KLINEDINST PC
501 West Broapway, SuITE 600
SAN DIEGO, CALIFORNIA 92101

Case 2)12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 1of35 Page ID #:3166

1 || Heather L. Rosing, Bar No. 183986
David M. Majchrzak, Bar No. 220860
2 || Philip W. Vineyard, Bar No. 233628
3 || KLINEDINST PC
501 West Broadway, Suite 600
4 || San Diego, California 92101
(619) 239-813 1/FAX (619) 238-8707
> || hrosing@klinedinstlaw.com
6 dmajchrzak@klinedinstlaw.com
pvineyard@klinedinstlaw.com
7
Attorneys for Specially Appearing for
8 || PRENDA LAW, INC.
9 UNITED STATES DISTRICT COURT
10 CENTRAL DISTRICT OF CALIFORNIA
1]
12 || INGENUITY 13 LLC, Case No. 2:12-cv-8333-ODW(JCx)
— Related cases: 2:12-cv-05709-ODW-(JCx)
13 Plaintiff, 2:12-cv-08322-ODW-(JCx)
14 V. PRENDA LAW, INC.'S NOTICE OF
15 || JOHN DOE, oiiaiaaiae
16 Defendant. Judge: Hon. Otis D. Wright, I
Magistrate Judge: Hon, Jacqueline Chooljian
17 Complaint Filed: September 27, 2012
Trial Date: None set
18
19 . .
" Please take NOTICE that specially appearing party Prenda Law, Inc. hereby
- appeals to the United States Court of Appeals for the Ninth Circuit from the
- following orders in the above-captioned matter:
- (1) The District Court’s February 7, 2013, Order to Show Cause Re
- Sanctions for Rule 11 and Local Rule 83-3 Violations;
- (2) The District Court’s March 5, 2013, Order instructing appearances by
- multiple out-of-state third parties for the Court’s March 11, 2013, hearing on the
ZF
28

' Attached hereto as Exhibit A (ECF No. 48).
-|-

PRENDA LAW, INC.'S NOTICE OF APPEAL
2:12-cv-8333-ODW(JCx)

Case 2:12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 2 o0f 35 Page ID #:3167

KLINEDINST PC
501 West Broapway, SuITe 600
SAN DIEGO, CALIFORNIA 92101

Oo CO ~~ DB UA HS WH bO —

jr eet
Go

* Attached hereto as Exhibit B ECE No. 303

February 7, 2013, Order to Show Cause;
(3) The District Court’s March 14, 2013, Order extending the February 7,
2013, Order to Show Cause to, among others, Prenda Law, Inc.”

(4) The District Court’s May 6, 2013, Order Issuing Sanctions."

Pers

Klinedinst PC 7

ra & oe = —cenensnnnncctn ER MEER

ye Pa emcee
eo ky

DATED: Mav 20. 2013 By:

feather L. Rosing

David M. Majchrzak

Peso W. bb a ‘ _
ttorneys specia earing tor

PRENDA LAW. INC.

; Attached hereto as Exhibit C (ECF No. 86).
Attached hereto as Exhibit D (ECF No. 130).
2D
PRENDA LAW, INC.'S NOTICE OF APPEAL
2:12-cv-8333-ODW(JCx)

KLINEDINST PC

501 West BroaDway, SuITE 600
SAN DIEGO, CALIFORNIA 92101

Case 2)12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 3o0f 35 Page ID #:3168

—

———'

CSC OU FOF SH HN OH He WY LN

REPRESENTATION STATEMENT

Prenda Law, Inc. (“Prenda Law’’) files this Notice of Appeal through its
current counsel, Klinedinst PC (“Klinedinst’”), but intends to obtain new counsel,
because Klinedinst had a limited scope of representation agreement with Prenda
Law. That agreement obligated Klinedinst to defend Prenda Law solely through
the Order to Show Cause proceedings that are the subject of the intended appeal,
and Prenda Law has consented to Klinedinst’s withdrawal as counsel of record.

Pursuant to the Federal Rules of Appellate Procedure, Rule 12(b) and Ninth
Circuit Rule 3-2, Prenda Law submits the following Representation Statement.
The following list identifies the relevant parties and third parties affected by the
appealed Orders and identifies, when known, the counsel for those parties and the
corresponding contact information. Where Prenda Law has no personal knowledge
of, or must rely on information and belief for, the information necessary for the
Representation Statement, it will disclose said lack of knowledge or the source of

its information and belief.

Party or Third Party Counsel of Record / Pro Se

Klinedinst PC
501 West Broadway, Suite 600
San Diego, CA 92101

619.239.8131

Prenda Law, Inc.
161 N. Clark St., Suite 3200
Chicago, IL 60601 |
800.380.0840

Paul Duffy Pro Se
2.N. La Salle St., 13" Floor

Chicago IL 60602

312.952.6136

Paul Hansmeier Pro Se

Alpha Law Firm, LLC
900 IDS Center

80 South 8" Street
Minneapolis, MN 55402
612.234.5744

Taken from Paul Hansmeier’s Notice

ee
PRENDA LAW, INC.'S NOTICE OF APPEAL
2:12-cv-8333-ODW(JCx)

KLINEDINST PC
501 West Broapway, Suite 600
SAN DieGO, CALIFORNIA 92101

Case 2:12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 4o0f35 Page ID #:3169

~ Ingenuity 13, LLC Pro Se
3 || Springates East
Government Road
4 || Charlestown, Nevis
5 {I (Taken from Brett Gibbs’ Notice of
6 Appeal)
7 || AF Holdings, LLC Pro Se -
Springates East
8 || Government Road
9 Charlestown, Nevis
19 || (Laken from Brett Gibbs’ Notice of
| Appeal)
11
Putative John Doe Morgan Pietz, Esq.
12 | Contact Information unknown The Pietz Law Firm
3 3770 Highland Ave., Suite 206
Manhattan Beach, CA 90266
14 310.424.5557
15 Nicholas Ranallo
16 371 Dogwood Way
Boulder Creek, CA 95006
17 §3 1.703.401 1
18
20 Lipo
91 || DATED: Mav 20. 2013 Bv vA . vf |
_ Heather L. Rosing
oe, David M. Majchrzak
— W. pone er : —
23 ttorneys Specially Appearing for
PRENDA LAW. INC. '
24
>
26
27 1554984 1v1
28

PRENDA LAW, INC.'S NOTICE OF APPEAL
2:12-cv-8333-ODW(JCx)

Case 2:12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 5of35 Page ID #:3170

Exhibit A

Case 2:12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 6of35 Page ID #:3171

Case 2:12-cv-08333-ODW-JC Document 48 Filed 02/07/13 Page 1ofi11 Page ID #:600

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

INGENUITY 13 LLC, Case Nos. 2:12-cv-8333-ODW(JCx)
Plaintiff, ORDER TO SHOW CAUSE RE
V. SANCTIONS FOR RULE 11 AND

| | LOCAL RULE 83-3 VIOLATIONS
JOHN DOE,

Defendant.

