LegalZoom.com Inc v. Rocket Lawyer Incorporated

Filing 168

OPPOSITION to EX PARTE APPLICATION for Leave to TO FILE MOTION TO SUPPLEMENT FACTUAL RECORD IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT AND TO SET BRIEFING SCHEDULE 166 filed by Plaintiff LegalZoom.com Inc. (Attachments: # 1 Declaration of Aaron Allan)(Heather, Fred)

i PATRICIA L. GLASER -State Bar No. 55668
pglaser~a,glaserweil.com
2 FRED I3. HEATHER -State Bar No. 110650
([e-mail]
3 AARONZ'. ALLAN -State Bar No. 144406
aallan~a,glaserweil.com
4 GLASER WEIL FINK HOWARD
AVCHEN & SHAPIRO LLP
5 10250 Constellation Boulevard, 19th Floor
Los Angeles, California 90067
6 Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiff
s LegalZoom.com, Inc.
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CENTRAL DISTRICT OF CALIFORNIA

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UNITED STATES DISTRICT COURT

WESTERN DIVISION

tz LEGALZOOM.COM,INC., a Delaware
corporation,
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Plaintiff,
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Hon. Gary A. Feess
Courtroom: 740

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CASE NO.: CV 12-9942-GAF(AGE)

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ROCKET LAWYER INCORPORATED,
~6 a Delaware corporation,
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Defendant.

DECLARATION OF AARON P.
ALLAN IN SUPPORT OF
LEGALZOOM.COM,INC.'S
OPPOSITION TO ROCKET
LAWYER'S EX PARTE
APPLICATION TO FILE MOTION
TO SUPPLEMENT FACTUAL
RECORD
TBD
Date:
TBD
Time:
Courtroom: 740

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Complaint Filed: November 20, 2012

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DECLARATION OF AARON P. ALLAN
961021

DECLARATION OF AARON P. ALLAN
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I, AARON P. ALLAN,declare and state as follows:

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1.

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I am an attorney at law duly admitted to practice before all courts ofthe

State of California and am a Partner of the law firm of Glaser Weil Fink Howard

s Avchen &Shapiro LLP, attorneys of record herein for Plaintiff LegalZoom.com,Inc.
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("LegalZoom"). I submit this declaration in support of the "MEMORANDUM OF
POINTS AND AUTHORITIES OF LEGALZOOM.COM,INC.IN OPPOSITION

s TO ROCKET LAWYER'S EX PARTE APPLICATION TO FILE MOTION TO
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SUPPLEMENT FACTUAL RECORD" I have personal knowledge of the facts set

io forth herein, and if called upon to testify thereto, I could and would competently do so
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under oath.
2.

Attached hereto as Exhibit A is a true and correct copy of an email from

Rocket Lawyer's counsel, Brian Cook, dated October 20, 2014, together with the

t4 cover page of an agreed upon set of undisputed jury instructions, along with

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Instruction No. 22, which provides the "ELEMENTS OF FALSE ADVERTISING

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(Lanham Act —Federal Law)" which has been agreed to by the parties, and which will
be submitted to the Court on October 28, 2014, with the other pretrial filings.

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3.

Attached hereto as Exhibit B is a true and correct copy of the cover page

and appropriate excerpts(pp. 19-20)from the Expert Report submitted by Dr. Larry

Zo Chiagouris for this matter, dated April 15, 2014. While this report was designated as
z~ "highly confidential" by LegalZoom,the two pages included do not contain
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information that LegalZoom has determined must be filed under seal. As to the

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remainder of Dr. Chiagouris' report, no waiver of the confidentiality designation is

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intended by LegalZoom.

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4.

Attached hereto as Exhibit C is a true and correct copy of excerpts from

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the Deposition ofPaul Hollerbach, who Rocket Lawyer designated to testify

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regarding the damages it seeks in this litigation.

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5.

