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89 iL if you don't accept this offer, then, you know, we are 2 going to part ways. So the offer was to be in house 3 counsel for Livewire, and so I was hired W2 employee for 4 this company which is a holding company of copyrights. 5 Q And you understood that one of the subsidiaries of
6 that company included AF Holdings; correct?
7 A That was my understanding, yeah. 8 Q When did you come to a different understanding? 9 A Oh. Well, during the deposition, I came to a
10 different understanding because obviously the deposition il was said what was said, and I asked Paul Hansmeier about 12 that.
13 Q And what we are talking about here is
14 Mr. Hansmeier's testimony that there was a trust that
15 owned AF --
16 A That is correct.
17 Q And before that testimony, you heard that
18 testimony, you understood as of January 1, that Livewire
| 19 would own --
20 A Yes.
21 Q Livewire would own AF Holdings?
22 A That is correct.
23 Q And that is why in at least one of the pleadings
24 you put that you are in house counsel for AF Holdings
25 because that was a company that was owned by Livewire;
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correct? A I was specifically told to sign as in house counsel for AF Holdings by Paul Hansmeier in that case. I was actually because of Mark Lutz' position as CEO, I was trying to get his signature for that document, but Paul Hansmeier said, no, you are in house counsel for Livewire thereby in house counsel for AF Holdings, you sign it on behalf of the client. Q Is one of the other reasons you decided to leave Livewire is because you learned that the stamp was being used for your signature? A Yes. Certain letters were sent out without my knowledge. I never authorized them, never approved them. When I questioned John about them, he was, like, basically said, this is your role. This is what you have to do. You have to send these letters out, and I said I don't feel comfortable, these aren't even my cases, essentially. And, you know, I actually e-mailed Mark Lutz about that, and he said you got to talk with John and Paul about this.
THE COURT: I'm sorry. What kind of letters are we talking about? Is that the settlement letters?
THE WITNESS: Settlement letters. They had been using -- they originally said they were going to do a
stamp for me for certain things, but I thought they were
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91 only for my cases. And, you know, later, I found out that stamp might have been used for cases that I never even participated in or seen the letters before they went out.
THE COURT: Let me make sure I understand now. Livewire eventually became the parent of AF Holings and Ingenuity 13 LLC?
THE WITNESS: That was my understanding. I was told that, yeah. And that is why I was hired and a lot of people were hired in terms of working as W2 employees for Livewire. So it was the company that was a holdings company that would do litigation as well as distribution. That is what they told me.
THE COURT: And you were a W2 employee?
THE WITNESS: That's correct. And I still have not been paid for that position.
Q BY MR. WAXLER: That was for a period of two months; correct?
A That's correct. And I gave him my notice early February essentially.
THE COURT: Where was Livewire's offices?
THE WITNESS: Livewire has an address of Washington DC address, but, obviously, I don't know if it has an office to be honest with you. It is just a matter
of, kind of a cloud type office. It might be a situation
ere trtese eaE M
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where -- I am just speculating right now.
THE COURT: You have never visited Washington DC offices?
THE WITNESS: No. I believe it is just a PO box over there. That is just a mailing address for them.
THE COURT: Did that form letter requesting payment of the settlement sums, did that letter change to reflect that payment now should be sent to Livewire at the Washington DC address?
THE WITNESS: Absolutely. It wasn't sent to me or anything like that. It was sent to that mailbox, and then I believe it would be sent back to somebody at some point somewhere. But that is the kind of issues that I started having, and along with a lot of other different issues. So I just decided to -- I asked them if I could go ahead and substitute out with Paul Duffy who had a license in California. I talked to Paul Duffy about that, he said sure, and then I proceeded to do that.
THE COURT: All right. So you substituted out. Now, how long were you general counsel for Livewire?
THE WITNESS: Two months basically. I mean, I guess you could say, I think the official documents were signed. It never actually specified that I was in house counsel, but that is what I was told. The documents were
just general employment documents, but that was from I
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93 think January 7th on. That's when I signed the documents.
Q BY MR. WAXLER: You were not general counsel. You were in house counsel; right?
A In house counsel. Sorry.
Q You have never held the position of general counsel, have you?
A No.
THE COURT: Did you know about any other employees there?
THE WITNESS: Yes.
THE COURT: Was there a bookkeeper or an accountant?
THE WITNESS: Yes.
THE COURT: Do you know whether -- well, okay.
Thank you.
MEMBER OF THE AUDIENCE: Your Honor?
THE COURT: You are?
MEMBER OF THE AUDIENCE: Jason (inaudible). I represent Godfread and Cooper in some of the defamation cases.
THE COURT: You represent Godfread?
MEMBER OF THE AUDIENCE: Yes.
THE COURT: So back in Minnesota, lawyers have
lawyers?
ia icin
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MEMBER OF THE AUDIENCE: I am from Massachusetts.
THE COURT: And how can I help you?
MEMBER OF THE AUDIENCE: I had a conversation with Mr. Gibbs probably back in October regarding AF Holdings where he told me that he was national counsel for AF Holdings and that any settlement negotiations were to be made through him. And the local counsel for that case confirmed that he was the one us told me to contact Mr. Gibbs.
THE COURT: Have you come to understand as.have I
' that every representation made by a lawyer associated
with Prenda is not necessarily true?
MEMBER OF THE AUDIENCE: I have known that for three years.
THE COURT: Okay. Good. So you aren't shocked, are you?
MEMBER OF THE AUDIENCE: No.
THE COURT: Nor am I, but thank you.
MEMBER OF THE AUDIENCE: You are welcome. Q BY MR. WAXLER: Mr. Gibbs, you know you are under penalty of perjury testifying here today? A That is correct. Q -Have you ever made a representation to a court in the Central District of California or any other court»
that you know is untrue?
94
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95 A No.
THE COURT: Well, that isn't exactly accurate, is it? You have caused documents to be filed with, let's just be kind and say falsified signatures.
THE WITNESS: Your Honor, I had no idea that these were allegations --
THE COURT: That is "yes" or "no".
THE WITNESS: Your Honor, I think it is still an open question.
THE COURT: Oh. No. It is not an open question. We have had the individual testify under oath. Those were not his signatures on these documents.
THE WITNESS: And that is the first time I have heard in terms of him saying out loud that he absolutely did not sign those papers, those exact papers. He said before he was not associated with the companies, but that is the first time I heard him say he did not sign those exact papers.
THE COURT: Are you saying that you have had prior conversations with him where he either admitted or tacitly admitted that he signed?
THE WITNESS: No, your Honor. I haven't had any conversations with Mr. Cooper.
THE COURT: That was my thought. I thought that
you had never met the man.
LLL HN LN NENA NHN UU
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THE WITNESS: No. I never met the man. He never met me, and I have never talked with him.
