Case 5:18-md-02834-BLF Document 742 Filed 04/22/22 Page 1 of 25
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`J. DAVID HADDEN (CSB No. 176148)
`dhadden@fenwick.com
`SAINA S. SHAMILOV (CSB No. 215636)
`sshamilov@fenwick.com
`MELANIE L. MAYER (admitted pro hac vice)
`mmayer@fenwick.com
`TODD R. GREGORIAN (CSB No. 236096)
`tgregorian@fenwick.com
`RAVI R. RANGANATH (CSB No. 272981)
`rranganath@fenwick.com
`FENWICK & WEST LLP
`Silicon Valley Center
`801 California Street
`Mountain View, CA 94041
`Telephone:
`650.988.8500
`Facsimile:
`650.938.5200
`
`Counsel for AMAZON.COM, INC.,
`AMAZON WEB SERVICES, INC., and
`TWITCH INTERACTIVE, INC.
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`
`Case No.: 5:18-md-02834-BLF
`Case No.: 5:18-cv-00767-BLF
`Case No.: 5:18-cv-05619-BLF
`
`OPPOSITION OF AMAZON.COM, INC.,
`AMAZON WEB SERVICES, INC., AND
`TWITCH INTERACTIVE, INC. TO
`SECOND MOTION TO WITHDRAW
`AS COUNSEL BY STUBBS ALDERTON
`& MARKILES, LLP
`
`PERSONAL WEB TECHNOLOGIES, LLC ET
`AL., PATENT LITIGATION,
`
`AMAZON.COM, INC., and AMAZON WEB
`SERVICES, INC.,
`Plaintiffs
`
`v.
`PERSONALWEB TECHNOLOGIES, LLC and
`LEVEL 3 COMMUNICATIONS, LLC,
`Defendants.
`
`PERSONALWEB TECHNOLOGIES, LLC, and
`LEVEL 3 COMMUNICATIONS, LLC,
`
`Plaintiffs,
`
`v.
`
`TWITCH INTERACTIVE, INC.,
`
`Defendant.
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
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`
`

`

`Case 5:18-md-02834-BLF Document 742 Filed 04/22/22 Page 2 of 25
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`TABLE OF CONTENTS
`
`INTRODUCTION .............................................................................................................. 1
`
`BACKGROUND ................................................................................................................ 4
`
`A.
`
`B.
`
`C.
`
`The attempt to game the district court proceedings after the entry of
`judgment against PersonalWeb by withdrawing SAM as counsel.......................... 4
`The use of an asset protection scheme to force PersonalWeb into a
`receivership for entities controlled by Mr. Bermeister and his family. .................. 6
`The abuse of the California Superior Court’s receivership over
`PersonalWeb. .......................................................................................................... 8
`The current motion to reconsider the withdrawal issue. ....................................... 10
`D.
`ARGUMENT .................................................................................................................... 12
`
`1
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`I.
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`II.
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`III.
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`IV.
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`ATTORNEYS AT LAW
`
`FENWICK & WEST LLP
`
`
`
`
`A.
`B.
`
`C.
`
`Legal Standard. ..................................................................................................... 12
`SAM has not identified any material change in fact or law that requires
`the Court to reconsider its ruling and permit unconditional withdrawal. ............. 13
`1.
`The alleged breakdown of the relationship between SAM and
`PersonalWeb’s principals is irrelevant because the state court
`receiver has exclusive control over PersonalWeb in the
`litigation. ................................................................................................... 14
`The alleged breakdown of the relationship between SAM and
`PersonalWeb’s principals is not a valid basis to withdraw
`unconditionally in any event. .................................................................... 15
`Unconditional withdrawal would still prejudice Amazon,
`notwithstanding SAM’s attempt to blame Amazon for failing to
`stop PersonalWeb’s misconduct. .............................................................. 17
`The Court should take additional evidence and impose conditions
`before allowing SAM to withdraw. ....................................................................... 18
`1.
`The Court should direct SAM to comply immediately with the
`discovery orders as a condition of withdrawal. ......................................... 18
`The Court should issue an order to show cause to the receiver
`before permitting withdrawal. ................................................................... 20
`The Court should retain jurisdiction over SAM for purposes of
`imposing sanctions. ................................................................................... 21
`CONCLUSION ................................................................................................................. 21
`
`2.
`
`3.
`
`2.
`
`3.
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`ii
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
`
`

