Amanda Bronstad is a reporter for The National Law Journal, an American Lawyer affiliate.
Correction, 3/21/13, 8:32 a.m. EDT: This article has been reflect to reflect the fact that attorney Morgan Pietz denies that he runs the two websites in question.
A federal judge in Los Angeles, raising concerns about a "legal shakedown," has ordered four attorneys and a paralegal to show up at a hearing next month to explain why they shouldn't be sanctioned for fraudulently filing dozens of actions against unnamed individuals accused of downloading copyrighted pornography videos.
U.S. District Judge Otis Wright on February 7 had issued an order to show cause why Brett Gibbs, a Mill Valley, Calif., of counsel to Prenda Law Inc. who filed the actions now pending before him, shouldn't be sanctioned for having disobeyed a discovery order and for possibly stealing the identity of someone to validate a potentially sham client.
Following a March 11 hearing, Wright expanded his order to include possible sanctions against others associated with Prenda Law, including attorneys John Steele, Paul Hansmeier and Paul Duffy, and paralegal Angela Van Den Hemel.
"The evidence presented suggests these persons may be culpable for the sanctionable conduct…which the Court previously attributed to Brett Gibbs only," Wright wrote in a March 14 order. "Further, it appears that these persons, and their related entities, may have defrauded the Court through their acts and representations in these cases."
He ordered the attorneys to appear at an April 2 hearing.
An attorney for Gibbs, Andrew Waxler of Waxler Carney Brodsky in El Segundo, Calif., declined to comment. In court documents, Gibbs has said he is "very sorry that the Court is concerned with his conduct. Mr. Gibbs has strived to be honest and forthright with this Court, and all courts during his legal career."
Heather Rosing, a partner and head of the professional liability department at Klinedinst in San Diego, who represents Steele, Hansmeier, Duffy and Van Den Hemel, did not return a call for comment.
The allegations behind the sanctions order first surfaced when Morgan Pietz, an attorney in Manhattan Beach, Calif., who represented a "John Doe" defendant in one of the cases, accused Gibbs of masterminding a "widespread fraud" on the courts.
In court documents, he noted that Gibbs had filed more than 40 lawsuits in the past year in federal court in Los Angeles on behalf of shell companies called Ingenuity 13 LLC and AF Holdings LLC.
In particular, Pietz accused Gibbs of stealing the identity of a Minnesota man named Alan Cooper to sign documents as a principal for Ingeniuty, which claims to own the copyrights to A Peek Behind the Scenes at the Show and Five Fan Favorites.
Pietz claims the real Cooper is a caretaker for some property for Steele and has testified in court documents that he knows nothing about Ingenuity.
"Prenda Law, which still represents both AF Holdings and Ingenuity 13, has so far refused to clarify whether there really is another Alan Cooper who is the true principal of these entities," wrote Pietz.
The alleged fraud goes beyond the cases in Los Angeles, he wrote. He cites rulings by judges in other cases filed in California and Florida by AF Holdings or Ingenuity 13 that have questioned the legitimacy of the companies.
"The conduct of Prenda and its 'of counsel' Mr. Gibbs in these cases undermines the integrity of the courts and the public's confidence in the justice system," Pietz wrote. "Here, Prenda has shown that it is willing to do just about anything to obtain grist for its national 'settlement' mill. Repeatedly, in hundreds of actions filed in courts across the country, Prenda has resorted to misrepresentations, halftruths, and questionable tactics, if not outright fraud, forgery, and identity theft."
Gibbs, in response, has accused Pietz, who operates two Web sites, fightcopyrighttrolls.com and dietrolldie.com, of attacking him for publicity purposes.
"Specifically, Mr. Pietz believes that his sloppy attempts to defame and overburden Prenda Law will gain him coverage—and, subsequently, clients—from the two primary niche blogs which vehemently oppose Prenda's efforts to protect its clients' copyrights," he wrote in court papers.
Calling Pietz's claims "baseless and unsubstantiated," Gibbs sought sanctions against his opponent, which were denied on December 21.
Pietz, meanwhile, said he doesn’t run the websites. “Aside from those sites taking a close interest in some of my cases, I have nothing to do with them,” he said.
On December 20, Wright ordered Gibbs to explain how he would proceed in the litigation to identify individual defendants using only an Internet Protocol address—particularly since the person paying the bills might not be the alleged infringer.
"The Court is concerned with the potential for discovery abuse in cases like this," he wrote. "And given the subject matter of Ingenuity 13's accusations and the economics of defending such a lawsuit, it is highly likely that the subscriber would immediately pay a settlement demand—regardless whether the subscriber is the actual infringer. This Court has a duty to protect the innocent citizens of this district from this sort of legal shakedown, even though a copyright holder's rights may be infringed by a few deviants."
Gibbs fired back with a motion to disqualify Wright, alleging the judge had shown repeated bias in other cases against holders of pornography copyrights. U.S. District Judge Michael Fitzgerald denied the disqualification motion on January 15.
In his order to show cause last month, Wright expanded his concerns about discovery abuse against Gibbs to include possible fraud on the court, citing the allegations involving Cooper. Such a finding could lead to a "monetary fine, incarceration, or other sanctions sufficient to deter future misconduct," he wrote.
He ordered Gibbs, Cooper, Hansmeier and Steele to show up at the March 11 hearing. Hansmeier, of Minnesota, and Steele, of Florida, are former law partners at Steele Hansmeier, the predecessor to Prenda Law, which is based in Chicago.
He also ordered Prenda Law principal Duffy and paralegal Van Den Hemel to appear, as well as Mark Lutz, who Gibbs has said is the chief executive of AF Holdings, and Peter Hansemeier, an expert in the cases who Pietz claims is the brother of Paul Hansmeier.
In court documents, Gibbs insists that he has never met Cooper. And although he defended the legitimacy of his clients, he said senior attorneys at the firm communicate with them.
After the hearing, Wright had more questions. So did Pietz, who attended the hearing.
"There are still a number of unanswered question in these cases," he told The National Law Journal. "I look forward to get to the bottom of it."
Just before the hearing, Steele, Hansmeier, Duffy and Van Den Hemel hired their own counsel, who filed court documents arguing they didn't need to show up. Calling their request "gamesmanship," Wright denied the request and expanded possible sanctions to include all of them, as well as Lutz, Cooper and Peter Hansemeier.
