Case 5:18-md-02834-BLF Document 886 Filed 07/07/23 Page 1 of 6
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`IN RE PERSONALWEB
`TECHNOLOGIES, LLC ET AL. PATENT
`LITIGATION.
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`Case No. 18-md-02834-BLF
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`ORDER DENYING SECURED
`CREDITORS' ADMINISTRATIVE
`MOTION FOR LIMITED
`INTERVENTION
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`[Re: ECF No. 883]
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`On June 27, 2023, non-party movants Europlay Capital Advisors LLC, Claria Innovations
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`LLC, Brilliant Digital Entertainment Inc., and Monto Holdings Pty. Ltd. (collectively, “Movants”)
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`filed an administrative motion for limited intervention for the purpose of opposing the further
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`supplemental fee request. ECF No. 883 (“Mot.”). Amazon.com, Inc.; Amazon Web Services,
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`Inc.; and Twitch Interactive, Inc. (collectively, “Amazon”) filed a response. ECF No. 885
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`(“Resp.”).
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`The Court first notes that a motion for intervention is not properly filed as an
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`administrative motion. See Civ. L.R. 7-11 (explaining an administrative motion may be brought
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`for “miscellaneous administrative matters, not otherwise governed by a federal statute, Federal
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`Rule, local rule, or standing order of the assigned Judge”). Intervention is governed by Federal
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`Rule of Civil Procedure 24, as Movants cite in their moving papers. See Mot. at 3-6. The motion
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`should have been filed as a noticed motion, and Movants could have filed a motion to shorten time
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`to address any concerns about the timing of this motion vis-á-vis the fee motion. See Civ. L.R. 6-
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`3. Further, the Court notes that Movants exceeded the five-page limit for administrative motions.
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`See Civ. L.R. 7-11(a). And, as the Court noted in a previous Order, Movants failed to comply
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`with the Court’s Standing Order Re Civil Cases. See ECF No. 884. That being said, the Court has
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`Case 5:18-md-02834-BLF Document 886 Filed 07/07/23 Page 2 of 6
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`received a response and will consider the motion on the merits.
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`Movants are investors in PersonalWeb. Mot. at 1; Resp. at 1. There is currently a state
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`court action between Movants and Amazon, in which the parties are litigating whether Movants
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`are alter egos of PersonalWeb. See Mot. at 1; Resp. at 1; Declaration of Michael Shipley, ECF
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`No. 883-1 (“Shipley Decl.”) ¶ 1, Ex. 1. Movants seek limited intervention to oppose Amazon’s
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`further supplemental fee request. See Mot. They argue that they satisfy the standards for both
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`mandatory and permissive intervention. Id. at 3-6. Amazon does not oppose intervention only if
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`Movants commit to liability for a supplemental fee award; otherwise, Amazon opposes
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`intervention. Resp. at 1.
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`An applicant seeking to intervene as of right under Rule 24(a) must “make four showings
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`to qualify under this Rule: (1) it has a significant protectable interest relating to the property or
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`transaction that is the subject of the action; (2) the disposition of the action may, as a practical
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`matter, impair or impede the applicant’s ability to protect its interest; (3) the application is timely;
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`and (4) the existing parties may not adequately represent the applicant’s interest.” Perry v.
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`Schwarzenegger, 630 F.3d 898, 903 (9th Cir. 2011) (internal quotation marks and citation
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`omitted).
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`Amazon argues that Movants have not satisfied the fourth element. See Resp. at 1-3. A
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`court “consider[s] three factors in deciding whether a present party adequately represents the
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`interests of a prospective intervenor.” Callahan v. Brookdale Senior Living Communities, Inc., 42
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`F.4th 1013, 1020 (9th Cir. 2022). These factors are:
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`(1) whether the interest of a present party is such that it will
`undoubtedly make all of a proposed intervenor's arguments; (2)
`whether the present party is capable and willing to make such
`arguments; and (3) whether a proposed intervenor would offer any
`necessary elements to the proceeding that other parties would neglect.
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`Id. (quoting Arakaki v. Cayetano, 324 F.3d 1078, 1086 (9th Cir. 2003)). “If the proposed
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`intervenor's interest is ‘identical to that of one of the present parties, a compelling showing should
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`be required to demonstrate inadequate representation.’” Id. at 1020-21 (quoting Arakaki, 324 F.3d
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`at 1086). Movants and PersonalWeb have an identical interest: avoiding the imposition of further
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`fees. See Resp. at 2. Movants have not made the compelling showing required to demonstrate
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`Case 5:18-md-02834-BLF Document 886 Filed 07/07/23 Page 3 of 6
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`that PersonalWeb would not adequately represent its interests.
