Judge Orders Prenda / AF Holdings To Show The Original 'Salt Marsh' Signature; This Ought To Be Good

from the we'll-be-waiting dept

On Friday, we wrote about how Prenda was in trouble in another case, this one in Northern California. Judge Edward Chen has wasted little time in issuing a ruling, with the key part being a demand that “AF Holdings” produce the original document supposedly signed by “Salt Marsh,” the supposed owner of AF Holdings. If you haven’t been following this case that closely, on one of the many (sometimes conflicting or confusing) documents filed by “AF Holdings” — the shell company that many suspect is really Prenda lawyers in disguise, even though everyone claims they have no idea who owns it — was “signed” by “Salt Marsh,” claiming to be the owner.

Now, as you may recall, it was in this very case that there was a big deposition taken of Paul Hansmeier as a person knowledgeable about AF Holdings, in which he did absolutely everything to avoid answering questions about Salt Marsh. When asked about the signature, Hansmeier gave one of his many ridiculous answers:

My testimony was that I don’t know what the exact name of the trust is. If the name of the trust is Salt Marsh, then Salt Marsh is the owner. If the name of the trust is not Salt Marsh, then —

But there were a few problems with this, beyond the fact that almost no one believes this. First up, Salt Marsh is not a person, but the signature requires a statement that the person signing needs to have read an ADR certification handbook, and obviously a non-person can’t read anything (let alone sign). But then there’s the interesting aside about one Anthony Saltmarsh, who used to live with John Steele’s sister. When questioned on this back during the deposition, Hansmeier tapdanced even more than normal.

Q. So returning to these corporate representatives. Have there been any other corporate representatives other than Alan Cooper, Mark Lutz for AF Holdings?
A. I can think one of other corporate representative.
Q. And who is that?
A. And that would Anthony Saltmarsh.
Q. Where does Mr. Saltmarsh reside?
A. I don’t know where Mr. Saltmarsh resides.
Q. Was Mr. Saltmarsh ever compensated for acting as a corporate representative for AF Holdings?
A. Not that I’m aware of.
Q. Exhibit 101 and 102. Those are both the ADRs that are signed by Salt Marsh. I believe you testified you thought that that might be of the name the trust that owns AF Holdings. Could that be a misspelling of Anthony Saltmarsh?
A. The only thing I can say about these documents is that if you wanted me to come prepared to testify about them, you may have included them as exhibits to the notice or supplement the notice with the documents. You’re asking me is it possible that Salt Marsh as spelled on here is a misspelling of the name Anthony Saltmarsh?
Q. Perhaps an alias would be a better word for it.
A. Or an alias for Salt Marsh. I’m a bit skeptical of that theory because it says AF Holdings owner and Anthony Saltmarsh is not an owner of AF Holdings.

Uh huh. As as part of this case, the defense attorneys noted that the document filed indicates an electronic acknowledgement of an actual signature. And they wanted to see the original…. which the judge has now granted:

Finally, the Court addresses Mr. Navasca’s request that it order AF to produce the original of an ADR certification that was e-filed by AF as Docket No. 8. The ADR certification that was e-filed does not contain any actual signature from an AF representative; rather, there is simply the following e-signature: “/s/ Salt Marsh, AF Holdings Owner.” Docket No. 8 (ADR certification). As Mr. Navasca points out, under the Civil Local Rules, AF’s counsel should have maintained a copy of the ADR certification containing the original signature as a part of its files. See Civ. L.R. 5-1(i)(3) (providing that, in the case of a Signatory who is not an ECF user, the actual filer of the document “shall maintain records . . . for subsequent production for the Court, if so ordered, or for inspection upon request by a party, until one year after the final resolution of the action (including appeal, if any)”). Because Mr. Navasca has asked the Court for relief encompassed by the Civil Local Rules, the Court grants the request. AF’s counsel is hereby ordered to produce the original of the ADR certification, containing the original signature of “Salt Marsh” by April 29, 2013. If AF’s current counsel does not have the original document, then it must contact former counsel to obtain the document. On April 29, AF’s current counsel shall also file a declaration with the Court, stating whether it was able to provide a copy of the original document and, if not, why not.

That ought to be rather interesting.

Separately, the court had some choice words about Paul Duffy’s arguments last week trying to claim that the reason he dismissed the case was because of high bond requirements and the spoliation of evidence because of the use of CCleaner. The judge doesn’t buy either reason at all. The spoliation argument is a dead end for many reasons, but mainly because there’s no actual proof. The high bond requirement is similarly dismissed, because that bond can be required at any point, and the judge basically says “if you weren’t willing to put up the bond, why did you file the lawsuit in the first place?”

The Court finds neither argument availing

As to spoliation, it is far from clear that there was any spoliation in the first instance. Notably, Judge Vadas instructed AF to “review the expert declaration that Navasca filed with his letter brief, to fully understand the purpose and effect of CCleaner.” Docket No. 50 (Order at 2). However, there is no evidence to suggest that AF did that or any other investigation into whether CCleaner would in fact irrevocably destroy electronic files. Furthermore, as the Court noted at the hearing, even if CCleaner did irrevocably destroy electronic files, that might actually work in AF’s favor; in other words, the stronger the evidence of improper spoliation, the better the chance AF stood of obtaining, e.g., an evidentiary sanction or adverse inference in its favor based on the spoliation.

Effectively conceding the weakness of its spoliation argument, AF focused at the hearing on the prohibitive cost of the undertaking. But the Court finds this position unconvincing for two reasons. First, AF ignores the fact that the Court stayed its undertaking ruling and expressly gave AF the opportunity to file a motion to reconsider. The Court even noted that AF could present evidence of its professed inability to pay. In spite of this, AF never took any action to move for reconsideration, opting instead for a voluntary dismissal. Cf. AF Holdings LLC v. Trinh, No. C-12- 2393 CRB (N.D. Cal.) (Docket No. 45) (Order at 2) (noting that a plaintiff can obtain relief from a bond requirement if unable to pay but that AF had offered no support for its contention that a bond is beyond its means). Second, to the extent AF suggests that it may be financially able to pay, but the bond is simply more than the value of the case, see Mot. at 2 (arguing that Plaintiff cannot “afford to tie up nearly $50,000 in capital simply in order to proceed with its claims against a single infringer”), it ignores the fact that a bond may be required in any given case in California (based on California specific law). As the plaintiff which initiated the action, AF knew at the outset that a bond might be required. A plaintiff cannot invoke the benefits of the judicial system without being prepared to satisfy its obligations as a litigant. Cf. AF Holdings LLC v. Magsumbol, No. 12-4221 SC, 2013 U.S. Dist. LEXIS 25572, at *2 (N.D. Cal. Feb. 25, 2013) (in case in which AF moved for a voluntary dismissal without prejudice before court was able to rule on defendant’s motion to post an undertaking; denying AF’s motion because tendered reasons for requesting dismissal were not compelling – “Plaintiff brought this case knowing the rules of this jurisdiction and the risks of litigation, and now he seeks dismissal of his case without prejudice so that he can bring it another day”).

The case is not over, but it’s clear the judge is paying attention. He cites the case in southern California presided over by Judge Otis Wright, and seems extremely skeptical of the story being told by Prenda. For now, though, we wait eagerly for Prenda to produce the “original” Salt Marsh signature as ordered by the court.

Companies: af holdings, prenda