LegalZoom.com Inc v. Rocket Lawyer Incorporated

Filing 21

JOINT REPORT Rule 26(f) Discovery Plan ; estimated length of trial 4-5 days, filed by Plaintiff LegalZoom.com Inc, Defendant Rocket Lawyer Incorporated.. (Hainline, Forrest)

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Patricia L. Glaser - State Bar No. 55668
[e-mail]
Fred D. Heather - State Bar No. 110650
[e-mail]
Mary Ann T. Nguyen – State Bar No. 269099
[e-mail]
GLASER WEIL FINK JACOBS
HOWARD AVCHEN & SHAPIRO LLP
10250 Constellation Boulevard, 19th Floor
Los Angeles, California 90067
Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiff
LEGALZOOM.COM, INC.
Forrest A. Hainline III (SBN 64166)
[e-mail]
Anna Hsia(SBN 234179)
[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]
Attorneys for Defendant
ROCKET LAWYER INCORPORATED

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

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LIBA/2381593.7

Case No. 2:12-cv-09942-GAF-AGR
JOINT SCHEDULING
CONFERENCE REPORT
PURSUANT TO RULE 26(f)
Date:
Time:
Judge:
Courtroom:

April 15, 2013
1:30 p.m.
Judge Gary A. Feess
740
255 East Temple Street
Los Angeles, CA 90012
Action Filed: November 20, 2012

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Plaintiff LegalZoom.com, Inc. (“Plaintiff” or “LegalZoom”) and Defendant

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Rocket Lawyer Incorporated (“Defendant” or “Rocket Lawyer,” collectively “the

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Parties”) hereby submit this Joint Scheduling Conference Report Pursuant to Rule

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26(f) and the Court’s Order Regarding Rule 26(f) Scheduling Conference and Joint

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Report, ECF No. 12, following a series of conferences of the Parties first held on

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March 1, 2013 and the final conference held on April 4, 2013.

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I.

SYNOPSIS

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A.

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LegalZoom asserts that Rocket Lawyer has engaged in willful and systematic

Plaintiff

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acts of false advertising and unfair competition in violation of the Lanham Act, 15

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U.S.C. § 1125(a) and California Business & Professions Code §§ 17500 and 17200

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et seq. In particular, LegalZoom asserts that Rocket Lawyer falsely and

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misleadingly advertises “free” products and services, which Rocket Lawyer knows,

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or by exercise of reasonable care should know, are not in fact “free.” For example,

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Rocket Lawyer’s advertisements represent that customers can “incorporate for

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free… pay no fees ($0)” and “free incorporation,” when, in fact, customers seeking

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to “incorporate for free” through Rocket Lawyer’s services are nonetheless required

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to pay the state fees associated with incorporation – a fact which customers do not

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discovery until after they have accessed the Rocket Lawyer website, completed a

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“company setup” and filled out information relating to the “company details.”

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Rocket Lawyer’s advertisements also represent that customers can get “free help

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from local attorneys” and “free legal review” when, in fact, access to the “free help

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from local attorneys” and access to the “free legal review” are available only after

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customers become paid members of RocketLawyer’s “Basic Legal Plan” or “Pro

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Legal Plan.” This membership requirement for the “free help from local attorneys”

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and “free legal review” is not disclosed in close proximity to the advertisements on

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the RocketLawyer website. While after the filing of LegalZoom’s original

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Complaint, RocketLawyer changed the language of its “On Call Terms of Service”

LIBA/2381593.7

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to provide that “Customers who enter into a one week (seven (7) calendar days) free

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trial are eligible to receive one (1) free legal matter consultation,” access to the

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advertised “free help from local attorneys” and the “free legal review” is still

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conditioned upon customers actively enrolling in RocketLawyer’s trial membership

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and providing RocketLawyer with their credit card information. Rocket Lawyer’s

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advertisements also represent that customers can get “free” trials of RocketLawyer’s

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“Pro Legal Plan,” when, in fact, customers who sign up for a trial membership under

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the “Pro Legal Plan” are directed to enroll in a one-week trial of RocketLawyer’s

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“Basic Legal Plan” and thereafter find themselves enrolled unwittingly in

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RocketLawyer’s “negative option” program without conspicuous notice of the terms

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at the outset of the offer. Not only does Rocket Lawyer engage in false and

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misleading advertisement practices, Rocket Lawyer purchases search terms,

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including, but not limited to, “LegalZoom,” “Legal Zoom” and “LegalZoom.com,”

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from Internet search engines such as Google.com, Yahoo.com and Bing.com, to

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trigger sponsored links to Rocket Lawyer’s false and misleading advertisements,

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which improperly diverts potential LegalZoom customers to Rocket Lawyer’s

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website. Further, LegalZoom asserts that Rocket Lawyer has registered, in bad

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faith, the internet domain names, “www.legalzoomgadget.com” and

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“www.legalzoomer.com.” These domain names are confusingly similar to

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LegalZoom’s trademarks and Rocket Lawyer is not licensed or authorized in any

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way to use LegalZoom’s trademarks, or any confusingly similar imitations thereon

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in connection with its advertisements for its products or services.

