LegalZoom.com Inc v. Rocket Lawyer Incorporated

Filing 42

REPLY LEGALZOOM.COM Inc.'s Reply in Support of its Motion for Summary Judgment filed by Plaintiff LegalZoom.com Inc, Counter Defendant LegalZoom.com Inc. (Attachments: # 1 Declaration of Patty Chikamagalur, # 2 Declaration of Mary Ann Nguyen, # 3 Response to Evidentiary Objections, # 4 Response to Separate Statement of Undisputed Material Facts, # 5 Memorandum of Evidentiary Objections)(Heather, Fred)

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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.

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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,

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

CASE NO.: CV 12-9942-GAF (AGRx)
Hon. Gary A. Feess
Courtroom: 740
PLAINTIFF LEGALZOOM.COM,
INC.’S RESPONSE TO ROCKET
LAWYER’S MEMORANDUM OF
EVIDENTIARY OBJECTIONS
Date:
October 21, 2013
Time:
9:30 a.m.
Courtroom: 740
255 East Temple Street
Los Angeles, CA 90012

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Complaint Filed: November 20, 2012

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Plaintiff LegalZoom.com, Inc. (“LegalZoom”) hereby responds to Defendant

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Rocket Lawyer, Incorporated’s (“Rocket Lawyer”) Memorandum of Evidentiary

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Objections in Support of Its Opposition to LegalZoom’s Motion for Summary

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Judgment as follows:

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Separate Statement Paragraph 7: Objection to Paragraph 5 of the Declaration of

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Mary Ann T. Nguyen (“Nguyen Decl.”) (“Rocket Lawyer’s customers are required to

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pay the state fees associated with incorporation and formation”) on the grounds that it

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is misleading. To the extent this statement implies that Rocket Lawyer imposes the

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fees, as opposed to the state, or that customers of LegalZoom or of any other

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competitor are not required to pay the same fees, it is misleading. Fed. R. Evid. 403.

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Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 7:

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The statement that consumers who incorporate a business are required to pay state

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fees is a demonstrable and uncontrovertible fact. Here, it is admissible because it is

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directly relevant to the central issue in this case—that is, whether the ads used by

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Rocket Lawyer which state or imply that incorporation is “free”—violate the Lanham

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Act and constitute unfair competition and false advertising under the California

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Business and Professions Code. Given its direct relevance, the fact contested is

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admissible under Federal Rule of Evidence 401. Rocket Lawyer’s attempt to invoke

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the protections of Rule 403 as a basis to exclude this directly relevant and highly

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probative evidence on the ground that it is misleading is unavailing. Indeed, Rocket

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Lawyer has asserted no fact demonstrating, as would be required to do in order to

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preclude the introduction of evidence with such high probative value, the misleading

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nature of this statement. Contrary to Rocket Lawyer’s suggestion, the statement

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implies nothing in connection with who imposes the state fees. Moreover, to the

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extent that it is ambiguous as to whether Rocket Lawyer’s, but not other competitor’s,

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customers need to pay the state-imposed fees, it highlights the misleading nature of

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Rocket Lawyer’s own ads, which are silent on their face, as to whether a consumer
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must pay state fees and which directly suggest that incorporation is entirely “free.” In

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any event, there is nothing misleading about this statement, which reflects the idea

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that consumers are required to pay fees to the state in order to incorporate.

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Separate Statement Paragraph 8: Objection to Exhibit D to the Nguyen Decl.,

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“Screen grabs of Rocket Lawyer’s ‘Interview’ for ‘Company Set-Up’ and ‘Company

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Details,”‘ on the grounds that the evidence is incomplete and misleading. To the

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extent that it is offered to show the only disclosure of state filing fees on Rocket

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Lawyer.com, it is incomplete and misleading. Fed. R. Evid. 106, 403.

