Court Opinion

ID: 2748865
Source: CourtListenerOpinion
Date Created: 2014-11-06 21:00:59.856918+00
Date Added: 2024-06-11T10:17:06.552740
License: Public Domain

FILED
                            NOT FOR PUBLICATION                               NOV 06 2014

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In the Matter of: 3DFX INTERACTIVE,              No. 11-15189
INC., a California corporation,
                                                 D.C. No. 5:08-cv-04634-RMW
              Debtor,

                                                 MEMORANDUM*
WILLIAM A. BRANDT, Jr., Trustee,

              Plaintiff - Appellant,

  v.

NVIDIA CORPORATION, a Delaware
corporation; NVIDIA US INVESTMENT
COMPANY, a Delaware corporation,
FKA Titan Acquisition Corp. No. 2,

              Defendants - Appellees.

                  Appeal from the United States District Court
                     for the Northern District of California
                Ronald M. Whyte, Senior District Judge, Presiding

                        Argued and Submitted October 8, 2014
                              San Francisco, California

Before: THOMAS, McKEOWN, and W. FLETCHER, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      William Brandt, the trustee of the estate of 3dfx Interactive, a California-

based manufacturer of graphics processing units, appeals from the district court’s

judgment affirming the bankruptcy court’s determination that NVIDIA did not pay

less than fair market value for assets purchased from 3dfx shortly before 3dfx filed

for bankruptcy. We have jurisdiction under 28 U.S.C. § 158(d). We review the

bankruptcy court’s legal conclusions de novo and its factual determinations for

clear error. Decker v. Tramiel, 617 F.3d 1102, 1109 (9th Cir. 2010). We affirm.

      As a threshold matter, we retain jurisdiction over this case even after the

Supreme Court’s decision in Executive Benefits Insurance Agency v. Arkison, 134
S. Ct. 2165 (2014). Arkison did not disturb our prior precedent that the parties’

consent permits a bankruptcy court to hear and decide so-called Stern claims. See

Mastro v. Rigby, 764 F.3d 1090, 1093–95 (9th Cir. 2014). Here, the parties did not

argue below, and have not argued here, that jurisdiction was improper. Thus the

bankruptcy court had jurisdiction to enter final judgment on Brandt’s claim, and

the district court and this court have jurisdiction over Brandt’s appeal.

      Brandt argues that 3dfx’s transfer of assets to its competitor NVIDIA was a

fraudulent conveyance. He contends that NVIDIA obtained 3dfx’s assets without

paying reasonably equivalent value, leaving 3dfx insolvent. In particular, he

argues that NVIDIA itself valued the transaction at $108 million, not the $70

                                          2
million it paid; and that the higher estimate was justified, as NVIDIA acquired

3dfx’s graphics business and its workforce, as part of the asset sale, in the

transaction. We disagree.

      First, the bankruptcy court did not err in holding that NVIDIA’s declaration,

on a form filed with the Department of Justice and the Federal Trade Commission,

that the transaction was worth $108 million, did not estop NVIDIA from claiming

that the value of the transferred assets was less than $70 million. The relevant

regulations require disclosure of “the fair market value of the assets, or, if

determined and greater than the fair market value, the acquisition price.” 16

C.F.R. § 801.10(b) (emphasis added). Neither NVIDIA’s disclosure nor the

bankruptcy court’s initial order estopped NVIDIA from claiming that the fair

market value of the assets was $70 million or less.

      Second, the bankruptcy court did not err in concluding that 3dfx did not

transfer its graphics business and its associated workforce to NVIDIA. The

bankruptcy court’s finding that a graphics chip business was not transferred is

amply supported by the record. Its conclusion that 3dfx did not transfer its

workforce is supported by the record and our precedent: the purchase agreement

did not make payment contingent on hiring 3dfx engineers, and the fact that many

3dfx engineers subsequently joined NVIDIA does not require a contrary result.

                                           3
See Atchison, Topeka & Santa Fe Ry. Co. v. Brown & Bryant, Inc., 159 F.3d 358,

365 (9th Cir. 1998).

      Finally, Brandt’s arguments involving procedural irregularities at trial are

unavailing. The bankruptcy court’s decision to exclude Brandt’s proposed rebuttal

expert witnesses was not an abuse of its discretion. Yeti by Molly, Ltd. v. Deckers

Outdoor Corp., 259 F.3d 1101, 1105–07 (9th Cir. 2001). Brandt was not

prejudiced by the bankruptcy court’s order temporarily closing proceedings to the

public.

      AFFIRMED.

                                         4