Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 1 of 15
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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
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`CORRECTED 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
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`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.
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`TWITCH INTERACTIVE, INC.,
`
`Defendant.
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`CORRECTED OPPOSITION TO MOTION
`TO WITHDRAW AS COUNSEL
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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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`Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 2 of 15
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`I.
`
`BACKGROUND ................................................................................................................ 2
`
`TABLE OF CONTENTS
`
`A.
`B.
`
`The attempt to game these proceedings by withdrawing as counsel. ..................... 2
`The use of an asset protection scheme to force PersonalWeb into
`receivership. ............................................................................................................ 3
`The abuse of the receivership over PersonalWeb for the principals’
`benefit. ..................................................................................................................... 4
`The current motion to reconsider the withdrawal issue. ......................................... 5
`D.
`ARGUMENT ...................................................................................................................... 6
`
`C.
`
`A.
`B.
`
`C.
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`Legal Standard. ....................................................................................................... 6
`SAM has not identified a material change to warrant reconsideration. .................. 6
`1.
`The SAM-PersonalWeb principal relationship is irrelevant. ...................... 7
`2.
`The harm to Amazon from withdrawal trumps any harm to
`SAM. ........................................................................................................... 7
`Unconditional withdrawal would prejudice Amazon. ................................ 8
`3.
`The Court should impose conditions before allowing SAM to
`withdraw. ................................................................................................................. 9
`1.
`The Court should direct SAM to comply with the discovery
`orders. .......................................................................................................... 9
`The Court should issue an order to show cause to the receiver. ............... 10
`The Court should retain jurisdiction over SAM for possible
`sanctions. ................................................................................................... 10
`CONCLUSION ................................................................................................................. 10
`
`2.
`3.
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`II.
`
`III.
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`CORRECTED OPPOSITION TO MOTION
`TO WITHDRAW AS COUNSEL
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`CASE NOS. 5:18-md-02834-BLF,
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`Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 3 of 15
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`TABLE OF AUTHORITIES
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`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) ...................................................................................................................................10
`BSD, Inc v. Equilon Enters., LLC,
`No. 10-cv-5223-SBA, 2013 WL 942578 (N.D. Cal. Mar. 11, 2013) .................................10
`Chaleff v. Super. Ct.,
`69 Cal. App. 3d 721 (1977) ...................................................................................................8
`Deal v. Countrywide Home Loans,
`No. 09-cv-01643 SBA, 2010 WL 3702459 (N.D. Cal. Sept. 15, 2010). ..............................6
`Doe 1 v. Wolf,
`No. 18-cv-02349-BLF, 2020 WL 5576136 (N.D. Cal. Sept. 17, 2020) ..............................6
`FDIC v. BayONE Real Est. Inv. Corp.,
`No. 15-cv-02248-BLF (SVK), Dkt. 69 (N.D. Cal. Mar. 27, 2017) .....................................9
`Gottlieb v. Alphabet Inc.,
`No. 17-cv-06860-EJD, 2018 WL 2010976 (N.D. Cal. Apr. 30, 2018) .................................8
`Ohntrup v. Firearms Center, Inc.,
`802 F.2d 676 (3d Cir. 1986) ..................................................................................................8
`Optrics Inc. v. Barracuda Networks Inc.,
`No. 17-cv-04977-RS, 2020 WL 1815690 (N.D. Cal. Feb. 28, 2020) .................................10
`Robinson v. Delgado,
`No. 02-cv-1538-NJV, 2010 WL 3259384 (N.D. Cal. Aug. 18, 2010) ..................................6
`Rowland v. Cal. Men’s Colony,
`506 U.S. 194 (1993) ..............................................................................................................6
`
`S.E.C. v. Poirier,
`No. 96-2243, 2007 WL 2462173 (D. Ariz. Aug. 24, 2007) ..................................................8
`United States v. Mr. Hamburg Bronx Corp.,
`228 F. Supp. 115 (S.D.N.Y. 1964) ......................................................................................10
`Vitug v. Griffin,
`214 Cal. App. 3d 488 (1989) ...............................................................................................10
`Wyman v. High Times Prods., Inc.,
`No. 2:18-cv-02621-TLN-EFB, 2020 WL 6449236 (E.D. Cal. Nov. 3, 2020) ......................8
`
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`CORRECTED OPPOSITION TO MOTION
`TO WITHDRAW AS COUNSEL
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`Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 4 of 15
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`TABLE OF AUTHORITIES
`(continued)
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`Statutes and Rules:
`Civ. L. R. 3-9(b) ..........................................................................................................................6
`Fed. R. Civ. P. 4.1(b) ................................................................................................................10
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`CORRECTED OPPOSITION TO MOTION
`TO WITHDRAW AS COUNSEL
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`Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 5 of 15
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`This motion is the sixth filing by Stubbs Alderton and Markiles, LLP (“SAM”) seeking to
`withdraw. (See Dkts. 674, 678, 679, 683, 688, 728.) The Court already ruled that SAM may
`withdraw when substitute counsel appears. (Dkt. 694.) The Court did not permit unconditional
`withdrawal because that would prejudice Amazon: PersonalWeb is an LLC which cannot represent
`itself, and SAM’s involvement allows the Court to preserve a line of communication with
`PersonalWeb. (Id. at 3–4.) SAM points to no valid reason for the Court to reconsider this ruling.
