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`Case 5:18-md-02834-BLF Document 747-13 Filed 04/26/22 Page 1 of 46
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`EXHIBIT 12
`EXHIBIT 12
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`Case 5:18-md-02834-BLF Document 747-13 Filed 04/26/22 Page 1 of 46
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`EXHIBIT 12
`EXHIBIT 12
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`Document received by the CA 2nd District Court of Appeal.
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`Case 5:18-md-02834-BLF Document 747-13 Filed 04/26/22 Page 2 of 46
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`IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
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`SECOND APPELLATE DISTRICT, DIVISION FOUR
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`AMAZON.COM, INC., AMAZON
`WEB SERVICES, INC., and
`TWITCH INTERACTIVE, INC.,
`
`
`Appellants,
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`v.
`
`LOS ANGELES COUNTY
`SUPERIOR COURT,
`
`
`Respondent,
`
`Court of Appeal No.
`B317580
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`
`Superior Court No.
`21VECV00575
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`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 Appellants’ Motion to Intervene
`Decided Nov. 17, 2021; Entered Nov. 17, 2021
`Hon. Bernie LaForteza, Dept. U, L.A. Cty. Sup. Ct.
`Hon. Valerie Salkin as of January 10, 2022
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`APPELLANTS’ OPENING BRIEF
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`Document received by the CA 2nd District Court of Appeal.
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`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
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`Michael J. Baratz
`(Pro Hac Vice pending)
`Steven K. Davidson
`(Pro Hac Vice forthcoming)
`Emma S. Marshak
`(Pro Hac Vice pending)
`STEPTOE & JOHNSON LLP
`1330 Connecticut Avenue, NW
`Washington, D.C. 20036
`Telephone: 202.429.6468
`Email: mbaratz@steptoe.com
`Email: sdavidson@steptoe.com
`Email: emarshak@steptoe.com
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`Counsel for Appellants
`AMAZON.COM, INC.,
`AMAZON WEB SERVICES,
`INC., AND TWITCH
`INTERACTIVE, INC.
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`CERTIFICATE OF INTERESTED ENTITIES OR PERSONS
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`Counsel for appellants 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.
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`Nature of interest
`
`Amazon.com, Inc.
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`Ownership interest in:
`Amazon Web Services, Inc.
`Ownership interest in:
`Twitch Interactive, Inc.
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`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).
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`Dated: March 25, 2022
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`By: /s/ Todd R. Gregorian
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`Todd R. Gregorian
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`C.
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`TABLE OF CONTENTS
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`TABLE OF AUTHORITIES .............................................................6
`INTRODUCTION .............................................................................9
`STATEMENT OF THE CASE ...................................................... 13
`STATEMENT OF APPEALABILITY ........................................... 15
`STATEMENT OF FACTS ............................................................. 16
`A.
`AMAZON’S JUDGMENT AGAINST PERSONALWEB ... 16
`B.
`INSIDERS’ COMPETING CLAIMS AGAINST
`PERSONALWEB ................................................................. 17
`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 ........................................ 18
`AMAZON MOVED UNOPPOSED TO INTERVENE,
`WHICH MOTION THE SUPERIOR COURT DENIED .... 21
`AUTHENTICITY OF EXHIBITS ....................................... 23
`E.
`ARGUMENT .................................................................................. 24
`A.
`STANDARD OF REVIEW ................................................... 24
`B.
`AMAZON HAS A RIGHT TO MANDATORY
`INTERVENTION ................................................................. 24
`1.
`Amazon has a direct interest in the PersonalWeb
`assets. ......................................................................... 25
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`D.
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`2.
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`3.
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`C.
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`D.
