LegalZoom.com Inc v. Rocket Lawyer Incorporated

Filing 31

NOTICE OF MOTION AND MOTION for Summary Judgment filed by Plaintiff LegalZoom.com Inc. Motion set for hearing on 10/7/2013 at 09:30 AM before Judge Gary A. Feess. (Attachments: # 1 Separate Statement, # 2 Proposed Order)(Heather, Fred)

i PATRICIA L. GLASER -State Bar No. 55668
pglaser glaserweil.com
2 FRED .HEATHER -State Bar No. 110650
fheather laserweil.com
T. NGUYEN -State Bar No. 269099
3 MARY
mnguyen laserweil.com
IL FINK JACOBS
4 GLASER
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 CALIFORI~IIA

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UNITED STATES DISTRICT COURT

WESTERN DIVISION

i2 LEGALZOOM.COM,INC., a Delaware
corporation,

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

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Hon. Gary A. Feess
Courtroom: 740

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

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
ai
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Date:
October 7, 2013
Time:
9:30 a.m.
Courtroom: 740

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LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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Pursuant to Rule 56 ofthe Federal Rules of Civil Procedure and Local Rule 7.1

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

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

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UNCONTROVERTED FACT

EVIDENTIARY SUPPORT

LegalZoom and Rocket Lawyer are Rocket Lawyer's Answer to Amended

8 both providers of online legal products.

Complaint and Amended Counterclaims

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("Rocket Lawyer's Amended

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11 2.

Counterclaims"), ECF No. 17, 12:2-3.
LegalZoom and Rocket Lawyer

12 compete with one another in the online

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

13 ;legal products industry.
14 3.

LegalZoom and Rocket Lawyer

is both offer incorporation and formation

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

16 services and other online legal products.
17 4.

On its website, Rocket Lawyer

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).

20 II owners.
21 5.
At least in 2011, 2012 and 2013,
22 Rocket Lawyer advertised "free"

Nguyen Decl., ¶ 4, Ex. B (Screen grabs
of Rocket Lawyer's Advertisements).

23 ]~ incorporation and "free" limited liability
24 companies(EEGs).
__
25 6.
Rocket Lawyer has advertised

Nguyen Decl., ¶ 4, Ex. B (Screen grabs

26 "Zoom Charges $99. Rocket Lawyer is

of Rocket Lawyer's Advertisements).

27 Fast, Easy, &Free. Incorporate Your
28 Business Today,""Incorporate for Free...
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LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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UNCONTROVERTED FACT

1 11

EVIDENTIARY SUPPORT

2 Pay No Fees $0,""Incorporate Your
3 'Business at Rocket Lawyer Free,""Form
4 ~~ Your LLC Free at Rocket Lawyer" and
5 II"Free... LLCs."
6 ~~ 7.

Rocket Lawyer's customers are

Nguyen Decl., ¶¶ 2, 5, Ex. C(Screen

~ required to pay the state fees associated

grabs of state filing options through

g with incorporation and formation.

Rocket Lawyer's services); Declaration

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of Mary Ann T. Nguyen("Nguyen

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Decl.")

11 II 8.

Customers who access the Rocket

Nguyen Decl.,¶ 6, Ex. D(Screen grabs

12 Lawyer link to the "Incorporate for

of Rocket Lawyer's "Interview" for

13 Free... Pay No Fees $0,""Incorporate

"Company Set-Up" and "Company

14 your Business at Rocket Lawyer Free,"

Details")

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

Rocket Lawyer subsequently

Rocket Lawyer's Answer and Amended

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changed the language ofthese

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

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advertisements after LegalZoom filed its

("Rocket Lawyer admits that it has

Zs original Complaint.

produced new advertisements regarding

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its business and a variety of services it

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offers since the service of the original

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complaint....")
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J,EGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS

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UNCONTROVERTED FACT
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2 10. At least in 2012, Rocket Lawyer
3 'advertised "Free help from local

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

4 'attorneys" and "Free legal review."
5 ' 11.

Rocket Lawyer's customers could

Nguyen Decl., ¶ 8, Ex. F (Rocket

6 'access"help from local attorneys" or

Lawyer's On Call Terms of Service,

~ ' "legal review" for free only if they were

dated July 2012, as printed on November

g "Eligible Members" who had either(a)

27, 2012).

9 'purchased three consecutive months of
to 'Rocket Lawyer's monthly Legal Plan, or
11 (b)purchased a Rocket Lawyer annual
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12 Legal Plan.
13 12.

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The paid-membership requirement

Nguyen Decl., ¶ 9,see

14 for access to the purported "free help

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

is from local attorneys" and "free legal

terms-of -service.rl.

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16 review" was not disclosed in close

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1~ proximity to the advertisements on
1 g :Rocket Lawyer's website.
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19 13.
The paid-membership requirement Nguyen Decl., ¶ 9, see
2~ was only disclosed in Rocket Lawyer's

~ http://www.rocketlawver.com/on-call-

21 "On Call Terms of Service," which was

~ terms-of -service.rl.

22 ;accessible to customers on a separate link
23 found at
24 http://www.rocketlawyer.com/on-call25 ;terms-of -service.rl.
26 ', 14.

Rocket Lawyer subsequently

27 changed the language of its "On Call
28 'Terms of Service" to provide that

'Nguyen Decl., ¶ 10, Ex. G(Rocket
;Lawyer's On Call Terms of Service,
dated November 2012, as printed on

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LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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1 II

UNCONTROVERTED FACT

2 II"Customers who enter into a one week

EVIDENTIARY SUPPORT
November 29, 2012).