THE COURT: And you were acting on the representation of John Steele that --
THE WITNESS: And Paul Hansmeier.
THE COURT: -- that they actually had the signatures, the authentic signature of the real Alan Cooper?
THE WITNESS: Yes. I was told that. And I investigated that in terms of, — know, what is going on here when the first Alan Cooper issue arose, and I. was told that there was no issue, that he -- that he did sign the document. And so I also did a little bit of research and found out that the assignor, even if the assignor is invalid, it still is a valid document. So combining those two things, I still believed -- I don't think I filed a case after that. It was just a matter of kind of addressing with these guys, and they were my sole information for this type of thing.
THE COURT: Okay. You also indicated that you had on file the original or notarized signature of Alan Cooper, but you really don't, do you?
THE WITNESS: No. No. I never said I had on file. No. Prenda law or Steele Hansmeier had it on
file. They told me they had it on file, and that is I
SEE ES SEER SESE ESAS SARA IRSRIESE EERSTE TUSSLE AES ARNO GIN aA HARASS
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believe what was in the declaration. So I said, okay, you know, do we have this notarized copy, do you guys have it over there? I don't think I ever saw it, but they told me, yes, we have copies of this, it is here, and you can go ahead and file that based on our representation to you.
THE COURT: Do you feel like you have been duped by Hansmeier and Steele?
THE WITNESS: In a way, yes.
THE COURT: Okay. This has been very enlightening. Q BY MR. WAXLER: Mr. Gibbs -- I just have a few more your Honor. Mr. Gibbs, have you ever been a 30(b) (6)
witness for AF Holdings?
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A No.
Q Have you ever been a 30(b) (6) witness for Ingenuity 13?
A No.
Q Have you ever received client funds in any of your
capacities as counsel affiliated with Steele Hansmeier or
Prenda Law?
A No.
0) The court expressed some disappointment in the manner in which you described how you determined the
location of the houses that sat on the lots, and the-
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1 router, the ability for the router to pick up people who 2 were not authorized to pick up that signal. And let me
3 ask you some questions about that.
4 A Sure.
5 Q It is your understanding that when wireless routers 6 are used and they determine what the distance is where
7 they would be able to pick up a signal, that those
8 determinations are made where there is an open field and 9 not placed in the middle of a structure? 10 A Yeah. I have read some reports on that and that 11 the projections are basically favorable to them because 12 there is no obstacles in the middle, there is nothing 13 like walls or fences or bushes or trees which have a 14 great effect on wireless signals. 15 Q Tell me how you described the Denton residence and 16 what facts you had to support your description of the 17 Denton residence? 18 THE COURT: Which city? Is this Santa Maria or
19 West Covina?
20 THE WITNESS: I believe it is the second one. 21 MR. WAXLER: I will find it, your Honor. 22 MR. PIETZ: Your Honor, I might suggest we look at
23 Exhibit II which is the picture, the geographical Google
24 maps picture of the two residences.
25 THE COURT: That is why I wanted to know. IT mean,
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I went to Google Earth as well, and I just want to know which one we are talking about because in West Covina, you made some representations of fact that you cannot possibly know to be true.
THE WITNESS: Well, your Honor, based on my personal knowledge of wireless networks, I believed they were true.
THE COURT: I am talking about of the residence itself. It is a gated community.
I'm sorry. I didn't mean to bateenupe you.
MR. WAXLER: I am happy to address that, your
Honor. Q Mr. Gibbs, the map that you have seen that was offered by Mr. Gibbs and Mr. Pietz -- and I apologize if I am butchering your name, by the way --
MR. PIETZ: Pietz.
MR. WAXLER: Pietz.
Q That is not the type of map that you saw; correct? A No, that is not. Q Please describe the map that you looked at when you
made the representations in the filings that we have done in this courthouse.
A It was a map that you could go down the street, it is actually focused on the house, not on an overview like
that, but it is on, basically, there is like a street
SLES ELE LTTE NESE SLES TEER EA A EAN ERNE
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JC Document 218-3 Filed 07/11/13», Page 12 of 71 ot #:4119 A view on Google that allows Hou. 06; like, look around the house essentially. Kind of. It is limited to a certain extent though. Q What did you see when you looked at that map? A I saw a house that I believed it was likely not something that wifi could have broadcasted out to neighbors. Q Did you see a gate? A I did see a gate. Q Did you see several structures? A I did. Q Did you see bushes and shrubs and trees around, between the house structure and the street where someone might be driving by? A I did. Actually, the aerial view, I think, is even
covering the house if I remember correctly. So, yeah, it
is -- I mean, in terms of trees, there is a lot of trees there. Q And it is your understanding that the wireless
signal doesn't just fly over these trees, does it?
A No. Actually, I mean, there is just certain things
that -- I mean, I think everyone kind of knows when they
go into certain people's houses and say, hey, I want to use the wifi connection, there are certain rooms in the
house that don't get, even in the same house that don't
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1 get the wifi connection. So, yes, walls, trees, these
2 things definitely have a dramatic effect. Sometimes,
3 concrete wall, for instance, sometimes it just altogether 4 stops something. That is my understanding of it.
5 Q Was your description of the residence in West
6 Covina when you signed your declaration and submitted
7 these papers and we submitted these papers on your behalf 8 accurate to the best of your knowledge.
9 A Yes, it was. It was based on my personal 10 knowledge. Yes. 11 Q And do you still believe it is accurate despite the 12 very different map that was submitted to the court?
“as A That is correct. I believe that map might be -- I 14 don't even know where the yards come, or I don't know how 15 that works.
16 Q Would the same be true for the residence in Santa 17 Maria?
18 A It was the same analysis essentially. It was just 19 part of the full analysis, but yeah.
20 Q In other words, there were walls, there were
21 buildings, there were shrubs, all of which would block 22 the signal and reduce by a great extent the range of the 23 wireless network?
24 A Yes. That was my impression from them, the street
25 maps from Google.
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102 1 MR. WAXLER: May I have one moment, your Honor? 2 THE COURT: Certainly. 3 Q BY MR. WAXLER: Mr. Gibbs, did you knowingly violate 4 the discovery orders from this court? 5 A No. 6 Q Did you cause to be served on the ISP providers the
7 October 19, 2012 discovery order by this court?
8 A Yes. I mean, at least, I thought I did. I had
9 requested it.
10 Q And it was your understanding that that was done? 11 A It was my understanding. I confirmed it
12 afterwards, and they said it was taken care of.
13 Q And the first time you learned that an ISP may not 14 have received a copy of that order was when?
15 A I believe it was in the response by the ISP, AT&T 16 possibly.
17 MR. WAXLER: I have nothing further, your Honor.
18 Thank you.
19 THE COURT: Okay. Thank you. But you started
20 getting responses from some of the Internet service
21 providers, didn't you?
