Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_16-cv-05111/USCOURTS-cand-5_16-cv-05111-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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Case No.16-CV-05111-LHK 

ORDER DENYING APPELLANTS’ MOTION FOR STAY PENDING APPEAL

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

DBD CREDIT FUNDING LLC, and CF 

CRESPE LLC,

Appellants,

v.

SILICON LABORATORIES, INC.,

Appellee.

Case No. 16-CV-05111-LHK 

ORDER DENYING APPELLANTS’ 

MOTION FOR STAY PENDING 

APPEAL

Re: Dkt. No. 3

Appellants DBD Credit Funding LLC (“DBD”) and CF Crespe LLC (collectively, 

“Appellants”), appeal from the U.S. Bankruptcy Court for the Northern District of California. 

ECF No. 1. Before the Court is Appellants’ motion for a stay pending appeal. ECF No. 3. 

Specifically, Appellants move for a stay of the bankruptcy court’s order granting Appellee Silicon 

Laboratories, Inc.’s (“Appellee”) motion to compel Appellants to comply with a bankruptcy court 

order of sale. Having considered the parties’ submissions, the relevant law, and the record in this 

case, the Court DENIES Appellants’ motion for stay pending appeal. 

I. BACKGROUND

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A. Factual Background

The instant dispute originated in the Chapter 7 bankruptcy proceedings of Cresta 

Technology Corporation (“Cresta”), a corporation that owned patents and trademarks and that 

declared bankruptcy on March 18, 2016. ECF No. 3-2, at 5; ECF No. 14-1, at 1–4. Appellants 

and Appellee were both involved with Cresta prior to its bankruptcy. 

On July 16, 2014—nearly two years prior to Cresta’s declaration of bankruptcy—

Appellee sued Cresta in the U.S. District Court for the Northern District of California, Silicon 

Laboratories, Inc. v. Cresta Technology Corporation, Case No. 14-CV-03227-JCS (hereinafter, 

the “N.D. Cal. Patent Litigation”), alleging that Cresta infringed Appellee’s patents. See ECF No. 

3-2, at 5. The N.D. Cal. Patent Litigation was assigned first to United States Magistrate Judge 

Paul Grewal then to United States Magistrate Judge Joseph Spero. See Silicon Labs., Inc., Case 

No. 14-CV-03227-JCS.

In December 2014—also approximately two years prior to Cresta’s bankruptcy—

Appellant DBD entered into loan agreements with Cresta. Id. at 5. Specifically, Cresta borrowed 

approximately $3 million from DBD and DBD received as collateral “a lien in essentially all of 

[Cresta’s] tangible and intangible property.” Id. at 5–6. 

On March 18, 2016, Cresta filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court 

for the Northern District of California (hereinafter, the “bankruptcy court”). ECF No. 14-1, at 1–

4. Doris Kaelin (“the Trustee”) was appointed as Cresta’s Chapter 7 Trustee to administer the 

assets of Cresta’s estate. ECF No. 3-2, at 5. 

Significantly, at the time that Cresta declared bankruptcy, the N.D. Cal. Patent Litigation 

between Appellee and Cresta was one week away from trial. Id. at 11; See Docket No. 269,

Silicon Labs, Inc., Case No. 14-CV-03227-JCS.

1. The Sale Agreement Between the Trustee and DBD 

On April 20, 2016, the Trustee moved in the bankruptcy court for an order authorizing the 

Trustee to enter into an Agreement to Sell Intellectual Property and Certain Related Litigation 

(hereinafter, the “Sale Agreement”). Id. at 5, 10; see 11 U.S.C. § 363(b) (setting forth the 

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procedures for a trustee to sell the property of a bankrupt estate “outside of the ordinary course of 

business”).

The Sale Agreement provided that, in exchange for $100,000 and “the proceeds from the 

monetization” of Cresta’s intellectual property, the Trustee would sell to DBD the intellectual 

property that Cresta owned. ECF No. 3-2, at 12. Further, the Sale Agreement also provided that 

the Trustee would sell DBD “all of [Cresta’s] right, title and interest in and to the” litigation 

related to Cresta’s intellectual property, including, among other lawsuits, the N.D. Cal. Patent 

Litigation. Id. at 11–12.

The Sale Agreement stated that “[n]ot later than seven (7) business days after the Effective 

Date [of the Sale Agreement], [DBD], at its sole cost and expense, shall take and complete all 

actions necessary to become the real party in interest in the Litigation [enumerated above] and 

[Cresta] shall no longer be an active party to the Litigation.” Id. at 13. 

The Sale Agreement was conditioned upon both “Bankruptcy Court approval and higher 

and better offers.” Id. at 12. The Trustee gave Cresta’s creditors notice of its intent to enter into 

the Sale Agreement. See ECF No. 18-4. 

On May 5, 2016, Appellee filed in the bankruptcy court an opposition to the Trustee’s 

motion for authorization of the Sale Agreement. ECF No. 9-4. Appellee explained that it was one 

of Cresta’s “largest unsecured creditors as a result of [Appellee’s] claims” against Cresta in 

litigation. Id. at 7. Appellee objected to the Trustee’s Sale Agreement for several reasons, 

including that the Trustee had structured the sale “so that it is highly unlikely that any party other 

than [DBD] would ever participate,” id. at 10, and that the Trustee had not properly marketed 

Cresta’s patents and patent litigation prior to sale, id. at 12–13. 

The Trustee replied to Appellee’s opposition on May 9, 2016. ECF No. 9-3. The Trustee 

stated that “[i]n evaluating [Cresta’s] Patents, the Trustee considered, among other things,” that 

the “Patents were encumbered by a duly perfected lien in favor of [DBD],” and that “Silicon Labs 

was successful, to date, in getting favorable rulings in the [N.D. Cal. Patent Litigation] that [DBD] 

had infringed [Appellee’s]” intellectual property. Id. at 4–5. The Trustee explained that “[u]nder

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these facts and circumstances . . . it is unfair to the Trustee and disingenuous, at best, for 

[Appellee] to assert that the Trustee has not demonstrated that the purchase price [for Cresta’s 

intellectual property] is fair and reasonable.” Id. at 5. 

3. The Bankruptcy Court’s Sale Order

On May 13, 2016, the bankruptcy court issued an order overruling Appellee’s objections to 

the sale and granting the Trustee’s motion to enter the Sale Agreement with DBD (hereinafter, the 

“Sale Order”). ECF No. 3-3, at 2–3. 