The Court hereby orders Brett L. Gibbs, attorney of record for AF Holdings
LLC and Ingenuity 13 LLC, to appear on March 11, 2013, at 1:30 p.m., to justify his
violations of Federal Rule of Civil Procedure 11 and Local Rule 83-3 discussed
herein.
A. Legal Standard

The Court has a duty to supervise the conduct of attorneys appearing before it.
Erickson v. Newmar Corp., 87 F.3d 298, 301 (9th Cir. 1996). The power to punish
contempt and to coerce compliance with issued orders is based on statutes and the
Court’s inherent authority. /nt’] Union, United Mine Workers of Am. v. Bagwell, 512
' The violations discussed herein were committed in the following related cases: AF Holdings LLC v.
Doe, No. 2:12-cv-6636-ODW(JCx) (C.D. Cal. filed Aug. 1, 2012); AF Holdings LLC v. Doe, No.
2:12-cv-6669-ODW(JCx) (C.D. Cal. filed Aug. 2, 2012); Ingenuity 13 LLC v. Doe, No. 2:12-cv-
6662-ODW(JCx) (C.D. Cal. filed Aug. 2, 2012); Ingenuity 13 LLC v. Doe, No. 2:12-cv-6668-
ODW(JCx) (C.D. Cal. filed Aug. 2, 2012); Ingenuity 13 LLC v. Doe, No. 2:12-cv-8333-ODW(JCx)

(C.D. Cal. filed Sept. 27, 2012). To facilitate this matter, Mr. Gibbs will be given the opportunity to
address these violations together in one hearing rather than in several separate hearings.

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Case 2:12-cv-08333-ODW-JC Document 48 Filed 02/07/13 Page 20f11 Page ID #:601

U.S. 821, 831 (1994). And though this power must be exercised with restraint, the

| Court has wide latitude in fashioning appropriate sanctions to fit the conduct. See

Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-65 (1980).
B. Rule 11(b)(3) Violations

By presenting a pleading to the Court, an attorney certifies that—after
conducting a reasonable inquiry—the factual contentions in the pleading have
evidentiary support or, if specifically so identified, will likely have evidentiary
support after a reasonable opportunity for further investigation or discovery. Fed. R.
Civ. P. 11(b)(3). This precomplaint duty to find supporting facts is “not satisfied by
rumor or hunch.” Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677, 683 (7th
Cir. 1992). The reasonableness of this inquiry is based on an objective standard, and
subjective good faith provides no safe harbor. Golden Eagle Distrib. Corp. v.
Burroughs Corp., 801 F.2d 1531, 1538 (9th Cir. 1986); F.D..C. v. Calhoun, 34 F.3d
1291, 1296 (Sth Cir. 1994); Knipe v. Skinner, 19 F.3d 72, 75 (2d Cir. 1994). The
Court wields the discretion to impose sanctions designed to “deter repetition of the
conduct or comparable conduct by others similarly situated.” Fed R. Civ. P 11(c)(4).

In Ingenuity 13 LLC v. Doe, No. 2:12-cv-6662-ODW(JCx) (C.D. Cal. filed
Aug. 2, 2012), the Court ordered Plaintiff on December 20, 2012, to show cause why
it failed to timely serve the Defendant or, if the Defendant has already been served, to
submit the proof of service. (ECF No. 12.) In response, Plaintiff noted that the delay
was because it waited to receive a response from the subscriber of the IP address
associated with the alleged act of infringement. (ECF No. 14.) Plaintiff further noted:
“Though the subscriber, David Wagar, remained silent, Plaintiff's investigation of his
household established that Benjamin Wagar was the likely infringer of Plaintiffs
copyright.” (ECF No. 14, at 2.) Based on this investigation, Plaintiff filed an
Amended Complaint, substituting Benjamin Wagar for John Doe. (ECF No. 13.)

Plaintiffs Amended Complaint alleges the following in connection with

Benjamin Wagar:

i]

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mesnah

“Defendant Benjamin Wagar (‘Defendant’) knowingly and _ illegally
reproduced and distributed Plaintiff's copyrighted Video by acting in

concert with others via the BitTorrent file sharing protocol and, upon

information and belief, continues to do the same.” (AC 1);

e “Defendant is an individual who, upon information and belief, 1s over the
age of eighteen and resides in this District.” (AC { 4);

e “Defendant was assigned the Internet Protocol (‘IP’) address of
96.248.225.171 on 2012-06-28 at 07:19:47 (UTC).” (AC 4);

e “Defendant, using IP address 96.248.225.171, without Plaintiff's
authorization or license, intentionally downloaded a torrent file particular
to Plaintiff's Video, purposefully loaded that torrent file into his
BitTorrent client—in this case, Azureus 4.7.0.2—-entered a BitTorrent
swarm particular to Plaintiff's Video, and reproduced and distributed the
Video to numerous third parties.” (AC 22);

e “Plaintiff's investigators detected Defendant’s illegal download on 2012-
06-28 at 07:19:47 (UTC). However, this is a [sic] simply a snapshot
observation of when the IP address was observed in the BitTorrent
swarm; the conduct took itself [sic] place before and after this date and
time.” (AC ¥ 23);

e “The unique hash value in_ this case is_ identified as
F016490BD8E60E184ECS5B7052CEBIFAS70A4AF 11.” (AC ¢ 24.)