22 THE WITNESS: I didn't get the responses.
23 THE COURT: All right. You filed a status report
24 with the court?
25 THE WITNESS: Yes.
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THE COURT: Right? THE WITNESS: Yes. THE COURT: And at the time you filed that status
report, there had been no returns on those subpoenas;
right?
THE WITNESS: Yes.
THE COURT: Then about a week later --
THE WITNESS: Well, sorry, let me qualify my answer. There were -- at that point, there was nothing
in the computers that showed there was any returns on the subpoenas.
THE COURT: Okay. That changed a few days later.
THE WITNESS: It changed, I think, on the 7th. Yes.
THE COURT: And, of course, you updated that status report, you advised the court, then -- right -- that suddenly, for whatever reason, people are now starting to send you information on your subscribers; right? You updated your filing, didn't you?
Actually, no, you didn't.
THE WITNESS: I didn't, your Honor, but if I can explain why.
THE COURT: Yes.
THE WITNESS: Okay. So I did some investigation
on that, and what I was told, and, again, I don't handle
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104 the subpoenas. These are handled out of the Chicago and Minnesota offices. I was told that these things are usually delivered and that either hand-delivered or I believe mailed but most likely they are just a few blocks away. Like CT Corporation is just a few blocks away, that CT Corporation would send, mail back the information.
I didn't realize that that information was faxed back by Vertes, I never knew that. And I did some investigation on it. And I, also, I talked to Paul Duffy, and the exact date of the court's order in that case, there had been -- he had had some eye surgery and he also had some trauma related to it.
So what he said was he wasn't picking up his mail as frequently during that time period. So I thought that the information had been received essentially by, through his mailbox at that point but hadn't been input in the computer until later. So that was my understanding. That was my understanding of what had happened.
Q BY MR. WAXLER: Do you now regret not advising the court when you learned on November 7th that Prenda Law had received information in response to those subpoenas and that there was information in the status report that
was not correct?
a
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105 A Absolutely. Absolutely. MR. WAXLER: Thank-you, your Honor.
THE COURT: Mr. Pietz.
CROSS-EXAMINATION
BY MR. PIETZ:
Q Mr. Gibbs, I would ask you to refer to the binder
that is there with you to Exhibit EE which is the substitution of counsel that was filed apparently with your CM/ECF account listing you as in house counsel for AF Holdings.
A Yes, I am familiar with that document.
Q So Mr. Gibbs, just to clarify, then, your testimony is that when you filed that document, that was an accurate representation -- correct -- that you were at that moment in house counsel for AF Holding?
A When I filed that document, I believed I was. What I was told afterwards and after the deposition was that that merger or that acquisition hadn't happened therefore it was still owned by the trust. So I, essentially, I had been told to go ahead. and file as in house counsel, but, for some reason, Livewire didn't own AF Holdings at that time.
Q So can you just pin down for me exactly when it was
that your capacity as in house counsel for AF Holdings
RTE
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1 begun and exactly when it terminated?
2 A Well, my understanding was that -- my understanding 3 when I was told that I was in house counsel for Livewire 4 that I was therefore in house counsel for AF Holdings and “5 the other companies as well, Ingenuity and Guava.
6 And only did I find out later when I was
7 exiting and I was already leaving all these cases
8 essentially, only then, I found out that they had not
9 actually acquired -- Livewire had not acquired AF
10 Holdings according to Mr. Hansmeier.
11 Q Mr. Gibbs, have you ever authorized anyone else to 12 use your CM/ECF password?
13 A I don't -- I might have. I don't know.
14 Q Who?
15 rN An individual by the name of Carl. He worked for 16 me, or he worked with me, I guess you would say. He
lf actually worked for Prenda Law.
18 Q How about John Steele?
19 A No. I don't think so. Not to my knowledge. I am 20 not saying -- in terms of authority, I did not, no. 21 Q How about Paul Hansmeier, did you ever authorize 22 him to use your CM/ECF password? 23 A I don't believe so. I mean, I know he had my -- he 24 had access to my passwords at one point, so he might
25 have, yeah.
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107 Q What was your business telephone number while you worked for Prenda Law? A It was (415) 325-5900. Q And what was your business e-mail address when you worked for Prenda Law? A It was blgibbs@wefightpiracy.com. Q Have you ever instructed Prenda local counsel to file pleadings using your business e-mail and business telephone number on the pleadings even though it was their name and physical address? A So, yes, my name is on -- my e-mail address and my number and my phone number is on certain cases in other states. I was instructed to do so like that by Paul Hansmeier. And, essentially, the way that was explained to me was that I would essentially forward all of the communications to the outside counsel. Yeah. So.
MR. PIETZ: Before we move on any farther, I would ask that Exhibit EE be admitted into evidence as Exhibit 13 Q Mr. Gibbs, I have some copies of a few different complaints, one that was filed by a local counsel in Nebraska and three complaints filed by local counsel in Florida all of which list the name of the local counsel, a mailing address in those respective states and an
e-mail address, blgibbs@wefightpiracy.com and your 415
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108 i telephone number, is that consistent with your 2 understanding of what the normal practice was at Prenda 3 that your business e-mail and phone would be on pleadings
4 all around the country?
5 MR. WAXLER: Objection. Irrelevant, your Honor. 6 THE COURT: Overruled. 7 THE WITNESS: That was what I was instructed to do
8 by Prenda, yeah, was to do that because I was essentially
9 helping those guys out on their cases. It was their 10 case, but, yes. 11 Q BY MR. PIETZ:I would ask Mr. Ranallo to pass out
, £2 No. 2 which is the declaration of Matt Catlett, an
13 attorney in Nebraska, and he is authenticating the | 14 service copy of the complaint filed in Nebraska listing | 15 Mr. Gibbs. I would ask that that be admitted into 16 evidence as Exhibit 14. 17 Similarly, Mr. Ranallo, if you would be so 18 kind as to pass out 3, 4 and 5 which are the complaint in 19 Sunlust v. Nguyen, First Time Video. Here is Sunlust v. 20 Nguyen. That is Middle District, Florida. We also have 21 First Time Videos v. Paul Uphold and Openmind Solutions 22 v. Barry Wolfson. 23 MR. WAXLER: Your Honor, I would object to the 24 introduction of those exhibits.
‘20 THE COURT: Right. We don't need this. We have
24
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109 basically got his testimony.
MR. PIETZ: Fair enough.
THE COURT: And we have got the testimony on the reason why, but I got to tell you, that doesn't sound reasonable to me that you weese inviting telephone calls, litigation in Florida on a case that you know nothing about. How do you field these calls?
