Prenda Law is an organization that has sued thousands for allegedly downloading porn from BitTorrent over the past few years. But since one of their cases fell apart and a federal judge began asking tough questions, the organization has been in collapse. Instead of prosecuting their copyright cases, Prenda lawyers are dismissing the cases and have been reduced to comparing EFF to terrorists and pleading the Fifth when asked about their own litigation tactics.

One of the cases they tried to drop, but couldn't, was a San Francisco lawsuit brought by AF Holdings against Joe Navasca. At a hearing last week, US District Judge Edward Chen asked Prenda lawyer Paul Duffy to explain why he had chosen to drop the case and who was behind the shell company AF Holdings. Now Chen has ordered the case to be dismissed "with prejudice," meaning it can't be brought back.

Once Chen required AF Holdings to pay a $50,000 "undertaking" to proceed with their case, the shell company asked for its case against Navasca to be dismissed, but with permission to refile. In today's order, Chen said that wouldn't be appropriate. If the case had proceeded, it's likely AF Holdings would have faced "adverse rulings" on more than one point, Chen writes.

In other words, if it actually had any intention to litigate, the shell company would have lost, badly. AF Holdings was "likely" to face an adverse ruling on the issue of standing, since it can't show a legally proper transfer of the copyright in the work: a video called "Popular Demand." It may also face negative rulings because of the investigation underway by US District Judge Otis Wright in Los Angeles.

As for Duffy's testimony at the hearing that Navasca had engaged in "spoliation" of evidence by using CCleaner, a product he was using on all his computers for many months before being sued, Chen writes that it's "far from clear that there was any spoliation in the first instance." As for the argument that AF Holdings is too poor to proceed after paying a $50,000 undertaking, Chen didn't find that convincing either. He had even invited the shell company to show "evidence of its professed inability to pay," but it never did so.

The order ends by making clear that Navasca can still file a motion to ask for attorneys' fees, which seems likely to happen. The question is whether AF Holdings will have any assets to pay.

In the Navasca case, there's a document that was signed by "Salt Marsh - AF Holdings Owner." But it wasn't clear whether Salt Marsh is a real person or not. At the hearing, Duffy suggested Salt Marsh is actually another trust, a notion recently confirmed by Prenda. Salt Marsh is a trust benefiting "any children born to or adopted by" Prenda affiliate Mark Lutz, who has no children at present.

But if Salt Marsh is a legal entity, it's strange that it could promise to the have "read the handbook entitled 'Dispute Resolution Procedures in the Northern District of California'" and "discussed the available dispute options," which it swore it had done.

In any case, Judge Chen wants to see the original signed copy. Court rules require lawyers to keep original copies of electronically signed documents for at least one year after the resolution of an issue (including appeal). "AF's counsel is hereby ordered to produce the original of the ADR certification, containing the original signature of 'Salt Marsh' by April 29, 2013" writes Chen. If they can't produce it, they need to explain why.