Prenda Law Must Pay Sanctions — Appeals Court

Rhett Pardon

CHICAGO — The 7th U.S. Circuit Court of Appeals on Thursday affirmed a lower court decision levying contempt sanctions against three attorneys who filed a copyright infringement case on behalf of adult operator Lightspeed Media Corp.

In consolidated appeals, the three-judge panel held that an original order calling for $261,000 in sanctions, as well as finding Prenda Law's principals — attorneys John Steele, Paul Hansmeier and Paul Duffy — in civil contempt, were appropriate.

Prenda Law for years has been prolific in exacting payments from porn piracy defendants through court-approved subpoenas.

The appeal acted on Thursday stemmed from a case against a man named Anthony Smith, who was alleged to have been the ringleader of a hacking gang involving 6,600 users who obtained stolen passwords to break into about 40 Lightspeed Media porn sites.

At the behest of Lightspeed Media, Prenda Law made additional claims against corporate executives at AT&T and Comcast Cable Communications that they aided, abetted and conspired with the hackers to steal content because they refused to comply with subpoenas and turn over subscriber data based on IP addresses.

Prenda Law later told the court in a motion that Lightspeed Media intended to drop the suit. That motion spurred defendants into action with requests for reimbursement of attorneys fees because the suit was based on "frivolous claims," which the lower court later affirmed.

The lower court ordered Lightspeed Media's attorneys to pay sanctions for Smith ($72,000), AT&T ($120,000) and Comcast ($69,000).

After missing deadlines to pay the $261,000 in sanctions, a lower court ordered the firm to pay 10 percent more as a fine.

Prenda Law attorneys Duffy, Steele and Hansmeier appealed; however, on Thursday the 7th Circuit rejected contentions that the sanctions were not appropriate, as well as their appeal holding them in civil contempt and imposing the fine.

The attorneys offered a litany of reasons why their two appeals should stand, including that they didn't receive proper notice for the motion for sanctions, that they were never given opportunity to be heard on the motion and opposing counsel fee itemization and that the merits of ordering the imposition of attorneys fees were lacking.

But the 7th Circuit panel was not convinced with Prenda Law attorneys' arguments.

"Lightspeed raised baseless claims and pressed for a meritless 'emergency' discovery hearing. The district court found that the litigation 'smacked of bully pretense,'" the panel wrote. "At the Nov. 13, 2013, hearing on fees, the court could not have been more clear: it stated that appellants were engaged in 'abusive litigation simply filing a lawsuit to do discovery to find out if you can sue somebody. That's just utter non sense.'

"We see no need to belabor the point. The record amply supports the district court's conclusions, as our discussion of the case thus far demonstrates. There was no abuse of discretion in the court's decision to grant either the ISPs or Smith fees for the entire case."

The case is Lightspeed Media Corp. vs. Anthony Smith, Nos. 13-3801 and 14-1682.


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