THE WITNESS: No, sir. I would pass the messages on to the other attorneys.
THE COURT: Back to Florida?
THE WITNESS: Yes. I would pass the messages on to them because, essentially, it was just easy for them at that point. I was like their secretary essentially, and that is the way that Prenda wanted to do it.
THE COURT: Why?
THE WITNESS: I don't know. I mean, they changed the practice at some point where people were putting their own e-mails, their own numbers, but I don't know why that was the way it was structured originally.
And I don't know. I mean, I don't know who had access to my e-mail either. So I don't know, like, I have no idea if I was sent something or if someone else read it. | Q BY MR. PIETZ: Did John Steele have access to your
e-mail?
EU CS
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110 1 A He did. I don't know if he did throughout, but he Z did. 3 Q Would he routinely respond to e-mail inquiries at 4 the blgibbs@wefightpiracy.com e-mail address? 5 A I never knew it because he didn't CC me on them, or 6 he didn't let me know he was doing them. But I believe 7 he did. 8 Q Did Paul Hansmeier have access to that e-mail 9 address? 10 A I think he had access. I have no idea whether he 11 used it or not. 12 Q How about Mr. Duffy, Paul Duffy, did he have access
13 to that e-mail account?
14 A I don't think so.
15 Q Mr. Gibbs, earlier, you testified that some things
16 were sent out with your signature stamped on there that
{ ( | |
17 didn't have your approval. I would like to refer now --. 18 actually, before I venture any farther afield, I would
19 ask that the court take judicial notice of the complaints 20 I have just identified as Exhibits, I think, 15, 16 and 21 LT.
22 In any event, moving on, now, to what has been 23 previously identified in this action as Exhibit X, ask
24 that it be admitted now as Exhibit 18.
25 Essentially, I would just like to ask you a
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#:4130 Lid 1 question to confirm. 2 A Sure. 3 Q Is this the kind of letter you are talking about? 4 This was a demand letter sent in the Guava, St. Clair 5 County, Illinois case. I note that it is dated -- what 6 is the date on it? January 30th. And it is, 7 essentially, a, you know, a demand letter. And then I 8 will go to the last page there. It has a pleading in 9 there. So, in any event, on the last page of the letter | 10 itself, there is a stamped signature, what appears to be | 11 a stamped signature that says Brett Gibbs. Is it your | 12 testimony that this letter was sent out without your 13 authorization? 14 A That is my testimony. 45 Q You had no knowledge whatsoever that this letter 16 was being sent out? L7 A No. Not with my name on it. I don't even 18 remember -- no one ever told me about this before I found 19 out. I actually found out through an opposing counsel
20 that contacted me and wrote me a letter saying,
21 basically, you know, you have nothing on my client, and 22 you communicate through me. So I was kind of confused, 23 but I eventually saw the letter, and it had my stamped
24 signature on it.
25 Q Mr. Gibbs -- I will represent to the court that
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112 1 this letter has been sent to over 300 Internet users 2 across the country. Have you done anything to correct
3 the fact that this letter went out with your signature on
4 it without your authorization? I note that it was filed 5 in late January.
6 A Yeah. I actually talked with Mark Lutz, and Mark 7 said, I said, Mark, do not send any of these letters out
8 anymore that are, you know, please contact me and let me 9 know what is happening before you send out these letters. 10 And the response from Mr. Lutz was I don't control those 11 types of things, you have to talk with Paul and John.
12 Q Fair enough. Mr. Gibbs, have you ever hired local
13 counsel for Prenda Law?
14 A Actually, the hiring, no, because the hiring
15 process was done by John Steele.
16 Q Are you familiar with an attorney in Florida named 17 Matthew Wasinger?
18 A Yes. Yes.
19 Q Are you aware of the fact that Mr. Wasinger
20 testified under oath in federal court in Florida at the Zu Sunlust hearing that you hired him and that, as far as he 22 understood, you were a principal of Prenda law? Are you 23 aware of that, Mr. Gibbs?
24 MR. WAXLER: Objection, your Honor. It is
ao irrelevant. It is also hearsay.
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MR. PIETZ: I am asking Mr. Gibbs if he is aware of 22:
THE COURT: Sustained. I have got the picture. Okay. And I appreciate it. Thank you.
MR. PIETZ: I will move along, your Honor.
THE COURT: Okay. To what? Give me a blueprint.
MR. PIETZ: Fair enough, your Honor. I will explain the broad strokes of the categories I have, and whatever the court is interested in, we will move to that.
In addition to a few more things about
Mr. Gibbs hiring, firing and even threatening local counsel, I have evidence on him being delegated independent authority to settle cases which he actually concluded. Contrary to Mr. Gibbs' assertion which is a little confusing in light of the fact that he says I spoke to Mark Lutz, in any event, with respect to his
assertion that he never had any direct client contact, I
have a number of documents which actually show -- some of
which are Mr. Gibbs' own prior words showing that, in fact, at least according to him, he was communicating back and forth with the client, whatever that means, and my theory is that that may mean John Steele.
But in any event, beyond the direct client
interaction, you know, I could ask Mr. Gibbs about his
Page ID
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Sonne ne Ne ree een t oo Feu Ha ET ROR ESN STANT
Case secalciaoi ak i 4 Document 218-3 Filed Be erage 26 of 71 Page ID
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25
#:4133
investigation in the case, about the petition, but those
are the broad strokes, your Honor. If the court has got
the picture, I don't need to necessarily get into all the
documents. THE the client client has client is. MR.
THE
MR. THE MR. Honor.
THE
COURT: I do have the picture, and I know who is. We have talked about the client, and the
been running everything. Yeah, I know who the
PIETZ: Very good.
COURT: Okay. Thank you.
Gentlemen. Mr. Brodsky, you look bored. BRODSKY: I am not bored, your Honor. COURT: All right.
WAXLER: We have no further questions, your
COURT: All right.
Unless anyone has anything else in terms of
evidence to offer, the matter will stand submitted. ALL
right.
THE
THE
Thank you, sir. You may step down? WITNESS: Thank you, your Honor. COURT: Good luck to you.
All right. How about this, I will leave this
up to counsel, if you wish. If you would like to sum up
your position, you may do so at this time. It is not
Case 2:12-cv-08333-ODWé5
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#4134 J
Li5
necessary. I am just making that offer.
MR. WAXLER: Thank you, your Honor for giving us the opportunity to clear Mr. Gibbs' name, and what I would like to add to the declarations that he has submitted and the papers that we have submitted is that Mr. Gibbs did not intend to disrespect this court or disobey any orders of this court. Mr. Gibbs had no knowledge that perhaps others may have knowingly or unknowingly disregarded some orders of this court in terms of the service of the knowledge of the October 17th order.
