Yesterday I wrote that I would not be coming up with a story about yesterday’s eventful day. I provided a couple of links to eloquent, well thought pieces, especially by Megan Geuss (ArsTechnica) and Ken “Popehat” White. Yet this morning an anonymous commenter, who attended the hearings, shared his own story, which belongs to a post, not a comment. Even though we will eventually obtain and publish the transcript, personal perspectives of attendees are invaluable: only facts can be redundant, not impressions.
Gibbs did not have Wright wrapped around his finger. Believe me nobody who’s touched Prenda or their shells (that are “not even shells” in Wright’s words) should feel safe.
The tone of the hearing was set when Wright opened by calling out Prenda’s attorney:
“ARE THEY HERE!?”
“HAVE A SEAT!”
Federal Judge Otis D. Wright
That was basically all he wanted to hear, although there was a brief exchange that established they were supposedly available by phone (whether that would be a domestic or international call was not established). She took a dressing down for the last minute filing tricks, but the bottom line is Wright did not dignify their gamesmanship by letting their attorney make excuses, he did not waste time grinding through their objections, he said they had been given an opportunity to explain themselves, and since they chose not take that opportunity, he moved on. I can only imagine what she is thinking after sitting through that hearing, because I’m sure they didn’t fill her in on the backstory.
The next order of business was calling out Hansmeier’s deposition. The judge dismissively tossed a copy on the desk in front of him (seriously) and said he spent the weekend reading it and it was the most revealing document thus far. Wright was extremely upset with that deposition. Extremely.
“Someone has an awful lot to hide.”
Hansmeier is probably in trouble.
The rest is incomplete and not very chronological, just salient points:
Wright used the phrase “the lawyers have a pecuniary interest.”
He noted that none of these companies file tax returns.
The fact that LiveWire has no office, just a P.O. box in DC, came up. Gibbs’ lawyer started to make an attempt to make this sound legit, but then he said something about it being a “cloud office,” there were derisive snorts, and he just kind of gave up.
Wright took several specific shots at Prenda’s credibility. The word “lie” was used. And “fraud.” A few times when Gibbs was trying to pass blame to avoid giving a straight answer, Wright admonished him for doing “all the stuff that you do” to redirect responsibility. Expect a defamation suit against Judge Wright to be forthcoming…
Alan Cooper of Minnesota was there. He confirmed the bits we’ve heard, that Steele bragged about his copyright litigation plans, Steele’s goal was $10,000/day for sending letters, told Cooper not to answer any calls related to Steele’s companies. Denied knowledge of all of Steele’s uses of the name “Alan Cooper.” Basically, it confirmed what we had already heard and read in his letter, but no doubt putting this on the record, under oath, in front of this judge was very damaging to Prenda. Gibbs’s attorneys appeared to begin to counter Cooper’s testimony by asking Cooper if he had called Steele and left a voicemail asking “how are my porn companies doing?” Cooper simply said “no” and they gave up. This must have been a reference to the “iPhone record function” Steele was blabbering about on Twitter, but if there is anything there, Gibbs’s attorneys did not think it was worth pursuing. By that point Steele’s credibility had been shredded, and Pietz had played several voicemails of Steele threatening Cooper with more litigation, so I assume that if a recording (of someone) exists Gibbs’s attorneys do not have a copy and decided not to gamble on Steele’s word.
During the break Mitch Stoltz told us EFF took care of Cooper’s travel arrangements, so those guys deserve all our thanks and if you wanted to find a way to help with Cooper’s travel arrangements, make a donation to the EFF.
A new revelation that came out while Gibbs was under oath is that he was briefly a W2 employee of one or more of the shells, I think it was LiveWire and/or AF Holdings, but it’s so convoluted with the “mergers” and everyone owning everyone that it was hard to keep straight. That contradicted his prior statements that he had only ever been a 1099 employee. Of course he was never paid while he was on the payroll, and it was strange, he sounded like he was bewildered by the fact he had been an employee, like maybe they did that without telling him first too? Since he was under oath at the time he was perhaps less likely to be BS’ing at that point, but that was the story regarding his surprise “in-house counsel” job.
