Saying it is alarmed and troubled by allegations raised in a case brought by a client of the now-dissolved Prenda Law firm, an appeals panel this week ordered the St. Clair County Circuit Court to dismiss a pre-suit discovery petition seeking to identify hundreds of alleged computer hackers.

The Fifth District Appellate Court handed down its ruling Tuesday in Guava LLC v. Comcast, et al., which required the justices to dedicate 26 of their 36-page opinion to explaining the background of the case and convoluted history of Prenda Law.

The former Chicago firm and the three attorneys believed to be behind it -- Paul Duffy, John Steele and Paul Hansmeier -- have since been accused by a few judges of "brazen misconduct" and creating shell companies in order to file copyright infringement and computer hacking suits to exploit the court's subpoena powers and extort settlements.

Not only does the panel’s decision reverse the lower court and order the dismissal of the November 2012 request for pre-suit discovery Guava LLC brought against Comcast, but it remands the matter for an evidentiary hearing on a petition for rule to show cause as to why Guava, its attorneys and others should not be held in contempt and sanctioned.

It further requires the circuit court to address at least 10 issues on remand and compel the attendance of those named in the petition, which was filed in January 2013 by one of the dozens of John Does seeking to protect their personal information from being disclosed through their Internet Protocol (IP) addresses, ones Guava claims hacked into its computers to illegally download porn.

The petition named: Prenda-clients Guava LLC and Lightspeed Media Corp., as well as their officers and directors; Duffy; Belleville attorney Kevin Hoerner, who served as local counsel for Guava, as well as in other Prenda-related cases; Steve Jones, a supposed agent of Lightspeed; and Allan Mooney, an alleged principal of Guava whose signature is listed on the pre-suit discovery petition, although there are claims it was falsified and forged.

The court’s order to compel the attendance of these people --specifically Mooney, whose name has been spelled several different ways in Prenda filings and other documents --could prove beneficial for Prenda litigation playing out in courts across the nation.

In its opinion, the panel explains that Steele, a former Chicago attorney who now lives in Florida, presented an affidavit to the lower court at a February 2013 hearing that Mooney allegedly signed, confirming it was his signature on the verification for the pre-suit discovery petition.

That affidavit also identified Mooney as a principal of Guava, which the Fifth District noted in its opinion “is the first statement in any of the pleadings purporting to identify a corporate officer of Guava.”

The following month in a California court, attorneys in a different Prenda case filed a notice and exhibit of a March 10, 2013 Minneapolis Star Tribune article that quoted Mooney as saying he knew Hansmeier, but didn’t know his name was being used as an agent of Prenda clients or to file suits.

Following the February 2013 hearing, the St. Clair County Circuit Court granted Guava’s motion to strike the rule to show cause request, overruling objections from the John Does and ordering Comcast to disclose the identifying information of the John Doe movants.

The opinion lists St. Clair County Circuit Judge Andrew J. Gleeson as the judge who presided over the matter at the lower court.

The John Does filed a request for reconsideration, as well as a motion to stay judgment, both of which the circuit court denied, leading to their appeal to the Fifth District.

According to the opinion, the John Doe movants filed their opening brief in August 2013 and Guava failed to submit their brief by its Sept. 16, 2013 deadline. As such, the court sent a notice to Duffy and Hoerner letting them know their brief was overdue.

In response, Hoerner asked the court for leave to withdraw as an attorney for Guava, saying he had not been retained to defend the appeal. Despite an objection from the John Doe movants, the Fifth District panel granted Hoerner’s request on Nov. 1, 2013.

Duffy then filed a motion for more time to file Guava’s brief. The panel granted that, but a brief was never filed, something Duffy argued in a subsequent motion he had prepared, but must have gotten lost in the mail.

The panel denied his request in January, and the John Doe movants the following month filed a motion, asking for an award of attorney’s fees because Guava’s pre-suit discovery petition contained false allegations and a forged verification.

