LegalZoom.com Inc v. Rocket Lawyer Incorporated

Filing 100

REPLY MOTION for Partial Summary Judgment 69 (Redacted) filed by Plaintiff LegalZoom.com Inc. (Attachments: # 1 Evidentiary Objections to Rocket Lawyer's Opposition to LegalZoom's Motion for Partial Summary Judgment (Redacted))(Heather, Fred)

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PATRICIA L. GLASER - State Bar No. 55668
[e-mail]
FRED D. HEATHER - State Bar No. 110650
[e-mail]
AARON P. ALLAN - State Bar No. 144406
[e-mail]
GLASER WEIL FINK HOWARD
AVCHEN & SHAPIRO LLP
10250 Constellation Boulevard, 19th Floor
Los Angeles, California 90067
Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiff
LegalZoom.com, Inc.

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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WESTERN DIVISION

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LEGALZOOM.COM, INC., a Delaware
corporation,

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Plaintiff,

CASE NO.: CV 12-9942-GAF (AGRx)
Hon. Gary A. Feess
Courtroom: 740

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v.
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ROCKET LAWYER INCORPORATED,
a Delaware corporation,
Defendant.

REPLY MEMORANDUM OF
POINTS AND AUTHORITIES IN
SUPPORT OF MOTION FOR
PARTIAL SUMMARY JUDGMENT
BROUGHT BY PLAINTIFF
LEGALZOOM.COM, INC.
Date:
August 18, 2014
Time:
9:30 a.m.
Courtroom: 740
[Evidentiary Objections filed
concurrently herewith]

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Complaint Filed: November 20, 2012
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TABLE OF CONTENTS

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Page
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I.

INTRODUCTION ........................................................................................... 1 

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II.

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ROCKET LAWYER HAS FAILED TO PRODUCE EVIDENCE
WHICH CREATES A GENUINE DISPUTE AS TO THE FACTS
PROFFERED BY LEGALZOOM IN SUPPORT OF ITS MOTION............ 2 

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A.

LegalZoom’s Twenty Uncontroverted Facts Are Not In Genuine
Dispute .................................................................................................. 2 

B.

The Additional Facts Proffered By Rocket Lawyer, Even if
Assumed to be True, Would Fail to Defeat LegalZoom’s Motion ....... 6 

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1.

LegalZoom’s Right to Pre-Approve Ad Copy. .......................... 6 

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2.

LegalZoom’s Instructions and Directions to Mr. Giggy. ........... 6 

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3.

Manipulation of Customer Reviews at Legalspring.com. .......... 7 

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Potential Concealment of Review Manipulation. ....................... 7 

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Indications that Customer Reviews are Helpful. ........................ 8 

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6.

LegalZoom’s Ownership or Leasing of Legalspring.com.......... 8 

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How LegalZoom Benefits from Legalspring.com...................... 9 

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III.

ROCKET LAWYER HAS FAILED TO PRODUCE EVIDENCE OF
ANY ACTIONABLE STATEMENT OF FACT AT
LEGALSPRING.COM IN SUPPORT OF ITS FALSE ADVERTISING
CLAIM ............................................................................................................ 9 

IV.

ROCKET LAWYER HAS FAILED TO PRODUCE EVIDENCE THAT
THE ALLEGED DECEPTION OF CONSUMERS WAS MATERIAL ..... 11 

V.

ROCKET LAWYER CONCEDES THAT ITS UNFAIR
COMPETITION CLAIMS RISE OR FALL ALONG WITH ITS
LANHAM ACT CLAIM............................................................................... 13 

VI.

ROCKET LAWYER HAS FAILED TO DEMONSTRATE ANY
LINKAGE BETWEEN LEGALZOOM’S CONDUCT AND ITS
CLAIMS AGAINST ROCKET LAWYER TO SUPPORT AN
UNCLEAN HANDS DEFENSE .................................................................. 14 

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VII. CONCLUSION ............................................................................................. 15 

