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Response to Vogels Sealed Motion to Have his Propriety of Actions Confirmed

No. 10-11202
In the
United States Court of Appeals
for the Fifth Circuit
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NETSPHERE, INC. Et Al,
Plaintiffs
v.
JEFFREY BARON,
Defendant-Appellant
v.
ONDOVA LIMITED COMPANY,
Defendant-Appellee
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Appeal of Order Appointing Receiver in Settled Lawsuit
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Cons. w/ No. 11-10113
NETSPHERE INC., Et Al, Plaintiffs
v.
JEFFREY BARON, Et Al, Defendants
v.
QUANTEC L.L.C.; NOVO POINT L.L.C.,
Appellants
v.
PETER S. VOGEL,
Appellee
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Appeal of Order Adding Non-Parties Novo Point, LLC
and Quantec, LLC as Receivership Parties
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From the United States District Court
Northern District of Texas, Dallas Division
Civil Action No. 3-09CV0988-F
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RESPONSE TO VOGEL SEALED MOTION TO HAVE
THE PROPRIETY OF HIS ACTIONS CONFIRMED
AND MOTION FOR EVIDENTIARY HEARING
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Case: 10-11202 Document: 00511598319 Page: 1 Date Filed: 09/09/2011
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TO THE HONORABLE FIFTH CIRCUIT COURT OF APPEALS:
COMES NOW Appellants, and subject to the preliminary Fifth Amendment
objection and motion previously filed in this cause, make this response with
respect to the 8-16-11 Sealed MOTION filed by Appellee Mr. Peter S. Vogel in 11-
10113 to Confirm Propriety of Domain Name Deactivations and sealed appendix.
Appellants move that an evidentiary hearing be allowed prior to the entry of an
order confirming the propriety of the receivers actions.
I. ARGUMENT AND AUTHORITY
Vogel offers no legal authority to support the relief he requests. Vogel does
not seek court approval, but seeks a preemptive finding that his actions have been
proper.
Background of Peter Vogel and Jeff Baron
Several years ago, Jeff Baron personally consulted with Vogel, and shared
important trade secrets regarding the domain name registration process of Ondova.
Barons consultations with Vogel were clearly with a view towards Vogels and his
firms representation of Baron and Ondova. Accordingly, Vogel was under a strict
duty to maintain the confidentiality of Barons disclosures to him. See Nolan v.
Freeman, 665 F.2d 738, 739 n.3 (5th Cir. 1982). Vogel, however, violated that
confidence and used the information to turn his law firm into a specialist at suing
Jeff Baron and Ondova. Pursuant to Federal law, all of this should have been
disclosed by Vogel before he was appointed special master in the District Court
Case: 10-11202 Document: 00511598319 Page: 2 Date Filed: 09/09/2011
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proceedings below.
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It was not. Then, while acting as special master, Vogel held
secret consultations with respect to having himself appointed receiver over Jeff
Baron. SR. v5 p238. Vogel then personally filed an order signed by Judge
Furgeson appointing Vogel receiver ex parte. Vogel, while still employed as
special master in the case, then filed a motion to have himself appointed receiver
over the assets of Novo Point, LLC, and Quantec, LLC. R. 1717.
DOMAIN NAME DISPUTES: What Should Be Happening
Novo Point, LLC and Quantec, LLC own together around two hundred
thousand unique domain name assets. The domains were registered in good faith,
based on a computer algorithm as to what pragmatically are key generic terms that
web surfers would be interested in. The focus of the companies business model is
providing multiple users access to common domain names. While sites are being
developed, domain monetization services are used to provide additional income
streams. Many of the domain names are extremely valuable, and third parties
occasionally attempt to take over the domains by filing domain name disputes.
Additionally, sometimes a domain name intended to be generic is not, and due to
an error in the computer algorithm a domain name might have been registered that
clearly is not generic.
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Federal Rule of Civil Procedure 53(b)(3) strictly requires that a court may issue an order
appointing a special master only after the master files an affidavit disclosing any ground for
disqualification under 28 U.S.C. §455.
