Report from another epic Prenda hearing (AF Holdings v. Patel, 1/28/2014)

Posted: January 28, 2014 by SJD in Community contributions, Prenda
Tags: , , , , , , , , , , , , ,

Today a long anticipated hearing in the AF Holdings v. Patel (GAND 12-cv-00262) took place in Gainesville, Georgia. Oralia Oglesbee was there and documented the event. Let us thank her: it is understandable how challenging the task was.

Although I previously reported on this case (I counted four posts), this case is so eventful that I did not cover all the important moments, especially the recent ones. Fortunately, there are stories on the net that fill the gap, particularly the one by Mike Masnick that discussed the order that called for this hearing.

In short, Judge O’Kelley was unhappy with both parties (primarily with Prenda) and ordered AF Holdings’ counsel Jacque Nazaire to explain a lot of things related to Prenda’s shenanigans (the only alleged violation defense attorney Blair Chintella would need to address was his campaign to crowdfund Mark Lutz’s deposition). The conclusion of the order suggested that the judge was quite serious about getting to the bottom of things:


US District Judge
William Clark O’Kelley

In case this order did not adequately drive the point home earlier, the court is not pleased with how this litigation has progressed. Failure to attend the show cause hearing will not be well received. Failure to attend will result in severe sanctions and may result in referral to the State Bar of Georgia. Failure to directly address the court’s concerns will result in equally severe sanctions.

Notwithstanding this court’s prior order prohibiting the parties from filing additional motions, the parties may file a supplemental brief addressing the court’s concerns to the extent that the supplemental brief provides facts not already present in the record. The parties are strongly encouraged to bring any relevant evidence to the show cause hearing. Specifically, plaintiff must produce the original assignment agreement for inspection. If a party wishes to present testimony that it deems critical to its case, the party should be prepared to solicit that testimony through a live witness. The parties are on notice that they may not use affidavits as a means to circumvent cross examination.

 

Spring Street courtroom, 300 GAND Gainesville, Georgia, 10 am.

Defendant Rajesh Patel & his attorney Blair Chintella sit on defendant’s side, Mark Lutz and Jacques Nazaire — on plaintiff’s side. Attorney for Comcast Michael Goldman is there along with me, Kat, and two other people, who looked to be attorneys and the court staff. Judge O’Kelly enters the courtroom. Show cause hearing is announced. Nazaire requests that any witnesses on defendant’s side be sequestered. Graham Syfert has to leave the courtroom. Nazaire asks if Andrew Norton will be testifying. Blair informs court that Andrew has been unable to attend. Court will address Nazaire’s motion to withdraw at the end, asks Nazaire how long he will be on active duty. He says: “One year.” Court asks where he will be stationed, and Nazaire replies he doesn’t want to say because of the nature of the case. Eventually says: “Fort Benning.” O’Kelly wants to get on with it because he is worried about the weather.

The first issue that Blair wants to address is the crowdfunding, he calls Patel to the witness stand and Patel is sworn in. Patel manages two gas stations and repairs computers on the side. He states he was served to one of his parents at home, which he thought was weird, since it was the business IP address that was recorded in the alleged infringement. He gave $2,000 to Blair as a retainer agreement, and they agreed that more funds may be needed depending on what happens in the case. Patel was made aware of the ability to crowdsource the funds after discovery and agreed to do so, he also told Blair to link or notify people about the case, so the public would know what’s going on. Blair finishes, and it’s Nazaire’s turn to cross.