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TABLE OF AUTHORITIES
Page

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FEDERAL CASES 

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AMCO Ins. Co. v. Inspired Technologies, Inc.,
CIV. 08-5748 JRT/FLN, 2012 WL 2395179 (D. Minn. June 25, 2012) ............... 11
Anderson v. Liberty Lobby Inc.,
477 U.S. 242 (1986) ............................................................................................. 3, 7
Campagnolo S.R.L. v. Full Speed Ahead, Inc.,
2010 WL 2079694 (W.D. Wash. May 20, 2010) aff’d, 447 F. App’x 814
(9th Cir. 2011) ........................................................................................................ 11
Coca-Cola Co. v. Overland, Inc.,
692 F.2d 1250 (9th Cir. 1982) ................................................................................ 14
Coca-Cola Co. v. Tropicana Products, Inc.,
690 F.2d 312 (2d Cir. 1982) ..................................................................................... 9
Diamond Triumph Auto Glass, Inc. v. Safelite Glass Corporation,
441 F. Supp. 2d 695, 709 (M.D. Pa. 2006) ............................................................ 15
Emco, Inc. v. Obst,
2004 WL 1737355 (C.D. Cal. May 7, 2004).......................................................... 14
Fuddruckers, Inc. v. Doc’s B.R. Others, Inc.,
826 F.2d 837 (9th Cir. 1987) .................................................................................. 14
Harper House, Inc. v. Thomas Nelson, Inc.,
889 F.2d 197 (9th Cir. 1989) .................................................................................. 11
Lexmark Int’l, Inc. v. Static Control Components, Inc.,
134 S. Ct. 1377 (2014) ........................................................................................... 13
Matsushita Elec. Industrial Co. v. Zenith Radio Corp.,
475 U.S. 574 (1986) ................................................................................................. 3
Southland Sod Farms v. Stover Seed Co.,
108 F.3d 1134 (9th Cir. 1997) ...................................................................... 4, 10, 11

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U-Haul Int’l, Inc. v. Jartran, Inc.,
793 F.2d 1034 (9th Cir. 1986) ................................................................................ 10

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STATE CASES 

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Mattco Forge, Inc. v. Arthur Young & Co.,
5 Cal. App. 4th 392 (1992) ..................................................................................... 14

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FEDERAL STATUTES 

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15 U.S.C. § 1125(a) ................................................................................................. 9, 13

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Fed. R. Civ. P. 56(e) ...................................................................................................... 3

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Fed. R. Evid. 801-804 .................................................................................................... 8

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MEMORANDUM OF POINTS AND AUTHORITIES

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I.

INTRODUCTION
As to Counts IV, V and VI of Rocket Lawyer’s counterclaim based on

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Legalspring.com, Rocket Lawyer’s opposition to LegalZoom’s motion is fatally

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flawed in the following respects:

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 Rocket Lawyer has failed to identify a false statement of fact about

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LegalZoom’s or Rocket Lawyer’s products at the Legalspring.com web

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site, which is a required predicate for any false advertising claim;

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 Rocket Lawyer has produced no evidence that the customer reviews

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posted at Legalspring.com are not genuine, and in fact Rocket Lawyer

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admits that those reviews “may or may not have” all been authored by

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actual consumers;

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 Rocket Lawyer has failed to produce any evidence, in the form of

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consumer surveys or otherwise, showing that consumers were actually

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deceived or misled by any statements made at Legalspring.com;

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 Rocket Lawyer’s evidence which is based on consumers finding web
reviews “helpful” is obvious hearsay which should be rejected; and
 Rocket Lawyer’s purported evidence that LegalZoom “

or

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“

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nothing more than requests and suggestions by LegalZoom, and Rocket

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Lawyer has produced no evidence showing that LegalZoom exercised

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either legal or actual control over Mr. Giggy’s decision as to what

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content was posted and in what manner.

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” Mr. Giggy to post certain content at Legalspring.com shows

In addition, Rocket Lawyer cannot have it both ways. In filing its own motion

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for summary judgment (ECF No. 60), Rocket Lawyer argued strenuously to this

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Court that (a) false advertising statements must be either false or misleading “as

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evidenced by consumer surveys” (id. at 13); (b) that the false advertising plaintiff

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must “demonstrate that ‘a statistically significant part’ of the intended audience ‘holds
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the false belief allegedly communicated by the challenged advertisement’” (id. at 16);

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and (c) that the advertisement in question “caused diversion of sales from [the

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plaintiff] or caused a decrease in good will associated with [the plaintiff’s] products

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(id. at 20). Despite making these arguments in support of its own motion for

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summary judgment, Rocket Lawyer has produced not a shred of evidence (survey