Should the Court entertain this motion, LegalZoom proffers that Dr.
DECLARATION OF AARON P. ALLAN

961021

Goedde will provide a declaration which confirms that his analysis, which resulted in
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his supplemental report served on October 6, 2014, examined advertisements which

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included the terms "free trial" and "free legal help," in his determination of

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LegalZoom's lost profits. Dr. Goedde will confirm that each of these terms is present

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in either(1) Rocket Lawyer's "free" business formation advertisements that do not

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mention state filing fees, or in(2)Rocket Lawyer's advertisements using LegalZoom
trademarks or similar terms as Internet search terms. As such, Dr. Goedde will

g confirm that these terms are included in his calculation of LegalZoom's lost profits
9 due to the actions of Rocket Lawyer as described in paragraphs 15-34 of Dr.
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Goedde's supplemental report.
I declare under penalty of perjury under the laws of the State of California and

i 2 the United States that the foregoing is true and correct. Executed on October 22,

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~3 2014, at Los Angeles, California.

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AARON P. ALLAN

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DECLARATION OF AARON P. ALLAN
961021

EXHIBIT A

Aaron Allan
From:
Sent:
To:
Cc:
Subject:
Attachments:

Cook, Brian W [[e-mail]]
Monday, October 20, 2014 2:23 PM
Aaron Allan
Hainline, Forrest A; Jones, Michael T; Vu, Hong-An; Fred Heather
RE: LZ/RLI -Undisputed and Disputed Jury Instructions
141020 Disputed Jury Instructions.DOCX; 141020 Undisputed Jury Instructions.DOCX

Aaron,
Pursuant to your email below, attached are revised versions of the Disputed and Undisputed Jury Instructions.
Disputed Instruction Number 1: No change
Disputed Instruction Number 2: Per the agreement below, this has been deleted and moved into the Undisputed
Instructions as Number 26.
Disputed Instruction Number 3: Previously deleted.
Disputed Instruction Number 4: The second and third paragraphs have been deleted, as you agreed. We have
supplemented our position with the argument made in our last email. Otherwise, no change.
Disputed Instruction Number 5: Since we are agreed on the addition of the phrase "and the defendant has the burden
if
of proving otherwise," we have added that. We have also added our position that the instruction would be acceptable
dispute.
the word "must" were replaced with "may," which we understand you
Disputed Instruction Number 6: No change.
Disputed Instruction Number 7: Per the agreement below, this has been deleted and the revised version has been
inserted as Undisputed Instruction Number 34.
Disputed Instruction Number 8: No change.
Disputed Instruction Number 9: Per the agreement below, this has been deleted and the revised version has been
inserted as Undisputed Instruction Number 35.
Disputed Instruction Number 10: No change. If we can reach agreement on disputed instruction number S, above,
then Rocket Lawyer will withdraw this instruction.
Disputed Instruction Number 11: No change.
Disputed Instruction Number 12: No change.
Thank you,
Brian Cook

Brian W. Cook
Goodwin Procter ~~P
53 State Street
Boston, MA 02109
T: 617-570-1 p81

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Forrest A. Hainline III(SBN 64166)
ainline~,Qoodwinprocter.com
on -An~V'u(SBN 266268)
hvu a goodwinprocter.com
GO DWIN PROCTER LLr
Three Embarcadero Center
24th Floor
San Francisco, California 94111
Tel.: [phone]
Fax.: [phone]

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Michael T. Jones(SBN 290660)
(a~~oodwinprocter.com
m ones
~OOD~TN PROCTER Lr.r
135 Commonwealth Drive
Menlo Park, California 94025-1 105
Tel.: [phone]
Fax.: [phone]

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Brian W. Cook (Pro Hac Vice)
bcook(~~oodwinprocter.com
GOO~`GVIN PROCTER LLr
53 State Street
Boston, MA 02109-2802
Tel.: [phone]
Fax.: [phone]

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Attorneys ~or De endant
ER INCORPORATED
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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
LEGALZOOM.COM,INC., a Delaware Case No. 2:12-cv-09942-GAF-AGR
corporation,
UNDISPUTED JURY
INSTRUCTIONS
Plaintiff,

