Prenda Now In Trouble In Another Case In California

from the more-popcorn dept

While Prenda is dealing with trouble down in Southern California (and Florida, and Illinois, and... ), it's run into some more problems in Northern California as well, where it tried to dismiss one of the AF Holdings cases, but the judge asked lawyer Paul Duffy (who stepped in for Brett Gibbs to appear in person) which he did yesterday. As Cathy Gellis explained in a detailed report on the hearing, it appears that (a) the judge knows what's going on and (b) Duffy put himself in a tough spot:

Paul Duffy has a problem. He's counsel of record for AF Holdings, to the extent that AF Holdings even is a client separate and distinct from Prenda Law. But in between the time he filed the motion for voluntary dismissal and now, the April 2 hearing in Los Angeles happened where he (among other Prenda Law people) plead the Fifth Amendment in refusing to answer questions about AF Holdings. This act put him in a bind: if he opened up his mouth in San Francisco to talk about AF Holdings it could inculpate him in its affairs. You can't assert the Fifth Amendment in some contexts and waive it in others, that's not the way it works. Anything he says about AF Holdings in some proceedings can and will be used against him in others.
On the other hand, as counsel to a purportedly separate and distinct client, he can't just blow off the hearing, even if that might be the best option for saving his own skin. AF Holdings, whoever it is, is staring down the barrel of a judgment on the order of tens of thousands of dollars against it. If it were truly a separate client it should be able to count on him to try to prevent such a judgment. Note: this doesn't mean the client could expect him to prevail, but it could expect him to at least give it the ol' college try. That meant that he couldn't just not show up (which apparently was what he did — or, er, didn't do — at a hearing yesterday in Illinois). He couldn't just withdraw as counsel, either, because that generally requires the court's permission once a lawsuit is underway in order to make sure a client isn't being left high and dry (see, for example, the earlier motion to substitute Duffy for Gibbs, which they needed the court to approve). Nor could he choose to just not argue, or purposefully argue badly, without abrogating his ethical duties to the client. But it was unclear what he could argue that wouldn't further implicate him in the misdealings of the Prenda Law enterprise.

Duffy, somewhat ridiculously tried to claim that the reason Prenda tried to dismiss the case was because of a claim of "spoliation" of evidence, but that was based on the highly questionable claim that CCleaner, an app for optimizing a hard drive, which had been on the computer for a while, was used to delete evidence -- something the product is not designed to do.

Either way, the judge pointed out that this argument made no sense, because if it were true, they could just argue spoliation and it would help their case, and hurt the defendants.' As the judge said:

In any case, as Judge Chen honed in on later in the hearing, usually a plaintiff is happy for there to be spoliation problems. "Normally if you argue spoliation, you win the case!" It seemed very strange, he observed, to give up because you are claiming spoliation (and, he asked later, if it really were such a problem, why did you wait to withdraw the case and not do so as soon as you learned of it?).

The judge seemed pretty clued in to the real reasons Prenda is trying to drop all its cases and run, and isn't necessarily prepared to let that happen, as he also said that he wondered if the attempt to dismiss was just an attempt to avoid an adverse ruling -- one that might open them up to having to pay fees. Yet another case to watch...