In a different case, Ingenuity 13 LLC v. Doe, No. 2:12-cv-6668-ODW(JCx)
(C.D. Cal. filed Aug. 2, 2012), Plaintiff essentially makes the same response to the
Court’s December 20, 2012 Order To Show Cause (ECF No. 12): “Though the
subscriber, Marvin Denton, remained silent, Plaintiff's investigation of his household
established that Mayon Denton was the likely infringer of Plaintiffs copyright.”
(ECF No. 13, at 2.) And based on this information, Plaintiff filed an Amended

Complaint (ECF No. 16), similar in all respects to the one filed against Benjamin

Loe

Case 2:12-cv-08333-ODW-JC Document157 Filed 05/20/13 Page 9of35 Page ID #:3174

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Cat

Oo oe “I oN

Wagar in /ngenuity 13 LLC v. Doe, No. 2:12-cv-6662-ODW(JCx) (C.D. Cal. filed
Aug. 2, 2012), with the following technical exceptions:
e “Defendant was assigned the Internet Protocol (‘IP’) address of 75.128.55.44
on 2012-07-04 at 07:51:30 (UTC).” (AC 4 4);
e “Defendant . . . purposefully loaded that torrent file into his BitTorrent
client—in this case, uTorrent 3.1.3....” (AC § 22);
e “The unique hash value in this case is _ identified as
0D47A7A035591BOBA4FASCB86AFE986885FS5EI8E.” (AC ¥ 24.)
Upon review of these allegations, the Court finds two glaring problems that

Plaintiff's technical cloak fails to mask. Both of these are obvious to an objective

observer having a working understanding of the underlying technology.

i Lack of reasonable investigation of copyright infringement activity

The first problem is how Plaintiff concluded that the Defendants actually
downloaded the entire copyrighted video, when all Plaintiff has as evidence is a
“snapshot observation.” (AC { 23.) This snapshot allegedly shows that the
Defendants were downloading the copyrighted work—at least at that moment in time.
But downloading a large file like a video takes time; and depending on a user’s
Internet-connection speed, it may take a long time. In fact, it may take so long that the
user may have terminated the download. The user may have also terminated the
download for other reasons. To allege copyright infringement based on an IP
snapshot is akin to alleging theft based on a single surveillance camera shot: a photo
of a child reaching for candy from a display does not automatically mean he stole it.
No Court would allow a lawsuit to be filed based on that amount of evidence.

What is more, downloading data via the Bittorrent protocol is not like stealing
candy. Stealing a piece of a chocolate bar, however small, is still theft; but copying an
encrypted, unusable piece of a video file via the Bittorrent protocol may not be
copyright infringement. In the former case, some chocolate was taken; in the latter

case, an encrypted, unusable chunk of zeroes and ones. And as part of its prima facie

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copyright claim, Plaintiff must show that Defendants copied the copyrighted work.
Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). [fa download
was not completed, Plaintiff's lawsuit may be deemed frivolous.

In this case, Plaintiff's reliance on snapshot evidence to establish its copyright
infringement claims is misplaced. A reasonable investigation should include evidence
showing that Defendants downloaded the entire copyrighted work——or at least a
usable portion of a copyrighted work. Plaintiff has none of this—no evidence that
Defendants completed their download, and no evidence that what they downloaded is
a substantially similar copy of the copyrighted work. Thus, Plaintiffs attorney
violated Rule 11(b)(3) for filing a pleading that lacks factual foundation.

2. Lack of reasonable investigation of actual infringer’s identity

The second problem is more troublesome. Here, Plaintiff concluded that
Benjamin Wagar is the person who illegally downloaded the copyrighted video. But
Plaintiff fails to allege facts in the Amended Complaint to show how Benjamin Wagar
is the infringer, other than noting his IP address, the name of his Bittorrent client, and
the alleged time of download.” Plaintiff’ s December 27, 2012 Response to the Court’s
Order to Show Cause re Lack of Service sheds some light:

Though the subscriber, David Wagar, remained silent, Plaintiff's
investigation of his household established that Benjamin Wagar was the
likely infringer of Plaintiffs copyright. As such, Plaintiff mailed its
Amended Complaint to the Court naming Benjamin Wagar as the
Defendant in this action. (ECF No. 14, at 2.)

The disconnect is how Plaintiff arrived at this conclusion—that the actual infringer is
a member of the subscriber’s household (and not the subscriber himself or anyone
else)}—when all it had was an IP address, the name of the Bittorrent client used, the

alleged time of download, and an unresponsive subscriber.

° This analysis similarly applies in Ingenuity 13 LLC v. Doe, No. 2:12-cv-6668-ODW(JCx) (C.D.
Cal. filed Aug. 2, 2012), where Plaintiff fails to allege sufficient facts to show how Mayon Denton is
the infringer.

Case 2:12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 11o0f35 Page ID #:3176
Case 2:12-cv-08333-ODW-JC Document 48 Filed 02/07/13 Page 6of11 Page ID #:605

Plaintiff's December 27, 2012 Discovery Status Report gives additional insight
2 | into Plaintiff's deductive process:

In cases where the subscriber remains silent, Plaintiff conducts
investigations to determine the likelihood that the subscriber, or someone
in his or her household, was the actual infringer. .. . For example, if the
subscriber is 75 years old, or the subscriber 1s female, it 1s statistically
quite unlikely that the subscriber was the infringer. In such cases,
Plaintiff performs an investigation into the subscriber’s household to
determine if there is a likely infringer of Plaintiff's copyright... .
Plaintiff bases its choices regarding whom to name as the infringer on
factual analysis. (ECF No. 15, at 24.)

or a"

VO wa ~ OS

10 | The Court interprets this to mean: if the subscriber is 75 years old or female, then
11 || Plaintiff looks to see if there is a pubescent male in the house; and if so, he 1s named
12 | as the defendant. Plaintiff's “factual analysis” cannot be characterized as anything
13 } more than a hunch.

14 Other than invoking undocumented statistics, Plaintiff provides nothing to
15 | indicate that Benjamin Wagar is the infringer. While it is plausible that Benjamin
16 || Wagar is the infringer, Plaintiff's deduction falls short of the reasonableness standard
17 || required by Rule 11.

18 For instance, Plaintiff cannot show that Benjamin is the infringer instead of
19 | someone else, such as: David Wagar; other members of the household; family guests;
20 || or, the next door neighbor who may be leeching from the Wagars’ Internet access.
21 || Thus, Plaintiff acted recklessly by naming Benjamin Wagar as the infringer based on
22 || its haphazard and incomplete investigation.

23 Further, the Court is not convinced that there is no solution to the problem of
24 | identifying the actual infringer. Here, since Plaintiff has the identity of the subscriber,
25 | Plaintiff can find the subscriber’s home address and determine (by driving up and
26 || scanning the airwaves) whether the subscriber, (1) has Wi-Fi, and (2) has password-
27 || protected his Wi-Fi access, thereby reducing the likelihood that an unauthorized user

28 || outside the subscriber’s home is the infringer. In addition, since Plaintiff is tracking a

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Cage 2:12-cv-08333-ODW-JC Document 48 Filed 02/07/13 Page 7 of11 Page ID #:606

number of related copyrighted videos, Plaintiff can compile its tracking data to

determine whether other copyrighted videos were downloaded under the same IP

| address. This may suggest that the infringer is likely a resident of the subscriber’s

home and not a guest. And an old-fashioned stakeout may be in order: the presence of
persons within the subscriber’s home may be correlated with tracking data—the
determination of who would have been in the subscriber’s home when the download
was initiated may assist in discovering the actual infringer.

