Shortly before noon on Thursday, March 14 — three days after a dramatic hearing at which he expressed grave concerns about the operations of Prenda Law — United States District Judge Otis D. Wright II has issued a new Order to Show Cause directing principals of Prenda Law to appear before him, this time on March 29, 2013 at 10:30 a.m. [Edit: As is noted below, this has been moved to April 2, 2013 at 10:00 a.m.]
The order is here.
Here's what the order does, and the significance of its terms.
First, the judge retroactively denies the Prenda principals' ex parte request that he lift his order requiring them to appear. Judge Wright concludes — absolutely correctly based on the evidence, I submit — that he has jurisdiction over them. He also blasts them for their last-minute filing evading the March 11 appearance:
The Court has received the Ex Parte Application filed on behalf of John Steele,
Paul Hansmeier, Paul Duffy, and Angela Van Den Hemel, requesting the Court to withdraw its March 5, 2013 Order requiring their attendance on March 11, 2013.
Based on the papers filed and the evidence presented during the March 11, 2013 hearing, the Court concludes there is at least specific jurisdiction over these persons because of their pecuniary interest and active, albeit clandestine participation in these cases. Not only does the Ex Parte Application lack merit, its eleventh-hour filing exemplifies gamesmanship. Accordingly, the Ex Parte Application is
Specific jurisdiction means jurisdiction over a particular case (like this one), as contrasted with general jurisdiction, which means jurisdiction in any case anyone might care to bring. In other words, Judge Wright is suggesting that their actions in this case subject them to personal jurisdiction in connection with this case. Note the "albeit clandestine" line, a reference to Judge Wright's conclusion — supported by evidence in the record — that Prenda Law principals are concealing their financial interest in the putative clients acting as plaintiffs in their cases.
Next, Judge Wright gives a taste of what he has concluded:
The March 11, 2013 hearing raised questions concerning acts performed by other persons related to Prenda Law, Inc., Steele Hansmeier PLLC, Livewire Holdings LLC, AF Holdings LLC, Ingenuity 13 LLC, and 6881 Forensics, LLC. The evidence presented suggests these persons may be culpable for the sanctionable conduct explained in the Court’s February 7, 2013 Order to Show Cause, which the Court previously attributed to Brett Gibbs only. Further, it appears that these persons, and their related entities, may have defrauded the Court through their acts and representations in these cases.
Next, Judge Wright announces what he is ordering:
Thus, the Court amends its February 7, 2013 Order to Show Cause (ECF No. 48) to include sanctions against the persons and entities in subparagraphs a–m below:
a) 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;
l) Ingenuity 13 LLC; and
m) 6881 Forensics, LLC.
These persons and entities are ORDERED to appear on March 29, 2013, at 10:30 a.m., TO SHOW CAUSE for the following:
1) Why they should not be sanctioned for their participation, direction, and execution of the acts described in the Court’s February 7, 2013 Order to Show Cause;
2) Why they should not be sanctioned for failing to notify the Court of all parties that have a financial interest in the outcome of litigation;
3) Why they should not be sanctioned for defrauding the Court by misrepresenting the nature and relationship of the individuals and entities in subparagraphs a–m above;
4) Why John Steele and Paul Hansmeier should not be sanctioned for failing to make a pro hac vice appearance before the Court, given their involvement as “senior attorneys” in the cases; and
5) Why the individuals in subparagraphs a–g above should not be sanctioned for contravening the Court’s March 5, 2013 Order (ECF No. 66) and failing to appear on March 11, 2013.
Judge Wright is demanding, in other words, that all the individuals and entities associated with Prenda Law show up and explain why they shouldn't be sanctioned for the full range of conduct he has been investigating: allegations that they filed lawsuits without adequate investigation of the identity of the John Doe defendants, allegations that they participated in fraud by using Alan Cooper's name as a fraudulent head of a shell company, allegations that they hid the true owners of the putative plaintiffs, allegations that they failed to appear as the true lawyers in the cases instead of using local counsel, and their failure to appear as ordered on March 11, 2013.
And if they don't?
Should the persons and entities in subparagraphs a–m above not appear on March 29, 2013, the Court is prepared to draw reasonable inferences concerning their conduct in the cases before the Court, including any inferences derived from their failure to appear. Failure to comply with this order will result in the imposition of sanctions.
The individuals named in the order are in a bind. On the one hand, an angry and motivated federal judge is considering sanctioning them. On the other hand, the same judge is accusing them of a broad scheme to defraud the court. I respectfully suggest that they should only submit to questioning about their conduct after a very serious discussion with competent attorneys about their constitutional rights.
Edited To Add: Judge Wright has moved the new hearing to April 2, 2013 at 10:00 a.m. The order appears to be a mere scheduling issue, not anything of substance.