`Since May 2021, a receiver has exclusive control over PersonalWeb. The PersonalWeb
`principals used an asset protection scheme to obtain this receivership shortly after this Court
`awarded Amazon over $5 million in fees. Their purpose was to protect new payments to SAM and
`other attorneys pursuing PersonalWeb’s patent lawsuits, while shielding those payments and
`PersonalWeb assets from this Court’s judgment. The PersonalWeb principals treated the
`receivership as a sham—they continued operating PersonalWeb despite being divested of that
`authority. SAM, for its part, participated in this arrangement for nine months: it took orders from
`the principals, not the receiver; it argued that any attempt to enforce this Court’s discovery orders
`would put Amazon in contempt; and it waited until after approval of up to $1 million in new
`payments to SAM and others before claiming that the same basic facts it knew in mid-2021—i.e.,
`Mr. Bermeister’s interference with the receivership and this Court’s discovery orders—only just
`now create a conflict that justifies SAM’s unconditional withdrawal.
`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 professional responsibility rules. SAM cites
`no authority that these professional responsibility rules trump Ninth Circuit law directing that
`PersonalWeb must have counsel. 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 controlling PersonalWeb is the
`receiver, an officer of the California Superior Court—not PersonalWeb’s “representatives,” who
`consented to the receiver’s control and ceded their own authority voluntarily. And the receiver
`confirmed that he never directed SAM to violate the Court’s orders or refused to turn over
`CORRECTED OPPOSITION TO MOTION
`CASE NOS. 5:18-md-02834-BLF,
`TO WITHDRAW AS COUNSEL
`5:18-cv-00767-BLF, and
`5:18-cv-05619-BLF
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`Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 6 of 15
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`PersonalWeb records. SAM thus has not shown it faces any actual ethical conflict; rather, SAM
`until now has simply played along with the “representatives’” attempts to avoid the judgment.
`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
`documents responsive to the Court’s post-judgment discovery orders. As a PersonalWeb investor
`and its corporate counsel, SAM maintains many of the records that the Court ordered to be produced
`without objections. By ordering that SAM produce the documents, the Court will protect SAM by
`removing the alleged uncertainty concerning SAM’s ethical obligations. On the other hand,
`allowing SAM to withdraw while it shields 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 cause
`PersonalWeb to comply with the Court’s orders; and (b) why he has not retained substitute counsel.
`Finally, the Court should retain jurisdiction over SAM for possible sanctions. There are open
`disputes concerning SAM’s conduct that led to the fee award and its participation in PersonalWeb’s
`evasions—including SAM’s role in creating and benefitting from the asset protection scheme.
`Retaining jurisdiction over counsel for potential sanctions is routine and the record warrants it here.
`BACKGROUND
`I.
`The attempt to game these proceedings by withdrawing as counsel.
`A.
`The Court previously ruled that this was an exceptional case and awarded Amazon over
`$5.3 million in attorney fees and costs. (Dkts. 648 & 656.) Amazon then began efforts to secure
`the judgment by serving discovery concerning PersonalWeb’s assets. (See Dkts. 659-3 & 659-4.)
