Brilliant Dig. Entm't v. Personalweb Techs.

• Decision Date: 03 October 2022
• Docket Number: B317580
• Parties: BRILLIANT DIGITAL ENTERTAINMENT, INC., et al., Plaintiffs and Respondents, v. PERSONALWEB TECHNOLOGIES, LLC, Defendant and Respondent; AMAZON.COM, INC., et al., Movants and Appellants.
• Court: California Court of Appeals Court of Appeals

BRILLIANT DIGITAL ENTERTAINMENT, INC., et al., Plaintiffs and Respondents,
v.
PERSONALWEB TECHNOLOGIES, LLC, Defendant and Respondent;

AMAZON.COM, INC., et al., Movants and Appellants.

B317580

California Court of Appeals, Second District, Fourth Division

October 3, 2022

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of Los Angeles County No. 21VECV00575, Bernie LaForteza, Judge. Reversed.

FENWICK &WEST, J. David Hadden, Todd R. Gregorian and Christopher S. Lavin; STEPTOE &JOHNSON, Michael J. Baratz and Emma S. Marshak for Movants and Appellants.

No appearance for respondents.

CURREY, J.

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INTRODUCTION

Plaintiffs Brilliant Digital Entertainment, Inc. (BDE), Europlay Capital Advisors, LLC (ECA), Claria Innovations, LLC (Claria), and Monto Holdings Pty Ltd. (Monto) filed a collection action against defendant PersonalWeb Technologies, LLC (PersonalWeb). Amazon.com, Inc., Amazon Web Services, Inc., and Twitch Interactive, Inc.,^[1] moved to intervene under Code of Civil Procedure,^[2] section 387, subdivision (d)(1)(B) and (d)(2). The trial court denied the motion, finding Amazon did not establish a sufficient interest in the case to justify mandatory or permissive intervention.

Amazon appeals from the order denying its motion to intervene, arguing it satisfied the statutory criteria for both mandatory and permissive intervention. As discussed below, we conclude Amazon is entitled to mandatory intervention under section 387, subdivision (d)(1)(B). We therefore need not address whether it also is entitled to permissive intervention.

Accordingly, we reverse the order denying Amazon's motion to intervene. We do so reluctantly because, as the busy trial judge noted, Amazon failed to cite the key case, Continental Vinyl Products Corp. v. Mead Corp. (1972) 27 Cal.App.3d 543 (Continental Vinyl), to the trial court except in its supplemental

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brief, and then only in passing. With the additional time afforded us to review the matter, however, we have concluded that Continental Vinyl entitles Amazon to intervene. We remand to the trial court with instructions to enter an order granting Amazon's motion, and to conduct further proceedings consistent with this opinion.

BACKGROUND^[3]

Beginning in January 2018, PersonalWeb filed 85 patent infringement lawsuits against different Amazon customers in various courts across the country. Shortly thereafter, Amazon intervened in those actions and undertook the defense of its customers. It also filed its own lawsuit against PersonalWeb, seeking an injunction prohibiting further litigation against its customers, and seeking declarations that PersonalWeb's claims are either barred or meritless. In June 2018, these lawsuits were consolidated into a multi-district litigation proceeding (MDL) in the United States District Court for the Northern District of California (Northern District).

By orders entered in March 2019 and February 2020, the Northern District granted summary judgment in Amazon's favor on all of PersonalWeb's claims. Then, by orders entered in October 2020, March 2021, and April 2021, the court awarded Amazon approximately $5.4 million in attorneys' fees and costs under Title 35 United States Code section 285. In so doing, the

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court found the case was "exceptional" under the statute because PersonalWeb engaged in unreasonable litigation tactics throughout the proceedings. Specifically, it found "th[e] case both lacked 'substantive strength' and was litigated in an 'unreasonable manner[,]'" noting: "(1) PersonalWeb's infringement claims related to [one of Amazon's products] were objectively baseless and not reasonable when brought because they were barred due to a final judgment in a [prior patent infringement suit brought by PersonalWeb against Amazon]; (2) PersonalWeb frequently changed its infringement positions to overcome the hurdle of the day; (3) PersonalWeb unnecessarily prolonged th[e] litigation after claim construction foreclosed its infringement theories; (4) PersonalWeb's conduct and positions regarding the customer[s'] cases were unreasonable; and (5) PersonalWeb submitted declarations that it should have known were not accurate."

On April 27, 2021, plaintiffs filed the underlying action against PersonalWeb. Their verified complaint alleged PersonalWeb executed separate promissory notes to each of them, under which "all principal advances and interest thereon are payable immediately on demand by [each plaintiff], or if no such demand is made, in full on December 31, 2022[.]" The notes were secured by separate agreements granting each plaintiff "a security interest in all of [PersonalWeb's] personal property and collateral[.]"

Plaintiffs alleged that at an unspecified time "prior to the institution of [the underlying] action[,]" each of them "demanded payment in full from [PersonalWeb]." They alleged PersonalWeb "defaulted under each . . . note by refusing to pay each [p]laintiff in full, as demanded." Thus, they alleged the following sums were

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due and payable by PersonalWeb: at least $2,871,948 with $2,719,228 in interest to BDE; at least $532,622 with $552,588 in interest to ECA; at least $274,700 with $325,205 in interest to Claria; and at least $10,020,609 with $2,637,523 in interest to Monto. Among other remedies, plaintiffs sought appointment of a receiver to take possession of the collateral securing their notes (i.e., all of PersonalWeb's assets) and "preserve it, manage it, collect it, and liquidate it for proper distribution . . . to [p]laintiffs."

On May 3, 2021, plaintiffs filed an ex parte application for immediate appointment of a receiver and for a preliminary injunction in aid of the receiver. That same date, Michael Weiss, the President of PersonalWeb, submitted a...