The bankruptcy court’s Sale Order stated that “[t]he trustee is authorized to enter into and 

perform the [Sale Agreement] with [DBD] . . . [a]ll terms and conditions of the [Sale] Agreement 

are approved.” Id. The Sale Order also provided: “The trustee is authorized to sell [Cresta’s]

Assets (as defined in the Agreement) to [DBD] pursuant to the terms and conditions set forth in 

the [Sale] Agreement.” Id. 

4. Appellee’s Motion to Compel

On May 20, 2016, the Trustee assigned Cresta’s patents and trademarks to DBD’s assign,1

CF Crespe LLC (“CF Crespe”). See ECF No. 3-4. Subsequently, pursuant to the Sale Agreement, 

CF Crespe substituted for Cresta as the real party in interest in a District of Delaware litigation in 

which Cresta was involved. See, e.g., ECF No. 9-18 (granting CF Crespe’s motion to substitute 

for Cresta as plaintiff in the United States District Court for the District of Delaware). CF Crespe 

also substituted for Cresta as Appellant before the U.S. Patent and Trademark Office Patent Trial 

and Appeal Board. See Appellee Opp. at 18; ECF No. 9-17 (substituting for Cresta as Appellant 

before the U.S. Patent and Trademark Office Patent Trial and Appeal Board).

Significantly, however, neither CF Crespe nor DBD substituted for Cresta as a defendant 

in the N.D. Cal. Patent Litigation. ECF No. 18-12, at 2. Rather, Appellants took the position that 

they were not required by the Sale Agreement to substitute for Cresta in the N.D. Cal. Patent 

Litigation. See ECF No. 9-8, at 3. In June 2016, however, Appellants were informed by the 

 

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The bankruptcy court refers to “assignee” as “assign” and “assignees” as “assigns.” For 

simplicity, this order does the same.

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Trustee that, “[w]hile your position [regarding the N.D. Cal. Patent Litigation] is understandable, 

[the Trustee] do[es] not believe it conforms with the provisions of the [Sale Agreement].” Id. at 2. 

On July 7, 2016, Appellee filed in the bankruptcy court a motion for an order compelling 

Appellants to comply with the bankruptcy court’s Sale Order. ECF No. 3-6. Specifically, 

Appellee requested that the bankruptcy court “order DBD as Buyer (and any of its assigns) to 

comply with the terms of the Court’s Sale Order and fully substitute for [Cresta] in the N.D. Cal. 

[Patent] Litigation.” Id. at 3–4. 

On July 25, 2016, Appellants filed in the bankruptcy court an opposition to Appellee’s 

motion to compel. ECF No. 3-7. Appellants asserted, among other arguments, that the 

bankruptcy court’s Sale Order “merely authorized the Trustee to execute, deliver and perform the 

underlying” Sale Agreement, but that the Sale Order itself did not incorporate the terms of the 

Sale Agreement. Id. at 6. Thus, Appellants argued, Appellants were not violating the bankruptcy 

court’s Sale Order by not substituting in as a defendant in the N.D. Cal. Patent Litigation; at most, 

Appellants were breaching the Sale Agreement. Id. at 6. Appellants also argued that Appellee, as 

a non-party to the Sale Agreement, lacked standing to move the bankruptcy court for a motion to 

compel DBD. Id. Rather, Appellants contended, the Trustee alone could seek to enforce the terms 

of the Sale Agreement if Appellants were breaching the Sale Agreement, and the Trustee had 

chosen not to do so. Id. 

Finally, Appellants argued that the Sale Agreement did not require Appellants to substitute 

in to the N.D. Cal. Patent Litigation. Id. at 16. In accordance with this argument, Appellants 

moved the bankruptcy court for an order that reformed the Sale Agreement “to ensure that [the 

Sale Agreement] unequivocally reflects the intention of the parties” that Appellants did not have to 

substitute for Cresta as a defendant in the N.D. Cal. Patent Litigation. Id. at 16. 

5. The Bankruptcy Court’s Compel Order

On August 11, 2016, in an oral finding of fact and conclusions of law, the bankruptcy court 

granted Appellee’s motion to compel (hereinafter, “Compel Order”). ECF No. 3-8. The 

bankruptcy court held that the bankruptcy court’s Sale Order “authorized [the Trustee] to enter 

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into a sale . . . on the terms and conditions set forth in the [Sale Agreement] between” the Trustee 

and DBD. Id. at 7 (emphasis added). Thus, “to the extent [DBD] is not complying with [the Sale 

Agreement’s] terms, it is a violation of” the bankruptcy court’s Sale Order. Id. 

The bankruptcy court also rejected Appellants’ argument that Appellee lacked standing to 

move the bankruptcy court for an order to compel. Id. The bankruptcy court explained that, 

although “[t]he general rule is that an unsuccessful bidder usually lacks standing to challenge a 

Bankruptcy Court’s approval of a sale,” here, Appellee could proceed under Federal Rule of Civil 

Procedure 71, id. at 7–8, which states that “[w]hen an order grants relief for a nonparty . . . the 

procedure for enforcing the order is the same as for a party,” Fed. R. Civ. P. 71. The bankruptcy 

court found that because the Sale Order required DBD to substitute in to the N.D. Cal. Patent 

Litigation, that part of the Sale Order was “beneficial to Silicon Labs” and, under Rule 71, 

“Silicon Labs has standing to enforce that portion of the sale order that ran in its favor.” Id. at 8. 

Accordingly, the bankruptcy court ordered that “[DBD] or its assigns [CF Crespe], is 

required to take and complete all actions necessary to become the real party in interest in the [N.D. 

Cal. Patent Litigation] no later than seven business days after entry of the order granting 

[Appellee’s] motion to compel.” Id. at 14–15. 

Following this holding, during the same hearing, Appellants orally moved the bankruptcy 

court to stay the Compel Order until the bankruptcy court held a hearing on the Appellants’ thenpending motion to reform the Sale Agreement. Id. at 16. The bankruptcy court denied the motion 

for stay, explaining that Appellants’ motion to reform the Sale Agreement presented “identical” 

arguments to those presented by Appellants with regards to the bankruptcy court’s Compel Order. 

Id. at 22. Accordingly, the bankruptcy court held that “based on [its] ruling . . . in the context of 

[Appellants’] opposition to the motion to compel, there’s nothing before [it] to indicate the 

likelihood of success on [Appellants’] motion to reform.” Id. Thus, the bankruptcy court denied 

Appellants’ request for a stay of the Compel Order pending the bankruptcy court’s decision on

Appellants’ motion to reform the Sale Agreement. Id. at 22.

Immediately thereafter, Appellants orally moved the bankruptcy court for a stay of the 

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Compel Order pending appeal of the Compel Order to this Court. Id. at 24. However, the 

bankruptcy court denied Appellants’ motion for stay pending appeal “for the same reasons” that 

the bankruptcy court denied Appellants’ motion for a stay of the Compel Order pending a hearing 

on Appellants’ motion to reform the Sale Agreement. Id. at 24. 