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evidence or other evidence) supporting these points in its attempt to defeat

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LegalZoom’s motion.
Finally, Rocket Lawyer’s argument in support of its unclean hands defense is

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without merit but somewhat revealing. The argument fails because the alleged

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conduct upon which it now relies (that LegalZoom advertises its services without

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disclosing the additional cost of state fees) is not sufficiently similar to the basis upon

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which Rocket Lawyer has been sued – based on how Rocket Lawyer falsely and

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misleadingly uses the term “FREE” in its advertisements. But putting that defect

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aside, Rocket Lawyer now appears to admit in a judicial filing that engaging in such

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conduct (failing to disclose state fees) is both wrongful and actionable.

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II.

ROCKET LAWYER HAS FAILED TO PRODUCE EVIDENCE WHICH

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CREATES A GENUINE DISPUTE AS TO THE FACTS PROFFERED

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BY LEGALZOOM IN SUPPORT OF ITS MOTION

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LegalZoom relied upon twenty (20) uncontroverted facts as support for its

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motion. Rocket Lawyer has failed to produce any evidence that creates a genuine

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dispute as to any of those facts. Instead, Rocket Lawyer purports to rely upon fifty-

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one (51) “additional undisputed facts” as a means for creating a triable issue in order

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to avoid partial summary judgment, but none of those additional facts have any legal

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significance to the false advertising claim at hand.

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A.

LegalZoom’s Twenty Uncontroverted Facts Are Not In Genuine
Dispute

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After the moving party has sustained its initial burden, the nonmoving party

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must come forth with enough evidence to demonstrate the existence of a “genuine
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issue” of material fact for trial. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 256

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(1986); Fed. R. Civ. P. 56(e). The nonmoving party’s burden is such that it must do

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more than simply show there is some metaphysical doubt as to the material facts.

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Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). For

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the following reasons, and as to each of LegalZoom’s twenty uncontroverted facts,

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none of the evidence produced by Rocket Lawyer shows a genuine dispute:

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Fact No. 1. Rocket Lawyer does not dispute that Legalspring.com is a

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website that was formerly owned, operated and moderated by Travis Giggy, which is

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the only fact stated.

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Fact No. 2. Undisputed.

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Fact No. 3. Undisputed.

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Fact No. 4. Rocket Lawyer disputes that the “opinion” and third party

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customer reviews posted at Legalspring.com are selected and published exclusively

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by Legalspring.com. The evidence upon which Rocket Lawyer relies, however, does

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nothing to support such a dispute. Thus,

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undermine the proffered fact, which is limited to the opinion and third party customer

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reviews. Evidence that LegalZoom was
, does nothing

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to refute that Mr. Giggy selected and published those reviews – indeed it supports the

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fact that LegalZoom did not control the process, and instead had to request that Mr.

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Giggy do so. Similarly, evidence that Mr. Giggy was “

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the removal of reviews provides no indication that Mr. Giggy was not the one

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selecting that content.

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” LegalZoom about

Fact No. 5. Rocket Lawyer disputes that LegalZoom has not authored

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any of the reviews on Legalspring.com, and has no responsibility for the reviews

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which are actually posted. The

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does not indicate in any way that LegalZoom authored those reviews. Indeed, Rocket

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Lawyer admits elsewhere in its papers that the customer reviews “may or may not

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have been authored by consumers” (Opp. at 3:18-20).

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Fact No. 6. Undisputed – no opposing evidence.

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Fact No. 7. Undisputed.

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Fact No. 8. Rocket Lawyer disputes that while Mr. Giggy, at one time,

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received compensation from LegalZoom for any products sold by LegalZoom as a

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result of a consumer first visiting Legalspring.com, that relationship terminated as of

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March 2013. The problem is that Rocket Lawyer’s evidence does not contradict

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either that Mr. Giggy received compensation or that his relationship terminated as of

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March 2013.
, does

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nothing to controvert the proffered facts. But in any event, none of this evidence

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supports Rocket Lawyer’s false advertising claim.

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Fact No. 9. Rocket Lawyer disputes that all of the content at

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Legalspring.com is expressed as opinion rather than fact. Rocket Lawyer provides no

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evidence, but merely identifies “dates of customer reviews” and the “overall rating of

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LegalZoom” as statements of fact. But even if you could call those items facts, which

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is debatable, they are not statements of fact about the advertiser’s product or another’s

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product, which is a predicate for a false advertising claim. Southland Sod Farms v.

