Case 5:18-md-02834-BLF Document 854 Filed 03/08/23 Page 1 of 6
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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
`CHRISTOPHER S. LAVIN (CSB No. 301702)
`clavin@fenwick.com
`FENWICK & WEST LLP
`Silicon Valley Center
`801 California Street
`Mountain View, CA 94041
`Telephone:
`650.988.8500
`Facsimile:
`650.938.5200
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`Counsel for Defendants AMAZON.COM, INC.,
`AMAZON WEB SERVICES, INC., and
`TWITCH INTERACTIVE, INC.
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`IN RE: PERSONAL WEB TECHNOLOGIES,
`Case No.: 5:18-md-02834-BLF
`LLC ET AL., PATENT LITIGATION
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`Case No. 5:18-cv-00767-BLF
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`AMAZON.COM, INC., and AMAZON WEB
`Case No. 5:18-cv-05619-BLF
`SERVICES, INC.,
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`ADMINISTRATIVE MOTION OF
`Plaintiffs
`AMAZON.COM, INC., AMAZON WEB
`SERVICES, INC., AND TWITCH
`INTERACTIVE, INC. FOR RELIEF
`FROM PROTECTIVE ORDER
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`v.
`PERSONALWEB TECHNOLOGIES, LLC and
`LEVEL 3 COMMUNICATIONS, LLC,
`Defendants,
`PERSONALWEB TECHNOLOGIES, LLC and
`LEVEL 3 COMMUNICATIONS, LLC,
`Plaintiffs
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`v.
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`TWITCH INTERACTIVE, INC. a Delaware
`corporation
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`Defendants.
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`ADMIN. MOTION FOR RELIEF FROM PO
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`CASE NOS 5:18-md-02834-BLF;
`5:18-cv-00767-BLF; 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 854 Filed 03/08/23 Page 2 of 6
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`Amazon moves under Civil Local Rule 7-11 for limited relief from the protective order to
`allow certain discovery produced in this action to be submitted as evidence in the Los Angeles
`County Superior Court action (Civ. A. No. 21VECV00575) in a filing currently due March 21, 2023.
`As the Court is aware, Amazon has intervened in that case because PersonalWeb’s beneficial owners
`used their own related entities1 to obtain a receivership and an injunction preventing legitimate
`creditors like Amazon from enforcing debts against PersonalWeb. Amazon’s complaint in
`intervention asserts a claim for equitable subordination, alleging that because the investors are
`insiders who own PersonalWeb and colluded with it, their loans should be treated as equity, and they
`should collect from PersonalWeb only after Amazon has been paid.
`The investors’ newest trick has been filing special motions to strike (anti-SLAPPs) against
`Amazon’s complaint in intervention, arguing—apparently for the first time in the history of
`California’s heavily litigated anti-SLAPP statute—that Amazon’s claim to priority in distribution of
`assets from the estate is frivolous litigation brought merely to punish the investors for exercising
`their First Amendment rights. To respond, Amazon must come forward with evidence to support its
`claims. But most of that evidence was produced under a protective order in this case. In December,
`Amazon requested that the investors deem their productions as also made in the Superior Court
`action, but the investors did not meaningfully engage Amazon concerning the proposal. (Declaration
`of Christopher Lavin in Support of Administrative Motion (“Lavin Decl.”), Ex. 1.) Discovery in the
`Superior Court is now stayed while the anti-SLAPP motion is pending. And even though the
`Superior Court case involves the identical parties (Amazon, PersonalWeb, and the subpoenaed
`investors), PersonalWeb and the investors have claimed that Amazon’s use of documents from this
`case to defend itself would violate this Court’s protective order.2 There is no legitimate reason for
`this refusal, as any actual confidentiality interests in the documents will be protected by the Superior
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`1 Brilliant Digital Entertainment, Inc. (“BDE”), Claria Innovations, LLC (“Claria”), Europlay
`Capital Advisors, LLC (“ECA”), and Monto Holdings Pty Ltd. (“Monto”) (collectively,
`“investors”).
`2 PersonalWeb, Claria, and ECA have refused Amazon’s use of their productions. BDE and
`Monto have agreed to the use of some documents, but refused as to their financial records.
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`ADMIN. MOTION FOR RELIEF FROM PO
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`CASE NOS 5:18-md-02834-BLF;
`5:18-cv-00767-BLF; 5:18-cv-05619-BLF
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`Case 5:18-md-02834-BLF Document 854 Filed 03/08/23 Page 3 of 6
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`Court’s sealing procedures. These parties simply seek to hamstring Amazon and prevent the
`Superior Court from seeing more evidence of their misconduct. Amazon therefore respectfully
`moves for limited relief as set forth in the proposed order.
`I.