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Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 8:

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The subject evidence, which includes certain pages of Rocket Lawyer’s website, is

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relevant to a central issue in the case—whether Rocket Lawyer’s ads, which boast

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“free” incorporation services are nonetheless false or misleading under the Lanham

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Act and the California Business and Professions Code, particularly because the

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disclosure that the subject services (i.e. incorporation) are not, in fact, free, are made

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in places on the website far removed from the “free” advertisements. The evidence is

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also probative of whether the disclosure that certain fees must be paid are sufficiently

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conspicuous and clear as to not mislead consumers, a critical inquiry for purposes of

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Rocket Lawyer’s violation of California Business and Professions Code section

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17200. See, e.g., In the Matter of Prodigy Servs. Corp., 125 F.T.C. 430, 434 (Mar. 16,

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1998) (Prodigy liable for advertising “free” Internet service but failing to disclose at

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the outset that customers would be charged if they did not cancel during the trial

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period); 16 C.F.R. § 251.1 (1998).

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Neither Federal Rule of Evidence 106 nor 403 operates to preclude the

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admission of this evidence that is taken directly from Rocket Lawyer’s own website

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featuring its ads—which Rocket Lawyer does not contest. To the extent that Rocket

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Lawyer argues that the selected pages of the website are “incomplete,” Federal Rule

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106 does not mandate outright exclusion of the subject evidence. In fact, Rocket

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Lawyer has not clearly established why or how the subject screenshots are
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incomplete. Nor has Rocket Lawyer made the requisite showing indicating that

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“fairness” requires the introduction of additional material. U.S. v. Branch, 91 F.3d

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699 (1996); U.S. v. Boylan, 898 F.2d 230 (1990), cert. denied, 111 S.Ct. 139 (noting

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that there is no “per se rule requiring the admission of evidence in any case and that a

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preliminary decision is required concerning what units contained in a document

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collection constitutes a “fair and reasonably” complete unit of material). In any

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event, to the extent that Rule 106 does apply, Rule 106 simply permits Rocket Lawyer

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to offer evidence rendering the pages of the website (to the extent that they constitute

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“writings” or “recorded statements” for purposes of the Rule) whose contents Rocket

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Lawyer suggests are allegedly incomplete, complete. By now, Rocket Lawyer should

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have proffered whatever evidence it believes is necessary to make this submission

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complete, thus mooting this objection altogether. If not, it certainly had the

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opportunity to do so.

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Rocket Lawyer’s attempt to invoke the protections of Rule 403 as a basis to

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exclude this directly relevant and highly probative evidence is also unavailing.

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Rocket Lawyer has not established that the probative value of the evidence itself is

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substantially outweighed by any potential confusion. Again, the evidence goes to a

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central issue. Moreover, there is nothing confusing or misleading about the evidence

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itself, particularly where, as here, Rocket Lawyer has had the opportunity to provide

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contemporaneous corrective statements or evidence to controvert it.

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Separate Statement Paragraph 9: Objection to the assertion that “Rocket

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Lawyer subsequently changed the language of these advertisements after LegalZoom

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filed its original Complaint” on the grounds that it is irrelevant, evidence of a

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subsequent remedial measure, and misleading. Any Rocket Lawyer advertising not

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complained of is irrelevant. Fed. R. Evid. 401, 402. To the extent it is offered as a

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subsequent remedial measure demonstrating culpable conduct, it is inadmissible. Fed.

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R. Evid. 407. To the extent it is offered to show an admission of guilt, it is misleading

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as LegalZoom has offered no evidence and Rocket Lawyer has made no concession
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that its new advertisements resulted from the original Complaint. Fed. R. Evid. 403.
Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 9:

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By Rocket Lawyer’s own admission, evidence of its ads and policies—both as they

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exist now and as they existed previously—are undoubtedly relevant. In its

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opposition, Rocket Lawyer specifically invites this Court to view its current

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advertisements on the website today as distinct from its prior advertisements evident

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previously and to which LegalZoom has cited extensively. See, e.g., Opposition at p.

