-defendant 17 copyright infringement lawsuits, against 15,878 John Does, but not a single 18 defendant had ever been served in any of these cases. 19 The same pattern has held in the single-defendant cases filed by Prenda. Over 20 and over again, the record has shown that if Prenda cannot get a default judgment, 21 and a John Doe starts to effectively stick up for him or herself, or if a Court takes an 22 active role overseeing the cases, Prenda simply unilaterally dismisses the case, 23 without prejudice. That was exactly what happened in each of the Ingeunity 13 and 24 AF Holdings cases pending in this district. 25 As for Prenda's unlawful purpose, that would be profit through extortion and 26 intimidation. These cases are not really about vindicating copyright rights. Rather, 27 they are about using the threat of statutory damages, and (where they can get away 28 with it) the Court's subpoena power, to leverage Internet users into paying quick -24- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 25 of 33 Page ID #:764 1 settlements, upon threat of grave public embarrassment. That Prenda's scheme is 2 unlawful, and not merely improper is further confirmed by California's criminal 3 prohibition on barratry, which makes unlawful the stirring up of three or more 4 actions "with a corrupt or malicious intent to vex and annoy." Cal. Pen. Code ?? 5 158-59. In sum, all of Prenda's lawsuits in this district are "sham" litigation within the 6 7 meaning of the fraud exceptions to the Noerr-Pennington doctrine. 8 (b) 9 10 Given the Circumstances of These Cases, Prenda Routinely Fails to Comply with its Rule 11(b)(3) Obligations The role Rule 11 standards should play in cases like these with respect to 11 investigation of claims, good faith factual allegations, and borderline legal 12 arguments, has been an underexplored topic in BitTorrent cases. 13 (1) 14 A litigant other than Mr. Gibbs could perhaps make an argument (though not 15 a convincing one) that merely paying the Internet bill for a household is enough, by 16 itself, to justify naming and serving that person as a defendant in a case like this. 17 However, Mr. Gibbs should not now be heard to make such an argument, because he 18 knows better--Mr. Gibbs has gone on record with his view about this issue, multiple 19 times, in prior court filings. 20 Mr. Gibbs' Past Statements on the Rule 11 Implications of These Cases As further detailed in the Dec'l. re: Prenda Law, ?? 21-22, on at least four 21 separate occasions, Mr. Gibbs has addressed this Rule 11 issue with various other 22 courts. Mr. Gibbs has confidently assured the courts that, in his view, additional 23 investigation beyond the ISP subpoena is required in order to have a good faith basis 24 to allege that an Internet user is a defendant in a case like this. When Prenda is 25 seeking to obtain extensions of a Rule 4(m) deadline, and trying to explain to 26 suspicious Judges why no John Doe defendants have been named and served, this 27 has been the answer: 'Nobody has yet been served, because Prenda needed to do 28 -25- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 26 of 33 Page ID #:765 1 more investigation of the ISP subscribers identified in the subpoena return in order 2 to have a good faith basis to name and serve them.' If and to the extent that Mr. Gibbs now reverses course and suggests that the 3 4 subpoena return itself is sufficient, under Rule 11(b)(3) to justify signing a 5 complaint naming someone as a defendant, he should be judicially estopped from 6 making the argument, because it directly contradicts his prior stance on this issue. 