Such an investigation may not be perfect, but it narrows down the possible
infringers and is better than the Plaintiff's current investigation, which the Court finds
involves nothing more than blindly picking a male resident from a subscriber’s home.
But this type of investigation requires time and effort, something that would destroy
Plaintiff's business model.

The Court has previously expressed concern that in pornographic copyright
infringement lawsuits like these, the economics of the situation makes it highly likely
for the accused to immediately pay a settlement demand. Even for the innocent, a
four-digit settlement makes economic sense over fighting the lawsuit in court—not to
mention the benefits of preventing public disclosure (by being named in a lawsuit) of
allegedly downloading pornographic videos.

And copyright lawsuits brought by private parties for damages are different
than criminal investigations of cybercrimes, which sometimes require identification of
an individual through an IP address. In these criminal investigations, a court has some
guarantee from law enforcement that they will bring a case only when they actually
have a case and have confidently identified a suspect. In civil lawsuits, no such
guarantees are given. So, when viewed with a court’s duty to serve the public interest,
a plaintiff cannot be given free rein to sue anyone they wish—the plaintiff has to
actually show facts supporting its allegations.
ag)
ge

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C. Local Rule 83-3 Violations

Under Local Rule 83-3, the Court possesses the power to sanction attorney
misconduct, including: disposing of the matter; referring the matter to the Standing
Committee on Discipline; or taking “any action the Court deems appropriate.”
L.R. 83-3.1. This includes the power to fine and imprison for contempt of the Court’s
authority, for: (1) misbehavior of any person in its presence or so near thereto as to
obstruct the administration of justice; (2) misbehavior of any of its officers in their
official transactions; or, (3) disobedience or resistance to its lawful writ, process,
order, rule, decree, or command. 18 U.S.C. § 401.

The Court is concerned with three instances of attorney misconduct. The first
and second instances are related and concern violating the Court’s discovery order.
The third instance concerns possible fraud upon the Court.

i. Failure to comply with the Court’s discovery order

In AF Holdings LLC v. Doe, No. 2:12-cv-6636-ODW(JCx) (C.D. Cal. filed
Aug. 1, 2012) and AF Holdings LLC v. Doe, No. 2:12-cv-6669-ODW(JCx) (C.D. Cal.
filed Aug. 2, 2012), the Court ordered Plaintiff to “cease its discovery efforts relating
to or based on information obtained through any abovementioned Rule 45
subpoenas.” (ECF No. 13, at 1; ECF No. 10, at 1.) Further, Plaintiff was required to
name all persons that were identified through any Rule 45 subpoenas. (/d.)

Plaintiff responded on November 1, 2012, and indicated that it did not obtain
any information about the subscribers in both of these cases. (ECF No. 10, at 6-7,
10.)° But in response to the Court’s subsequent Orders to Show Cause, Plaintiff not
only named the subscribers, but recounted its efforts to contact the subscriber and find
additional information. (ECF No. 15; ECF No. 18.)

This conduct contravenes the Court’s order to cease discovery. Plaintiff has
provided no justification why it ignored the Court’s order.

> This response was filed in AF Holdings LLC v. Doe, No. 2:12-cv-5709-ODW(JCx) (C.D. Cal. filed
July 2, 2012).

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2. Fraud on the Court

Upon review of papers filed by attorney Morgan E. Pietz, the Court perceives
that Plaintiff may have defrauded the Court. (ECF No. 23.)’ At the center of this
issue is the identity of a person named Alan Cooper and the validity of the underlying
copyright assignments.” If it is true that Alan Cooper’s identity was misappropriated
and the underlying copyright assignments were improperly executed using his
identity, then Plaintiff faces a few problems.

First, with an invalid assignment, Plaintiff has no standing in these cases.
Second, by bringing these cases, Plaintiff's conduct can be considered vexatious, as
these cases were filed for a facially improper purpose. And third, the Court will not
idle while Plaintiff defrauds this institution.

D. Conclusion

Accordingly, the Court hereby ORDERS Brett L. Gibbs, TO SHOW CAUSE
why he should not be sanctioned for the following:

¢ In AF Holdings LLC v. Doe, No. 2:12-cv-6636-ODW(JCx) (C.D. Cal.
filed Aug. 1, 2012), violating the Court’s October 19, 2012 Order
instructing AF Holdings to cease its discovery efforts based on
information obtained through any earlier-issued subpoenas;

e In AF Holdings LLC v. Doe, No. 2:12-cv-6669-ODW(JCx) (C.D. Cal.
filed Aug. 2, 2012), violating the Court’s October 19, 2012 Order
instructing AF Holdings to cease its discovery efforts based on
information obtained through any earlier-issued subpoenas;

aa

* Although the papers revealing this possible fraud were filed in Ingenuity 13 LLC v. Doe, No. 2:12-
cv-8333-ODW(JCx) (C.D. Cal. filed Sept. 27, 2012), this fraud, if true, was likely committed by
Plaintiff in each of its cases before this Court.

> For example, in AF Holdings LLC v. Doe, No. 2:12-cv-6669-ODW(JCx) (C.D. Cal. filed Aug. 2,
2012), Plaintiff filed a copyright assignment signed by Alan Cooper on behalf of Plaintiffs. (ECF
No. 16-1.)

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Cas@ 2:12-cv-08333-ODW-JC Document 48 Filed 02/07/13 Page 10 o0f11 Page ID #:609

coco Po SN OO HN ROH

e In Ingenuity 13 LLC v. Doe, No. 2:12-cv-6662-ODW(JCx) (C.D. Cal.
filed Aug. 2, 2012), violating Rule 11(b)(2) by:

o alleging copyright infringement based on a snapshot of Internet
activity, without conducting a reasonable inquiry; or,

o alleging that Benjamin Wagar is the infringer, without conducting
a reasonable inquiry;

e In /ngenuity 13 LLC v. Doe, No. 2:12-cv-6668-ODW(JCx) (C.D. Cal.
filed Aug. 2, 2012), violating Rule 11(b)(2) by:

o alleging copyright infringement based on a snapshot of Internet
activity, without conducting a reasonable inquiry; or,

o alleging that Mayon Denton is the infringer, without conducting a
reasonable inquiry;

e In /ngenuity 13 LLC v. Doe, No. 2:12-cv-8333-ODW(JCx) (C.D. Cal.
filed Sept. 27, 2012), perpetrating fraud on the Court by
misappropriating the identity of Alan Cooper and filing lawsuits based
on an invalid copyright assignment.