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Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997). Moreover, any “rating”

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assigned to LegalZoom’s products or services is by definition an evaluation, and not a

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statement of fact.

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Fact No. 10. Undisputed.

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Fact No. 11. Rocket Lawyer disputes that the only content on

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Legalspring.com for which LegalZoom provided any authorship is the disclaimer

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which appears at the bottom of the first web page. The evidence upon which Rocket

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Lawyer relies, however, does nothing to support such a dispute. See paragraph 4
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above.

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Fact No. 12. Undisputed.

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Fact No. 13. Undisputed.

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Fact No. 14. Undisputed.

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Fact No. 15. Rocket Lawyer disputes that the Legalspring.com website

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merely provides “opinions” and “reviews” by the site moderator and by actual

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customers.

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indicate in any way that LegalZoom authored those reviews. Indeed, Rocket Lawyer

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admits elsewhere in its papers that the customer reviews “may or may not have been

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authored by consumers” (Opp. at 3:18-20).

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Fact No. 16. Undisputed.

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Fact No. 17. Rocket Lawyer disputes that it has no evidence that posted

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customer reviews are not genuine. Rocket Lawyer relies upon evidence that

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LegalZoom was “
, but such a process (even assuming it were

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true) would not indicate in any way that the posted reviews were not originally

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authored by actual consumers. Indeed, Rocket Lawyer admits elsewhere in its papers

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that the customer reviews “may or may not have been authored by consumers” (Opp.

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at 3:18-20).

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Fact No. 18. Undisputed.

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Fact No. 19. Undisputed.

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Fact No. 20. Rocket Lawyer disputes that it alleged three specific bases

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for its third affirmative defense of unclean hands. But the evidence that Rocket

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Lawyer points to in support are generalized statements from its pleading that

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“LegalZoom engages in the conduct it complains about in the Complaint” and that

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“LegalZoom engages in unlawful conduct that is confusing and misleading to

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consumers and is anti-competitive.” That evidence does not refute the proffered fact
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about Rocket Lawyer’s specific alleged bases for its defense.
Based on the above, Rocket Lawyer has failed to create any genuine dispute as

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to the uncontroverted facts relied upon by LegalZoom to support its motion for partial

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summary judgment.

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B.

The Additional Facts Proffered By Rocket Lawyer, Even if Assumed

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to be True, Would Fail to Defeat LegalZoom’s Motion

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The additional facts relied upon by Rocket Lawyer break down into the

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following categories, each of which are irrelevant to a false advertising claim based

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on the content of Legalspring.com:
1.

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LegalZoom’s Right to Pre-Approve Ad Copy.

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Rocket Lawyer contends that LegalZoom had pre-approval rights over the

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content of LegalSpring as it relates to LegalZoom. As evidence, Rocket Lawyer

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points to

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.” (Vu Declaration, ¶5, Ex. 4 at § 4.7). This

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provision, by its terms, does not apply to the opinions or customer reviews that

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. Accordingly, this “right” has nothing to do with establishing

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Rocket Lawyer’s false advertising claim.
2.

LegalZoom’s Instructions and Directions to Mr. Giggy.

Rocket Lawyer argues that LegalZoom

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Contrary to this assertion, every piece of evidence cited by Rocket Lawyer shows
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only “requests” and “suggestions” by LegalZoom,
Moreover, Rocket

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Lawyer has produced no evidence showing that LegalZoom exercised either legal or

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actual control over Mr. Giggy’s decision as to what content was actually posted and

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in what manner. To the contrary, the evidence offered by RocketLawyer

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demonstrates Mr. Giggy’s discretion. (Vu Declaration, ¶3, Ex. 2 (
.

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3.

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LegalZoom did not participate in or approve of the manipulation of customer

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Manipulation of Customer Reviews at Legalspring.com.

reviews at LegalSpring.
; but this evidence relates only to Mr. Giggy’s actions – not

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any conduct by LegalZoom. Rocket Lawyer has produced no evidence showing that

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LegalZoom participated in or approved such acts.
4.

