Minnesota Judge Revives Five Prenda Cases, Citing Fraud

MINNESOTA—A federal judge in Minnesota has reopened five AF Holdings copyright infringement cases, alleging that the plaintiff’s legal team “attached a fraudulent document to the complaint.” Federal Magistrate Judge Franklin L. Noel’s order, which was filed Friday in one of the cases, AF Holdings LLC v John Doe, gives Michael K. Dugas, who was hired by the Prenda Law team to act as its local counsel, five days from the date of the order to file a declaration answering detailed questions about negotiated settlements that AF Holdings, né Prenda Law, had made with John Does.

All of the cases had been voluntarily dismissed by Dugas earlier this year, a point referenced by Judge Noel in his final notation: “The Court notes that Mr. Dugas, counsel for the plaintiff, voluntarily dismissed every single pending case he had in this District shortly after Judge Wright's first show-cause hearing. Eleven cases were voluntarily dismissed after the hearing.”

The reference is to U.S. District Judge Otis D. Wright II's now legendary May 6, 2013 order in another series of similar copyright infringement cases brought by AF Holdings in California, which contains the first mention of the claim by AF Holdingss supposedly official designee Alan Cooper that the Prenda Team had actually stolen his identity and used his signature without permission in the AF Holdings cases. In his Friday order, Judge Noel reprinted the following passages from Judge Wright’s order:

[John] Steele, [Paul] Hansmeier, and [Paul] Duffy (“principals”) are attorneys with shattered law practices. Seeking easy money, they conspired to operate this enterprise and formed the AF Holdings and Ingenuityl3 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.

The Principals stole the identity of Alan Cooper (of 2l70 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.

According to Noel, “The copyright-assignment agreement at issue before Judge Wright was the same agreement attached to the complaint in three of these five cases. The other two cases involve a different copyrighted film, Sexual Obsession, but the assignment agreement for that film was also purportedly signed by Mr. Alan Cooper on behalf of the plaintiff, AF Holdings LLC.”

The rest of the 8-page order is mostly taken up making the legal arguments that allow the judge to bring the five cases back from the dead. Referencing another case in which an act of fraud perpetrated on the court resulted in additional sanctions being levied, Judge Noel wrote, “The Court agrees with the reasoning of Pino and concludes—based on its own interpretation of Rule 60(bX3) and Rule 60(dx3)—that it has jurisdiction to strike a plaintiff's notice of voluntary dismissal, reopen the case, and award appropriate relief when allegations of a possible fraud on the court come to its attention. This interpretation of Rule 60 is necessary to preserve the integrity of the judicial system.”

He continued, “All three elements of the Pino test are met here: (1) the plaintiff attached a fraudulent document to the complaint; (2) the Court relied upon that document in authorizing the discovery of internet subscriber information—information the plaintiff was not entitled to receive absent a court order; and (3) after obtaining the discovery (which—at least as far as the Court is aware—is the only relief the plaintiff ever seeks in these cases), the plaintiff settled and voluntarily dismissed all of these cases.”

In his order, the judge does not ask either side to address the question of whether fraud was perpetrated here, instead ruling:

The Court concludes that he “has jurisdiction, under Rule 11 and Rule 60, to determine whether the plaintiff committed a fraud on the court in the above-captioned cases. In light of the foregoing, it is HEREBY ORDERED that:

1. Within five days of the date of this order, Mr. Michael K. Dugas, counsel for the plaintiff, shall file a declaration under seal and made under penalty of perjury in which he:

a. identifies the name, address, and contact information for any individuals identified as a result of the district judge's order authorizing the early discovery ("the John Doe defendants");

b. identifies the name, address, and contact information for any attorneys retained by the John Doe defendants;

c. indicates whether the plaintiff and the John Doe defendants agreed to settle these cases and, if so, the exact terms of the agreements—including to whom any money was paid and the manner of payment (e.g. cash or check);

d. attaches a copy of any written settlement agreement and any release of claims executed by the parties in the above-captioned cases; and

e. certifies that the John Doe defendants and their attorneys have been served with a copy of this order and the attached order from Judge Wright.

2. Within five days of the date of this order Mr. Dugas shall send one courtesy copy of his declaration and any attachments directly to the undersigned’s chambers.

There is an assumption underlying the judge's order that the John Does who settled with AF Holdings may very well get their money back, but whether any other sanctions are levied remains to be seen.

Judge Franklin L. Noel’s June 20 Order can be read here.