LegalZoom.com Inc v. Rocket Lawyer Incorporated

Filing 170

REPLY IN SUPPORT OF 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 Defendant Rocket Lawyer Incorporated. (Attachments: # 1 DECLARATION OF MICHAEL T. JONES IN SUPPORT OF ROCKET LAWYER INCORPORATED'S REPLY IN SUPPORT OF ITS EX PARTE APPLICATION TO FILE MOTION TO SUPPLEMENT THE FACTUAL RECORD)(Jones, Michael)

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Forrest A. Hainline III (SBN 64166)
[e-mail]
Hong-An Vu (SBN 266268)
[e-mail]
GOODWIN PROCTER LLP
Three Embarcadero Center
24th Floor
San Francisco, California 94111
Tel.: [phone]
Fax.: [phone]
Michael T. Jones (SBN 290660)
[e-mail]
GOODWIN PROCTER LLP
135 Commonwealth Drive
Menlo Park, California 94025-1105
Tel.: [phone]
Fax.: [phone]
Brian W. Cook (Pro Hac Vice)
[e-mail]
GOODWIN PROCTER LLP
53 State Street
Boston, MA 02109-2802
Tel.: [phone]
Fax.: [phone]
Attorneys for Defendant
ROCKET LAWYER INCORPORATED

16

UNITED STATES DISTRICT COURT

17
18
19
20
21
22
23
24
25
26
27

CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
LEGALZOOM.COM, INC., a Delaware Case No. 2:12-cv-09942-GAF-AGR
corporation,
ROCKET LAWYER
Plaintiff,
INCORPORATED’S REDACTED
REPLY IN SUPPORT OF ITS EX
v.
PARTE APPLICATION TO FILE
MOTION TO SUPPLEMENT THE
ROCKET LAWYER
FACTUAL RECORD
INCORPORATED, a Delaware
corporation,
Date:
TBD
Time:
TBD___
Defendant.
Judge:
Judge Gary A. Feess
Courtroom: 740
255 East Temple Street
Los Angeles, CA 90012
Action Filed: November 20, 2012

28

ACTIVE/79607102.3

1

objection and Mr. Liu’s deficient response.

2

II.

3

ROCKET LAWYER ARGUED THAT LEGALZOOM SUFFERED NO
INJURY AS A RESULT OF ROCKET LAWYER’S ADS
Contrary to LegalZoom’s Opposition, Rocket Lawyer did argue in its

4
5

summary judgment motion and reply that LegalZoom has no evidence that it

6

suffered any injury from Rocket Lawyer’s ads. Rocket Lawyer’s argument that

7

LegalZoom has not been damaged is presented on pages 20-22 of the Motion, and is

8

referenced in its reply at pages 13-14. See ECF Nos. 60 and 92. Rocket Lawyer

9

specifically pointed out that LegalZoom had no damages theory relating to its

10

intrawebsite advertisements – free trial offer, free help from local attorneys, and free

11

legal review. ECF No. 60 at 21. Rocket Lawyer is merely requesting that the Court

12

consider newly acquired evidence – that LegalZoom refused to present a witness to

13

testify regarding damages and only presents damages evidence related to one

14

category of the ads at issue – because it only received this evidence on October 3

15

and 6, two months after the summary judgment briefing was completed.
LegalZoom had notice of Rocket Lawyer’s position regarding injury and

16
17

damages, and that the non-business formation ads are not related to search engine

18

marketing, before serving its third damages report. The failure to produce evidence

19

of damages relating to three of the four ads at issue cannot be excused.

20

III.

21
22
23
24
25
26
27
28

THE GOEDDE REPORT NEVER REFERENCES FREE TRIAL, FREE
LEGAL REVIEW, OR FREE HELP FROM LOCAL ATTORNEYS
LegalZoom’s claim that Mr. Goedde addresses the three intrawebsite ads is

untrue. Nowhere in his new report does Mr. Goedde reference Rocket Lawyer’s
free trial, free help from local attorneys, or free legal review ads. See Jones Decl.,
ECF No. 166-3, Ex. 1 (Goedde Report). Instead, his report expressly focuses on
search engine marketing: “I calculated LegalZoom’s lost profits due to the actions of
Rocket Lawyer by first reviewing Rocket Lawyer spreadsheets for two types of
offending search engine ads: those for free business formation document solutions

ACTIVE/79607102.3

2

1

that do not mention state filing fees; and, those ads using LegalZoom’s trademark

2

(“LEGALZOOM”) or similar terms such as “Legal Zoom” as internet search terms.”

3

ECF No. 166-3 at Ex. 1, ¶ 15 (emphasis added).
As stated in Rocket Lawyer’s summary judgment motion and undisputed by

4
5

LegalZoom, Rocket Lawyer did not advertise “free legal review” or “free help from

6

local attorneys” in search engine advertising. See ECF No. 60 at 11, SUF 77.