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Judge Gary A. Feess
740
255 East Temple Street
Los Angeles, CA 90012
Action Filed: November 20, 2012

Judge:
Courtroom:

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ROCKET LAWYER
INCORPORATED,a Delaware
corporation,

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Defendant.
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Formatted: Da ID

89G887.tA6TJV~Ei783r,3&~7,~J

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INSTRUCTION NO.22

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ELEMENTS OF FALSE ADVERTISING (Lanham Act —Federal Law)

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Both parties have asserted claims against one another for false advertising

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under the Lanham Act. To prove this claim, the party asserting the claim has the

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burden of proving each of the following elements by a preponderance of the

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evidence:

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(1)

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the other party made a false or misleading statement of fact about its

own product or another's product in commercial advertising;
(2)

the statement actually deceived or has the tendency to deceive a

substantial segment of its audience;
(3)

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decision;

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(4)

the deception is material, in that it is likely to influence the purchasing
the other party caused its false or misleading statement to enter

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interstate commerce; and

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the party asserting the claim has been or is likely to be injured as a
result of the false or misleading statement, either by direct diversion of sales from

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itself to the other party or by a lessening ofthe goodwill associated with its

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products.

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(5)

I will now explain each of these elements in detail.

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Authority: Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139(9th
Cir. 1997); Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038, 1054 (9th

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c;r. Zoos; is u.s.c. § ~ i2s~a)(~)(B).

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Formatted: Da ID

9GOEs7.,tAf7~I.V.E~/~78~3~i1&7~T~~3

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EXHIBIT B

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PATRICIA L. GLASER -State Bar No. 55668
pglaser glaserweil.com
2 FRED .FATHER -State Bar No. 110650
flleather laserweil.com
3 MARY
T. NGUYEN -State Bar No. 269099
[e-mail]
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GLASER WEIL FINK JACOBS
HOWARD AVCHEN & SHAPIRO LLP
5 10250 Constellation. Boulevard, 19th Floor
Los Angeles, California 90067
6 Telephone: [phone]

Facsimile: [phone]
Attorneys for Plaintiff
s 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(AGRac)
Hon. Gary A. Feess
Courtroom: 740

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REPORT OF DR.LARRY
CHIAGOURIS,APRIL 15, 2014

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

Complaint Filed: November 20, 2012

• The word "free" is considered to be a power word by a wide variety of marketing
practitioners and scholars.
• Use ofthe word free in a search ad will likely have a positive impact on a business's
search results and that impact will come at the expense of its competitors.
• Use of affiliate marketing is a commonly accepted practice in the conduct of Internet
marketing programs.
I have reviewed documents provided to me that reflect complaints submitted by consumers
to the Better Business Bureau.40 The vast majority of these complaints pertain to the
communications by Rocket Lawyer in the use ofthe word free.
These complaints are important given the material that I have already covered in this
opinion. As already discussed, free is a very powerful word. Free is a word that can motivate
people to take a positive action to adopt a product or service.
Consumers will be disappointed if they seek to adopt a product that they believe is 100%
free only to find out after they begin the adoption process that the product is not 100% free. This
disappointment can produce negative business results for all the businesses that compete in a
category.
Consumer disappointment can lead to a loss of good will by other competitors in a category.
The loss of good will would be highest for the market leader if consumers perceive that the business
practices of one competitor are likely to be similar to the business practices of other competitors.
Ina 2012 survey with 696 consumers, LegalZoom scored the highest awareness levels
among the companies examined in the study41 The LegalZoom awareness levels were substantially
higher than the next company's levels(73%for LegalZoom versus 46%for Lawyers.com).
LegalZoom would clearly be considered a market leader if not the market leader in its category of
legal services based on this survey data.
BBB0000000-BBB0000255.
uStamp 2012 Consumer Survey

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HIGHLY CONFIDENTIAL

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LegalZoom, as the market leader, clearly is likely to have experienced the greatest loss of
good will due to any consumer disappointment created by Rocket Lawyer.

