I was childishly hoping for some explosive TV-style courtroom drama but this leaves me satisfied.
One thing I don't understand is why all the shadowy connections and potential fraud? Couldn't one of the attorney's started a media holding company which acquired the copyrights, and then hired the second to pursue lawsuits? Then keep track of payouts and payments to the lawyer.
The tax evasion theory I guess would make them some more money, but still, why risk it if you've got a money making scheme running?
Also, Popehat is great to follow, along with Groklaw, for reading legal news.
From the bits I've read, you must disclose who has interest in a copyright suit. And you can't sell the "right to sue" to other entities. So if company X owns a movie, and wants company Y to sue on its behalf, Y must list X as having interest in the suit or X must transfer all rights to Y.
Right but if they just had company A owned by dude X purchase the rights and hired company B owned by dude Y as legal counsel what would the problem be? How is that different than any other copyright suit? I'm not understanding why they needy the shadowy shell corporation structure.
Edit: prenda has problems with a fake CEO and other issues of who is responsible for what. That's really what confused me. Why not just put one guy in charge and the other as legal counsel?
By statute the Copyright Act provides for attorney's fees to the prevailing party (Plaintiff only). An attorney representing themselves (or with interest in the matter) is not entitled to the statutory attorney's fees, so it appears that ownership of the company was willfully obscured by the Firm so the Firm could represent the Company and seek prevailing party fees that they would otherwise not be entitled to.
You are correct a lawyer can purchase IP or a Company that owns IP and enforce the same, they can hire another attorney to represent them (as you suggested), and if they win be entitled to attorney's fees, or they could represent themselves but not be entitled to prevailing party attorney's fees. To take it a step further, even if an attorney owned the IP, and had the Firm he/she worked for represent the individual attorney this can still be very problematic.
Here they appear to be having their cake and eating it too, not only does it appear to be willful fraud on the Court but willful fraud on the Court by a officer of the Court.
As the saying goes the lawyer that represents themselves has a fool for a client.
Thank you. So their scheme might be something like sue someone for $1,000 or whatever, and if they win collect $10,000 in attorney fees.
But without the shadow ownership, they would only be entitled to the $1,000?
edit: although on rereading my hypothetical, I still don't understand why strictly separating ownership of the media company and the law firm wouldn't have been sufficient.
>I still don't understand why strictly separating ownership of the media company and the law firm wouldn't have been sufficient.
Lawyers are not allowed to knowingly misrepresent facts to the Court. So the Firm's interest would/should always be revealed.
Ownership can always be traced back, this generally is revealed during discovery, but if as alleged the true ownership was not revealed because the very Firm who both is attorney of record and actually owns the the Plantiff's Company and the Firm willfully misrepresented that to the Court - never-mind the allegation of identify theft to deceive the Court.
There's a pretty decent chance that it would have been sufficient to satisfy all of that, but that's not what they chose to do it seems. They instead created a company that they owned, put someone else's name on it with alleged forged signatures that had little idea what was going on ( Cooper ) and tried to do that while controlling both so that they'd have complete discretion to sue and collect fees.
This is an interesting situation, since it reads like the judge in this case is running his own investigation. Rather than having an investigative agency like the FBI or local law enforcement doing it.
Further, while the folks could use the 5th amendment to avoid testifying about themselves, it seems like they could be compelled (or held in contempt) to testify about the others. It would seem is all you need is one going to prison and that would unlock this particular deadlock.
Very curious, and amusing in a morbid sort of way.
So, think of it this way: It doesn't read like he is running his own investigation, he is in fact, running his own investigation.
In this case, for this particular issue, he is also the fact finder.
So he's trying to find facts.
Being a court, rather than an investigative body, the ways he can go about finding facts are rather limited, but he can still do a few things.
As for the fifth amendment:
1. As Ken at popehat points out, the fifth amendment taking is going to end up being held against them in every civil matter.
2. Yes, you can compel people to testify about others (with limited exceptions), assuming it does not also incriminate you.
Even in that case, they could just give the paralegal (or someone) immunity and force them to testify.
They can basically force immunity on you and then force you to testify.
It is very likely the Judge will refer this to the Attorney General for criminal investigation and the State Bar to any and all state's the individual attorneys are licensed, but the Judge's actions were appropriate in a Order to Show Cause.