The order itself, you know, did not require service on the ISP's, but that was what Mr. Gibbs wanted to do. And that is the undisputed testimony here today that that is what he wanted to do was to have those ISP's notified of that. And he took no action whatsoever, your Honor, to do discovery, formal discovery of those ISP's or ask the ISP's to follow-up on the information provided.
So Mr. Gibbs stands before you, your Honor, he is I think we could say humbled by this experience, and I think he is regretful that he has perhaps been put in a position where the court at least in the original OSC made comments suggesting that he was a culpable party
here. And he is not, your Honor. And I hope you see it
Case 2:12-cv-08333-ODW*
», Page 28 of 71 Page ID
116 that way too.
And I thank you very much for your time. Appreciate the opportunity you have given us to clear his name.
THE COURT: Thank you, counsel. Anything from this side? You don't have to. MR. PIETZ: I will keep it very brief, your Honor.
I can appreciate that there may be more parties, other people who are more culpable than Mr. Gibbs with respect to what has occurred in these cases. However, I think the assertion that Mr. Gibbs is merely an independent contract attorney is simply not credible. I would just simply leave it at this, there is ample evidence showing that Mr. Gibbs was been involved since day one or at least very shortly thereafter on a key level exercising operational control over this litigation on a national basis.
So while I am sympathetic that perhaps to a certain extent, maybe there are other people more culpable, I will just leave it that certainly there is ample evidence showing that Mr. Gibbs indeed played a key role in all of this.
Thank you, your Honor.
THE COURT: Okay. I just have one question,
gentlemen. As a licensed attorney in this state,
Case 2:12-cv-08333-ODW-JC Document 218-3 Filed O7/11/43) Page 29 of 71 Page ID #:4136 ~~
117 1 particularly when it is only your name on the pleadings, 2 don't you think you have some responsibility to assure i: the accuracy of those pleadings? Or is it permissible 4 simply to go they told me to do so or the senior partner 2 said it is okay, it may not have sounded right to me, but 6 they said it was okay. Could you do that really? 7 MR. WAXLER: Your Honor, I am going to suggest 8 that that is not what happened on a key issue. 9 THE COURT: Okay. 10 MR. WAXLER: On a key issue, the issue involving Ta Alan Cooper, there was not one shred of information that
12 Alan Cooper wasn't Alan Cooper until Mr. Gottfried's
3 letter in November of 2012 at which point Mr. Gibbs
14 immediately questioned whether this was accurate or not. 15 And the most important thing is that Mr. Gibbs filed no 16 further pleadings after that time which purported to rely 17 on Mr. Cooper being the assignee of AF Holdings. And so
18 Mr. Gibbs reacted to the notion.
19 He investigated and he did nothing further on 20 it. He was assured that Alan Cooper was Alan Cooper, but 21 so he -- he did something other than said somebody told
22 me. And on the other issues, your Honor, these were not 23 examples of him relying on anybody else to do things that
24 were improper. He was doing. discovery. He was doing
25 investigations. They were supervising him, but he was
EERSTE eer eee tee eR
24
25
Document 218-3 Filed 07/11/14», Page 30 of 71 Page ID #:4137 Nc!
118 acting like a California lawyer doing what he thought in his best judgment should be done as a California lawyer in these cases.
THE COURT: All right. MR. WAXLER: Thank you. THE COURT: Thank you, counsel. All right. Again, the matter stands submitted. We are adjourned. MR. WAXLER: Thank you, your Honor. MR. PIETZ: Thank you, your Honor.
(Proceedings concluded.)
Case 2:12-cv-08333-ODW3C Document 218-3 Filed 07/11/18, Page 31 of 71 Page ID
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#:4138 4
CERTIFICATE
I hereby certify that pursuant to Section 753, Title 28, United States Code, the foregoing is a true and correct transcript of the stenographically reported proceedings held in the above-entitled matter and that the transcript. page format is in conformance with the regulations of the Judicial Conference of the United States.
Date: March 17, 2013
/s/ Katie Thibodeaux, CSR No. 9858, RPR, CRR
Case 2:12-cv-08333-ODW-
Document 218-3 Filed 07/11/43") Page 32 of 71 Page ID #:4139 Bi
OTE NS
Case 2:12-cv-08333-ODW-IC Document 218-3 Filed 07/11/13», Page 33 of 71 Page ID ad #:4140 ae
Sia
Exhibit G
{ }
Case 2:12-cv-08333-ODW-3JC Document 218-3 Filed ames Page 34 of 71 Page ID
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UU ae eee ULSAN ISLS UENO SE
‘Attached are
District:
ALL you will. need to da is draft the civil cover sheet, and file these: they. are. already in -pdf form) .
Please email or call me with any questions.
‘Brett L. Gibbs, Esq. (SBN 251000)
Gf Counsel to Prenda Law Inc.
38. Miller Avenue, #263 ‘Mall Valley, CA 94041
415-341-5318
‘PlgibbekweFigntpa ceey: com
NOTICE: THIS EMAIL IS INTENDED TO BE PART OF A SETTLEMENT NEGOTIATION AND IS NOT ADMISSIBLE UNDER FRE RULE 408.
NOTICE:
% communication is acoges by the Electronic Communications ‘Privacy Act, dat. a8 oO, ‘So C. asi seq. and as intended to remain confidential and f subject to applicable ata Falsiae and/or work product privileges. TE youare not the intended recipient of this message, or if this message
has been addressed to you in-error, please immediately-alert the sender by reply e-mail and then delete this message and all attachments. Do not ‘deliver, distribute or copy this message and/or any attachments and if you ‘are not the intended recipient, do not. disclose the contents or take any
action in reliance upon the information contained an this communication or any attachments.
Circular 230. Disclosure: Pursuant. to recently-enacted U.3. Treasury Department regulations, WE are now Tequired ‘to advise -you that, .uniess GoHeteLee eupressiy indicated, any federal tax advice contained in this inicabion, gor attachments and enclosures, is not intended or id may not be used, for the purpose. ot {3} avoiding ander the Internal, Revenue Code or oe pees
erin Laveia.
Case 2:12-cv-08333- -ODW=IC Document 218-3 Filed 07/11/13», Page 35 of 71 Page ID
Stews” #:4142 e)
I am giving you your first {and likely not last} Hacker Case for Minnesota. Because of the unique non— filing process (i.e. pocket service) in Minnesota; you {with the help of will be able to initiate this suit on Monday. All of the necessary documents are attached.