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2, lines 18-20 (“[i]f the Court were to visit Rocketlawyer.com today, it would look

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substantially different from LegalZoom’s exhibits”). Advertisements of any nature at

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any time are directly relevant to whether there has been a violation of the Lanham Act

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or Business and Professions Code. See, e.g., Skydrive Arizona, Inc. v. Quattrocchi,

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2009 WL 6597892, *25 (D. Ariz. Feb. 2, 2009) ( liability for false advertising under

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the Lanham Act may not be avoided by removing false statements from later

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advertising). The evidence is additionally relevant to Rocket Lawyer’s intent,

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including specifically Rocket Lawyer’s state of mind regarding whether it knew that

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its ads were false or whether an alternative was feasible. See, e.g., Pom Wonderful

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LLC v. Coca Cola Co., 727 F. Supp. 2d 849, 869 (C.D. Cal. 2010) (aff'd in part,

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vacated in part, remanded sub nom. Pom Wonderful LLC v. Coca-Cola Co., 679 F.3d

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1170 (9th Cir. 2012)) (“if [the defendant has] intentionally misled consumers, [the

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court will presume that] consumers were in fact deceived and [the defendant] would

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have the burden of demonstrating otherwise”) Thus, under 401, the evidence should

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be admitted.

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Contrary to Rocket Lawyer’s position, Section 407 does not mandate exclusion

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of this evidence. Indeed, it is questionable whether Section 407 even applies to this

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case. To the extent that Rocket Lawyer contends that the changes that it has instituted

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to its website are “subsequent remedial measures” (and Rocket Lawyer does not

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appear to have made any such claim), 407 is inapplicable. Rule 407 only applies in

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instances where the “subsequent remedial measure” has made the injury or harm that
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was posed by the prior condition less likely to occur. See, e.g., In re

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HOMESTORE.COM, INC. Securities Litigation, 2011 WL 291176 (C.D. 2011)

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(where act or repair not taken in order to improve the conditions that led to harm or

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injury, the evidence does not constitute a subsequent remedial measure within the

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realm of Rule 407); Brazos River Authority v. GE Ionics, Inc., 469 F.3d 416, 42 (5th

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Cir. 2006). Whatever changes Rocket Lawyer has made, it has not been established

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and there is no evidence submitted in connection with these motions that its changes

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“lessened” any confusion on the part of the consumer. Moreover, it is not being

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offered for an impermissible purpose under section 407.

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Insofar as Rocket Lawyer’s objection on the basis of section 403 is concerned,

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there is no evidence that the probative value of this evidence (which Rocket Lawyer

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admits) is substantially outweighed by the danger of misleading this Court. Indeed,

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that Rocket Lawyer elected to change features of its website is already in evidence on

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account of Rocket Lawyer’s own admissions. The Court is free to draw from this

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evidence those inferences that are supported from the available evidence.

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Separate Statement Paragraph 10: Objection to Exhibit E to the Nguyen Decl.,

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“Screen grabs of Rocket Lawyer’s Advertisements,” on the grounds that the evidence

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is misleading and irrelevant. Page 45 of Exhibit E purports to show that Rocket

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Lawyer advertised “free legal review.” The evidence is taken from Rocket Lawyer’s

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website and does not make clear when in the user experience this screen is

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encountered. Thus, to the extent it is offered to show what Rocket Lawyer advertised

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to non-customers, it is misleading and irrelevant to the fact asserted. Fed. R. Evid.

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401, 402, 403.

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Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 10:

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Rocket Lawyer objects to evidence from its own website evidencing the central

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advertisements at issue in this lawsuit as “misleading and irrelevant.” It strains

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credulity that Rocket Lawyer could claim that its own statements and advertising that

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are the subject of this lawsuit are “irrelevant,” and that is true whether a consumer
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ultimately was lured by the ads and became a customer or not. And, to the extent

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that Rocket Lawyer claims that it is “misleading,” because it is unclear “when” in the

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“user experience” this screen is encountered, it proves, at a minimum, that the ads

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themselves, are misleading to the extent that they are read as stand-alone statements.