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`TABLE OF AUTHORITIES
`
`Page(s):
`
`Cases:
`Amazon Logistics, Inc. v. Mann Bros. Transp., Inc.,
`No. 1:19-cv-01060-DAD-SAB, 2020 WL 2194005 (E.D. Cal. May 6,
`2020) ...................................................................................................................................19
`BSD, Inc v. Equilon Enters., LLC,
`No. 10-cv-5223-SBA, 2013 WL 942578 (N.D. Cal. Mar. 11, 2013) .................................19
`Chaleff v. Super. Ct.,
`69 Cal. App. 3d 721 (1977) .................................................................................................17
`Deal v. Countrywide Home Loans,
`No. 09-cv-01643 SBA, 2010 WL 3702459 (N.D. Cal. Sept. 15, 2010). ............................13
`Denton v. Suter,
`No. 11-cv-2559-PHX-EHC, 2013 WL 5477155 (N.D. Tex. Oct 2, 2013) .........................16
`Doe 1 v. Wolf,
`No. 18-cv-02349-BLF, 2020 WL 5576136 (N.D. Cal. Sept. 17, 2020) ............................12
`FDIC v. BayONE Real Est. Inv. Corp.,
`No. 15-cv-02248-BLF (SVK), Dkt. 69 (N.D. Cal. Mar. 27, 2017) ...................................18
`Gottlieb v. Alphabet Inc.,
`No. 17-cv-06860-EJD, 2018 WL 2010976 (N.D. Cal. Apr. 30, 2018) ...............................16
`Kona Enters., Inc. v. Estate of Bishop,
`229 F.3d 877 (9th Cir. 2000) ...............................................................................................13
`Ohntrup v. Firearms Center, Inc.,
`802 F.2d 676 (3d Cir. 1986) ................................................................................................16
`Optrics Inc. v. Barracuda Networks Inc.,
`No. 17-cv-04977-RS, 2020 WL 1815690 (N.D. Cal. Feb. 28, 2020) .................................21
`Pac. Grp. v. First State Ins. Co.,
`841 F. Supp. 922 (N.D. Cal. 1993), rev’d on other grounds by 70 F.3d 524
`(9th Cir. 1995) .....................................................................................................................12
`Reading Int’l, Inc. v. Malulani Grp., Ltd.,
`814 F.3d 1046 (9th Cir. 2016) .............................................................................................13
`Robinson v. Delgado,
`No. 02-cv-1538-NJV, 2010 WL 3259384 (N.D. Cal. Aug. 18, 2010) ................................13
`Rowland v. Cal. Men’s Colony,
`506 U.S. 194 (1993) ............................................................................................................13
`
`
`
`
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`iii
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
`
`ATTORNEYS AT LAW
`
`FENWICK & WEST LLP
`
`
`
`

`

`Case 5:18-md-02834-BLF Document 742 Filed 04/22/22 Page 4 of 25
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`
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`TABLE OF AUTHORITIES
`(continued)
`
`S.E.C. v. Poirier,
`No. 96-2243, 2007 WL 2462173 (D. Ariz. Aug. 24, 2007) ................................................16
`Swapna v. Deshraj,
`No. 16-cv-05482-JSC, Dkt. 33 (N.D. Cal. July 11, 2017) ..................................................19
`Towns v. Morris,
`No. 93-1295, 1995 WL 120687 (4th Cir. 1995) .................................................................16
`United States v. Mr. Hamburg Bronx Corp.,
`228 F. Supp. 115 (S.D.N.Y. 1964) ......................................................................................20
`Vitug v. Griffin,
`214 Cal. App. 3d 488 (1989) ...............................................................................................20
`Wyman v. High Times Prods., Inc.,
`No. 2:18-cv-02621-TLN-EFB, 2020 WL 6449236 (E.D. Cal. Nov. 3, 2020) ....................16
`Statutes and Rules:
`Cal. Bus. & Prof. Code § 6103 .................................................................................................15
`Cal. Rule of Professional Conduct 1.1 ......................................................................................15
`Cal. Rule of Professional Conduct 1.7(b) .................................................................................15
`Civ. L. R. 3-9(b) ........................................................................................................................13
`Civ. L. R. 7-9(b) ........................................................................................................................12
`Civ. L.R. 11-5(a) .......................................................................................................................13
`Fed. R. Civ. P. 4.1(b) ................................................................................................................20
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`iv
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`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
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`