In light of Minnesota’ 3 Bules on "Pocket Service," this Complaint »
*won™ t*be filed initially. instead,
*copies *{not the original) of the executed Summons and Complaint Will. be p mally se ved a a process seryer -- I assume
will help you coordinate that), and after the process is completed, the
server will need to Fill out the Affidavit of Service (attached), and
mn this to you. A copy of the Summons, laints and Affidavit of Service should be stannéd and put wp on =
Also, any further documents you e in this case (such as the Answer}, or future cases, should all be
Please note that my information is everywhere that it can legally be. This is because we are trying to drive all of the phone calis ta me, so we don" t have to burden local counsel with settlement discussions. I£, for instance, would like to serve you personally, and contacts me to initiate that process, Iwill be in touch with you.
Please contact me if you have any questions... Remember, while this is going ta be your case, you can stiil talk to me about it (and future ones) at any time. “Understandably, considering this is the first time in Minnesota {for beth of us}, having a quick pre-service conversation to iron cut any concerns or questions might be helpful. Please feel free to cali-me: 415-341-5318 or 415-381-3104.
shanks,
Brett L. Gibbs, Esq. {SBN 257000) OE Ceunsel to Prenda Lew Inc.
38 Miller Avenue, #263
Mill Valley,. Ch 94947 415-341-5218 blgibbs@wefightpiracy.com
Case 2:12-cv-08333-ODW23C Document 218-3 Filed 07/11/14, Page 36 of 71 Page ID
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Case 2:12-cv-08333-ODW
JC Document 218-3 Filed 07/11/18, Page 41 of 71 Page ID #:4148 a | UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA — WESTERN DIVISION HONORABLE OTIS D. WRIGHT
UNITED STATES DISTRICT JUDGE PRESIDING
Ingenuity 13 LLC, PLAINTIFF, vs. NO. CV 12-8333 ODW
John Doe, et al., DEFENDANT,
wee ee
REPORTER'S TRANSCRIPT OF PROCEEDINGS
LOS ANGELES, CALIFORNIA
TUESDAY, APRIL 2, 2013
KATIE E. THIBODEAUX, CSR 9858 U.S. Official Court Reporter 312 North Spring Street, #436 Los Angeles, California 90012
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
Case 2:12-cv-08333-ODW=aJC Document 218-3 Filed 07/11/48, Page 42 of 71 Page ID
“ #:4149
APPEARANCES OF COUNSEL:
FOR RESPONDENT GIBBS:
WAXLER CARNER BRODSKY LLP
BY: ANDREW J. WAXLER -and- BARRY BRODSKY 1960 E. Grand Avenue Suite 1210
El Segundo, CA 90245
FOR DEFENDANT:
THE PIETZ LAW FIRM BY: MORGAN E. PIETZ 3770 Highland Avenue Suite 206
Manhattan Beach, CA 90266
-and-
oe,
NICHOLAS RANALLO LAW OFFICES
BY: NICHOLAS R. RANALLO 371 Dogwood Way Boulder Creek, CA 95006
FOR RESPONDENTS DUFFY, VAN DEN HEMEL & PRENDA LAW:
KLINEDINST LAW OFFICES BY: HEATHER ROSING
-and- PHILIP W. VINEYARD III
-and- DAVID M. MAJCHRZAK 501 W. Broadway
Suite 600
San Diego, CA 92101
UNITED STATES DISTRICT COURT,
CENTRAL DISTRICT OF CALIFORNIA
UNITED STATES DISTRICT COURT,
APPEARANCES: (Cont'd)
FOR RESPONDENT HANSMEIER:
BAKER, KEENER & NAHRA LLP BY: PHILLIP A. BAKER
—-and-— DANIEL PATRICK LEONARD 633 West Fifth Street Fifty-fourth Floor
Los Angeles, CA 90071
FOR RESPONDENT STEELE:
MURPHY, PEARSON, BRADLEY & FEENEY BY: THOMAS P. MAZZUCCO
-and- TIMOTHY J. HALLORAN
88 Kearny Street
Tenth Floor
San Francisco, CA 94108
Page ID
CENTRAL DISTRICT OF CALIFORNIA
Case 2:12-cv-08333-OD
MIC Document 218-3 Filed 07/11/18. Page 44 of 71 Page ID sd #:4151 Noo?
4
LOS ANGELES, CALIFORNIA; TUESDAY, APRIL 2, 2013
THE CLERK: Calling Item No. 1, CR 12-8333, ODW, Ingenuity 13, LLC, versus John Doe, et al. Counsel, please state your appearances. MR. PIETZ: Morgan Pietz, P-I-E-T-Z, for the putative John Doe defendant in 12-CV-8333.
MR. RANALLO: And Nicholas Ranallo for the same
THE COURT: Morning, counsel.
MR. WAXLER: Andrew Waxler and Barry Brodsky, both for Brett Gibbs who is here today.
THE COURT: By the way, thank you for your submittal with respect to your efforts to effect service. Thank you.
MR. BAKER: Phil Baker and Dan Leonard specially
appearing for Paul Hansmeier.
MR. LEONARD: Morning, your Honor. ’ MR. BAKER: And he is present today. THE COURT: Where? MR. BAKER: Mr. Hansmeier, will you stand up.
THE COURT: Front row.
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
i #:4152
Case 2:12-cv-08333-ODWeJC Document 218-3 Filed 07/11/48, Page 45 of 71 Page ID
5
MR. HALLORAN: Morning your Honor. My name is Tim Halloran, Thomas Mazzacco on behalf of John Steele who is also present.
THE COURT: Mr. Steele.
MR. STEELE: Yes.
MS. ROSING: Morning, your Honor. geachey Rosing with Klinedinst PC with my eed veasnes Phil Vineyard and Dave Majchrzak snnest iis on behalf of Paul Duffy, Angela Van Den Hemel and Prenda Law, and Mr. Duffy and Ms. Van Den Hemel are in the audience today.
THE COURT: Thank you.
Is that it?
MR. BAKER: Your Honor?
THE COURT: Yes.
MR. BAKER: There are other individuals pursuant to your order here. They are not represented.
THE COURT: Mark Lutz?
MR. BAKER: Yes, he is present.
MR. LUTZ: Yes.
THE COURT: Mr. Lutz, welcome, sir. Did Alan -- well, do we have an Alan Cooper? Any Alan Cooper?
(No response.)
THE COURT: All right. Peter Hansmeier?
MR. HANSMEIER: Yes, your Honor.
THE COURT: Good morning, sir.
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
Case Se eee OE Document 218-3 Filed ld Page 46 of 71 Page ID bn ed te ‘ei?
#4153
MR. HANSMETER: Morning.
THE COURT: Any représentatives of any other representatives of Prenda Law, Livewire Holdings, AF Holdings other than Mr. Lutz, Ingenuity 13 other than Mr. Lutz and 6881 Forensics, LLC.
MS. ROSING: Mr. Duffy is appearing on behalf of Prenda Law, your Honor.