On August 12, 2016, the bankruptcy court issued a written Compel Order. ECF No. 3-9. 

The bankruptcy court restated that “Silicon Labs has standing to bring the Motion to Compel” and 

that the Sale Order “required DBD or its assigns to substitute into the N.D.Cal. Case as the real 

party in interest.” Id. at 3. However, the Compel Order concluded that “DBD is required to 

substitute into the N.D. Cal Case no later than seven (7) business days from entry of this order.” 

Id. (emphasis added).

6. Appellants’ Motion to Modify the Compel Order

On August 17, 2016, Appellants filed in the bankruptcy court a motion to modify the 

Compel Order. ECF No. 3-10. Specifically, Appellants requested that the bankruptcy court 

“clarify that either DBD or its assigns may substitute into” the N.D. Cal. Patent Litigation, rather 

than simply DBD alone. Id. at 3. 

Following a hearing on Appellants’ motion to modify the Compel Order, the bankruptcy 

court stated that it would “modify the order to state DBD and its assigns is required to substitute” 

and that the determination of “whether DBD and/or its assigns are the appropriate party in interest 

are reserved for resolution in the [N.D. Cal. Patent Litigation] case” before Magistrate Judge 

Spero. ECF No. 3-11, at 34 (emphasis added). On August 19, 2016, the bankruptcy court 

amended its Compel Order, stating that “DBD and its assigns is required to substitute into the 

N.D. Cal. [Patent Litigation] . . . . All rights are reserved as to the appropriate entity or entities 

between DBD and its assigns as to which is/are the appropriate real party-in-interest.” ECF No. 3-

12, at 3. 

7. Appellants’ Motion to Substitute in the N.D. Cal. Patent Litigation

On August 23, 2016, pursuant to the bankruptcy court’s Compel Order, Appellants moved 

in the N.D. Cal. Patent Litigation to substitute for Cresta as a defendant in the N.D. Cal. Patent 

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Litigation. ECF No. 3-5. Appellants’ motion to substitute in the N.D. Cal. Litigation asserted 

that, although both DBD and its assign, CF Crespe, were ordered by the bankruptcy court to 

substitute in to the litigation, “CF Crespe should be the defendant—and only defendant—in th[e] 

[N.D. Cal. Patent] litigation.” Id. at 3. Judge Spero has yet to rule on Appellants’ motion to 

substitute in the N.D. Cal. Patent Litigation case. See generally Silicon Labs., Inc., Case No. 14-

cv-03227-JCS.

B. Procedural History

On September 2, 2016, Appellants appealed the bankruptcy court’s Compel Order to this 

Court. ECF No. 1. 

On September 15, 2016, Appellants filed in this Court a motion for stay pending appeal of 

the bankruptcy court’s Compel Order. ECF No. 3 (“Appellants Mot.”). Appellee responded on 

September 29, 2016. ECF No. 9; ECF No. 13-2 (“Appellee Resp.”). Appellants replied on 

October 11, 2016, ECF No. 12 (“Appellants Reply”).

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II. LEGAL STANDARD

 

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In their reply, Appellants noted that Appellee’s response to Appellants’ motion was 

untimely and exceeded the page-limit requirement. Appellants Reply at 6. Specifically, 

Appellants stated that “[u]nder Civil L.R. 16-4, bankruptcy appeals are governed by the Federal 

Rules of Bankruptcy Procedure and the local bankruptcy rules,” rather than the Civil Local Rules. 

Id. The Bankruptcy Local Rules require that a response “be filed within seven days of service of 

the motion,” should be 14-point font, and should not exceed 20 pages. Id. Appellee’s response 

was filed three days late under the Bankruptcy Local Rules and Appellee used 12-point font. Id. 

Thus, although Appellee’s motion was nominally 20 pages, if Appellee had used 12-point font 

instead of 14-point font, as required, Appellee’s motion would have exceeded the 20-page page 

limit. Id. 

On October 12, 2016, Appellee filed a response and indicated that its mistake was 

inadvertent. ECF No. 13. Appellee attached to its response an amended opposition that conformed 

to the 12-point font-size requirement—and thus the 20-page page limit—without making 

substantive changes. Id. 

The Court will consider Appellee’s response because Appellants replied to the response, 

and Appellants were not prejudiced by the three-day delay. See Quinto v. JPMorgan Chase Bank, 

2012 WL 2792445, at *1 (N.D. Cal. July 9, 2012) (considering a defendant’s opportunity to 

respond in deciding whether to strike an untimely opposition). Further, the delay does not 

otherwise affect deadlines of this Court and consideration of Appellee’s response on the merits is 

consistent with the goals of the Federal Rules of Civil Procedure. Ferchau v. CitiMortgage, 2014 

WL 27528, at *3 (N.D. Cal. Jan. 2, 2014) (noting that resolving an untimely opposition on the 

“merits rather than on procedural grounds” is more consistent with the Federal Rules of Civil 

Procedure). However, in considering Appellee’s response, the Court will refer only to Appellee’s 

amended response, which conforms to the Bankruptcy Local Rules. 

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Federal Rule of Bankruptcy Procedure 8007 governs a motion to stay a bankruptcy court’s 

order on appeal. Fed. R. Bankr. P. 8007. “Motions for stay pending appeal or for other relief 

pending appeal must ordinarily be presented to the bankruptcy court in the first instance, before 

the movant may seek relief from the [Bankruptcy Appellate Panel] or the district court, as the case 

may be.” In re Ho, 265 B.R. 603, 604 (B.A.P. 9th Cir. 2001). “Where the bankruptcy court has 

already denied a stay . . . the appellate court’s review is limited to a simple determination of 

whether the bankruptcy court abused its discretion.” In re North Plaza, LLC, 395 B.R. 113, 118 

(S.D. Cal. 2008). “The abuse of discretion standard on review of the bankruptcy court’s order 

denying a stay encompasses a de novo review of the law and a clearly erroneous review of the 

facts with respect to the underlying issues.” Id. 

“Appellants seeking a discretionary stay under [Rule 8007] must meet the terms of a test 

virtually identical to that for a preliminary injunction.” Lynch v. Cal. Pub. Util. Comm’n, 2004 

WL 793530, at *2 (N.D. Cal. Apr. 9, 2004) (internal quotation marks omitted). Accordingly, in

deciding whether to issue a stay pending a bankruptcy appeal under Federal Rule of Bankruptcy 

Procedure 8007, courts consider four factors: “(1) whether the stay applicant has made a strong 

showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably 

injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties 

interested in the proceeding; and (4) where the public interest lies.” Hilton v. Braunskill, 481 U.S. 

