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Updated: Judge gives Prenda, Duffy until Feb. 19 to pay sanction, file financial info in defamation case

By Bethany Krajelis | Feb 12, 2015

Editor's note: This story was updated Friday to reflect an order that was filed after the publication of the story about Thursday's hearing.

While Chicago attorney Paul Duffy and the now-dissolved Prenda Law firm were given more time Thursday to file documents in their ongoing defamation, an order filed after the hearing makes it clear they still have to pay $11,000-plus in sanctions.

And they need to do so by Feb. 19, according to the order from U.S. District Judge John Darrah.

"Plaintiff shall satisfy the sanctions that the Court imposed and file the requested financial information by February 19, 2015," the order states. "Plaintiff is granted leave to file the requested financial information under seal."

The order was filed after a brief hearing Thursday, during which time it sounded like the judge was giving Duffy and Prenda more time to brief the sanction and inability to pay issues when, based on the order, he was actually giving them until Feb. 19 to not only file financial statements, but to pay the previously-imposed sanction.

It notes that Darrah granted in part and denied the "Plaintiff's Consolidated Motion for Extension of Time and Motion to File Financial Statement Under Seal" and set a Feb. 19 deadline for Duffy and Prenda to file their response to the defendants' October renewed motion to dismiss under Minnesota's Anti-SLAPP Act, with the reply due on Feb. 26.

Because Duffy and Prenda were given the chance to file a response to the defendants' renewed moti0n to dismiss even though they missed the previous deadline, status hearings and rulings expected for later this month have been reset for April 9

Darrah, during the hearing, also denied the defendants' Feb. 6 motion requesting that Duffy and Prenda be held in contempt and further sanctioned for failing to pay $11,758 in sanctions by the Feb. 5 deadline he set last month.

After the judge said briefing schedules in the defamation case against Minnesota attorney Paul Godfread and his client Alan Cooper have not been followed, Duffy said "I'm in the process of trying to raise funds" to pay the sanction imposed in June.

In successfully seeking the sanctions, Cooper and Godfread in September 2013 accused Prenda and Duffy of lying to an employee of the St. Clair County Clerk’s Office to get an amended complaint filed and to Darrah about what U.S. Chief Judge David Herndon said when he denied their remand request in southern Illinois’ federal court.

Chicago defense attorney Erin Russell told Darrah that on Jan. 22, the last hearing held in the case, he ordered Duffy and Prenda to pay the sanction by Feb. 5 or submit the necessary paperwork to assert an inability to pay.

Duffy didn't do either, which led Russell and fellow defense counsel Massachusetts attorney Jason Sweet to file the Feb. 6 motion for contempt.

Noting that he denied that contempt motion without prejudice, Darrah said at Thursday's hearing that he wants to see what the plaintiffs have to say in their soon-to-be filed documents.

Duffy attended the hearing after being a no-show at the Jan. 22 hearing. While waiting for the hearing to be called, Duffy was texting and using his cell phone in Darrah's 12th floor courtroom. He left immediately after the hearing and hopped in a cab.

Thursday's hearing comes two years after Prenda and Duffy each sued Godfread and Cooper in the circuit courts of St. Clair and Cook counties.

The suits, which accuse the Minnesota men of making false statements online about Prenda and its principles, were eventually removed to their respective federal courts and then transferred to Chicago, where they have been proceeding before Darrah as a consolidated matter although each has its own electronic case file.

In subsequently filed and amended counterclaims, Godfread and Cooper contend they were sued in retaliation for filing an identity theft suit in Minnesota against Prenda and its principals. Cooper claims his name had been used as an officer or director of AF Holdings, an alleged client of Prenda Law, without his knowledge or consent.

AF Holdings has been accused of being a shell corporation, created as an alleged way for Prenda to exploit the courts’ subpoena powers and extort defendants into settling copyright infringement and computer hacking suits.

Cooper had served as a caretaker for property owned by John Steele, who along with Duffy and Minnesota attorney Paul Hansmeier are believed to be the key players behind Prenda and its litigation tactics.

Steele late last year registered with the Illinois Attorney Registration and Disciplinary Commission (ARDC). His law license previously was listed as inactive and he put a Miami address on past Prenda-related court documents.

ARDC records list Steele as an attorney with Accessibility Law Group in Chicago. The Illinois Secretary of State's (SOS) website shows Steele incorporated the firm on Dec. 30. Neither the ARDC listing nor SOS record show a phone number for Steele.

Given the name of the new firm, it's possible Steele might have plans to follow in the footsteps of Hansmeier, who since Prenda's fall out, has been bringing lawsuits alleging violations of the Americans with Disabilities Act with Class Justice, a Minneapolis firm that appears to be using similar settlement strategies as Prenda Law.

Steele, however, hasn't filed any lawsuits in Chicago's federal court since about 2012, according to electronic court records.

As for Duffy, court records list him as an attorney in five open cases in Chicago's federal court, although two of those cases are the defamation suits he and Prenda filed against Godfread and Cooper and he either withdrew or was terminated from two of the others.

Records show Duffy filed a motion to withdraw as the defendant's attorney in Clean Harbors Services Inc v. Illinois International Port District in June 2013. He filed his appearance in the case in November 2012, but in his withdrawal filing said "circumstances have arisen that make it infeasible continue to represent the Port District."

And records show he was terminated as an attorney in December in a breach of contract suit Heather Tolaro brought on behalf of herself and her minor son in February 2014 against Invitation Homes LP and THR Property Illinois LLC.

Duffy was terminated in this case, along with Daniel Voelker-- who represented Prenda before the Seventh Circuit Court of Appeals in its appeal over the quarter of a million dollars in sanctions handed down in Lightspeed Media Corp. v. Anthony Smith, et al.--and other attorneys at Voelker Litigation Group.

A December docket entry in Tolaro v. Invitation Homes states that the plaintiff appeared at a hearing on behalf of herself and her son, "and stated her desire to terminate the Voelker Litigation Group and Paul A. Duffy as her counsel. Plaintiffs are seeking new counsel."

The fifth open case listing Duffy as an attorney is a civil rights lawsuit his client, plaintiff Kelly James, brought against the City of Chicago and some of its police officers. Filed in May, the suit includes counts alleging false arrest/unreasonable detention, malicious prosecution and failure to investigate.

The suit, according to a December docket entry, has been stayed pending the outcome of the underlying criminal proceeding with a status hearing set for March.

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