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`Case 5:18-md-02834-BLF Document 742 Filed 04/22/22 Page 5 of 25
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`I.
`
`INTRODUCTION
`This motion is the sixth filing by Stubbs Alderton and Markiles, LLP (“SAM”) seeking to
`withdraw as counsel for PersonalWeb. (See Dkts. 674, 678, 679, 683, 688, 728.) The Court already
`ruled last year that SAM may withdraw when substitute counsel has appeared. (Dkt. 694.) The
`Court did not permit SAM to withdraw unconditionally because that would prejudice Amazon:
`PersonalWeb is an LLC which cannot represent itself in federal court, and SAM’s involvement
`allows the Court to preserve a line of communication without which it could not conduct
`meaningful post-judgment proceedings. (Id. at 3–4.) SAM points to no valid reason for the Court
`to reconsider this ruling.
`Since May 2021, a California Superior Court order has given a receiver exclusive control
`over PersonalWeb’s operations, including managing (or even replacing) its counsel in this
`litigation. PersonalWeb’s principals Kevin Bermeister and Michael Weiss used an asset protection
`scheme to obtain this receivership shortly after this Court awarded over $5 million in fees to
`Amazon. Their purpose was to gain a means to protect new payments to SAM and other attorneys
`pursuing PersonalWeb’s patent lawsuits, while shielding those payments and any other
`PersonalWeb cash and assets from this Court’s judgment. Once they achieved this goal,
`PersonalWeb’s principals treated the receivership as a sham—they continued running PersonalWeb
`themselves despite knowing that the state court’s order divested them of that authority. SAM, for
`its part, participated in this arrangement for eight months: SAM took orders from Mr. Bermeister
`and his “judgment enforcement counsel” Ronald Richards that the receiver did not approve; SAM
`argued that any attempt to enforce this Court’s discovery orders would undermine the receivership
`and put Amazon in contempt of the state court injunction assuming control of the PersonalWeb
`estate; and SAM waited until after the state court approved up to $1 million in new payments to
`SAM and others before claiming that the same basic facts it knew in the summer of 2021—i.e., Mr.
`Bermeister’s interference with the receivership and this Court’s discovery orders—only just now
`create an ethical conflict that justifies SAM’s unconditional withdrawal. SAM’s motion is thus just
`one more example of the opportunistic changes in position that characterized this case.
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`1
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
`
`ATTORNEYS AT LAW
`
`FENWICK & WEST LLP
`
`
`
`
`