Nazaire asks when Patel found out about the case. Patel states: “About 9 months ago.” Nazaire asks if he knows that the case has been dismissed with prejudice. Patel states “yes.” Nazaire asks if he knows what “with prejudice” means. Patel says “yes,” and Nazaire asks why he needed funds if the case had been dismissed. Patel says he felt the case was filed in bad faith, that he was being unfairly targeted. Nazaire asks when the crowdfunding began, Patel states: “June or July.” Nazaire asks how much money was collected. Patel says around $3,200. Nazaire asks how it was collected, and Patel responds: “With a crowdfunding site.” Nazaire asks Patel about an IOTA account, and if the funds were going there. Patel says he doesn’t know what that is. Nazaire asks if Patel had ever received a letter with an account number explaining the accounting of the funds, Patel says “no.” Nazaire asks if he knows the names of the people who donated, Patel says he doesn’t. Nazaire asks if anything was promised to the people who donated to the crowdfunding, Patel says “no.” Nazaire asks about the gas stations with Wi-Fi, if it was password protected, he states “yes.” Nazaire asks if he has ever been contacted by Lutz, he says “no.” Nazaire asks if Patel ever tried to contact AF Holdings, Patel says: “No that’s why I hired an attorney.” Nazaire rests. Blair’s turn for redirect.

Blair asks Patel if he was told the money was going into a trust account. Patel says “no.” Blair asks if he received an email about the crowdfunding, he states he did. Blair asks if the money was compensation for legal fees to attorney, Patel says “no.” Blair rests. Nazaire recross asks if Patel knew that one of the donors was Blair’s mom, Patel said no, Nazaire asks if he knew that a video of Mark Lutz was promised to the funders, Patel says “no.” So this is when I look up to see Steele’s dead eyes staring back at me: he had taken a seat not directly behind Nazaire but pretty close.

The judge then asks Blair if he is planning on perusing anything to do with his motion against plaintiff, which he was expecting to hear today. Blair says: “We haven’t got all the discovery in the case yet.” And this is where the judge starts to lay into both Blair & Nazaire. Judge:

Both of you , this matter has gotten out of hand, it’s a battle between two opposing sides, all over principals that surrounded this case. It’s like starting all over again. I allowed you to proceed, neither of you know what you are doing. I got put off by both sides, I wanted this hearing today to close this case. I’m very concerned about this case: it took on a totally different nature. I thought it may take all day long, I don’t want this to go on another year or two. These items were just preliminary, I just added them on because I was so disgusted, I thought you would let someone handle the case. Some of the allegations are criminal, and I will get to the bottom of it. Is there anything legitimate about this case?

Nazaire pops in and says $3,100 was offered to defendant to settle this matter. Judge O’Kelly says they are trying to buy out, how rotten this matter is, and continues: “We have had seen 20 to 35 of these cases in this court, 2-3 cases were mine, upon reflection, they weren’t handled right. I wouldn’t have known about these issues if defendant hadn’t told me after the case was closed. I’m not going to let this continue, you are stopped. This is the day to use it.” Blair says: “We don’t have enough, it’s been extremely difficult without cooperation in our discovery efforts.” O’Kelly says: “I could have had a heyday with this case in a professional matter. I’ve got concerns, some I’m willing to turn loose and tell you to go find something else to do. I don’t have time for this, I want to conclude this. We have had many of these cases, and I don’t know what went on. There have been comments here at the lunch table about council in this case, and you don’t have a good reputation in the Northern district of Georgia, or anywhere in the country. Most cases have just gone by, but I’m disgusted with the way it’s been presented, and this is directed at both sides since this thing was filed.”

Nazaire calls Blair to the stand to explain the crowdsourcing and how it relates to discovery. Blair says the funds went into his trust account. Nazaire asks Blair about his bankruptcy, and Blair says he wasn’t prepared to discuss his bankruptcy today. Judge says a bankruptcy trustee would be needed to talk about that. Nazaire withdraws his question about Blair’s bankruptcy. Nazaire asks how much money is in the account, Blair states $3,200. Nazaire asks if any of the funds have been used, Blair states yes, but he didn’t know how much. Nazaire says that Patel had testified that none of the money had been used, Blair says he doesn’t think that is what Patel said. Nazaire asks if he used the money for certain things, and Blair invokes his attorney-client privilege. Judge wants to know where this is going, Nazaire says that other attorneys are donating to the fund because they want discovery, in return he said he’d send them a video. They are going behind the backs of federal judges to get discovery. O’Kelley says that judge didn’t give discovery. And continues: “AF Holdings was used in this court, but there was another name, I don’t remember what that is, but once they depose, they will have evidence in their files, I don’t know why it can’t be shared, and a protective order can’t be utilized. Nazaire says preventing co-mingling of funds is what he’s talking about. O’Kelley says: “You haven’t showed me any co-mingling of funds in this case.” He then goes on to explain how trust accounts work to Nazaire. 15 min recess is called.

