Cellspin Soft, Inc. v. Canon U.S.A., Inc.

Filing 110

ORDER GRANTING 99 100 108 109 Defendant's Ex Parte Application for a Debtor's Exam. Judgment Debtor Exam set for 2/21/2019 01:30 PM. Signed by Judge Kandis A. Westmore on 11/21/2018. (kawlc2, COURT STAFF) (Filed on 11/21/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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CELLSPIN SOFT, INC.,
Plaintiff,

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v.
CANON U.S.A., INC.,
Defendant.

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United States District Court
Northern District of California

Case No. 17-cv-05938-YGR (KAW)
ORDER GRANTING DEFENDANT'S
EX PARTE APPLICATION FOR A
DEBTOR'S EXAM
Re: Dkt. Nos. 99, 100, 108, 109

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On October 17, 2018, Defendant Canon U.S.A., Inc. filed an ex parte application

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requesting an order that Plaintiff Cellspin Soft, Inc. appear for a debtor's examination. (Def.'s

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Mot. for Debtor's Exam, Dkt. No. 99; Dkt. No. 100). Defendant was previously awarded

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$100,000 in attorney's fees, and have since obtained a writ of execution. (Dkt. Nos. 91, 98.) The

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case was then referred to the undersigned for post-judgment/collections actions. (Dkt. No. 105.)

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On October 31, 2018, Plaintiff filed an opposition. (Plf.'s Opp'n, Dkt. No. 106.) On November 7,

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2018, Defendant filed its reply. (Def.'s Reply, Dkt. No. 107.) On November 20, 2018, Defendant

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filed the same ex parte application requesting a debtor's exam, but for February 21, 2019. (Dkt.

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Nos. 108, 109.)

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Federal Rule of Civil Procedure 69(a)(2) provides that a judgment creditor "may obtain

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discovery from any person -- including the judgment debtor -- as provided in these rules or by the

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procedure of the state where the court is located." Under California law, a "judgment creditor may

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apply to the proper court for an order requiring the judgment debtor to appear before the court . . .

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at a time and place specified in the order, to furnish information to aid in enforcement of the

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money judgment." Cal. Code of Civ. P. § 708.110(a); see also Hooser v. Superior Ct. of San

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Diego Cty., 84 Cal. App. 4th 997, 1002 (2000) ("Pursuant to the statutory procedure, the judgment

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creditor may obtain an order requiring the judgment debtor to appear before the court, or a court-

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appointed referee, to furnish information that will aid in the enforcement of the money

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judgment"), disapproved on other grounds by Williams v. Superior Court, 3 Cal. 5th 531, 557

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(2017).
In opposing the request for a debtor's examination, Plaintiff does not dispute that there is a

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valid judgment. Instead, Plaintiff first argues that Defendant served interrogatories that went

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"beyond requests for information relating to the existence of transfer of Cellspin's assets or

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relating to property Cellspin has, or may acquire in the future, that may be available to satisfy

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Defendant's judgments." (Plf.'s Opp'n at 9.) Specifically, Plaintiff takes issue with the
interrogatories' definition of "You" and "Your," which was defined to include Plaintiff and

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United States District Court
Northern District of California

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Plaintiff's agents, representatives, attorneys, or anyone authorized or purportedly authorized to act

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on Plaintiff's behalf, as well as owners, managers, members, partners, limited partners, or parent

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entities. (Id.; see also id., Exh. 1 at 2.) Defendant responds that information about Plaintiff's

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managers or principals is necessary because there may be a basis to obtain judgments against the

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individuals, arguing that "the corporate form cannot be used as a shield to insulate owners against

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liability for their own tortious conduct or tortious conduct they control." (Def.'s Reply at 4.)
The Court agrees that questions about Plaintiff's managers or principles may be relevant to

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determining what assets are available to pay a judgment. Likewise, information as to corporate

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structure and formalities are relevant to determining if Plaintiff's managers or principles may be

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held liable, such as under an alter ego theory. Otherwise, as Defendant points out, if Plaintiff was

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"[t]o come to court . . . as an undercapitalized entity seeking monetary damages against defendant

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companies," this would "improperly skew[] the playing field, as only one side of the case bears

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nearly the entire risk of litigation."1 (Def.'s Reply at 5.)
The Court does, however, find that questions regarding Plaintiff's attorneys would be

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overbroad. Defendant provides no explanation for why Plaintiff's attorneys specifically could be

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held liable for the judgment. Therefore, questions regarding the assets or other personal or

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Notably, Plaintiff asserts that it has no money to file a supersedeas bond, yet apparently has the
assets to afford multiple appeals. (See Plf.'s Opp'n at 2.)
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financial information of Plaintiff's attorneys are not appropriate.
Second, Plaintiff argues that Defendant's request for an examination is premature because

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there is an appeal. (Plf.'s Opp'n at 13.) Plaintiff theorizes that Defendant is trying to obtain

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Plaintiff's patents in order to stop the appeals. (Id.) The Court disagrees. Again, Defendant has a

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valid judgment, and are entitled to a judgment debtor exam to determine what assets are available

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to pay the judgment. Further, Defendant has not yet sought Plaintiff's patents to satisfy the

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judgment. Therefore, Plaintiff's concerns about Defendant's alleged motivations for obtaining the

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patents is premature.

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Third, Plaintiff suggests that the Court should stay post-judgment enforcement proceedings
during the pendency of the appeals. (Plf.'s Opp'n at 14.) Again, Plaintiff is primarily concerned

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United States District Court
Northern District of California

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with the possibility that Defendant may obtain Plaintiff's patents. (Id.) As explained above, this is

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premature, and not a reason to stay post-judgment proceedings. Plaintiff provides no authority

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that would otherwise suggest a stay is necessary, particularly where Plaintiff has failed to file a

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supersedeas bond.

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Accordingly, the Court GRANTS Defendant's ex parte application and ORDERS Plaintiff

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to appear for a debtor's exam before this Court, located at 1301 Clay Street, Oakland, California

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94612, on February 21, 2019 at 1:30 p.m. During this debtor's examination, Defendant may not

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ask questions about the personal assets or financial information of Plaintiff's counsel.

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IT IS SO ORDERED.
Dated: November 21, 2018
__________________________________
KANDIS A. WESTMORE
United States Magistrate Judge

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