Lightspeed Media Corp. v. Smith
2014 U.S. App. LEXIS 14725
| 7th Cir. | 2014Background
- Appealsfrom district court orders imposing 1927 sanctions on Duffy, Steele, and Hansmeier, including joint and several liability, and contempt related to nonpayment.
- Lightspeed Media v. Does involved subpoenas to ISPs for co-conspirators’ PII; Illinois Supreme Court approved quashing similar subpoenas; case removed to SDIL.
- Duffy, Steele, and Hansmeier operated as Prenda Law; details of firm identities and services blurred, with related conduct in state and federal courts prompting sanctions in other cases.
- District court found the sanctions warranted based on abusive litigation and emergency discovery conduct; Smith was awarded fees and costs under 1927.
- ISPs sought additional fees against all appellants; district court held hearings, granted fees to ISPs and to Smith, and later addressed motions to reconsider.
- Appellants challenge notice, opportunity to be heard, fee itemization, timeliness, and the joint/separate liability structure; the court ultimately affirms sanctions and contempt orders.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Due process notice for sanctions | Steele and Hansmeier: inadequate notice; violated due process. | Courts provided notice and opportunity; rehearing cured any defect. | No due process violation; notice and hearing adequate. |
| Timeliness and reconsideration of fee motions | Motions under 1927 were untimely or improperly timed. | District court properly exercised discretion; timing reasonable. | No abuse of discretion; motions timely enough given posture. |
| Merits of 1927 sanctions against ISPs and Lightspeed | Counts I–VI plead viable theories; sanctions inappropriate. | Counts lack legal basis; sanctions appropriate for abusive litigation. | Sanctions upheld for the entire case; baseless claims and abusive conduct found. |
| Joint and several liability under §1927 | Liability should be individual, not joint and several. | District court properly imposed joint and several liability given coordinated conduct. | Joint and several liability affirmed. |
Key Cases Cited
- Overnite Transp. Co. v. Chicago Indus. Tire Co., 697 F.2d 789 (7th Cir. 1983) (timeliness and jurisdiction in fee-shifting sanctions matters)
- Baxter v. Palmigiano, 425 U.S. 308 (1976) (adverse inferences against parties who refuse to testify in civil actions)
- In re Resource Tech. Corp., 624 F.3d 376 (2d Cir. 2010) (inability to pay defense in civil contempt; complete inability standard)
- Autotech Techs., LP v. Integral Research & Dev. Corp., 499 F.3d 737 (7th Cir. 2007) (contempt elements; court order as unambiguous command)
- FMI Indus., Inc. v. Citicorp Credit Servs., Inc., 614 F.3d 335 (7th Cir. 2010) (scope of responsibility of attorneys under §1927)
- Evans v. City of Evanston, 941 F.2d 473 (7th Cir. 1991) (civil contempt remedial vs. criminal characterization)
- Claiborne v. Wisdom, 414 F.3d 715 (7th Cir. 2005) (direct liability under §1927; joint and several liability concepts)
- Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951 (Ill. 2002) (Illinois consumer fraud case; pleading standards for deceptive practices)
- United States Air Funds, Inc. v. Espinosa, 559 U.S. 260 (2010) (due process notice for governmental or court actions; notice reasonably calculated)
- Steele Hansmeier PLLC, Prenda Law considerations referenced (2013) (context for sanctions and deception in related proceedings)