PersonalWeb Technologies, LLC v. Twitch Interactive, Inc.

Background

The order arose in multidistrict patent litigation involving PersonalWeb Technologies, LLC. Amazon.com, Inc., Amazon Web Services, Inc., and Twitch Interactive, Inc. were pursuing post-judgment discovery from third-party investors in PersonalWeb. The discovery sought information about the investors’ relationship with PersonalWeb and their financial interests, in connection with efforts to trace assets and pursue alter-ego theories.

The third parties opposed Amazon’s motion to compel production under subpoenas. They argued that a California state-court receivership action was the first and only court with jurisdiction over PersonalWeb, its secured creditors, its assets, and the relationships among those parties and assets. They relied on the rule that the court first taking control of property may retain jurisdiction over it to the exclusion of another court.

Court’s analysis

The court held that the rule cited by the third parties did not apply. That rule concerns situations in which federal and state courts are both proceeding in actions involving property. The discovery proceeding in this court was instead an action against persons, not an action involving property itself. The court stated that state courts generally cannot block the prosecution of such federal proceedings. It therefore rejected the third parties’ arguments based on the state receivership, comity, and alleged interference with that proceeding.

The court also recognized that post-judgment discovery is broad and generally includes matters arguably related to a judgment creditor’s efforts to trace a debtor’s assets and enforce the judgment. It cited Federal Rule of Civil Procedure 69(a)(2), which permits a judgment creditor to obtain discovery from any person under the federal rules or the discovery procedures of the state where the federal court is located.

Disposition

The court granted Amazon’s motion to compel production of documents under the subpoenas identified in the parties’ joint submission. Each third party must respond to the requests for production and produce any responsive documents that are not privileged or otherwise protected and that are within the third party’s possession, custody, or control. The deadline was 14 days from the date of the order. The order was signed by United States Magistrate Judge Susan Van Keulen.