7 (2) 8 In considering the objective reasonableness of Prenda's additional 9 "investigation" of Mr. Wagar and Mr. Denton which led to Mr. Gibbs signing a 10 "Inquiry Reasonable Under the Circumstances" pleading naming them as defendants, several "circumstances" should be considered. First, Prenda's lawsuits are calculated to embarrass, because they all involve 11 12 allegations of illegally downloading pornography. Given the salacious content, and 13 the fact that in a case like this, the embarrassing allegations can turn a person with 14 meritorious defenses into an immediate loser, Prenda (and similar pornography 15 plaintiffs) should have a heightened duty under this rule. That is, under the 16 circumstances of these cases, with their propensity to embarrass, the investigation 17 required to name someone as a defendant should be a little higher than in cases 18 involving more mundane content. Because the stakes for the defendant are higher, 19 so should they be higher for the plaintiff as well.20 Second, Prenda's routine practice of publicly shaming the people it "names" 20 21 on its website is another circumstance that should be taken into account when 22 evaluating the objective reasonableness of Mr. Gibb's conduct here. Similarly, 23 third, Prenda's routine practice of dismissing most of its cases without prejudice at 24 the first hint of trouble, is another circumstance that should be taken into 25 consideration. 26 27 28 20 If Prenda objects to being held to a higher pleading standard based on the content of the copyrighted works at issue, then it could simply seek leave to name people under seal, or subject to a protective order guarding against public disclosure (Prenda never does this) which is another way to mitigate the harm. -26- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 27 of 33 Page ID #:766 1 Fourth, Prenda has hundreds of these lawsuits against tens of thousands of 2 defendants; as a professional BitTorrent copyright infringement litigant, a higher 3 degree of factual certainty and investigation can and should be required of Prenda 4 than might be asked of other litigants. 5 Taken together, all four of these circumstances militate in favor of a finding 6 that Mr. Gibb's factual investigation in the Wagar and Denton cases was objectively 7 unreasonable. 8 (3) Other Examples of Prenda's Shoddy "Investigation" 9 Notwithstanding his several representations to various Courts, and the specific 10 warning on this issue from Judge Seeborg, Mr. Gibbs has repeatedly relied on 11 shoddy, objectively unreasonable investigations in order to try and name people in 12 complaints. Mr. Wagar and Mr. Denton are not alone; other Internet users 13 victimized by Mr. Gibbs' lax interpretation of Rule 11(b)(3) include Jesse Nason, 14 Josh Hatfield, and John Botson. 15 The circumstances of Mr. Gibb's shoddy additional "investigation" in the 16 Nason and Hatfield cases are described in detail in the Dec'l re: Prenda Law, ?? 23- 17 28. Mr. Gibbs' insufficient investigation in the Botson case is memorialized at AF 18 Holdings, LLC v. John Doe, N.D. Cal. No. 12-cv-02048-EJD (ECF No. 30, 11/6/12). 19 In each of these cases, when pressed to explain the "investigation" that had 20 supposedly identified the defendant, Mr. Gibbs responded with paltry "facts," which 21 turned out to the incorrect. 22 (4) The "Snapshot" Theory of Copyright Infringement 23 Undersigned counsel agrees with the Court that based on the factual 24 allegations at issue in this group of cases, accusing the defendants of copyright 25 infringement likely veers into questionable territory. 26 In sum, Mr. Gibbs decision to name Mr. Wagar and Mr. Denton is part of 27 another pattern, whereby Mr. Gibbs has taken a purposefully lax stance on Rule 28 11(b), in order to maximize the extortionate impact of these kinds of cases. -27- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 28 of 33 Page ID #:767 1 (c) There is No Excuse for Violating the Court's Discovery Order 2 These violations speak for themselves. Apparently, while under orders from 3 the Court to suspend discovery efforts, Prenda continued right on running the usual 4 playbook. As noted above, Mr. Gibbs' proffered explanation does not hold water in 5 light of the directly contradictory declarations offered by AT&T. Dec'l. of Bart 6 Huffman; Dec'l. of Camille D. Kerr. 7 IV. CURSORY REBUTTAL TO MR. GIBBS' OSC RESPONSE 8 The first thing that should be pointed out about Mr. Gibbs OSC response is 9 that somebody is mistaken (or lying) about who owns AF Holdings. On the same 10 day that Mr. Gibbs special counsel filed a pleading stating that AF Holdings was 11 recently sold to Livewire Holdings, LLC, an AF Holdings 30(b)(6) witness sat in a 12 deposition and testified that AF Holdings sole owner is a Nevis trust. Mr. 13 Hansemeier testified at the deposition that AF Holdings is not sure who formed this 14 trust (other than the paid incorporator), where it is organized, whether there are any 15 trust documents, what the name of the trust is, who might have a beneficial 16 ownership interest in the trust, or who would have authority to terminate the trust. 