7th Circuit to Prenda Law: We told you to stop digging—you didn’t listen

From ArsTechnica:

The US Court of Appeals for the 7th Circuit has found for the second time that the mastermind of the Prenda Law “porno-trolling” scheme should be made to pay sanctions to a defendant.

In an opinion (PDF) published yesterday, a three-judge panel upholds most, but not all, of the lower court’s finding that John Steele, Paul Hansmeier, and Paul Duffy should pay more than $260,000 in sanctions. However, they also sided with Steele on one key issue.

Here’s a brief recap of the Lightspeed v. Smith case: in 2012, Prenda Law filed a bizarre anti-hacking lawsuit against Anthony Smith, then served subpoenas to ISPs asking for identifying information of more than 6,600 users, whom they dubbed “co-conspirators.” The ISPs did not comply, moved the case to federal court, and fought the subpoena.

In the spring of 2013, Prenda’s business began falling apart, following a strongly worded sanction order from US District Judge Otis Wright in California. The firm moved to dismiss Lightspeed v. Smith and other lawsuits around the country. Smith’s attorneys demanded legal fees. They won $261,025, and the sanctions were upheld on appeal.

The case went back to district court, where the judge overseeing it found Hansmeier and Steele in contempt, ruling that they had hidden their assets to avoid paying the original sanction. The court tacked on a contempt sanction and another fine for violating discovery rules. The Prenda duo appealed again, resulting in this week’s order.

“When last we considered John Steele and Paul Hansmeier’s challenges to contempt sanctions imposed on them, we gave them some friendly advice: stop digging,” wrote Circuit Judge Diane Wood, who authored the unanimous 16-page opinion. “Apparently they did not realize that we meant what we said. …

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