`

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`The Court should deny the motion. SAM’s request rests on the vague claim that
`“PersonalWeb representatives” caused it to disobey the Court’s orders and the state court
`injunction, thereby placing SAM at risk of violating California’s professional responsibility rules.
`(Dkt. 728 at 3, 5–6.) SAM cites no authority that these professional responsibility rules control
`over the Ninth Circuit law directing that PersonalWeb must have counsel. Amazon has found
`none—the California state obligations SAM invokes are instead merely a factor the Court may
`consider in deciding the motion, and if the Court accepted SAM’s view it would mean that no
`counsel could represent PersonalWeb because that attorney would stand in the same place that
`SAM does now. But more important, SAM’s premise is mistaken. The party with ultimate control
`of PersonalWeb is the receiver, an officer of the California Superior Court. PersonalWeb’s
`“representatives”—who consented to the receiver’s control and ceded their own authority
`voluntarily—do not have the final say. And the receiver recently confirmed that while he has given
`general instructions about this litigation, he never directed SAM to violate the Court’s orders or
`refused to turn over the PersonalWeb records in his control. SAM thus has not shown it faces any
`actual ethical conflict; PersonalWeb’s principals merely engineered another way to try to escape
`the Court’s jurisdiction and until now SAM has played along.
`The Court should therefore still require substitute counsel to appear before SAM withdraws,
`and it also should impose the following conditions. First, the Court should order SAM to produce
`the documents in its possession responsive to the Court’s post-judgment discovery orders. SAM is
`an investor in PersonalWeb, served as its primary corporate counsel, and communicated about the
`receivership and PersonalWeb’s other attempts to evade the Court’s authority—i.e., SAM
`maintains many of the records that the Court ordered to be produced. Moreover, the Magistrate
`Judge ruled that PersonalWeb waived its objections to Amazon’s requests and must produce all
`responsive documents. The documents and communications in SAM’s possession are subject to
`that order (because SAM is PersonalWeb’s agent) and cannot be withheld based on a waived claim
`of privilege or any other waived objection. By ordering that SAM must produce the documents,
`the Court will in fact protect SAM by removing the alleged uncertainty concerning SAM’s ethical
`obligations that Mr. Bermeister and Mr. Richards created through their unlawful conduct. On the
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`2
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
`
`ATTORNEYS AT LAW
`
`FENWICK & WEST LLP
`
`
`
`

`

`Case 5:18-md-02834-BLF Document 742 Filed 04/22/22 Page 7 of 25
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`other hand, allowing SAM to withdraw while it continues to shield these documents for
`PersonalWeb in violation of the Court’s orders would reward PersonalWeb’s principals for their
`lawlessness.
`Second, the Court should issue an order to show cause to the receiver to explain (a) why he
`has failed to use his exclusive authority to cause PersonalWeb and its attorneys to comply with the
`Court’s orders compelling production; and (b) why he has not used his express authority under the
`state court order to retain substitute counsel. The receiver is subject to the Court’s jurisdiction
`through PersonalWeb (and under the civil contempt power as well). PersonalWeb’s litigations
`against Google, Facebook, and VMware have now ended, and this MDL proceeding and the related
`appeals are therefore, according to the receiver himself, PersonalWeb’s sole remaining asset left
`for him to manage. He can appear and explain whether there is truly an ethical conflict or dispute
`about SAM’s continued representation of PersonalWeb that merits the Court reconsidering the
`previous withdrawal order.
`Finally, the Court should retain jurisdiction over SAM for the purpose of potentially
`imposing sanctions. There are open disputes concerning SAM’s conduct during the litigation that
`led to the fee award and its participation in PersonalWeb’s evasions—including: asserting the
`baseless claim that SAM could not receive service of documents in this case to stall post-judgment
`discovery; failing to supervise PersonalWeb’s response to multiple discovery orders of the Court;
`trying to pass off PersonalWeb’s token production as compliance instead of reporting to the Court
`that PersonalWeb’s principals had interfered with the receivership and prevented compliance (i.e.,
`the same violation that SAM now claims justifies its withdrawal nearly a year later); and SAM’s
`role in creating and benefitting from the asset protection scheme that allowed PersonalWeb and its
`principals to avoid the Court’s judgment. Retaining jurisdiction over withdrawing counsel for
`potential discipline and sanctions is a routine step and the record warrants it here.
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`3
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
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`

