Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-07034/USCOURTS-cand-3_06-cv-07034-6/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 09:0010 Petition to Vacate Arbitration Award

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MCDERMOTT WILL & EMERY LLP

ATTORNEYS AT LAW

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LAS99 1517529-4.074203.0014

MOTION FOR LEAVE TO FILE MOTION FOR RECONSIDERATION

McDERMOTT WILL & EMERY LLP

Dana N. Levitt (State Bar No. 077180)

Charles Weir (State Bar No. 211091)

Jeffrey N. Goldberg (State Bar No. 217555)

2049 Century Park East, 34th Floor

Los Angeles, CA 90067.3208

Telephone: 310.277.4110

Facsimile: 310.277.4730

Attorneys for PLAINTIFFS THE THOMAS KINKADE

COMPANY (FORMERLY KNOWN AS MEDIA ARTS

GROUP, INC.) AND RICHARD F. BARNETT

UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF CALIFORNIA

THE THOMAS KINKADE COMPANY,

FORMERLY KNOWN AS MEDIA ARTS

GROUP, INC., a California corporation and

RICHARD F. BARNETT,

Plaintiffs,

v.

KAREN HAZLEWOOD, JEFF SPINELLO

AND THOMAS KINKADE AT THE

DOWNTOWN MALL, LLC, a Virginia

corporation,

Defendants.

CASE NO. C06 7034 MHP

MOTION FOR LEAVE TO FILE MOTION

FOR RECONSIDERATION ON

JURISDICTIONAL GROUNDS OF

COURT’S AUGUST 29, 2007 ORDER RE:

DEFENDANTS’ MOTION TO DIRECT A

REHEARING OR, ALTERNATIVELY,

REQUEST FOR CORRECTION OF

CLERICAL ERRORS IN SAME;

[PROPOSED] ORDER

Hon. Marilyn Hall Patel

U

NITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DENIED

Judge Marilyn H. Patel

Case 3:06-cv-07034-RS Document 186 Filed 02/27/08 Page 1 of 6
MCDERMOTT WILL & EMERY LLP

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LAS99 1517529-4.074203.0014 1

MOTION FOR LEAVE TO FILE MOTION FOR RECONSIDERATION

TO THE HONORABLE MARILYN HALL PATEL AND ALL PARTIES AND THEIR

ATTORNEYS OF RECORD:

PLEASE TAKE NOTICE that, pursuant to Local Rule 7-9, Plaintiffs The Thomas

Kinkade Company and Richard F. Barnett hereby request leave to file a motion seeking

reconsideration of the Court’s August 29, 2007 Order re: Defendants’ Motion to Direct a

Rehearing (the “Rehearing Order”) on the grounds that the Court lacked jurisdiction to enter the

Rehearing Order or, alternatively, request that the Court correct several clerical errors in the

Rehearing Order.

MOTION FOR LEAVE TO FILE MOTION FOR RECONSIDERATION

Defendants filed a notice of appeal on August 7, 2007 (the “Appeal”) seeking appellate

review of this Court’s (1) Order dated June 6, 2007, vacating the arbitration award in favor of

Defendants, (2) Order dated July 6, 2007, denying Defendants’ motion for leave to file a motion

for reconsideration of that Order, and (3) Order dated July 18, 2007, vacating the award of

attorneys’ fees and costs to Defendants’ counsel (collectively, the “Orders”). Defendants elected

to exercise their right to appeal the Orders pursuant to 9 U.S.C. § 16, which permits appeals to be

taken from, inter alia, orders vacating an arbitration award. See also Technosteel, LLC v. Beers

Construction Co., 271 F.3d 151 (4th Cir. 2001) (orders enumerated in 9 U.S.C. § 16(a)(1) are

immediately appealable).

1 Defendants’ Appeal to the Ninth Circuit Court of Appeals divested

this Court of jurisdiction over any and all matters that are the subject of that appeal, including the

matters addressed in Defendants Motion to Direct a Rehearing (the “Rehearing Motion”).