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`Denial of intervention would impede Amazon’s
`ability to protect its interest. ..................................... 32
`Amazon’s interests are not adequately represented
`by the existing parties. .............................................. 33
`AMAZON HAS A RIGHT TO PERMISSIVE
`INTERVENTION ................................................................. 34
`AMAZON HAS A VALID CLAIM FOR EQUITABLE
`SUBORDINATION .............................................................. 36
`CONCLUSION ............................................................................... 42
`CERTIFICATE OF WORD COUNT ............................................. 43
`DECLARATION OF SERVICE ..................................................... 44
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`TABLE OF AUTHORITIES
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`Page(s)
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`FEDERAL CASES
`
`Checkpoint Sys., Inc. v. All-Tag Sec. S.A.,
`858 F.3d 1371 (Fed. Cir. 2017) ................................................. 27
`Ocean Thermal Energy Corp. v. Coe,
`No. 19-05299, 2020 WL 4108161
`(C.D. Cal. Mar. 5, 2020) ..................................................... 30, 32
`
`Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
`572 U.S. 545 (2014) ................................................................... 27
`Pepper v. Litton,
`308 U.S. 295 (1939) ............................................................. 39, 40
`
`CALIFORNIA CASES
`Bame v. City of Del Mar,
`86 Cal. App. 4th 1346 (2001) .............................................. 15, 24
`Bank of N.Y. Mellon v. Citibank, N.A.,
`8 Cal. App. 5th 935 (2017) ........................................................ 38
`Carlsbad Police Officers Ass’n v. City of Carlsbad,
`49 Cal. App. 5th 135 (2020) ...................................................... 33
`Cnty. of Alameda v. Carleson,
`5 Cal. 3d 730 (1971) ............................................................ 15, 24
`Cont’l Vinyl Prods. Corp. v. Mead Corp.,
`27 Cal. App. 3d 543 (1972) ....................................................... 31
`Del Conte Masonry Co. v. Lewis,
`16 Cal. App. 3d 678 (1971) ................................................. 37, 38
`Edwards v. Heartland Payment Sys., Inc.,
`29 Cal. App. 5th 725 (2018) ...................................................... 24
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`Feresi v. Livery, LLC,
`232 Cal. App. 4th 419 (2014) .............................................. 37, 39
`Hodge v. Kirkpatrick Dev., Inc.,
`130 Cal. App. 4th 540 (2005) .............................................. 15, 24
`Hoover v. Galbraith,
`7 Cal. 3d 519 (1972) .................................................................. 31
`In re Pac. Coast Bldg.-Loan Ass’n of L.A.,
`15 Cal. 2d 134 (1940) ................................................................ 39
`Jun v. Myers,
`88 Cal. App. 4th 117 (2001) ...................................................... 15
`Knox v. Phoenix Leasing Inc.,
`29 Cal. App. 4th 1357 (1994) .............................................. 37, 39
`Lovett v. Point Loma Dev. Corp.,
`266 Cal. App. 2d 70 (1968) ....................................................... 30
`Nicoletti v. Lizzoli,
`124 Cal. App. 3d 361 (1981) ..................................................... 38
`Noya v. A.W. Coulter Trucking,
`143 Cal. App. 4th 838 (2006) .............................................. 15, 24
`Pangborn Plumbing Corp. v. Carruthers & Skiffington,
`97 Cal. App. 4th 1039 (2002) .................................................... 38
`Siena Ct. Homeowners Ass’n v. Green Valley Corp.,
`164 Cal. App. 4th 1416 (2008) ............................................ 24, 25
`Simpson Redwood Co. v. State of Cal.,
`196 Cal. App. 3d 1192 (1987) ............................................. 25, 29
`Turrieta v. Lyft, Inc.,
`69 Cal. App. 5th 955 (2021) ................................................ 24, 25
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`STATUTES AND RULES
`35 U.S.C. § 285 ............................................................................... 27
`Code Civ. Proc. § 387(d) ........................................................... 25, 34
`Code Civ. Proc. § 902 ..................................................................... 15
`Fed. R. Civ. P. 62(a) ....................................................................... 17
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`OTHER AUTHORITIES
`3 Cal. Real Est. Digest 3d Liens § 9 (June 2021) ......................... 38
`42A Cal. Jur. 3d Liens §§ 45, 48 ................................................... 39
`Patricia Redmond et al., Scary Nightmares for Secured
`Lenders, American Bankruptcy Institute Concurrent
`Session at 258-59 (July 18, 2013)............................................. 36
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`INTRODUCTION
`This dispute concerns the priority of the claims that
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`Amazon.com, Inc., Amazon Web Services, Inc., and Twitch
`Interactive, Inc. (collectively, “Amazon”), on the one hand, and
`Brilliant Digital Entertainment, Inc. (“BDE”), Europlay Capital
`Advisors, LLC (“ECA”), Claria Innovations, LLC (“Claria”), and
`Monto Holdings Pty Ltd. (“Monto” and, collectively, “Insiders”),
`on the other hand, have asserted against PersonalWeb
`Technologies, LLC (“PersonalWeb”).