Guava did not respond to the attorney’s fee request and in March, the appeals panel agreed to take up that matter with the appeal. In April, Guava asked the panel to strike the motion for attorney’s fees and dismiss the appeal.

In its recent opinion, the Fifth District denied both of Guava’s requests, and focused the  majority of its 10-page analysis on explaining why it ordered the lower court to dismiss the pre-suit discovery request and hold an evidentiary hearing on the show cause petition.

“[T]his court is alarmed at the allegations set forth in the petition for rule to show cause and the motion for sanctions on appeal,” Justice Stephen Spomer wrote for the panel. “However, a determination of the merits of these allegations and the degree of culpability to be attributed to those responsible for the petition for discovery before suit will require an evidentiary hearing.”

Spomer added, “This court is not in a position to adjudicate the merits of the Doe appellants' allegations of false and frivolous pleading, harassment, extortion, identity theft, and forgery. This court is of the firm conviction that justice requires inquiry by the circuit court and that a full evidentiary hearing of the Doe appellants' petition for rule to show cause take place.”

Although the panel's ruling largely favored the John Doe movants, it did, however, deny their request for attorney’s fees and sanctions.

Spomer explained the appellate “court is not the proper arbiter of these matters,” but added that because the Doe movants prevailed, they can petition for attorney’s fees and costs after the circuit court holds the hearing on the petition for a rule to show cause.

The panel also gave the John Doe movants a hint on how to go about seeking sanctions the next time around, although it appears its advice could help Guava and its attorneys assert their right against self-incrimination.

“We note that a petition initiating indirect criminal contempt proceedings should not have the title ‘Petition for Rule to Show Cause,’ which is the designation commonly used for a petition initiating an indirect civil contempt proceeding,” the panel states in its opinion.

“Instead,” it explained, “a petition initiating indirect criminal contempt proceedings should have the title ‘Petition for Adjudication of Criminal Contempt,’ because a respondent in indirect criminal contempt proceedings enjoys the privilege against self-incrimination and therefore cannot be required to ‘show cause’ why he should not be held in indirect criminal contempt.”

Spomer wrote that on remand, the Doe movants “should be required to amend their pleadings to conform to the requirements that are commensurate with the type of relief they are requesting for Guava and/or its representatives' alleged misconduct, and the circuit court shall take care to ensure that the procedural requirements necessary to the proceedings are in place.”

In addition, the panel laid out at least 10 issues the circuit court should address on remand of the petition for rule to show cause, including:

  • whether Guava and its attorneys knew it was false when they said at least one of the alleged hackers lived in St. Clair County;

  • whether Mooney’s verification was forged and falsified;

  • whether Guava was an actual company with standing to bring the original petition, and if not, whether the attorneys knew that;

  • whether Guava intended to go forward with litigation or just wanted to extort the John Does into settling;

  • whether Guava’s attorneys had personal interests in Guava and if they intentionally hid such interests from the court;

  • whether Guava engaged in sanctionable conduct; and

  • the relative culpability of Guava’s attorneys, both lead and local, in relation to potential findings of misconduct.

The panel was rounded out by Justices Melissa Chapman and Thomas Welch. Written by Spomer, the opinion included several footnotes, as well citations to other Prenda Law-related cases and rulings.

According to the opinion, the John Doe movants are represented by South Barrington attorney Thomas Leverso, Belleville attorney Laura Beasley and Chicago attorney Erin Russell. Guava is represented by Duffy.

(Editor's note: This article has been updated. A previous version stated that attorney Andrew G. Toennies was an attorney for Guava. The Fifth District Appellate Court, in its opinion, listed Toennies as representing Guava. Toennies represents Comcast in this case, which was not part of the appeal. Neither Toennies nor Comcast were subject to the panel's order remanding the matter for an evidentiary hearing on a petition for rule to show cause as to why Guava, its attorneys and others should not be held in contempt and sanctioned).

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