Case 5:18-md-02834-BLF Document 855 Filed 03/13/23 Page 1 of 7
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`Mark Holscher (SBN 139582)
`mark.holscher@kirkland.com
`Michael Shipley (SBN 233674)
`michael.shipley@kirkland.com
`Matthew Gamsin (SBN 307830)
`matthew.gamsin@kirkland.com
`KIRKLAND & ELLIS LLP
`555 South Flower Street
`Los Angeles, CA 90071
`Telephone: (213) 680-8400
`
`Attorneys for Third Parties Europlay Capital
`Advisors, LLC and Claria Innovations, LLC
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`Case No.: 5:18-md-02834-BLF
`IN RE: PERSONAL WEB TECHNOLOGIES,
`LLC ET AL., PATENT LITIGATION,
`
`Case No.: 5:18-cv-00767-BLF
`AMAZON.COM, INC., and AMAZON WEB
`SERVICES, INC.,
`Case No.: 5:18-cv-05619-BLF
`
`Plaintiffs
`EUROPLAY CAPITAL ADVISORS,
`LLC’S AND CLARIA INNOVATIONS,
`LLC’S OPPOSITION TO
`“ADMINISTRATIVE MOTION” FOR
`RELIEF FROM PROTECTIVE ORDER
`
`v.
`PERSONALWEB TECHNOLOGIES, LLC and
`LEVEL 3 COMMUNICATIONS, LLC,
`Defendants.
`
`PERSONALWEB TECHNOLOGIES, LLC, and
`LEVEL 3 COMMUNICATIONS, LLC,
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`Plaintiffs,
`
`v.
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`TWITCH INTERACTIVE, INC.,
`
`Defendant.
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`OPPOSITION TO “ADMINISTRATIVE MOTION” FOR RELIEF FROM PROTECTIVE ORDER
`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 855 Filed 03/13/23 Page 2 of 7
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`In the evening, on Wednesday, March 8, 2023, the Amazon parties filed a motion, styled as an
`administrative motion under Local Civil Rule 7-11, to modify the protective order in this litigation.
`Amazon asks the Court to permit it to use certain documents produced in post-judgment discovery to
`defend against anti-SLAPP motions that Europlay, Claria, and the other Secured Creditors filed in the
`state court receivership action pending in Los Angeles Superior Court.
`The motion should be denied, for a number of reasons. It is procedurally improper to bring a
`discovery motion under L.R. 7-11. Amazon appears to have done so to get extra pages it uses on
`irrelevant “Background” in an effort to prejudice the Secured Creditors with the Court as to some future
`alter ego litigation. And in any event, the motion aims to subvert a discovery stay in the receivership
`case, an improper basis to obtain relief under settled Ninth Circuit law.
`A.
`This Motion Is Not a Proper Administrative Motion.
`Merits aside, modifying a protective order is an inappropriate subject for an administrative
`motion. Administrative motions are limited to “miscellaneous administrative matters, not otherwise
`governed by a federal statute, Federal Rule, local rule, or standing order of the assigned Judge.” N.D.
`Cal. L. Civ. R. 7-11 (emphasis added). As the key case cited by Amazon makes evidently clear, motions
`to modify protective orders for use of discovery materials in collateral cases are discovery motions
`governed by Rule 26(c). See Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1130 (9th Cir.
`2003). And the Court’s Civil and Discovery Matters Standing Order includes a detailed set of
`procedures for briefing discovery motions. § 8. As this motion is “governed by a . . . Federal Rule [and
`a] standing order of the assigned Judge,” it is procedurally improper. N.D. Cal. L. Civ. R. 7-11.