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`PersonalWeb is under the control of a receiver, which was appointed in state court. See
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`Mot. at 2; Shipley Decl. ¶ 3, Ex. 3. Movants argue that their interests cannot be adequately
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`represented by PersonalWeb because it is insolvent, and therefore, PersonalWeb/the receiver
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`“have little motive to vigorously contest the [] enhanced demand.” Mot. at 4. Movants’ attorney
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`states in a Declaration that it is his understanding that the receiver’s counsel stated on June 20,
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`2023 that “the receivership estate had less than $25,000 cash on hand, with most of that taken up
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`by accounts already payable.” Shipley Decl. ¶ 4. He further states that he has been informed by
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`counsel for PersonalWeb that “absent an infusion of additional cash into the receivership estate,
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`PersonalWeb likely lacks funds to pay its counsel to oppose the fee motion.” Id. ¶ 5.
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`Amazon argues that the Movants are controlled by the same individuals who operated
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`PersonalWeb, and these individuals merely want to stop funding the receiver because doing so is
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`no longer to their advantage. Resp. at 1. Amazon also asserts that the individuals who control the
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`Movants also still control PersonalWeb, despite the existence of the receivership. Id. at 2-3.
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`Amazon argues that PersonalWeb has counsel, who is already preparing an opposition to the fee
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`request. Id. at 2. And Amazon provides that Movants are “creating a false impression” that
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`PersonalWeb has insufficient funds, as “[t]he receiver last reported nearly $50,000 in cash on hand
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`as of its last report in April and may issue up to $1,000,000 in receiver certificates,” Resp. at 3
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`(citing Shipley Decl., Ex 3), of which $225,000 remains to be called, id. They conclude that the
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`Movants’ “desire to stop paying for PersonalWeb’s lawyers is not a valid basis for them to
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`intervene in this case.” Id.
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` The Court concludes that Movants have not made the compelling showing required to
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`demonstrate that PersonalWeb would not adequately represent their interests. The Court
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`determines that Movants have an “identical” interest to PersonalWeb and that PersonalWeb can
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`adequately represent this interest. Movants have not made a compelling showing that
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`PersonalWeb/the receiver would fail to or are unable to do so. The two cases cited by Movants
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`are distinguishable. In both, the courts were deciding whether to amend a judgment to add
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`additional judgment debtors. See Katzir’s Floor & Home Design, Inc. v. M-MLS.com, 394 F.3d
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`Case 5:18-md-02834-BLF Document 886 Filed 07/07/23 Page 4 of 6
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`1143, 1149 (9th Cir. 2004); NEC Elecs. Inc. v. Hurt, 208 Cal. App. 3d 772, 780 (1989). In
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`Katzir’s Floor & Home Design, Inc. v. M-MLS.com, the Ninth Circuit determined that the district
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`court erred in finding that Sommer, an individual, was an alter ego of the defendant corporation
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`and erred in adding Sommer to the judgment without finding his interests were protected in the
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`underlying action. 394 F.3d at 1149. The Ninth Circuit looked to NEC Electrics Inc. v. Hurt, 208
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`Cal. App. 3d 772 (1989). Katzir’s Floor & Home Design, 394 F.3d at 1149-50. The Ninth Circuit
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`summarized NEC as follows:
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`In NEC, the Court of Appeals of California reversed the Santa Clara
`County Superior Court's judgment adding a shareholder to a judgment
`against his wholly-owned corporation where the shareholder's
`individual interests were not represented in the lawsuit. The
`corporation did not appear at trial or defend itself, despite a colorable
`defense, because it was on the verge of bankruptcy. The court
`reasoned that the sole shareholder, who was not a named party to the
`suit and had no personal liability, had no duty to intervene. . . . It
`further found that the shareholder's interests were not represented
`during the lawsuit where the corporation had no incentive to, and in
`fact did not, defend given its pending bankruptcy.
