LegalZoom.com Inc v. Rocket Lawyer Incorporated

Filing 28

NOTICE OF MOTION AND MOTION for Summary Judgment filed by Plaintiff LegalZoom.com Inc. Motion set for hearing on 9/30/2013 at 09:30 AM before Judge Gary A. Feess. (Attachments: # 1 Separate Statement, # 2 Exhibit A - L, # 3 Proposed Order)(Heather, Fred)

1 PATRICIA L. GLASER -State Bar No. 55668
pglaser glaserweil.com
FRED .I
-BATHER -State Bar No. 110650
2
fheather laserweil.com
T. NGUYEN -State Bar No. 269099
3 MARY
mnguyen laserweil.com
IL FINK JACOBS
4 GLASER
HOWARD AVCHEN & SHAPIRO LLP
s 10250 Constellation Boulevard, 19th Floor
Los Angeles, California 90067
)
6 Telephone: [phone]
Facsimile: (310} 556-2920
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

is LEGALZOOM.COM,INC., a Delaware
corporation,
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Plaintiff,
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ROCKET LAWYER INCORPORATED,
i6 a Delaware corporation,
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is
19

Defendants.

CASE NO.: CV 12-9942-GAF(AGI~)
Hon. Gary A. Feess
Courtroom: 740
PLAINTIFF LEGALZOOM.COM,
INC.'S SEPARATE STATEMENT
OF UNDISPUTED MATERIAL
FACTS IN SUPPORT OF ITS
MOTION FOR SUMMARY
JUDGMENT
[Notice of Motion and Motion for
Summary Judgment submitted
under separate cover]

Zo
21

as

September 30,2013
Date:
Time:
9:30 a.m.
Courtroom: 740

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LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
810030

Pursuant to Rule 56 ofthe Federal Rules of Civil Procedure and Local Rule 7.1

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a of this Court, Plaintiff LegalZoom.com,Inc.("LegalZoom") hereby submits the
3

following statement of material facts in support of its motion for summary judgment:

4

s
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~ 1.

_
__.
__ MATERIAL FACTS
_
EVIDENTIARY SUPPORT
UNCONTROVERTED FACT
LegalZoom and Rocket Lawyer are Rocket Lawyer's Answer to Amended

g both providers of online legal products.

Complaint and Amended Counterclaims

9

("Rocket Lawyer's Amended

io
11.2,

Counterclaims"), ECF No. 17, 12:2-3.
Rocket Lawyer's Amended

LegalZoom and Rocket Lawyer

~a

12 compete with one another in the online

Counterclaims, ECF No. 17, 12:2-3.

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13 legal products industry.
_.....
14 3.
LegalZoom and Rocket Lawyer

Rocket Lawyer's Amended

1s "both offer incorporation and formation

Counterclaims, ECF No. 17, 12:2-3.

services andv other online legal_......
~.~ _ _ _.~ ~~.. ~ _._...... - _ _.. _.. _ _ products.__
On its website, Rocket Lawyer
17 ` 4.

Declaration of Mary Ann T. Nguyen

18 'touts to provide affordable legal services

("Nguyen Decl."), ¶ 3, Ex. A (Rocket

19 ',° to individuals, families and business

Lawyer's "About Us" webpage).

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16

20 owners.
21 5.

Nguyen Decl., ¶ 4,Ex. B (Screen grabs

At least in 2011,2012 and 2013,

22 Rocket Lawyer advertised "free"

of Rocket Lawyer's Advertisements).

23 ~~ incorporation and "free" limited liability
24 companies(EEGs).
25 6.
;Nguyen Decl., ¶ 4,Ex. B (Screen grabs
Rocket Lawyer has advertised
26 "Incorporate for Free... Pay No Fees $0," of Rocket Lawyer's Advertisements).
27 ~~ "Incorporate Your Business at Rocket
28 ~ Lawyer Free,""Form Your LLC Free at
a
LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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1 I

UNCONTROVERTED FACT

EVIDENTIARY SUPPORT

2 ~ Rocket Lawyer" and "Free... LLCs."
3 ~ 7.

Rocket Lawyer's customers are

Nguyen Decl., ¶¶ 2, 5, Ex. C(Screen

4 `;: required to pay the state fees associated

grabs of state filing options through

5 'with incorporation and formation.

Rocket Lawyer's services); Declaration

6

of Mary Ann T. Nguyen("Nguyen
Decl.")

g 18.