On the way to the elevator Blair, smiling, asks Steele where he is living these days. You could see red in John’s eyes when he told Blair to stop with the cattiness, this is a serious matter we are in a courtroom here. John takes the stairs with Nazaire & Lutz, and we take the elevator to meet at the bottom floor. We all head outside, Lutz, Steele, and Nazaire go the opposite direction.


Mark Lutz

After recess, Nazaire is yelled at for not standing at the lecture stand when speaking, he also mumbles a lot. The court reporter had to tell him to stop mumbling. Nazaire starts. He says the first issue is cooperate disclosure, he filed that document showing AF Holdings as the only interest holder. He calls Mark Lutz to the stand. Lutz is sworn in. He is wearing a suit & buzzcut by the way. Nazaire asks what Lutz’s connection to AF Holdings is. Lutz says he is the trustee. Nazaire asks if he owns AF Holdings, Lutz says: “For lack of a better term, yes, it was a trust created in Nevis, no one else holds any interest.” Nazaire asks if Duffy, Steele or Hansmeier own any interest in AF Holdings, Lutz says “no.” Nazaire asks: “Am I the only attorney working for plaintiff in this case?” Lutz says “yes.” Nazaire asks if he was supposed to do a deposition for this case. Lutz says: “Yes, but that was simply to humiliate me, I saw the website, and there is a video being offered for whoever wanted to see it, and make fun of.” Nazaire asks if Lutz has received harassing emails or calls, Lutz says “yes.” Nazaire wants to know why they might want a video of Lutz, Lutz replies: “People would find it entertaining, I guess. The site was advertising the video of the deposition, they wanted to make a circus out of it.” Nazaire asks if AF Holdings is a large corporation, Lutz says: “No, just myself.” Nazaire asks if Lutz has ever spoken to Patel, Lutz says: “Yes, Gibbs informed me of the infringement, and I contacted Patel, he said he had gas stations with free WiFi, which I found hard to believe. I’ve never heard of a gas station having a free WiFi.” Nazaire asks if Lutz had the assignment, Lutz said: “No, Gibbs did.” Nazaire asks why he asked Gibbs to go after Patel, Lutz says that he explained the situation to Gibbs and told him to proceed as necessary. Nazaire asks: “It was a legitimate subpoena via Judge Howell, correct?” Lutz said “yes.” Nazaire asks if it was valid. Lutz says: “I assume so.” Nazaire asks if he has other cases like these before. Lutz says “yes.” Nazaire asks if any of these judges found it reasonable to sue over this assignment. Lutz says “yes.” Nazaire asks if Lutz has been able to testify before, Lutz says “no.” Nazaire asks how this has affected his business. Lutz states that it killed his brand, and he’s starting a new business in a new industry. Nazaire asks if Lutz has lost money on this case. Lutz says “no.” Nazaire asks what about airfare here, hotel & food? Lutz says he did lose that: $400 for the flight, and $100 for the room. Nazaire has no further questions for Lutz. Blair to cross.

