Duffy v. Godfread et al

Filing 28

MEMORANDUM Opinion and Order Signed by the Honorable John W. Darrah on 8/14/2013.(tg, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
PAUL DUFFY,
Plaintiff,
v.
PAUL GODFREAD, ALAN COOPER,
and JOHN DOES 1-10,
Defendants.

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Case No. 13-cv-1569
Judge John W. Darrah

MEMORANDUM OPINION AND ORDER
Plaintiff Paul Duffy filed suit against Defendants, Paul Godfread, Alan Cooper, and ten
John Doe Defendants in the Circuit Court of Cook County, Illinois, on February 15, 2013.
Godfread and Cooper removed this action to the Northern District of Illinois on February 28,
2013, pursuant to 28 U.S.C. 1332(a), on the basis of complete diversity among the parties.1
Godfread and Cooper filed an Answer, Affirmative Defenses, and Counterclaim on March 21,
2013. Duffy moves to dismiss the Counterclaim and strike the Affirmative Defenses, while
Godfread and Cooper move to dismiss Duffy’s Complaint. The parties were given the
opportunity to fully brief the motions, though Duffy failed to file a reply brief in support of his
Motion to Dismiss the Counterclaims.
Based on the analysis below, Duffy’s Motion to Dismiss the Counterclaim is granted, and
Godfread and Cooper’s Motion to Dismiss the Complaint is denied.

1

The amount in controversy exceeds $75,000. The citizenship of the John Doe
Defendants is unknown but disregarded for purposes of determining diversity. See 28 U.S.C. §
1441(b)(1).

BACKGROUND
The following facts are taken from the Complaint and Counterclaim and are accepted as
true for purposes of resolving the Motions to Dismiss. See Reger Dev., LLC v. Nat'l City Bank,
592 F.3d 759, 763 (7th Cir. 2010). According to the Complaint, Duffy is the sole officer of
Prenda Law, LLC (“Prenda”), a law corporation with its principal place of business in Chicago,
Illinois. (Compl. ¶ 5.) Godfread is a Minnesota attorney. (Compl. ¶ 6.) Cooper is a Minnesota
citizen and a client of Godfread. (Compl. ¶ 7.) The John Doe Defendants are individuals whose
names are, as yet, unknown to Duffy, though Duffy has observed them libeling him on the
Internet. (Compl. ¶¶ 8-9.) Prenda pursues civil claims for copyright infringement and for
computer hacking. (Compl. ¶¶ 13, 25.) Duffy lists sixty-six examples of what he characterizes
as libelous statements posted on the Internet about Prenda and its agents, including Duffy, in his
Complaint. (Compl. ¶¶ 33-99.)
Duffy asserts Godfread and Cooper made allegations in a complaint filed in the District
Court for the Fourth Judicial Circuit of Minnesota that are patently false. (Compl. ¶¶ 6-7.)
Duffy further alleges that these false and defamatory statements from the Complaint appeared on
Internet websites before the Minnesota Complaint was filed. (Compl. ¶ 6.) The Minnesota
Complaint2 identifies Cooper as a plaintiff, represented by Godfread, and sues John Steele;
Prenda Law Inc.; AF Holdings, LLC; and Ingenuity 13, LLC. (Notice of Removal, Ex. B.)
Duffy asserts six claims against Defendants: (1) libel per se by making false allegations
of criminal offenses; (2) libel per se by making false allegations of Duffy’s (and Prenda’s) want