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B.

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Plaintiff’s First Amended Complaint, ECF No. 14, asserts claims for: (1)

Defendant

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Federal False & Misleading Advertising and Unfair Competition under the Lanham

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Act, 15 U.S.C. § 1125(a); (2) California False and Misleading Advertising; and (3)

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California Unfair Competition Law violations.

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Plaintiff’s first two claims allege that Rocket Lawyer has advertised a variety

LIBA/2381593.7

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of free services without disclosing related fees and/or limitations. Rocket Lawyer

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asserts two main affirmative defenses:

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(1) Unclean Hands: Plaintiff engages in the same conduct alleged in its

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complaint, in particular in its use of “free” for its own products and services, and

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engages in misleading and anticompetitive conduct by operating through an agent

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the review website www.legalspring.com, which represents itself as a neutral third

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party while actually promoting Plaintiff’s website to the detriment of consumers and

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competitors, including Rocket Lawyer.

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(2) Laches, Waiver, and/or Estoppel: Plaintiff raised the alleged misconduct

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with Rocket Lawyer over a year before filing its complaint, delaying filing to

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coincide with Rocket Lawyer’s much-publicized international launch after

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conveying by inaction its lack of interest in prosecuting the alleged claims. Rocket

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Lawyer relied on Plaintiff’s silence after initially raising these allegations to Rocket

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Lawyer’s detriment.

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Rocket Lawyer asserts counterclaims based on LegalZoom’s operation or

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direction of LegalSpring.com (“LegalSpring”). LegalSpring purports to be a

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neutral, third-party reviewer of legal services providers. In fact, LegalSpring was

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created by a LegalZoom employee, likely at LegalZoom’s direction, and it acts to

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promote LegalZoom while failing to mention several of its top competitors at all,

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and it receives payments from LegalZoom in exchange for the click-throughs it

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provides. LegalZoom has not adequately disclosed its relationship and/or direction

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of LegalSpring, thus causing a likelihood of consumer confusion or deception,

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harming Rocket Lawyer through the direct diversion of sales from Rocket Lawyer to

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LegalZoom.

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Rocket Lawyer seeks declaratory judgment that it has properly advertised its

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free products and services. Rocket Lawyer has also alleged that LegalZoom has

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engaged in misleading and/or false business practices, in violation of the Lanham

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Act, 15 U.S.C. § 1125(a) and the California Business and Professions Code,

LIBA/2381593.7

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§§ 17500 and 17200 et seq.

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II.

KEY LEGAL ISSUES

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A.

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LegalZoom asserts that the issues in dispute are whether Rocket Lawyer’s

Plaintiff

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conduct constitutes violation of the Lanham Act, 15 U.S.C. § 1125(a) and California

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Business & Professions Code §§ 17500 and 17200 et seq. and whether Rocket

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Lawyer’s claims against LegalZoom are valid.

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B.

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The key legal issues from Defendant’s perspective include:

Defendant
 Whether Rocket Lawyer has adequately disclosed in its advertisements

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the terms and conditions related to its free products and services;

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 The nature of the relationship between Plaintiff and Travis Giggy
and/or LegalSpring.com;

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 Whether LegalSpring.com constitutes advertising for Plaintiff;

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 Whether Plaintiff’s operation and/or direction of LegalSpring.com

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constitutes advertising and, if so, whether such advertising is

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misleading and or deceptive;
 Whether Plaintiff’s claims are barred in whole or in part by the doctrine

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of unclean hands; and

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 Whether Plaintiff’s claims are barred in whole or in party by the

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doctrine of laches and/or estoppel.

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III.

PERCIPIENT WITNESSES AND KEY DOCUMENTS
A.

1.

