Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 1 of 57
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 1 of 57
`
`EXHIBIT 11
`EXHIBIT 11
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 1 of 57
`
`EXHIBIT 11
`EXHIBIT 11
`
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 2 of 57
`
`IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
`
`SECOND APPELLATE DISTRICT, DIVISION ___
`
`AMAZON.COM, INC., AMAZON
`WEB SERVICES, INC., and
`TWITCH INTERACTIVE, INC.,
`
`
`Petitioners,
`
`v.
`
`LOS ANGELES COUNTY
`SUPERIOR COURT,
`
`
`Respondent,
`
`
`BRILLIANT DIGITAL
`ENTERTAINMENT, INC.,
`EUROPLAY CAPITAL ADVISORS,
`LLC, CLARIA INNOVATIONS, LLC,
`MONTO HOLDINGS PTY LTD, and
`PERSONALWEB TECHNOLOGIES,
`LLC,
`
`
`Real Parties in Interest.
`
`
`
`
`Appeal from an Order Denying Petitioners’ Motion to Intervene
`Decided Nov. 17, 2021; Entered Nov. 17, 2021
`Hon. Bernie LaForteza, Dept. U, L.A. Cty. Sup.Ct. (818-407-2243)
`Hon. Valerie Salkin as of January 10, 2022 (818-901-4608)
`
`PETITION FOR WRIT OF SUPERSEDEAS;
`MEMORANDUM OF POINTS AND AUTHORITIES
`
`
`
`1
`
`Document received by the CA 2nd District Court of Appeal.
`
`
`
`Court of Appeal No.
`B_______
`
`
`Superior Court No.
`21VECV00575
`
`
`STAY REQUESTED
`
`
`
`
`
`
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 3 of 57
`
`Document received by the CA 2nd District Court of Appeal.
`
`J. David Hadden
`State Bar No. 176148
`Todd R. Gregorian
`State Bar No. 236096
`Christopher S. Lavin
`State Bar No. 301702
`FENWICK & WEST LLP
`555 California Street, 12th Flr.
`San Francisco, CA 94104
`Telephone: 415.875.2300
`Email: dhadden@fenwick.com
`Email: tregorian@fenwick.com
`Email: clavin@fenwick.com
`
`Michael J. Baratz
`(Pro Hac Vice forthcoming)
`Steven Davidson
`(Pro Hac Vice forthcoming)
`STEPTOE & JOHNSON LLP
`1330 Connecticut Avenue, NW
`Washington, D.C. 20036
`Telephone: 202.429.6468
`Email: mbaratz@steptoe.com
`Email: sdavidson@steptoe.com
`
`Counsel for Petitioners
`AMAZON.COM, INC.,
`AMAZON WEB SERVICES,
`INC., AND TWITCH
`INTERACTIVE, INC.
`
`
`
`
`
`
`2
`
`
`
`
`
`
`
`
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 4 of 57
`
`CERTIFICATE OF INTERESTED ENTITIES OR PERSONS
`
`Counsel for petitioners certifies that interested entities or
`persons required to be listed under rule 8.208 of the California
`Rules of Court are as follows:
`
`Full name of interested
`entity or person
`Amazon.com, Inc.
`
`Nature of interest
`
`Amazon.com, Inc.
`
`Ownership interest in:
`Amazon Web Services, Inc.
`Ownership interest in:
`Twitch Interactive, Inc.
`
`
`The undersigned certifies that the above-listed persons or
`entities (corporations, partnerships, firms, or any other
`association, but not including government entities or their
`agencies) have either (1) an ownership interest of 10 percent or
`more in the party if it is an entity; or (2) a financial or other
`interest in the outcome of the proceeding that the justices should
`consider in determining whether to disqualify themselves, as
`defined in rule 8.208(e)(2).