2

In Godfread and Cooper’s Reply in Support of their Motion to Dismiss, they represent
that the defendants in the Minnesota Complaint, including Prenda Law (but not expressly naming
Paul Duffy as a party) defaulted in the Minnesota action. (Reply at 1.)
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of integrity in his employment; (3) libel per se by making false allegations imputing Duffy’s (and
Prenda’s) lack of ability in the legal profession; (4) libel per se by making false allegations of
Duffy (and Prenda’s agents) committing fornication and adultery; (5) false light and defamation;
and (6) tortious interference with contractual relationships.
Godfread and Cooper answered Duffy’s Complaint on March 21, 2013, denying the
allegations, and alleging counterclaims against Duffy. In the Counterclaim3, Cooper alleges he
was a caretaker for a property owned by Steele and asserts that Steele controls operations at
Prenda. (Counterclaim ¶¶ 1, 9.) Cooper asserts that he learned his name was being used as an
officer or director of AF Holdings, LLC, a client of Prenda, without his knowledge or
permission. (Counterclaim ¶¶ 10-11.) Godfread and Cooper assert six counts against Duffy in
the Counterclaim: (I) a declaratory judgment that Duffy’s claims are barred by the Minnesota
Anti-SLAPP (or “Strategic Lawsuit Against Public Participation”) Act4, Minn. Stat. § 554.01, et
seq.; (II) invasion of privacy; (III) civil conspiracy; (IV) alter ego – piercing the corporate veil
with respect to AF Holdings, LLC; (V) alter ego – piercing the corporate veil with respect to
Ingenuity 13, LLC; and (VI) alter ego – piercing the corporate veil with respect to Prenda.
Godfread and Cooper move to dismiss all counts of Duffy’s Complaint pursuant to the
Minnesota Anti-SLAPP Act, Minn. Stat. § 554.01, et seq. Duffy moves to dismiss Godfread and
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In the Counterclaim, it appears that Godfread and Cooper copied much of the language
used in the Complaint filed by Cooper in the Minnesota Complaint. As such, the Counterclaim
refers to multiple “Defendants,” including Defendant John Steele. However, no parties besides
Paul Duffy are named as Counter-Defendants in the Counterclaim.
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“SLAPPs are ‘lawsuits aimed at preventing citizens from exercising their political rights
or punishing those who have done so.’ SLAPPs use the threat of money damages or the prospect
of the cost of defending against the suits to silence citizen participation; anti-SLAPP statutes
‘guard against the chilling effect of SLAPPs.’” Lucky Fella LLC v. Village of Oak Brook, Case
No. 11 C 8936, 2013 WL 1337316, at *6 n.4 (N.D. Ill. Mar. 29, 2013) (quoting Wright
Development Group, LLC v. Walsh, 939 N.E.2d 389 (Ill. 2010)).
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Cooper’s Counterclaim, pursuant to Fed. R. Civ. P. 12(b)(6), for failure to state a claim upon
which relief may be granted.
LEGAL STANDARD
To properly assert a claim in a complaint, the plaintiff must present “a short and plain
statement of the claim showing that the pleader is entitled to relief and a demand for the relief
sought.” Fed. R. Civ. P. 8. Rule 8 “does not require ‘detailed factual allegations,’ but it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007)). While a court is to accept all allegations contained in a complaint as true, this
principle does not extend to legal conclusions. Iqbal, 129 S. Ct. at 1949.
A defendant may file a motion to dismiss a claim under Federal Rule 12(b)(6) for failure
to state a claim upon which relief may be granted. To defeat a motion to dismiss under Rule
12(b)(6), a plaintiff must plead sufficient factual matter to state a claim for relief that is
“plausible on its face.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 570). A claim is
facially plausible “when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at
1949.
However, “[w]here the well-settled pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has alleged – but it has not ‘show[n]’ –
‘that the pleader is entitled to relief.’” Iqbal, 129 S. Ct. at 1950. For a claim to be plausible, the
plaintiff must put forth enough “facts to raise a reasonable expectation that discovery will reveal
evidence” supporting the plaintiff’s allegations. Brooks v. Ross, 578 F.3d 574, 581 (7th Cir.
2009) (quoting Twombly, 550 U.S. at 556).
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ANALYSIS
Defendants’ Motion to Dismiss the Complaint
Godfread and Cooper contend Duffy’s claims against them are barred by the Minnesota
Anti-SLAPP Act. That statute “applies to any motion in a judicial proceeding to dispose of a
judicial claim on the grounds that the claim materially relates to an act of the moving party that
involves public participation.” Minn. Stat. § 554.02. The Act provides immunity for “[l]awful
conduct or speech that is genuinely aimed in whole or in part at procuring favorable government
action . . . unless the conduct or speech constitutes a tort or a violation of a person's
constitutional rights.” Minn. Stat. § 554.03.
Choice of Law
“A federal court sitting in diversity applies the forum state's choice-of-law rules to
determine which state's substantive law applies.” Federal Ins. Co. v. J.K. Mfg. Co., Case No. 12
C 3465, 2013 WL 1248635, at *4 (N.D. Ill. Mar. 28, 2013) (citations omitted). “Courts do not
worry about conflict of laws unless the parties disagree on which state’s law applies.” AutoOwners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009) (quoting Wood v.
Mid-Valley Inc., 942 F.2d 425, 427 (7th Cir. 1991)). Duffy contends in his Response that the
Minnesota law is inapplicable; therefore, a choice of law determination is necessary.
“The Illinois Supreme Court has emphasized that the analysis must begin by identifying
the conflict. Choice-of-law issues are then resolved on an issue-by-issue basis, with the Illinois
courts endorsing the concept of dépeçage, which involves splitting the case into individual
issues, each subject to a separate choice of law analysis.” Curtis v. TransCor America, LLC,
Case No. 10 C 4570, 2012 WL 1080116, at *4 (N.D. Ill. Mar. 29, 2012) (citing Townsend v.
Sears, Roebuck & Co., 879 N.E.2d 893, 898 (Ill. 2007)).