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Rocket Lawyer’s invocation of Rule 403 as a grounds for exclusion is unavailing

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where, as here, the evidence is relevant to a central issue in the case and the value is

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not outweighed, let alone substantially outweighed, by any purported confusion

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concerning the statements of Rocket Lawyer on its own website. Even to the extent

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that the evidence is related to the impact of the ads on consumers who are not

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currently customers of Rocket Lawyer, the evidence is not “misleading” for purposes

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of section 403, but, in fact, the best evidence of what Rocket Lawyer advertises.

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Objection to the supporting evidence of http://www.Rocket Lawyer.com/on-

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call-terms-of-service.rl for assertion that “The paid-membership requirement for

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access to the purported `free help from local attorneys’ and `free legal review’ was

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not disclosed in close proximity to the advertisements on Rocket Lawyer’s website”

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on the grounds that it is irrelevant and misleading. The evidence provided does not

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demonstrate the disclosure’s proximity or lack thereof to Rocket Lawyer’s advertising

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and is therefore irrelevant to the asserted fact. Fed. R. Evid. 401, 402. To the extent it

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is used for such purpose, it is misleading. Fed. R. Evid. 403.

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Response to Rocket Lawyer’s Objection: Evidence of the terms and conditions

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attached to the receipt of the free services offered by Rocket Lawyer is undoubtedly

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relevant. Notably, Rocket Lawyer does not dispute that its website contains

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disclosures concerning the terms of the consumer’s purported free access. To the

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extent that it is clear from looking at the terms of service that the advertisement is not

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on the same page, it is further relevant and persuasive as to whether there has been a

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violation of the law, see, e.g, Cal. Bus. & Prof. Code § 17600 et seq., California

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Business and Professions Code § 17200; In the Matter of Prodigy Servs. Corp., 125

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F.T.C. 430, 434 (Mar. 16, 1998) (Prodigy liable for advertising “free” Internet service
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but failing to disclose at the outset that customers would be charged if they did not

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cancel during the trial period); 16 C.F.R. § 251.1 (1998), and therefore admissible

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under section 401. Any attempted exclusion on the grounds of the catch-all of

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Federal Rule of Evidence 403 is specious. The evidence makes clear that the

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advertisement is not contained on the same page as the terms of service relating to the

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conditions upon which access is given.

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In any event, Rocket Lawyer’s invocation of Rule 403 as a grounds for

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exclusion is unavailing where, as here, the evidence is relevant to a central issue in

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the case and the value is not substantially outweighed by any purported confusion

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concerning where these terms and conditions are encountered in relation to the ads at

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issue in this litigation. Again, Rocket Lawyer has now had the opportunity to clear up

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any confusion concerning these terms and conditions.

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Separate Statement Paragraph 13: Objection to the supporting evidence of

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http://www.Rocket Lawyer.com/on-call-terms-of-service.rl for assertion that “The

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paid-membership requirement was only disclosed in Rocket Lawyer’s `On Call Terms

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of Service,’ which was accessible to customers on a separate link found at

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http://www.Rocket Lawyer.com/on-call-terms-of -service.rl.” The evidence provided

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does not support the assertion that the Terms of Service are the only disclosure. To

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extent that it is used for that purpose, it is misleading. Fed. R. Evid. 403.

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Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 13:

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Evidence of the terms and conditions, and how readily accessible the terms and

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conditions are, upon which the receipt of the free services advertised by Rocket

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Lawyer are and were to the consumer is clearly relevant to the issue of whether there

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is a violation of the Lanham Act and the California Business & Professions Code.

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see, e.g, Cal. Bus. & Prof. Code § 17600 et seq. To the extent that Rocket Lawyer

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here argues for exclusion on the grounds that other information exists on the website

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also discloses these conditions, that is for Rocket Lawyer to argue and to present to

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the Court. However, exclusion under 403 is not required in light of the highly
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probative value of the subject evidence.