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Rocket Lawyer suggests that LegalZoom employees may have concealed the

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Potential Concealment of Review Manipulation.

manipulation of reviews,
. This evidence does not

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adequately raise a genuine dispute for three reasons: (1) the statement does not

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mention the Legalspring.com website; (2) it is pure speculation as to what was meant

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by “

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transmitting a customer’s review, or it could have been referring to something else;

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and (3) there is no mention of what is being potentially reviewed – whether it is

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LegalZoom, Rocket Lawyer or some other product or company. See Anderson v.

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Liberty Lobby Inc., 477 U.S. 242, 252 (1986) (a “scintilla of evidence” is insufficient

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to support the non-moving party's position; “there must be evidence on which the jury

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could reasonably find for the [non-moving party].”)

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///

” – it could have been meant as a joke, or it could have meant

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Indications that Customer Reviews are Helpful.

Each customer review posted on Legalspring.com displays a summary of the

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number of people that found a particular review helpful. Rocket Lawyer’s attempt to

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use these summaries as evidence that a significant portion of the intended consumer

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audience was misled into a false belief about LegalZoom is absurd. Whether or not a

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review is “helpful” is not a demonstration of whether the reader has formed any

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particular belief about the company being reviewed. Moreover, the “helpful”

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designations are clearly inadmissible hearsay, not subject to any exception, under Fed.

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R. Evid. 801-804.
6.

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LegalZoom’s Ownership or Leasing of Legalspring.com.

Rocket Lawyer offers no evidence supporting its contention that LegalZoom

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operated LegalSpring between 2012-2013. The emails cited by Rocket Lawyer only

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indicate that

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. Vu Declaration, ¶18, Ex. 17 (Mr. Giggy indicates he

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.”). It also remains uncontested that Mr. Giggy never

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sold or transferred moderation of the website to LegalZoom. (Giggy Decl. ¶3.)

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Likewise, Rocket Lawyer’s citation to an email from a LegalZoom R&D

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employee stating that “

” is not

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evidence that LegalZoom either owned or operated LegalSpring between 2012-2013.

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First, the email made the point that LegalZoom did not own LegalSpring (i.e.,

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LegalSpring was not an asset). Second, the term “

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the fee arrangement whereby

” is, at most, a reference to

. (Vu Declaration, ¶5, Ex. 4 at

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§ 2.1). Putting aside how a website could be “

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is no “

”

” in the conventional sense, there

in evidence, and the only clear evidence before the Court is
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that Mr. Giggy never sold or transferred moderation of the website to LegalZoom.

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(Giggy Decl. ¶3.)
7.

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How LegalZoom Benefits from Legalspring.com.

Rocket Lawyer’s introduction of facts indicating that LegalZoom benefited

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from LegalSpring activities are irrelevant to a false advertising claim. A defendant’s

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benefit from alleged false statements is not an element of a false advertising claim

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under the Lanham Act; rather, the plaintiff must show that it has been injured as a

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result of a false statement of fact about a competitive product or service.

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III.

ROCKET LAWYER HAS FAILED TO PRODUCE EVIDENCE OF ANY

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ACTIONABLE STATEMENT OF FACT AT LEGALSPRING.COM IN

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SUPPORT OF ITS FALSE ADVERTISING CLAIM

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“The purpose of the [Lanham] Act is to insure truthfulness in advertising and to

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eliminate misrepresentations with reference to the inherent quality or characteristics

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of another’s product.” Coca-Cola Co. v. Tropicana Products, Inc., 690 F.2d 312, 318

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(2d Cir. 1982) (emphasis added). Indeed, the text of the Lanham Act, 15 U.S.C. §

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1125(a), refers specifically to a false or misleading statement of fact which

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“misrepresents the nature, characteristics, qualities, or geographic origin of his or her

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or another person’s goods, services, or commercial activities.” (Emphasis added).

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Rocket Lawyer has failed to produce any evidence that satisfies such a requirement.

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Moreover, putting aside a citation to a New York Times article, Rocket Lawyer has

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cited no legal precedent for its claim that the “manipulation of customer reviews,”

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even assuming that was done improperly here, is actionable false advertising or unfair

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competition.

