—

&

nD

ase 2:12-cv-08333-ODW-JC Document 183 Filed 06/13/13 Page1of7 Page ID #:334

an E. Pietz En 260629)
EPIETZ LAW FIRM

3770 Highland Avenue, Suite 206

Manhattan Beach, CA 90266

mpietz@pietzlawfirm. com

Telephone: (310) 424-5557

Facsimile : (310) 546-5301

Nicholas Ranallo (SBN 275016)
371 Dogwood Wa
Boulder Creek, CA 95006
nick@ranallolawoffice.com
a one: S31) 703-4011
(831) 533-5073

Attorneys for Putative John Doe in 2:12-cv-08333-ODW-JC
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

INGENUITY 13, LLC, a Limited
Liability Company Organized Under
the Laws of the Federation of Saint
Kitts and Nevis,

Plaintiff,
V.

JOHN DOE,

Defendant.

Case Number: 2:12-cv-08333-ODW-JC

Case Assigned to:
District Judge Otis D Wright, II

Discovery Referred to:
Magistrate Judge Jacqueline Chooljian

Case Consolidated with Case Nos:.:
2:12-cv-6636; 2:12-cv-6669;
2:12-cv-6662; 2:12-cv-6668

DOE’S RESPONSE TO PAUL
HANSMEITER’S EMERGENCY
MOTION FOR CLARIFICATION
AND RECONSIDERATION OF THE
COURT’S JUNE 6 ORDER, OR IN
THE ALTERNATIVE, FOR AN
ORDER STAYING IMPOSITION OF
THE JUNE 6 ORDER PENDING
APPEAL

<j.

DOE’S RESPONSE TO PAUL HANSMETER’S EMERGENCY MOTION FOR CLARIFICATION
AND RECONSIDERATION OF THE COURT’S JUNE 6 ORDER, OR IN THE ALTERNATIVE,
FOR AN ORDER STAYING IMPOSITION OF THE JUNE 6 ORDER PENDING APPEAL

se 2:12-cv-08333-ODW-JC Document 183 Filed 06/13/13 Page 2of7 Page ID #:334

RESPONSE

Once again, attorneys associated with the Prenda Law firm have failed to
follow the rules applicable to ex parte applications’ and have waited until the
eleventh hour before seeking “emergency” relief. See, e.g., ECF No. 86 (“Not only
does the Ex Parte Application lack merit, its eleventh-hour filing exemplifies
gamesmanship’”’); ECF No. 164 (“Not only was this application improperly filed; but
once again, Prenda resorted to an eleventh-hour plea for relief’).

Further, had Prenda’s lawyers attempted to meet and confer in good faith
about the specifics of a bond prior to posting one and filing a motion seeking to have
it approved, it might have been possible to avoid the instant “emergency” motion
altogether. See ECF No. 175-2 at pp. 2-5 (email chain where Prenda lawyers ignore
attempts to meet and confer about bond specifics).

As to substance, the question of whether a bond for costs on appeal should
include attorney’s fees appears to come down to whether or not this Court’s prior
sanctions order (ECF No. 130) has effected a “material alteration of the legal
relationship of the parties,” thus enabling an award of attorney’s fees under Section
505 of the Copyright Act. Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of
Health & Human Res., 532 U.S. 598, 604 (2001); Cadkin v. Loose, 569 F. 3d 1142,
1145 (9th Cir. 2009) (holding that Buckhannon’s material alteration test applies to §
505 of the Copyright Act).

As Mr. Hansmeier has correctly (albeit tardily) pointed out, normally, a
plaintiffs voluntary dismissal without prejudice does not bring about the requisite
material alteration of the legal relationship between the parties sufficient to confer
prevailing party status on a defendant. Cadkin, 569 F.3d at 1145 (9th Cir. 2009).

' Notwithstanding the proof of service, as of June 13, 2013, undersigned counsel still has not
received a service copy of the “emergency motion.” The first notice received of any kind was
when the motion was filed on the ECF docket, which happened just before the ECF system going
offline for the annual power-down. Undersigned counsel was not able to view the motion until

Thursday morning June 13, 2013. 2.

DOE’S RESPONSE TO PAUL HANSMEIER’S EMERGENCY MOTION FOR CLARIFICATION
AND RECONSIDERATION OF THE COURT’S JUNE 6 ORDER, OR IN THE ALTERNATIVE,
FOR AN ORDER STAYING IMPOSITION OF THE JUNE 6 ORDER PENDING APPEAL

se 2:12-cv-08333-ODW-JC Document 183 Filed 06/13/13 Page 3of7 Page ID #:335

(a) There Was a Change in Legal Status Because the Prenda Parties Are

Now Under Formal Investigation

Here, however, there are extraordinary facts. The voluntary dismissal here
was followed not only by monetary sanctions, but by extensive factual findings that
the plaintiffs and their lawyers have engaged in grave misconduct coupled with
referrals to prosecutorial agencies. Thus, in a sense, there was a “material
alteration” of the legal relationship between the parties insofar as that the Prenda
parties are now being formally prosecuted for the very activities at issue in this
litigation, as a direct result of this action. Thus, distinguishing Cadkin, here it
cannot be said that the end result “leaves the situation as if the action had never
been,” (Cadkin, 569 F.3d at 1150) because the Prenda parties are in rather more
legal trouble now than they were when it started.
(b) The Court Should Consider Striking Plaintiff's Complaint as a Further