17 Mr. Hansemeier sat there and testified to all this with Mr. Gibbs (who, according to 18 his own special counsel, at ECF No. 49. p.1, became general counsel of the company 19 that acquired AF Holdings, Livewire Holdings, LLC back in January) right there at 20 his side, as counsel of record for AF Holdings. In short, the story his evening is that 21 AF Holdings was sold several weeks ago to Livewire Holdings (Mr. Gibbs new 22 employer). But the story this afternoon was that AF Holdings is owned by a 23 mystery trust. Clearly, someone is wrong. 24 A second, major misrepresentation in the OSC response: when Mr. Gibbs first 25 saw the name Alan Cooper. Mr. Gibbs' special counsel states that "Indeed, the first 26 time Mr. Gibbs saw the name "Alan Cooper" was on the copyright assignment that 27 was attached to the complaints in the litigations regarding the copyrights." ECF No. 28 49, at 25:5-8. This is also false. See Exhibit L. Assuming he looked at the verified -28- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 29 of 33 Page ID #:768 1 petition he filed before filing it (which special counsel says was his custom and 2 practice) Mr. Gibbs would have seen Alan Cooper's name on the verification page to 3 a petition Mr. Gibbs filed (while still at Steele Hansemeier) for Ingenuity 13 back in 4 2011 in In the Matter of a Petition by Ingenuity 13, LLC, E.D. Cal No. 11-mc-0084, 5 ECF No. 1, p. 8 (Exhibit L). Special counsel's attempt to explains away this prior, 6 verification, with a "/s/" signature with Alan Cooper's name on it are not 7 convincing. Depending on when "exhaustion of all appeals" occurred in that action, 8 Mr. Gibbs likely would have still been under a duty to keep a copy of the original as 9 of December 2012 when he was being asked to produce it. See E.D. Cal. L.R. 10 131(f).21 Finally, the attempt to explain away the apparently fraudulent verification in 11 12 the St. Clair County, Illinois Guava action (a case where Mr. Gibbs has recently 13 started signing his name to demand letters) should not be credited. Although the 14 verification in that case purports to be "notarized," the "notarization" consists of an 15 illegible squiggle, and Prenda still has not disclosed the name, notary seal number, 16 or state of registration of the purported notary. Further, it also appears that Prenda 17 may be playing games with the spelling of Alan Mooney. 18 V. RELIEF REQUESTED 19 (a) Substantial Monetary Sanction Against Prenda Law, Inc. in an Amount 20 Sufficient to Have a Significant Deterrent Effect on a Repeat Bad Actor 21 In order to have a meaningful deterrent effect on a litigation enterprise which 22 has bragged about making millions of dollars in this kind of litigation, and which has 23 21 24 25 26 27 28 "(f) Non-Attorney's Electronic Signature. Documents that are required to be signed by a person who is not the attorney of record in a particular action (verified pleadings, affidavits, papers authorized to be filed electronically by persons in pro per, etc.), may be submitted in electronic format bearing a "/s/" and the person's name on the signature line along with a statement that counsel has a signed original, e.g., "/s/ John Doe (original signature retained by attorney Mary Roe)." It is counsel's duty to maintain this original signature for one year after the exhaustion of all appeals. This procedure may also be followed when a hybrid electronic/paper document is filed, i.e., the conventionally served document may also contain an annotated