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The only purported facts that Rocket Lawyer claims were misrepresented at

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Legalspring.com are the “timestamps” of customer reviews and a manipulation of the

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balance of negative and positive reviews. These facts, according to Rocket Lawyer,

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misrepresent consumer satisfaction with LegalZoom’s products. But these are not

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allegedly false or misleading facts about LegalZoom’s products or services -- these
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are allegedly false or misleading facts about the reviews. There is no law requiring

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the reviews to be posted in any particular order, either chronologically or otherwise.

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Nor does Legalspring.com anywhere represent that this set of reviews is exhaustive,

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or that it represents the entirety of customer opinions about LegalZoom. They are

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provided as merely a particular set of opinions, provided by certain customers, and

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nowhere does Rocket Lawyer produce any evidence that the posted opinions are not

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genuine or actually held. Indeed, Rocket Lawyer admits that the customer reviews

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“may or may not have been authored by consumers.” Opp. at 3:18-20.
In addition, even if Rocket Lawyer were correct that the alleged manipulation

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and placement of reviews misrepresented “the overall consumer opinion of

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LegalZoom as represented on Legalspring.com” (Opp. at 10:18-19), such a

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misrepresentation of the “overall consumer opinion” is not actionable because it is not

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false or misleading about the actual product being advertised. “[P]roduct superiority

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claims that are vague or highly subjective often amount to nonactionable puffery.”

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Southland Sod Farms, 108 F.2d at 1145. In contrast, “misdescriptions of specific or

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absolute characteristics of a product are actionable.” Id. There is nothing in the

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placement of customer reviews that either describes or misdescribes the absolute

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characteristics of LegalZoom’s products, and Rocket Lawyer has failed to point to

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any such misdescription. Nor does Rocket Lawyer even attempt in its opposition

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papers to demonstrate any such misrepresentation about the products or services at

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issue.

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Because there is no evidence that any fact about the competing products has

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been misrepresented at Legalspring.com, Rocket Lawyer is unable to gain any

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presumption based on an alleged “intent to deceive” by LegalZoom. Each of the

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cases that Rocket Lawyer cites as support for such a presumption all involved some

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misrepresentation of fact about the product in question: See U-Haul Int’l, Inc. v.

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Jartran, Inc., 793 F.2d 1034, 1040-41 (9th Cir. 1986) (defendant’s nationwide

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newspaper advertisements falsely compared defendant’s services to competitor’s
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services); Harper House, Inc. v. Thomas Nelson, Inc., 889 F.2d 197, 209 (9th Cir.

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1989) (defendant’s advertisement depicted a product that differed from the product

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actually available for purchase); AMCO Ins. Co. v. Inspired Technologies, Inc., CIV.

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08-5748 JRT/FLN, 2012 WL 2395179 (D. Minn. June 25, 2012) (defendant

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manipulated photograph to depict competitor’s product in an unfavorable way). None

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of these cases supports the unprecedented claim that Rocket Lawyer is attempting to

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make here with respect to Legalspring.com.
Because the posting of opinions and reviews at Legalspring.com does not

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comprise a false or misleading statement of fact about the products or services

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provided by LegalZoom or Rocket Lawyer, the question of whether Mr. Giggy is

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considered to be LegalZoom’s agent or whether LegalZoom provided requests,

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directions, or suggestions to Mr. Giggy, is completely moot. But Rocket Lawyer also

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fails to produce evidence showing that LegalZoom, and not Mr. Giggy, was in control

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over what content was ultimately posted at Legalspring.com. See PSUF 4, 5, 11; see

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also Campagnolo S.R.L. v. Full Speed Ahead, Inc., 2010 WL 2079694, *8 (W.D.

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Wash. May 20, 2010) aff’d, 447 F. App’x 814 (9th Cir. 2011) (supplier that benefited

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from distributor’s advertisement of product but did not control the manner of

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advertisement was not vicariously liable for distributor’s false advertisement). Where

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none of the content at Legalspring.com was actually published by LegalZoom, it

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cannot be the proximate cause of Rocket Lawyer’s alleged injury. See Southland Sod

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Farms, 108 F.3d at 1139 (requiring as an element of a false advertising claim that

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“the defendant caused its false statement to enter interstate commerce.”).

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IV.

ROCKET LAWYER HAS FAILED TO PRODUCE EVIDENCE THAT

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THE ALLEGED DECEPTION OF CONSUMERS WAS MATERIAL

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Another required element of a false advertising claim is “materiality” – that the

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alleged deception “is likely to influence the purchasing decision.” Southland Sod

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Farms, 108 F.2d at 1139. This Court previously ruled that a false advertising plaintiff

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“bears the ultimate burden of proving actual deception using market research or
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consumer surveys, showing exactly what message ordinary consumers perceived.”