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Separate Statement Paragraph 14: Objection to the supporting evidence of

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Rocket Lawyer’s On Call Terms of Service dated November 2012 on the grounds that

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it is irrelevant, misleading, and evidence of a subsequent remedial effort. Any Rocket

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Lawyer terms of service not complained of are not relevant. Fed. R. Evid. 401, 402.

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To the extent it is offered as a subsequent remedial measure demonstrating culpable

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conduct, it is inadmissible. Fed. R. Evid. 407. To the extent it is offered to show an

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admission of guilt or that the prior terms of service were insufficient as a disclosure, it

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is misleading. Fed. R. Evid. 403.

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Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 14:

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By Rocket Lawyer’s own admission, evidence of Rocket Lawyer’s ads and policies

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concerning receipt of the services that are the subject of those ads—both as they exist

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now and as they existed previously—are undoubtedly relevant. See, e.g., Opposition

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at p. 2, lines 18-20. Rocket Lawyer, in fact, submits into evidence, virtually the

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same—if not identical—Terms of Service in defense of its position opposing

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summary judgment. See, e.g., Exhibit 13 to the Declaration of Hong-An Vu

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Submitted in Support of its Opposition to LegalZoom’s Motion for Summary

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Judgment. It, thus, strains credulity that Rocket Lawyer could argue that the very

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same document taken from its website within 6 days of the other could be argued as

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relevant and straightforward when submitted by it, but irrelevant and misleading

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when submitted by LegalZoom. In fact, it cannot be the case that an earlier version of

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the terms and conditions under which consumers receive Rocket Lawyer’s services is

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simply mooted or deemed inactionable upon the inclusion of later terms and

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conditions. Indeed, liability for false advertising under the Lanham Act may not be

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avoided by removing false statements from later advertising. Skydrive Arizona, Inc.

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v. Quattrocchi, 2009 WL 6597892, 25 (D. Ariz. Feb. 2, 2009). The evidence is

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additionally relevant to Rocket Lawyer’s intent, including specifically Rocket

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Lawyer’s state of mind regarding whether it knew that its ads were false or whether
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an alternative was feasible. See, e.g., Pom Wonderful LLC v. Coca Cola Co., 727 F.

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Supp. 2d 849, 869 (C.D. Cal. 2010) (aff'd in part, vacated in part, remanded sub nom.

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Pom Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170 (9th Cir. 2012)) (“if [the

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defendant has] intentionally misled consumers, [the court will presume that]

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consumers were in fact deceived and [the defendant] would have the burden of

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demonstrating otherwise”) Thus, under 401, the evidence should be admitted.

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Neither Federal Rule of Evidence 403 nor 407 preclude its introduction into

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evidence. First, contrary to Rocket Lawyer’s position, Section 407 does not mandate

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exclusion of this evidence. Indeed, it is questionable whether section 407 even

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applies to this case. To the extent that Rocket Lawyer contends that the changes that

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it has instituted to its website are “subsequent remedial measures,” (and Rocket

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Lawyer actually has not made any such claim), 407 is only applicable in instances

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where the “subsequent remedial measure” has made the injury or harm that was posed

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by the prior condition less likely to occur. See, e.g., In re Homestore.com, Inc.

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Securities Litigation, 2011 WL 291176 (C.D. 2011) (where act or repair not taken in

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order to improve the conditions that led to harm or injury, the evidence does not

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constitute a subsequent remedial measure within the realm of Rule 407); Brazos River

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Authority v. GE Ionics, Inc., 469 F.3d 416, 42 (5th Cir. 2006). Whatever changes

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Rocket Lawyer has made, it has not been established, and there is no evidence

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submitted in connection with these motions to suggest, that its changes “lessened”

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any confusion on the part of the consumer. Moreover, it is not being offered for an

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impermissible purpose under section 407.