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`Katzir’s Floor & Home Design, 394 F.3d at 1150 (citation omitted). The Ninth Circuit
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`determined that Sommer could not be added to the judgment, noting that doing so “without
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`allowing [him] to litigate any questions beyond [his] relation to the allegedly alter ego corporation
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`would patently violate [due process].” Id. (quoting Motores De Mexicali, S.A. v. Sup. Ct. In & For
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`Los Angeles Cnty., 51 Cal. 2d 172, 176 (1958)). First, these courts were looking at whether a
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`potential alter ego’s interests were adequately represented by a business for a completely different
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`purpose—adding them to the judgment. Second, in both of these cases, the defendant company in
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`fact did not defend the action. That makes it distinguishable from the case here, as Amazon
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`represents that PersonalWeb will be opposing the further supplemental fee request. See Resp. at 2.
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`Movants are not entitled to intervention as of right.
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`Even where intervention as of right is unavailable, courts may still permit intervention
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`under Rule 24(b). “Under Federal Rule of Civil Procedure 24(b), a district court has discretion to
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`permit intervention when the movant presents ‘(1) an independent ground for jurisdiction; (2) a
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`timely motion; and (3) a common question of law and fact between the movant's claim or defense
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`and the main action.’” Callahan, 42 F.4th at 1022 (quoting Freedom from Religion Found., Inc. v.
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`Case 5:18-md-02834-BLF Document 886 Filed 07/07/23 Page 5 of 6
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`Geithner, 644 F.3d 836, 843 (9th Cir. 2011)). If those initial conditions are met, a district court “is
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`then entitled to consider other factors in making its discretionary decision on the issue of
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`permissive intervention.” Id. (quoting Spangler v. Pasadena City Bd. of Educ., 552 F.2d 1326,
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`1329 (9th Cir. 1977)). These additional factors include:
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`the nature and extent of the intervenors' interest, their standing to raise
`relevant legal issues, the legal position they seek to advance, and its
`probable relation to the merits of the case. The court may also
`consider whether changes have occurred in the litigation so that
`intervention that was once denied should be reexamined, whether the
`intervenors' interests are adequately represented by other parties,
`whether intervention will prolong or unduly delay the litigation, and
`whether parties seeking intervention will significantly contribute to
`full development of the underlying factual issues in the suit and to the
`just and equitable adjudication of the legal questions presented.
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`Id. (quoting Spangler, 552 F.2d at 1329).
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`The Court determines that the initial factors are met here. The first factor is not relevant
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`where, as here, the movants bring no new claims. Geithner, 644 F.3d at 844. As to timeliness, the
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`supplemental fees motion was filed on May 23, 2023, this motion was filed on June 27, 2023, and
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`in the interim Movants were speaking with Amazon in an attempt to obtain consent to intervene.
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`See ECF No. 880; Mot.; Shipley Decl. ¶ 2, Ex. 2. The motion is timely. As to the third factor, the
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`issues of law and fact raised by Movants are the same as at issue in the underlying motion—
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`whether Amazon is entitled to supplemental fees. See Resp. at 5.
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`The Court thus turns to the Spangler factors, and it determines that they weigh against
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`intervention. For the reasons discussed above, the Court determines that Movants’ interests “are
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`adequately represented by other parties”—PersonalWeb. See Spangler, 552 F.2d at 1329. The
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`Court also determines that Movants will not “significantly contribute to full development of the
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`underlying factual issues in the suit and to the just and equitable adjudication of the legal
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`questions presented.” Id. Movants argue that they satisfy this factor because “PersonalWeb lacks
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`the interest and resources to thoroughly litigate the Fee Motion,” but the Court already rejected
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`this argument. See Mot. at 6. As to the first factor, the Court is concerned that Movants are
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`asserting that they have a real economic interest in the outcome of the supplemental fee motion
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`while also asserting in state court that they are not alter egos of PersonalWeb. See id. As argued
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`Case 5:18-md-02834-BLF Document 886 Filed 07/07/23 Page 6 of 6
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`by Amazon, the Movants have only an indirect interest in the outcome of the further supplemental
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`fee motion if they are not alter egos of PersonalWeb. See Opp. at 1. The Court declines to grant
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`permissive intervention.
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`For the reasons explained above, the Court DENIES Movants’ motion for limited
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`intervention for the purpose of opposing the further supplemental fee request.
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`IT IS SO ORDERED.
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`Dated: July 7, 2023
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`______________________________________
`BETH LABSON FREEMAN
`United States District Judge
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