Blair asks: “Are you familiar with John Steele? Is he here?” Nazaire objects. Overruled. Lutz says John is a friend of his, but they have no business together now. Steele was at one time a business associate. Blair asks if he ever lived with Steele, Lutz said “no.” Blair asks if they ever had a lease together. Lutz says “yes.” Nazaire objects again, overruled again. Blare asks if Lutz is familiar with AF Holdings v. Navasca, Nazaire objects, Blair withdraws the question. Blair asks what properties or assets AF Holdings holds. Lutz says “none.” Blair asks how AF Holdings conducted business. Lutz says: “We purchased copyrights, which were worth nothing, eliminated the infringement and then moved forward.” Blair asks who “we” is. Lutz says “me.” Nazaire objects, overruled. Blair asks who Paul Hansmeier is. Lutz says he had represented cases before. Blair says: “Was there anything else?” Lutz says “no.” Blair asks: “What about the deposition in California?” Lutz says: “Oh, yes.” Blair asks if he was paid. Lutz says “no.” Blair asks who all Lutz’s attorneys are. Lutz says: “At one time we had 9 or 10.” Blair again asks who “we” is. Lutz says AF Holdings. Blair asks who the attorneys were that have represented AF Holdings, Lutz says: “Gibbs, Nazaire…” And he is then interrupted by Nazaire calling objection for attorney-client privilege. The judge says he hasn’t even asked anything yet about client-attorney privilege. Nazaire nonetheless asks to note his objection. Blair asks Lutz if he spoke to someone about the California AF Holdings deposition. Lutz replies “yes.” Blair asks if it was Hansmeier. Nazaire objects, and the objection is sustained. Blair starts another question: “Do you know at that deposition it was said that…” Nazaire calls objection. Sustained.

Blair asks if the content was being distributed. Lutz says not by him, he couldn’t make any money off it. Blair pulls out two DVDs saying he has copies of the movies that he purchased online and had sent to his office. Nazaire objects to authenticity. Judge inspects DVDs, mailing envelopes, and invoices; as he is looking at the DVDs, he says he sees no copyright notice, and allows Blair to proceed. Blair approaches the stand and asks Lutz if he recognizes the registrations he handed him. Lutz says “no.” Blair asks if that is his signature on the document, Lutz says “no,” he assumes its Paul Hansmeir’s signature. Blair asks if Lutz is familiar with the Lincoln road address in Miami, Lutz says “yes,” he was a paralegal for Steele Hansmeier at that address. Nazaire objects to relevancy, Blair withdraws question. Blair asks Lutz to identify the signature on the certificate of designation document, Lutz says it is his own signature. Blair asks Lutz if he is familiar with what a registered agent does, Lutz says he didn’t know he had a specific duty. Blair asks: “When you were a paralegal at Steele Hansmeier, did you ever work on any AF Holdings cases.” Lutz states “yes.” Blair asked who owned Steele Hansmeier, Lutz says Steele and Hansmeier did. Blair asks Lutz if Prenda Law represented any AF Holdings cases in Georgia. Lutz says he doesn’t know.

Blair asks if Lutz knows Duffy. Lutz says he was his previous employer at Prenda Law and the owner. Nazaire objects saying this is taking too long, and they could be here all day. Judge says so be it. Blair asks if AF Holdings was a client of Prenda Law, Lutz says “yes.” Blair asks if AF Holdings was a client under both employers, Lutz says “yes”: Steele and Hansmeier oversaw his work at Steele Hansmeier firm. Blair asks if Popular Demand movie was being distributed at that time. Lutz says: “Not by me.” Blair asks if Lutz is aware of anyone else distributing the film other than Bittorrent? Lutz says “no.” Blair tenders DVDs as evidence.