770, 776 (1987); see also In re North Plaza, LLC, 395 B.R. at 119 (using these four factors in 

evaluating a motion for stay pending appeal from a bankruptcy court decision). “The party 

moving for a stay has the burden on each of these elements.” In re Irwin, 338 B.R. 839, 843 (E.D. 

Cal. 2006) (internal quotation marks omitted). “The first two factors are the most critical, but a 

failure on any one factor requires the court to deny the application for a stay.” In re Swartout, 554 

B.R. 474, 476 (Bankr. E.D. Cal. 2016). 

III. DISCUSSION

Appellants move pursuant to Rule 8007 for a stay pending appeal of the bankruptcy court’s 

Compel Order. Prior to addressing the merits of Appellants’ argument in support of a stay 

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pending appeal, however, the Court must first consider the threshold issue of whether Appellants

complied with Rule 8007 by first moving in the bankruptcy court for a stay pending appeal. 

A. Appellants Moved for Stay Pending Appeal in the Bankruptcy Court

Appellee asserts that Appellants cannot obtain relief from this Court because Appellants 

have failed to comply with the presentation requirement of Rule 8007. Appellee Resp. at 13; see 

In re Rivera, 2015 WL 6847973, at *2 (N.D. Cal. Nov. 9, 2015) (“Rule 8007 contains a 

presentation requirement.”). 

Rule 8007 provides that “[o]rdinarily, a party must move first in the bankruptcy court for . 

. . a stay of a judgment, order, or decree of the bankruptcy court pending appeal.” Fed. R. Bankr. 

P. 8007(a)(1)(A). If a motion for stay is then made in the district court on direct review of the 

bankruptcy court, the movant must “either state that the court has not yet ruled on the motion [for 

stay], or state that the court has ruled and set out any reasons given for the ruling.” Fed. R. Bankr. 

P. 8007(b)(2). If the movant did not make a motion for stay in the bankruptcy court prior to 

moving for stay in the district court, the movant must “show that moving first in the bankruptcy 

court would be impracticable.” Id. “A failure to seek emergency relief in the bankruptcy court is 

a critical defect and not often overlooked.” In re Rivera, 2015 WL 6847973, at *2. This is 

because “[t]he reviewing court should have the benefit of the learning of the lower court, which is 

more familiar with the parties, facts and legal issues.” Id. (internal quotation marks omitted). 

“[D]istrict courts routinely dismiss motions for a stay pending appeal when stay relief is not first 

sought from the bankruptcy judge and the failure to do so is not adequately explained.” Id. 

(quoting In re BGI, Inc., 504 B.R. 754, 761 (S.D.N.Y. 2014)). 

The record demonstrates that Appellants complied with Rule 8007. Following the 

bankruptcy court’s oral statement of its Compel Order, Appellants orally moved for a stay of the 

Compel Order pending the bankruptcy court’s resolution of Appellants’ then-pending motion to 

reform the Sale Agreement. ECF No. 3-8, at 16. The bankruptcy court noted that “[t]he 

arguments presented in the motion [to reform] are identical to those addressed here [regarding 

Appellee’s motion to compel].” Id. at 22. The bankruptcy court then reasoned that, given its 

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Compel Order and its “review of these issues and arguments as presented in the context of 

opposition to [Appellee’s] motion to compel,” there was “nothing before [the bankruptcy court] to 

indicate the likelihood of success on a motion to reform, thus indicating that a stay [of the Compel 

Order] may be appropriate” pending the bankruptcy court’s ruling on Appellants’ motion to 

reform the Sale Agreement. Id. 

Following the bankruptcy court’s denial of Appellants’ motion to stay pending the 

bankruptcy court’s resolution of Appellants’ motion to reform the Sale Agreement, Appellants

orally moved the bankruptcy court “for a stay pending appeal” of the Compel Order. Id. at 24. 

Appellants noted that they “assume[d] the [bankruptcy court] would deny [the motion for stay 

pending appeal], but at least we’d like to have a denial on the record.” Id. The bankruptcy court 

then stated that it would “take that as your request for a stay pending appeal,” and the bankruptcy 

court “den[ied] it for the same reasons as [it] just denied” Appellants’ request for a stay of the 

Compel Order pending resolution of Appellants’ motion to reform the Sale Agreement. Id. 

Thus, the record demonstrates that Appellants first presented to the bankruptcy court their 

request for a stay of the Compel Order pending appeal, and the bankruptcy court stated on the 

record its reasons for denying a stay of the Compel Order pending appeal. See id. Accordingly, 

this Court has “the benefit of the views of the Judge who is familiar with the issues pertaining to” 

the motion for stay pending appeal, In re BGI, Inc., 504 B.R. at 766 (internal quotation marks 

omitted), which is the purpose of Rule 8007, In re Rivera, 2015 WL 6847973, at *2 (noting that 

the purpose of Rule 8007(a) is for the district court to have “the benefit of the bankruptcy court’s 

opinion on the issue”). Appellants have thus satisfied Rule 8007(a)’s presentation requirement. 

Id. Accordingly, the Court will turn to consider the merits of Appellants’ motion for a stay of the 

Compel Order pending appeal.

B. Appellants Have Not Demonstrated That a Stay Pending Appeal is 

Warranted

As discussed above, in considering whether a stay pending appeal is warranted, the Court 

must examine four factors: “(1) Movant’s likelihood of success on the merits of the appeal; (2) 

significant and/or irreparable harm that will come to Movant absent a stay; (3) harm to the adverse 

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party if a stay is granted; and (4) where the public interest lies.” In re North Plaza, LLC, 395 B.R. 

at 119. “The first two factors . . . are the most critical,” but “a failure on any one factor dooms the 

motion.” In re Rivera, 2015 WL 6847973, at *2 (internal quotation marks omitted). The Court 

considers each of the four factors in turn. 

1. Likelihood of Success on the Merits

First, in order to establish that a stay pending appeal is warranted, Appellants must 

“demonstrate a likelihood of success on the merits of the appeal.” In re North Plaza, LLC, 395 

B.R. at 119. The Ninth Circuit has stated that “[t]here are many ways to articulate the minimum 

quantum of likely success necessary to justify a stay—be it a ‘reasonable probability’ or ‘fair 

prospect,’ . . . ‘a substantial case on the merits,’ . . . [or] that ‘serious legal questions are raised.’” 

