St. Louis Record

Tuesday, August 20, 2019

Judge denies Missouri AG's request for sanctions against Backpage's law firm

Lawsuits

By Scott Holland | Jun 7, 2019


ST. LOUIS – A federal judge has rejected the Missouri Attorney General’s Office request to impose sanctions in connection with litigation concerning Backpage.com.

According to a May 29 opinion issued by Judge Patricia Cohen of the U.S. District Court for the Eastern District of Missouri, the state is seeking sanctions against Backpage’s former counsel, Davis Wright Tremaine, as well as to hold Backpage in criminal contempt for “repeatedly lying” to the court because it repeatedly denied any involvement in alleged human trafficking.

Although the dispute with Backpage began under former Attorney General Josh Hawley, current Attorney General Eric Schmitt is named in the pending litigation. The state argued Davis Wright Tremaine should have known, at the time it filed a complaint and motions for preliminary injunction against the state, accusing it of violating its rights, that Backpage was engaging in conduct not protected under the U.S. Constitution or Communications Decency Act.

The ruling states the state alleged “numerous red flags that would have cautioned any reasonable attorney to engage in a thorough investigation before filing its vexatious lawsuit,” which Cohen said included the arrest of Backpage CEO Carl Ferrer “on sex trafficking charges in October 2016; Ferrer’s indictment two months later for misrepresenting Backpage to credit card companies; a report by a U.S. Senate permanent subcommittee released in January 2017 detailing Backpage’s human trafficking activity; and documents published by the Washington Post, which revealed that Backpage edited and/or created ads for illegal services.”

However, Cohen wrote, the state didn’t establish the firm knew in 2017 that Backpage officers were lying about corporate involvement in sex trafficking and financial crimes. She pointed to a March 28 decision in federal court in Chicago in which a court denied Cook County Sheriff Tom Dart’s request to sanction the same law firm.

Although Ferrer and other corporate officers eventually entered guilty pleas, Cohen added, Schmitt’s office didn’t produce evidence that Davis Wright Tremaine knew the truth about Backpage’s conduct at the time it was providing representation in federal court.

“The 2018 Backpage guilty pleas that raise concerns about earlier contrary sworn statements made by Backpage’s personnel were not made until months after DWT filed this lawsuit and related materials on behalf of Backpage in 2017 and after the court dismissed the case on Nov. 28, 2017,” Cohen wrote. “Without more, the record does not support a conclusion that the April 2018 guilty pleas show that DWT knew or should have known that sworn statements made by Backpage personnel in and prior to 2017 were false.”

Cohen further rejected the state’s request the firm be forced to provide compensation for the expense of defending against the request for an injunction. She noted Backpage ultimately agreed to close its website and forfeit all corporate assets to the federal government, which means it has no money to pay any sanctions. Backpage said criminal and civil sanctions would interfere with the government’s forfeiture efforts.

Although the alleged misrepresentations were “a serious matter” that arguably impeded the state’s effort to investigate possible violations, Cohen said, “given that Backpage is already subject to a forfeiture order regarding all of its assets and a nationwide victims’ fund is being established as a result of its guilty pleas, the request to hold criminal contempt proceedings in this closed case does not merit the substantial investment of the court’s and the litigants’ valuable resources that such proceedings would entail.”

Cohen also denied Schmitt’s request to order discovery that might show DWT knew its lawsuit was unfounded, saying the record didn’t support the conclusion the firm “engaged in inappropriate conduct during the course of the proceedings before this court” and that state didn’t show the extraordinary circumstances that would be needed to permit discovery in otherwise settled litigation.

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Missouri Attorney General U.S. District Court for the Eastern District of Missouri

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