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Illinois has its own statute to discourage SLAPP suits, the Illinois Citizen Participation
Act (“ICPA”), 735 ILCS 110/1 et seq. Godfread and Cooper contend that the ICPA and the
Minnesota Anti-SLAPP Act are materially different. (Defs.’ Mot. to Dismiss at 10.) Duffy
concedes this difference, acknowledging that the Minnesota Act is more favorable to Defendants
than the ICPA. (Pl.’s Resp. at 1.) In particular, Godfread and Cooper assert that the statutes
differ because, unlike the ICPA, the Minnesota Act provides for a “SLAPP-back” suit against a
plaintiff, allowing a defendant to recover damages for a plaintiff’s abuse of the legal process.
(Defs.’ Mot. to Dismiss at 10.) Therefore, Godfread and Cooper reason, their counterclaim
regarding declaratory judgment under the Minnesota anti-SLAPP Act does not exist under the
ICPA. Moreover, the Minnesota Act offers a wider array of remedies available to SLAPP
targets. For these reasons, a conflict exists between the statutes, and a determination as to the
choice of law must be made.
Accordingly, the Illinois choice of law rules are considered. Illinois courts apply the
“most significant contacts test . . . which involves balancing a number of factors, including the
place where the injury occurred; the place where the conduct causing the injury occurred; the
domicile or place of business of each party; and the place where the relationship between the
parties is centered.” Ennenga v. Starns, 677 F.3d 766, 774 (7th Cir. 2012) (citing Wreglesworth
ex rel. Wreglesworth v. Arctco, Inc., 738 N.E.2d 964, 971 (Ill. App. Ct. 2000)).
Four of Duffy’s claims against Godfread and Cooper allege libel per se. Libel is “[a]
defamatory statement expressed in a fixed medium, esp. writing but also a picture, sign, or
electronic broadcast”; libel per se is “[l]ibel that is defamatory on its face, such as the statement
‘Frank is a thief.’” Black’s Law Dictionary 934 (8th ed. 2004). “When the defamatory
statement is communicated in many different states, it makes sense to apply the law of the
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plaintiff's domicile, and that is the usual result in Illinois.” Kamelgard v. Macura, 585 F.3d 334,
341 (7th Cir. 2009) (citations omitted). “[I]n multistate defamation cases, Illinois cases indicate
that the applicable law is that of the victim's domicile, period.” Cook v. Winfrey, 141 F.3d 322,
329 (7th Cir. 1998) (citations and quotations omitted).
In considering Duffy’s libel and defamation claims, Illinois law is applicable, as the
defamatory statements Duffy alleges were published on Internet websites and, therefore, are
accessible in many different states. Duffy’s domicile “is where the principal injury from a
defamation will occur because it is where the victim works and lives and where (in the usual
case) most of the people . . . are found with whom he has personal or commercial transactions,
which might be impaired by defamation.” Kamelgard, 585 F.3d at 342.
However, applying the doctrine of dépeçage, the issue of what is defamatory is
considered separately from defenses to defamation, like an anti-SLAPP statute. Doctor’s Data,
Inc. v. Barrett, Case No. 10 C 3795, 2011 WL 5903508, at *2 (N.D. Ill. Nov. 22, 2011) (citing
Global Relief Found. v. New York Times Co., Case No. 01 C 8821, 2002 WL 31045394, at *10
(N.D. Ill. Sept. 11, 2002)). “[T]he threshold question [of defamation] and the defenses are
different issues and call for different analyses.” Vantassell-Matin v. Nelson, 741 F.Supp. 698,
704 (N.D. Ill. 1990). States have strong interests in the application of their own anti-SLAPP
laws to their own citizens’ speech. Chi v. Loyola University Medical Center, 787 F. Supp. 2d
797, 803 (N.D. Ill. 2011). Accordingly, the Minnesota Anti-SLAPP statute must be applied with
respect to Godfread’s and Cooper’s defense in this case.
Minnesota Anti-SLAPP Act and Dismissal of the Complaint
As discussed above, the Minnesota Anti-SLAPP Act “applies to any motion in a judicial
proceeding to dispose of a judicial claim on the grounds that the claim materially relates to an act
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of the moving party that involves public participation.” Minn. Stat. § 554.02, subd. 1. Public
participation is defined as “speech or lawful conduct that is genuinely aimed in whole or in part
at procuring favorable government action.” Minn. Stat. § 554.01, subd. 6.
The court employs a two-step analysis to determine if a case should be dismissed under
the Anti-SLAPP Act. Nexus v. Swift, 785 N.W.2d 771, 782 (Minn. App. Ct. 2010).
First, a district court must make a preliminary determination that the anti-SLAPP
statute is properly invoked. The moving party bears a minimal burden of making
a threshold showing that the plaintiff's underlying claim materially relates to an
act of the defendant's that involved public participation. Once a district court
determines that the moving party has made this threshold showing, the burden
then shifts to the responding party to show by clear and convincing evidence that
the acts at issue are not immune under Minn. Stat. § 554.03.
Leiendecker v. Asian Women United of Minnesota, Case Nos. A12-1978, A12-2015, 2013 WL
2372179, at *4 (Minn. App. Ct. June 3, 2013). Speech aimed at procuring “favorable
government action” is protected speech, unless the speech is tortious or violates an individual’s
constitutional rights. Minn. Stat. § 554.03. In his Complaint, Duffy asserts that “Godfread has
made both written and oral statements to Plaintiff and its agents that are libelous with respect to
Plaintiff . . . [and] those statements have appeared, or been incorporated, in comments on . . .
Internet sites . . . .” (Compl. ¶ 6.) These defamatory statements, Duffy alleges, were provided to
Godfread by Cooper, and “[a]s such, Cooper’s false statements, when published to third parties,
constitute defamation per se.” (Compl. ¶ 7.) Godfread and Cooper fail, at this stage, to make a
threshold showing that Duffy’s claims of their defamation involved public participation or were
otherwise “aimed in whole or in part at procuring favorable government action.” Minn. Stat. §
554.01, subd. 6. Therefore, Godfread and Cooper’s Motion to Dismiss Pursuant to the
Minnesota Anti-SLAPP Act is denied.