1

Soon after receiving Defendants’ Notice of Appeal, Plaintiffs’ counsel met and conferred with

Defendants’ counsel regarding the propriety of appealing this Court’s Orders while at the same

time seeking a modification of the relief granted in such Orders from this Court. Plaintiffs’

counsel initially asserted that the appeal was premature because no final judgment was entered

and asked Defendants’ counsel for authority that would support their position that they could

appeal the Orders. Defendants’ counsel refused to provide authority. However, when

Defendants’ counsel filed its docketing statement with the Ninth Circuit it revealed that

Defendants were appealing the Orders pursuant to 9 U.S.C. § 16, which does in fact give

Defendants the right to appeal prior to a final judgment being issued. However, as described

herein, it does not cure the fundamental problem originally identified by Plaintiffs’ counsel – two

courts cannot have jurisdiction over the same issues at the same time.

Case 3:06-cv-07034-RS Document 186 Filed 02/27/08 Page 2 of 6
MCDERMOTT WILL & EMERY LLP

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LAS99 1517529-4.074203.0014 - 2 -

MOTION FOR LEAVE TO FILE MOTION FOR RECONSIDERATION

Accordingly, upon reconsideration, the Court should vacate the Rehearing Order and deny the

Rehearing Motion on such grounds.

2

The Orders, now on appeal, fully adjudicated the parties’ cross-motions and encompass

any and all issues that were raised or could have been raised by the parties in their cross-motions

to vacate and confirm. Notwithstanding the pending appeal, Defendants did not withdraw the

Rehearing Motion, but instead pursued the motion which seeks to modify the relief granted by the

appealed Orders. Having elected to vest the Court of Appeals with jurisdiction, Defendants lost

their right and ability to seek and obtain any modifications of that relief from this Court.

3

Such modification of relief subject to a pending appeal is beyond the jurisdiction of the

district court. In Britton v. Co-op Banking Group, 916 F.2d 1405 (9th Cir. 1990), the Court of

Appeals explained its earlier holding in McClatchy Newspapers v. Central Valley Typo. Union

No. 46, 686 F.2d 731 (9th Cir. 1982), that “the district court lacked jurisdiction to enter an

amended judgment while an appeal of the original judgment was pending.” Britton, 916 F.2d at

1411. The Court stated: “In McClatchy the modified order reflected a change in the result of the

very issue on appeal; if allowed to stand, the appeals court would be dealing with a moving target

if it ruled on the revised order or, alternatively, its ruling would be obsolete if it ruled on the ‘old’

2

Plaintiffs’ motion is made pursuant to Local Rule 7-9(b)(1) on the grounds that a material

difference in fact or law exists (i.e., the filing of the Appeal) since Defendants filed their

Rehearing Motion. Defendants’ filed their notice of appeal on the same day that Plaintiffs filed

their opposition to the Rehearing Motion. Plaintiffs did not receive the notice of appeal, however,

until after they had already filed their opposition to the Rehearing Motion. Therefore, it is not

because of a lack of reasonable diligence that Plaintiffs did not know such fact or law at the time

that they filed their opposition to the Rehearing Motion. Moreover, since the Court vacated the

hearing on the Rehearing Motion, it is not because of a lack of reasonable diligence that Plaintiffs

were unable to raise this issue prior to the issuance of the Rehearing Order. Therefore, leave to

file a motion for reconsideration is appropriate. In any event, issues of jurisdiction can be raised

at any time. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1194, n.2 (9th Cir. 1988) (“It is

elementary that the subject matter jurisdiction of the district court is not a waivable matter and

may be raised at anytime by one of the parties, by motion or in the responsive pleadings, or sua

sponte by the trial or reviewing court.”).

3

For purposes of jurisdiction, it is immaterial that “[t]he propriety of the hearing with respect to

the tort and contract claims was never argued before this court” and that “this court has made no

finding in that regard.” Rehearing Order, 6. What matters is that these issues could have been

raised and decided before Defendants filed their Appeal, but were not. Defendants made a choice

to appeal the Orders fully disposing of the parties’ cross-motions and granting certain relief

without waiting for a ruling on their pending Rehearing Motion from this Court. When they did

so, they divested this Court of jurisdiction to grant new and different relief such as the relief

granted in the Rehearing Order.