`

`Case 5:18-md-02834-BLF Document 742 Filed 04/22/22 Page 8 of 25
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`II.
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`BACKGROUND
`
`A.
`
`The attempt to game the district court proceedings after the entry of
`judgment against PersonalWeb by withdrawing SAM as counsel.
`
`The Court previously ruled that PersonalWeb’s conduct in this MDL proceeding made it an
`exceptional case and awarded Amazon over $5.3 million in attorney fees and costs. (Dkts. 648 &
`656.) PersonalWeb neither paid the judgment nor posted a supersedeas bond while it pursued
`multiple appeals. In April 2021, Amazon therefore began efforts to secure the judgment by serving
`discovery concerning PersonalWeb’s assets. (See Dkts. 659-3 & 659-4.)
`SAM represented PersonalWeb throughout the case and had an interest in its outcome
`through its venture capital entity SAM Venture Partners. (See Case No. 5:18-cv-05619-BLF, Dkt.
`3; Dkt. 611-5 (Bermeister Dep. Tr.) at 62:2–10; Dkt. 612-9.) Although SAM remained counsel of
`record in both this Court and the appeals, Jeffrey Gersh of SAM responded to Amazon’s discovery
`by claiming that SAM did not represent PersonalWeb for that purpose and that Amazon had “no
`authority” to serve SAM with those documents. (Dkts. 661 & 659-1.)
`On Amazon’s application (Dkts. 661, 662), the Court ordered PersonalWeb to produce its
`bank and financial account information by early May and appear for a debtor’s examination. (Dkts.
`664, 665.) SAM received these orders through ECF but again asserted baselessly that service was
`ineffective. (Dkt. 673-1 at 3.) Amazon also provided the orders to Ronald Richards, an attorney
`who PersonalWeb retained to resist enforcement of the judgment. But Mr. Richards reported that
`he would not appear in the case “except for post judgment motions if for some reason we need to
`involve the Court.” (Id. at 4.) After receiving the Court’s orders, he nonetheless instructed the
`SAM attorneys that they are “not authorized” by PersonalWeb “to do anything post judgment.”
`(Id. at 1.) Mr. Gersh of SAM stated that he would comply with Mr. Richards’s instruction, cc’ing
`Amazon’s counsel. (Id.)
`PersonalWeb did not produce any of its bank and financial account information as the Court
`ordered. (Dkt. 673 at 2.) Instead, the next week SAM moved to withdraw as counsel, stating that
`the client “knowingly and freely assents to termination of the representation.” (Dkt. 674.) In mid-
`May, the Court held a case management conference, during which the Court made clear that
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`4
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
`
`ATTORNEYS AT LAW
`
`FENWICK & WEST LLP
`
`
`
`

`

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`corporate entities require representation by counsel and expressed concern over the fact that Mr.
`Richards had not appeared. (See Dkt. 686 at 13:11–12 (“PersonalWeb is a company. It can’t
`represent itself.”), 9:17–18 (“I don’t know why Mr. Richards has not appeared.”), 14:12–15 (“I
`have some concern about [] transferring this to Mr. Richards, or PersonalWeb deciding it’s not
`going to have counsel on this collection matter.”).) The Court also stated that it would consider the
`motion to withdraw only after Amazon filed its opposition brief. (Id. at 12:11–18.)
`Despite the Court’s instructions, SAM then tried to secure a clerk’s order approving the
`withdrawal before Amazon could file an opposition. SAM filed a “Notice of Substitution”
`purporting to substitute itself with PersonalWeb appearing “in pro per”—i.e., exactly what the
`Court had told SAM was impermissible just the day before at the case management conference.
`(Dkt. 678.) The notice also tried to pass off a defunct UPS mailbox as the address where Amazon
`could supposedly contact PersonalWeb about the case going forward. (Id.; Dkt. 691-1, ¶ 2.) With
`no response from the clerk, SAM re-filed the notice as a “motion” event in ECF three days later.
`(Dkt. 679.) SAM then withdrew the original noticed motion to withdraw pending before the
`District Judge. (Dkt. 684.) That same day, the Court denied the “motion” because “[a] corporation
`or other artificial entity must be represented by licensed counsel.” (Dkt. 685 (citations omitted).)
`Its attempt to circumvent the District Judge in favor of the clerk thwarted, SAM once again filed a
`noticed motion seeking to withdraw without substitute counsel. (Dkt. 688.) In late June, the Court
`conditionally granted the motion dependent on Mr. Richards substituting as counsel. (Dkt. 694.)
`Mr. Richards has never noticed an appearance.
`Amazon also moved to compel PersonalWeb to comply with the Court’s late April 2021
`order concerning document production. (Dkt. 687.) PersonalWeb and SAM did not respond by
`the deadline. In late May, counsel for Amazon and SAM conferred on a separate motion to compel
`PersonalWeb to respond to Amazon’s post-judgment interrogatories and requests for production,
`with Mr. Richards declining an invitation to participate. (Dkt. 691-1, ¶ 3.) The Magistrate Judge
`ordered PersonalWeb to produce all documents requested in the post-judgment discovery requests
`without objections. (Dkt. 704 (“[T]he Court ORDERS that…PersonalWeb…respond without
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`5
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
`
`ATTORNEYS AT LAW
`
`FENWICK & WEST LLP
`
`
`
`