`It appears that Amazon’s choice of an administrative motion is an effort to evade the page and
`exhibit restrictions in the Court’s Standing Order. Doing so permitted it to include two full pages of
`“Background” that has essentially nothing to do with its request, seemingly for the purpose of dirtying
`up the Secured Creditors or having the Court pre-judge some future alter ego claim. (A claim that the
`Court doesn’t even have subject matter jurisdiction to consider. See Peacock v. Thomas, 516 U.S. 349,
`351 (1996) (ancillary jurisdiction does not reach effort to add new debtor to judgment); Thomas, Head &
`Greisen Emps. Trust v. Buster, 95 F.3d 1449, 1455 (9th Cir. 1996) (Rule 69 does not extend ancillary
`jurisdiction); U.S.I. Props. Corp. v. M.D. Const. Co., 230 F.3d 489, 498 (1st Cir. 2000) (ancillary
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`OPPOSITION TO “ADMINISTRATIVE MOTION” FOR RELIEF FROM PROTECTIVE ORDER
`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 855 Filed 03/13/23 Page 3 of 7
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`jurisdiction cannot be used to add additional judgment debtor to a judgment using Rule 69 procedures)).1
`Amazon’s fervent desire to make examples of its adversaries in order to deter other patent holders from
`pressing their rights is not a license for it to play by its own rules.
`B.
`Amazon’s “Background” Discussion Is Misleading and Legally Wrong.
`Several of the inflammatory and false characterizations in Amazon’s brief can’t go unanswered.
`First, the receivership action is not, and has never been, the sinister “scheme” Amazon posits it
`to be. Mot. at 2. No order requires the receiver to “run PersonalWeb specifically for the benefit of the
`investors[.]” Id. Indeed, such an order would be contrary to the very nature of a receiver—a neutral
`agent of the court with a fiduciary duty to “act for the benefit of all parties interested in the property” of
`the entity in receivership. City of Chula Vista v. Gutierrez, 207 Cal. App. 4th 681, 685 (2012); Cal. R.
`Ct. 3.1179(a). And acts that Amazon breathlessly describes as if they were criminal are expressly
`permitted under California receivership law. See Cal. R. Ct. 3.1175 (receiver can be appointed ex parte);
`Cal. R. Ct. 3.1177 (parties can suggest “one or more persons for appointment . . . as receiver”).
`Were the goal to con Amazon out of the benefit of its fee judgment, a receivership would be a
`particularly poor tactic to do so. Among other protections: (1) a receiver is required to give notice to
`“every person or entity known to the receiver to have a substantial, unsatisfied claim that will be
`affected” by the receiver’s plan to distribute estate assets, Cal. R. Ct. 3.1184; (2) “all creditors, whether
`their status is contingent or fixed, have a right to be heard concerning distribution and apportionment of
`receivership funds,” Vitug v. Griffin, 214 Cal. App. 3d 488, 496 (1989); and (3) at all times a “receiver is
`an agent and officer of the court, and is under the control and supervision of the court.” S. Cal. Sunbelt
`Devs., Inc. v. Banyan Ltd. P’ship, 8 Cal. App. 5th 910, 922 (2017) (cleaned up). Amazon’s constant
`insinuation that the Secured Creditors have the capacity to, and somehow did, corrupt the receiver, the
`receivership process, and even the court, has zero basis in law or fact.
`Without doubt, when they filed the receivership action in April 2021, a goal of Secured Creditors
`was to prevent Amazon from using Rule 69 procedures to execute on PersonalWeb’s most significant
`remaining assets—its pending appeals of the Court’s Kessler, non-infringement, and Octane rulings, the
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`1 The Secured Creditors recently filed a state court action for a declaration that Amazon cannot pierce
`PersonalWeb’s corporate veil. Europlay anticipates that that action will be transferred as a related case
`and heard in the same department that is presiding over the receivership action.
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`OPPOSITION TO “ADMINISTRATIVE MOTION” FOR RELIEF FROM PROTECTIVE ORDER
`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 855 Filed 03/13/23 Page 4 of 7
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`latter of which remains pending in the Federal Circuit. Accord RMA Ventures Cal. v. SunAmerica Life
`Ins. Co., 576 F.3d 1070, 1075-76 (10th Cir. 2009) (victorious defendant that won attorney fee award
`successfully executed on pending appeal). In that, their interests were fully aligned with PersonalWeb. It
`is not some inequitable “scheme” when parties with aligned economic interests cooperate to use the
`legal system to protect their common interests. To the contrary, the right to engage in concerted action is
`protected by the constitutional right to petition. Cal. Motor Transp. Co. v. Trucking Unltd., 404 U.S.
`508, 510–11 (1972). Crucially, Amazon has never pointed to any act in the receivership case where
`Secured Creditors made any misstatement, violated any statute or rule, or where the receiver or the court
`acted improperly, much less at the behest of Secured Creditors. Amazon’s “scheme” claim is nonsense.