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ECF No. 44, MSJ Ruling, at 10. Moreover, Rocket Lawyer has conceded in its own

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motion for summary judgment that (a) false advertising statements must be either

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false or misleading “as evidenced by consumer surveys” (id. at 13); (b) that the false

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advertising plaintiff must “demonstrate that ‘a statistically significant part’ of the

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intended audience ‘holds the false belief allegedly communicated by the challenged

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advertisement’” (id. at 16); and (c) that the advertisement in question “caused

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diversion of sales from [the plaintiff] or caused a decrease in good will associated

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with [the plaintiff’s] products (id. at 20). But Rocket Lawyer has failed to produce a

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single shred of evidence supporting these elements.

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First, Rocket Lawyer has presented no survey evidence whatsoever. Despite

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numerous reports presenting market surveys related to LegalZoom’s claims from a

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retained marketing expert Dr. Wind, Rocket Lawyer never even attempted to support

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its claim about Legalspring.com with survey evidence from Dr. Wind or anyone else.

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Second, Rocket Lawyer has not even attempted to establish who the “intended

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audience” is for Legalspring.com, or that any statistically significant portion of that

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audience holds a “false belief” as a result of the alleged manipulation of customer

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reviews. Nothing in Rocket Lawyer’s papers attempts to identify who was affected

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by the placement of ads, and/or to quantify how many members of that audience were

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confused or misled by that placement. Instead, Rocket Lawyer relies exclusively

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upon the notion that many customers indicated at Legalspring.com that they found the

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reviews “helpful.” But these indications are not only obvious hearsay because they

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are offered to prove the truth of the matter asserted (that the reviews are helpful to

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consumers), but they also fail entirely to demonstrate that consumers were actually

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influenced to purchase or not purchase products from either Rocket Lawyer or

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LegalZoom, or that those consumers formed a false belief about those products. We

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would have to speculate as to what belief such consumers held after reading a

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“helpful” review.
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Third, Rocket Lawyer has presented zero evidence that there has been any

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“diversion” of sales from Rocket Lawyer as a result of the placement of reviews at

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Legalspring.com. While Rocket Lawyer hints about visitors to Legalspring.com

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being converted into purchasers of LegalZoom products, Rocket Lawyer fails to

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produce any evidence that those same consumers would have otherwise purchased

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Rocket Lawyer products.
Finally, Rocket Lawyer has not even attempted to show any other injury to its

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commercial interests resulting from Legalspring.com. Nor has Rocket Lawyer

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addressed the argument in LegalZoom’s moving papers that there is no standing here

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because the plaintiff’s interests must “fall within the zone of interests protected by the

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law invoked”, and the plaintiff’s injuries must be “proximately caused by violations

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of the statute.” Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct.

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1377, 1388-90 (2014). Under Lexmark, “to come within the zone of interests in a suit

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for false advertising under § 1125(a), a plaintiff must allege an injury to a commercial

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interest in reputation or sales.” Id. at 1390. To show proximate cause, “a plaintiff

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suing under § 1125(a) ordinarily must show economic or reputational injury flowing

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directly from the deception wrought by the defendant’s advertising; and that occurs

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when deception of consumers causes them to withhold trade from the plaintiff.” Id. at

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1391. Again, Rocket Lawyer has failed to present any evidence that consumers

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visiting Legalspring.com would otherwise have purchased Rocket Lawyer products,

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or evidence that otherwise satisfies this requirement.

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Based on the above, and based on Rocket Lawyer’s own views of the law

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which it relied upon in seeking summary judgment, Rocket Lawyer is unable to carry

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its burden to show actionable false advertising based on Legalspring.com.

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V.

ROCKET LAWYER CONCEDES THAT ITS UNFAIR COMPETITION

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CLAIMS RISE OR FALL ALONG WITH ITS LANHAM ACT CLAIM

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See Opp. pp. 15-16. Because Rocket Lawyer has failed to provide evidentiary

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support for a claim under the Lanham Act, it must necessarily concede that its unfair
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competition claims also fail.

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VI.

