Lightspeed defendants ask court to hold Prenda attorneys in contempt for not paying $261K

The defendants in a computer hacking case voluntarily dismissed this past spring asked a federal judge late last month to hold a trio of lawyers with ties to the now-dissolved Prenda Law firm in contempt for failing to pay more than a quarter of a million dollars in attorneys’ fees and costs.

The request from the defendants in Lightspeed Media Corp. v. Anthony Smith, et al., was made on Dec. 27, one month after U.S. District Judge G. Patrick Murphy gave attorneys Paul Duffy, Paul Hansmeier and John Steele 14 days to pay Anthony Smith, AT&T and Comcast a total of $261,025.11.

On Dec. 12, the day after the pay-up deadline, the three plaintiffs lawyers appealed the fee order, in which Murphy wrote they showed “a serious and studied disregard for the orderly process of justice,” as well as a “relentless willingness to lie to the Court on paper and in person” in the case.

Attorneys representing the defendants assert that while Duffy, Hansmeier and Steele appealed Murphy’s Nov. 27 order to the Seventh Circuit Court of Appeals, they did not join it with a motion to stay the order’s obligations or a supersedeas bond, and as such “contempt is now appropriate notwithstanding the appeal.”

The defendants’ motion was submitted by several attorneys. Massachusetts attorneys Jason Sweet and Dan Booth represent Smith; Bart Huffman in Texas and Troy Bozarth in Edwardsville represent AT&T; and John Seiver and Ronald London in Washington D.C., as well as Belleville attorney Andrew Toennies, represent Comcast.

In their contempt motion, the defendants’ attorneys contend that the law is well-settled on this matter: An appeal by a losing party does not stop payment of an ordered sum to the prevailing party, unless a stay is granted.

“Where a court’s decision unequivocally requires a litigant to take specific steps, including paying moneys owed – as is the case here – it is plain that even when an appeal is pending, failure to comply with that decision can and should subject the noncomplying party to a contempt finding,” the motion states.

The defendants’ attorneys assert that Murphy’s “fee order could not have clearer." It stated that Duffy, Hansmeier and Steele "are jointly and severally liable, and shall pay within 14 days of this order," $72,367 to Smith, $119,637.05 to AT&T and $69,021.26 to Comcast, for a grand total of $261,025.11, with interest.

They further argue that the three lawyers “have intentionally and flagrantly defied that order, just as they disregarded their obligations as officers of the court in the vexatious and improper litigation they advanced – first, in state court until the Illinois Supreme Court blocked that path, and then upon amendment and removal in federal court here.”

The motion asks the court to find Duffy, Hansmeier and Steele in contempt of Murphy’s order, to sanction them and order them again to pay up, “this time with additional interest as permitted by law and a daily fine for [their] continued failure to pay as ordered.”

“At a minimum,” the motion adds, “the Court should issue an order requiring … Duffy, Hansmeier and Steele to show cause why they should not be held in contempt and sanctioned further.”

The motion for contempt stems from a suit Lightspeed brought against a potential John Doe defendant in the St. Clair County Circuit Court. It was amended in August 2012 to name Smith AT&T and Comcast as defendants and eventually removed to the U.S. District Court for the Southern District of Illinois.

Lightspeed sued Smith for computer fraud and abuse, conversion, unjust enrichment, breach of contract and other civil conspiracy claims, accusing him and his alleged co-conspirators of hacking passwords to gain access to its websites.

The suit also accused AT&T and Comcast, as well as one unnamed corporate representative with each of the companies, of allowing their subscribers to hack into its website and interfere with its efforts to identify thousands of alleged hackers through their Internet protocol addresses.

Prior to the complaint being amended and removed to federal court, the circuit court granted Lightspeed’s request to subpoena AT&T and Comcast in its efforts to obtain personally identifiable information about the owners of Internet Protocol addresses accused of illegally downloading its porn.

The defendants went to the Supreme Court with an emergency motion for a stay and the high court in June 2012, issued a supervisory order telling the circuit court to grant the Internet Service Providers’ request to quash the subpoenas.

In March 2013, Lightspeed voluntarily dismissed its suit. The following month, Smith filed a motion seeking attorney fees, in which he asserted the plaintiff’s claims against him were baseless.

Murphy agreed with Smith in an Oct. 30 order that stated “the litigation smacked of bullying pretense.” He also granted fee requests from AT&T and Comcast and gave the defendants a month to file an itemization of fees.

Duffy, Hansmeier and Steele each filed motions to vacate or reconsider the fee order, arguing that their client’s claims were not frivolous and that Sweet and Booth routinely file baseless motions for attorney fees.

Hansmeier and Steele also argued that the fee order should be vacated because it imposed sanctions on them without giving them notice or a chance to be heard. They claimed Smith failed to serve them and were no longer attorneys of record in the case.

Murphy rejected their arguments and in his Nov. 27 order, set specific amounts that he ordered the attorneys to pay the defendants.

He also noted that at a Nov. 13 hearing on the motions, “Hansmeier skirted the Court’s direct questions, Steele made feigned protestations, and both flat-out lied about their association with Prenda Law, Inc. in the face of documentary evidence on the record in this case, and their sworn declarations in other cases.

A transcript of that hearing shows that Murphy called Lightspeed’s suit “pointless, worthless, a sham” and that its attorneys’ “chances of being successful on appeal are somewhere between slim and below zero.”

As of early Thursday afternoon, no response or order on the defendants’ contempt motion had been filed, according to federal court records.

Records for the Seventh Circuit show that Duffy, Hansmeier and Steele have until Jan. 27 to file their briefs over their Dec. 12 appeal of Murphy’s fee order.