Sanction

The Court might also consider another approach, which would both (1) better
serve the policy underlying the Copyright Act, and (2) appropriately punish the
Prenda parties for continuing to ignore this Court’s orders, and applicable rules, in
defiance of the very severe sanctions already imposed. To wit, what the Court might
consider is striking the plaintiff's complaint with prejudice, as a further sanction, of
last resort. See Eagle Hospital Phys’ns. v. SRG Consulting, Inc., 561 F.3d 1298,
1302-03 (11th Cir. 2009) (affirming sanction striking litigant’s pleading where he
engaged in bad faith and the court made a finding that no lesser sanction would
suffice).

If Corcoran v. Columbia Broadcasting System, Inc., 121 F.2d 575, 576 (9th
Cir. 1941) were still the law on this Circuit, the instant case would very clearly
qualify as the kind where, based on the policy considerations underlying the
Copyright Act, a defendant should be considered the prevailing party after the

plaintiff dismisses a case without prejudice. Here, the putative Doe defendant has
-3-

DOE’S RESPONSE TO PAUL HANSMEIER’S EMERGENCY MOTION FOR CLARIFICATION
AND RECONSIDERATION OF THE COURT’S JUNE 6 ORDER, OR IN THE ALTERNATIVE,
FOR AN ORDER STAYING IMPOSITION OF THE JUNE 6 ORDER PENDING APPEAL

se 2:12-cv-08333-ODW-JC Document 183 Filed 06/13/13 Page 4of7 Page ID #:335

been forced to incur substantial expense to defend himself, and this kind of cases
clearly runs counter to the policies underlying the Copyright Act,-—both of which
are factors which would have guided a court’s inquiry under Corcoran. Id.

On this circuit,’ the apparent effect of Buckhannon has been to somewhat
limit the discretion of district courts to consider defendant’s expenses and the
policies underlying the Copyright Act when determining whether to award
prevailing party attorney’s fees under Section 505 of the Copyright Act after a
voluntary dismissal. Cadkin, 569 F. 3d at 1144-49.

Simply put, the policies underlying the Copyright Act would be better served
if plaintiffs filing abusive copyright infringement cases like the ones at issue here
could not count on always “cut[ting] [their] losses and run[ing] out of court, using
Rule 41 as an emergency exit.” See Cooter & Gell v. Hartmarx Corp., 496 U.S.
384, 390 (1990). The threat of a voluntary dismissal without prejudice still resulting
in the award of prevailing party attorney’s fees would act as a substantial deterrent to
this particular kind of abusive copyright “settlement” business.

Post-Buckhannon, the principal tool available to district courts faced with a
plaintiff like Prenda, who files many cases but dismisses most of them voluntarily, at
the first hint of trouble, is the threat of post-dismissal sanctions. This Court has
already invoked this power by awarding compensatory sanctions to the target of
Prenda’s abusive litigation scheme, in the form of double attorney’s fees.

However, the putative John Doe would argue that under the truly exceptional
circumstances of this case, where the bad faith has continued, in defiance of the

severe sanctions already issued, even a further sanction is warranted. Namely, the

* The Court here said it best, “So now, copyright laws originally designed to compensate starving
artists allow, starving attorneys in this electronic-media era to plunder the citizenry.” ECF No. 130
at 2:3-5.

* Notably, the Seventh Circuit has taken an opposite view, holding that voluntary dismissal by a
plaintiff in a copyright case can render the defendant a prevailing party under Buckhannon.
Riviera Distribs., Inc. v. Jones, 517 F.3d 926, 928 (7th Cir. 2008).

DOE’S RESPONSE TO PAUL HANSMEIER’S EMERGENCY MOTION FOR CLARIFICATION
AND RECONSIDERATION OF THE COURT’S JUNE 6 ORDER, OR IN THE ALTERNATIVE,
FOR AN ORDER STAYING IMPOSITION OF THE JUNE 6 ORDER PENDING APPEAL

se 2:12-cv-08333-ODW-JC Document 183 Filed 06/13/13 Page5of7 Page ID #:335

Court might consider striking the plaintiff's complaint, with prejudice, as a sanction.
See Eagle Hospital Phys’ns., 561 F.3d at 1302-03.

