The Prenda lawyers appealed the sanctions award by the Southern District of Illinois in the case captioned Lightspeed Media v. Smith, 13 -3801. Today, the Seventh Circuit held oral argument in the appeal by the three Prenda lawyers, Duffy, Hansmeier and Steele. The members of the panel were Judges Wood, Sykes and Kanne. I did not attend the argument, but I listened to the tape of the argument. To say the least, the argument did not go well for Prenda. The panel was convinced that there was sufficient evidence of bad faith conduct by the Prenda attorneys before the district court. The panel brushed aside Prenda’s arguments that there was no support in the record for the bad faith finding. Prenda’s other argument, that it was wrong to base a sanctions opinion on the decision of another judge, was also brushed aside. Prenda also argued that there was insufficient notice to some of its attorneys that they were going to be sanctioned. It would appear that the panel was not impressed with this argument either.
Judge Diane Sykes asked Prenda’s lawyer to explain “in 25 words or less” the relationship between Lightspeed, Prenda Law and Alpha law. Prenda’s counsel, Daniel Voelker, admitted that he could not explain the relationship. Judge Sykes responded “That is shocking.”
Voelker also argued that it was improper to sanction the lawyers based on the voluntary dismissal by Prenda. The problem for Prenda is that the voluntary dismissal, coming after contentious litigation, appeared to lend support to the idea that the entire case was a shakedown, not a serious piece of litigation.
Judge Kanne seemed to have some interest in the argument that Hansmeier did not receive adequate notice of the sanctions motion. Hansmeier was not served with the motion. Instead, the internet service providers served the Prenda Law firm.
Although I hate to predict what the Court of Appeals will do, I am going to make a guess.
First, the Seventh Circuit will affirm the finding of bad faith and vexatious conduct by the Prenda lawyers. There did not appear to be any doubt about the result.
Second, the Seventh Circuit will remand the case to the district court for a hearing on the reasonableness of the legal fees claimed by the Defendants.
Third, the Seventh Circuit will issue a published opinion, which will essentially finish the legal careers of the three respondents. I believe that John Steele has already resigned from the Illinois Bar and no longer has a license to practice law.
Again, this is my opinion based on reading the briefs and listening to the tape of the argument.
Edward X. Clinton, Jr.
Note: since this post was published a well-respected technology journalist drew conclusions similar to mine.
Here is the link to the oral argument recording.