`

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`objection to the…requests for production…and…produce all documents requested in the requests
`for production.”))
`The use of an asset protection scheme to force PersonalWeb into a receivership
`B.
`for entities controlled by Mr. Bermeister and his family.
`
`During this same period, Mr. Bermeister and PersonalWeb’s other beneficial owners
`worked to trigger a previously arranged asset protection scheme. SAM is silent as to whether it
`played a role in creating the corporate structure and transactions underlying this scheme, but SAM
`named-partner Murray Markiles is a founding director of PersonalWeb, and SAM apparently
`served as PersonalWeb’s corporate counsel. (Dkt. 717-12 at 13.) At any rate, the scheme was
`organized as follows. Four insider-investors in PersonalWeb (collectively, “Insiders”) have the
`same or overlapping beneficial owners:
`(1) Brilliant Digital Entertainment, Inc. (“BDE”), founded by Kevin Bermeister, who is
`also its Chairman and CEO;
`(2) Europlay Capital Advisors, LLC, founded by Mark Dyne, the former chair and CEO
`of BDE who is also Mr. Bermeister’s cousin;
`(3) Claria Innovations, LLC, owned 99% of PersonalWeb and had governing authority
`when PersonalWeb was formed; and
`(4) Monto Holdings Pty Ltd, an Australian entity that currently owns 20% of
`PersonalWeb, for which Mr. Bermeister is a director.
`(Declaration of Todd R. Gregorian (“Gregorian Decl.”), ¶ 2, Ex. 1 at 5; id., ¶ 2, Ex. 2 at 1; Dkt.
`717-3 at 3.) These Insiders characterized a major portion of their investment in PersonalWeb as
`debt—four alleged “loans” issued beginning in August 2010 for which PersonalWeb pledged all of
`its “tangible and intangible assets” as collateral years later (May 2012 and March 2014). (Dkt.
`717.) The Insiders regularly amended their agreements such that the loans remained continually
`outstanding. The most recent restatement, on December 31, 2019, provided a new maturity date of
`December 31, 2022. (Id.) Even though these “loans” were less than halfway through this latest
`term when the Court awarded fees against PersonalWeb, Insiders demanded immediate repayment
`in full based on the amounts due as of March 31, 2021.
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`6
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
`
`ATTORNEYS AT LAW
`
`FENWICK & WEST LLP
`
`
`
`