`
`Dated: January 14, 2022
`
`
`By: /s/ Todd R. Gregorian
`
`Todd R. Gregorian
`
`
`
`
`
`
`
`3
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 5 of 57
`
`TABLE OF CONTENTS
`
`
`Page
`TABLE OF AUTHORITIES .............................................................7
`PETITION FOR WRIT OF SUPERSEDEAS ............................... 11
`PRAYER ......................................................................................... 12
`VERIFICATION ............................................................................ 13
`MEMORANDUM OF POINTS AND AUTHORITIES ................ 14
`I. INTRODUCTION ....................................................................... 14
`II. STATEMENT OF THE CASE .................................................. 18
`Parties. ....................................................................... 18
`Amazon’s judgment against PersonalWeb. .............. 19
`Insiders’ competing claim against PersonalWeb. .... 20
`Insiders demanded early repayment of their
`investment in PersonalWeb and brought the
`receivership action to evade the federal district court
`judgment, to the prejudice of Amazon. ..................... 21
`Amazon moved unopposed to intervene, which motion
`the Superior Court denied. ........................................ 24
`Amazon moved for a stay before the Superior Court.
`..................................................................................... 25
`Authenticity of exhibits. ............................................ 26
`
`III. BASIS FOR RELIEF ............................................................... 28
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`4
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 6 of 57
`
`2.
`
`
`
`
`
`3.
`
`IV. MEMORANDUM OF LAW ..................................................... 31
`An automatic statutory stay applies to continued
`proceedings at the Superior Court. ........................... 31
`1.
`None of the statutory exemptions to the
`automatic stay apply. ............................ 31
`The automatic stay prohibits entry of the
`stipulated judgment and any further
`proceedings. ............................................ 33
`Amazon’s writ petition is ripe because the
`Superior Court and Insiders have refused
`to acknowledge the automatic stay. ...... 37
`In the alternative, the Court should exercise its
`discretion to stay the case because the balance of
`hardships favors a stay and the appeal presents
`substantial issues. ..................................................... 38
`1.
`Amazon is more likely to be injured than
`PersonalWeb or Insiders without a stay.
`................................................................. 40
`a.
`Amazon will suffer irreparable
`harm. ............................................ 40
`A balancing of the hardships tips in
`favor of Amazon favoring a stay. 42
`Amazon’s appeal raises substantial
`issues. ..................................................... 44
`a.
`Amazon has a direct, arms’ length
`interest in the PersonalWeb assets.
`....................................................... 44
`
`b.
`
`2.
`
`5
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 7 of 57
`
`b.
`
`Amazon has a valid claim for
`equitable subordination. .............. 46
`Amazon will raise additional substantial arguments
`on appeal .................................................................... 50
`CONCLUSION ............................................................................... 51
`CERTIFICATE OF COMPLIANCE .............................................. 53
`EXHIBITS ...................................................................................... 54
`PROOF OF SERVICE ................................................................... 55
`
`
`
`
`
`
`
`
`
`6
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 8 of 57
`
`TABLE OF AUTHORITIES
`
`
`
`FEDERAL CASES
`
`Page(s)
`
`Gen. Ins. Co. v. Lowry,
`570 F.2d 120 (6th Cir. 1978)..................................................... 48
`Pepper v. Litton,
`308 U.S. 295 (1939) ............................................................. 46, 47
`
`CALIFORNIA CASES
`Bank of N.Y. Mellon v. Citibank, N.A.,
`8 Cal. App. 5th 935 (2017), as modified (Mar. 1, 2017) .......... 48
`Chapala Mgmt. Corp. v. Stanton,
`186 Cal. App. 4th 1532 (2010) .................................................. 37
`City of Hollister v. Monterey Ins. Co.,
`165 Cal. App. 4th 455 (2008) .................................................... 31
`Cont’l Vinyl Prods. Corp. v. Mead Corp.,
`27 Cal. App. 3d 543 (1972) ....................................................... 45