`SAM represented PersonalWeb and has an interest in the litigation 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.) SAM responded to Amazon’s discovery by
`claiming that it did not represent PersonalWeb for that purpose and that Amazon had “no authority”
`to serve SAM. (Dkts. 661 & 659-1.) The Court ordered PersonalWeb to produce discovery. (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
`CORRECTED OPPOSITION TO MOTION
`TO WITHDRAW AS COUNSEL
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`Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 7 of 15
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`attorney who PersonalWeb retained to resist enforcement of the judgment. After receiving the
`Court’s orders, he instructed SAM that it was “not authorized to do anything post judgment.” (Id.
`at 1.) PersonalWeb did not comply with the Court’s orders. (Dkt. 673 at 2.) Instead, SAM moved
`to withdraw as counsel. (Dkt. 674.) During a hearing, the Court stated that corporate entities
`require representation by counsel. (See Dkt. 686 at 13:11–12, 9:17–18, 14:12–15.) It also stated
`that it would consider withdrawal only after Amazon filed an opposition. (Id. at 12:11–18.) Despite
`the Court’s instructions, just one day later SAM tried to secure a clerk’s order approving withdrawal
`by notice before Amazon could oppose. (Dkt. 678.) The notice identified a defunct UPS mailbox
`as an address for PersonalWeb. (Id.; Dkt. 691-1, ¶ 2.) SAM then re-filed the notice as a “motion,”
`withdrawing its original noticed motion. (Dkt. 679.) The Court denied it because “[a] corporation
`or other artificial entity must be represented by licensed counsel.” (Dkt. 685 (citations omitted).)
`Its attempt to avoid a contested motion thwarted, SAM re-filed its noticed motion, which the Court
`conditionally granted dependent on substitute counsel appearing. (Dkt. 688; Dkt. 694.)
`Amazon also moved to compel compliance with the Court’s order concerning document
`production. (Dkt. 687.) PersonalWeb and SAM did not respond by the deadline. The Magistrate
`Judge ordered PersonalWeb to produce all responsive documents without objections. (Dkt. 704.)
`The use of an asset protection scheme to force PersonalWeb into receivership.
`B.
`During this same period, the PersonalWeb principals triggered an asset protection scheme.
`While SAM is silent as to whether it played a role, SAM named-partner Murray Markiles is a
`founding director of PersonalWeb, and SAM was PersonalWeb’s corporate counsel. (Dkt. 717-12
`at 13.) In this scheme, four insider-investors in PersonalWeb (collectively, “Insiders”) have the
`same or overlapping beneficial owners: (1) Brilliant Digital Entertainment, Inc. (“BDE”), founded
`by Mr. 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 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.)
`CORRECTED OPPOSITION TO MOTION
`TO WITHDRAW AS COUNSEL
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`Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 8 of 15
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`These Insiders characterized investments in PersonalWeb as debt—four alleged “loans”
`dating back to August 2010 for which PersonalWeb pledged assets as collateral. (Dkt. 717.) The
`Insiders regularly amended their agreements such that the loans remained continually outstanding.
`The most recent December 31, 2019 restatement provided a new maturity date of December 31,
`2022. (Id.) Even though these restated “loans” were less than half-elapsed when the Court awarded
`fees against PersonalWeb, Insiders demanded immediate repayment in full around March 31, 2021.
`Insiders filed suit against PersonalWeb in California state court, demanding the
`appointment of a receiver and the entry of a preliminary injunction enjoining other PersonalWeb
`creditors. (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 injunction. (Dkt. 717-4.)
`None of these filings disclosed that Amazon is a creditor of PersonalWeb or that PersonalWeb’s
`beneficial owners are the same as Insiders’ (i.e., that Mr. Bermeister is directing both sides).
`The receivership order empowers the receiver to manage PersonalWeb, including this
`litigation and litigation counsel. (Gregorian Decl., ¶ 3, Ex. 3, ¶¶ 1–2, 14.) PersonalWeb’s President
`Mr. Weiss agreed to appointment of the receiver: “a Receiver is needed to take control of those and
`administer them for the protection of the secured [creditors.]” (Dkt. 717-4, ¶ 3.) The injunction
`further establishes that the receivership is run exclusively for Insiders’s benefit. (Dkts. 717-5 &
`717-6.) It bars any PersonalWeb creditor from enforcing claims against the PersonalWeb estate
`during the receivership—but it also carves out any pending PersonalWeb litigation. (Id. at 4.)