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Duffy’s Motion to Dismiss the Counterclaim
Duffy moves to dismiss Godfread and Cooper’s Counterclaim, pursuant to Fed. R. Civ. P.
12(b)(6), for failure to state a claim upon which relief may be granted. In particular, Duffy
asserts that the Counterclaim “does not contain a single allegation stating that Plaintiff personally
took any action.” (Pl.’s Mot. at 1.) Indeed, essentially nothing in the Counterclaim refers to
Duffy, except for a reference to the Cook County action removed to this District. (Counterclaim
¶ 43.1.)
The facts of the Counterclaim are poorly drafted and were perhaps copied from one of the
many lawsuits related to this case. The facts refer to “Defendants” (rather than CounterDefendants) and identify those Defendants as Steele and Prenda Law, Inc. (Counterclaim ¶¶ 26,
30.) Neither Steele nor Prenda are named parties in this litigation. It is apparent, however, that
Godfread and Cooper are embroiled in multiple suits filed on behalf of individuals affiliated with
Prenda, including Duffy. (Counterclaim ¶ 43.) Godfread and Cooper assert that Duffy, along
with Steele and Paul Hansmeier, formed Prenda5 and “have developed a lucrative practice
monetizing copyright infringement allegations of pornographic films.” (Defs.’ Resp. at 1.)

