No. 10-11202

In the

United States Court of Appeals

for the Fifth Circuit

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NETSPHERE, INC. Et Al,

Plaintiffs

JEFFREY BARON,

Defendant-Appellant

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

JEFFREY BARON, Et Al, Defendants

QUANTEC L.L.C.; NOVO POINT L.L.C.,

Appellants

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

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 receiver’s 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.

Baron’s consultations with Vogel were clearly with a view towards Vogel’s and his

firm’s representation of Baron and Ondova. Accordingly, Vogel was under a strict

duty to maintain the confidentiality of Baron’s 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

proceedings below.

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.

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

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

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

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 results—but only while the receivership is pending. What will happen the

second the receivership is dissolved ? Due to Vogel’s 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

interest and the interest of his law firm, but it is in direct violation of Vogel’s

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 court’s 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, Vogel’s 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

CERTIFICATE OF SERVICE

This is to certify that this motion was served this day on all parties who receive

notification through the Court’s 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