Customers who access the Rocket

Nguyen Decl., ¶ 6,Ex. D (Screen grabs

9 Lawyer link to the "Incorporate for

of Rocket Lawyer's "Interview" for

~o Free... Pay No Fees $0,""Incorporate

"Company Set-Up" and "Company

11 your Business at Rocket Lawyer Free,"

Details")

12 "Form Your LLC Free at Rocket Lawyer"
13 ~ or "Free... LLCs" do not discover that
14 they must actually pay the state filing fees
is ;until after they have accessed the Rocket
16 Lawyer website, completed a "company
17 setup" and filled out information relating
18 to the "company details."
19 : 9,

Rocket Lawyer subsequently

Rocket Lawyer's Answer and Amended

20 changed the language ofthese

Counterclaims, ECF No. 17, 2:26-3:1

21 advertisements after LegalZoom filed its

("Rocket Lawyer admits that it has

22 original Complaint.

produced new advertisements regarding

23 '

its business and a variety of services it

24

offers since the service ofthe original

Zs

complaint....").

26 i 10.

At least in 2012, Rocket Lawyer

27 advertised "Free help from local

Nguyen Decl., ¶ 7, Ex. E(Screen grabs of
Rocket Lawyer's Advertisements).

28 ~ attorneys" and "Free legal review."
__.
3
LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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EVIDENTIARY SUPPORT

UNCONTROVERTED FACT

lall
2 11.

Nguyen Decl., ¶ 8,Ex. F(Rocket

Rocket Lawyer's customers could

3 access "help from local attorneys" or

Lawyer's On Call Terms of Service,

4 , "legal review" for free only if they were

dated July 2012, as printed on November

s "Eligible Members" who had either(a)

27, 2012).

6 ' purchased three consecutive months of
~ Rocket Lawyer's monthly Legal Plan, or
g (b) purchased a Rocket Lawyer annual
9 Legal Plan.
io 12.

Nguyen Decl., ¶ 9,see

The paid-membership requirement

ii for access to the purported "free help
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12
13 .'

review" was not disclosed in close

14

terms-of -service.rl.

from local attorneys" and "free legal

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in
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http://www.rocketlawyer.com/on-call-

proximity to the advertisements on

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is Rocket Lawyer's website.
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The paid-membership requirement Nguyen Decl., ¶ 9,see

i~ was only disclosed in Rocket Lawyer's

http://www.rocketlawyer.com/on-call-

is ~"On Call Terms of Service," which was
I

terms-of -service.rl.

i9 accessible to customers on a separate link
ao found at
ai http://www.rocketlawyer.com/on-calla2 terms-of -service.rl.
Rocket Lawyer subsequently

23

14.

24 `

changed the language of its "On Call

Zs Terms of Service" to provide that
26

"Customers who enter into a one week

2~

Lawyer's On Call Terms of Service,
dated November 2012, as printed on
November 29, 2012).

(seven(7)calendar days)free trial are

28

Nguyen Decl., ¶ 10, Ex. G(Rocket

eligible to receive one(1)free legal
4
LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS

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EVIDENTIARY SUPPORT

UNCONTROVERTED FACT _
__
2 : matter consultation..." after LegalZoom
1

3 'filed its original Complaint.
4 15.

Nguyen Decl., ¶ 10, Exs. F and G

The access to "free help from local

5 attorneys" and "free legal review" during

(Rocket Lawyer's On Call Terms of

6 a "free trial" was not available before

Service, dated July 2012, as printed on

~ LegalZoom's filing ofthe original

November 27, 2012; Rocket Lawyer's

g Complaint.

On Call Terms of Service, dated

E

November 2012, as printed on November

io

29, 2012).

11 16.

Nguyen Decl., ¶ 11, Ex. G(Rocket

Access to the advertised "free help

12 from local attorneys" and the "free legal

Lawyer's On Call Terms of Service,

13 review" was still conditioned upon

dated November 2012, as printed on

14 ;customers actively enrolling in Rocket

November 29, 2012).

is Lawyer's trial membership and providing
16 ' Rocket Lawyer with their credit card
17 'information.
18 ~ 17.

At least in 2012 and 2013, Rocket ' Nguyen Decl., ¶ 12, Ex. H(Rocket

19 Lawyer advertised on its website "free"

Lawyer "Try It Free" Advertisement).

20 trials of its "Basic Legal Plan" and "Pro
~i ~ Legal Plan."
22 18.

Nguyen Decl., ¶ 13, Ex. I(Rocket

Customers who sign up fora one-

23 week free trial membership under the

Lawyer's "Free" Trial Enrollment Page).

24 , "Basic Legal Plan" or "Pro Legal Plan"
25 must first provide Rocket Lawyer with
26 `their credit card information and enroll in
27 Rocket Lawyer's "negative option"
28 program — i.e., a program in which
s
LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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UNCONTROVERTED FACT
_
__
_
2 '. customers are automatically enrolled and
1

_

EVIDENTIARY SUPPORT
_

3 ,billed and must contact Rocket Lawyer to
4 opt out of.
5 19.