Blair asks Lutz who owns AF Holdings. Lutz says a trust. Blair asks: “What trust?” Lutz says: “Saltmarsh.” Blair asks if it was ever any other name. Lutz says “yes,” but he can’t remember what it was, the trust was set up with the help of the company Nevis Trust Services, Ms. Nesbit assisted in making the trust. Blair asks if Lutz knows who Steven Goodhue is. Lutz says: “Yes he is an attorney in Arizona that has represented AF Holdings.” Blair asks if he is familiar with the Harris case. Lutz says “yes.” Blair asks if anyone would have dealt with Goodhue on Lutz’s behalf. Lutz says: “Yes, Gibbs.” Blair continues: “In the document from the July 19, 2013 hearing in Harris’s case, Goodhue says the trust is named AF Trust, can you reconcile those discrepancies?” Nazaire objects, sustained. O’Kelley says to Blair: “You are not making a very good impression on me , let’s move on. He testifies the trust had a different name, I don’t know where the inconsistency is at. But since you are objecting (to Nazaire), I think I’ll let him go on.” Lutz says: “Actually, I need to clarify that. Thank you for bringing it up, Goodhue is correct. Originally when I set it up, I didn’t have my passport, so it originally was Saltmarsh. Then, when I had my passport, I had it changed to AF Trust.” Blair says that’s not what Lutz testified to earlier, Lutz says: “Yes I was incorrect.” Blair asks Lutz if the trust receives any money from AF Holdings. Lutz says: “I don’t know.” Blair asks if he has ever handled money for AF Holdings. Lutz says: “Yes, the Prenda Law trust account in beginning of 2013; the only money received was for settlements of copyright infringement cases.” Blair asks if he knows the amounts of any of these payments, Lutz says “no.” Bair asks who would have that information, Lutz says Duffy or Gibbs. Blair asks if Steele would know. Lutz says “no.” Blair asks why Steele was here today (he never returned after the first recess). Lutz says: “I don’t know.” Blair asks if Lutz rode with Steele, Lutz says Steele was on the same flight as him. Blair approaches Lutz with documents — requests for production. Blair asks if he knows what they are. Lutz says he doesn’t know because he’s not an attorney. Blair asks if Lutz provided the responses. Lutz said: “I assume I did, yes.” Blair starts to ask Lutz about request for admissions. At this moment the judge interrupts with: “What are you trying to prove? The court is already closed in Atlanta, do you want to spend the rest of the week in hotels up here?” Blair states that AF Holdings has misled Nazaire, if it’s not Nazaire’s own fault, and he’d like to show the court. No discovery requests were ever signed by anyone but Nazaire. O’Kelly says: “Well, you went about it agonizingly, instead of asking 25 questions, you could have just asked two. How much longer is this going to be?” Blair: “Well, we haven’t yet seen the copyright assignment, which you requested , and they haven’t responded to any of my interrogatories.” Nazaire says he would like to move forward to his motion to withdraw. 15 min recess to check the weather.

Return from recess. Judge saw both attorneys in his chambers during recess. The judge says: “There are two or three things I want to deal with, one is the issue of preclusion on Wright’s order. Are there any questions to it’s authenticity? Not how truthful it is, but its validity?” Nazaire says “no.” O’Kelley says the court will accept that with no further proof. He then addresses Lutz and says: “Your attorney Nazaire needs to withdraw, do you have a problem with that?” Lutz says: “No, he’s been great and I appreciate his services.” Judge asks Lutz if he will be getting another attorney. Lutz says he will have to think about it. Judge says: “It’s a corporation, you have to have an attorney. So have an attorney enter their appearance within 10 days, or the court will strike all of AF Holdings statements from the record and decide from there.” Lutz says “OK.” O’Kelley says to Nazaire: “We will relieve you as an attorney, but you are not let off for being a respondent, and we will set that, let your superiors know to give you a schedule, so we can accommodate the military.” Judge asks if Nazaire has the original copyright assignment. He says: “Lutz had it.” Lutz says that Gibbs was the last one who had it, but due to the circumstances, he won’t return phone calls. Judge says: “So, you don’t have the original?” Lutz says: “No, the attorney’s have it.”

Judge O’Kelley adjourned court for inclement weather, will reset hearing.

Followup
Comments
  1. Good write-up Oralia.
    Yeah, I couldn’t be there. Mainly because I had my car engine blow up a week or two ago, and I had no replacement (tried over the weekend but couldn’t get anything suitable), but even if I had, the same weather conditions that cut the hearing short, meant that my kids school day was cut short, and so I’d have to be home to meet them. Snow’s gotten pretty bad here, I’m barely going to walk to get the mail tomorrow!

    Should be there next time however.

  2. James says:

    It seems that the judge remains upset at both attorneys, but that he is cutting Blair a lot more slack than our friend Jacques. I find it interesting that Steele made the trip but didn’t hang around for long; what was that all about?