`The abuse of the receivership over PersonalWeb for the principals’ benefit.
`C.
`Insiders used the receivership to “lend” PersonalWeb up to $1 million to pay SAM and
`others to continue litigation. (Dkts. 717-7 & 717-8.) Insiders, SAM, and even the receiver’s
`counsel then began threatening Amazon with violations of the injunction and contempt sanctions
`if Amazon attempted to enforce the judgment or take discovery. (Gregorian Decl., ¶ 4, Exs. 4–7.)
`Following this Court’s orders, PersonalWeb served interrogatory responses that improperly
`asserted waived objections and incorporated its entire document production. (See, e.g., Dkt. 717-9
`at 1–3 (incorporating entire document production); id., at 4 (asserting privilege).) The document
`CORRECTED OPPOSITION TO MOTION
`TO WITHDRAW AS COUNSEL
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`Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 9 of 15
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`production was no better—records chosen by PersonalWeb without oversight by SAM. (See Dkt.
`717-10 at 3; id. at 2.) Initially, SAM stated that it would supplement. (Id. at 1.) But within hours,
`it did an about-face, asserting that Amazon’s request for compliance violates the injunction. (Id.)
`Amazon then sought to intervene in the state court action to resolve these threats and because
`Insiders’ prioritized $19 million claim would make this Court’s judgment uncollectable. The court
`denied the motion. (Gregorian Decl., ¶ 5, Ex. 8, at 5.) Amazon filed a lien, as well as appealed the
`intervention ruling and requested stays from both the trial and appellate courts. (Gregorian Decl.,
`¶¶ 6-9, Exs. 9–12.) Amazon then requested that this Court confirm its post-judgment jurisdiction,
`which the Court did. (Dkt. 717; Dkt. 725 at 3:8–10.) The Court also reaffirmed that SAM must
`remain counsel because a corporation cannot proceed pro se and Amazon has a right to have a
`PersonalWeb representative appear. (Id. at 10:15–20, 11:3–14, 13:20–14:1.)
`The current motion to reconsider the withdrawal issue.
`D.
`SAM now attempts to withdraw for a sixth time. (Dkt. 728.) It claims that there is a
`breakdown in the SAM-PersonalWeb relationship since the Court last ruled on withdrawal. (Id. at
`1:7–10.) But the basis of the “breakdown” is not any conflict with PersonalWeb or the receiver.
`Rather it is the interference by Mr. Bermeister (and others) with the receivership, primarily
`consisting of preventing compliance with this Court’s orders. (See id. at 3:18–24; Dkt. 728-3, ¶¶ 5,
`8; Dkt. 728-6, ¶¶ 5, 8.) In other words, not only is there no actual “breakdown,” the claimed
`“breakdown” is not new. Rather, SAM knew of the interference since May 2021 and indulged it
`for months to pursue the appeals and secure additional payments for itself.
`
`Given this revelation, Amazon requested that the receiver assume control of PersonalWeb
`and direct its compliance with this Court’s orders. (Gregorian Decl., ¶ 10, Ex. 13 at 1.) The
`receiver’s counsel later confirmed that the receiver has provided “big picture” direction to
`PersonalWeb’s attorneys about the litigations, but it has not had any input concerning discovery
`matters and has not directed SAM concerning compliance with this Court’s orders. (Id.) The
`receiver separately confirmed that he has access to PersonalWeb records. (Declaration of
`Christopher Lavin (“Lavin Decl.”), ¶ 2.) After these disclosures, SAM tried to cover up its failure
`to disclose Mr. Bermeister’s interference and instead blame the receiver. (Gregorian Decl., ¶¶ 11-
`CORRECTED OPPOSITION TO MOTION
`TO WITHDRAW AS COUNSEL
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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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`Case 5:18-md-02834-BLF Document 747 Filed 04/26/22 Page 10 of 15
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`12, Exs. 14–15.) It asked—apparently for the first time, and nine months after the Court’s orders—
`whether the receiver would secure PersonalWeb’s compliance. (See id., ¶ 11, Ex. 14 at 2.)
`ARGUMENT
`II.
`Legal Standard.
`A.