`Davis v. Custom Component Switches, Inc.,
`13 Cal. App. 3d 21 (1970) ................................................... 28, 40
`Deepwell Homeowners’ Protective Ass’n v. City Council of
`Palm Springs,
`239 Cal. App. 2d 63 (1965) ....................................................... 39
`Del Conte Masonry Co. v. Lewis,
`16 Cal. App. 3d 678 (1971) ....................................................... 48
`Dowling v. Zimmerman,
`85 Cal. App. 4th 1400 (2001) .................................................... 28
`
`7
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 9 of 57
`
`Elsea v. Saberi,
`4 Cal. App. 4th 625 (1992) ........................................................ 31
`English v. Olympic Auditorium, Inc.,
`217 Cal. 631 (1933) ................................................................... 48
`Estate of Murphy,
`16 Cal. App. 3d 564 (1971) ..................................... 28, 40, 42, 43
`Feresi v. Livery, LLC,
`232 Cal. App. 4th 419 (2014),
`as modified (Jan. 8, 2015)............................................. 47, 48, 49
`Hoover v. Galbraith,
`7 Cal. 3d 519 (1972) .................................................................. 45
`In re Dabney’s Estate,
`37 Cal. 2d 402 (1951) ................................................................ 37
`In re Marriage of Horowitz,
`159 Cal. App. 3d 377 (1984) ..................................................... 31
`In re Pac. Coast Bldg.-Loan Ass’n of L.A.,
`15 Cal. 2d 134 (1940) ................................................................ 47
`Knox v. Phoenix Leasing Inc.,
`29 Cal. App. 4th 1357 (1994) .............................................. 48, 49
`LAOSD Asbestos Cases,
`28 Cal. App. 5th 862 (2018) ...................................................... 37
`Mills v. Cty. of Trinity,
`98 Cal. App. 3d 859 (1979) ....................................................... 40
`Nicoletti v. Lizzoli,
`124 Cal. App. 3d 361 (1981) ..................................................... 48
`Nielsen v. Stumbos,
`226 Cal. App. 3d 301 (1990) ..................................................... 28
`
`8
`
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 10 of 57
`
`Document received by the CA 2nd District Court of Appeal.
`
`Pangborn Plumbing Corp. v. Carruthers & Skiffington,
`97 Cal. App. 4th 1039 (2002) .................................................... 48
`People ex rel. S.F. Bay Conservation & Dev. Comm’n v.
`Emeryville,
`69 Cal. 2d 533 (1968) ................................................................ 39
`Scottsdale Ins. Co. v. Super. Ct.,
`No. BC363862, 2011 WL 3629170 (2011) ................................ 32
`Socialist Workers 1974 Cal. Campaign Comm. v. Brown,
`53 Cal. App. 3d 879 (1975) ....................................................... 34
`Sun-Maid Raisin Growers of Cal. v. Paul,
`229 Cal. App. 2d 368 (1964) ..................................................... 42
`Varian Med. Sys., Inc. v. Delfino,
`35 Cal. 4th 180 (2005) ........................................................ passim
`
`STATUTES
`California Code of Civil Procedure § 116.810 ............. 17, 28, 32, 33
`California Code of Civil Procedure § 916 .................... 17, 32, 33, 34
`California Code of Civil Procedure § 916(a) ..................... 28, 31, 32
`California Code of Civil Procedure §§ 917.1
`through 917.9 ............................................................ 7, 28, 31, 32
`California Code of Civil Procedure Section 923 ............... 17, 38, 39
`
`RULES
`Federal Rule of Civil Procedure 62(a) ........................................... 20
`
`
`
`
`
`9
`
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 11 of 57
`
`OTHER AUTHORITIES
`3 Cal. Real Est. Digest 3d Liens § 9 (June 2021), Priorities ....... 49
`42A Cal. Jur. 3d Liens §§ 45, 48 ................................................... 49
`Eisenberg et al., Cal. Practice Guide:
`Civil Appeals and Writs (The Rutter Group 2013) ..... 32, 34, 37
`Patricia Redmond et al., Scary Nightmares for Secured
`Lenders, American Bankruptcy Institute Concurrent
`Session at 258–59 (July 18, 2013) ............................................ 46
`
`
`
`
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`10
`
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 12 of 57
`
`PETITION FOR WRIT OF SUPERSEDEAS
`Petitioners Amazon.com, Inc., Amazon Web Services, Inc.,
`and Twitch Interactive, Inc. (collectively, “Amazon”) seek a writ
`of supersedeas directing the respondent Los Angeles County
`Superior Court to stay the case pending the resolution of
`Amazon’s appeal of the order denying its motion for leave to
`intervene.