A disclosure of Rocket Lawyer's

6 negative option is found in standard font

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__
_
; Nguyen Decl., ¶ 13, Ex. I(Rocket
Lawyer's "Free" Trial Enrollment Page).

~ only upon the customer being directed to
g ~ enroll in the "free trial," and no further
9 'acknowledgement regarding the negative
to ,option is provided.
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11 , 20.

No further acknowledgement

i~ regarding the negative option (other than

~~

13 ;

14

21.

__

Lawyer's "Free" Trial Enrollment Page).

as described in 19)is provided.

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_
,Nguyen Decl., ¶ 13, Ex. I(Rocket

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On October 13, 2011,LegalZoom's NguYen Decl., 1f 14, Ex. J CE-mail

is Chairman, Brian Liu, contacted Rocket
16 : Lawyer's CEO,Dan Nye, stating that

Exchange Between Brian Liu and Dan
; Nye, dated October 13, 2013).

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17 there were "important issues that
1 g [LegalZoom's] legal department has
19 brought up regarding [Rocket Lawyer's]
20 advertising."
21 22.

Dan Nye responded by stating that 1 Nguyen Decl., ¶ 14, Ex. J (E-mail

~~ Liu should discuss this issue with Charley ~ Exchange Between Brian Liu and Dan
23 Moore,Rocket Lawyer's founder and

Nye, dated October 13, 2013).

24 Chairman, and copied Moore on the email
2s I exchange
26 23.

On October 14, Brian Liu had a

27 telephone conversation with Charley

;Nguyen Decl., ¶ 15, Ex. K(E-Mail from
Brian Liu to Charley Moore, dated

28 . Moore, stating that LegalZoom took issue :October 14, 2011).
6
LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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UNCONTROVERTED FACT

1 l

EVIDENTIARY SUPPORT

2 with Rocket Lawyer's ads, which
3 'promised "Set up a Free LLC... Totally
4 Free," and "100% Free," since state filing
s fees must always be paid when setting up
6 ' an LLC through Rocket Lawyer.
~ 24.

Brian Liu also asked Charley

g 1 Moore to read and follow the Federal

Nguyen Decl., ¶ 15, Ex. K(E-Mail from
Brian Liu to Charley Moore, dated

9 Trade Commission's guidelines regarding October 14, 2011).
to the use ofthe word "free" in advertising,
11 which requires, among other things, that
12 "all terms, conditions and obligations
13 'upon which receipt and retention ofthe
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14 "Free" item are contingent should be set
is forth clearly and conspicuously at the
16

outset ofthe offer so as to leave no

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17 reasonable probability that the terms of
18 the offer might be misunderstood."
19 25.

Brian Liu requested that Rocket

Nguyen Decl., ¶ 15, Ex. K(E-Mail from

20 Lawyer immediately take down these and

Brian Liu to Charley Moore, dated

21 other misleading advertisements.

October 14, 2011).

22 ' 26.

Nguyen Decl., ¶ 16, Ex. L(Liu's

In November 2011, Rocket

23 Lawyer's advertising regarding "free"

November E-mails to Rocket Lawyer).

24 . trials and services still had not been
25 j~ changed or removed.
26 .27.

Beginning November 15, 2011, in a Nguyen Decl., ¶ 16, Ex. L (Liu's

27 series of emails, Brian Liu repeatedly

'November E-mails to Rocket Lawyer).

28 ;requested that Rocket Lawyer discontinue
LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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1

UNCONTROVERTED FACT
__
__

EVIDENTIARY SUPPORT

2 ;its false advertising and unfair
3 competition practices.
4
5

6 DATED: August 23, 2013

Respectfully submitted,

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GLASER WEIL FINK JACOBS
HOWARD AVCHEN & SHAPIRO LLP

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By:
/s/ Fred Heather
PATRICIA L. GLASER
FRED D. HEATHER
MARY ANN T. NGUYEN
Attorneys for Plaintiff
LegalZoom.com,Inc.

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LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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i

PROOF OF SERVICE

a

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 23, 2013,I electronically filed the following documents) using the
CM/ECF system.
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PLAINTIFF LEGALZOOM.COM,INC.'S SEPARATE STATEMENT
9

OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF ITS MOTION
io
FOR SUMMARY JUDGMENT
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Participants in the case who are registered CM/ECF users will be served by the
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CM/ECF system.
I declare that I am employed in the office of a member ofthe bar of this court at
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whose direction the service was made. I declare under penalty of perjury that the
above is true and correct.

a~

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Executed on August 23, 2013 at Los Angeles, California.
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/s/ Fred Heather
Fred Heather

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PROOF OF SERVICE
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