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In a case in the Central District of California, Judge Wright described the behavior of
Prenda and its affiliates, including Duffy, Steele, and Hansmeier, in the following manner:
Plaintiffs have outmaneuvered the legal system. They've
discovered the nexus of antiquated copyright laws, paralyzing
social stigma, and unaffordable defense costs. And they exploit
this anomaly by accusing individuals of illegally downloading a
single pornographic video. Then they offer to settle-for a sum
calculated to be just below the cost of a bare-bones defense. For
these individuals, resistance is futile; most reluctantly pay rather
than have their names associated with illegally downloading porn.
So now, copyright laws originally designed to compensate starving
artists allow, starving attorneys in this electronic-media era to
plunder the citizenry.
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As the Counterclaim is presently constructed, it is unclear what role Duffy played in the
claims asserted, particularly as none of the facts alleged in the Counterclaim allege actions
specifically taken by Duffy. It is clear, however, Godfread and Cooper believe multiple other
individuals and entities are involved, who have not been named as parties to this lawsuit.
For that reason, Duffy’s Motion to Dismiss the Counterclaim is granted. Godfread and
Cooper’s Counterclaim is dismissed without prejudice. However, they are directed to file an
Amended Counterclaim within thirty days of this order.
Duffy’s Motion to Strike the Affirmative Defenses
Duffy further moves to strike the ten affirmative defenses asserted by Godfread and
Cooper. Fed. R. Civ. P. 12(f) provides that a court may strike an insufficient defense “or any
redundant, immaterial, impertinent, or scandalous matter.” Affirmative defenses must comply
with Fed. R. Civ. P. 8 and provide a “short and plain statement” of the basis for the defense.
“Courts apply a three-part test in examining the sufficiency of affirmative defenses under
Rule 12(f): (1) whether the matter is properly pled as an affirmative defense; (2) whether the
affirmative defense complies with Federal Rules of Civil Procedure 8 and 9; and (3) whether the
affirmative defense can withstand a Rule 12(b)(6) challenge.” Rudzinski v. Metro. Life Ins. Co.,
No. 05 C 0474, 2007 WL 2973830, at *1 (N.D.Ill. Oct. 4, 2007) (citing Surface Shields, Inc. v.
Poly-Tak Protection Systems, Inc., 213 F.R.D 307, 308 (N.D. Ill. 2003)). If any of these three

Ingenuity 13 LLC v. John Doe, Case No. 2:12-cv-8333-ODW, 2013 WL 1898633,
at *1, *3-*5 (C.D. Cal. May 6, 2013) (making a finding of fact that “the
Principals,” including Duffy, stole the identity of Alan Cooper and used his
(continued from Page 10) signature without his authorization, and further stating
the court would refer attorneys Duffy, Steele, Hansmeier and Brett Gibbs to their
respective state and federal bars for “moral turpitude unbecoming of an officer of
the court.”).
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requirements are not met, the affirmative defense shall be stricken. Rudzinski v. Metro. Life Ins.
Co., 2007 WL 2973830, at *1. Affirmative defenses are stricken only when they are deficient on
the face of the pleadings; motions to strike affirmative defenses are generally disfavored.
Williams v. Jader Fuel Co., Inc., 944 F.2d 1388, 1400 (7th Cir. 1991).
In reviewing Godfread and Cooper’s affirmative defenses, it is apparent they have met
the basic requirements of Rule 8, and their defenses would withstand a Fed. R. Civ. P. 12(b)(6)
challenge. “[I]f it is impossible for defendants to prove a set of facts in support of the
affirmative defense that would defeat the complaint, the matter must be stricken as legally
insufficient.” Davis v. Elite Mortgage Services, Inc., 592 F. Supp. 2d 1052, 1058 (N.D. Ill.
2009) (citations and quotations omitted). Here, the affirmative defenses asserted are sufficient,
and it is possible for Godfread and Cooper to prove a set of facts that would support each of the
affirmative defenses alleged. Thus, Duffy’s Motion to Strike the Affirmative Defenses is denied.
CONCLUSION
For the reasons provided above, Godfread and Cooper’s Motion to Dismiss the
Complaint [11] is denied. Duffy’s Motion to Strike Affirmative Defenses is denied. Duffy’s
Motion to Dismiss the Counterclaim [9] is granted; the Counterclaim is dismissed without
prejudice and with leave to refile the Counterclaim within thirty days of this order.

Date:

August 14, 2013

______________________________
JOHN W. DARRAH
United States District Court Judge

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