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`Amazon holds a $5.4 million judgment for attorney fees and
`costs against PersonalWeb, awarded by a federal court based on
`PersonalWeb’s misconduct in filing and pursuing more than 80
`baseless patent lawsuits against Amazon customers.
`
`Insiders are the beneficial owners of PersonalWeb and
`share overlapping management with it. Insiders allege that they
`possess $19 million in demand instruments for funds which they
`lent PersonalWeb, in part to fund those abusive patent litigations
`in the hope of extorting settlement payoffs from Amazon’s
`customers. 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.
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`But as soon as the federal district court awarded Amazon
`its fees and costs, the Insiders filed the Superior Court action and
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`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 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.1
`What’s more, PersonalWeb’s only assets are the lawsuits
`against Amazon, Amazon customers, and other major technology
`companies like Google and Facebook. Insiders seeks to shift
`those assets from PersonalWeb to entities they otherwise control
`and by so doing avoid and frustrate Amazon’s judgment—a
`judgment that was awarded because of PersonalWeb’s abuse of
`the judicial system. If the receivership proceeds without
`Amazon’s intervention and subordination of Insiders’ claims,
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`1 For example, Claria owned 99% of PersonalWeb and had
`governing authority of PersonalWeb, at PersonalWeb’s formation
`(AA338-339); Monto owns 20% of PersonalWeb (AA355); the
`founder of BDE was Kevin Bermeister, the Non-Executive
`Chairman of PersonalWeb (AA358–373 (Exs. 18–20)); and the
`former chair and CEO of BDE, Mr. Bermeister’s cousin Mark
`Dyne, founded ECA. (AA366–401 (Exs. 20–22).)
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`PersonalWeb will be left with no assets whatsoever and only one
`liability—the judgment owed to Amazon.
`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, Insiders have used it to shield new payments to
`PersonalWeb to pay lawyers for more litigation against Amazon,
`Amazon’s customers, Google, and Facebook. This is but the latest
`chapter in what the federal district court described as
`“chameleon-like efforts” to “thwart collection of the judgment
`ordered by this Court.” (AA252–253.)
`Amazon moved for leave to intervene to enforce its
`judgment against PersonalWeb and establish priority over
`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 receivership action affects that interest because the
`receiver is currently dissipating PersonalWeb’s funds on
`litigation and will fully dispose of the PersonalWeb estate; and (3)
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`the current parties, Insiders—who procured the receivership
`through collusion with PersonalWeb—are using it to continue
`PersonalWeb’s patent litigation business while defeating
`Amazon’s attempt to collect the judgment, and cannot possibly
`“represent” Amazon’s interest. The Superior Court therefore
`erred in denying Amazon’s unopposed motion for leave to
`intervene, and this Court should reverse.
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`STATEMENT OF THE CASE
`In February 2020, the United States District Court for the
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`Northern District of California granted Amazon summary
`judgment in a multidistrict litigation consisting of 85 patent
`infringement lawsuits filed by PersonalWeb against Amazon
`customers in courts nationwide. (AA238.) In March and April
`2021, the District Court awarded Amazon attorney fees and costs,
`and accrued interest, in the sum of $5,403,122.68. (AA290–330
`(Exs. 14–16).)
`On April 27, 2021, Insiders filed a complaint in Superior
`Court seeking to have PersonalWeb enter receivership to benefit
`themselves to the detriment of PersonalWeb’s arms’ length
`creditors. (AA239; AA118 ¶ 26.) On May 3, 2021, Insiders moved
`for an order appointing a receiver, which the court granted a
`week later. (AA179–183 (Ex. 6); AA184–203 (Ex. 7).) On May 20,
`2021, Insiders moved for a preliminary injunction, which the
`court entered on June 1, 2021. (AA204–216 (Ex. 8); AA226–231
`(Ex. 10).)
