Duffy apologizes for misstatements in Prenda defamation case; says it was result of his memory, not intent to mislead

Chicago attorney Paul Duffy apologized to a federal judge earlier this week in a filing that opposes the defendants’ fee petition for sanctions in Prenda Law’s defamation suit.

Before saying sorry, Duffy acknowledged his motion was late and then blamed it on defense counsel, saying she filed her clients’ most recent documents a day late, “a delay, while admittedly short, caused substantial scheduling problems for plaintiff, due to competing professional obligations and intervening personal medical issues.”

Filed Monday, Duffy’s motion asks U.S. Judge John Darrah to accept it despite its tardiness and opposes the attorney’s fees requested in the ongoing defamation case that he and the now-dissolved Prenda Law firm brought against Minnesota attorney Paul Godfread and his client, Alan Cooper.

Darrah today issued an order that accepts Duffy’s late petition and gives the defendants until March 21 to submit their reply. He also canceled a status hearing set for next week and scheduled one for June 12, when he will likely issue a ruling on the fee issue.

Duffy, who represents Prenda, asserts the fee petition filed by the defendants’ attorneys, Erin Russell of Chicago and Jason Sweet of Massachusetts, “includes a request for a vast amount of money for the work involved, and it raises many significant issues.”

They asked Darrah last month to order Prenda and Duffy to pay them at least $26,452.50 for the 60-plus hours they have spent since April 2013 working on the aspects of the case that spurred the judge to grant their motion seeking sanctions.

Darrah granted request on Jan. 23 and called out Prenda and Duffy in his memorandum and opinion for lying and engaging in duplicitous behavior in the now-consolidated defamation suits they brought last year in the circuit courts of St. Clair and Cook counties.

In regards to his determination that Duffy lied to him, Darrah in his opinion pointed to an August hearing at which Duffy presented with him with a motion to remand the suit back to circuit court.

The remand motion was almost the identical to the one Duffy filed and U.S. District Judge David Herndon denied when the matter was in southern Illinois’ federal court, except the caption had been changed to show Alpha Law Firm in Minnesota as a plaintiff.

After admitting he filed a similar motion in the Southern District, Duffy told Darrah at the August hearing that “the Court indicated that on the four corners of the complaint, it stated that it was a Minnesota corporation. However, the complaint also states that its principal place of business is in Minnesota.”

But, Darrah found that “the record reflects that the Southern District of Illinois Court said nothing of the sort. Duffy had the opportunity to address this lie in his response to the Motion for Sanctions and did not.”

He added, “To fabricate what a federal judge said in a ruling before another court falls well outside the bounds of proper advocacy and demonstrates a serious disregard for the judicial process.”

Duffy wrote in his recent filing that during the August hearing, “I mistakenly incorrectly described a decision issued by the U.S. Court for the Southern District of Illinois in denying a prior motion to remand this case to State court.”

“In reality,” he explains, “what I described was what I recall having argued; it was not what the Southern District of Illinois held in its Order. The statements were a result of my memory, not an attempt to mislead anyone as to what was in the Order. I apologize to the Court, counsel and the parties for my error.”

Duffy goes on to argue that defense counsel shouldn’t be entitled to fees for their work opposing his remand motion.

He asserts that he filed a request to withdraw his remand motion shortly after the hearing and while it wasn’t granted until August 20, its filing showed his “clear intent to abandon its attempts to have the case remanded.”

“Further, unless Defendants intended to oppose the motion to withdraw—and they did not oppose the motion—then there was no reasonable prospect that it would be denied,” Duffy states in his motion.

“Yet,” he adds, “instead of simply consenting to Plaintiff’s motion to withdraw, the Defendants took the far-costlier approach of opposing the motion to remand. The first (and less expensive) approach would have been a much more cost-effective approach of preventing remand.”

Duffy also claims the defendants’ fee request is “exorbitant.”

“Here, Defendants seek over $25,000—a significant portion of which was expended for the task of responding to a motion to remand that was pending withdrawal,” he contends. “This amount is exorbitant by any standard.”

He further argues that defense counsel failed to “substantiate the reasonableness of that amount.”

In their fee request, Russell and Sweet detail the amount of hours they spent working on the remand motion, as well as in seeking sanctions. Using their hourly rates, $400 for Russell and $409 for Sweet, their fees added up to slightly more than $26,000.

They dubbed that amount as more than reasonable and “a relative bargain” considering their rates fell below the 2012 median rate of $425 that was cited in a nationwide survey from the American Intellectual Property Law Association.”

Duffy, however, argues in his opposition motion that neither Russell nor Sweet are admitted to practice before the U.S. Patent and Trademark office so “there is no basis on which they can justify a rate applicable to intellectual property attorneys.”

He also asserts Russell’s rate is too high because she has “only been practicing for eight years and the median billing rate listed for actual intellectual property partners with that level of experience is $300.”

“In any event, however, Ms. Russell is not an intellectual property attorney. Nor is this an intellectual property case,” Duffy states in his motion. “Defendants’ counsel have failed their burden of establishing a reasonable hourly rate.”

In addition, Duffy asks Darrah to exclude sanctions attributable to other attorneys when he awards fees against him and Prenda.

Duffy explains that in his memo and opinion granting sanctions, Darrah “included a significant number of references” to Belleville attorney Kevin Hoerner, who appeared in state court when the case was pending in St. Clair County Circuit Court, but not in federal court.

Hoerner, who is not subject to Darrah’s sanction order, has been accused of making misrepresentations to the St. Clair County Circuit Clerk’s office to get an amended complaint filed without the court’s permission.

The amended complaint added Alpha Law Firm in Minnesota as a plaintiff, a move that would have destroyed the defendants’ diversity argument and had it been properly filed, possibly could have allowed the plaintiffs to keep the suits in state court.

“[Hoerner] does not work for the undersigned, and (upon information and belief after a review of the court docket) he did he did not file an appearance in this case after it was removed to Federal Court,” Duffy states in the motion.

As such, he asks Darrah to “reduce any sanction imposed in direct correlation to the extent to which it relates to acts or omissions of individuals not in this case.”

In an order issued Wednesday, Darrah struck the defendants’ amended counterclaim with leave to re-plead them within 30 days.

The defendants’ counterclaim asserts the defamation suit was brought in retaliation for an identity theft suit they brought against Prenda Law and its principles over the alleged theft of Cooper’s identity.

The identity theft issue focuses on the claim Cooper’s name had been used as an officer of director of AF Holdings –one of Prenda Law’s clients that a few judges have dubbed as sham corporations created to benefit the attorneys representing them-- without his consent.

Duffy sought dismissal of the counterclaims, a request Darrah this week deemed moot since he gave the defendants a month to re-plead them so they conform to federal rules, including one that requires paragraphs to be numbered.