`
`
`
`
`
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`11
`
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 13 of 57
`
`Document received by the CA 2nd District Court of Appeal.
`
`
`
`PRAYER
`Amazon prays that a writ of supersedeas issue from this
`Court commanding the Superior Court to order a stay:
`(i)
`precluding the entry of the proposed stipulated
`judgment before the Superior Court (or any other
`final judgment) among real parties in interest
`Brilliant Digital Entertainment, Inc. (“BDE”),
`Europlay Capital Advisors, LLC (“ECA”), Claria
`Innovations, LLC (“Claria”), Monto Holdings Pty Ltd
`(“Monto”) (collectively, “Insiders”), and PersonalWeb
`Technologies, LLC (“PersonalWeb”);
`barring disbursement of any of PersonalWeb’s assets
`to the Insiders; and
`(iii) precluding any other management of the
`PersonalWeb estate by the receiver that would favor
`Insiders as creditors over Amazon;
`all pending the resolution of Amazon’s appeal of the Superior
`Court’s order denying Amazon’s motion for leave to intervene to
`protect its interests in the PersonalWeb estate.1
`
`(ii)
`
`
`1 Amazon does not seek a stay of other activities by the receiver,
`such as the receiver taking prudent steps to marshal assets to
`benefit all creditors or requesting receiver’s certificates. Amazon
`already requested this relief twice before the Superior Court,
`which denied it and refused to consider a renewed request on a
`timely basis but instead instructed Amazon to notice a hearing
`for late April 2022.
`
`12
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 14 of 57
`
`VERIFICATION
`I am counsel for Petitioners, am over the age of 18, and
`have read this Petition for Writ of Supersedeas; Memorandum of
`Points and Authorities and know its contents. I make this
`verification because I am familiar with the proceedings giving
`rise to this Petition.
`I either know the Petition’s allegations to be true or believe
`them to be true based on the documents in the accompanying
`Exhibits. The Exhibits are true and correct copies of documents
`filed or lodged in Respondent Los Angeles County Superior Court
`relating to the Order Denying Petitioners’ Motion to Intervene in
`Brilliant Digital Entertainment, Inc., et al. v. PersonalWeb
`Technologies, LLC, L.A. Cnty. Superior Court No. 21VECV00575,
`entered on November 17, 2021, which is the subject of this
`Petition.
`I declare under penalty of perjury under the laws of the
`State of California that the foregoing is true and correct and that
`this verification was executed on January 14, 2022, at San
`Francisco, California.
`
`
`By: /s/ Todd R. Gregorian
`
`Todd R. Gregorian
`
`13
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 15 of 57
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`I.
`INTRODUCTION
`This dispute concerns the assignment of priority for the
`competing claims Amazon and Insiders have asserted against
`PersonalWeb. Amazon holds a $5.4 million judgment for
`attorney fees and costs against PersonalWeb awarded based on
`PersonalWeb’s misconduct in filing and pursuing more than 80
`baseless patent lawsuits against Amazon customers. Insiders
`allege that they possess $19 million in demand instruments for
`funds which they lent PersonalWeb in-part to fund those abusive
`patent litigations and in the hope of extorting settlement payoffs
`from Amazon’s customers.
