Amazon.com, Inc. et al v. Personal Web Technologies, LLC et al

Filing 372

ORDER ON JOINT STATEMENT RE AMAZON'S MOTION TO COMPEL PRODUCTION OF DOCUMENTS WITHHELD AS PRIVILEGED (re (860) in case 5:18-md-02834-BLF; (358) in case 5:18-cv-00767-BLF; (263) in case 5:18-cv-05619-BLF). Signed by Judge Susan van Keulen on 5/16/2023. (svklc1, COURT STAFF) (Filed on 5/16/2023)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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IN RE PERSONALWEB
TECHNOLOGIES, LLC, ET AL. PATENT
LITIGATION.

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ORDER ON JOINT STATEMENT RE
AMAZON’S MOTION TO COMPEL
PRODUCTION OF DOCUMENTS
WITHHELD AS PRIVILEGED
Re: -2834 Dkt. No. 860

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United States District Court
Northern District of California

Case No. 18-md-02834-BLF
Case No. 5:18-cv-00767-BLF
Case No. 5:18-cv-05619-BLF

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Over the past year, judgment-creditor Amazon has come to this Court for assistance in

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compelling production from judgment-debtor PersonalWeb and subpoenaed third-party investors

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Brilliant Digital Entertainment, Inc. (“BDE”), Monto Holdings, Pty, Ltd. (“Monto”), Europlay

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Capital Advisors, LLC (“ECA”) and Claria Innovations, LLC (“Claria”) (collectively “Investors”)

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in Amazon’s effort to enforce the judgment against PersonalWeb. The Court’s management of the

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many disputes between Amazon and Investors is reflected in several orders over the past thirteen

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months. See, e.g., Dkt. 738, 779, 850. In September 2022, the Court set a deadline of October 22,

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2022 for Investors’ production of a privilege log, and that privilege log is the subject of the present

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dispute. Dkt. 860, 863-2, 869, 872.

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The many post-judgment discovery disputes between these parties have informed this

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Court as to the principals involved and relationships between the parties and as such provide

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context for the dispute at hand. In consideration of that context, the parties’ briefing on this

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dispute, relevant case law and Federal Rules of Civil Procedure, the Court determines that this

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matter may be resolved without oral argument. Civ. L.R. 7-1(b). For the reasons stated herein,

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the Court DENIES WITHOUT PREJUDICE Amazon’s motion.

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I.

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RELEVANT BACKGROUND
Amazon now moves to compel production of certain documents on Investors’ privilege

United States District Court
Northern District of California

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log. Specifically, Amazon seeks two categories of documents from the time period March 2,

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2021-April 30, 2021 on the grounds that claims of privilege have been waived. Dkt. 860, 864.

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The first category comprises documents between certain of the Investors and their attorneys on

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which attorney Jeffrey Gersh is copied. Amazon contends that Mr. Gersh did not represent the

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Investors in this correspondence but rather was counsel for plaintiff PersonalWeb. Consequently,

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Amazon argues, the documents were shared with a third party, waiving the attorney-client

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privilege. The second category is documents between Investors and their attorneys for which

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Amazon contends there has been a subject matter waiver. Finally, Amazon argues for a broad

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application of the crime-fraud exception to privilege.

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Investors raise a number of arguments against waiver. As to the first category, they argue

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that Mr. Gersh was not copied on the correspondence in his capacity as counsel for PersonalWeb

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but rather in light of his or his firm’s long-standing relationship with Investors. Dkt. 860, 869.

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Alternatively, Investors argue even if Mr. Gersh was acting as counsel for PersonalWeb, Investors

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and PersonalWeb shared a common interest in defeating Amazon’s efforts to access PersonalWeb

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assets and as such the documents are protected by a “common interest” privilege. As for subject

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matter waiver, the third-party Investors argue that the subject matter of the produced documents

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does not support a broad waiver. Investors further argue as to subject matter waiver and the crime

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fraud exception that there is first a failure of proof and, at a minimum, a document-by-document

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in-camera review would be required to ensure that any waiver was strictly applied.

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II.

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DISCUSSION
This Court has previously articulated the challenge of balancing the generally broad scope

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of post-judgment discovery with Investors’ status as third parties with acknowledged ties to

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PersonalWeb, all in consideration of the proportionality requirements of Rule 26. See Dkt. 850.

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It is with this continuing challenge in mind that the Court reasons as follows.

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In Amazon’s submissions in connection with the present dispute, it has not explained the

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relevance of the information sought (a number of documents listed on the Investors’ privilege

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log)—specifically, Amazon has not articulated where and how it intends to use the documents.

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Normally, the party seeking discovery bears the burden of demonstrating the relevance of the
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United States District Court
Northern District of California

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information sought. See Ellis v. J.P. Morgan Chase & Co., No. 12-cv-03897-YGR (JCS), 2014

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WL 1510884, at *3 (N.D. Cal. Apr. 1, 2014). Ultimately, however, “district courts have broad

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discretion in determining whether evidence is relevant for discovery purposes.” Surfvivor Media,

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Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005). In evaluating relevance, the Court

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takes into account the context of the present dispute. Because Amazon seeks to compel

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production of documents Investors listed on their privilege log, the documents are presumably

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within the scope of relevant information that the Court already ordered Investors to produce.

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The Court also recognizes that the scope of post-judgment discovery is broad. JW Gaming

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Dev., LLC v. James, 544 F. Supp. 3d 903, 926 (N.D. Cal. 2021). Such discovery is permitted “[i]n

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aid of the judgment or execution.” Fed. R. Civ. P. 69. This Court has an interest in enforcement

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of its judgment, and as discussed above the Court has permitted Amazon to conduct discovery of

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PersonalWeb and Investors in connection with Amazon’s attempt to enforce the judgment.