In Eagle Hospital, as here, defendant Gerst engaged in flagrant bad faith
conduct and invoked his Fifth Amendment right against self-incrimination, which
led the district court to strike his pleadings and award sanctions. According to the
Court of Appeals, the court below “felt that a severe sanction was necessary ‘to act

999

as a deterrent to other litigants’” that Gerst’s “egregious misconduct disrupted the
litigation. . .and that extreme sanctions were necessary to punish [Gerst] and deter
others.” /d. at 1306-07. Gerst argued (1) that the court violated his Fifth
Amendment rights by drawing adverse inferences from his refusal to testify, and that
(2) the court violated his Fifth Amendment rights by sanctioning him and dismissing
his suit in response to his taking the fifth. /d. at 1303. The Court of Appeals
“disagree[ed] on both counts,” finding that the district court did not abuse its
discretion in awarding a sanctions of last resort, and noting that the district court had
made a specific finding that no lesser sanction would suffice. Jd.

Here, this Court has already awarded substantial sanctions. ECF No. 130.
Since then, the attorneys’ fee award was not paid within the requisite 14-days. Othe
than Mr. Gibbs, no party has responded to the Court’s order to show cause as to why
they should not be sanctioned $1,000 a day for not timely posting a bond or paying
the sanctions award. To undersigned’s knowledge, the applicable $7,000 daily
sanction has not been posted with the Clerk. An “emergency” motion was made to
the Ninth Circuit without bothering to even try and post a bond, or take the issue up
first in the district court, and without explaining why doing so was impracticable.
Undersigned counsel’s attempts to meet and confer in good faith about the specifics
of the bond were rebuffed with a bunch of nonsense, precipitating the most recent
“emergency” motion, which is yet another improperly filed ex parte. In short, the
bad faith continues.

Simply, given the egregious misconduct already addressed in this case, and
-5-

DOE’S RESPONSE TO PAUL HANSMEIER’S EMERGENCY MOTION FOR CLARIFICATION
AND RECONSIDERATION OF THE COURT’S JUNE 6 ORDER, OR IN THE ALTERNATIVE,
FOR AN ORDER STAYING IMPOSITION OF THE JUNE 6 ORDER PENDING APPEAL

se 2:12-cv-08333-ODW-JC Document 183 Filed 06/13/13 Page6of7 Page ID #:335

the fact that the bad faith continues to this date, one must ask, if this case is not
worthy of a “sanction of last resort,” then what case is?

Accordingly, the putative John Doe respectfully requests that the Court sua
sponte strike the plaintiff's complaint with prejudice, declare the putative John Doe
a prevailing party, thereby mooting the instant dispute about whether attorneys fees
should be included in the appellate bond. If the putative John Dos is adjudged a
prevailing party, Prenda should then be required to secure appellate costs which
include attorneys’ fees, which would provide further incentive for robust prosecution|
of some fairly important issues on appeal.

(c) The Issues Other than Attorney’s Fees on Appeal

The term “Prenda parties” should have been clarified in the proposed order,
for which undersigned counsel apologizes. By this, it is meant the seven parties who
were sanctioned, namely Paul Hansmeier, John Steele, Paul Duffy, Brett Gibbs,
Prenda Law, Inc., AF Holdings, LLC, and Ingenuity 13, LLC.

Mr. Hansmeier raises no substantive arguments attacking the conditions on
the bond. Accordingly, there is no reason to delay filing the required
acknowledgments of these conditions.

Finally, given the possibility of looming bankruptcy for the Prenda parties, the
putative John Doe requests that the bond issue be finally resoled as expeditiously as
possible. The Kleindinst Firm, on behalf of Prenda Law, Inc., is already threatening
an “emergency appeal” to the Ninth Circuit, along the same lines as the current
motion before this Court. See Exhibit 1.

/

-6-

DOE’S RESPONSE TO PAUL HANSMEIER’S EMERGENCY MOTION FOR CLARIFICATION
AND RECONSIDERATION OF THE COURT’S JUNE 6 ORDER, OR IN THE ALTERNATIVE,
FOR AN ORDER STAYING IMPOSITION OF THE JUNE 6 ORDER PENDING APPEAL

se 2:12-cv-08333-ODW-JC Document 183 Filed 06/13/13 Page 7of7 Page ID #:335

Respectfully submitted,
DATED: June 14, 2013 THE PIETZ LAW FIRM

/s/ Morgan E. Pietz

Morgan E. Pietz

THE PIETZ LAW FIRM
Attorney for Putative John Doe(s)
Appearing on Caption

<7

DOE’S RESPONSE TO PAUL HANSMEIER’S EMERGENCY MOTION FOR CLARIFICATION
AND RECONSIDERATION OF THE COURT’S JUNE 6 ORDER, OR IN THE ALTERNATIVE,
FOR AN ORDER STAYING IMPOSITION OF THE JUNE 6 ORDER PENDING APPEAL