Leiva-Perez v. Holder, 640 F.3d 962, 967–68 (9th Cir. 2011) (per curium) (internal citations 

omitted); see also In re O’Reilly & Collins, 2014 WL 4060693, at *3 (N.D. Cal. Aug. 14, 2014) 

(applying these factors in the context of a motion for stay pending appeal of a bankruptcy court

decision). These “interchangeable” formulations each require, “‘at a minimum,’ . . . that there is a 

‘substantial case for relief on the merits,’” but do not require the movant “to show that ‘it is more 

likely than not that [the party seeking stay] will win on the merits.’” Lair v. Bullock, 697 F.3d 

1200, 1204 (9th Cir. 2012) (quoting Leiva-Perez, 640 F.3d at 966–68). 

Appellants’ main contention in support of their motion for stay pending appeal is that the 

bankruptcy court erred in granting its Compel Order because Appellee’s lacked standing to seek 

enforcement of the Sale Agreement or Sale Order. Appellants Mot. at 15. This argument has two 

primary subparts. First, Appellants assert that Appellants never violated the bankruptcy court’s 

Sale Order. Appellants Mot. at 15. According to Appellants, the bankruptcy court’s Sale Order 

merely authorized the Trustee to enter into the Sale Agreement, but the Sale Order did not 

incorporate the terms of the Sale Agreement. Id. at 16. Thus, Appellants argue, Appellants at 

most breached the Sale Agreement with the Trustee, to which Appellees were not a party. Id. at 

16. Second, even assuming that Appellants violated the bankruptcy court’s Sale Order, Appellants 

contend that the bankruptcy court erred in relying on Federal Rule of Civil Procedure 71 to grant

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Appellee’s motion to compel because the Sale Order did not “grant relief” to Appellee, as Rule 71 

requires. Id. at 17. 

For the reasons discussed below, the Court agrees with Appellants that, at this stage of the 

appeal, Appellants have established a likelihood of success on appeal that the bankruptcy court 

erred in relying on Rule 71 in order to grant Appellee’s motion to compel. Accordingly, the Court

will assume without deciding that Appellants violated the bankruptcy court’s Sale Order in 

addition to the Sale Agreement. Thus, the Court turns to address Appellants’ argument that the 

bankruptcy court erred in relying on Rule 71.

Federal Rule of Civil Procedure 71, which is incorporated into bankruptcy proceedings, 

provides that “[w]hen an order grants relief for a nonparty or may be enforced against a nonparty, 

the procedure for enforcing the order is the same as for a party.” Fed. R. Civ. P. 71; see Fed. R. 

Bankr. P. 7071 (incorporating Federal Rule of Civil Procedure 71 into adversary proceedings) & 

Fed. R. Bankr. P. 9014 (applying Bankruptcy Rule 7071 in contested matters). In granting 

Appellee’s motion to compel, the bankruptcy court held that, although “[t]he general rule is that an 

unsuccessful bidder usually lacks standing to challenge a Bankruptcy Court’s approval of a sale 

transaction,” Appellee here was seeking to enforce the portion of the bankruptcy court’s Sale 

Order that “ran in [Appellee’s] favor.” ECF No. 3-8, at 7–8. The bankruptcy court held that 

Appellee could do so under Rule 71. Id. 

As other courts have recognized, “[t]he precise contours of Rule 71 . . . remain unclear.” 

Beckett v. Air Line Pilots Ass’n, 995 F.2d 280, 287–88 (D.C. Cir. 1993); see also In re Emp’t 

Discrimination Litigation Against the State of Ala., 213 F.R.D 592, 601 (M.D. Ala. 2003) (quoting 

Beckett for the same proposition). The history of Rule 71 and the available cases interpreting the

rule show, however, that there are nonetheless “some parameters in how Rule 71 may be 

construed.” In re Emp’t Discrimination, 213 F.R.D. at 601. 

In In re Employment Discrimination Litigation Against the State of Alabama, 213 F.R.D. 

592, Judge Myron Thompson provided an “extensive review of the development of the rule and its 

interpretation.” Wright & Miller, Federal Practice & Procedure § 3031. There, Judge Thompson 

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explained that Rule 71 “is a rewording of former Equity Rule 11, which enabled a non-party to 

enforce orders made in [the non-party’s] ‘favor . . . by the same process as if he were a party.’” Id. 

at 598 (quoting Rules of Practice for the Courts of Equity of the United States, Rule 11, 226 U.S. 

649, 652 (1912)). “Rule 11 was applied narrowly.” Id. The cases interpreting Rule 11 and its 

predecessors do not demonstrate that Rule 11 was interpreted “to reach any beneficiary of an 

order.” Id. at 599. Rather, “the historical background against which Rule 71 was drafted and the 

terms in which its authors understood its application strongly suggest that the provision was 

intended to enable non-parties to pursue relief in court in circumstances where they had been 

specifically identified as beneficiaries of an order.” Id. (emphasis added). 

For example, in Farmers’ Loan & Trust Co. v. Chicago & A. Ry. Co., 44 F. 653, 658 

(C.C.D. Ind. 1890)—a case cited in the Advisory Committee Notes to Rule 71—the Chicago & 

Atlantic Railroad Company purchased a railroad at a foreclosure sale. A prior district court order 

“direct[ed] the receiver to deliver possession [of the railroad] ‘to [the] Chicago & Erie Railroad 

Company[] as the grantee and assignee of said purchasers at the commissioner’s sale.’” Id. at 658. 

The prior district court order “reserve[d] the right to resume the possession of said railroad and 

other property in case the said Chicago & Erie Railroad Company shall hereafter fail or refuse . . . 

to pay into this court any money allowances for costs.” Id. at 659. Thereafter, the Chicago & Erie 

Railroad Company petitioned the district court for assistance to obtain possession of the railroad 

because another railroad company occupied a portion of the rail. Id. at 654. In considering the 

petition, the district court recognized that the Chicago & Erie Railroad Company was “not the 

purchaser” of the railroad and thus was not a “party to the cause,” but was rather “the grantee of 

the purchasers.” Id. at 658. Nonetheless, the district court quoted the portions of its prior order

that “direct[ed] the receiver to deliver possession” of the railroad to the Chicago & Erie Railroad 

Company, and the portions of its prior order that “reserve[d] the right to resume the possession” of 

the railroad “in case the said Chicago & Erie Railroad Company” shall fail to pay the court. Id. 

The district court then held that the Chicago & Erie Railroad Company, although not a party,

could petition the district court for possession of the railroad under the predecessor to Rule 11, 

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which provided that “[e]very person not being a party in any cause, who has obtained an order, or 

in, whose favor an order shall have been made, shall be enabled to enforce obedience to such order 

by the same process as if he were a party to the cause.” Id. at 659. 

The district court’s “application of the equity rule [in Farmer’s Loan] . . . was narrow.” 