7

Rocket Lawyer gained zero conversions on free trial ads placed on LegalZoom’s

8

brand terms. ECF No, 60 at 9; SUF 55. Furthermore, LegalZoom’s claims regarding

9

these ads relate solely to the adequacy of the disclosures on Rocket Lawyer’s

10

website regarding these offerings. See FAC, Ex C, at pages 45 and 46 of 50, Ex. D;

11

Order re Summary Judgment ECF No. 44 (“Plaintiff adamantly disputes the

12

adequacy and conspicuousness of these disclosures”). After three opportunities, the

13

Court should not consider LegalZoom’s promise that it will again provide additional

14

information at a later time.

15

IV.

16

THE CHIAGOURIS REPORT IS NOT PART OF THE SUMMARY
JUDGMENT RECORD FOR DAMAGES AND IS INADMISSIBLE
The expert report of Larry Chiagouris is of no assistance to LegalZoom. As

17
18

an initial matter, the Chiagouris report, which was disclosed on April 15, 2014, is

19

not part of the summary judgment record. See ECF No. 74-2 (Declaration of

20

Patricia J. Winograd) (making no reference to the Chiagouris Report).3 LegalZoom

21

chose not to use Mr. Chiagouris’ report to support its argument that it has been

22

harmed. The Court should not consider the two pages of this report belatedly

23

submitted with LegalZoom’s ex parte Opposition.4

24
25
26
27
28

3

LegalZoom makes passing reference to the Chiagouris report in its argument
regarding materiality, but does not submit the report as part of its opposition. See
ECF No. 74 at 18.
4
See Local Rule 56-3 (“In determining any motion for summary judgment or partial
summary judgment, the Court may assume that the material facts as claimed and
adequately supported by the moving party are admitted to exist without controversy
except to the extent that such material facts are (a) included in the “Statement of
ACTIVE/79607102.3

3

1

Second, the Chiagouris opinion is inadmissible as he purports to opine about

2

consumer behavior – i.e., disappointment stemming from Rocket Lawyer’s free ads

3

would project onto other competitors including LegalZoom – without conducting a

4

survey. See ECF No. 168-1. It is well established that expert opinion about

5

consumer behavior must be supported by consumer research. See, e.g., Ortho

6

Pharm. Corp. v. Cosprophar, Inc., 32 F.3d 690, 695 (2d Cir. 1994) (affirming

7

dismissal of claims following bench trial because proof was insufficient to show

8

likely injury and observing that district court judge “was puzzled. . . as to why

9

[plaintiff had] not a single survey of consumers”); Sandoz Pharm. Corp. v.

10

Richardson-Vicks, Inc., 902 F.2d 222, 229 (3d Cir. 1990) (explaining that consumer

11

behavior cannot be presumed; a survey to prove consumer expectation and behavior

12

must be conducted); Schwab v. Philip Morris USA, Inc., No. CV 04-1945(JBW),

13

2005 WL 2401647, at *4 (E.D. N.Y. Sept. 29, 2005) (expert opinion on consumer

14

behavior not supported by survey or acceptable data was inadmissible); Diamond

15

Triumph Auto Glass, Inc. v. Safelite Glass Corp., 441 F. Supp. 2d 695, 711 (M.D.

16

Pa. 2006) (concluding expert opinion formed without a survey on what consumer

17

was “likely to do” was insufficient). Mr. Chiagouris conducted no such research.5

18

Third, Chiagouris’ opinion does not rebut any material facts asserted in

19

Rocket Lawyer’s motion. The Wind survey, which specifically asked consumers

20

what they would do after reviewing Rocket Lawyer’s offerings, demonstrates that

21

there is no significant loss of good will resulting from Rocket Lawyer’s ads.6 Mr.

22

Genuine Disputes” and (b) controverted by declaration or other written evidence
filed in opposition to the motion.”).
5
Mr. Chiagouris purports to draw his conclusions from various books, blog
postings, and various studies (not produced by LegalZoom) that allegedly examined
consumer awareness of online legal service providers. There is no indication that
these materials tested or even addressed consumers’ reaction to “free”
advertisements.
6
Only an average of 5.4% of respondents across both experiments would decide not
to purchase online legal services at all. See ECF No. 61-1 at 41, 57. And on
average across both experiments, about 32.4% would continue searching for other
legal services sites, giving competitors, like LegalZoom, a second chance at getting
consumer’s business. See ECF No. 61-1 at pp. 41, 57. Moreover, there is no

23
24
25
26
27
28

ACTIVE/79607102.3

4

1

consider whether to add to the summary judgment record, this recently acquired

2

evidence of LegalZoom’s lack of damages.

3
4

Dated: October 23, 2014

Respectfully submitted,

5

By:

6
7
8
9
10
11
12
13

/s/ Michael T. Jones
Forrest A. Hainline III
[e-mail]
Hong-An Vu (SBN 266268)
[e-mail]
Michael T. Jones (SBN 290660)
[e-mail]
Brian W. Cook (Pro Hac Vice)
[e-mail]
GOODWIN PROCTER LLP
Three Embarcadero Center
24th Floor
San Francisco, California 94111
Tel.: [phone]
Fax.: [phone]

Attorneys for Defendant
ROCKET LAWYER INCORPORATED

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ACTIVE/79607102.3

6