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

Background

Amazon was enforcing a judgment against PersonalWeb and had subpoenaed third-party investors—Brilliant Digital Entertainment, Inc., Monto Holdings, Pty, Ltd., Europlay Capital Advisors, LLC, and Claria Innovations, LLC—for post-judgment discovery. The dispute concerned documents listed on the investors’ privilege log. The court had previously set an October 22, 2022 deadline for producing the privilege log.

Amazon sought two categories of documents from March 2, 2021, through April 30, 2021. The first involved communications between some investors and their attorneys on which Jeffrey Gersh was copied. Amazon argued that Gersh represented PersonalWeb, not the investors, so sharing the communications with him waived attorney-client privilege. The second involved documents that Amazon claimed were subject to a subject-matter waiver. Amazon also argued for a broad application of the crime-fraud exception to privilege.

The investors argued that Gersh was copied because of his or his firm’s longstanding relationship with them, not because he was acting as PersonalWeb’s lawyer. Alternatively, they argued that PersonalWeb and the investors shared a common interest in resisting Amazon’s efforts to reach PersonalWeb’s assets. They also disputed the alleged subject-matter waiver and crime-fraud exception, arguing that Amazon had not offered enough proof and that any waiver should be evaluated through document-by-document, private court review.

Court’s analysis

The court explained that post-judgment discovery is broad and may be used to aid enforcement of a judgment, but it remains subject to the requirements of relevance and proportionality under Federal Rule of Civil Procedure 26(b)(1). The court also noted that it has discretion to determine whether evidence is relevant for discovery purposes.

The court found that Amazon had not explained the relevance of the documents or where and how it intended to use them. Although the documents were presumably within the general scope of information the court had already ordered the investors to produce, Amazon’s submissions suggested that the documents were primarily relevant to Amazon’s claim for equitable subordination in a state-court receivership action.

The court said that use of discovery in a related proceeding can sometimes help enforce its judgment, but it also had to prevent an end-run around discovery limits in the state-court case. Amazon had already conducted extensive post-judgment discovery, and that discovery had enabled it to intervene in the receivership action. The court concluded that, under these circumstances, it was not proportional to the needs of this case to undertake the complex privilege analysis and private document review that might be needed to order more production.

Ruling

Judge Susan Van Keulen denied without prejudice Amazon’s motion to compel. The court said the dispute was more appropriately pursued in the pending state-court receivership action and expressed no view on the parties’ privilege, waiver, or crime-fraud arguments. The denial did not prevent Amazon from raising the issues again if the documents became relevant and necessary for other purposes.