HIGHLY CONFIDENTIAL

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•

Respectfully submitted,

., ;
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Larry Chiagouris, Ph.D. President, BrandMarketing Services, Ltd.
I reserve the right to supplement my opinions stated herein with any additional documents
produced, additional pleadings, data, testing or depositions. In addition,I reserve the right to
amend my opinion stated herein based on any additional material or information that is
provided to me.

HIGHLY CONFIDENTIAL

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EXHIBIT C

CONFIDENTIAL DEPOSITION OF PAUL HOLLERBACH
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IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
LEGALZOOM.COM, INC., A
DELAWARE CORPORATION,

)
)
)
PLAINTIFF,
)
)
VS.
)
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ROCKET LAWYER INCORPORATED, A )
DELAWARE CORPORATION,
)
)
DEFENDANT.
)
______________________________)

CASE NO.
CV-12-9942-GAF (AGRX)

C O N F I D E N T I A L
(THE FOLLOWING TRANSCRIPT HAS BEEN DESIGNATED
CONFIDENTIAL, FOR ATTORNEYS' EYES ONLY)
INDIVIDUAL AND 30(B)(6) DEPOSITION
DEPOSITION OF PAUL HOLLERBACH, TAKEN ON
BEHALF OF THE PLAINTIFF, AT THREE
EMBARCADERO, 24TH FLOOR, SAN FRANCISCO,
CALIFORNIA, COMMENCING AT 9:59 A.M.,
WEDNESDAY, OCTOBER 1, 2014, BEFORE
LANA L. LOPER, RMR, CRR, CCP, CME, CLR,
CSR NUMBER 9667.

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CONFIDENTIAL DEPOSITION OF PAUL HOLLERBACH
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Q.

OKAY.

HAVE YOU DONE ANY SPECIFIC

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FINANCIAL CALCULATIONS AS TO WHAT EFFECT ON ROCKET

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LAWYER'S REVENUES HAVE BEEN CAUSED BY WHAT YOU

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BELIEVE ARE THE ACTIONS STATED IN ROCKET LAWYER'S

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COUNTER-CLAIM AGAINST LEGALZOOM?

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A.

WE HAVEN'T DONE SPECIFIC

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CALCULATIONS AS IT RELATES TO THE LEGAL SPRING.

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IT WOULD BE SOMEWHAT SPECULATIVE.

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BUT I CAN -- BUT WE DO KNOW, IT'S A

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MATTER OF FACT, THAT THE CLICK-THROUGH RATES AND

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THE TRAFFIC DRIVEN ON CERTAIN AD PLACEMENTS ON THE

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WEBSITE ARE HIGHER, ARE GREATER, THE HIGHER YOU

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CONFIDENTIAL DEPOSITION OF PAUL HOLLERBACH
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ARE IN THE SEARCH RESULTS PAGE.
SO BY THEM TAKING THE FIRST, SECOND

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OR THIRD PLACE, THEY'RE DIVERTING A HIGHER LEVEL

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OF TRAFFIC AWAY FROM ROCKET LAWYER.
AND ALSO, AS I SAID, IT'S A

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WELL-KNOWN FACT THAT IF YOU'RE BIDDING FOR THE TOP

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TERM, AND -- IT'S GOING TO COST YOU A LOT MORE

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THAN IT IS FOR OTHERS.
SO THEY DID CAUSE US HARM IN MAKING

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US BID HIGHER, BID MORE, TO GET A PREMIUM

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PLACEMENT ON GOOGLE.
Q.

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BUT YOU HAVEN'T PUT PEN TO PAPER TO

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TRY AND MAKE ANY KIND OF MATHEMATICAL CALCULATION

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AS TO THE VALUE OF THAT HARM THAT YOU BELIEVE

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OCCURRED?

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A.

NO, I HAVE NOT.

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Q.

OKAY.

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AND TO YOUR KNOWLEDGE, NO

ONE ELSE AT ROCKET LAWYER HAS?

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A.

NO.

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Q.

I'M CORRECT ABOUT THAT; RIGHT?

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A.

TO MY KNOWLEDGE.

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