Prenda

The Ninth Circuit affirms fee award imposed by Judge Wright against Prenda principals three years ago

A long awaited ruling by the US Court of Appeals for the Ninth Circuit is out. Circuit Judges Harry Pregerson, Richard Tallman, and Jacqueline Nguyen affirmed district court’s award of attorney’s fees (including a punitive multiplier, and a second supersedeas bond order) imposed by Judge Wright against Prenda principals (John Steele, Paul Hansmeier, and Paul Duffy [deceased]) in 2013.

The oral argument took place a year ago:

 

Congratulations to Morgan Pietz, Nicholas Ranallo, Jason Sweet, Erin Russel, and many others who contributed to Prenda’s dishonorable finale.

One scam is down, more to go.

Since the order is short (12 pages), descriptive, and isn’t dealing with complex legal issues, there is nothing to analyse, explain or comment on. Just read it.

Coverage

…and now for something completely different (and so painfully clueless that I struggle to keep my eyeballs in the sockets). Written by a Harvard law professor, no less:

  • Bloomberg: Porn, Copyright Law and a Raised Judicial Eyebrow

     

    But it remains noteworthy that the district judge reacted so strongly to the trolling scheme, and that the Ninth Circuit was happy to wink and let him get away with it.

    Essentially, Prenda’s conduct was barely unlawful. Without the misrepresentation, it would have been completely legal.

    What made the judges angry was the fact that Prenda made the legal system look foolish — by drawing attention to how the law could be used to enforce a scheme that Wright called a “legal shakedown.”

Tl;dr: forget about a myriad of instances when other courts ruled against Prenda and sanctioned its attorneys, forget that Steele and Hansmeier are about to be disbarred, forget an imminent criminal indictment — it was all Judge Wright’s whim.

You may say that the author is naive, I disagree: don’t attribute to naivete what can be adequately explained by snobbery.

Update

6/15/2016

Today Morgan Pietz and Nick Ranallo filed a request for attorney’s fees on appeal and motion for fees as damages (scroll down for the exhibits, which include a hilarious 2013 email from Prenda’s appellate attorney, Daniel Voelker, to Morgan Pietz). The defendant asks for $65,611 in fees and $795.30 in costs.

In related news, the Ninth Circuit denied Hansmeier’s application for admission to the bar of the circuit for failure to file status reports — as was ordered in May 2013, when the appeal was filed.

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Discussion

42 responses to ‘The Ninth Circuit affirms fee award imposed by Judge Wright against Prenda principals three years ago

  1. Of course they can still appeal this to the Supreme Court, but as I don’t think we are talking about a substantial federal question or constitutional issue so let me be the first to say it . . . cert denied.

  2. Well, my dream scenario was that the Court would affirm these sanctions and THEN remand for additional criminal contempt proceedings, but this isn’t bad. Technically speaking, this decision will not have any impact on the remaining 7th Circuit appeal, or the attorney disciplinary hearings, but judges are human, and the 9th Circuit finding what everyone else has certainly is another nail in Steele and Hansmeier’s coffins.

    To answer the questions before they are asked, yes, they may petition this panel for rehearing, or ask for an “en banc” hearing, or ask the Supreme Court for review, but to get the percentage chance of any of those happening, you would have to go about 7 places to the right of the decimal point to get a number that is not ‘0’.

    • The chances for rehearing or en banc hearing or Supreme Court review may be zero but the time delay achieved in that manner is not and continues to fill the coffers of the crooks with “settlements” from their ongoing scams. When the final hammer falls, they’ll be out of the country. But there is no incentive for them not to delay its fall at the cost of a larger crash since they will be away when it happens.

      • There is no time delay. There is no stay, the bond has already been paid to those awarded sanctions. And the actions against their licenses in MN and IL has absolutely nothing to do with any request for en banc hearing or appeal to the Supreme Court in this or any other case.

  3. It is disappointing that for our part, the Internet Hate Group [IHG] wasn’t even mentioned. I thought (according to the Prenda Principals) that we were the ones who were responsible for Prenda’s downfall. And we didn’t even get honorable mention or a footnote.