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Percipient Witnesses
Plaintiff

Based on information reasonably available to LegalZoom at this time,
LegalZoom hereby identifies the following percipient witnesses:

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(a)

Brian Liu;

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(b)

Dorian Quispe;

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(c)

Scott MacDonnell; and

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(d)

Eddie Hartman

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2.

Defendant

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Defendant’s expected witnesses include:

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(a)

Charles Moore, Founder and Executive Chairman, Rocket Lawyer;

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(b)

David Bega, Senior Vice President, Sales and Business Development,
Rocket Lawyer; and

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(c)

Alisa Weiner, Vice President, Marketing, Rocket Lawyer.

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B.

Key Documents

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1.

Plaintiff

Based upon information reasonably available to LegalZoom at this time,
LegalZoom hereby describes the key documents:

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(a)

LegalZoom’s trademarks and file history;

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(b)

Communications and other documents related to RocketLawyer’s use

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of LegalZoom’s trademarks as search terms to trigger RocketLawyer’s

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advertisements;

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(c)

advertisements using the term “free”;

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(d)
(e)

RocketLawyer’s registration of the domain names
www.legalzoomer.com and www.legalzoomgadget.com; and

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Communications and other documents related to RocketLawyer’s
negative option program;

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Communications and other documents related to RocketLawyer’s

(f)

Non-party Legalspring.com’s disclosure related to its affiliate

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relationships with third party sites reviewed on its site.

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2.

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Defendant

Based on information reasonably available at this time, Rocket Lawyer
expects to rely on:
(a)

LIBA/2381593.7

Advertising by Plaintiff in various formats and locations;
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(b)

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Screenshots of advertising by Rocket Lawyer in various formats and
locations;

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(c)

Screenshots of LegalSpring.com;

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(d)

Documents and communications establishing the relationship between
Plaintiff and LegalSpring.com, as well as its creator, Travis Giggy;

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(e)

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Documents showing the volume business driven to Plaintiff through its
affiliation with and/or direction of LegalSpring.com;

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(f)

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Documents showing Plaintiff’s history of duplicating Rocket Lawyer’s
products, services, and web layouts;

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(g)

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Documents and communications related to LegalZoom’s advertising
use of the word “free”.

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The above documents reflect what was attached as part of Rocket Lawyer’s

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answer and counterclaims and the documents currently available to Rocket Lawyer.

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Both parties have served written discovery and Rocket Lawyer anticipates that

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additional evidence in support of Rocket Lawyer’s counterclaims and defenses will

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be produced in discovery.

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IV.

DAMAGES

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A.

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LegalZoom is currently unaware of the total amount of damages as it has not

Plaintiff

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yet received any discovery in this case. LegalZoom seeks damages adequate to

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compensate it for Rocket Lawyer’s misconduct, including its actual damages,

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Rocket Lawyer’s profits, treble and punitive damages, as well as its attorneys’ fees

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and costs, in an amount to be ascertained pursuant to applicable laws, including

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without limitation, 15 U.S.C. §1117 and California law. LegalZoom further seeks

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the transfer of the domains, www.legalzoomer.com and

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www.legalzoomgadget.com, to LegalZoom. LegalZoom further seeks a temporary,

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preliminary and permanent injunction against Rocket Lawyer from further

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registration of domain names that are identical or confusingly similar to

LIBA/2381593.7

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LegalZoom’s trademarks, or any infringing or dilutive variations thereto, from

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further use of LegalZoom’s trademarks as search terms to trigger sponsored links to

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Rocket Lawyer’s false and misleading advertisements, from further use of false and

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misleading advertisements as alleged in LegalZoom’s First Amended Complaint,

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and from any further acts of false and misleading advertising and unfair competition

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that would damage or injure LegalZoom.

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B.

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Rocket Lawyer has no knowledge of the total amount of damages as no

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discovery has not yet occurred. Rocket Lawyer seeks damages resulting from

Defendant

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LegalZoom’s improper conduct, including statutory damages, restitution for

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LegalZoom’s violation of Cal. Bus. & Prof. Code § 17200, punitive and exemplary

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damages, and its reasonable attorneys’ fees and costs. Rocket Lawyer expects that

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the total amount of damages will be determined in part by the nature of

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LegalZoom’s relationship with LegalSpring, the volume of customers channeled to

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LegalZoom by LegalSpring, the revenue received as a result and any payments

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made by LegalZoom to LegalSpring in exchange.

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V.

INSURANCE
There does not currently appear to be insurance coverage for the claims being

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alleged in this action.

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VI.

LIKELIHOOD OF MOTIONS

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A.