`Insiders are the beneficial owners of PersonalWeb and
`share overlapping management. They have amended and
`restated their alleged demand instruments multiple times over
`the course of a decade, and, based on the most recent
`restatement, those instruments did not mature until December
`31, 2022. But as soon as the federal district court awarded
`Amazon its fees and costs, the Insiders filed the Superior Court
`action and moved for a preliminary injunction and order
`establishing a receivership over PersonalWeb exclusively for their
`benefit and to the detriment of any other PersonalWeb creditors
`like Amazon. PersonalWeb, for its part, colluded with the
`
`14
`
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 16 of 57
`
`Document received by the CA 2nd District Court of Appeal.
`
`Insiders to establish the receivership and avoid paying the
`judgment it owes—it used Insiders’ own lawyers to submit a
`declaration to the court consenting immediately to the
`receivership. Neither the complaint nor any of Insiders’ other
`filings at the Superior Court disclosed that Amazon is a creditor
`of PersonalWeb or that the ultimate beneficial owners of
`PersonalWeb are the same as the ultimate beneficial owners of
`Insiders.2
`This is a profoundly inequitable result. It is axiomatic that
`arms’ length creditors like Amazon are to be paid before owners
`like Insiders. The Insiders have alleged (and Amazon agrees)
`that their $19 million demand exhausts PersonalWeb’s current
`estate many times over, and it will therefore defeat entirely
`Amazon’s ability to collect the judgment. And since obtaining the
`receivership, the Insiders have used it to shield new payments to
`PersonalWeb to pay its lawyers for more litigation against
`Amazon, Amazon’s customers, and other technology companies
`like Google and Facebook. This is but the latest chapter in what
`the federal district court described as PersonalWeb’s “chameleon-
`
`
`2 For example, Amazon has alleged that Claria owned 99% of
`PersonalWeb and had governing authority of PersonalWeb, at
`PersonalWeb’s formation (Ex. 13 at 229-230); Monto owns 20% of
`PersonalWeb (Id. at 246); the founder of BDE was Mr.
`Bermeister, the Non-Executive Chairman of PersonalWeb (Exs.
`14–16); and the former chair and CEO of BDE, Mr. Bermeister’s
`cousin Mark Dyne, founded ECA. (Exs. 16–18).
`
`15
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 17 of 57
`
`like efforts” to “thwart collection of the judgment ordered by this
`Court.” (Ex. 8 at 143–144.)
`Amazon moved for leave to intervene below to enforce its
`judgment against PersonalWeb and establish priority to Insiders,
`alleging causes of action for judgment enforcement, equitable
`subordination, and equitable accounting. Amazon meets the
`legal standard to intervene and have its claims heard and
`decided on the merits: (1) as a judgment creditor, Amazon has a
`direct and fundamental interest in the PersonalWeb estate; (2)
`the disposition of the receivership action will affect that interest
`because it fully disposes of that estate; and (3) the current
`parties, Insiders—who procured the receivership at best through
`collusion with PersonalWeb and at worst through an outright
`fraud on the court, and who are using it to continue
`PersonalWeb’s patent litigation business while defeating
`Amazon’s attempt to collect the judgment—cannot possibly
`“represent” Amazon’s interest. Nevertheless, the Superior Court
`denied Amazon’s unopposed motion for leave to intervene, which
`Amazon now appeals.
`In the meantime, Insiders and PersonalWeb have filed a
`stipulated judgment seeking to make the receivership in favor of
`Insiders permanent. This stipulated judgment remains pending
`and, once the Superior Court enters it, the path is paved to make
`permanent the management of the PersonalWeb estate to benefit
`
`16
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 18 of 57
`
`only the Insiders, including the dissipation of PersonalWeb’s
`current assets to fund continued litigation against Amazon itself.
`Moreover, both Mr. Bermeister at least one of the Insiders are
`based abroad, meaning that any assets transferred into their
`control may be placed outside the jurisdiction of the Court where
`they are effectively unrecoverable.