Case: 10-11202 Document: 00511598319 Page: 3 Date Filed: 09/09/2011
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When a third party raises to the attention of the companies that they have an
issue with the companies ownership of any particular domain, there is a
fundamental legal question that must be answered as a preliminary matter: Was the
registration of the domain name lawful ? Because the computer algorithm used to
register the domain names was designed to register lawful generic names, the
answer to this question should in the usual course of events be Yes.
DOMAIN NAME DISPUTES: What Is Happening
Here Vogel has a serious conflict of interest. He and his law partners have in
the past filed a substantial number of lawsuits alleging that the registration of
domain names (including specifically those owned now by Novo Point, LLC and
Quantec, LLC) was not lawful. If Vogel were to assert as is his fiduciary duty
as receiver for the companies that the registrations are lawful, he would be
undermining a significant portion of the lawsuits his firm would otherwise
undertake. Accordingly, in direct and gross violation of his fiduciary duties to
the companies, Vogel has prevented the companies from asserting that their
registration of the domains was lawful. The results have been disastrous for the
companies.
As Vogel is well aware (he and his law partners have alleged this fact in
prior lawsuits), a company that has lost prior domain name dispute arbitrations is
presumed to have registered domains in bad faith. The more prior domain name
registrations that have been lost, the greater and more significant the presumption
Case: 10-11202 Document: 00511598319 Page: 4 Date Filed: 09/09/2011
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of bad faith. To contest a domain name dispute in arbitration, a simple form
needs to be filled out, explaining why the domain registration was proper pursuant
to the international rules. A staff attorney at $8,000.00 per month cost would
normally perform this function for the companies.
Vogel has prevented this from happening, and has instead DEFAULTED on
every single domain name dispute brought against the companies. Because he
does not want to take the position that the registrations were lawful, Vogel has
refused to defend the companies assets. Instead, Vogel has attempted to
intimidate those with domain name disputes to honor the District Court stay.
This has worked for some claimants, but many, realizing that the District Court has
no jurisdictional authority to stay international arbitration proceedings, have
continued with their disputes. The companies have BY DEFAULT lost those
disputes. Vogel has for the time being hidden the result of his gross and intentional
neglect by pushing the domain name registrar to ignore the international arbitration
panel resultsbut only while the receivership is pending. What will happen the
second the receivership is dissolved ? Due to Vogels multiple defaults, it appears
that hundreds of thousands of dollars (and potentially millions of dollars) in
domain name assets will be instantly lost as the registrar then complies with the
completed arbitration panel decisions against the companies (which Vogel
intentionally defaulted on).
Notably, Vogel has caused severe reputation damage to the companies by
allowing multiple defaults of domain name disputes. This serves his personal
Case: 10-11202 Document: 00511598319 Page: 5 Date Filed: 09/09/2011
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interest and the interest of his law firm, but it is in direct violation of Vogels
fiduciary duties to the companies.
Vogel Seeks to Be Relieved of Liability for His Gross Violation of Duty
Accordingly, what Vogel is really seeking is a court order he can later use to
absolve himself of liability for his gross violation of his fiduciary duty as receiver.
Notably, Vogel has failed to disclose to this Honorable Court that he has prevented
the companies from substantively responding or defending before the arbitration
panels any of the multiple domain name disputes brought against the companies
assets. Vogel notably offers no legal authority as to why an international
arbitration panel, clearly outside the territorial jurisdiction of a US District Court,
would be suspended by a district courts receivership order. Notably too, Vogel has
taken no action to reverse the arbitration awards against the companies that have
been granted in the past 9 months.
WHEREFORE, Vogels motion should be in all things denied and overruled.
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
5400 LBJ Freeway, Suite 1200
Dallas, Texas 75240
(214) 210-5940 - Telephone
(214) 347-4031 - Facsimile
Email: legal@schepps.net
COUNSEL FOR APPELLANTS
Case: 10-11202 Document: 00511598319 Page: 6 Date Filed: 09/09/2011
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CERTIFICATE OF SERVICE
This is to certify that this motion was served this day on all parties who receive
notification through the Courts electronic filing system.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT
Case: 10-11202 Document: 00511598319 Page: 7 Date Filed: 09/09/2011


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