213 F.R.D. at 599. The district court’s prior order in Farmer’s Loan had “specifically identified” 

the Chicago & Erie Railroad Company and the district court’s prior order had “clearly defined and 

circumscribed” the Chicago & Erie Railroad Company’s “rights and obligations.” Id. Indeed, this 

“narrow” application of Rule 71’s predecessor is consistent with the other early cases invoking the 

rule. Id. For example, courts applied the rule in circumstances where “the interests of the nonparty individuals . . . were ‘so closely connected with the [party] defendant’ as to be almost 

‘identical,’” such as a corporation and the corporation’s owner. Id. (quoting Robert Findlay Man. 

Co. v. Hygrade Lighting Fixture Corp., 288 F. 80, 81 (S.D.N.Y. 1923)). 

Modern decisions interpreting Rule 71 have similarly indicated that the rule’s reach is 

limited. See id. at 598. For example, in United States v. American Society of Composers, Authors 

and Publishers, 341 F.2d 1003, 1008 (2d Cir. 1965), the Second Circuit held that a third party 

could not use Rule 71 to move to hold a party in contempt of a consent decree. The court 

emphasized that “[n]o monetary or other relief was specifically granted to” the third party by the 

decree, nor was the third party “named in the judgment.” Id. “[I]t is not enough,” the Second 

Circuit stated, “that [the third party] was indirectly or economically benefited by the decree.” Id. 

Accordingly, the historical background of Rule 71 and the available cases interpreting the 

rule suggest that the Rule is properly invoked in situations in which a non-party is “specifically 

identified as [a] beneficiar[y] of an order,” In re Emp’t Discrimination, 213 F.R.D. at 599, or the 

order “specifically grant[s]” the non-party a form of relief, Am. Soc. of Composers, Authors, and 

Publishers, 341 F.2d at 1008. 

Here, by contrast, the bankruptcy court invoked Rule 71 to grant Appellee’s motion to 

compel Appellants to comply with the bankruptcy court’s Sale Order—an order that granted the 

Trustee’s motion for the bankruptcy court’s approval of the Trustee’s Sale Agreement with DBD

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pursuant to 11 U.S.C. § 363. See 11 U.S.C. § 363(b) (providing procedures for a trustee to sell 

property of the bankruptcy estate “outside of the ordinary course of business”); see also ECF No. 

3-2, at 21; ECF No 9-2, at 4 (noting, at the hearing on the Trustee’s motion, that “[t]his is a 363(b) 

sale . . . it’s a showing of whether the Trustee has articulated a business justification for the sale”). 

The Sale Order authorized the Trustee “to enter into and perform the [Sale Agreement]” and “to 

sell the Assets . . . to [DBD] pursuant to the terms and conditions set forth in the Agreement.” 

ECF No. 3-3, at 3. The bankruptcy court’s Sale Order explicitly mentions Appellee only in the 

context of overruling Appellee’s objections to the Trustee’s motion; it does not otherwise 

“specifically identif[y]” Appellee as a beneficiary of the order or “grant[] relief” to Appellee. See 

In re Emp’t Discrimination, 213 F.R.D. at 599; Fed. R. Civ. P. 71. Moreover, even the Sale 

Agreement between the Trustee and DBD that the bankruptcy court’s Sale Order approved

mentions Appellee only indirectly. Specifically, Appellee is a plaintiff in the N.D. Cal. Patent 

Litigation that was sold to DBD, and thus the Sale Agreement lists the case caption and case 

number for the N.D. Cal. Patent Litigation. ECF No. 3-2, at 11–13. However, other than this case 

caption, the Sale Agreement does not otherwise identify or discuss Appellee. See id. Thus, 

neither the Sale Agreement nor the bankruptcy court’s Sale Order “grants relief” to Appellee in a 

way that the case law discussed above suggests that Rule 71 intends. In re Emp’t Discrimination, 

213 F.R.D. at 599; Fed. R. Civ. P. 71. 

Moreover, the single case cited by the bankruptcy court in support of its reliance on Rule 

71, In re Metropolitan Metals, 210 B.R. 249 (M.D. Penn. 1997), does not lend strong support to 

Appellee’s argument that the bankruptcy court appropriately invoked Rule 71 here. See ECF No. 

3-8, at 7–8. That case involved the bankruptcy of Metropolitan Metals, Inc. (“Metropolitan”). 

210 B.R. at 251. Metropolitan owed several thousand dollars to the Enos family, and the Enoses

themselves owed several thousand dollars to the Internal Revenue Service (“IRS”). Id. at 251–52. 

The IRS issued a Notice of Levy on Metropolitan regarding the taxes owed by the Enoses, and 

Metropolitan agreed to pay the IRS $1,500 per week “to be applied to the tax liability of Enos and 

his wife for which the aforesaid levy was made.” Id. at 252. 

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In bankruptcy court, the trustee of Metropolitan moved the bankruptcy court for an order 

compelling “the IRS to pursue assets of [the Enoses] to satisfy tax liabilities of the Enoses to the 

IRS.” In re Metropolitan Metals, 50 B.R. 685, 686 (M.D. Penn. 1985) (hereinafter, “Metropolitan

Metals I”). The bankruptcy court issued an order in Metropolitan Metals I denying the trustee’s 

motion to compel the IRS to pursue the assets of the Enoses. Id. However, although denying the 

trustee’s motion to compel, the bankruptcy court in Metropolitan Metals I concluded that 

Metropolitan “should be subrogated to the rights of the IRS against Enos.” Id. at 687. 

Following the bankruptcy court’s order in Metropolitan Metals I, the IRS pursued the 

Enoses for their tax liabilities. See Metropolitan Metals, 210 B.R. at 250 (hereinafter, 

“Metropolitan Metals II”). Thereafter, in Metropolitan Metals II, the Enoses invoked Rule 71 and 

moved in the bankruptcy court for the bankruptcy court to enforce its prior order in Metropolitan 

Metals I that denied the trustee’s motion to compel the IRS to pursue the assets of the Enoses. Id. 

The bankruptcy court in Metropolitan Metals II held that, although Rule 71 could allow the 

Enoses to enforce the bankruptcy court’s prior order in Metropolitan Metals I if the IRS was being

compelled to pursue the Enoses, that was not the situation before the bankruptcy court in 

Metropolitan Metals II. Id. at 251. Rather, the IRS had pursued the Enoses on its own volition, 

not “pursuant to the order of any court.” Id. Accordingly, there was no “evidence of a failure to 

comply with” the bankruptcy court’s prior order in Metropolitan Metals I denying the motion to 

compel, and the Enoses’ motion to enforce the bankruptcy court’s order was thus unnecessary. Id. 