THE COURT: All right. Here is my interest, and we can proceed in any way that seems to make sense. I am pleasantly surprised that we have everyone here. Otherwise, I was going to be forced to draw reasonable inferences from the facts as I know them.
It should be clear by now that this court's
focus has now shifted dramatically from the area of
protecting intellectual property rights to attorney
misconduct such misconduct which I think brings discredit to the profession. That is much more of a concern now to this court than what this litigation initially was about. Mr. Steele -- well, let me do it this way. I have questions of Mr. Steele. Mr. Steele can choose to answer those questions or not. The same applies for Mr. Duffy and Mr. Hansmeier. Now, as the attorneys, how do you all propose we proceed?
MR. BAKER: May I take the podium, your Honor?
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
Case 2:12-cv-08333-ODWaAJC Document 218-3 Filed 07/11/
1, Page 47 of 71 Page ID #:4154 =,
THE COURT: Well, actually, we don't have one, but we do have a iéchuea and you are free to use it.
MR. MAZZUCCO: Thomas Mazzucco on behalf of Mr. Steele.
Your Honor, in light of some of the
information that was in the transcript of March 11th,
2013 in this courtroom and some of the concerns that this court has mentioned, at this point in time, if Mr. Steele is called to testify, he ie. Geing to exercise his Fifth Amendment privilege against forced testimony.
And we state for two reasons, one, there were serious allegations made by the court and others of not just attorney misconduct but the word fraud was used several times in the transcript.
THE COURT: Should have been.
MR. MAZZUCCO: The next step is there is also an issue involving attorney-client privilege. If Mr. Steele was to testify, that privilege belongs to the client.
THE COURT: Which client might that be?
MR. MAZZUCCO: That would be several of his clients. Mr. Halloran is going to handle that part of the argument, but that is a two pronged argument, your Honor.
THE COURT: Are you talking about AF Holdings,
Ingenuity 13, those clients?
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
Case 2:12-cv-08333-ODy
JC Document 218-3 Filed 07/11/18, Page 48 of 71 Page ID / #:4155 No!
MR. MAZZUCCO: Yes.
THE COURT: And you think there is a difference between those clients and Mr. Steele?
MR. MAZZUCCO: I think there is, your Honor, yes.
THE COURT: From what I know about this case, there is no difference at all, but that is why I am glad Mr. Steele is here. Maybe he can clarify some of those things, but if you say answering those kinds of questions would incriminate him, I'll take you at your word.
MR. MAZZUCCO: No, your Honor. I'm not saying they are going to incriminate him. I said it is his Fifth Amendment privilege against forced testimony.
There was language on the record from March 1ith where this court made some accusatory statements about fraud upon the court, things that were in the transcript.
THE COURT: Yes.
MR. MAZZUCCO: You leave my client with no alternative but.
THE COURT: To rebut those statements.
MR. MAZZUCCO: He can rebut those statements in
the proper venue, your Honor. This is an order to show
cause in front of this court. THE COURT: Let's cut to the chase. I am really not interested in -- I want to know if some of my
conjecture is accurate. The only way I can find out is
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
M=JC Document 218-3 Filed 07/11/18, Page 49 of 71 Page ID o, #:4156 YO
1 to have the principles here and answer those questions. 2 Now, if you say he will not answer those 3 questions, then I will draw whatever inferences I think 4 are reasonable from the facts as I know them. This is an 5 opportunity for him to protect himself, to defend and 6 protect himself. It is up to him. So you are saying he 7 doesn't want to answer any questions, fine. I am not 8 going to go through the charade of asking the questions 9 and have him assert the Fifth.
10 MR. MAZZUCCO: Your Honor, he is not going to
43 respond to your questions.
12 THE COURT: All right. Fine.
13 What about Mr. Hansmeier? What is his
14 position, the same?
15 MR. BAKER: The exact same, your Honor.
16 THE COURT: All right. You may be seated.
17 Mr. Duffy.
18 MS. ROSING: Your Honor, Mr. Duffy and
19 Ms. Van Den Hemel will also be taking the fifth
20 amendment. Though, in response to your desire for
21 additional information, I do have approximately 25
22 minutes of argument, and I do have some exhibits that are
23 judicially noticeable.
24 THE COURT: On what? Relevant to what?
25 MS. ROSING: To the seven issues pending before
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
Case 2:12-cv-08333-ODW-=JC Document 218-3 Filed 07/11/18, Page 50 of 71 Page ID J #:4157 kc) i
1 this court. 2 THE COURT: Give me the Cliff Note version. Just 3 give me a summary, what it is that you would like to -- 4 MS. ROSING: Well, your Honor, what I would like 5 to argue because my clients are entitled to a reasonable 6 opportunity to be heard, we weren't allowed -- 7 THE COURT: Excuse me. They are giving up that 8 right to be heard. Now, what have you got to say that is 9 under oath? 10 MS. ROSING: Well, your Honor, my arguments are 11 legal arguments. 12 THE COURT: I know. I am looking for facts. I 13 really am. I am not a looking for legal arguments. 14 MS. ROSING: Well, your Honor -- 15 THE COURT: Can you tell me, for example, who 16 directs the litigation here in California? Who makes the 17 decision as to whether or not cases are dismissed or 18 settled for how much money? Can you tell me that? 19 MS. ROSING: Your Honor, I can't testify. 20 THE COURT: "Yes" or "no", please. Because we 21 need to move through this. Can you tell me that? 22 MS. ROSING: I personally cannot tell you that, 23 your Honor. 24 THE COURT: All right. Do you know whether or not
25 there is another Alan Cooper other than the one that was
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
#:4158
‘ivan
Case 2:12-cv-08333-ODWaJC Document 218-3 - Filed 07/11/18, Page 51 of 71 Page ID
il
here at the last hearing?
MS. ROSING: I am not aware of another Alan Cooper, your Honor.
THE COURT: All right. Good.
What happens to the settlement money?
MS. ROSING: Your Honor, obviously, I represent Mr. Duffy and Ms. Van Den Hemel. I don't have personal knowledge of any of this.
THE COURT: Why weren't notices of related cases filed? Who made the decision to hide from the court the fact that all of these cases were related.
MS. ROSING: I do have a judicially noticeable
document on that, your Honor, where the Northern District
declined to relate the cases.
THE COURT: That is a different thing. That is consolidating them.
MS. ROSING: It is actually an order declining to relate them.
THE COURT: Same plaintiff, same film, same causes of action, and they are not related? Excuse me?
Okay. Tell me this. Who made the decision not to disclose to the court the fact that the law firms have a financial interest in the outcome of this litigation?
MS. ROSING: Your Honor, there is no evidence
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
Case aah aiaciallaa > Document 218-3 Filed 07/11/18», Page 52 of 71 Page ID a Zo : of
#:4159 uae
12
before this court at all that the law firm or any, well,
certainly, my clients, Paul Duffy or Angela Van Den Hemel, have any financial interest in the outcome of this litigation.