Wright dug into Gibbs quite a bit for pathologically failing to file notices of related cases, and Gibbs’ persistent confusion of “joinder” vs. “related” for filing purposes. He did a bit of digging into Gibbs weak and apparently inaccurate justification of his “investigation” of the properties. Wright said he had used Google Earth himself to take a look, so Gibbs ended up claiming that when he looked at maps of those addresses, the maps he saw had a different angle that totally gave the impression the house was surrounded by emptiness. It was not convincing.
For the juicier issues of Prenda’s decision-making process, Gibbs pretty much just passed the blame on to “senior members” with lots of “decisions were made” type responses. After all our speculation that Duffy is a nominal figurehead, it was very interesting to hear Gibbs talk about who gave his marching orders. It sounded like he basically never talked to Duffy, maybe once or twice was the impression I got. Even after the firm supposedly changed ownership and Duffy took over, whenever Wright asked who was giving instructions and making decisions, it was always Steele and Hansmeier. No matter where we were in the timeline or who was supposed to be the owner of what, whenever Gibbs was asked who gave him orders it was “Paul and John,” and according to my notes the order Gibbs spoke was “Paul and John,” which may be revealing: certainly Hansmeier has more direct involvement than I had believed to be the case. As they got to the newer entities, Lutz’s name was sprinkled in here and there, almost as if they were still in the process of reconstructing the story to shift more responsibility (read: blame) to Lutz. In any case, it was enough to make me wonder if Duffy is even a real person, or if he has had his identity misused too or what, because he doesn’t seem to do anything, so it doesn’t make sense that he would put his name on this powder keg of risk (unless of course he is getting fat checks, which may well be).
I will grant that Gibbs did a somewhat successful job of looking duped and misled. He was even asked directly if he felt duped by Wright, and after a surprisingly long pause said “in a way.” Not that I believe this could be true after two years of working with Paul and John, but I think he pulled it off. There were one or two points that even made me feel a bit of sympathy for him. For example, according to Gibbs’s testimony, many of the recent dunning letters bearing his signature that have been sent out for cases in other states used a stamp of his signature without his permission. He claims this began after he had decided to get out and sever ties with the firm, and that he told Lutz and Steele to stop (of course he didn’t notify any courts or authorities…). It sounded like a possible carefully constructed CYA, but given Steele’s vindictiveness it may well be that Gibbs is a “victim” in the sense that Steele has been attempting to set Gibbs up for even more trouble. Gibbs deserves every bit of trouble he may get, but I don’t want Steele to be allowed to weasel out of his own share of responsibility by using Gibbs’s name instead of his own. I can also believe that Gibbs did not know about the Alan Cooper and other possible forgery issues.
For the most part, the specific issues for which Gibbs was present became a sideshow. His attorneys kept returning to them, because that appeared to be all they were prepared for. My guess is they have absolutely no idea how deep the rabbit hole goes, but if they do know they have not had time to prepare excuses for the past two years of shenanigans, and they were overwhelmed. They had canned responses to the points on the OSC, but Wright was far more interested in digging into Prenda’s overall pattern of behavior and business model. Gibbs’s attorneys were unprepared to field those questions, and they occasionally offered up some objection that Wright’s line of inquiry wasn’t relevant to the OSC, but Wright rebuffed them by stating his concern was now patterns of practice and fraud upon the court. The last words from Gibbs’ counsel were an obviously prepared statement that seemed awkwardly out of place given the turn the hearing had taken; I believe they expected to show up, run through a prepared script, and call it a day. They are probably wondering what the hell happened.
What struck me as ominous for Gibbs and especially the rest of Prenda is that Morgan Pietz and Nicholas Ranallo appeared well prepared to go into greater depth to establish that Gibbs was working in more than an “of counsel” role, to argue the jurisdictional issues of the other Prenda guys, etc. But Wright really wasn’t interested in hearing more. But I don’t mean he didn’t find it relevant or convincing, more like he had made up his mind that this circus has gone on long enough. I would sum up his attitude at this point as “Why bother? I don’t need to hear this.” It was as if Wright was satisfied that he had more than enough for… Whatever comes next… And when he got to that point he was just done.
To me, the absolute standout moment of the day was when Gibbs stepped down from the witness box and Wright said “Good luck to you.” You had to be there to appreciate the menace in his voice.
For now, we can only guess what Gibbs might need that luck for.
Personally, I think Lady Justice is practicing her dropkicks.