3 , (seven (7)calendar days)free trial are
4 eligible to receive one(1)free legal
s ,matter consultation..." after LegalZoom
6 filed its original Complaint.
~ 15.

The access to "free help from local

Nguyen Decl., ¶ 10, Exs. F and G

8 attorneys" and "free legal review" during

(Rocket Lawyer's On Call Terms of

9 II a "free trial" was not available before

Service, dated July 2012, as printed on

to LegalZoom's filing ofthe original

November 27, 2012; Rocket Lawyer's

11 Complaint.

On Call Terms of Service, dated

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November 2012, as printed on November

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14 16.

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Access to the advertised "free help

29, 2012).
Nguyen Decl., ¶ 11, Ex. G(Rocket

is from local attorneys" and the "free legal

Lawyer's On Call Terms of Service,

16 review" was still conditioned upon

dated November 2012, as printed on

17 customers actively enrolling in Rocket

November 29, 2012).

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18 Lawyer's trial membership and providing
19 Rocket Lawyer with their credit card
20 information.
21 17.

At least in 2012 and 2013, Rocket

22 Lawyer advertised on its website "free"

Nguyen Decl., ¶ 12, Ex. H(Rocket
Lawyer "Try It Free" Advertisement).

23 ;trials of its "Basic Legal Plan" and "Pro
Za Legal Plan."
25 18.

Customers who sign up fora one-

26 ;week free trial membership under the

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

27 "Basic Legal Plan" or "Pro Legal Plan"
28 must first provide Rocket Lawyer with
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LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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UNCONTROVERTED FACT

1

EVIDENTIARY SUPPORT

2 their credit card information and enroll in '.
3 Rocket Lawyer's "negative option"
4 program — i.e.,a program in which
s customers are automatically enrolled and
6 'billed and must contact Rocket Lawyer to
~ 'opt out of.
g ' 19.

A disclosure of Rocket Lawyer's

9 negative option is found in standard font

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

to 'only upon the customer being directed to
11 'enroll in the "free trial," and no further
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12 acknowledgement regarding the negative

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i3 option is
provided.......
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14 20. No further acknowledgement
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' is regarding the negative option (other than
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Nguyen Decl., ¶ 13, Ex. I(Rocket
Lawyer's "Free" Trial Enrollment Page).

as described in 19.) is provided.

17 :21.

On October 13, 2011, LegalZoom's ;Nguyen Decl., ¶ 14, Ex. J (E-mail

18 'Chairman,Brian Liu, contacted Rocket

Exchange Between Brian Liu and Dan

19 '; Lawyer's CEO,Dan Nye, stating that

Nye, dated October 13, 2013).

20 there were "important issues that
21 [LegalZoom's] legal department has
22 brought up regarding [Rocket Lawyer's]
23 advertising."
24 ' 22.

Dan Nye responded by stating that

Nguyen Decl., ¶ 14, Ex. J (E-mail

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

Nye, dated October 13, 2013).

27 ' Chairman, and copied Moore on the email
2g 'exchange.
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LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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UNCONTROVERTED FACT

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2 23.

On October 14, Brian Liu had a

EVIDENTIARY SUPPORT
Nguyen Decl., ¶ 15, Ex. K(E-Mail from

3 telephone conversation with Charley

Brian Liu to Charley Moore, dated

4 Moore, stating that LegalZoom took issue

October 14, 2011).

s with Rocket Lawyer's ads, which
6 promised "Set up a Free LLC... Totally
~ Free," and "100% Free," since state filing
g fees must always be paid when setting up
9 an LLC through Rocket Lawyer.
l0 24.

Brian Liu also asked Charley

11 II Moore to read and follow the Federal

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

12 Trade Commission's guidelines regarding October 14, 2011).
13 the use ofthe word "free" in advertising,
14 which requires, among other things, that
is ' "all terms, conditions and obligations
16 upon which receipt and retention ofthe
17 "Free" item are contingent should be set
18 forth clearly and conspicuously at the
19 outset ofthe offer so as to leave no
20 reasonable probability that the terms of
21 the offer might be misunderstood."
22 25.

Brian Liu requested that Rocket

Nguyen Decl., ¶ 15, Ex. K(E-Mail from

23 Lawyer immediately take down these and

Brian Liu to Charley Moore, dated

24 other misleading advertisements.

October 14, 2011).

as X26.

Nguyen Decl., ¶ 16, Ex. L (Liu's

In November 2011, Rocket

26 '

Lawyer's advertising regarding "free"

2~ '

trials and services still had not been

November E-mails to Rocket Lawyer).

as ~ changed or removed.
LEGALZOOM'S SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
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2 ' 27.

EVIDENTIARY SUPPORT

UNCONTROVERTED FACT

Beginning November 15, 2011, in a Nguyen Decl., ¶ 16, Ex. L (Liu's
November E-mails to Rocket Lawyer).

3 series of emails, Brian Liu repeatedly
4 requested that Rocket Lawyer discontinue
s its false advertising and unfair
6 competition practices.

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9 DATED: September 4, 2013

Respectfully submitted,

to

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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PROOF OF SERVICE
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 September 4, 2013,I electronically filed the following documents) using
the CM/ECF system.
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PLAINTIFF LEGALZOOM.COM,INC.'S SEPARATE STATEMENT
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OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF ITS MOTION
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FOR SUMMARY JUDGMENT
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Participants in the case are registered CM/ECF users and will be served by the
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CM/ECF system.
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I declare that I am employed in the office of a member ofthe bar ofthis 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.
Executed on September 4, 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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