`“[A] motion for reconsideration may be made on one of three grounds: (1) a material
`difference in fact or law exists from that which was presented to the Court, which, in the exercise
`of reasonable diligence, the party applying for reconsideration did not know at the time of the order;
`(2) the emergence of new material facts or a change of law; or (3) a manifest failure by the Court
`to consider material facts or dispositive legal arguments presented before entry of judgment.” Doe
`1 v. Wolf, No. 18-cv-02349-BLF, 2020 WL 5576136, at *2 (N.D. Cal. Sept. 17, 2020) (slip. op.).
`In considering a motion for withdrawal, courts consider the following factors: (1) the
`reasons for withdrawal; (2) the possible prejudice to other litigants; (3) any harm to the
`administration of justice; and (4) whether withdrawal will delay resolution of the case. Deal v.
`Countrywide Home Loans, No. 09-cv-01643 SBA, 2010 WL 3702459, at *2 (N.D. Cal. Sept. 15,
`2010). “Ultimately, a ruling on a motion to withdraw must involve a balancing of the
`equities.” Robinson v. Delgado, No. 02-cv-1538-NJV, 2010 WL 3259384, at *2 (N.D. Cal. Aug.
`18, 2010) (emphasis supplied) (internal quotations omitted).
`SAM has not identified a material change to warrant reconsideration.
`B.
`
`The Court ordered that SAM may withdraw when substitute counsel appears. (Dkts. 685 &
`694.) The Court did so because PersonalWeb must have counsel. (See Dkt. 685); see also Rowland
`v. Cal. Men’s Colony, 506 U.S. 194, 201–202 (1993); Civ. L. R. 3-9(b). It did so also because
`SAM’s unconditional withdrawal would prejudice Amazon. (See Dkt. 694 at 3–4.) SAM does not
`raise any valid reason to reconsider the substitution requirement and leave PersonalWeb
`unrepresented: (1) the supposedly “new” ethical conflict that SAM invokes is illusory and SAM
`has known the key facts since May 2021; (2) the supposed conflict does not warrant unconditional
`withdrawal; and (3) Amazon will suffer prejudice if SAM withdraws unconditionally. Thus, the
`Court should deny the motion and SAM should remain counsel until any substitution, which the
`receiver can effectuate, and subject to the conditions discussed below.
`CORRECTED OPPOSITION TO MOTION
`CASE NOS. 5:18-md-02834-BLF,
`6
`TO WITHDRAW AS COUNSEL
`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 747 Filed 04/26/22 Page 11 of 15
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`The SAM-PersonalWeb principal relationship is irrelevant.
`
`1.
`SAM argues that new conflicts have arisen because PersonalWeb “representatives”
`interfered with the receivership causing PersonalWeb to violate the orders. (Dkt. 728 at 3, 5–6.)
`But SAM’s relationship with PersonalWeb’s principals is irrelevant to withdrawal. The receiver
`has had “exclusive control” of PersonalWeb. (Gregorian Decl., ¶ 3, Ex. 3, ¶¶ 1–2.) Moreover,
`PersonalWeb’s principals consented. (Dkt. 717-4, ¶ 3.) The receiver manages this litigation and
`may hire and direct counsel. (Gregorian Decl., ¶ 3, Ex. 3, ¶¶ 1–2.) The very purpose of a legitimate
`receivership is to protect creditors by giving the court control over the debtor and divesting current
`management. Moreover, information received from the receiver indicates that SAM faces no actual
`ethical conflict. The receiver has confirmed that he has access to PersonalWeb’s records. (Lavin
`Decl., ¶ 2; see also Gregorian Decl., ¶ 3, Ex. 3, ¶ 1.) And four days after SAM filed this motion,
`the receiver stated that he has given direction concerning this litigation and has not refused
`compliance with this Court’s orders. (See Gregorian Decl., ¶ 10, Ex. 13.) SAM has known for
`months that the receiver controls PersonalWeb. It admits it knew of the receivership in May 2021
`and has followed the state action and corresponded with the receiver. (Dkt. 728-6, ¶ 4.) SAM thus
`fails to show any ethical conflict or breakdown in its relationship with PersonalWeb—only that it
`inexplicably took direction from PersonalWeb’s ousted principals instead of the receiver.
`The harm to Amazon from withdrawal trumps any harm to SAM.