`Along similar lines, Amazon sneeringly debases the Secured Creditors’ anti-SLAPP motions as a
`“trick.” Mot. 1. But Amazon indisputably sued the Secured Creditors for instituting the receivership
`proceedings. Lavin Decl. Ex. 2 ¶¶ 21–24. That is, for planning and filing a lawsuit—“an exercise of the
`First Amendment right to petition the government.” Bonni v. St. Joseph Health Sys., 11 Cal. 5th 995,
`1024 (2021). “Consequently, claims that arise out of the filing of a suit arise from protected activity for
`purposes of the anti-SLAPP statute.” Id. Amazon goes so far as to glibly claim the Secured Creditors are
`making arguments “for the first time in the history of California’s heavily litigated anti-SLAPP statute.”
`Mot. at 1. Nonsense. The arguments are identical to those defendants have made (and won) in scores if
`not hundreds of published anti-SLAPP cases: claims that arise from the filing of a lawsuit—like
`Amazon’s retaliatory equitable subordination claim—are SLAPPs. See 5 Witkin California Procedure,
`Pleading § 1036 (2022 online ed.) (collecting cases). And published cases hold that precisely what
`Amazon accuses the Secured Creditors of doing here—instituting litigation to avoid the collection of
`debts—is protected activity. Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP, 133
`Cal. App. 4th 658,672 (2005). Far from a “trick,” it is likely that the motions will be granted.
`C.
`There Is No Good Cause to Afford Amazon Relief from the Protective Order.
`Ninth Circuit law generally “favors access to discovery materials to meet the needs of parties
`engaged in collateral litigation.” Foltz, 331 F.3d at 1131. “Nonetheless, a court should not grant a
`collateral litigant’s request for such modification automatically.” Id. at 1132. To modify a protective
`order to use documents in other litigation, a “litigant must demonstrate the relevance of the protected
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`OPPOSITION TO “ADMINISTRATIVE MOTION” FOR RELIEF FROM PROTECTIVE ORDER
`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 855 Filed 03/13/23 Page 5 of 7
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`discovery to the collateral proceedings and its general discoverability therein.” Id. On discoverability,
`“[i]f [a] limitation on discovery in the collateral litigation would be substantially subverted by allowing
`access to discovery material under a protective order, the court should be inclined to deny modification.”
`R. Marcus, Federal Practice & Procedure § 2044.1 (2022 online ed.). Courts must “prevent the
`subversion of limitations on discovery in the collateral proceedings[.]” Foltz, 331 F.3d at 1133.
`Amazon has not even met its burden to show that the materials it seeks are relevant to its anti-
`SLAPP opposition. It offers—without citation—a series of claims about purported “inequity,”
`undercapitalization, and the ownership of PersonalWeb. Mot. 4. While these issues are potentially
`relevant to some unpled alter ego claim, they are wholly irrelevant to the pending anti-SLAPP motions.
`Amazon admits that the documents are potentially relevant only to the second, merits-based step
`of the anti-SLAPP analysis. There, only documents about the origin of the receivership are relevant.
`That is because, in step two, Amazon must “make the requisite showing” that it can legally and factually
`prevail on the “challenged claim that is based on allegations of protected activity.” Baral v. Schnitt, 1
`Cal. 5th 376, 392 (2016) (emphasis added). Here, the protected activity concerns the receivership. So
`Amazon must show that its claim about the inequity of the receivership “state[s] a legally sufficient
`claim” and it must produce evidence to make “a prima facie factual showing sufficient to sustain a
`favorable judgment” for that claim. Id. at 384–85. If parts of Amazon’s claim are based on nonprotected
`activity—such as the unpled alter ego issues referenced in its brief—they are disregarded in the first step
`and essentially irrelevant in the second. Id. at 396. Amazon provides no explanation why the documents
`it seeks are relevant to the receivership issue.
`Foltz also explains that although the ultimate decision regarding discoverability rests in the
`hands of the collateral court, a moving party’s burden includes “general discoverability.” Foltz, 331 F.3d
`at 1132–33. Lifting a protective order cannot “subvert[t] limitations on discovery in the collateral
`proceeding[.]” Id. at 1133; see AT&T Corp. v. Sprint Corp., 407 F.3d 560, 562 (2d Cir. 2005) (declining
`to modify order because it was “an attempt to circumvent the close of discovery in [the collateral]
`Action”). Here, discovery is stayed while the anti-SLAPP motion is pending. Cal. Code Civ. Proc.