`On August 10, 2021, Amazon sought to intervene as a
`plaintiff-creditor to enforce its judgment for fees and costs and
`protect its interest in the PersonalWeb estate, and, on August 19,
`2021, Insiders filed a statement of non-opposition to Amazon’s
`request. (AA232–248 (Ex. 11); AA416–420 (Ex. 24).) No party,
`including the receiver, opposed Amazon’s intervention. The
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`following week, on August 27, 2021, Insiders and PersonalWeb
`filed a stipulation for entry of final judgment for Insiders that
`remains pending before the Superior Court. (AA421–437 (Ex.
`25).)
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`On November 17, 2021, the Superior Court denied leave to
`intervene, ruling “Amazon’s motion does not show a sufficient
`interested [sic] in the current litigation to justify this Court
`granting intervention.” (AA438–452 (Ex. 26).) This appeal
`follows.
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`STATEMENT OF APPEALABILITY
`Amazon appeals from the judgment of the Los Angeles
`County Superior Court, Department U, under Code of Civil
`Procedure, section 902 and precedent. Cnty. of Alameda v.
`Carleson, 5 Cal. 3d 730, 736 (1971); Hodge v. Kirkpatrick Dev.,
`Inc., 130 Cal. App. 4th 540, 547 (2005); Noya v. A.W. Coulter
`Trucking, 143 Cal. App. 4th 838, 841 (2006); Jun v. Myers, 88
`Cal. App. 4th 117, 122–123 (2001); Bame v. City of Del Mar, 86
`Cal. App. 4th 1346, 1363 (2001).
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`STATEMENT OF FACTS
`A. Amazon’s judgment against PersonalWeb
`In 2018, PersonalWeb filed 85 patent infringement lawsuits
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`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. (AA238.) 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.)
`The United States Court of Appeals for the Federal Circuit
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`has affirmed both rulings. (AA36–61 (Ex. 2); AA402–415 (Ex.
`23).) PersonalWeb has sought review by the United States
`Supreme Court of the first ruling on preclusion (AA62–107 (Ex.
`3)), but any further review of that issue is of no practical
`consequence for the outcome given the later non-infringement
`ruling.
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`In March 2020, Amazon—as the prevailing party—moved
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`for attorney fees and costs. (AA15–35 (Ex. 1).) The federal
`district court held that PersonalWeb submitted deliberately
`inaccurate declaration testimony and engaged in other
`unreasonable conduct throughout the case. (AA261–267.) 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. (AA290–330 (Exs. 14–16).)
`This is $5,403,122.68 in attorney fees and costs and accrued
`interest.
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`Each order awarding fees became fully enforceable against
`PersonalWeb 30 days after it issued, as PersonalWeb failed to
`post a supersedeas bond under Federal Rule of Civil Procedure
`62(a). (AA327–330 (Ex. 16).)
`B.
`Insiders’ competing claims against
`PersonalWeb
`Insiders include the principals and beneficial owners of
`
`PersonalWeb. They have characterized their equity investments
`in PersonalWeb as secured debt in the amount of around $19
`million. PersonalWeb pledged all its tangible and intangible
`assets as collateral for these purported “loans.” (AA110 ¶ 7;
`AA115–119 ¶¶ 12, 16, 20–21, 27.)
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`The four instruments that support the Insiders’ claims first
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`issued in August 2010 (Claria), February 2011 (ECA), October
`2011 (BDE), and May 2012 (Monto). (AA110 ¶ 7; AA115–117
`¶¶ 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). (AA147 ¶ 3; AA111–118 ¶¶ 10, 15, 19, 24–25.)
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`All four instruments were amended and restated regularly,
`most recently on December 31, 2019. (A110 ¶ 7; AA115–117
`¶¶ 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 instruments was December
`31, 2022. (AA110 ¶ 7; AA115–119 ¶¶ 12, 16, 20–21, 27.)
`C.
`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
`On April 27, 2021, Insiders filed a complaint in Superior
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`Court seeking to have PersonalWeb enter receivership
`exclusively to benefit Insiders.