The problem with asking anyone involved questions regarding the other is that they may technically be co-conspirators. Since Conspiracy can be a charge unto itself compelling someone to testify about a co-conspirator would trigger the 5th, b/c that testimony could be incriminating as it would demonstrate how much someone knew about the conspiracy or what steps were taken in furtherance of the conspiracy.
It gets hairy if the person they're being asked to testify about is a client because that implicates the attorney/client privilege, which the article mentions.
But who is the client in this case? In theory it's "Alan Cooper" but is there actually an Alan Cooper who is the client to be the beneficiary of that privilege?
At some point, they will need to prove this person exists, or else the court is likely to strip the privilege.
After all, otherwise as a lawyer you could just avoid testifying about anything ever, by claiming you have this client you see, and well, he told me things about this, and thus it's privileged.
Judges are incredibly powerful and have broad discretion to do lots of things. Doing something that provokes one's ire is generally a dumb thing to do.
So the judge is essentially taking their insistence on pleading the fifth as evidence of guilt?
My main problem with this tactic is that it's not too tough to argue that this is a violation of the Fifth Amendment. I have no sympathies for the defendant in this case, but I'm concerned that a conviction along these lines wouldn't stand up on appeal. They could get it declared a mistrial, and this is not the sort of case one should leave vulnerable to that tactic.
From what I've gathered reading Popehat's coverage over the past hour:
* The attorneys had previously brought a John Doe suit trying to identify an alleged copyright infringer.
* The defending attorney brought it to the Judge's attention that the plaintiff was deliberately obfuscating the actual parties of interest in the suit against Federal court rules and that there were other shenanigans going on, e.g., the alleged CEO of one of the holding companies says he has nothing to do with the company and his identity was stolen by one of the attorneys for use in the suits they were bringing.
* The Judge has been looking into the matter and is strongly inclined to believe that those claims are true.
* The Judge had previously ordered these attorneys to show up and explain themselves on March 11. They blew off the court order and didn't show.
* They did show up this time, but were unwilling to answer any of the Judge's questions.
* The Judge will now decide whether he should levy administrative sanctions against these attorneys and whether he'll refer the case to the US Attorney for investigation into possible criminal conduct.
So -- and I'm not a lawyer -- if I'm understanding this correctly, it's less that the Judge is taking this as evidence of guilt so much as they haven't taken advantage of either of the opportunities he's given them to explain the evidence he's seen that they've engaged in misconduct.
> So the judge is essentially taking their insistence on pleading the fifth as evidence of guilt?
No, but he's probably taking their refusal to show cause why they should not be sanctioned for a variety of actions which appear, on their face, to warrant sanctions as, well, a failure to show cause why they should not be sanctioned.
> My main problem with this tactic is that it's not too tough to argue that this is a violation of the Fifth Amendment.
Except that its not, since there is no criminal matter before the court, and even if the matter before the court was criminal, the attorneys potentially subject to sanction aren't the defendants in that case, and their use refusal to testify is not being used as evidence of guilt.
> I have no sympathies for the defendant in this case, but I'm concerned that a conviction along these lines wouldn't stand up on appeal.
The people subject to sanctions are attorneys for the plaintiff (and, possibly also -- and this is the source of the problem -- simultaneously the actual plaintiff) in the case, not the defendants (and its not a criminal case, and there is no "conviction" at issue, unless a criminal referral is made against them and then a criminal case would begin.)
> They could get it declared a mistrial, and this is not the sort of case one should leave vulnerable to that tactic.
No, they couldn't, because its not a trial.
That sanction might, on the extreme end, include a referral for criminal prosecution, but, were that to occur, their taking the Fifth (either now or in the criminal case itself) would still not be evidence of guilt, though it might be a missed opportunity to rebut other evidence of guilt.
This is not a criminal case against these lawyers, though. This is a continuation of a lawsuit that they filed. The judge essentially said that he was summoning them to court to explain how the business arrangement that they had set up and the suits they were filing was not an attempt to defraud the court and abuse the legal system. Since they declined to explain anything, they may be subject to such consequences as being disbarred or being fined for court costs. Since it is not a criminal or even civil trial against them, the rules are different, but there is no direct possibility of jail time or punitive fines.
Now, the judge could very well refer the case to the US Attorney, in which case criminal charges could be filed against any or all of the attorneys/employees in question. In any trials ensuing from such charges, pleading the 5th cannot be used as evidence against them, but there would presumably be plenty of other evidence to demonstrate their guilt.
