WITH FRIENDS LIKE THESE...
In addition to Sheri Falco, Gary had two big-time lawyers working on his case -- Katie Diemer of Campeau & Thomas, a San Jose firm, and Joel Dichter of New York City. You would think three lawyers would be enough, but Gary had a problem. None of them were doing a damn thing.
The case had been filed in June, 1998, with legal fees being paid by two Internet pornography magnates, Seth Warshavsky and Ron Levy. Warshavsky, now a fugitive, was famous for putting Pamela Lee Anderson’s sexual adventures before the eyes of millions, and Ron Levy is the owner of CyberErotica, a large Internet porn site. Gary had agreed that if Seth and Ron paid the cost of suing Cohen, that all three would jointly own the domain name after victory. Seth and Ron had outbid famous porn loudmouth Serge Birbrair for this privilege. The agreement became well-known in the porn industry as a result of postings on the infamous LukeFord.com website. Ford wrote that Gary was a “big dummy,” a quote from Gary’s own video testimony, which Ford viewed thanks to Cohen. Gary had called himself a “big dummy” when asked whether he was known by any other names besides “Gary Kremen.” Gary turned a simple question about aliases into an opportunity for self-deprecating humor. Which Luke turned into an admission of stupidity. It takes a journalist. Everyone in “the industry” read Ford’s website in those days, so everyone knew about the agreement. The problem was, said Gary, Levy and Warshavsky hadn’t been paying the bills, and the lawyers weren’t doing any work.
The case had started out well enough. Sheri Falco got a signed affidavit from Sharyn Dimmick stating under oath that she had nothing to do with Online Classified’s letter to NSI, and hadn’t signed it. Sheri also confirmed with Dimmick what Gary had said about their “relationship.” There never was one. Kremen had rented a room in Dimmick’s rent-controlled apartment at 252 Cole Street, the two had never gotten along, and Gary had moved out. Indeed, as later investigation would show, Dimmick was not even living at 252 Cole Street on October 15, 1995, the date of the forged letter.
Then Joel Dichter decided to do a strange thing. Apparently he believed that because the Sex.Com registration was in the name of Online Classifieds, Inc., the company should be a plaintiff in the lawsuit. One problem only -- there was no such company, because Gary had never incorporated.
So, before filing the lawsuit, Dichter created Online Classifieds, Inc., a Delaware corporation, because there was already an Online Classifieds, Inc. registered in California. I wouldn’t necessarily disapprove of that strategy, if you would just do one additional thing -- have Gary assign his ownership of Sex.Com to Online Classifieds, Inc. It’s nothing new for an individual to acquire property for the benefit of a corporation that they intend to create, and then later to give the property to the corporation after it is formed. This is called “assigning the rights,” and it would have made the new Online Classifieds, Inc. the owner of Sex.Com by either of two directions -- owning it directly based upon the registration, or owning it through Gary Kremen based upon the assignment. Dichter didn’t do this.
On July 10, 1998, Gary’s lawyers filed his original complaint, naming Online Classifieds, Inc., a Delaware corporation as a co-plaintiff, along with Gary Kremen. Cohen was on the mistake like a hawk. He knew how to search corporate databases. He knew Online Classifieds, had not been incorporated anywhere at the time of the original registration. He got the Delaware incorporation documents to prove it.
Cohen’s lawyer, Bob Dorband, filed a motion to dismiss Online Classifieds, Inc. from the lawsuit on the grounds that it didn’t even exist when Gary registered Sex.Com. Gary had no assignment to present in response to this argument; accordingly, Judge Ware ruled that Online Classifieds, Inc. was not the “real party in interest,” and had “no standing” to sue Cohen. And Dichter stood there looking like Wile E. Coyote from the Roadrunner cartoons -- still holding his exploded stick of dynamite, while Cohen disappeared around the bend with a final “Beep-Beep!”