    • simality says:

      @James I didn’t feel that they he was cutting Blair more slack as much as Nazaire was pissing him off more often. Nazaire objected to EVERYTHING that might not go his way. At one point the judge said, “Well, since you keep objecting I’m going to let him [Blair] keep talking”. Or something to that effect.

      But the Judge did fuss at Blair a fair amount. He even went so far as to say that he had considered removing Blair from the case and putting someone else in charge. Which, for me at least, was a real jaw-dropping moment.

    • simality says:

      I think Steele might of been worried about being called as a witness.

  3. WDS says:

    Did anybody check to see if Lutz had an earbud in. Steele could have been feeding him answers from outside. :)

  4. This was an “oh my gosh… Oh My Gosh… OH MY GOSH!!” read. The title and the top part of the article don’t do justice to the amazing story of everything that happened in that hearing. I know Blair has been working hard on this case, and the number of issues he needs to balance, while fighting the underbelly of the Prenda machine is probably more than he bargained for. Kudos to Blair Chintella, kudos to the author, kudos to you for posting this article. There is SO MUCH here that can be flushed out into multiple articles.

  5. James says:

    The best quotes of the day:

    “There have been comments here at the lunch table about council in this case, and you don’t have a good reputation in the Northern district of Georgia . . .”

    Ouch!

    “. . . He testifies the trust had a different name, I don’t know where the inconsistency is at. But since you are objecting (to Nazaire), I think I’ll let him go on.”

    Very ouch!

    “. . . you are not let off for being a respondent, and we will set that, let your superiors know to give you a schedule, so we can accommodate the military.”

    This is not going to end well for Jacques.

  6. Christenson says:

    sniff…sniff…is that smoke I smell??? In the judge, in everyone involved there??

  7. WDS says:

    I should have said this earlier, but thanks to both Oralia and Kat for taking the trouble to attend in bad weather, and for Oralia’s excellent report and Kat’s tweeted reports.

  8. Gazza says:

    Hiya there, thanks for this [A welcome popcorn diversion to all i think during this period of bad weather] I was reading the end part of the judges summing up – the order for a new lawyer or else all AF Holding statements are struck out. Does that mean what I think it means, i.e. its time to lay on the Super Power called “Sanctions”?

  9. Anonymous says:

    What’s the deal with that USC Title 10 mobilization? Given fewer opportunities to deploy, and the fact that its CONUS, I wonder if he saw going on active duty for a year as a good exit strategy for the mess got himself into.

    • simality says:

      No idea. Nazaire did not want to go into details on the record.

      But you know what I find telling is that he didn’t do more to cite the statues that required him to withdraw. We’re talking about a lawyer who knows the rulebook by heart and doesn’t hesitate to cite chapter and verse at every opportunity. So for him to simply say that he has to withdraw due to Title 10 is a bit out of character.

  10. Anonymous says:

    There are still mobilizations going one, my daughter is off to Afghanistan shortly (she previously did a tour in Iraq) but the number of experienced military is declining, especially in the officer ranks. Letting inactive reserves do a tour at Ft. Benning frees up others to go.

    Nazaire was scheduled to go overseas but a UN Tribunal ruled that exposing the Taliban to Jacques would be a crime against humanity.

  11. SJD says:

    Nazaire asks if Lutz has received harassing emails or calls, Lutz says “yes.”

    The next question should’ve been: “Do you think you don’t deserve it?”

  12. Quiet Lurcker says:

    Is this the same Mark Lutz who seems to have pulled a disappearing act back in September???

    http://www.techdirt.com/articles/20131001/10073124713/asked-to-explain-disappearance-mark-lutz-team-prenda-says-theyre-sure-he-has-good-reason.shtml

    If it is, I wonder where he’s been and how someone managed to coax him out of hiding.

  13. […] Report from another epic Prenda hearing (AF Holdings v. Patel, 1/28/2014) […]

  14. CBL says:

    Will someone please post when the hearing it to be resumed/reset once that info is available?

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