Paul Hansmeier Pops Up In Prenda Law Defamation Case, As Prenda Tries To Force It Back To State Court

Defamation

from the twists-and-turns dept

Ah, the twists and turns of Prenda Law cases. While much of the focus has been on the big showdown in California, there are also the infamous defamation cases. As you may recall, three separate lawsuits were filed in state courts against Alan Cooper (John Steele’s caretaker, who has accused Steele of identity fraud in signing his name to documents for various shell companies involved in Steele’s copyright trolling operation), Paul Godfread, who is Cooper’s lawyer, and a variety of anonymous internet bloggers and commenters. Two of the original lawsuits were filed in Illinois state court — one with Prenda Law (the firm) as the plaintiff and another with Prenda’s sole principal (or so they claim), Paul Duffy. Another was filed in Florida with John Steele as the plaintiff, though that one was quickly dropped by Steele himself (the rumor we’ve heard was that this was dropped after someone informed Steele of a fairly big procedural snafu concerning how defamation cases need to be filed in Florida).

As we noted, Cooper and Godfread quickly had the cases removed to federal court, which is a fairly common move. Defendants will often remove a case to federal court if they can, because generally speaking, federal courts have a lot more clear caselaw and precedent that the judges will follow, and (subjective statement here, but many agree with it) federal judges tend to just be better informed about the law and are somewhat less prone to wacky rulings. One common way to remove a case from state to federal court is by claiming “diversity,” which is when the plaintiffs and defendants are in different states. That seemed like a no-brainer in this case, seeing as Cooper and Godfread are based in Minnesota, while Duffy and Prenda are in Illinois.

However, the latest filing in the case (as noticed by Raul, filed by Paul Duffy (yes, representing his own firm) claims that the case should be sent back to the state court. Here’s where it gets tricky. The original complaint in the Prenda Law case, was filed on February 12th. However, on February 21st, Hansmeier notes that an amended complaint was filed, which also named Paul Hansmeier’s own firm, Alpha Law Firm, as a plaintiff. While that complaint incorrectly claimed that Alpha Law Firm was organized under the laws of the State of Illinois it seems likely that was a sloppy copy-and-paste error in filing the amended complaint. Either way, the amended complaint correctly notes that Alpha Law Firm’s principal place of business was in Minnesota.

This, Duffy argues, kills the diversity claim and means that the federal court has no jurisdiction. I am, of course, not a lawyer, and my expertise in the nuances of federal court jurisdiction is limited, but from my understanding of these things, this is a case where Duffy may be legally correct, though there’s all sorts of sleaziness associated with this. The general rules for removing to federal court under diversity includes that no plaintiffs live/work in the same state as any defendants. If Alpha Law is in the same state as Cooper and Godfread (as they are), they can argue that there is no diversity, and a federal court very likely could agree. Of course, it’s not difficult to speculate that some of the Team Prenda folks realized this after the initial filing, which is what inspired the decision to suddenly add Alpha as a plaintiff, solely for the point of killing the diversity claim. There are situations in which courts will claim that some parties have been added to a lawsuit as “nominally” or “fraudulently joined” defendants, solely for the purpose of avoiding a diversity claim. Perhaps Cooper and Godfread’s lawyer can make that claim, but it’s a crapshoot whether or not the court will buy it.

Of course, aiding the claim that this is a bogus addition solely to block a diversity claim is the fact that it is not explained anywhere in the amended filing, why Alpha Law was added as a plaintiff to the lawsuit. None of the statements quoted in the filing which the plaintiffs claim to be defamatory actually refer to Alpha Law. Hell, none of them even refer to Paul Hansmeier. The only Hansmeier mentioned is Peter, Paul’s brother. Nearly all of the statements mention Prenda, not Alpha. Reading the amended complaint, it’s not at all clear what Alpha Law is even complaining about, since the comments do not reference it.

There are other oddities here as well. The lawyer representing Cooper and Godfread, Erin Russell, never acknowledges Alpha as a plaintiff in any of her filings. Duffy’s filing argues that this is a purposeful omission to hide this fact for the sake of getting diversity, and also claims that he emailed Russell the day her original Notice of Removal was filed to point her to the amended complaint. If this is true, then that could be seen to reflect poorly on Russell. Even if there are questionable motives behind adding Alpha, if the firm were legitimately added, Russell should have acknowledged that. That said, given how many times we’ve seen the crew of folks around Prenda make statements that were less than totally forthcoming about litigation they were involved in, I’ll reserve judgment until we see more details and the inevitable reply from Russell.

Duffy even seeks legal fees in response to this, though that seems like a huge long shot.

It will be interesting to see what happens here, but there is a very real possibility that the judge might send this back to the state court for lack of diversity. Of course, while that’s not ideal, it’s hardly the end of the world. The case itself seems so weak, and there is so much other information now available concerning Prenda’s actions, that I can’t see the original case getting very far, even if it is stuck in a state court in Southern Illinois. On that note, Russell has already been trying to move the federal case from Southern Illinois to Northern Illinois arguing (quite reasonably) that no one involved in the case is from Southern Illinois at all, but Prenda/Duffy are based in Northern Illinois). It does make you wonder why the case was filed in st. Clair County in the first place — other than that was also the state court that Prenda has used for some of its lawsuits. Still, this move reeks of playing legal games, for which Prenda is quite famous. It sometimes seems like there isn’t a loophole they’re unfamiliar with. In the long run, all this gamemanship isn’t going to help them in the bigger cases concerning their conduct.

Filed Under: alan cooper, defamation, diversity, gamesmanship, jurisdiction, paul duffy, paul godfread, paul hansmeier, removal to federal court
Companies: alpha law firm, prenda, prenda law