This paragraph from the post is key in understanding the significance of the lawyers taking the fifth:
I'm a criminal defense attorney. I cherish and support the Fifth Amendment. Its invocation here was completely lawful. But its invocation will have catastrophic consequences for the Prenda Law enterprise, which cannot possibly continue. When they appeared today, John Steele, Paul Hansmeier, and Paul Duffy were not merely individuals facing the overwhelming power of the state. They were also officers of the court and, according to the testimony of Brett Gibbs, the very attorneys who directed nationwide litigation for the Prenda Law enterprise. Judge Wright ordered them to answer for the conduct of that enterprise in his court, as he had the right and power to do. Their invocation of their Fifth Amendment rights in the face of that order is utterly unprecedented in my experience as a lawyer. In effect, the responsible lawyers for a law firm conducting litigation before a court have refused to explain that litigation to the court on the grounds that doing so could expose them to criminal prosecution.
The lawyers in questions are not on trial. They are there as part of the court. So when they take the fifth, they are essentially saying "I am not a disinterested member of this court." That's not normal.
I didn't see that anyone has suggested they could be convicted simply for taking the Fifth.
Disbarment is another matter, though. I don't know exactly how that works, but I wouldn't be at all surprised if taking the Fifth in a situation like this is sufficient to get one disbarred.
> Disbarment is another matter, though. I don't know exactly how that works, but I wouldn't be at all surprised if taking the Fifth in a situation like this is sufficient to get one disbarred.
Taking the Fifth, by itself, won't get them disbarred. The evidence of misconduct which is the basis for the judge hauling them in to show cause why they should not be sanctioned, OTOH, might be -- taking the Fifth is just a refusal to respond to the cause to show cause why they shouldn't be sanctioned. The case for the sanctions is, in the judge's mind, already made, they were just being hauled in to explain why the judge was mistaken in thinking they should be sanctioned.
The thing is, they aren't really getting in trouble for the original scheme, which is essentially to sue on behalf of a porn studio for copyright infringement, to join a lot of IPs in a single case in order to save on filing fees, and then to make a lot of money on small settlements. That is still pretty viable, although a lot of judges now are getting reluctant to turn those massive list of IPs into names.
They seem to be running into trouble mainly because they decided that it would be much easier to be their own client: have a shell company purchase the porn video and take 100% of the settlements. But then that runs into issues with attorney-client separation, and then they used some appropriated names on the shell company to limit the paper trail, and suddenly there is real trouble brewing.
>That is still pretty viable, although a lot of judges now are getting reluctant to turn those massive list of IPs into names.
Actually, the judge in this case was shooting down their reasoning for obtaining the identity connected to a single IP, had halted discovery until they could provide a basis for it, and specifically called out what they were doing as abusing the courts to extort defendants. Prenda then moved to dismiss the case in February, but the defending lawyer had already let the cat out of the bag about all the other shenangians Prenda was engaged in, and the judge started digging into possible misconduct from there.
Their business model was already in trouble if the statements the judge had made to that point are any indication, but things got really bad for them when it turned out they were pulling all kinds of other shady things behind the scenes.
Yeah, disbarring is not taken lightly since it's essentially ending their law career. The bar association would much rather wait for a criminal conviction before taking any action.
They're a copyright troll that was suing John Does for pirating pornography. They'd go to court, say "this IP downloaded X" and subpeona for the identity of the person assigned that IP. They'd then use the threat of the suit to attempt to extort a settlement out of the person identified in order to avoid the cost and embarrassment of being named in a suit for downloading porn.
The judge in this case had already called them out on this and refused to allow discovery unless they could show that they could specifically identify the person that had committed the infringement (specifically noting that IPs identify the person paying for the IP, not necessarily the person who committed the act), and that they could minimize the likelihood of the incorrect person being named -- and therefore unfairly embarrassed -- by the suit.
Prenda subsequently withdrew the case, but it turned out they were pulling all kinds of shady shell games that the judge is now looking into as willful misconduct and abuse of the court.
One thing I don't understand is why all the shadowy connections and potential fraud? Couldn't one of the attorney's started a media holding company which acquired the copyrights, and then hired the second to pursue lawsuits? Then keep track of payouts and payments to the lawyer.
The tax evasion theory I guess would make them some more money, but still, why risk it if you've got a money making scheme running?
Also, Popehat is great to follow, along with Groklaw, for reading legal news.