This order to show cause is scheduled for hearing on March 11, 2013, at 1:30
p.m., to provide Mr. Gibbs the opportunity to justify his conduct. Based on the
unusual circumstances of this case, the Court invites Morgan E. Pietz to present
evidence concerning the conduct outlined in this order. The Court declines to sanction
Plaintiffs AF Holdings LLC and Ingenuity 13 LLC at this time for two reasons:
(1) Mr. Gibbs appears to be closely related to or have a fiduciary interest in Plaintiffs:
and; (2) it is likely Plaintiffs are devoid of assets.

If Mr. Gibbs or Mr. Pietz so desire, they each may file by February 19, 2013, a
brief discussing this matter. The Court will also welcome the appearance of Alan
Cooper—to either confirm or refute the fraud allegations.

Based on the evidence presented at the March 11, 2013 hearing, the Court will

consider whether sanctions are appropriate, and if so, determine the proper

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ee

Co Oo SF SN DO we & WH bt

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punishment. This may include a monetary fine, incarceration, or other sanctions
sufficient to deter future misconduct. Failure by Mr. Gibbs to appear will result in the
automatic imposition of sanctions along with the immediate issuance of a bench
warrant for contempt.

IT IS SO ORDERED.

February 7, 2012 "

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OTIS D. WRIGHT, I
UNITED STATES DISTRICT JUDGE

Case 2:12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 17 of35 Page ID #:3182

Exhibit B

Case 2,12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 18 of 35 Page ID #:3183
Case 2:12-cv-08333-ODW-JC Document 66 Filed 03/05/13 Page lof2 Page ID #:1292

3

4

5

6

7 UNITED STATES DISTRICT COURT

8 CENTRAL DISTRICT OF CALIFORNIA

9
10 | INGENUITY 13 LLC, Case Nos. 2:12-cv-8333-ODW(JCx)
11 Plaintiff, ORDER

" V.
i JOHN DOE,

a Defendant.

15 In light of the parties’ recent representations made in response to the Court’s

16 || Order to Show Cause, the Court hereby orders the following:

ly 1) The following persons are hereby ORDERED to appear on March 11,
18 | 2013, at 1:30 p.m.:

19 a) John Steele, of Steele Hansmeier PLLC and/or Livewire Holdings
20 LLC:

21 b) Paul Hansmeier, of Steele Hansmeier PLLC and/or Livewire
22 Holdings LLC;

23 Cc) Paul Duffy, of Prenda Law, Inc.;

24 d) Angela Van Den Hemel, of Prenda Law, Inc.;

25 e) Mark Lutz, CEO of AF Holdings LLC and Ingenuity 13 LLC;

26 f) Alan Cooper, of AF Holdings LLC;

274 g) Peter Hansemeier of 6881 Forensics, LLC; and

28 h) Alan Cooper, of 2170 Highway 47 North, Isle, MN 56342.

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Cage 2:12-cv-08333-ODW-JC Document 66 Filed 03/05/13 Page 2of2 Page ID #:1293

| 2) Brett L. Gibbs is hereby ORDERED to serve a copy of this order on the
2 || persons in subparagraphs a—g above by March 7, 2013.

3 3) Morgan E. Pietz is hereby ORDERED to serve a copy of this order on
4 || the person in subparagraph h above by March 7, 2013.

5 IT IS SO ORDERED.

6 March 5, 2013 %
i;

8

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OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

I

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Exhibit C

Case 2:12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 21 0f 35 Page ID #:3186
Case 2:12-cv-08333-ODW-JC Document 86 Filed 03/14/13 Page 1lof3 Page ID #:2133

3

4

5

6

7 UNITED STATES DISTRICT COURT

8 CENTRAL DISTRICT OF CALIFORNIA
9
10 | INGENUITY 13 LLC, Case Nos. 2:12-cv-8333-ODW(JCx)
fi Plaintiff, ORDER
. V.
a JOHN DOE,
a Defendant.

15 The Court has received the Ex Parte Application filed on behalf of John Steele,
16 || Paul Hansmeier, Paul Duffy, and Angela Van Den Hemel, requesting the Court to
17 | withdraw its March 5, 2013 Order requiring their attendance on March 11, 2013.

18 Based on the papers filed and the evidence presented during the March 11, 2013
19 | hearing, the Court concludes there is at least specific jurisdiction over these persons
20 | because of their pecuniary interest and active, albeit clandestine participation in these
21) cases. Not only does the Ex Parte Application lack merit, its eleventh-hour filing
22 || exemplifies gamesmanship. Accordingly, the Ex Parte Application is DENIED.

23 The March I1, 2013 hearing raised questions concerning acts performed by
24 | other persons related to Prenda Law, Inc., Steele Hansmeier PLLC, Livewire Holdings
25 | LLC, AF Holdings LLC, Ingenuity 13 LLC, and 6881 Forensics, LLC. The evidence
26 || presented suggests these persons may be culpable for the sanctionable conduct
27 | explained in the Court’s February 7, 2013 Order to Show Cause, which the Court
28 | previously attributed to Brett Gibbs only. Further, it appears that these persons, and

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their related entities, may have defrauded the Court through their acts and

representations 1n these cases.
Thus, the Court amends its February 7, 2013 Order to Show Cause (ECF

No. 48) to include sanctions against the persons and entities in subparagraphs a—m

below:

a)
b)
Cc)

d)
e)

John Steele, of Steele Hansmeier PLLC, Prenda Law, Inc., and/or
Livewire Holdings LLC;

Paul Hansmeier, of Steele Hansmeier PLLC and/or Livewire Holdings
LLC;

Paul Duffy, of Prenda Law, Inc.;

Angela Van Den Hemel, of Prenda Law, Inc.;

Mark Lutz, of Prenda Law, Inc., AF Holdings LLC and/or Ingenuity
13 LLC;

Alan Cooper, of AF Holdings LLC;

Peter Hansemeier, of 6881 Forensics, LLC;

Prenda Law, Inc.;

Livewire Holdings LLC;

Steele Hansmeier PLLC;

AF Holdings LLC;

Ingenuity 13 LLC; and

6881 Forensics, LLC.

These persons and entities are ORDERED to appear on March 29, 2013, at
10:30 a.m., TO SHOW CAUSE for the following:

l)

2)

Why they should not be sanctioned for their participation, direction,
and execution of the acts described in the Court’s February 7, 2013
Order to Show Cause;

Why they should not be sanctioned for failing to notify the Court of

all parties that have a financial interest in the outcome of litigation;

hs

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Ca

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3) Why they should not be sanctioned for defrauding the Court by
misrepresenting the nature and relationship of the individuals and
entities in subparagraphs a~—m above;

4) Why John Steele and Paul Hansmeier should not be sanctioned for
failing to make a pro hac vice appearance before the Court, given
their involvement as “senior attorneys” in the cases; and

5) Why the individuals in subparagraphs a-g above should not be
sanctioned for contravening the Court’s March 5, 2013 Order (ECF
No. 66) and failing to appear on March 11, 2013.