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`Although their purported “loans” did not mature until
`December 31, 2022, and they had just amended and restated
`them, Insiders demanded payment of the $19 million in full
`“prior to the institution of th[e] action.” (AA118 ¶ 26.) Insiders
`did not specify the date of the demand in their complaint, but
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`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. (AA239.)
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`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 (AA338–339); Monto owns 20% of PersonalWeb (AA355);
`the founder of BDE was Mr. Bermeister, the Non-Executive
`Chairman of PersonalWeb (AA358–373 (Exs. 18–20)); and the
`former Chairman and CEO of BDE, Mr. Bermeister’s cousin
`Mark Dyne, founded ECA. (AA374–401 (Exs. 21–22)).
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`On May 3, 2021, Insiders moved for an order appointing a
`receiver, which the Superior Court granted a week later.
`(AA179–183 (Ex. 6); AA184–203 (Ex. 7).) The court’s order
`directs the receiver to manage PersonalWeb’s assets to benefit
`Insiders. (See AA186 ¶ 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
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`retention, management, administration, and/or liquidation of the
`Collateral”).)
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`On May 20, 2021, Insiders moved for a preliminary
`injunction, which the court entered on June 1, 2021. (AA204–216
`(Ex. 8); AA226–231 (Ex. 10).) The preliminary injunction orders
`the Receiver to manage PersonalWeb assets to benefit the
`Insiders. (AA229, 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”); AA229-230, 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”).)
`
`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 Insiders
`which it could not pay, (b) its statement in a declaration filed by
`Insiders’ attorneys that “the best course of action with respect to
`the collateral is for the Receiver immediately to take possession”
`of it, and (c) its blanket consent to the appointment of the
`receiver and the entry of the preliminary injunction against its
`
`20
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`Document received by the CA 2nd District Court of Appeal.
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`Case 5:18-md-02834-BLF Document 747-13 Filed 04/26/22 Page 22 of 46
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`
`other creditors. (AA146–147 ¶¶ 2–4.) In short, Mr. Bermeister, a
`principal of both BDE and PersonalWeb, established the
`receivership so that the Insiders can continue to fund
`PersonalWeb’s litigations against Amazon and others without
`paying or securing the judgment.
`D. Amazon moved unopposed to intervene, which
`motion the Superior Court denied
`On August 10, 2021, Amazon sought to intervene as a
`
`plaintiff-creditor. On August 19, 2021, Insiders filed a statement
`of non-opposition to Amazon’s motion for leave to intervene.
`(AA416–420 (Ex. 24).) There was no opposition to Amazon’s
`motion for leave to intervene filed by any party including the
`receiver.2
`
`On August 27, 2021, Insiders (acting at the direction of Mr.
`Bermeister and members of his family) and PersonalWeb (also at
`the direction of Mr. Bermeister along with Mr. Weiss) continued
`their collusion by filing a stipulation for entry of judgment for
`Insiders against PersonalWeb. (AA421–437 (Ex. 25).) 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
`
`
`2 The reason for Insiders’ non-opposition to the motion to
`intervene became clear soon after—they intended to obtain a
`final judgment in their favor before Amazon’s request to
`intervene could even be heard.
`
`21
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`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-13 Filed 04/26/22 Page 23 of 46
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`
`amount totaling over $19 million (representing 100% of Insiders’
`claims rather than any arms’ length compromise). (AA423.)
`
`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 intervention.”
`(AA438–447 at AA443 (Ex. 26).) The Superior Court suggested
`instead that Amazon could file a lien against the proceeds from
`the case, which would not protect Amazon’s interest since (a) the
`receiver will dissipate the cash currently in the estate to pursue
`speculative patent litigations instead of paying Amazon’s
`judgment; and (b) without subordination, the combination of the
`receiver’s present use of PersonalWeb’s cash and assets to fund
`more litigation will more than exhaust the estate, leaving
`nothing for Amazon to enforce its lien against. At that same
`hearing, Amazon orally requested that the Court enter a stay
`pending appeal, which the Court refused to entertain. (AA450.)