    Disappointing, indeed.

    • @DarkMoe3 The work done by those behind the scenes is often as important or more important then those who are acknowledged in credits. IHG knows the work that was put in by many and contributed to lawyers to get the job done in the courts. It is the results that count in the end. This, I hope, is just step 1 with the DOJ and Disciplinary committees following close behind with even bigger hammers to nail them for good.

  4. I read the ruling again. There is an interesting phrase on page 11, first full paragraph: “They also failed to pay their own attorney’s fees in this case.”

    Does this mean they also stiffed Daniel Voelker? If he was stupid enough not to get paid in advance with this cast of characters….

    • Looks like they did. Voelker distanced himself from Steele and Hansmeier recently (and even represented defendants in Steele’s ADA scam). I mainly attribute it to Duffy’s death (he and Voelker were close for a long time), but non-payment can be also a huge factor.

    • I seem to recall in Hansmeier’s bankruptcy two items of $10k each ($20k) being paid to Daniel Voelker as lawyer’s fees. So he at least got that much if Hansmeier was truthful about it.

    • They were represented by Heather Rosig (Rosing?) during the appeal of the second bond. She withdrew when her firm was not paid by the Prenda Principals.

    • They had this really good, really sharp lawyer a while back. She dropped them for nonpayment (among other things)

  5. Does this mean they also stiffed Daniel Voelker?

    They may have had cause to. If my lawyer on appeal asked that the case be remanded to consider criminal sanctions against me, I wouldn’t be inclined to pay him either.

    • Except, of course, that Voelker specifically said that a remand for criminal contempt was what his clients wanted. A point that the judges on the panel made clear with further questioning. Remember Judge Tallman’s question ‘Do they know that they could face a life sentence?’ and Voelker’s response ‘My clients have made it clear that is what they want. They just want their day in court.”

        • With all due respect, I propose that you have little familiarity with Prenda, Hansmeier, and Steele.

          1) In every court proceeding that they have been involved with, from California to Florida, from state courts to bankruptcy courts, Hansmeier and Steele (and Duffy when he was alive) have made it perfectly clear that THEY are the ones making all the decisions, and the attorneys who are technically representing them are mere figureheads. See, most recently, Hansmeier’s bankruptcy case and the fact that Barbara May withdrew because Hansmeier was telling her to do things that were unethical. So the idea that some attorney would do something that they did not specifically tell him to do is laughable.

          2) They have also had the exact same argument in every appeal of contempt/discovery sanctions, “All we want is our day in court. We don’t care that we could face prison, all we want is our day in court.” Remember these two are arrogant enough to believe that they are smarter than everyone else and can out-talk everyone else. Since this approach is consistent with many different attorney’s in many different courts representing them, it must come from these two, and not from some crazy lawyer they hired.

          There is not the slightest doubt that Hansmeier and Steele control every aspect of every case they are involved in.

        • Oh well…

          Moving on, does anyone have any thoughts about why its taken so long for this judgement to be handed down? It looks straight-forward enough.

          • Because the 9th Circuit is incredibly backed up. There was a civil case with a decision released a couple of days ago that was argued 8 months before this Prenda case. According to court statistics, it is on average 32 months between when a district court reaches its decision until the 9th Circuit releases theirs.

            I think when the court is facing cases where people are facing being in prison or not, or civil cases where people’s livelihoods are at stake, I don’t think a dispute about discovery sanctions that involves a couple of lawyers is real high on their list of priorities. We were of course eagerly waiting it, but no one’s life or families was really at stake.

            Also Judge Harry Pregerson was one of the three judges on the panel. He is 92 years old. I don’t think that helped the case move along quickly.

        • On Judge Pregerson: any Judge who was wounded on Iwo Jima and is still serving as a Senior Status judge deserves a ton of respect.

          It is interesting to point out that a number of decisions for which he was on the panel were released today. A death penalty case, and 3 memorandum decisions – including Prenda. The two other memorandum cases were submitted on this Wednesday (6/8), so maybe his schedule was a factor in when this was released.