`As explained below, Amazon requests that the Court grant
`its petition for writ of supersedeas for a limited stay of the
`Superior Court action. The Court should impose an automatic
`stay, because the order denying Amazon’s motion for leave to
`intervene does not fall within any of the enumerated exceptions
`to the Section 916 automatic stay listed in Code of Civil
`Procedure Sections 917.1 through 917.9 and 116.810 and that
`order “embraces” or “affects” both the ongoing management of the
`receivership as well as any final judgment between PersonalWeb
`and the Insiders. Alternatively, if the Court determines that an
`automatic stay does not apply, Amazon requests that the Court
`exercise its discretion to stay the action under Code of Civil
`Procedure Section 923, because the balance of hardships weighs
`in Amazon’s favor and the appeal presents substantial issues.
`
`
`
`
`
`
`17
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 19 of 57
`
`II.
`STATEMENT OF THE CASE
`
` Parties.
`Petitioner Amazon.com, Inc. is a Delaware
`1.
`corporation with offices and employees throughout several of the
`United States, including the County of Los Angeles. (Ex. 19 at
`304 ¶ 1.)
`Petitioner Amazon Web Services, Inc. is a wholly-
`2.
`owned subsidiary of Amazon.com, Inc. (Id. ¶ 2.)
`Petitioner Twitch Interactive, Inc. is a wholly-owned
`3.
`subsidiary of Amazon.com, Inc. (Id. ¶ 3.)
`Respondent BDE is a Delaware corporation with its
`4.
`principal place of business in the County of Los Angeles. (Ex. 1
`at 9 ¶ 1.)
`Respondent ECA is a Delaware corporation with its
`5.
`principal place of business in the County of Los Angeles. (Id. at
`10 ¶ 2.)
`Respondent Claria is a Delaware limited liability
`6.
`company with its principal place of business in the County of Los
`Angeles. (Id. ¶ 3.)
`Respondent Monto is an Australian limited
`7.
`partnership with its principal place of business in New South
`Wales, Australia. (Id. ¶ 4.)
`
`18
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 20 of 57
`
`Respondent PersonalWeb is a limited liability
`8.
`company duly organized and existing under the laws of Texas
`and doing business in the County of Los Angeles, with its
`principal place of business at 112 E. Line Street, Suite 204, Tyler,
`TX 75702. (Ex. 19 at 304 ¶ 8.)
` Amazon’s judgment against PersonalWeb.
`In 2018, PersonalWeb filed 85 patent infringement
`9.
`lawsuits against Amazon customers in courts nationwide.
`Amazon intervened to defend its customers and filed a
`declaratory judgment suit against PersonalWeb seeking an
`injunction and declarations of claim and Kessler preclusion and
`non-infringement. (Ex. 7 at 129.) The federal Judicial Panel on
`Multidistrict Litigation centralized the suits in a multidistrict
`litigation proceeding in the United States District Court for the
`Northern District of California. Once there, Amazon moved for
`summary judgment of claim and Kessler preclusion, which the
`federal district court granted-in-part. (Id.) Amazon then moved
`for summary judgment of non-infringement as to all remaining
`claims, which the federal district court granted in February 2020.
`(Id.)
`10. The United States Court of Appeals for the Federal
`Circuit has affirmed both rulings. PersonalWeb has sought
`review by the United States Supreme Court of the first ruling on
`preclusion, but any further review of that issue is of no practical
`
`19
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 21 of 57
`
`consequence for the outcome given the later non-infringement
`ruling.
`In March 2020, Amazon—as the prevailing party—
`11.
`moved for attorney fees and costs. (Id.) The federal district court
`held that PersonalWeb brought baseless claims, submitted
`inaccurate declaration testimony, and engaged in other
`unreasonable conduct throughout the case. (Ex. 9 at 152–158.)