`2.
`SAM argues that Mr. Bermeister’s and Mr. Richards’s continuing interference with
`PersonalWeb place SAM at risk of violating California rules governing legal practice: (a) SAM
`continuing to take direction from these individuals is “willful disobedience or violation” of the
`receivership (citing Cal. Bus. & Prof. Code § 6103); (b) SAM cannot represent PersonalWeb
`competently because the PersonalWeb principals will not cooperate with discovery (citing Cal.
`Rule of Professional Conduct 1.1); and (c) SAM may face a future sanctions motion over its conduct
`and, if so, it plans to blame the PersonalWeb principals (citing Cal. Rule of Professional Conduct
`1.7(b)). (Dkt. 728 at 5–8.) As discussed above, SAM has presented no evidence of an ethical
`conflict in representing PersonalWeb. Instead, these are problems that SAM made for itself by
`continuing to take direction from the PersonalWeb principals and not the receiver.
`CORRECTED OPPOSITION TO MOTION
`CASE NOS. 5:18-md-02834-BLF,
`7
`TO WITHDRAW AS COUNSEL
`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 747 Filed 04/26/22 Page 12 of 15
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`But even assuming a potential conflict, SAM has presented no authority that professional
`responsibility standards supersedes either the federal rule against corporations proceeding pro se
`or the prejudice to Amazon from withdrawal. Instead, what authority exists suggests the opposite.
`“Th[e] rule against corporations appearing pro se has no specified exceptions, save for a few
`aberrant cases.” Gottlieb v. Alphabet Inc., No. 17-cv-06860-EJD, 2018 WL 2010976, at *4 (N.D.
`Cal. Apr. 30, 2018) (internal quotations omitted). For example, in Ohntrup v. Firearms Center,
`Inc., 802 F.2d 676 (3d Cir. 1986) the court affirmed the denial of counsel’s request to withdraw
`after a judgment against a defendant that had discharged its counsel after entry of the judgment and
`ceased communicating concerning discovery. The district court reasoned that permitting
`withdrawal would leave the court without a line of communication with an intractable litigant who
`had refused to satisfy the judgment or respond to discovery. Id. at 679. The Third Circuit, in turn,
`ruled that denial “fairly balanced [counsel’s] concerns with the court’s need for effective
`communication and efficient administration.” Id. Other courts hold similarly. See Wyman v. High
`Times Prods., Inc., No. 2:18-cv-02621-TLN-EFB, 2020 WL 6449236, at *3 (E.D. Cal. Nov. 3,
`2020); S.E.C. v. Poirier, No. 96-cv-2243, 2007 WL 2462173, at *2 (D. Ariz. Aug. 24, 2007).
`The facts here are analogous. After judgment, PersonalWeb’s principals—including Mr.
`Bermeister, a foreign national—purported to discharge SAM and refused to communicate about
`discovery. SAM at most faces the same challenges that courts have found insufficient to overcome
`the need for a line of communication with the defendant. (See Dkt. 725 at 10:15-20, 11:3-14.) By
`contrast, SAM cites only Chaleff v. Superior Court, 69 Cal. App. 3d 721 (1977). Chaleff concerned
`a public defender who, due to a claimed ethical conflict, refused an order to advise a criminal
`defendant proceeding pro se. The court of appeal allowed the public defender to withdraw. But
`Chaleff is distinguishable. The defendant was an individual who could proceed pro se and thus the
`public defender’s continued representation was unnecessary for further proceedings. (See Dkt. 725
`at 10:15–20, 11:3–14.) Moreover, no party suffered prejudice from the withdrawal.
`Unconditional withdrawal would prejudice Amazon.
`3.
`SAM’s remaining argument is that Amazon would no longer suffer prejudice from
`withdrawal because Amazon is “not moving with alacrity” to enforce the judgment. (Dkt. 728 at
`
`CORRECTED OPPOSITION TO MOTION
`TO WITHDRAW AS COUNSEL
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`8
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`
`
`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 747 Filed 04/26/22 Page 13 of 15
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`9; Dkt. 728-3, ¶ 9.) But Amazon pursued enforcement diligently through August 2021, when
`Insiders’ counsel, the receiver, and SAM itself began threatening Amazon that attempts to enforce
`the Court’s judgment violate the injunction.