  6. Hard to say why this decision took so long to write given that it is only twelve pages and courts of appeal issue far more complicated and lengthy opinions much faster than a year; this one emerged at the blistering pace of one page a month and four of those pages were headings and blank spaces so really only an eight page opinion. Going into the hearing, it was clear that the judges had been well-briefed and were ready to cause Prenda some pain, the only question was whether Judge Wright had the authority to do what he did in the precise way that he did it. Apparently he did, so set a course for warp speed eight Mr. Sulu.

    The only thing I can think of is that they slowed it down after some ex parte communication from federal law enforcement, but I don’t know if that sort of thing ever happens (or is even permitted to happen) on a purely civil case.

  7. I know they are all diseased (terminally) with Seven Deadly Sins, especially Pride and Gluttony. However, Paul Duffy is deceased.

  8. One more thing that is only tangentially-related. (I haven’t seen it noted on this site, if I missed it, I apologize.)

    I assume everyone reading this is aware that on 12 May the MN Office of Lawyers Professional Responsibility added a 5th count to their Petition for Disciplinary Action against Paul Hansmeier. This count focuses primarily on material learned through his bankruptcy proceedings.

    On 25 May, Hansmeier filed a response. No big deal. Except for the fact that it is listed as “Not viewable remotely.” Note that even the cover letter when they sent the documentation for this 5th count to the referee is available on the MN Case Management System website.

    So why is his response not viewable? In a normal case, since it is related to his personal finances, that might be a reason, but given the fact that it is all public knowledge though his bankruptcy that seems odd. Could he perhaps be arguing some …medical based.. defense? Hanging his wife out to dry? It is odd. (And it isn’t “daddy”, this is way out of his league of influence.)

    We have a lot of interesting things going on right now: Credible rumors of a federal investigation nearing closure. Within a week or two, a decision that supposedly could have come out a week after the oral hearing is finally published. At roughly the same time, the Bankruptcy Trustee says, “Oh, OK, i am fine with mediation now.” In roughly the same time frame, there is both a new 5th count against his license, and then there is a response that unlike everything else is sealed. Is this all random noise and coincidence, or is something going on behind the scenes? Good, like rats scrambling each other to leave the sinking ship? Or nefarious, like the “system” looking to mitigate the damage to the profession?

  9. One might expect the ABA _finally_ to sanction its own members who participate in these illegal (so the court said) activities, make them a violation of the canons, and proceed with disbarment to the extent that it’s within the ABA’s powers to do so. As long as it does not do so, the ABA is complicit as it licenses as fit the attorneys who engage in these illegalities.

    • Except that the ABA has absolutely no power over lawyers. It has the same power over lawyers as the HTML Standards Group has over what people write on the internet. Membership in the ABA, or even a state bar association is not necessary to practice law. All power to govern lawyers is exclusively vested with the appropriate courts. That is, the Supreme Court in each state, and to a much lesser extent dealing only with the matters before them, to other federal courts.

      • You’re correct, in terms of legal penalties. Perhaps what I meant to say was, the ABA and state Bar Associations should sanction — in the sense of , “condemn” — the practice of using the law for extortionate purposes. I recognize that there are others who also use the law for this purpose, but this one is so egregious, it’s in a category of its own, as the Appeals Court panel appeared to recognize.

  10. PS Also, kudos to FCT and the other anti-trolling blogs for their good work which the appellate judges’ apparently relied on in part to learn about the extortionate scheme and its nationwide application. All these many years of your critical attention and reporting was not in vain!

    • Thank you so much. I admit that at times I say to myself “screw it, it doesn’t worth the effort,” but then I receive signals — sometimes explicit, sometimes subtle — that it is indeed not in vain, and that is what keeps me going. I’m not a Don Quixote’s follower and I would definitely quit if not for positive feedback.

  11. SJD asked about the opinion being “unpublished”…that is a technical term, with a specific meaning, since all of the judgements of a court are supposed to be public, pacer fees notwithstanding.

