Month: June 2014

StreetEASY, INC. v. CHERTOK, Court of Appeals, 2nd Circuit 2014 – Google Scholar

StreetEASY, INC. v. CHERTOK, Court of Appeals, 2nd Circuit 2014 – Google Scholar.

In this case, the Second Circuit reversed an award of Rule 11 sanctions against a pro se litigant. The underlying case was a business dispute between a real estate listing website and one of its co-founders, Douglas Chertok.

The litigation was contentious. Eventually, the parties agreed to settle the case. However, the settlement did not last long as the parties soon began quarreling. The district court sanctioned Chertok for three instances of misconduct. The Second Circuit reversed two of the three instances of misconduct and then remanded the case for further proceedings. The Second Circuit explained: “We share the district court’s desire to check Chertok’s less-than-straightforward conduct, but for the following reasons we conclude that the district court erred in sanctioning Chertok on the basis of two of the identified instances. We also conclude, however, that the district court acted within its discretion in sanctioning Chertok for his misrepresentation of what documents he agreed to sign pursuant to the settlement agreement. Accordingly, we vacate the district court’s award of sanctions and remand the matter for reconsideration of the appropriate sanction amount in light of this decision.”

Edward X. Clinton, Jr.

District Court Sanctions Lawyer For Refiling Time-Barred Claim – 11th Circuit Affirms

Jackson v. HALL COUNTY GOVERNMENT, Court of Appeals, 11th Circuit 2014 – Google Scholar.

This is an unpublished decision of the 11th Circuit, affirming a $12,000 sanction award against a lawyer who re-filed a time-barred claim. On behalf of his client, Shawn Jackson, the lawyer filed an employment lawsuit against Jackson’s employer, the Hall County Government.

The first case, called Jackson I, was dismissed by the district court, without prejudice due to insufficient service of process. The next day the lawyer filed Jackson II, which asserted the same claims. The defendants moved to dismiss on the ground that the Title VII claim was time-barred. A plaintiff filing a Title VII claim must file within 90 days of receiving a right-to-sue letter from the EEOC.  Since more than 90 days had gone by, the claim was time-barred. After more litigation, the district court granted summary judgment on the remaining claims asserted by Jackson.

The defendants moved for Rule 11 sanctions on the ground that the attorney had re-filed the time-barred Title VII claim in Jackson II and that he had refused to dismiss the claim.

The district court agreed and imposed sanctions of $12,000, far less than the $50,000 sought by the defendants. The district judge ruled that the Title VII claim was frivolous under well-settled law.

The Eleventh Circuit affirmed the sanctions award.

In sum, the lawyer was sanctioned for disregarding well-settled law.

Edward X. Clinton, Jr.

D.C. Circuit Administers More Punishment To Prenda Law and Paul Duffy

The case is captioned, AF Holdings, LLC v. Does 1-1058, Cox Communications, Inc., 12-7135.

This is another case where Duffy, on behalf of AF Holdings, “sued and then sought discovery regarding more than a thousand unknown individuals who it claimed had illegally shared a copyrighted pornographic film.” Cox Communications appealed from an order granting AF Holdings motion to proceed with discovery. AF Holdings sued over 1000 defendants alleging that they had improperly downloaded a copyrighted pornographic film. AF Holdings then served subpoenas on five internet providers, seeking information about the John Doe clients who were sued. The internet service providers refused to produce documents, on the ground that the subpoena would subject them to an “undue burden” because AF Holdings did not establish that the court would have personal jurisdiction over the defendants. Very few of the over 1000 defendants resided in the District of Columbia. 

The D.C. Circuit reversed the district court’s order granting leave to serve the subpoenas on the internet service providers. The court stated “we think it quite obvious that AF Holdings could not possibly have had a good faith belief that it could successfully sue the overwhelming majority of the 1058 John Doe defendants in this district.” By seeking to enforce broad subpoenas on individuals who did not reside in the district, AF Holdings “clearly abused the discovery process.” at 12.

The court then held that most of the defendants (those who did not live in the district) were improperly joined in the case. The court then reversed the district court’s order granting AF Holdings the right to proceed with discovery. The court held that the subpoenas should have been quashed because very few of the defendants resided in the district and because the vast majority of the defendants were improperly joined in the lawsuit. 

The court then remanded the case to district court with a suggestion that the court consider awarding sanctions for Prenda’s use of an allegedly forged copyright assignment. 

The first paragraph of the opinion illustrates how hostile the federal courts have become to Prenda. “Generally speaking, our federal judicial system and the procedural rules that govern it work well, allowing parties to resolve their disputes with one another fairly and efficiently. But sometimes individuals seek to manipulate judicial procedures to serve their own improper ends. This case calls upon us to evaluate–and put a stop to– one litigant’s attempt to do just that.”

Prenda, in my opinion, can no longer move forward with any cases against anyone. It has been destroyed by the federal courts. However, the destruction of Prenda will not stop others from bringing copyright actions against those who wrongfully download movies. It is naive to think that the copyright trolls are gone for good. Soon they will reemerge with more carefully thought out lawsuits against more plausible defendants. Just this past two weeks, the owners of the movie, Dallas Buyer’s Club have initiated numerous lawsuits in the Northern District of Illinois against those who allegedly wrongfully downloaded the movie. Only time will tell if the plaintiffs in that case are correct.

Edward X. Clinton, Jr.