Gibbs is ORDERED to serve a copy of this order on the persons and entities in
subparagraphs a—n above by March 15, 2013, and must file proofs of service with the
Court by March 18, 2013. Gibbs is further ORDERED to appear on March 29, 2013,
at 10:30 a.m.

No other parties are required to appear on March 29, 2013. If so desired,
Morgan E. Pietz and Nicholas R. Ranallo may appear on behalf of Defendant Doe.

Should the persons and entities in subparagraphs a—m above not appear on
March 29, 2013, the Court is prepared to draw reasonable inferences concerning their
conduct in the cases before the Court, including any inferences derived from their
failure to appear. Failure to comply with this order will result in the imposition of
sanctions.

IT IS SO ORDERED.

March 14, 2013 7

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OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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Case 2:12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 24 of 35 Page ID #:3189

Exhibit D

Case 2:12-cv-08333-ODW-JC Document 157 Filed 05/20/13 Page 25 of 35 Page ID #:3190

Case@i2:12-cv-08333-ODW-JC Document 130 Filed 05/06/13 Page lofil Page ID #:2889

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

INGENUITY 13 LLC, Case No. 2:12-cv-8333-ODW(JCx)
Plaintiff, ORDER ISSUING SANCTIONS
Vv.
JOHN DOE,
Defendant.

“The needs of the many outweigh the needs of the few.”
—Spock, Star Trek II; The Wrath of Khan (1982).
I. INTRODUCTION
Plaintiffs’ have outmaneuvered the legal system.” They’ve discovered the
nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable
defense costs. And they exploit this anomaly by accusing individuals of illegally

downloading a single pornographic video. Then they offer to settlhe—for a sum

' The term “Plaintiffs” used in this order refers to AF Holdings LLC, Ingenuity 13 LLC, as well as

related entities, individuals, and attorneys that collaborated in the underlying scheme fronted by AF
Holdings and Ingenuity 13.

* This order concerns conduct committed in the following related cases: AF Holdings LLC v. Doe,
No. 2:12-cv-6636-ODW(JCx) (C.D. Cal. filed Aug. 1, 2012); AF Holdings LLC v. Doe, No. 2:12-cv-

| 6669-ODW(JCx) (C.D. Cal. filed Aug. 2, 2012); Ingenuity 13 LLC v. Doe, No. 2:12-cv-6662-

ODW(JCx) (C.D. Cal. filed Aug. 2, 2012); Ingenuity 13 LLC v. Doe, No. 2:12-cv-6668-ODW(JCx)
(C.D. Cal. filed Aug. 2, 2012); Ingenuity 13 LLC v. Doe, No. 2:12-cv-8333-ODW(JCx) (C.D. Cal.
filed Sept. 27, 2012).

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calculated to be just below the cost of a bare-bones defense. For these individuals,
resistance is futile; most reluctantly pay rather than have their names associated with
illegally downloading porn. So now, copyright laws originally designed to
compensate starving artists allow, starving attorneys in this electronic-media era to
plunder the citizenry.

Plaintiffs do have a right to assert their intellectual-property rights, so long as
they do it right. But Plaintiffs’ filing of cases using the same boilerplate complaint
against dozens of defendants raised the Court’s alert. It was when the Court realized
Plaintiffs engaged their cloak of shell companies and fraud that the Court went to
battlestations.

Il. PROCEDURAL HISTORY

The Court issued its February 7, 2013 Order to Show Cause re Sanctions to
allow counsel, Brett Gibbs, to explain why he ignored the Court’s discovery-stay
Order, filed complaints without reasonable investigation, and defrauded the Court by
asserting a copyright assignment secured with a stolen identity. (ECF No. 48.) As
evidence materialized, it turned out that Gibbs was just a redshirt.

Gibbs’s behavior in the porno-trolling collective was controlled by several
attorneys, under whom other individuals also took their orders. Because it was
conceivable that these attorneys (and others) were culpable for Gibbs’s conduct, the
Court ordered these parties to appear.

The following additional parties were ordered to appear: (a) John Steele, of
Steele Hansmeier PLLC, Prenda Law, Inc., and/or Livewire Holdings LLC; (b) Paul
Hansmeier, of Steele Hansmeier PLLC and/or Livewire Holdings LLC; (c) Paul
Duffy, of Prenda Law, Inc.; (d) Angela Van Den Hemel, of Prenda Law, Inc.;
(e) Mark Lutz, of Prenda Law, Inc., AF Holdings LLC, and/or Ingenuity 13 LLC;
(f) Alan Cooper, of AF Holdings LLC; (g) Peter Hansemeier, of 6881 Forensics, LLC;
(h) Prenda Law, Inc.; (1) Livewire Holdings LLC; (j) Steele Hansmeier PLLC; (k) AF
Holdings LLC; (1) Ingenuity 13 LLC; (m) 6881 Forensics, LLC; and (n) Alan Cooper,

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of 2170 Highway 47 North, Isle, MN 56342. (ECF Nos. 66, 86.) These parties were
ordered to show cause why they should not be sanctioned for their behind-the-scenes
role in the conduct facially perpetrated by Gibbs. These parties were also ordered to
explain the nature of their operations, relationships, and financial interests.

Il. LEGAL STANDARD

The Court has a duty to supervise the conduct of attorneys appearing before it.
Erickson v. Newmar Corp., 87 F.3d 298, 301 (9th Cir. 1996). The power to punish
contempt and to coerce compliance with issued orders is based on statutes and the
Court’s inherent authority. /nt’] Union, United Mine Workers of Am. v. Bagwell, 512
U.S. 821, 831 (1994). Though this power must be exercised with restraint, the Court
has wide latitude in fashioning appropriate sanctions to fit the conduct. See Roadway
Express, Inc. v. Piper, 447 U.S. 752, 764-65 (1980).