`BACKGROUND
`The Court is familiar with the background of the case, but Amazon includes an abbreviated
`summary of the facts relevant to the current motion. The Court entered judgment in favor of Amazon
`and ultimately awarded it $5,403,122.68 in attorney fees and costs. (Dkt. 708.) The Court’s first
`fee order prompted PersonalWeb’s beneficial owners to trigger an asset protection scheme. They
`had previously characterized a major portion of their investment in PersonalWeb as “loans” from
`four related entities, each secured by “all of [PersonalWeb’s] tangible and intangible assets” as
`collateral. The loans issued between August 2010 and May 2012, but they were regularly amended
`over the next decade to extend their maturity dates. In the meantime, PersonalWeb eventually
`operated as an undercapitalized shell—the investors paid PersonalWeb’s operating expenses as they
`came due, sometimes even paying them directly without bothering to deposit the funds in
`PersonalWeb’s account. And they promptly withdrew and distributed litigation settlement proceeds
`that PersonalWeb received.
`When the Court awarded Amazon its fees, the four loans were not scheduled to mature until
`December 2022, more than a year and a half away. But after discussing the fee award with
`PersonalWeb’s litigation counsel Stubbs Alderton, the investors demanded immediate repayment in
`full, and then sued PersonalWeb for non-payment in April 2021. (Dkt. 717-2.) Within days,
`PersonalWeb, through its President, Michael Weiss, signed a declaration prepared on the stationery
`of the investors’ counsel, agreeing that PersonalWeb owed $19 million and could not pay, and
`consenting to the appointment of a receiver and the entry of a preliminary injunction. (Dkt. 717-4.)
`The receivership placed PersonalWeb’s assets beyond the reach of the fee award while PersonalWeb
`continued to pursue its business in the normal course. The receiver was ordered to run PersonalWeb
`specifically for the benefit of the investors, while legitimate creditors like Amazon were enjoined
`from collecting.
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`ADMIN. MOTION FOR RELIEF FROM PO
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`CASE NOS 5:18-md-02834-BLF;
`5:18-cv-00767-BLF; 5:18-cv-05619-BLF
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`Case 5:18-md-02834-BLF Document 854 Filed 03/08/23 Page 4 of 6
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`As this scheme was unfolding, Amazon served post-judgment discovery on PersonalWeb
`and the four investor entities in this Court, (Dkts. 689-1 & 689-2 (Discovery), Dkt. 704 (Order);
`Dkts. 733-1, 733-2, 733-3, & 771-1 (Discovery), Dkts. 738, 750, & 779 (Orders)), which has
`yielded thousands of pages of documents, including documents showing that the PersonalWeb
`investors are the beneficial owners of PersonalWeb, that they colluded to frustrate the judgment,
`that PersonalWeb was purposely undercapitalized and repeatedly had to seek funding from the
`investors for its basic operation, and more.
`Amazon was permitted to intervene in the receivership action in December 2022. (Lavin
`Decl., Ex. 2 (Complaint in Intervention).) In late January/early February 2023, the investors filed
`two special motions to strike (anti-SLAPP) portions of Amazon’s complaint in intervention,
`including the cause of action for equitable subordination that seeks to assign priority to Amazon in
`the distribution of the estate. (Lavin Decl., Exs. 3-4.) To oppose these motions, Amazon must
`demonstrate the merit of its claim for equitable subordination by establishing a probability of
`success. See Equilon Enterprises v. Consumer Cause, Inc., 29 Cal. 4th 53, 67 (2002) (“Section
`425.16, subdivision (b)(1) requires the court to engage in a two-step process. First, the court decides
`whether the defendant has made a threshold showing that the challenged cause of action is one
`arising from protected activity….If the court finds such a showing has been made, it then
`determines whether the plaintiff has demonstrated a probability of prevailing on the claim.”
`(emphasis supplied).) Amazon currently faces an imminent March 21, 2023 deadline for filing its
`opposition to the motions to strike.
`The protective orders in this case bar Amazon from using the discovery produced in this
`action in other actions, such as the receivership action. (See, e.g., Dkt. 427 at 9-11 (§§ 7.1, et seq.
`(“A Receiving Party may use Protected Material that is disclosed or produced by another Party or
`by a Non-Party in connection with these Actions only for prosecuting, defending, or attempting to
`settle these Actions,” and generally restricting disclosure to certain specified classes of individuals).)
`Accordingly, Amazon now moves for relief from the protective order to use discovery from
`PersonalWeb and the PersonalWeb investors to oppose the motions to strike and support its cause
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`ADMIN. MOTION FOR RELIEF FROM PO
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`CASE NOS 5:18-md-02834-BLF;
`5:18-cv-00767-BLF; 5:18-cv-05619-BLF
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`Case 5:18-md-02834-BLF Document 854 Filed 03/08/23 Page 5 of 6
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`of action for equitable subordination.
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`II.