    IANAL, but I think the distinction is that an unpublished opinion is sufficiently obvious that it adds nothing to the body of the law itself — as here, they came, they saw the facts, and they affirmed on the facts and the law as presented and previously applied. There was no ground covered outside of the case proper.

    • Back in the dark days (late 20th century if you can remember that far back) cases were printed on dead trees in actual books. Memorandum opinions were created for those cases that literally weren’t worth the cost of the paper to reproduce for posterity. When you see a federal court of appeals issue a brief memorandum in lieu of a normal opinion it is a signal to the world that any facts and valid legal arguments were fully addressed by a competent lower court judge that did not abuse the discretion permitted to that court. It is the judicial equivalent of saying “Why did you even bother us with this, we are busy people. Go away.”

      or in sports terminology:

      Wow, a very unexciting game here today the with visitors getting creamed by the home team in what can only be described as a blow out. Despite some very fancy footwork by Daniel Voelker, every shot on goal was wide of the mark as Morgan Pietz absolutely dominated on the field as he brilliantly defended in goal. The Prenda team was bruised and battered coming into this contest, having lost a player after the preliminaries, and went home disqualified from future play. It was a long time coming, but Prenda has finally been relegated from the big leagues.
      Final score: Otis Wright 1, Prenda 0.

      Or if you prefer Monopoly:

      Morgan Pietz, playing with the battleship token, rolls a 12 and lands on Community Chest. The yellow card reads “You win your lawsuit, advance to Mediterranean Avenue. Pass Go and collect $230,000.”

      The crowd waits with anticipation as John Steele, playing the now-retired bag of money token, takes his turn, knowing that there is still an unplayed orange Chance card that says “Go to jail. Go directly to jail, do not pass Go, do not collect $200”.

      And here comes the roll . . .

      • Just to add one more piece to the “unpublished” thread:

        Jame’s gave a great explanation of why historically, “unpublished” opinions were created. But why do they still exist today? With electronic searches, and .pdf files, the original reason no longer really applies. Until a couple of decades ago, “unpublished” opinions could not be cited by a lawyer before a federal court, except for some very specific situations (i.e., arguing “double jeopardy”, or the very rough civil equivalent “res judicata.” ) Today, a lawyer in a federal court can cite them, although as mentioned many times already, they generally aren’t worth much.

        So why are there still two types of opinions if trees and massive books are no longer the issue? Because, it is far easier for a court – the judges or more usually their law clerks – to write an unpublished opinion. Think back to 9th grade and the difference between a “report” and an “essay.” With the report, you had to type it (boy, am I old), have an introduction and a conclusion, formal references, etc. An essay, you could just take out a piece of paper and start writing. The same thing with “published” and “unpublished” opinions. There is a much higher standard for all the things that have to be in a “published” opinion.

        The best way to show that is two cases from the 9th Circuit at roughly the same time. The first is the “unpublished” Hansmeier/Steele opinion. The second is a random “published” opinion from a day earlier of roughly the same length.

        https://cdn.ca9.uscourts.gov/datastore/memoranda/2016/06/10/13-55859.pdf

        https://cdn.ca9.uscourts.gov/datastore/opinions/2016/06/09/14-60017.pdf

        Which would you rather write? That is why the two still exist, and will likely always exist. Hansmeier/Steele: The 9th Circuit decided you just were not worth the effort.

        • Vandalia you might be old, but come on. Don’t you miss the rhythm of keys clicking away on the old Underwood as you wait for the little bell to ring? There was something wholesome about the process. Besides, my typing teacher was a real hottie.

  12. (I am pretty far behind on things like blogs. I am simply posting this here as a reply. If this site wants to put it somewhere else, they have my permission to do so.)

    So what is next for Paul Hansmeier? (For some reason, I really don’t care about John Steele anymore. Perhaps someone else can take up the role of following Steele’s path toward being in the custody of the Attorney General.) There is the criminal investigation, a couple more sanction cases making their way through the courts, and of course his bankruptcy proceeding. However, next on deck is likely his attorney disciplinary hearing in Minnesota.