Here are another hearing attendee’s observations:
Since you ask for more impressions/observations, here are some from my own non-legal-expert perspective:
- Many have noted the judge did not seem amused. While that is generally accurate with respect to Prenda’s (allegedly) fraudulent, deceptive, evasive practices, there were times at which the judge stifled laughter in apparent amusement. In particular: when he had to correct Waxler for saying the client “retains” attorneys; when Pietz corrected his use of the word “porno” with “adult entertainment.”
- There was a nice moment in which, just before breaking for a 10-minute recess, the judge almost tenderly said “I hate to stop you [to Pietz]. But, since I care more about her [referring to the court reporter] than this case, and she has been going non stop since this started, we are going to break for 10 minutes.”
- At one point, the judge asked Gibbs, under oath, if he understood his question, and then added, “Because I can hear you now… ’compound!’…”, making a joke about Gibbs’ extensive objections in the ~300 page deposition of Feb 19.
- I was careful to observe Heather Rosing (attorney for Steele, Hansmeier, van den Hemel, and Duffy) throughout the hearing, since she got shot down so harshly by Wright at its opening. She was quite active throughout, talking animatedly to two other gentlemen who accompanied her there, and taking copious notes. She also at some point, spoke with Gibbs’s attorneys in an effort to apparently join forces to get them to contact her clients by phone. Though a phone appearance never happened, it seemed for a bit like they were trying to make it a real possibility. For what it’s worth, and this is only my impression, Rosing seemed a bit stunned by the revelations offered at the hearing, as if she hadn’t had the full story when she filed that ex parte motion… I wouldn’t be terribly surprised if she withdrew after yesterday’s revelations.
- All the talk about popcorn, one might think there would have been a carnival atmosphere to the hearing. But it was really intense, people were quite glued to the proceedings, and very quiet. And, based on Wright’s demeanor and his strict no-food policy, it would have been terrifying to try to eat popcorn in there! I was even a bit scared to take a sip of my water in the room.
- I have never been to a hearing before, so maybe court clerks are always awesome. But I have to say, I was really impressed by the court clerk running the show. She was a well-dressed, petite woman who was extremely attentive and obviously very on top of things in the room — keeping track of all the exhibits, etc. Wright’s two clerks (sitting behind the defense’s table… I think that’s who they were), were also interesting to watch. At one point, one of them, dressed very nicely in a purple tie and grey suit, handed Pietz his own flow chart Prenda diagram to use on the overhead “document reader” thingie when Pietz was having difficulty with the display from his iPad.
- There were a bunch of reporters in the room. I noticed one young woman from the LA Times, who said at the very end of the hearing “I have a lot of reading to do.”
- Wright clearly likes and respects all of the people that work for him, and vice versa.
- Gibbs’s attorneys were making fun of Morgan (to themselves — I was just sitting behind them, watching closely) as he brought forward more and more evidence showing that Wright probably has jurisdiction over Steele and Hansmeier. It seemed like they were just saying it was overkill. The judge, however, seemed to appreciate Pietz’s efforts. At the end of the jurisdictional stuff, the judge said it was time for Plaintiff to go, and noted that they obviously would have no objection to the evidence Pietz brought forward to support Wright’s jurisdiction over Steele and Hansmeier, “Otherwise, he’s in [looking directly at Gibbs].”
- I thought it was noteworthy that during Pietz’s questioning of Gibbs, Gibbs admitted that Steele and probably Hansmeier have his email passwords, and also his ECF password, allowing them to send emails as Gibbs, read all emails Gibbs receives (attorney-client privilege??) and submit things to the court as Gibbs. Apparently Gibbs also received emails to other attorneys (I can’t remember their names, one in Nevada…) and then was supposed to forward them on to the actual attorneys. When all this was being revealed, Judge Wright sat back in his chair and frowned.
Transcripts of the voicemails John Steele left on the Alan Cooper’s phone are available. As Dark Moe tweeted after the hearing,
…and another thing: The voicemail messages from Steele bothered me. Cooper did nothing to deserve being threatened with a lawsuit.
It’s sickening. Wish you could have heard the messages. My lawyer was moved over it. Couldn’t believe what he was hearing.
Before reading the following, make sure you allocated enough time to have a shower afterwards.