Under the Court’s inherent authority, parties and their lawyers may be
sanctioned for improper conduct. Fink v. Gomez, 239 F.3d 989, 991 (9th Cir. 2001).
This inherent power extends to a full range of litigation abuses, the litigant must have
engaged in bad faith or willful disobedience of a court’s order. /d. at 992. Sanctions
under the Court’s inherent authority are particularly appropriate for fraud perpetrated
on the court. See Chambers v. NASCO, Inc., 501 U.S. 32, 54 (1991).

IV. DISCUSSION
A. Findings of fact

Based on the evidence presented on the papers and through sworn testimony,
the Court finds the following facts, including those based on adverse inferences drawn
from Steele, Hansmeier, Duffy, and Van Den Hemel’s blanket refusal to testify.”

l. Steele, Hansmeier, and Duffy (“Principals”) are attorneys with shattered

law practices. Seeking easy money, they conspired to operate this enterprise and

> Even if their refusal was based on the Fifth Amendment privilege against self-incrimination, the
Court still may draw adverse inferences against them in this civil proceeding. Baxter v. Palmigiano,
425 U.S. 308, 318 (1976).

re

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WC oO ~ co. ws os Cad

formed the AF Holdings and Ingenuity 13 entities (among other fungible entities) for
the sole purpose of litigating copyright-infringement lawsuits. They created these
entities to shield the Principals from potential liability and to give an appearance of
legitimacy.

Za AF Holdings and Ingenuity 13 have no assets other than several
copyrights to pornographic movies. There are no official owners or officers for these
two offshore entities, but the Principals are the de facto owners and officers.

a The Principals started their copyright-enforcement crusade in about 2010,.
through Prenda Law, which was also owned and controlled by the Principals. Their
litigation strategy consisted of monitoring BitTorrent download activity of their
copyrighted pornographic movies, recording IP addresses of the computers
downloading the movies, filing suit in federal court to subpoena Internet Service
Providers (“ISPs”) for the identity of the subscribers to these IP addresses, and
sending cease-and-desist letters to the subscribers, offering to settle each copyright-
infringement claim for about $4,000.

4. This nationwide strategy was highly successful because of statutory-
copyright damages, the pornographic subject matter, and the high cost of litigation.
Most defendants settled with the Principals, resulting in proceeds of millions of
dollars due to the numerosity of defendants. These settlement funds resided in the
Principals’ accounts and not in accounts belonging to AF Holdings or Ingenuity 13.
No taxes have been paid on this income.

>. For defendants that refused to settle, the Principals engaged in vexatious
litigation designed to coerce settlement. These lawsuits were filed using boilerplate
complaints based on a modicum of evidence, calculated to maximize settlement
profits by minimizing costs and effort.

6. The Principals have shown little desire to proceed in these lawsuits when
faced with a determined defendant. Instead of litigating, they dismiss the case. When

pressed for discovery, the Principals offer only disinformation—even to the Court.

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a The Principals have hired willing attorneys, like Gibbs, to prosecute these
cases. Though Gibbs is culpable for his own conduct before the Court, the Principals
directed his actions. In some instances, Gibbs operated within narrow parameters
given to him by the Principals, whom he called “senior attorneys.” |

8. The Principals maintained full control over the entire copyright-litigation
operation. The Principals dictated the strategy to employ in each case, ordered their
hired lawyers and witnesses to provide disinformation about the cases and the nature
of their operation, and possessed all financial interests in the outcome of each case.

9. The Principals stole the identity of Alan Cooper (of 2170 Highway 47
North, Isle, MN 56342). The Principals fraudulently signed the copyright assignment
for “Popular Demand” using Alan Cooper’s signature without his authorization,
holding him out to be an officer of AF Holdings. Alan Cooper is not an officer of AF
Holdings and has no affiliation with Plaintiffs other than his employment as a
groundskeeper for Steele. There is no other person named Alan Cooper related to AF
Holdings or Ingenuity 13.

10. The Principals ordered Gibbs to commit the following acts before this
Court: file copyright-infringement complaints based on a single snapshot of Internet
activity; name individuals as defendants based on a statistical guess; and assert a
copyright assignment with a fraudulent signature. The Principals also instructed
Gibbs to prosecute these lawsuits only if they remained profitable; and to dismiss
them otherwise.

11. Plaintiffs have demonstrated their willingness to deceive not just this
Court, but other courts where they have appeared. Plaintiffs’ representations about
their operations, relationships, and financial interests have varied from feigned
ignorance to misstatements to outright lies. But this deception was calculated so that
the Court would grant Plaintiffs’ early-discovery requests, thereby allowing Plaintiffs
to identify defendants and exact settlement proceeds from them. With these granted

requests, Plaintiffs borrow the authority of the Court to pressure settlement.

At

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B. = Sanctions

Although the Court originally notified the parties that sanctions would be
imposed under Federal Rule of Civil Procedure 11(b)(3) and Local Rule 83-3, the
Court finds it more appropriate to sanction the parties under its inherent authority. See
In re DeVille, 361 F.3d 539, 550 (9th Cir. 2004) (“[T]he bankruptcy court’s failure to
specify, in advance of the disciplinary proceedings, that its inherent power was a basis
for those proceedings, did not serve to undercut its sanctioning authority.”). The
sanctions for Plaintiffs’ misconduct are as follows.

e Rule 11 sanctions

The Court maintains that its prior analysis of Plaintiffs’ Rule 11 violations is
accurate. (ECF No. 48.) Plaintiffs can only show that someone, using an IP address
belonging to the subscriber, was seen online in a torrent swarm. But Plaintiffs did not
conduct a sufficient investigation to determine whether that person actually
downloaded enough data (or even anything at all) to produce a viewable video.
Further, Plaintiffs cannot conclude whether that person spoofed the IP address, is the
subscriber of that IP address, or is someone else using that subscriber’s Internet
access. Without better technology, prosecuting illegal BitTorrent activity requires
substantial effort in order to make a case. It is simply not economically viable to
properly prosecute the illegal download of a single copyrighted video.

Enter Plaintiffs and their cottage-industry lawsuits. Even so, the Court is not as
troubled by their lack of reasonable investigation as by their cover-up. Gibbs argued
that a deep inquiry was performed prior to filing. Yet these arguments are not
credible and do not support Gibbs’s conclusions. Instead, Gibbs’s arguments suggest
a hasty after-the-fact investigation, and a shoddy one at that.