Metropolitan Metals is accordingly not persuasive support for the bankruptcy court’s 

invocation of Rule 71 here. As stated, the bankruptcy court in Metropolitan Metals II ultimately 

did not rely on Rule 71 because the parties were in compliance with the bankruptcy court’s prior 

order in Metropolitan Metals I; the case stands, at most, for the proposition that if the IRS was 

being compelled to pursue the Enoses for their tax liabilities, the Enoses could rely on Rule 71 to 

enforce the bankruptcy court’s prior order that held that the trustee could not compel the IRS to 

pursue the Enoses. Id. This application of Rule 71 is consistent with the “narrow” limitations of 

the Rule, as discussed above. In re Emp’t Discrimination, 213 F.R.D. at 599. The tax liability of 

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the Enoses and the Enoses’ relationship with the IRS and Metropolitan was the direct subject of 

the bankruptcy court’s order in Metropolitan Metals I that the Enoses sought to enforce in 

Metropolitan Metals II. See 50 B.R. at 685–88. Indeed, as discussed above, although the 

bankruptcy court’s order in Metropolitan Metals I ultimately denied the Trustee’s motion to 

compel the IRS to pursue the Enoses, the bankruptcy court held in Metropolitan Metals I that 

Metropolitan was “subrogated to the rights of the IRS against [the Enoses].” Id. at 687. Thus, the 

holding of Metropolitan Metals I specifically identified and directly implicated the Enoses. Id. 

Here, by contrast, Appellee is not a direct beneficiary of the Sale Order or the Sale 

Agreement. Again, as discussed above, the Sale Order was an approval of the Trustee’s motion 

for the bankruptcy court to authorize the Sale Agreement between the Trustee and DBD. 

Although the Sale Agreement enumerates the N.D. Cal. Patent litigation in which Appellee was a 

plaintiff, as discussed above, the Sale Agreement does not directly “grant[] relief” to Appellee in 

the way that the case law indicates Rule 71 is intended to apply. See In re Emp’t Discrimination, 

213 F.R.D. at 599; Fed. R. Civ. P. 71. 

Thus, at this stage of the appeal, Appellants have established a likelihood of success on the 

merits regarding the bankruptcy court’s reliance on Rule 71. Although the full contours of Rule 

71 “remain unclear,” Beckett, 995 F.2d at 288, Appellants have made a “substantial case” at this 

stage of the proceedings that Appellee’s relation to the Sale Order is not the kind of relationship 

that is intended to fall within Rule 71, Lair, 697 F.3d at 1204. Moreover, the ambiguity in Rule 

71’s scope and the lack of clear case law addressing the exact situation here lends further support 

to finding that Appellants have demonstrated a likelihood of success on the merits regarding Rule

71. See In re Dudley, 2006 WL 862932, at *2 (finding that the lack of “clear cut answers . . . 

alone” suggested the movant had established a likelihood of success for a stay pending appeal 

from a bankruptcy court order). 

Further, the Court is not persuaded by Appellee’s arguments regarding Appellee’s

alternative grounds for standing to bring a motion to compel compliance with the Sale Order and 

Sale Agreement. See Appellee Resp. at 11–15. The cases cited by Appellee relate to the 

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bankruptcy court’s subject-matter jurisdiction, Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 

(2009) (finding that the bankruptcy court had subject-matter “jurisdiction to interpret and enforce 

its own prior orders”), or to whether an unsuccessful bidder or a creditor has standing to pursue 

other types of relief that are not at issue here, see, e.g., In re Harwald Co., 497 F.2d 443, 445 (7th 

Cir. 1974) (discussing whether an unsuccessful bidder had standing to petition the district court for 

review of an order of a bankruptcy referee in order to argue that the approval of the sale would 

violate antitrust laws); In re Bacigalupi, Inc., 60 B.R. 442, 446 (B.A.P. 9th Cir. 1986) (finding that 

a creditor had standing to object to a bankruptcy court’s approval of a Stipulation and Assignment 

that was issued without notice to creditors, in violation of the bankruptcy statute). 

In sum, at this stage of the proceedings—without the benefit of full merits briefing by the 

parties—the Court finds that Appellants have demonstrated a likelihood that the bankruptcy court 

erred in relying on Rule 71 to grant Appellee’s motion to compel. Having found a likelihood of 

success on the merits of this argument, the Court need not reach Appellants’ remaining argument

that the bankruptcy court erred in granting specific performance to Appellees. See Appellants

Mot. at 14–16. 

2. Irreparable Injury to Appellants

The second stay factor requires Appellants to show “that there is a probability of 

irreparable injury if the stay is not granted.” Lair, 697 F.3d at 1214. Here, Appellants primary 

contention is that if a stay pending appeal of the Compel Order is not granted, and Appellants are 

thus forced to substitute as defendants in the N.D. Cal. Patent Litigation, Appellants “would have 

to immediately begin to incur substantial legal expenses associated with having new counsel (who 

are strangers to the Patent Case) quickly master” the case. Appellants Mot. at 21. 

However, “nearly all courts ‘have concluded that incurring litigation expenses does not 

amount to an irreparable harm.’” Mohamed v. Uber Tech., 115 F. Supp. 3d 1024, 1033 (N.D. Cal. 

2015) (quoting Guifu Li v. A Perfect Franchise, Inc., 2011 WL 2293221, at *4 (N.D. Cal. June 8, 

2011)); see also Morse v. Servicemaster Global Holdings, Inc., 2013 WL 123610, at *3 (N.D. Cal. 

Jan. 8, 2013) (“[T]he money and time a party must expend in [the litigation] process, while 

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burdensome, does not alone constitute irreparable injury”). Indeed, courts generally find 

exceptions to this principle only in the “unique” case of arbitration, where “the anticipated 

advantages of arbitration . . . are lost” if the movant “must undergo the expense of trial before 

being able to appeal.” Zaborowski v. MHN Gov’t Servs., Inc., 2013 WL 1832638, at *2 (N.D. Cal. 

May 1, 2013). However, even in the arbitration context, courts frequently decline motions for stay

if the movant does not face irreparable harm from the current stage of litigation. See, e.g., In re 

Carrier IQ, Inc. v. Consumer Privacy Lit., 2014 WL 2922726, at *1 (N.D. Cal. June 13, 2014) 

(reasoning, in the context of a denial of a motion to compel arbitration, that a stay was not 

warranted because the defendant had failed to demonstrate it faced harm “at this juncture in the 

proceedings”). 