THE COURT: Excuse me. Did you read Hansmeier's deposition?
MS. ROSING: Yes, I did, your Honor.
THE COURT: And then you make the statement you just made?
MS. ROSING: Your Honor, there is no evidence that Mr. Duffy or Ms. Van Den Hemel who is a W2 paralegal at Prenda Law --
THE COURT: I understand that.
MS. ROSING: And I would be happy --
THE COURT: Wait a minute. The money goes to Prenda Law's trust account; right?
MS. ROSING: Your Honor, I have no personal knowledge, and I can't testify. But I do have an argument I would like to present to your Honor.
THE COURT: Relative to what? To anything I just asked?
MS. ROSING: Well, your Honor, it is a legal argument with some objections and some judicially noticeable documents.
THE COURT: Relative to what?
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
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13
MS. ROSING: Well, the seven issues before the court, the Alan Cooper issue, the discovery order issue, the Wagar investigation, the Denton investigation, Form CV30, the relationships, and March 11, the things that are noticed in this court's OSC.
But, your Honor, we would be happy to submit this in a brief if that would be more —-
THE COURT: Good. Do that. Thank you.
We are done.
(Proceedings concluded. )
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
Case 2:12-cv-08333-OD p
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CERTIFICATE
I. hereby certify that pursuant to Section 753, Title 28, United States Code, the foregoing is a true and correct transcript of the stenographically eeantes proceedings held in the above-entitled matter and that the transcript page format is in conformance with the regulations of the Judicial Conference of the United States.
Date: April 5, 2013
/s/ Katie Thibodeaux, CSR No. 9858, RPR, CRR
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
Case 2:12-cv-08333-ODW-JC Document 218-3 Filed 07/11/13 Page 55 of 71 Page ID #:4162
Case 2:12-cv-08333-OD
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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
INGENUITY 13 LLC, Case No. 2:12-cv-8333-ODW(JCx) Plaintiff, ORDER ISSUING SANCTIONS Bis 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 settle—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.; (i) 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. Int’l] 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. Id. 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.”
io Steele, Hansmeier, and Duffy (“Principals”) are attorneys with shattered
law practices. Seeking easy money, they conspired to operate this enterprise and
3 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 US. 308, 318 (1976).
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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.
2. 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.
3. 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.
5; 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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7. 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.
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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.
i. 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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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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what the Court had already imposed: denial of requests for early discovery. (ECF No. 28.)
a 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 that the Order was ignored because of miscommunication among Plaintiffs. The Order was purposely ignored—hoping that the ISPs were unaware of the vacatur and would turn over the requested subscriber information.
Then there is the Alan Cooper forgery. Although a recipient of a copyright assignment need not sign the document, a forgery is still a forgery. And trying to pass that forged document by the Court smacks of fraud. Unfortunately, other than these specific instances of fraud, the Court cannot make more detailed findings of fraud.
Nevertheless, it is clear that the Principals’ enterprise relies on deception. Part
of that ploy requires cooperation from the courts, which could only be achieved
through deception. In other words, if the Principals assigned the copyright to themselves, brought suit in their own names, and disclosed that they had the sole financial interest in the suit, a court would scrutinize their conduct from the outset. But by being less than forthcoming, they defrauded the Court. They anticipated that the Court would blindly approve their early-discovery requests, thereby opening the door to more settlement proceeds.
The Principals also obfuscate other facts, especially those concerning their operations, relationships, and financial interests. The Principals’ web of disinformation is so vast that the Principals cannot keep track—their explanations of their operations, relationships, and financial interests constantly vary. This makes it difficult for the Court to make a concrete determination.
Still, the Court adopts as its finding the following chart detailing Plaintiffs’ relationships. Though incomplete, this chart is about as accurate as possible given
Plaintiffs’ obfuscation.
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As for Van Den Hemel, Lutz, and Hansemeier, they are not without fault even though they acted under orders from the Principals. They were not merely assimilated; they knowingly participated in this scheme, reaping the benefits when the going was good. Even so, their status as non-attorneys and non-parties severely limits the sanctions that could be levied against them.
Despite these findings, the Court deems these findings insufficient to support a large monetary sanction—a seven-digit sanction adequate to deter Plaintiffs from continuing their profitable enterprise. Even if the Court enters such a sanction, it is certain that Plaintiffs will transfer out their settlement proceeds and plead paucity. Yet Plaintiffs’ bad-faith conduct supports other more fitting sanctions.
///
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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 IS SO ORDERED.
May 6, 2013
UNITED STATES DISTRICT JUDGE
11
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Exhibit J
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ORIGINAL
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John Steele
Lill Lincoln Rd Ste. 400 Miami Beach, FL.33139 Telephone: (708) 689-8131 johnisteele@gmail.com
In Propria Persona
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» MAY 17 2013
io PISTHIGT OF CALIFORNIA DEPUTY
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
INGENUITY 13 LLC, Plaintiff, v. JOHN DOE, Defendant.
i NOTICE OF APPEAL AND REPRESENTATION STATEMENT
CASE NO. 2:12-CV-8333-ODW (JCx)
Judge: Hon. Otis D. Wright, Il Magistrate Judge: Hon. Jacqueline Chooljian
JOHN STEELE’S NOTICE OF APPEAL AND REPRESENTATION STATEMENT
CASE NO. 2:12-CV-8333-ODW (JCx)
_ Case 2:12-cv-08333- ot 2 Document 218-3 Filed O7/1 Leh Page 71 of 71 Page ID #:4178 Case 12-cv-08333- opw-IC Document ed Filed 05/17/13 Bie 2of30 Page ID#: 3136 ;
NOTICE OF APPEAL NOTICE IS HEREBY GIVEN that John Steele hereby appeals to the United States
a
Court of Appeals for the Ninth Circuit from: (1) the Court's May 6, 2013 Order Issuing Sanctions (ECF No, 130), attached #8 Exhibit A; (2) the Court’s Order Granting Request for Leave to File a Reply (ECF No. 116) attached as Exhibit B; (3) the Court's March 14, 2013 Order to show cause (ECF No. 86) (amending and incorporating ECF No. 48) attached as Exhibit C; and (4) the Court’s Order to appear (ECF No. 66) attached as Exhibit D.
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Respectfully submitted,
10 || DATED: May 17, 2013
111] Lincoln Rd Ste. 400
Miami Beach, FL 33139 13 . Telephone: (708) 689-8131 johnisteel gmail.com i4 dn Propria Persona
DR 2
NTATION STATEMENT NOTICE OF APPEAL AND REPRESE T CASE NO, 2:12-CV-8333-ODW (ICx)