`On March 2, 2021, the federal district court awarded Amazon
`$4,615,242.28 in fees and $203,300.10 in non-taxable costs
`against PersonalWeb for work performed until February 2020,
`and on April 19, 2021, it awarded Amazon another $571,961.71 in
`fees and $11,120.97 in costs for work performed between
`February 2020 and February 2021. (Exs. 10–12.) This is
`$5,403,122.68 in attorney fees and costs and accrued interest.
`12. Each order awarding fees became a fully enforceable
`final judgment against PersonalWeb 30 days after it issued, as
`PersonalWeb failed to post a supersedeas bond under Federal
`Rule of Civil Procedure 62(a). (Ex. 12.)
`Insiders’ competing claim against PersonalWeb.
`
`Insiders include the principals and beneficial owners
`13.
`of PersonalWeb. They have characterized their equity
`investments in PersonalWeb as secured debt in an amount of
`around $19 million. PersonalWeb pledged all of its tangible and
`
`20
`
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 22 of 57
`
`Document received by the CA 2nd District Court of Appeal.
`
`intangible assets as collateral for these purported “loans.” (Ex. 1
`at 10 ¶ 7; 15–19 ¶¶ 12, 16, 20–21, 27.)
`14. The four instruments that support the Insiders’
`claims first issued in August 2010 (Claria), February 2011 (ECA),
`October 2011 (BDE), and May 2012 (Monto). (Id. at 10 ¶ 7; 15–17
`¶¶ 12, 16, 20.) The security agreements pledging “all of
`[PersonalWeb’s] tangible and intangible assets” as collateral
`issued in May 2012 (Monto and BDE) and March 2014 (ECA and
`Claria). (Ex. 2 at 47 ¶ 3; Ex. 1 at 11–18 ¶¶ 10, 15, 19, 24–25.)
`15. All four instruments were amended and restated
`regularly, most recently on December 31, 2019. (Ex. 1 at 10 ¶ 7;
`15–17 ¶¶ 12, 16, 20.) This latest amendment and restatement
`was the fourth for BDE and Monto, and the third for ECA and
`Claria. (Id.) The maturity date for all four, which collectively
`total about $19 million, was December 31, 2022. (Id. at 10 ¶¶ 7;
`15–19 ¶¶ 12, 16, 20–21, 27.)
`
`
`
`Insiders demanded early repayment of their
`investment in PersonalWeb and brought the
`receivership action to evade the federal district
`court judgment, to the prejudice of Amazon.
`16. On April 27, 2021, Insiders filed a complaint in
`Superior Court seeking to have PersonalWeb enter receivership
`exclusively to benefit Insiders.
`17. Although their purported “loans” did not mature
`until December 31, 2022, and they had just amended and
`
`21
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 23 of 57
`
`restated them on December 31, 2019, Insiders demanded
`payment of the $19 million in full “prior to the institution of th[e]
`action.” (Ex. 1 at 18 ¶ 26.) Insiders did not specify the date of the
`demand in their complaint, but state the amounts due as of
`March 31, 2021—thus, the reasonable inference to draw from
`Insiders’ silence (and the accelerated demand less than halfway
`through the term of loans amended and restated multiple times
`over the course of nearly a decade) is that the demand occurred
`between the federal district court’s March 2, 2021 award of
`millions of dollars of fees and costs to Amazon and March 31,
`2021. (Ex. 7 at 130.)
`18. Amazon alleges that real parties in interest BDE,
`ECA, Claria, and Monto are insiders, with the same beneficial
`owner as PersonalWeb: Claria owned 99% of PersonalWeb, and
`had governing authority of PersonalWeb, when PersonalWeb was
`formed (Ex. 13 at 229-230); Monto owns 20% of PersonalWeb (Id.
`at 246); the founder of BDE was Mr. Bermeister, the Non-
`Executive Chairman of PersonalWeb (Exs. 14–16); and the
`former Chairman and CEO of BDE, Mr. Bermeister’s cousin
`Mark Dyne, founded ECA. (Exs. 16–18).