Here, Appellants have not demonstrated “a probability of irreparable injury.” Lair, 697 

F.3d at 1214. Again, the only “irreparable injury” alleged by Appellants is loss of time and “legal 

expenses.” Appellants Mot. at 21. However, as stated above, “the money and time a party must 

expend in [the litigation] process . . . does not alone constitute irreparable injury.” Morse, 2013 

WL 123610, at *3. Moreover, although Appellants contend that they face a unique circumstance 

“because a reversal on appeal would eliminate . . . any involvement by Appellants in the [N.D. 

Cal. Patent Case],” Appellants Mot. at 22, even if this is true, Appellants have not met their 

burden to establish that they face irreparable harm “at this juncture” of the N.D. Cal. Patent 

Litigation proceedings. In re Carrier IQ, 2014 WL 2922726, at *1. Specifically, Judge Spero has 

yet to hold a hearing on Appellants’ motion to substitute as the real parties in interest in the N.D. 

Cal. Patent Litigation, and a trial in the N.D. Cal. Patent Litigation is currently not scheduled to 

occur until October 2017. See Docket No. 299, Silicon Labs, Inc., Case No. 14-CV-03227-JCS. 

Thus, given the current stage of the N.D. Cal. Patent Litigation, Appellants have not met their 

burden to show a probability of irreparable injury warranting a stay of the Compel Order pending 

appeal. See Bradberry, 2007 WL 2221076, at *4 (denying motion to stay because the current 

stage of litigation did not pose an irreparable injury to movants). 

3. Harm to Other Parties

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The third stay factor requires the Court to consider “whether issuance of the stay will 

substantially injure the other parties interested in the proceeding.” Leiva-Perez, 640 F.3d at 964. 

Appellee asserts that it will face substantial injury if a stay is granted because it “was fully ready 

to try this case when [Cresta] filed for bankruptcy” and “memories will fade” as time passes and 

witnesses and counsel may become unavailable as the N.D. Cal. Patent Litigation is continually

postponed. Appellee Resp. at 23. 

Appellee first filed the N.D. Cal. Patent Litigation in July 2014. See Docket No. 1, Silicon 

Labs, Inc., Case No. 14-CV-03227-JCS. Trial in the N.D. Cal. Patent Litigation was scheduled to 

occur on March 28, 2016, and both parties were on the eve of trial when Cresta gave notice of its 

bankruptcy on March 18, 2016. See Docket No. 269, Silicon Labs, Inc., Case No. 14-CV-03227-

JCS. After the bankruptcy court approved the Trustee’s Sale Agreement on May 13, 2016, 

Appellants did not substitute in to the N.D. Cal. Patent Litigation. Rather, Appellants only filed a 

motion to substitute as the real parties in interest on August 23, 2016, after the bankruptcy court 

issued its Compel Order on August 11, 2016. ECF No. 3-5; ECF No. 3-8. Trial in the N.D. Cal. 

Patent Litigation is currently not scheduled to occur until October 2017, over three years after

Appellee originally filed its complaint against Cresta. See Docket No. 299, Silicon Labs, Inc., 

Case No. 14-CV-03227-JCS.

Courts have recognized that “the risk of lost evidence weighs against granting a stay.” 

Bradberry, 2007 WL 2221076, at *4. Moreover, “delaying a plaintiff’s day in court” also 

constitutes “a substantial injury to the plaintiff.” Id. Here, a stay of the bankruptcy court’s 

Compel Order will only continue to delay the N.D. Cal. Patent Litigation that has already been 

pending for over two years, as discussed above. Accordingly, a stay pending appeal of the 

bankruptcy court’s Compel Order will exacerbate “the risk of lost evidence” that Appellee has 

already faced from Appellants’ delay, and a stay will continue to “delay[] [Appellee’s] day in 

court.” Bradberry, 2007 WL 2221076, at *4. Under these circumstances, the Court finds that the 

third factor weighs against granting Appellants’ motion for a stay pending appeal.

4. Public Interest

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Finally, the Court must consider the impact of granting a stay on the public interest. LeivaPerez, 640 F.3d at 964. Appellant argues that a stay is in the public interest because it will 

conserve judicial resources. Appellants Mot. at 19. However, although “the public interest lies in 

conservation of judicial resources,” Bradberry, 2007 WL 2221076, at *4, a stay of the bankruptcy 

court’s Compel Order will not “conserve judicial resources” here. Id. To the contrary, as 

discussed above, a stay pending appeal of the bankruptcy court’s Compel Order will only prolong 

the litigation between Appellant and Appellee that has been ongoing in multiple forums, including 

the bankruptcy court, the N.D. Cal. Patent Litigation, and this Court. Moreover, “[a] motion to 

stay . . . does not hinge only on considerations of judicial economy,” but rather “[i]t is also this 

court’s charge to consider prejudice or harm which a stay may impose on others.” ASUSTek 

Comp., Inc. v. Ricoh Co., Ltd., 2007 WL 4190689, at *2 (N.D. Cal. Nov. 21, 2007). As stated 

above, Appellee will face harm from continued delay of the N.D. Cal. Patent litigation. 

Bradberry, 2007 WL 2221076, at *4.

Finally, Appellants refused to substitute for Cresta as a defendant in the N.D. Cal. Patent 

Litigation, a case in which Cresta was on the eve of trial prior to bankruptcy, even though

Appellants moved to substitute for Cresta in other litigation in which Cresta was a plaintiff or in 

which Cresta was an Appellant. See Appellee Opp. at 18; ECF No. 9-17 (substituting for Cresta 

as Appellant in the U.S. Patent and Trademark Office Patent Trial and Appeal Board); ECF No. 9-

18 (substituting for Cresta as plaintiff in litigation in the U.S. District Court for the District of 

Delaware). Indeed, Appellants failed to substitute for Cresta in the N.D. Cal. Patent Litigation

even after the Trustee told Appellants that the Trustee believed that the Sale Agreement required 

Appellants to substitute for Cresta in the N.D. Cal. Patent Litigation. ECF No. 9-8 (stating that 

Appellants’ position did not “conform[] with the provisions of the [Sale Agreement]”). 

Accordingly, the record suggests that, as Appellee contends, Appellants have engaged in “cherrypicking” the litigation in which they wish to substitute. Appellee Opp. at 23. Under these 

circumstances, the Court agrees with Appellee that Appellants have not met their burden to 

demonstrate that the public interest lies in this Court staying the bankruptcy court’s Compel Order 

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that required Appellants to substitute for Cresta in the N.D. Cal. Patent Litigation. 

IV. CONCLUSION

For the foregoing reasons, the Court DENIES Appellants’ motion for stay pending appeal.

IT IS SO ORDERED.

Dated: November 23, 2016

______________________________________

LUCY H. KOH

United States District Judge

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