`§ 425.16(g). But Amazon could still obtain discovery “on noticed motion and good cause[.]” Id.
`Amazon has made no such motion. The materials sought are thus not generally discoverable.
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`OPPOSITION TO “ADMINISTRATIVE MOTION” FOR RELIEF FROM PROTECTIVE ORDER
`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 855 Filed 03/13/23 Page 6 of 7
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`Of course, the ultimate question of whether discovery should proceed despite the stay is in the
`state court’s discretion. Foltz, 331 F.3d at 1133. If the state court lifts the stay, and Amazon can actually
`show the materials are relevant—which it has not done here—Europlay concedes that the protective
`order will cease to be an impediment. But unless and until Amazon gets leave from the state court to
`take discovery, it should not be permitted to subvert the stay by modifying the protective order. See, e.g.,
`In re DRAM Antitrust Litig., 2008 WL 4191780, at *3 (N.D. Cal. Sept. 10, 2008) (conditioning
`modification on collateral litigant’s obtaining ruling on discoverability by collateral court).
`Amazon’s only response—improperly jammed into a long footnote, cf. Standing Order § 9—is
`that “there are no additional litigation discovery costs incurred by simply permitting the . . . use” of the
`materials subject to this motion because it already has the documents. Mot. 5 n.3. This motion is itself
`proof that costs claim is false. And the fact that a movant, like Amazon, is not a true “collateral litigant”
`because it is a party to both actions and thus already possesses the information does not preclude the
`application of Foltz’s burden of relevance and general discoverability. See, e.g., IceMOS Tech. Corp. v.
`Omron Corp., 2019 WL 5268872, at *2 (D. Ariz. Oct. 17, 2019). It was incumbent on Amazon to gather
`usable evidence to make out a prima facie claim before it embarked on suing Europlay and Claria for
`engaging in protected activity or to seek the state court’s relief under § 425.16(g). It did neither.
`* * *
`Amazon wants to make public spectacles of the parties who stood up PersonalWeb—in
`Amazon’s eyes, a “patent troll” who came after its customers. Amazon has successfully imposed
`massive burdens on the Secured Creditors, as the Court afforded it extraordinarily broad post-judgment
`third party discovery—99 percent of which had nothing to do with tracing PersonalWeb’s assets. And,
`no doubt, Amazon will soon seek to pin its own costs on PersonalWeb. But see Highland Springs v. City
`of Banning, 42 Cal. App. 5th 416, 425 (2019) (fees incurred in adding alter ego to judgment not
`recoverable post-judgment costs under California law).
`Blinded by its zeal, and having succeeded in inflicting some pain, Amazon has lost its way. It
`ignores clear procedure. It twists facts far beyond what evidence could reasonably show. It trampled the
`right to petition. There are valid channels for Amazon to seek permission to use discovery from these
`matters to oppose Europlay’s anti-SLAPP motion. This motion is not one of them. It should be denied.
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`OPPOSITION TO “ADMINISTRATIVE MOTION” FOR RELIEF FROM PROTECTIVE ORDER
`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 855 Filed 03/13/23 Page 7 of 7
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`Dated: March 13, 2023
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`Respectfully submitted,
`
` /s/ Michael Shipley
`Mark Holscher (SBN 139582)
`mark.holscher@kirkland.com
`Michael Shipley (SBN 233674)
`michael.shipley@kirkland.com
`Matthew Gamsin (SBN 307830)
`matthew.gamsin@kirkland.com
`KIRKLAND & ELLIS LLP
`555 South Flower Street
`Los Angeles, CA 90071
`Telephone: (213) 680-8400
`
`Attorneys for Third Parties Europlay Capital
`Advisors, LLC and Claria Innovations, LLC
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`OPPOSITION TO “ADMINISTRATIVE MOTION” FOR RELIEF FROM PROTECTIVE ORDER
`CASE NOS. 5:18-md-02834-BLF, 5:18-cv-00767-BLF, and 5:18-cv-05619-BLF
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