ROCKET LAWYER HAS FAILED TO DEMONSTRATE ANY

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LINKAGE BETWEEN LEGALZOOM’S CONDUCT AND ITS CLAIMS

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AGAINST ROCKET LAWYER TO SUPPORT AN UNCLEAN HANDS

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DEFENSE

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Rocket Lawyer’s unclean hands defense is properly disposable on a motion for

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summary judgment based on uncontroverted facts. Coca-Cola Co. v. Overland, Inc.,

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692 F.2d 1250, 1258 (9th Cir. 1982) (approving district court's grant of summary

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judgment on unclean-hands defense). Rocket Lawyer cites to a California Court of

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Appeal decision, Mattco Forge, Inc. v. Arthur Young & Co., 5 Cal. App. 4th 392

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(1992), which states that as a “general rule,” application of the unclean hands doctrine

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remains “primarily” a question of fact. Mattco is distinguishable not only because it

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is examining California and not federal procedure, but also because LegalZoom is

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arguing that Rocket Lawyer should not be able to avail itself of the unclean hands

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defense (rather than arguing for the application of the doctrine).

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Here, Rocket Lawyer is unable to establish a required element of the defense:

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that LegalZoom’s conduct relates to the subject matter of LegalZoom’s claims against

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Rocket Lawyer. Emco, Inc. v. Obst, 2004 WL 1737355 at *4 (C.D. Cal. May 7,

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2004) (citing Fuddruckers, Inc. v. Doc’s B.R. Others, Inc., 826 F.2d 837, 847 (9th

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Cir. 1987)). In opposition to LegalZoom’s motion, Rocket Lawyer has pointed

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exclusively to the following conduct as being similar to what LegalZoom attacks:

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“LegalZoom advertises the price of its services without disclosing the additional cost

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of state fees.” Opp. at pp. 17-18. But there is nothing false or misleading about

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advertising the price of LegalZoom services without disclosure of state fees when the

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word “FREE” is not being used in the advertisement to describe those services.

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Moreover, one may ask whether Rocket Lawyer is conceding that the simple failure

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to disclose state fees, without more, is false advertising or in any way unethical or

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“unclean.”
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In attempting to support its unclean hands defense, Rocket Lawyer is forced to

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engage in legal gymnastics to avoid the very heart of LegalZoom’s complaint in this

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lawsuit. Rocket Lawyer concedes that the unclean hands defense applies only where

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the plaintiff acted “in the same manner” for which it seeks relief, citing Diamond

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Triumph Auto Glass, Inc. v. Safelite Glass Corporation, 441 F. Supp. 2d 695, 709

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n.10 (M.D. Pa. 2006). But plainly LegalZoom has not used the word “FREE” in the

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“same manner” that it alleges Rocket Lawyer has used that word in its advertising,

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and there is no evidence before the Court stating otherwise. Rocket Lawyer’s unclean

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hands defense should fall together with its false advertising claim – no evidence

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supports either legal position in this case.

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VII. CONCLUSION

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LegalZoom respectfully requests that this Court grant LegalZoom partial

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summary judgment.

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DATED: August 4, 2014

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Respectfully submitted,
GLASER WEIL FINK JACOBS
HOWARD AVCHEN & SHAPIRO LLP

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By: /s/ Fred Heather
PATRICIA L. GLASER
FRED D. HEATHER
AARON P. ALLAN
Attorneys for Plaintiff
LegalZoom.com, Inc.

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CERTIFICATE OF SERVICE

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STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

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I am employed in the County of Los Angeles, State of California; I am over the
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age of 18 and not a party to the within action; my business address is 10250
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Constellation Boulevard, 19th Floor, Los Angeles, California 90067.
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On August 4, 2014, I electronically filed the following document(s) using the
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CM/ECF system.
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REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT
OF MOTION FOR PARTIAL SUMMARY JUDGMENT BROUGHT BY
PLAINTIFF LEGALZOOM.COM, INC.

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Participants in the case are registered CM/ECF users and will be served by the
CM/ECF system.
I declare that I am employed in the office of a member of the bar of this court at

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whose direction the service was made. I declare under penalty of perjury that the

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above is true and correct.

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Executed on August 4, 2014 at Los Angeles, California.

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/s/ Fred Heather
Fred Heather

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PROOF OF SERVICE
899042