Prenda Law’s Strategy at 9th Circuit Baffles Legal Peers

PASADENA, Calif. — After three appellate judges ripped into Prenda Law’s “operation” at a court hearing Monday, the notorious law firm’s counsel continued moving full steam ahead, claiming to the panel that its principals weren’t part of a “crooked extortion” scheme, as one judge described it.

Prenda Law, which disbanded shortly after U.S. District Judge Otis Wright accused it of operating a "porno-trolling collective" and handed out steep contempt sanctions in May 2013, now awaits a ruling that most legal experts say won’t favor the firm' former partners.

The “operation,” as Judge Harry Pregerson of the 9th U.S. Circuit Court of Appeals put it on Monday, involved Prenda Law principals purchasing a number of adult film copyrights, seeding a bit torrent network with films and waiting for the infringing porn fans to take the bait.

Prenda Law attorneys John Steele, Paul Duffy and Paul Hansmeier later were able to convince a number of federal judges to subpoena the records of the ISPs and name infringers with their exact addresses.

Thousands of legal demand letters asked the unwitting targets to cough up $3,400 for the copyright infringement offenses, but lawsuits were nil to rare.

And, Pregerson noted, the letters kept on going out despite the subpoenas ordered quashed.

"They used our court system for illegal purposes to extort money; they used our discovery system,” said Pregerson, calling Prenda Law’s sole litigation work an “ingenious, crooked, extortionate operation.”

The scheme began to unravel when Prenda Law ended up in front of Wright, the federal judge, who found evidence of forgery involving the copyright signatory for the porn films. That signatory, Alan Cooper, was the caretaker of a rural cabin owned by Steele.

Wright asked Prenda Law attorneys to explain the firm’s method of operation in the copyright cases, and they all plead the fifth, which not only triggered $81,000 in civil sanctions but possible criminal sanctions, including incarceration.

On appeal, it didn’t go well for Prenda Law on Monday.

A three-judge panel of the 9th U.S. Circuit Court of Appeals — Judges Pregerson, Jacqueline Hong-Ngoc Nguyen and Richard Tallman — heard the firm’s appellate lawyer, Daniel Voelker of Chicago, attempt to focus on “prodecural flaws” in Wright’s courtroom.

But the panel stuck to their guns, as well as their deep-seated knowledge of the case, and demanded that Voelker address the accusations of misconduct Wright had focused on, including why the firm kept on sending out letters to fingered infringers after he had quashed subpoena orders.

The panel was particularly baffled that Prenda Law and its principals, through Voelker’s oral arguments, was seeking to have criminal contempt sanctions remanded to Wright's court for further procedural hearings, given that the maximum penalty for federal criminal contempt is life imprisonment.

"Is that they want, even if they're looking at a potential life in prison?" Tallman asked. 

"They want their day in court," Voelker said.

"This is going to be written about for years and years. … I don't know where this is going to end up,” Pregerson said. “If they really want to have a trial on this, with all protections of a criminal case — burden of proof, and a prosecutor, and all the rest of it — you sure they want that it?"

"They want their day in court," Voelker repeated.

Attorney Leonard J. French, an Allentown, Pa., litigator who’s been following the proceedings, said that two of the 9th Circuit judges referred to additional criminal investigation and “opening Pandora's Box if the case is remanded for further hearing.”

“The allegations that Prenda is a true copyright troll might be trumped by whatever is waiting inside that box,” French told XBIZ. “Prenda seemed to continue their 'full steam ahead' approach, with their attorney hammering the point that, when criminal sanctions are involved, additional due process must be followed, and that wasn't done here. 

“So, it appears the judges may remand for a full hearing on the issues not heard when Prenda took the fifth. Why in the world Prenda would think this is a good idea, I don't know.” 

Another attorney who has been following the case, Jeffery Lewis, an appellate law specialist with Rolling Hills Estates, Calif.-based Broedlow Lewis LLP, said the hearing, which was live streamed and available on YouTube, captured moments of amazement.

“Did you see when Prenda’s attorney argued there was no evidence of extortion in the appellate record? Judge Pregerson almost fell out of his chair,” Lewis said.

Lewis told XBIZ that he believes it’s likely that the “compensation” portion of the sanctions award, without any doubling, will be affirmed. 

Wright’s original sanction was at $81,000; however its bond in the proceedings, about $250,000, would go to defense attorney Morgan Pietz and a John Doe client named in a lawsuit that was dismissed by Prenda Law.

“The remainder of the award, doubled by Judge Wright, as a punitive sanction will likely be overturned,” Lewis said. “The panel left open the possibility that Prenda’s attorneys could face a criminal trial for contempt with the possibility of prison time. [It’s] theoretically possible, but not likely.”

The 9th Circuit panel on Monday did not indicate when they would decide the case.

A video of Monday's proceedings can be viewed here at 59:45.