PersonalWeb Technologies, LLC v. Twitch Interactive, Inc.

Background

Stubbs Alderton & Markiles, LLP (SAM) filed a second motion to withdraw as counsel for PersonalWeb Technologies, LLC in post-judgment collection proceedings involving patent-infringement claims against Amazon.com, Inc., Amazon Web Services, Inc., and Twitch Interactive, Inc. The court had previously conditionally granted SAM’s first withdrawal motion, but only if replacement counsel filed a notice of appearance. No replacement counsel had appeared.

SAM argued that continuing to represent PersonalWeb could violate California professional-conduct rules and the California Business and Professions Code. It cited PersonalWeb’s failure to comply with federal discovery orders, possible conflicts concerning future sanctions or contempt proceedings, and a Los Angeles County Superior Court preliminary injunction entered in a receivership proceeding. That injunction appointed a receiver and restricted PersonalWeb and its representatives from interfering with the receiver. Amazon opposed withdrawal and sought additional relief against SAM.

The underlying judgment followed the court’s summary-judgment ruling that Amazon did not infringe PersonalWeb’s asserted patents. The judgment required PersonalWeb to pay more than $5 million in attorneys’ fees, costs, and post-judgment interest.

Court’s analysis

The court concluded that SAM had not shown enough changed circumstances to modify the earlier order. It rejected the idea that a lawyer could withdraw whenever a client failed to meet discovery obligations, noting that this could leave many parties without representation. The court also observed that the state-court preliminary injunction expressly excluded PersonalWeb’s intellectual-property litigation, but said the scope of that exclusion and the division of authority between the receiver and PersonalWeb remained unclear.

The court said it did not intend to force SAM to violate the state-court injunction. It therefore required PersonalWeb to seek written answers from the receiver about whether the receiver would retain counsel, whether the receiver would authorize and reasonably compensate PersonalWeb for hiring counsel, and whether the receivership restricted PersonalWeb’s ability to comply with federal-court orders and make binding statements.

Order

The court CONDITIONALLY GRANTED SAM’s second motion to withdraw. SAM may withdraw either when replacement counsel files a notice of appearance or after receiving the receiver’s responses, providing effective contact information for the receiver and PersonalWeb, and obtaining the court’s express approval. PersonalWeb was ordered to provide the receiver with the order and request written responses within 30 days, then file a status update within 30 days stating whether it received those responses.

The court ordered that, if the receiver did not respond, it would communicate directly with the Los Angeles County Superior Court. It STRUCK Amazon’s requests for affirmative relief in its opposition and STAYED further motion practice before the magistrate judge handling post-judgment discovery for 45 days.