The Online Classified, Inc. issue created more problems later, at Gary’s deposition. According to the correspondence I’ve read, Gary failed to meet with his lawyer to prepare for his deposition on several occasions. Therefore, no one had explained to him the strategy that had led to the creation of Online Classifieds, Inc., or if they had, he couldn’t remember it. Since Online Classifieds, Inc. had been dismissed from the lawsuit on the grounds that it had no standing, it was essential to stick with the “no assignment” story. Nevertheless, on the second day of his deposition Gary testified that he had in fact assigned the rights to Sex.Com to Online Classifieds, Inc., a Delaware corporation. By this blunder, Gary put himself on a spot that the judge had already declared a dead zone. I’m sure at that moment Dorband literally thought, “Checkmate.”
What Gary was thinking at that moment is one of life’s unanswered mysteries. As a lawyer once said in a luncheon during my early years: “If your client is just not getting it in deposition, and the answers are killing you, as a last resort you can always take your cigarette lighter and discreetly set his chair on fire.” I’m sure that when Gary testified he had assigned Sex.Com to Online Classifieds, Inc., Katie Diemer would have been willing to soak him with lighter fluid and ignite him with her Bic, if necessary. As it was, she hustled him out of the room, got him back in long enough to say he didn’t understand the meaning of “assignment,” and adjourned the deposition in a flurry of acrimony. I bequeath to Katie my golden cigarette lighter, for in this, she did well.
After that encounter, Katie was shell-shocked. When we talked on the telephone, she had little confidence in the case. Her early correspondence with Dichter had expressed great confidence she would achieve a swift victory, but a series of reversals had attended her efforts. Judge Ware had dismissed Online Classifieds, Inc., and additionally, had dismissed Gary’s claims for fraud, racketeering and unfair competition. The forged letter wasn’t a fraud, Judge Ware ruled, because Cohen hadn’t used it to deceive Gary. Even though Cohen was a convicted felon, and what Gary had alleged was a theft, this was not “racketeering” within the meaning of the statute. Finally, the theft of the domain name wasn’t an act of “unfair business competition” because it hadn’t caused any injury to “consumers.” These were important claims. Katie’s head must have been spinning.
Past experience told me that Katie was trying to convince herself that the client’s lawsuit was worthless, and thus if the case were dismissed, it would cause no real loss to Gary. This is a common syndrome among attorneys who are tiring of a difficult case, since the law provides that even if a lawyer commits malpractice, the client must still prove that competent representation would have put money in their pocket. Katie was clearly trying to convince herself that even if Gary had hired Daniel Webster, Clarence Darrow, Gerry Spence and Johnny Cochran, he would never have recovered Sex.Com.
The waiting room in hell is papered with documents that lawyers forgot to file. Most commonly seen among them is the fabled “Opposition to Motion to Dismiss.” On November 12, 1998, Cohen filed a Motion to Dismiss Gary’s second amended complaint. When it landed on Katie Diemer’s desk, she went missing. She never filed an opposition. Not filing opposition to a motion to dismiss is roughly the same thing as walking to the center of the ring, hands down, eyes closed, waiting for the knockout punch. When I finally got my hands on the motion to dismiss, and learned what Katie hadn’t done, I pointed out to Gary that he was about to be knocked out. Gary started pounding the table, demanding to know why an opposition had not been filed. As a result, Katie asked the judge for more time to file an opposition to the motion to dismiss.
I have seen some good excuses for not filing papers on time, but Katie Diemer’s absolutely takes the cake. Her motion for more time to respond to Cohen’s motion to dismiss said that she had negotiated an extension of time with Bob Dorband, or thought she had, but couldn’t remember for sure because she had had a hockey accident, and had memory problems. Judge Ware, a kindly and understanding jurist who overlooks the foibles of attorneys as part of his general procedure, granted the extension. That gave Katie until July 12, 1999 to file an opposition to that dreaded motion to dismiss the second amended complaint. Through that brief window of time, daylight shone for me.