Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-05528/USCOURTS-cand-3_06-cv-05528-33/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-Fraud

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

E-SMART TECHNOLOGIES, INC., et al.,

Plaintiffs,

 v.

WAYNE DRIZIN, et al.,

Defendants. /

No. C 06-5528 MHP

ORDER TO SHOW CAUSE

On September 11, 2006 plaintiffs E-Smart Technologies, Inc., et al., filed suit against

defendants. On June 2, 2010, plaintiffs’ counsel moved to withdraw as counsel, citing non-payment

of invoices and irreconcilable differences with plaintiffs. Docket No. 313 (Withdrawal Motion). 

Specifically, counsel for plaintiffs testify that “[d]uring the course of the May 7, 2010 settlement

conference, it became apparent to [plaintiffs’ counsel] that [plaintiffs’ counsel] and [plaintiffs] are at

an impasse about how to resolve this matter.” Withdrawal Motion, Lilly Declaration ¶ 3. The

June 2 withdrawal motion followed.

Plaintiffs have had numerous disagreements with their counsel, both current and former. 

This court has entertained several motions for withdrawal of counsel, each of which has occasioned

substantial delay in the prosecution of this action. See, e.g., Docket Nos. 239, 259. At the

September 21, 2009 hearing, the court warned plaintiffs’s counsel that it would not allow further

substitution of counsel. Docket No. 294 (Transcript) at 3:15–23. Plaintiffs’ counsel stated: “And

we understand that we are to be the last parade of lawyers, that there will be no others.” Id. at

10:5–14. The court was clear in its intention:

THE COURT: And you can advise Ms. Grace or anybody else that’s responsible that

that’s it. This is it.

MR. TSENG: We understand.

Case 3:06-cv-05528-MHP Document 315 Filed 06/28/10 Page 1 of 2
United States District Court

For the Northern District of California

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THE COURT: Any further problems with attorneys, and I’m just going to dismiss

the action.

MR. TSENG: Understood, Your Honor.

. . .

THE COURT: That’s an easy one. Defaults are harder, but that’s what will happen,

because obviously the corporation can’t represent itself. You have to have an

attorney.

MR. TSENG: Understood, Your Honor.

Id. at 22:11–22. Plaintiffs’ counsel now seek to withdraw. The motion provides no indication as to

whether plaintiffs have retained substitute counsel.

Plaintiffs’ counsel’s withdrawal motion follows on the heels of Herculean efforts by

Magistrate Judge Zimmerman, lasting almost a year, to resolve this long-running dispute. It appears

that the parties continue to dispute the contours of the trade secrets at issue, even though that matter

has been conclusively resolved by the special master. Plaintiffs have failed to both diligently

prosecute this action and to cooperate in the settlement process. Consequently, plaintiffs’ actions

amount to inefficient and ineffective litigation designed to delay resolution within a reasonable

period of time. For instance, even though this litigation has been pending for almost four years, it

appears that relevant discovery has yet to be completed.

All plaintiffs are corporations that cannot represent themselves. Therefore, plaintiffs through

their CEOs and/or Presidents shall appear at the hearing on July 12, 2010, and show cause why this

action should not be dismissed in its entirety with prejudice. Failure to appear will result in

dismissal of this action with prejudice.

IT IS SO ORDERED.

Dated: June 25, 2010 

MARILYN HALL PATEL

United States District Court Judge

Northern District of California

Case 3:06-cv-05528-MHP Document 315 Filed 06/28/10 Page 2 of 2