`
`On December 2, 2021, Amazon filed a written motion
`renewing its stay request. (AA459–468 (Ex. 29).) Amazon,
`Insiders, and PersonalWeb all appeared before the Superior
`Court on December 8, 2021, during which hearing the court again
`refused to entertain Amazon’s motion for stay. (See AA469–476
`(Ex. 30).) Instead, it directed Amazon to notice a new hearing for
`April 27, 2022. This appeal followed on January 4, 2022, and
`
`22
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`Document received by the CA 2nd District Court of Appeal.
`
`Case 5:18-md-02834-BLF Document 747-13 Filed 04/26/22 Page 24 of 46
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`
`Amazon petitioned for a writ of supersedeas on January 14, 2022,
`which the Court denied on February 17, 2022.
`E. Authenticity of exhibits
`All exhibits in the Appendix accompanying this brief are
`true and correct copies of original documents that are on file in
`the Superior Court, U.S. District Court for the Northern District
`of California, U.S. Court of Appeals for the Federal Circuit, or
`United States Supreme Court, and are incorporated by reference.
`There is no reporter’s transcript of the hearing on Amazon’s
`motion for leave to intervene or for a stay because there was no
`court reporter present. The Superior Court issued a tentative
`ruling denying the motion for leave to intervene before the
`hearing and then adopted its tentative ruling as the basis for the
`final order denying the motion.
`
`
`
`
`
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`Document received by the CA 2nd District Court of Appeal.
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`Case 5:18-md-02834-BLF Document 747-13 Filed 04/26/22 Page 25 of 46
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`ARGUMENT
`Standard of review
`A.
`“An order denying a motion for leave to intervene is directly
`appealable because it finally and adversely determines the
`moving party’s right to proceed in the action.” Hodge, 130 Cal.
`App. 4th at 547; see also Noya, 143 Cal. App. 4th at 841; Jun, 88
`Cal. App. 4th at 122–123; Bame, 86 Cal. App. 4th at 1363; Cnty.
`of Alameda, 5 Cal. 3d at 736, Amazon moved the Superior Court
`for mandatory intervention pursuant to Code Civ. Proc.
`§ 387(d)(1)(B) and, in the alternative, for permissive intervention
`pursuant to Code Civ. Proc. § 387(d)(2). (AA245, AA247.) Denial
`of a motion for mandatory intervention is reviewed de novo.
`Edwards v. Heartland Payment Sys., Inc., 29 Cal. App. 5th 725,
`732 (2018); see also Siena Ct. Homeowners Ass’n v. Green Valley
`Corp., 164 Cal. App. 4th 1416, 1425 (2008) (collecting cases);
`Turrieta v. Lyft, Inc., 69 Cal. App. 5th 955, 976 (2021) (“Several
`appellate courts have implicitly applied the de novo standard of
`review to an order denying mandatory intervention.”), review
`granted on other grounds, 502 P.3d 3 (Cal. 2022). The denial of
`permissive intervention is reviewed for abuse of discretion. Id.
`B. Amazon has a right to mandatory intervention
`PersonalWeb and its beneficial owners, Insiders, have
`
`colluded to maintain control of PersonalWeb’s assets, and
`Amazon has a direct interest in asserting the superiority of its
`
`24
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`Document received by the CA 2nd District Court of Appeal.
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`Case 5:18-md-02834-BLF Document 747-13 Filed 04/26/22 Page 26 of 46
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`claim to those assets. A nonparty has the right to mandatory
`intervention where there is “an interest relating to the property
`or transaction which is the subject of the action and that person
`is so situated that the disposition of the action may impair or
`impede that person’s ability to protect that interest, unless that
`person’s interest is adequately represented by one or more of the
`existing parties.” Code Civ. Proc. § 387(d)(1)(B); Siena, 164 Cal.
`App. 4th at 1424 (“[A]n intervenor of right has by definition . . .
`an interest at stake which the other parties will not fully protect,
`and which the intervenor can fully protect only joining the
`litigation. Such a party therefore has an interest in the litigation
`similar to that of the original parties.” (internal citation
`omitted)). Amazon has made a “threshold showing” of a direct
`interest. Turrieta, 69 Cal. App. 5th at 977, and the Insiders’
`claims impede Amazon’s interests and cannot possibly
`“represent” Amazon. “[S]ection 387 should be liberally construed
`in favor of intervention.” Simpson Redwood Co. v. State of Cal.,
`196 Ca
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