    The MN case is currently being reviewed by a referee (a retired judge) appointed by the MN Supreme Court. His report is due before 29 July 2016. Since a 5th Count was added to the complaint, the referee will likely take all the allowed time, or might even request an extension. After that, there are a number of additional steps and hearings before a final decision is reached by the MN Supreme Court. So you might think the whole thing will be on the back-burner for another year or two. If so, keep reading.

    IF the referee recommends disbarment – as the Office of Lawyer’s Professional Responsibility (OLPR) requested – his license is suspended IMMEDIATELY. So even though it may be another year before he is officially disbarred, his license could be gone (effectively for good) in the next month or two. Now either the referee or the MN Supreme Court could cancel the automatic suspension while the decision is pending. I have checked a number of cases where MN lawyers have been disbarred, but that information was not readily available. So I can’t say for certain that there is not a practice of automatically granting stays on the suspension, but according to the regulations, if the referee recommends disbarment, the license is normally immediately suspended.

    So what happens when his license is suspended (from now on referred to as IHIS – if he is suspended – for brevity)? Or if it works its way through and the MN Supreme Court officially disbars him? The real effect will be on his new racket of filing ADA suits. Upon suspension (or disbarment) an attorney must notify his clients, the other party’s attorneys and the courts within 10 days. Then he must make arrangements for his clients to receive their “case files.”
    As anyone who has followed this saga for a while knows the relationship between “Prenda” and their clients has been, shall we say, interesting. There is no reason to think that the relationship between Hansmeier and his clients in the ADA cases is any different. IHIS, his client would be free to select any other licensed attorney to continue these cases. Wouldn’t that be a slap in the face, if after all this work, another attorney steps in and reaps all the benefits (i.e., money)? Or, if the relationship is how we suspect that it is, there may be another attorney who is ready and willing to step in and take over these cases. Hmmm, I wonder who that might be?

    (Let me introduce another general legal principle: Anyone can represent themselves “pro se”, even if they are a disbarred attorney. However, only a validly licensed attorney can represent another person – or a corporation. Remember all Hansmeier’s work to set up all those intertwined corporations? If he is disbarred (or suspended), he cannot represent them, even if he is the sole owner. So, as usually happens, that may come back and bite him in a big way.)

    If an attorney is suspended, in Minnesota, he can still do legal-type work, as long as it is basically “behind the scenes” stuff, and is under the supervision of another MN licensed attorney. If the suspended/disbarred attorney over-steps here, both are liable for even more discipline. To keep an eye on this, any such arrangement must be reported to the OLPR. So back to my earlier question, who might be a licensed MN lawyer who could take over those ADA cases and keep everything “in house?” Padraigin Browne, of course.

    So she takes over as attorney, and he provides the background work, under “her supervision”, of course. In a number of states, it is not permitted for a suspended lawyer to work for his former firm, with former colleagues, or for family members since it is felt that they would not exercise true supervision. In MN, there is no such rule. However, the OLPR would likely keep a very close watch on such an arrangement.

    In summary, there is a good chance (it is by no means certain) that Hansmeier’s law license may disappear for good in July. If it does, then his ADA “clients” become essentially free agents. Do any of the old-timers remember the story of Eric Dickerson driving the Corvette provided by Texas A&M boosters to school at SMU? IHIS, his work on the ADA cases will suddenly become much more visible to both other attorneys and the courts and who knows where that will lead. If Browne takes over, I am certain OLPR will keep an incredibly close watch on both of them, and Hansmeier has traditionally not done well in such situations.

    So what will happen first? The administrative suspension of his law license upon the recommendation of the referee for disbarment? Or an indictment? The dark-horse candidate would be his bankruptcy being dismissed.

    • I like it. Will gladly make a blog post out of this comment (and add some links/documents). Let me know what name/pseudonym should I use.

  13. Fine with me. You have my permission to make any edits, or add links as you feel appropriate. My name on WordPress is “drvandalia”, so might as well use that.

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