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Meet John Doe: Seventh Circuit affirms awards to Booth Sweet client in Lightspeed Media Corporation v. Smith

In no uncertain terms, the United States Court of Appeals for the Seventh Circuit has affirmed an order sanctioning three notorious attorneys more than $261,000 for baseless, vexatious litigation, and a contempt order against them, adding another $26,000, for failing to pay as ordered. Lightspeed Media Corporation v. Smith et al., Nos. 13-3801 and 14-1682 (7th Cir. July 31, 2014). The sanctioned attorneys, John Steele, Paul Hansmeier, and Paul Duffy, ran a massive shakedown operation in the shape of the now-dissolved law firm Prenda Law, f/k/a Steele Hansmeier PLLC (“Prenda”). In a thorough decision written by Chief Judge Diane Wood, the Seventh Circuit lays bare Prenda’s ignominious practices and failed rationalizations. The decision also vindicates the defendants, AT&T, Comcast and Anthony Smith, who stood together against Prenda’s transparently false claims, which ranged from violations of the Computer Fraud and Abuse Act to a conspiracy in what Judge Wood called “a fictional copyright infringement ring.”

Booth Sweet LLP’s partners Jason Sweet and Dan Booth successfully defended Smith at both the district court and the appeals court. The Prenda attorneys’ misuse of Smith has never before been fully aired, because Prenda dropped the lawsuit while the defendants’ motions to dismiss were still pending, earning sanctions for raising “baseless claims despite knowledge those claims were frivolous.” But now the whole story can be told. Smith was an innocent man who served Prenda only as the most convenient scapegoat available.

The case was initially brought in 2012 in the Illinois Circuit Court for St. Clair County against a single unnamed “John Doe” defendant from Belleville, Illinois, alleging he’d conspired with some 6,600 others to hack into the plaintiff’s pornographic website. Prenda sent subpoenas to Internet service providers seeking the “co-conspirators” contact information, so they could arrange coercive settlements out of court. AT&T, Comcast, and other ISPs persuaded the Illinois Supreme Court to stay  the subpoenas, and moved for a supervisory order quashing the subpoenas outright. Prenda’s objection to the motion called John Doe the “master hacker” behind the vast infringement ring: “The Doe defendant residing in St. Clair County has been identified as one of the ‘worst of the worst.’ This individual is believed to operate a blog titled ‘World’s Biggest Hackers,’ a site that provides illegal backdoor credentials to dozens of password-protected websites, including Plaintiff’s. Further, this individual is believed to contribute hacked information to dozens of other hacker sites. The hacked credentials distributed by the ‘master hacker’ have been used by thousands of people worldwide. … When Plaintiff learns this individual’s identity, it will gladly name and serve him with process.” Objections page 11; see also page 1 (“The lawsuit … is a suit brought against a criminal who illegally hacked into the Plaintiff’s computer systems.”)

As the St. Clair County court wrote two days later, “The Plaintiff wants to identify people it can name as defendants replacing the protean seat-filler ‘John Doe.” … Lightspeed claims to have captured a St. Clair County IP address as that of the key conspiracy hub cracker through implementation of geolocation technology.” It soon became clear just how protean Prenda’s identification of that “master hacker” could be: when it served their purposes, he could become a completely different person.

The state court complaint’s Exhibit A (see last page) identified John Doe as a Charter Communications subscriber with the IP address 75.132.153.113, with an alleged date and time of access of Nov. 28, 2011 at 16:24. Exhibit B listed the IP addresses of the alleged co-conspirators. When the Illinois Supreme Court ordered the subpoenas quashed, Prenda retaliated with a breathtaking escalation: they amended the complaint to make AT&T and Comcast defendants, alleging that contesting the subpoenas made the ISPs co-conspirators who had aided and abetted federal crimes. And as the Seventh Circuit said, “‘John Doe,’ in the amended complaint, became Anthony Smith.” Plaintiff’s counsel plucked Smith’s Collinsville IP address (75.132.226.241) from the middle of Exhibit B (see page 45, about halfway down the right column) and started to call him the master hacker, though his IP address had been identified as accessing Plaintiff’s sites four days before John Doe.

Prenda knew Smith was the wrong man. They had used geolocation technology tools to support their contention that he was within St. Clair County. But Smith’s IP address was in Collinsville, Illinois, according to the geolocation tool whatismyipaddress.com, and he was served at his home in Collinsville  – which is in Madison County. Still, when the case was removed to the United States District Court for the Southern District of Illinois and Smith moved to dismiss; Duffy argued in Prenda’s opposition (see page 3): “This case is about computer hacking and theft, Plaintiff alleges that Smith is the primary hacker and thief. Smith is alleged to be the master hacker’ who illegally broke into Plaintiff’s websites with hacked passwords, took protected content, and assisted others who participated in the same ‘hacking community’ as he to do the same.” In other words, Prenda felt entitled to call the wholly innocent Anthony Smith the “master hacker” without calling attention to the switch. When Booth Sweet moved for sanctions on Smith’s behalf against the attorneys, Prenda’s opposition lamely claimed it had more evidence about him up its sleeve, but that it was “not required to prove, by a preponderance of the evidence, Defendant’s guilt at this stage of the litigation—before discovery has even commenced.” But by then Prenda had already chosen to dismiss the frivolous lawsuit, and no more “evidence” tying Smith to their outrageous allegations has ever surfaced.

For a few years, Prenda had its run of the legal system, filing mass copyright and CFAA suits against tens of thousands of John Does and collecting untold millions in settlements. The only judgments they collected were by consent or by default, since Prenda never let their cases go to trial, perhaps aware that such fabricated evidence could not withstand scrutiny. The courts ultimately caught on, and now have repeatedly scalded these three attorneys and their twisted version of the practice of law. Booth Sweet is honored to have helped exonerate Anthony Smith and expose Prenda to another richly deserved scalding.

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