signature in lieu of the original." -29- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 30 of 33 Page ID #:769 1 repeatedly ignored ethical duties, and skirted rules on perjury, a substantial sanction 2 is appropriate. Mr. Gibbs has filed 45 sham lawsuits in this district. A sanction of 3 $10,000 per suit would work out to $450,000, which is an amount that would have a 4 meaningful deterrent effect on Prenda and its associated attorneys. If the Court 5 deems that amount too high, perhaps the Court would consider instead a sanction of 6 $4,000 per case, which is the amount Ingenuity 13 has sought for up-front 7 settlements in the cases now before this Court. See ECF No. 13-2, p. 1 (email from 8 Mr. Gibbs to Mr. Pietz offering to settle the 12-cv-8333 action for $4,000 at the 9 outset of litigation). This sanction should be paid to the Clerk of Court by Prenda Law, Inc., and if 10 11 not satisfied by Prenda itself, the attorneys running Prenda, including Mr. Gibbs, 12 should make good on the amount owing as a matter of personal liability as attorneys 13 engaged in a fraudulent (but extremely profitable) enterprise. Sanctions are also appropriate "when an attorney is cavalier or bent on 14 15 misleading the court; intentionally acts without a plausible basis; [or] when the 16 entire course of the proceedings was unwarranted." Miera v. Dairyland Ins. Co., 143 17 F.3d 1337, 1342 (10th Cir. 1998) (quotations and internal citations omitted); see also 18 In re: Estate of Ferdinand E. Marcos Human Rights Litigation, Ninth Circuit No. 19 11-15487 (unpublished) (October 24, 2012) (affirming $353,600,000 contempt 20 judgment and $100,000 per day contempt sanction).22 21 (b) Award of Attorneys Fees and Costs, as Compensatory Sanction, Payable 22 by Mr. Brett Gibbs 23 On behalf of the putative John Doe defendant in 12-cv-8333, undersigned 24 counsel has billed substantial time in this matter. Calling Prenda to account for its 25 various frauds on the Court is time-consuming, detail-oriented work. Further, Mr. 26 Gibbs has filed several frivolous motions in this matter, including two identical 27 28 22 A copy of this unpublished opinion is attached as Exhibit DD. -30- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 31 of 33 Page ID #:770 1 sanctions motions against the undersigned, and an entirely frivolous disqualification 2 motion, which undersigned counsel spent considerable time responding to. The total 3 costs and attorneys fees billable to the client to date in this matter is likely to be 4 close to $25,000. If the Court so desires, undersigned counsel would be happy to 5 substantiate these costs and fees at or after the hearing on the sanctions motion. Undersigned counsel shares the Court's suspicion that Prenda's shell 6 7 companies do not have any assets. Indeed, in an opposition to a motion by a named 8 defendant to require AF Holdings to post and undertaking to proceed with the case, 9 Mr. Gibbs specifically argued that the undertaking should not be granted because, if 10 it was, AF Holdings could not pay it. See AF Holdings v. Navasca, N.D. Cal. No. 11 12-cv-2396-EMC, ECF No. 34, p. 1 ("Plaintiff simply cannot afford to post the 12 $48,000 required by the Trinh Court to pursue its claims.") Further, at the February 19, 2013 30(b)(6) deposition of AF Holdings, the 13 14 company's corporate representative Paul Hansemeier testified that AF Holdings has 15 "never recognized any income" and that all of the company's assets fit into one of 16 two categories. The first asset category is that AF Holdings owns copyrights. 17 According to Mr. Hansemeier, the second class of assets is that, to the extent that AF 18 Holdings has cash, all of the cash is located in the client trust accounts of AF 19 Holdings' various attorneys, including Prenda Law, Inc. and the Anti-Piracy Law 20 Group. Mr. Hansemeier testified that aside from reimbursement for costs and 21 attorneys fees, all of the rest of AF Holdings money simply sits in its attorneys' trust 22 accounts, so it can be used to finance further litigation. 