`

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`Insiders then filed suit against PersonalWeb in California state court, demanding the
`appointment of a receiver and the entry of a preliminary injunction enjoining any other
`PersonalWeb creditors from enforcing any claim, debt, right, lien, or interest against PersonalWeb.
`(Dkt. 717-2 at 15–17.) Within days, PersonalWeb’s President Michael Weiss, signed a declaration
`prepared on the stationery of Insiders’ counsel conceding that PersonalWeb owed $19 million to
`Insiders and could not pay, and consenting to the receiver and preliminary injunction. (Dkt. 717-4.)
`Neither the complaint nor any of Insiders’ other filings before the state court disclosed that Amazon
`is a creditor of PersonalWeb or that PersonalWeb’s ultimate beneficial owners are the same as
`Insiders’s. In other words, these filings concealed the fact that PersonalWeb (i.e., Weiss and
`Bermeister) had colluded with the Insiders (i.e., Bermeister and his family) to try to place
`PersonalWeb beyond the reach of this Court’s judgment while they continued to pursue
`PersonalWeb’s patent litigation business in the normal course.
`The receivership order empowers the receiver “to seize, manage, control, operate, and
`collect all of the collateral of Plaintiffs,” including this litigation. (Gregorian Decl., ¶ 3, Ex. 3,
`¶¶ 1–2.)
` It also states
`the receiver will have
`the power and responsibility “to
`employ…attorneys…to administer the Receivership estate and to protect the Collateral as it shall
`deem it necessary, including without limitation to continue the pre-receivership employment of
`attorneys for Defendant PW as to legal actions pending at the time of the receivership[.]” (Id.,
`¶ 14.) PersonalWeb’s principals expressly consented to this order divesting them of control of
`PersonalWeb’s litigations. Mr. Weiss’s sworn declaration agreeing as president of PersonalWeb
`to the appointment of the receiver states that: “given the nature of the major collateral at this point,
`the patent infringement claims, a Receiver is needed to take control of those and administer them
`for the protection of the secured [creditors.]” (Dkt. 717-4, ¶ 3 (emphasis supplied).)
`The preliminary injunction (Dkts. 717-5 & 717-6) establishes that the receivership is run
`exclusively for Insiders’s benefit. It prohibits any PersonalWeb creditor from enforcing claims
`against the PersonalWeb estate during the receivership. But it also expressly carves out the
`proceedings of any then-pending intellectual property enforcement actions filed by PersonalWeb:
`
`OPPOSITION TO MOTION TO
`WITHDRAW AS COUNSEL
`
`
`
`7
`
`CASE NOS. 5:18-md-02834-BLF,
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
`
`ATTORNEYS AT LAW
`
`FENWICK & WEST LLP
`
`
`
`

`

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`IT IS FURTHER ORDERED that except by leave of this Court,
`during the pendency of the receivership ordered herein, Defendant
`PersonalWeb, and all of its customers, principals, investors,
`collectors, stockholders, lessors, other creditors, judgment holders,
`and other persons seeking to establish or enforce any claim, debt,
`right, lien, or interest against Defendant PersonalWeb, or any of its
`subsidiaries or affiliates, and all others acting for or on behalf of
`such persons, attorneys, trustees, agents, sheriffs, constables,
`marshals, and any other officers and their deputies, and their
`respective attorneys, servants, agents, and employees, be and are
`hereby stayed from:
`
`(a) Commencing, prosecuting, continuing, or enforcing any suit,
`judgment, lien, levy, or proceeding against Defendant PersonalWeb,
`or any of its subsidiaries or affiliates, except such actions may be
`filed to toll any applicable statute of limitations;
`
`(b) Commencing, prosecuting, continuing, or entering into any suit
`or proceeding in the name or on behalf of Defendant PersonalWeb,
`or any of their subsidiaries or affiliates, except for any pending
`enforcement actions by Defendant PersonalWeb concerning it [sic]
`intellectual property claims;
`(Dkt. 717-6 at 4.)
`The abuse of the California Superior Court’s receivership over PersonalWeb.
`C.
`Not only did the receivership place any existing PersonalWeb assets beyond the reach of
`the Court’s judgment, Insiders used it to “lend” PersonalWeb up to an additional $1,000,000.00,
`also beyond the reach of the judgment, to pay SAM and others to pursue litigation against Amazon,
`its customers, and others such as Google, Facebook, and VMWare. (Dkts. 717-7 & 717-8.)
`Insiders, SAM, and even counsel for the receiver then began threatening Amazon with violations
`of the state court injunction and contempt sanctions if Amazon took further steps to enforce the
`judgment or to take discovery. (Gregorian Decl., ¶ 4, Exs. 4–7.)
`In August 2021, in response to the Court’s discovery orders, PersonalWeb served
`interrogatory responses that improperly asserted objections that the Magistrate Judge had ruled
`were waived, and (rather than provide substantive responses) incorporated its entire document
`production. (See, e.g., Dkt. 717-9 at 1–3 (broadly incorporating PersonalWeb’s entire document
`production without identifying any specific Bates numbers); id., at 4 (for Interrogatory Nos. 9 &
`10, asserting the attorney/c