Yesterday, Judge Darrah released an opinion sanctioning Paul Duffy and Prenda Law, Inc. Duffy and Prenda Law are well-known for filing actions against individuals (mostly men) alleging that those individuals violated copyright law by downloading pornographic movies without paying for them. A search of Prenda Law or Paul Duffy on Pacer will yield hundreds of similar lawsuits against John Doe defendants.
According to its critics, Prenda files a case and then solicits settlements from the individual defendants. The defendants, so it is claimed, are reluctant to have their names disclosed in public. They settle with Prenda, often for significant sums of money.
During the last twelve months, Prenda Law and its lawyer, Paul Duffy, have become targets of sanctions motions in various federal courts.
The latest sanction order was written by Judge Darrah in the case captioned Prenda Law, Inc. v. Paul Godfread, Alan Cooper and John Does 1-10. The case began as a defamation lawsuit filed by Prenda Law against Godfread, an attorney, and Cooper, allegedly one of his clients. In the lawsuit Prenda claimed that the men had defamed Prenda by making anonymous posts on the internet. The case began in the Circuit Court of St. Clair County, Illinois. Godfread and Cooper removed the case to the Southern District of Illinois on the basis of diversity jurisdiction.
Duffy then filed a motion to remand alleging that an amended complaint had been filed in the State court in which Alpha Law Firm, LLC, a Minnesota company, became the plaintiff instead of Prenda. However, the amended complaint was never filed in federal court. The defendants argued that the addition of Alpha was bogus – that Alpha Law was really a sham party designed to defeat diversity jurisdiction.
Shortly thereafter, the case was transferred from the Southern District of Illinois to the Northern District of Illinois on the ground that another “virtually identical” case was pending in that district. Judge Herndon of the Southern District of Illinois denied the motion to remand on the grounds that (a) Prenda did not obtain leave to file the Amended Complaint before it filed the Amended Complaint in the State court(Illinois law requires that a party obtain leave to amend a complaint once the other party has been served – filing an amended complaint without leave is prohibited); and (b) Prenda had allegedly lied to the clerk of the court (in the State court) that leave to amend was not necessary as no one had been served with the original complaint.
Upon transfer to the Northern District of Illinois, the case was assigned to Judge Darrah. Duffy and Prenda filed another motion to remand asserting the same arguments that had been rejected by Judge Herndon. A hearing on the motion was held and then Prenda filed a motion to withdraw the Renewed Motion to Remand.
Judge Darrah sanctioned Prenda and Paul Duffy on two grounds: (a) a violation of Section 1927 and (b) Rule 11.
Judge Darrah found that Prenda and Duffy violated Section 1927 by refiling the motion to remand after it had been rejected. Further, he found that Prenda had violated Illinois law by filing the amended complaint in the state court and that Prenda had falsely claimed to the clerk of that court that leave to amend was not necessary because no one had been served with the complaint. Judge Darrah also found that Duffy misrepresented the holding of the Southern District of Illinois. Sanctions were warranted because Duffy and Prenda had, in bad faith, multiplied the proceedings and had continued to advocate a motion to remand that was no longer tenable. Judge Darrah also rejected Prenda’s claim that it was entitled to the safe harbor contained in Rule 11(c)(2), which gives a party 21 days to withdraw a challenged paper or pleading. The court held that the safe harbor did not apply because the motion had already been rejected by Judge Herndon in the Southern District of Illinois.
Comment: the Defendants went to a great deal of work to trace the steps taken by Prenda Law to obtain a remand of the case to state court. They were intelligent enough to obtain an affidavit of the clerk of the court of St. Clair county. That affidavit was the strongest piece of evidence that Prenda and its lawyers were not being truthful with either the federal or state court. The moral of the story here is an old one – never lie to any court personnel or judges. Once the lie is uncovered, your reputation is seriously damaged. The two federal judges, both well respected judges, clearly believed that Prenda was playing some sort of game to manufacture a remand of the case. In my opinion, Judge Darrah acted correctly in imposing sanctions for Prenda’s behavior.
Disclaimer: obviously Prenda law disputes the claims that it acted in bad faith and that it violated Rule 11. It may well seek appellate review of Judge Darrah’s order.