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`THE COURT SHOULD GRANT AMAZON’S REQUEST FOR RELIEF FROM THE
`PROTECTIVE ORDER
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`The Ninth Circuit “strongly favors access to discovery materials to meet the needs of parties
`engaged in collateral litigation.” Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1131 (9th
`Cir. 2003). In fact, “[w]here reasonable restrictions on collateral disclosure will continue to protect
`an affected party’s legitimate interests in privacy, a collateral litigant’s request to the issuing court
`to modify an otherwise proper protective order so that collateral litigants are not precluded from
`obtaining relevant material should generally be granted.” Id. (citing Beckman Indus., Inc. v. Int’l
`Ins. Co., 966 F.2d 470, 475 (9th Cir. 1992); Olympic Refining Co. v. Carter, 332 F.2d 260, 265-66
`(9th Cir. 1964)).
`When evaluating whether to grant relief from a protective order, the court considers “the
`relevance of the protected discovery to the collateral proceedings and its general discoverability
`therein.” Id. Next, the court considers the reliance interest of the party opposed to the relief;
`however, where a blanket protective order is at issue, “any legitimate interest…can be
`accommodated by placing [the collateral litigants] under the same restrictions on use and disclosure
`contained in the original protective order.”’ Id. at 1133. Applying this framework, Amazon’s
`limited request should be granted.
`First, the relief sought is necessary to allow Amazon to oppose the investors’ motions to
`strike and to support the cause of action for equitable subordination. The discovery obtained in this
`case shows that the investors are the beneficial owners of PersonalWeb, that they colluded to
`frustrate the judgment, and that PersonalWeb was purposely undercapitalized and repeatedly seeking
`last minute cash infusions from the investors for its day-to-day operations. This evidence is relevant
`to Amazon’s claim that it would be inequitable to allow what are in essence equity investors to
`collect a $19 million “debt” from PersonalWeb before this Court’s judgment is satisfied. Amazon
`has no other route to get this evidence before the Superior Court because PersonalWeb and the
`investors have refused to deem it produced in that action and discovery is stayed. Amazon has thus
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`ADMIN. MOTION FOR RELIEF FROM PO
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`CASE NOS 5:18-md-02834-BLF;
`5:18-cv-00767-BLF; 5:18-cv-05619-BLF
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`Case 5:18-md-02834-BLF Document 854 Filed 03/08/23 Page 6 of 6
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`shown a clear need for relief. See Foltz, 331 F.3d at 1131; Beckman, 966 F.2d at 476; CBS
`Interactive, Inc. v. Etilize, Inc., 257 F.R.D. 195, 204-206 (N.D. Cal. 2009) (allowing the plaintiff to
`use confidential material produced by the defendant to pursue claims against the defendant in state
`court).
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`Second, any confidentiality interests in the documents will be protected. The materials will
`be accessed only by outside counsel and the Superior Court, and any confidential exhibits or portions
`of Amazon’s opposition brief can be filed under seal, pursuant either to motion or under a similar
`blanket protective order in that court. See Cal. Rules of Court, rules 2.550-2.551 (Sealed records;
`Procedures for filing records under seal).
`Third, neither PersonalWeb nor the investors have provided any specific, legitimate reason
`that Amazon should not be afforded the relief requested in this motion. BDE and Monto have already
`consented to use of most of their production (i.e., BDE- and Monto- Bates-stamped documents) but
`refuse as to relevant financial documents. The other parties have simply refused all use without
`legitimate grounds,3 to try to keep relevant evidence from the Superior Court and obtain an unfair
`advantage over Amazon on the motions to strike.
`Respectfully submitted,
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`Dated: March 8, 2023
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`FENWICK & WEST LLP
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`By: /s/ Todd R. Gregorian
`Todd R. Gregorian
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`Counsel for AMAZON.COM, INC.
`AMAZON WEB SERVICES, INC. and
`TWITCH INTERACTIVE, INC.
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`3 Claria and ECA have objected to use of the materials because “discovery proceedings” are stayed
`in the receivership action under the SLAPP statute. See Cal. Civ. Proc. § 425.16(g). First, this
`subsection is not triggered because Claria and ECA have already produced the documents to
`Amazon, and Amazon is requesting relief in this case where discovery is not stayed—no further
`“discovery proceedings” in the receivership action are necessary to simply grant Amazon use of the
`documents. Second, the purpose of the discovery stay is not frustrated by allowing use of the
`documents, because there are no additional litigation discovery costs incurred by simply permitting
`their use. See Equilon, 29 Cal. 4th at 65 (noting that the “stay of discovery” pending resolution of
`the motion evidences the Legislature’s intent to minimize the litigation costs of SLAPP targets.).
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`ADMIN. MOTION FOR RELIEF FROM PO
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`CASE NOS 5:18-md-02834-BLF;
`5:18-cv-00767-BLF; 5:18-cv-05619-BLF
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