`19. On May 3, 2021, Insiders moved for an order
`appointing a receiver, which the Superior Court granted a week
`later. (Exs. 3–4.) The court’s order directs the receiver to
`manage PersonalWeb’s assets exclusively to benefit Insiders.
`
`22
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 24 of 57
`
`(See id. at 86 ¶ 1 (enabling the Receiver to “seize, manage,
`control, operate, and collect all of the collateral of [Insiders] (i.e.,
`all of [PersonalWeb’s] personal property assets) . . . as the
`Receiver deems necessary for the property retention,
`management, administration, and/or liquidation of the
`Collateral”).)
`20. On May 20, 2021, Insiders moved for a preliminary
`injunction, which the court entered on June 1, 2021. (Ex. 5; Ex. 6
`(“Preliminary Injunction”).) The Preliminary Injunction also
`orders the Receiver to manage PersonalWeb assets only to benefit
`Insiders. (Id. at 120, clause (f) (barring the Receiver and all
`others from “[d]iverting in any way any of the proceeds from
`Plaintiffs’ Collateral including without limitation accounts,
`accounts receivable, general intangibles, payment intangibles,
`equipment, and/or inventory”); id. at 120–121, clause (h) (barring
`the Receiver and all others from “[f]ailing or refusing to
`immediately turn over to the Receiver Plaintiffs’ Collateral and
`all monies, checks, funds, or proceeds relating to Plaintiffs’
`Collateral”).)
`21. The unusually expedited schedule of the Superior
`Court action—a little over a month between the initiation of the
`case and the establishment of the receivership—would not have
`been possible without PersonalWeb’s collusion, in the form of (a)
`its immediate concession that it owed a $19 million debt to
`
`23
`
`
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 25 of 57
`
`Document received by the CA 2nd District Court of Appeal.
`
`Insiders which it could not pay, (b) its statement in a declaration
`filed by Insiders’ own attorneys that “the best course of action
`with respect to the collateral is for the Receiver immediately to
`take possession” of it, Ex. 2 at 47 ¶¶ 2–4, and (c) its blanket
`consent to the appointment of the receiver and the entry of the
`preliminary injunction.
` Amazon moved unopposed to intervene, which
`motion the Superior Court denied.
`22. On August 10, 2021, Amazon sought to intervene as a
`plaintiff-creditor because it has an interest in the property
`involved in the litigation (the assets in the PersonalWeb estate)
`and is so situated that any judgment rendered in its absence,
`prioritizing the claims of Insiders over its $5.4 million judgment
`against PersonalWeb, will impair Amazon’s ability to protect that
`interest. (Ex. 7.)
`23. On August 19, 2021, Insiders filed a statement of
`non-opposition to Amazon’s motion for leave to intervene. (Ex.
`20.) There was no opposition to Amazon’s motion for leave to
`intervene filed by any party including the receiver.
`24. The reason for Insiders’ non-opposition to the motion
`became clear soon after—they intended to obtain a final
`judgment in their favor before Amazon’s request to intervene
`could even be heard. On August 27, 2021, Insiders (acting at the
`direction of Mr. Bermeister and members of his family) and
`PersonalWeb (also acting at the direction of Mr. Bermeister along
`
`24
`
`
`
`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-12 Filed 04/26/22 Page 26 of 57
`
`with Mr. Weiss) continued their collusion by filing a stipulation
`for entry of judgment for Insiders against PersonalWeb. (Ex. 21.)
`The stipulated judgment purports to finalize the receivership,
`and states that “[j]udgment shall be entered immediately in this
`action” in favor of the Insiders against PersonalWeb in an
`amount totaling over $19 million (representing 100% of Insiders’
`claims rather than any arms’ length compromise). (Id. at 316)
`25. On November 17, 2021, the Superior Court denied
`Amazon’s unopposed motion for leave to intervene, finding
`“Amazon’s motion does not show a sufficient interested [sic] in
`the current litigation to justify this Court granting intervent
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