Case 3:06-cv-07034-RS Document 186 Filed 02/27/08 Page 3 of 6
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LAS99 1517529-4.074203.0014 - 3 -

MOTION FOR LEAVE TO FILE MOTION FOR RECONSIDERATION

order.” Id. at 1411-12. The Court’s Rehearing Order presents precisely the same problem as the

Court faced in McClatchy

4

and should be vacated for lack of jurisdiction. See Britton, supra, 916

F.2d at 1412 (9th Cir. 1990) (appeal deprives district court of jurisdiction over “matters that are

the subject of the appeal”); Bradford-Scott Data Corp. v. Physician Computer Network, Inc., 128

F.3d 504, 505 (7th Cir. 1997) (filing of a notice of appeal pursuant to 9 U.S.C. § 16 “is an event

of jurisdictional significance – it confers jurisdiction on the court of appeals and divests the

district court of its control over those aspects of the case involved in the appeal”, citing United

States Supreme Court authorities); Cambio Health Solutions, LLC v. Reardon, 228 F. Supp. 2d

883, 885-86 (M.D. Tenn. 2002) (same, citing Fort Gratiot Sanitary Landfill v. Michigan Dep’t of

Natural Resources, 71 F.3d 1197, 1203 (6th Cir. 1995)). Plaintiffs are prepared to brief this issue

more fully if granted leave to file a motion for reconsideration.

ALTERNATIVE REQUEST FOR CORRECTION OF CLERICAL ERRORS

If the Court denies Plaintiffs leave to file a motion for reconsideration and does not, based

upon this motion or sua sponte, vacate its Rehearing Order for lack of jurisdiction, Plaintiffs

respectfully request that the Court correct the following clerical errors in the Rehearing Order:

At page 6, at the end of the first paragraph, the Rehearing Order states that “[i]n

determining these damages, the Panel may not consider factual allegations not raised in the

Second Amended Claim.” Rehearing Order, 6 (emphasis added). Plaintiffs assume the Court

intended to state that “[i]n determining these damages, the Panel may not consider factual

allegations not raised in the First Amended Claim” and request that the Order be corrected to so

reflect.

At page 6, in the final paragraph, the Rehearing Order states that: “Plaintiffs assert that

remand to the original panel would be prejudicial, largely for reasons identified in defendants’

previous submissions concerning apparent bias on the part of the arbitrators. While defendants

have not provided sufficient evidence to support a finding of arbitrator bias or corruption

4

The Court’s June 6, 2007 Order vacated the arbitration award in its entirety and did not order a

rehearing. The Court’s Rehearing Order appears to now leave some of the Majority’s findings

intact and directs a rehearing. There is no question that the Court’s Rehearing Order represents a

modification of its June 6, 2007 Order, granting new and different relief.

Case 3:06-cv-07034-RS Document 186 Filed 02/27/08 Page 4 of 6
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LAS99 1517529-4.074203.0014 - 4 -

MOTION FOR LEAVE TO FILE MOTION FOR RECONSIDERATION

justifying vacatur on those grounds, the record in this matter discloses a pattern of shenanigans

and open acrimony among all parties that leaves this court hesitant to entrust further proceedings

to the original arbitration panel.” Plaintiffs assume that the Court intended to state “plaintiffs”

instead of “defendants” in the two underlined instances above and request that the Order be

corrected to so reflect.

Dated: September 6, 2007 Respectfully Submitted,

McDERMOTT WILL & EMERY LLP

By: /s/ Dana N. Levitt

Attorneys for Plaintiffs,

THE THOMAS KINKADE COMPANY and

RICHARD F. BARNETT

Case 3:06-cv-07034-RS Document 186 Filed 02/27/08 Page 5 of 6
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LAS99 1517529-4.074203.0014 1

[PROPOSED] ORDER GRANTING PLAINTIFFS’ LEAVE TO FILE MOTION FOR RECONSIDERATION

[PROPOSED] ORDER

Good cause having been shown, the Court hereby grants Plaintiffs leave to file a motion

for reconsideration and sets forth the following schedule for briefing and hearing:

ORDERED THIS ____ DAY OF SEPTEMBER, 2007.

__________________________________

Hon. Marilyn Hall Patel

United States District Court Judge

Northern District of California

DENIES , an appeal having been filed before the filing of this motion and the court thereby losing jurisdiction. 27th

U

NITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DENIED

U

Judge Marilyn H. Patel

NITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DENIED

Judge Marilyn H. Patel

Case 3:06-cv-07034-RS Document 186 Filed 02/27/08 Page 6 of 6