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Nevertheless, a request for post-judgment discovery is subject to analysis of relevance and

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proportionality under Rule 26(b)(1). See JW Gaming Dev., 544 F. Supp. 3d at 926 (“Even so,

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there are real limits to [post-judgment] discovery based on proportionality, harassment, and

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whether the discover[y] is reasonably calculated to lead to relevant information.”); Erickson

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Prods. Inc. v. Kast, No. 5:13-CV-05472-HRL, 2018 WL 2298602, at *3 (N.D. Cal. May 21, 2018)

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(“To the extent there are other specific requests for discovery in the [post-judgment] subpoenas

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that Erickson wishes to compel, they must bring a motion to compel that discovery, which

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identifies the particular requests at issue, details the basis for Erickson's contention that they are

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entitled to the requested discovery, and demonstrates how proportionality requirements are

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satisfied.”); Slack v. Burns, No. 13-cv-05001-EMC (KAW), 2016 WL 9185136, at *2 (N.D. Cal.

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Oct. 7, 2016) (ruling that relevance of post-judgment discovery did not outweigh burden of such

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discovery).

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Here, the Court has already permitted Amazon to conduct extensive post-judgment

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discovery of PersonalWeb and Investors. The results of that discovery were sufficient to enable

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Amazon to intervene in the state court receivership action and offer evidence regarding

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establishment of the receivership, as it has in that case and in the briefing on the present joint
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United States District Court
Northern District of California

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submission here. See generally Dkt. 863-2 at 1-2; Dkt. 863-4; Dkt. 863-5.
Amazon has not explained if or how the additional documents it now seeks will be used in

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this case. Instead, it appears that those documents would be relevant to Amazon’s claim for

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equitable subordination in the state court receivership action. As Amazon explained in its

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opposition to the motion to strike in the state court receivership action, “[t]o establish equitable

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subordination, Amazon must demonstrate, inter alia, inequitable conduct.” Dkt. 863-4 at 14.

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“Amazon therefore alleged that plaintiffs are under common control with PersonalWeb (CII ¶¶ 11-

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15), that plaintiffs called the loans in just after the fee award and long before the maturity date (id.,

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¶ 18), that this early demand was an attempt to thwart collection of the judgment (id., ¶ 19), that

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PersonalWeb coordinated the demand and consented to the receivership to avoid the judgment

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(id., ¶¶ 21-22), and that Amazon, as a third party creditor, should be prioritized over the insider

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plaintiffs. (Id., ¶ 23).” Id. The likelihood that Amazon seeks the present documents for use in the

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state court receivership action is reinforced by statements in Amazon’s supplemental brief. See,

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e.g., Dkt. 863-2 at 1-2 (discussing circumstances of creation of receivership). The chronology of

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the present dispute also supports a conclusion that the documents are sought for use in the state

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court receivership action: the subject documents were first listed on the Investors’ privilege log on

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October 3, 2022 (see Dkt. 860-1 ¶ 2; Dkt. 860-2), yet Amazon did not file the present challenge to

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those privilege claims until more than five months later, on March 23, 2023. Dkt. 860.

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Simply because the post-judgment discovery is intended for use in a collateral proceeding

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does not end this Court’s inquiry, however. Such collateral proceedings may be necessary to

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enforce this Court’s judgment. In Foltz v. State Farm Mut. Auto. Ins. Co., the Ninth Circuit

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expressed a preference for letting the fruits of discovery be used in collateral litigation. 331 F.3d

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1122, 1132 (9th Cir. 2003). However, that court also cautioned that “a court should not grant a

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collateral litigant's request for such modification automatically. As an initial matter, the collateral

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litigant must demonstrate the relevance of the protected discovery to the collateral proceedings

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and its general discoverability therein. Requiring a showing of relevance prevents collateral

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litigants from gaining access to discovery materials merely to subvert limitations on discovery in

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another proceeding . . . Such relevance hinges ‘on the degree of overlap in facts, parties, and issues
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between the suit covered by the protective order and the collateral proceedings.’” Id. (citations

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omitted).
Now that Amazon has intervened in the state court receivership action, this Court must

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Northern District of California

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guard against an end-run around discovery limitations in that case. The parties have previously

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informed the Court that discovery in the receivership action is stayed pending a ruling on the

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motions to strike and that the state court could have, but had not, allowed certain discovery

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notwithstanding the stay. See Dkt. 854 at 1:18-19; Dkt. 857 at 6:16-18. Moreover, although

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allowing the use of discovery from one case in collateral litigation is generally favored, requiring a

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party to produce documents in one litigation solely for use in another pending case raises

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additional concerns. Those concerns distinguish the present dispute from the previous one in

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which Amazon sought relief from the protective order in this case to enable it to use documents

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already produced in this case in the receivership case. See Dkt. 858.

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In sum, this Court has allowed Amazon to conduct post-judgment discovery of

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PersonalWeb and Investors, and that discovery enabled Amazon to intervene in the state court

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receivership case. In the present circumstances, the Court concludes that it is not proportional to

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the needs of this case to undergo the complex analysis and in-camera review that may be

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necessary to determine whether to order further production. This particular discovery battle is

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now more appropriately waged in the pending state court receivership action. The Court expresses

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no view on the proper resolution of the issues raised by the parties, and the denial of Amazon’s

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present motion to compel is without prejudice to Amazon’s ability to raise these issues again if the

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documents sought become relevant and necessary for other purposes.

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III.

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CONCLUSION
For the reasons discussed above, the DENIES WITHOUT PREJUDICE Amazon’s

motion to compel.
SO ORDERED.
Dated: May 16, 2023

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SUSAN VAN KEULEN
United States Magistrate Judge

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