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The Parties believe that the likelihood is low that either party will file a

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Motions to Add Parties

motion to add additional parties.

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B.

Motions to Amend Pleadings

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The Parties believe that the likelihood is low that either party will file a

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motion to amend the pleadings and as such have agreed that the pleadings may be

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amended only upon a showing of good cause.

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LIBA/2381593.7

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C.

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The parties do not anticipate any motions to transfer venue.

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VII.

Motions to Transfer Venue

DISCOVERY

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A.

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The Parties agreed to allow discovery to commence on March 8, 2013. Each

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Completed Discovery

Party has served written discovery as of March 13, 2013.

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B.

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The Parties’ contemplated future discovery will be addressed supra in Section

Contemplated Future Discovery

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VIII regarding the Discovery Plan. LegalZoom proposes a discovery cut-off of

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December 3, 2013. Rocket Lawyer proposes a discovery cut-off of December 6,

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2013.

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VIII. DISCOVERY PLAN

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A.

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Anticipated Depositions
1.

By Plaintiff

At this time, LegalZoom anticipates taking approximately five depositions,

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including, the depositions of: (1) Charley Moore, founder of Executive Chairman of

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Rocket Lawyer; (2) David Baga, Senior Vice President of Sales and Business

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Development of Rocket Lawyer; and (3) Alisa Weiner, Vice President of Marketing

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of Rocket Lawyer.

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2.

By Defendant

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Currently, Rocket Lawyer anticipates taking approximately seven (7)

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depositions, including those of: (1) Travis Giggy; (2) LegalSpring; (3) LegalZoom,

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Inc.; (4) Brian Liu; (5) Dorian Quispe; and (6) Scott MacDonnell; and (7) Eddie

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Hartman. Rocket Lawyer is considering deposing third parties including Alexander

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Rozman and Google, Inc.

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B.

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Written discovery has been served by both Parties as of March 12, 2013.

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Contemplated Written Discovery Requests

However, the Parties anticipate that each may serve additional written discovery in

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the form of interrogatories, requests for admission, and requests for production of

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documents.

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C.

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LegalZoom proposes a discovery cut-off of December 3, 2013. Rocket

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Lawyer proposes a discovery cut-off of December 6, 2013. LegalZoom proposes an

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expert disclosure deadline of September 24, 2013, and rebuttal report deadline of

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October 29, 2013. Rocket Lawyer proposes an expert disclosure deadline of

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September 27, 2013, and rebuttal report deadline of November 1, 2013. The Parties

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agree that expert depositions shall be held in October or November 2013 prior to the

Schedule for Completion of Discovery

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cut-off of discovery.

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IX.

PROPOSED DISCOVERY CUT-OFF DATE
LegalZoom proposes a discovery cut-off of December 3, 2013. Rocket

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Lawyer proposes a discovery cut-off of December 6, 2013.

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X.

ISSUES/CLAIMS RESOLVABLE UPON MOTION

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A.

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While LegalZoom believes a dispositive motion could be filed on one or more

Plaintiff

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of its claims at this time, LegalZoom will defer the filing of any such motion until it

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obtains discovery from Rocket Lawyer.

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B.

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Rocket Lawyer anticipates that it may seek to resolve certain issues, claims

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and/or counterclaims through motion for summary judgment, depending upon the

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documents produced and information exchanged in discovery.

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XI.

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Defendant

SCHEDULE OF CONTEMPLATED LAW AND MOTION MATTERS
A.

Plaintiff

LegalZoom anticipates that it will file a motion for partial summary judgment
concerning one or more issues pursuant to Federal Rule of Civil Procedure 56.
B.

Defendant

Rocket Lawyer anticipates that it will file a motion for summary judgment or

LIBA/2381593.7

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partial summary judgment pursuant to Federal Rule of Civil Procedure 56.

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XII.

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SETTLEMENT DISCUSSIONS
The Parties have agreed to an early settlement conference with Magistrate

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Gandhi to determine whether the Parties may be able to resolve this case. The

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Parties are continuing to discuss the process for mediation.