23 Although undersigned counsel is loathe to do so, under the circumstances of 23 24 this case, it is respectfully requested that the attorneys fee award be made payable by 25 Mr. Gibbs. It seems wrong that a massive enterprise that brags about making 26 millions of dollars should somehow avoid paying attorneys fees by pleading penury. 27 23 28 Undersigned counsel is doing his best to faithfully render this testimony, which was offered earlier today. -31- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 32 of 33 Page ID #:771 See Mick Haig Prods. E.K. v. Does 1-160, 687 F.3d 649, 652 (5th Cir. 2012) 1 2 (upholding sanctions entered against a mass BitTorrent copyright plaintiff's 3 attorney). Further, the imposition of attorney fees "must be available in 4 appropriate circumstances notwithstanding a private party's effort to cut its losses 5 and run out of court, using Rule 41 as an emergency exit." Cooter & Gell v. 6 Hartmarx Corp., 496 U.S. 384, 390 (1990) (citing Danik, Inc. v. Hartmarx Corp., 7 875 F.2d 890, 895 (D.C. 1989)). 8 (c) The putative John Doe in 12-cv-8333 further requests that, as a sanction, the 9 10 Striking of the Complaint With Prejudice, and Specific Factual Findings complaint in this matter be stricken with prejudice. See id. In addition, it is requested that the Court find that the AF Holdings cases in 11 12 this district are fraudulent, "sham" litigation because they are founded on forged 13 copyright assignment agreements, making the entire action illegitimate. Kaiser 14 Foundation, supra, 552 F. 3d at 1045 Similarly, it is requested that the Court find that the Ingenuity 13 cases in this 15 16 district are fraudulent, "sham" litigation because the cases were brought for an 17 improper purpose, without regard to the merits. Id. It is also requested that the Court find that Prenda "excited" the AF Holdings 18 19 and Ingenuity 13 cases in this district, and that these cases were brought "with a 20 corrupt or malicious intent to vex and annoy." See Cal. Pen. Code ?? 158-59. If the 21 Court is inclined to consider the entry of a vexatious litigant or pre-filing sanction, 22 undersigned counsel would be willing to further brief the issue. 23 (d) 24 25 Such Other Relief as the Court Deems Just and Proper To the extent other sanctions may be appropriate, such further measures are left to the sound discretion of the Court. 26 27 28 -32- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF Case 2:12-cv-08333-ODW-JC Document 52 Filed 02/19/13 Page 33 of 33 Page ID #:772 VI. CONCLUSION 1 2 The conduct of Prenda and its "of counsel" Mr. Gibbs in these cases 3 undermines the integrity of the courts and the public's confidence in the justice 4 system. Here, Prenda has shown is that it is willing to do just about anything to 5 obtain grist for its national "settlement" mill. Repeatedly, in hundreds of actions 6 filed in courts across the country, Prenda has resorted to misrepresentations, half- 7 truths, and questionable tactics, if not outright fraud, forgery, and identity theft. 8 Until now, Prenda has gotten away with quite a lot of these kinds of tactics because 9 it simply abandons its lawsuits, via a voluntary dismissal, after obtaining subpoena 10 returns, and some settlements. Indeed, as noted above, Mr. Gibbs is already at it 11 again, now sending out demand letters on behalf of Guava, LLC, which is now 12 purportedly owned by Livewire Holdings, LLC not a mystery trust. Exactly who is 13 responsible for the worst of Prenda's actions here may not yet be clear, but this is the 14 archetypical type of case, where there is a pattern of bad action that is done in such a 15 way to avoid scrutiny, where a major sanctions is appropriate as a deterrent. This 16 Court is urged not to go easy on Mr. Gibbs or Prenda Law. 17 18 19 Respectfully submitted, DATED: February 19, 2013 THE PIETZ LAW FIRM 20 21 /s/ Morgan E. Pietz 22 Morgan E. Pietz THE PIETZ LAW FIRM Attorney for Putative John Doe(s) Appearing on Caption 23 24 25 26 27 28 -33- PUTATIVE JOHN DOE'S RESPONSE TO ORDER TO SHOW CAUSE RE SANCTIONS FOR RULE 11 AND LOCAL RULE 83-3 VIOLATIONS AND REQUEST FOR RELIEF