MINNEAPOLIS — A Minnesota appeals court today found that former Prenda Law attorney Paul Hansmeier should be held liable along with others for defendants’ attorneys fees and costs stemming from a porn piracy case.
The case involving Hansmeier stems from sanctions imposed and affirmed last year.
The Minnesota Court of Appeals had ruled on a decision affirming a district court’s $63,000 judgment for attorneys fees against Guava LLC, a company that held copyrights for a number of adult films.
The court agreed with a lower court that Guava and the Alpha Law Firm’s suit against the defendants misused the subpoena process and ended up as an attempt to “harass and burden non-parties through obtaining IP addresses to pursue possible settlement rather than proceed with potentially embarrassing litigation regarding downloading pornographic movies.”
Afterward, a judgment creditor moved to add Hansmeier as a judgment debtor because of the Prenda Law attorney’s ties to the Alpha Law Group.
The district court granted the motion after new evidence that came to light in the debtors’ examinations showing that Hansmeier had intentionally defunded the Alpha Law Firm’s bank account and that his testimony to the court had been inconsistent.
His actions, the district court said, necessitated it to “pierce the corporate veil” and hold him jointly and severally liable, along with the copyright holder and the Alpha Law Firm, which initially filed the case against the original defendant. Hansmeier, meanwhile, appealed the court’s finding.
In its decision today, the appeals court ruled that the district court did not abuse its discretion by piercing Alpha Law Firm’s corporate veil to hold Hansmeier liable as a judgment debtor.
The appellate panel wrote that “Hansmeier knew of the possibility of sanctions in this action, transferred Alpha’s money away, and terminated Alpha to avoid paying the judgments in this action.”
“The record supports those findings, which clearly show that Hansmeier abused the corporate-liability shield to avoid paying sanctions in a bad-faith lawsuit for which he was responsible,” the appeals court said. “Neither the judgment debtors’ motion to post funds nor John Doe’s opposition to that motion undermines the conclusion that Hansmeier operated Alpha in an unjust manner."