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XIII. ESTIMATED TRIAL LENGTH

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The Parties anticipate a 4-5 day jury trial.
XIV. PROPOSED DATES

Matter
Trial (jury) (court)
Estimated length: 4-5
days
[Jury trial] Hearing on
Motions
in Limine; Hearing on
Disputed
Jury Instructions
[Court trial] File Findings
of
Fact and Conclusions of
Law;
Hearing on Motions in
Limine
Pretrial Conference;
Motions in
Limine to be filed;
Proposed
Voir Dire Qs Lodged and
Agreed−to Statement of
Case
Lodge Pretrial Conf.
Order; File
Memo of Contentions of
Fact
and Law; Exhibit &
Witness
Lists; File Status Report
re
Settlement; File Agreed
Upon
Set of Jury Instructions
and
Verdict Forms; File Joint
Statement re Disputed
Instructions, Verdicts,
etc.
LIBA/2381593.7

Time Weeks
before
trial
8:30
am

February
14, 2014

March 7,
2014

9:30
am

–1

February
7, 2014

February 28,
2014

–1

N/A

N/A

–4

January
17, 2014

January 31,
2014

–6

January 3,
2014

January 17,
2014

3:30
pm

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Plaintiff(s) Defendant(s) Court
(Request)
(Request) Order

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Matter
Last date to conduct
Settlement
Conference
Last day for hearing
motions
Discovery cut−off [Note:
Expert
disclosure no later than
70 days
prior to this date.]

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–10

Last to Amend Pleadings
or Add
Parties

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Time Weeks Plaintiff(s) Defendant(s) Court
before (Request)
(Request) Order
trial
–8
2 weeks
December
after ruling 20, 2013
on
dispositive
motion
December December
9:30 –9
10, 2013
13, 2013
am

XV.

December
3, 2013
(expert
disclosures
September
24, 2013)
Good
cause

December 6,
2013 (expert
disclosures
September
27, 2013)
Good cause

OTHER ISSUES
Confidential information will be exchanged in this matter; therefore, the

parties agree that a protective order will be necessary and will attempt to agree on
the form of the protective order. The parties also agree that service by e-mail will
be regarded as personal service under Federal Rule of Civil Procedure 5(b) for
purposes of serving any document or pleading. For any pleading that are nonconfidential and that are served using the ECF system, the parties agree to accept
service via the NEF from the ECF system. For any portion of any pleading that is
confidential and that is filed with the Court under seal, the parties agree to accept
service by e-mail, which service shall be regarded as personal service under Federal
Rule of Civil Procedure 5(b).
The parties have also agreed to discuss a format for productions and a
privilege log. They are also considering exchanging search terms for the search and
review of documents responsive to each parties’ respective requests for production.

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LIBA/2381593.7

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XVI. CORPORATE DISCLOSURES

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A.

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LegalZoom has lodged a Certification and Notice of Interested Parties with

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the Court identifying Institutional Venture Partners XIII, L.P. and Polaris Venture

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Partners V, L.P. as shareholders of LegalZoom. See ECF No. 2. Other than the

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entities listed on LegalZoom’s Certification and Notice of Interested Parties and the

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named parties, there are no entities known by LegalZoom to have either: (a) a

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financial interest in the subject matter in controversy or in a party to the proceeding;

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or (2) any other kind of interest that could be substantially affected by the outcome

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Plaintiff

of the proceeding.

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B.

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Defendant has lodged a Corporate Disclosure Statement with the Court

Defendant

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identifying that Rocket Lawyer has no parents or subsidiaries. See ECF No. 8.

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Other than the entities listed on Rocket Lawyer’s Corporate Disclosure Statement

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and the named Parties, there are no entities known by Rocket Lawyer to have either:

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(a) a financial interest in the subject matter in controversy or in a party to the

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proceeding; or (2) any other kind of interest that could be substantially affected by

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the outcome of the proceeding.

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Dated: _April 8, 2013

Respectfully submitted,
By: /s/ Fred D. Heather
Patricia L. Glaser
[e-mail]
Fred D. Heather
[e-mail]
Mary Ann T. Nguyen
[e-mail]
GLASER WEIL FINK JACOBS
HOWARD AVCHEN & SHAPIRO
LLP
10250 Constellation Boulevard,
19th Floor
Los Angeles, California 90067
Tel.: [phone]
Fax.: [phone]

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LIBA/2381593.7

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Attorneys for Plaintiff
LEGALZOOM.COM, INC.

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By: /s/ Forrest A. Hainline III
Forrest A. Hainline III
[e-mail]
Anna Hsia
[e-mail]
Hong-An Vu
[e-mail]
GOODWIN PROCTER LLP
Three Embarcadero Center, 24th
Floor
San Francisco, California 94111
Tel.: [phone]
Fax.: [phone]

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Attorneys for Defendant
ROCKET LAWYER INCORPORATED

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LIBA/2381593.7

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