For instance, Gibbs characterized Marvin Denton’s property as ‘“‘a very large
estate consisting of a gate for entry and multiple separate houses/structures on the
property.” (ECF No. 49, at 19.) He stated this to demonstrate the improbability that

Denton’s Wi-Fi signal could be received by someone outside the residence. But

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Cas

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Denton’s property is not a large estate; 1t is a small house in a closely packed
residential neighborhood. There are also no gates visible.

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Gibbs’s statement is a blatant lie. His statement resembles other statements
given by Plaintiffs in this and their other cases: statements that sound reasonable but
lack truth. Thus, the Court concludes that Gibbs, even in the face of sanctions,
continued to make factual misrepresentions to the Court.

Nevertheless, Rule 11 sanctions are inappropriate here because it is the wrong
sanctions vehicle at this stage of litigation. The cases have already been dismissed
and monetary sanctions are not available. Fed. R. Civ. P 11(c)(5)(B) (a court cannot
impose a monetary sanction on its own unless it issued the show-cause order before

voluntary dismissal). The more appropriate sanction for these Rule 11 violations is

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1 || what the Court had already imposed: denial of requests for early discovery. (ECF
2 No. 28.)

Z. Sanctions under the Court's inherent authority

In addition to Gibbs’s misrepresentations, there is the matter of the ignored

Court Order vacating early discovery. (ECF No. 28.) The evidence does not show

3

4

=

6 || that the Order was ignored because of miscommunication among Plaintiffs. The

7 || Order was purposely ignored—hoping that the ISPs were unaware of the vacatur and

8 || would turn over the requested subscriber information.

9 Then there is the Alan Cooper forgery. Although a recipient of a copyright
10 || assignment need not sign the document, a forgery 1s still a forgery. And trying to pass
11 || that forged document by the Court smacks of fraud. Unfortunately, other than these
12 || specific instances of fraud, the Court cannot make more detailed findings of fraud.

13 Nevertheless, it is clear that the Principals’ enterprise relies on deception. Part
14 of that ploy requires cooperation from the courts, which could only be achieved
15 || through deception. In other words, if the Principals assigned the copyright to
16 || themselves, brought suit in their own names, and disclosed that they had the sole
17 | financial interest in the suit, a court would scrutinize their conduct from the outset.
18 || But by being less than forthcoming, they defrauded the Court. They anticipated that
19 | the Court would blindly approve their early-discovery requests, thereby opening the
20 |} door to more settlement proceeds.

21 The Principals also obfuscate other facts, especially those concerning their
22 | operations, relationships, and financial interests. The Principals’ web of
23 | disinformation is so vast that the Principals cannot keep track—their explanations of
24 || their operations, relationships, and financial interests constantly vary. This makes it
25 | difficult for the Court to make a concrete determination.

26 Still, the Court adopts as its finding the following chart detailing Plaintiffs’

27 || relationships. Though incomplete, this chart is about as accurate as possible given

28 || Plaintiffs’ obfuscation.

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18 As for Van Den Hemel, Lutz, and Hansemeier, they are not without fault even

19 though they acted under orders from the Principals. They were not merely
20 || assimilated; they knowingly participated in this scheme, reaping the benefits when the
21 || going was good. Even so, their status as non-attorneys and non-parties severely limits
22 | the sanctions that could be levied against them. |

23 Despite these findings, the Court deems these findings insufficient to support a
24 || large monetary sanction—a seven-digit sanction adequate to deter Plaintiffs from
25 || continuing their profitable enterprise. Even if the Court enters such a sanction, it is
26 | certain that Plaintiffs will transfer out their settlement proceeds and plead paucity.
27 || Yet Plaintiffs’ bad-faith conduct supports other more fitting sanctions.

28 ///

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First, an award of attorney’s fees to Defendants is appropriate. This award
compensates them for expenses incurred in this vexatious lawsuit, especially for their
efforts in countering and revealing the fraud perpetrated by Plaintiffs.

So far, only Morgan Pietz and Nicholas Ranallo have appeared.” Upon review,
the Court finds Pietz’s expenditure of 120.5 hours at an hourly rate of $300 reasonable
based on his experience, work quality, and quantity of necessary papers filed with the
Court. (ECF No. 102.) Although many of these hours were spent after the case was
dismissed, these hours were spent in connection with the sanction hearings—time well
spent. Similarly, the attorney’s fees and costs incurred by Ranallo also appear
reasonable.

Therefore, the Court awards attorney’s fees and costs in the sum of $40,659.86
to Doe: $36,150.00 for Pietz’s attorney’s fees; $1,950.00 for Ranallo’s attorney’s fees;
$2,226.26 for Pietz’s costs; and $333.60 for Ranallo’s costs. As a punitive measure,
the Court doubles this award, yielding $81,319.72.°. This punitive multiplier is
justified by Plaintiffs’ brazen misconduct and relentless fraud. The Principals, AF
Holdings, Ingenuity 13, Prenda Law, and Gibbs are liable for this sum jointly and
severally, and shall pay this sum within 14 days of this order.

Second, there is little doubt that that Steele, Hansmeier, Duffy, Gibbs suffer
from a form of moral turpitude unbecoming of an officer of the court. To this end, the
Court will refer them to their respective state and federal bars.

Third, though Plaintiffs boldly probe the outskirts of law, the only enterprise
they resemble is RICO. The federal agency eleven decks up is familiar with their
prime directive and will gladly refit them for their next voyage. The Court will refer
this matter to the United States Attorney for the Central District of California. The

will also refer this matter to the Criminal Investigation Division of the Internal

: They appeared on behalf of the Doe Defendant in the case Ingenuity 13 LLC v. Doe, No. 2:12-cv-
8333-ODW(JCx) (C.D. Cal. filed Sept. 27, 2012).
> This punitive portion is calculated to be just below the cost of an effective appeal.

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Revenue Service and will notify all judges before whom these attorneys have pending
cases. For the sake of completeness, the Court requests Pietz to assist by filing a
report, within 14 days, containing contact information for: (1) every bar (state and
federal) where these attorneys are admitted to practice; and (2) every judge before
whom these attorneys have pending cases.

4. Local Rule 83-3 sanctions

For the same reasons stated above, the Court will refer Duffy and Gibbs to the
Standing Committee on Discipline (for this District) under Local Rule 83-3.

V. CONCLUSION

Steele, Hansmeier, Duffy, Gibbs, Prenda Law, AF Holdings, and Ingenuity 13
shall pay, within 14 days of this order, attorney’s fees and costs totaling $81,319.72 to
Doe. The Court enters additional nonmonetary sanctions in accordance with the
discussion above.

IT ISSO ORDERED.

May 6, 2013

Soe aay iA
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE