BECOMING THE ENEMY
In his discussion on “becoming the enemy,” Minamoto Musashi advised warriors to consider the enemy’s perspective. My copy of Musashi’s strategy, “The Book of Five Rings,” was a classic of tasteless publishing. Someone with a twisted sense of humor had defaced the venerable work with a cover photograph of a paranoid-looking businessman in a Burberry coat, wielding a copy of the Wall Street Journal as his weapon, sizing up a hulking samurai in lacquered armor, wearing a helmet adorned with flapping banners. It must have been printed during the Reagan era, when the yen was way up, our national self-image was in the toilet, and all things Japanese were enviable. Man, that was an ugly cover! One day, in a last ditch-attempt to procrastinate work a little longer, I pulled out my knife and excised the goofy picture from the cover in a frenzy of distaste. On the procrastination front, the gambit was highly successful. The project must have consumed at least five minutes and a foot of packing tape. The crude facelift also improved the book’s utility, since I now wasn’t afraid to be seen reading it in public. One day, sitting in an airport bar while working on Gary’s case, I read this section:
“Even a burglar caught in the act is thought to be formidable when he blockades himself in the house. But if you put yourself in his position, you will see that he feels helpless, that everyone in the world is against him. He who is blockaded himself is like a pheasant, while he who is waiting outside is like a hawk.”
Reflecting on Cohen’s situation, I realized that he had locked himself into a fortress. Although he looked and acted secure, one thing was sure -- he was in there, and he wasn’t leaving. A siege would seem to be the obvious solution, but Sun Tzu advised against costly, time-consuming sieges only as a last resort. The prize tends to be destroyed in the course of a siege. Many castle walls, once breeched, give access only to a ruin full of suicides. To abort this process, a siege must somehow be reasonably swift. Caesar Borgia developed a swift method of concluding a siege using focused firepower. He set up a cannon, and fired one cannonball after another at the castle walls, always at the exact same spot. The wall caved in within a day, Borgia’s troops stormed through the breech, and the cruel and innovative Italian added another jewel to his crown of conquests.
I figured it could be so with Cohen. Since we had State Farm on our side, providing additional firepower, we could afford a Borgia-style siege. We just had to keep blasting away at the same spot, until it caved in. The weak point in Cohen’s fortress was his refusal to disclose his financial records. Confident in his strategies, unaware that stone walls can be breeched, Cohen was satisfied to ignore our continuing assault. Cohen didn’t worry that it might provoke suspicion to hide behind a cloak of confidentiality and forgetfulness at depositions, to refuse to produce documents in response to our demands, and to rely almost entirely on witnesses who were either dead or living abroad. He apparently didn’t realize that it was suspicious to live in a crime capital like Tijuana and do business exclusively through international corporations with straw-man directors and confidentiality agreements guarding their financial records. He must have figured that if big, mainstream companies could set up foreign subsidiaries, invoke confidentiality and the Fifth Amendment to avoid producing damaging information, and use bogus shelters to avoid taxes, why couldn’t he? This argument, however, would merely put Cohen on the same level as Enron with a smaller capital base, and would not make his conduct lawful.
Like the Republicans say, it’s all about defining your adversary. Perhaps without realizing it, Cohen allowed us to define him as the kind of person who receives an abbreviated version of civil justice. By resisting our discovery so resolutely, he demonstrated that his claims were unworthy of thorough consideration. They deserved to be terminated with a sharp blow of judicial impatience. Though he denied it to himself and the court, Cohen was identifiably cast from a mold that has turned out large numbers of offshore-based intellectual-property thieves who play corporate shell games, disobey court orders, conceal assets, and use scorched-earth litigation tactics to exhaust their foes. Trial judges have developed a special body of law for disposing of these atavistic characters. When presented with enough evidence to prove that a party is a bad-faith litigant, exploiting the system, a judge can simply ignore their arguments and enter judgment against them. Where the basis for dismissal is a history of egregious discovery abuse, the appellate courts won’t second-guess the trial judge’s decision. This doctrine is a blunt instrument for dispatching litigants who hire criminally stupid lawyers willing to clog the courthouse with faux lawsuits in exchange for an hourly fee. With his history of “lying to the courts,” and his current position as a rogue pornographer exploiting a stolen domain name to reap undeserved profits, Cohen was easy to define as a classic intellectual property thief who should go directly to jail, without passing “Go.”
Being averse to sieges, Sun Tzu advised luring enemies out of their fortified castles by attacking something or someone precious to them. Thus, proper samurai houses -- basically a shed with a good conference room -- were often burned by their owners, and were designed to evoke no attachment. But it’s one thing to be detached about losing your house, and quite another to remain calm as the enemy attacks friends and relations.
In May 2000, Diestel served subpoenas on Cohen’s ex-wives Karon and Susan, and Susan’s daughter Chandra. Gary and I had served a subpoena on Midcom, where Cohen worked in a cubicle next to Lee Fuller during the exact time period when Cohen stole Sex.Com. We also subpoenaed Fuller and Midcom’s owner, Barbara Cepinko. We subpoenaed some of Cohen’s other confidantes dating back to the Tustin sex club, the French Connection, and the prison years. Each of these people knew about Cohen’s dealings with Zolp, Sporting Houses, Ghiglieri Fine Arts, and one would assume, Cohen’s acquisition of Sex.Com. As soon as he found out we’d served these people, Cohen would try to contact them. It probably wouldn’t be a lot of fun to get one of those phone calls from Cohen. Just imagine if one of your friends buried stolen loot in your back yard and swore you to secrecy. Then one day, the sheriff called and asked to take a look around your property. That wouldn’t be fun.
By mid-May, Cohen had identified Diestel’s additional firepower as the source of the subpoenas that his friends and relations were receiving, and was busy plugging leaks. Toward the end of May, we were closing on the date for Karon Cohen’s deposition in early June, when Cohen unveiled a new strategy -- a peace initiative. Just as we were getting ready to sink in our knives, Cohen offered Diestel a dismissal of all Cohen’s counterclaims against Gary. If we allowed Cohen to dismiss his claims against Gary, Diestel would be off the case, thus nullifying all the effort we’d spent getting State Farm onboard and bringing Diestel up to speed. Cohen’s entire counterclaim would have caused us only to chase our tail instead of spending time building our case. It would be far more satisfying, and productive of good results in court, to kill Cohen’s counterclaims on the merits, rather than allow him to withdraw them. If he’d thought farther ahead, Cohen would have dismissed his counterclaims before Diestel filed Gary’s answer, because now that Diestel had filed an answer, Dorband needed Diestel’s agreement or court approval to file a dismissal.
Peace sounded great to Diestel, of course, so I had to ask him. Was Cohen intending to dismiss the counterclaims permanently, with prejudice? Since Dorband hadn’t specified, I assumed he was offering to dismiss the claims without prejudice, which would allow Cohen to refile the case at any time. I was right -- that was all that Cohen was offering, and I wasn’t buying. Cohen’s tactics reminded me of Slobodan Milosevic’s peace proposals, which he used to rest his soldiers and build up supplies before launching another offensive. We could not afford a Bosnian peace accord, I told Gary, who agreed that any truce offered by Cohen would be a trick. I called Diestel immediately, and wasn’t surprised by his response. As a California state court litigator, where a dismissal never requires “leave of court,” and anything that clears the calendar is a good thing, my idea to oppose dismissal seemed topsy-turvy. Proving that he wasn’t in it just for the money, Diestel didn’t understand why I wanted to abort the peace process. He asked quizzically, “What can I do if he wants to dismiss his counterclaim?”
In an excited tone of voice, I said, “You can object! You can demand a dismissal with prejudice or no dismissal at all! You can demand that he pay your attorney’s fees as a condition of dismissal!” Those things are all available under Federal Rule of Civil Procedure 41, and Diestel wasn’t surprised to hear that we could block Cohen’s exit. It was just counter to his experience to frustrate an adversary’s attempt to surrender. He could have cited Sun Tzu’s exhortation: “Never fight an enemy who is going home.” I would have responded, however, that Sun Tzu did not advise against fighting enemies who are pretending to go home. Still, Diestel wasn’t ready to assume that Cohen was planning to blithely dismiss his counterclaims one day and re-file them at leisure. So I argued another point -- what difference did it make if Cohen dismissed the counterclaims at this point, when he still had the Portland federal lawsuit pending against both myself and Gary? We had to oppose this here, now.
On the Friday before the week when Karon Cohen’s deposition was to take place in Florida, since Diestel remained uncertain about how to respond to the peace proposal, I sent him a letter demanding a strategy meeting with Jose Guillermo of State Farm. Meanwhile Dorband, who undoubtedly realized that Diestel’s delay meant he wasn’t going to dismiss, filed an ex parte motion to dismiss the counterclaims, and a follow-on motion to quash all of the subpoenas Diestel had served on Cohen’s friends and relatives. Of course, Dorband filed his papers at 2:45 on Friday, June 2nd. This was a bit of a shock, because a Rule 41 motion to dismiss claims or counterclaims should not be filed ex parte, and must be filed as a “noticed motion,” giving the opposing party two weeks to file a response. An emergency motion provides a very short, uncertain window for response, and allows the judge to essentially grant the “ex-parte” request instantly.
I wanted Diestel to at least use that short, uncertain window for response that had opened on the evening before the weekend. On Monday, June 5th, Diestel could have filed an opposition, but he hadn’t. I couldn’t wait any longer, so at 6:30 a.m. on Tuesday, June 6th, I flew into San Francisco, arriving in Diestel’s office at 10:00 a.m. There’s nothing like stating your requests in person. I wanted an opposition filed, in writing, to prevent this ex-parte motion to dismiss from being granted. We haggled amiably as he agreed to call Judge Ware’s clerk and tell her that he would be opposing Cohen’s ex parte motion to dismiss and quash subpoenas. Diestel called the clerk on his speaker phone, and she told us something that saved my weekend. The judge had already denied Cohen’s ex-parte motions, ordering Cohen to refile the motion to dismiss as a regular noticed motion, and referring his motion to quash subpoenas to Judge Trumbull for decision. How surprising -- all the obstacles to taking Karon’s deposition had dissolved. Judge Trumbull’s calendar was so backed up there was no danger of her deciding a motion before Karon’s June 9th deposition.
The threat of peace had been scuttled, at least for the moment. While it is not always true that everything your opponent wants will injure your case, when you are dealing with a wily and dedicated foe like Cohen, represented by a skilled and able mercenary like Dorband, you can be virtually certain that anything they want to do has been efficiently designed to injure your case, and you should frustrate all of his efforts.
The way this story turns out demonstrates the correctness of this assumption. Dorband re-filed the motion to dismiss the counterclaims, putting it on the regular motion calendar. Diestel opposed the motion, arguing that the case should be dismissed with prejudice, or only after Cohen paid all Gary’s defense costs. At the hearing, Judge Ware was ready to give everyone what they wanted. He would grant Cohen’s request for dismissal, and grant Gary’s request to make it with prejudice. Diestel was surprised, and I was not, when Dorband reversed course and withdrew his motion to dismiss during oral argument, over a month after he had started the entire drama. This maneuver didn’t please Judge Ware, but Dorband cited precedents that allowed him to change position at the eleventh hour, and Judge Ware stayed his hand. Cohen’s counterclaims against Gary were allowed to stand.
This was of course what Gary and I had earnestly desired. Not that Gary enjoyed being the target of Cohen’s frivolous counterclaims, but they were the key to keeping State Farm in the case, and we couldn’t do without State Farm. Gary wanted State Farm to destroy Cohen’s counterclaims completely, not have them dismissed by stipulation so Cohen could hide them in the closet and then pull them out again whenever he found it convenient. Wagstaffe suggested that Diestel attack the counterclaims using California’s new “anti-SLAPP” law. “SLAPP” is short for a “Strategic Lawsuit Against Public Participation,” the type of lawsuit developers might file to punish a group of homeowners with legal fees and threats of humongous liability for opposing a local land-grab. To halt the filing of these anti-free-speech lawsuits, the California legislature enacted an anti-SLAPP law that allows judges to quickly dismiss meritless lawsuits filed to interfere with Constitutionally-protected free speech. Cohen’s bloated claim for nine-million dollars in damages resulting from Gary’s statement to Wired magazine was clearly a SLAPP suit. Indeed, the very idea that Cohen, an ex-con running a porn site from a Mexican safehouse, could even be defamed was kind of a hoot.
At that time, though, the anti-SLAPP law was a bit newfangled for Diestel, and since it would be costly to file, State Farm wasn’t moving in that direction. Tactically, however, it was an excellent time to attack Cohen’s counterclaims, because Cohen’s eagerness to dismiss, alternating with his refusal to accept a dismissal with prejudice, had raised questions in Judge Ware’s mind about his motive for filing the counterclaims in the first place. The innumerable shades of grey that had enshrouded the case for years were beginning to sort themselves into clear areas of black and white.