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Insofar as Rocket Lawyer’s objection on the basis of section 403 is concerned,

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there is no evidence that the probative value of this evidence (which Rocket Lawyer

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admits) is substantially outweighed by the danger of misleading this Court. In

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essence, Rocket Lawyer argues that evidence of its changed policies may be

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misleading to this Court. However, having itself placed into evidence the content of

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its prior policies, it may not now shun these policies when offered as evidence by
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LegalZoom. The Court is entitled to make whatever inferences about the documents

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to which the available evidence is susceptible.

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Separate Statement Paragraph 15: Objection to the supporting evidence of

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Rocket Lawyer’s On Call Terms of Service, dated July 2012, and Rocket Lawyer’s

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On Call Terms of Service, dated November 2012, on the grounds that they are

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misleading. Rocket Lawyer’s terms of service do not demonstrate what customers

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actually had access to attorney review. To the extent they are offered for that purpose,

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they are misleading. Fed. R. Evid. 403.

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Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 15:

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Rocket Lawyer’s own Terms of Service clearly are relevant as they clearly set forth

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(and are intended to set forth clearly to consumers) the conditions under which they

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can receive the services that Rocket Lawyer provides, and ultimately, are probative as

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to whether Rocket Lawyer provides anything for “free,” as it advertises. Rocket

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Lawyer admits so—having placed in evidence the same document to serve its own

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purposes. Federal Rule of Evidence 403 does not support the exclusion of this

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highly-probative evidence as there is no clearly-articulated argument that

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demonstrates that the probative value of this evidence is outweighed, let alone

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substantially outweighed, by any purported confusion. In any event, there is nothing

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inherently misleading about the document itself, another iteration of a document upon

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which Rocket Lawyer relies itself and does not preclude its introduction. That Rocket

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Lawyer does not agree that the document supports the proposition for which

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LegalZoom offers the document is of no moment.

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Separate Statement Paragraph 16: Objection to the supporting evidence of

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Rocket Lawyer’s On Call Terms of Service, dated November 2012, on the grounds

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that it is misleading. To the extent Rocket Lawyer’s terms of service are offered to

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show that customers provided Rocket Lawyer with credit card information and were

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billed, they are misleading. Fed. R. Evid. 403.

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Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 16:
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Rocket Lawyer’s own Terms of Service clearly are relevant as they clearly set forth

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(and are intended to set forth clearly to consumers) the conditions under which they

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can receive the services that Rocket Lawyer provides, and ultimately, are probative as

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to whether Rocket Lawyer provides anything for “free,” as it advertises. Rocket

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Lawyer admits so—having placed in evidence the same document to serve its own

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purposes. Federal Rule of Evidence 403 does not support the exclusion of this

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highly-probative evidence as there is no clearly-articulated argument that

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demonstrates that the probative value of this evidence is outweighed, let alone

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substantially outweighed, by any purported confusion. In any event, there is nothing

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inherently misleading about the document itself, another iteration of which Rocket

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Lawyer relies on itself. That Rocket Lawyer does not agree that the document

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supports the proposition for which LegalZoom offers the document is of no moment.

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Separate Statement Paragraph 18: Objection to Paragraph 13 of the supporting

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Nguyen Decl. (“[C]ustomers who sign up for a one-week free trial membership under

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the `Basic Legal Plan’ or `Pro Legal Plan’ must first provide Rocket Lawyer with

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their credit card information and enroll in Rocket Lawyer’s ‘negative option’ program

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— i.e., a program in which customers are automatically enrolled and billed and must

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contact Rocket Lawyer to opt out of.”) on the grounds that it is misleading and

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improperly sets forth a legal conclusion. To the extent that it is offered to show that

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Rocket Lawyer charges its customers for free trials, it is misleading. Fed. R. Evid.

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403. It is also misleading as to the use of the word “first.” Id. To the extent that it

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concludes Rocket Lawyer’s free trial is a negative option plan, it is an improper legal

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conclusion. Fed. R. Civ. Proc. 56(c)(4); L.R. 7-7; see Jones v. Corbis Corp., 815 F.

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Supp. 2d 1108, 1112 (C.D. Cal. 2011) aff’d, 489 F. App’x 155 (9th Cir. 2012)

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(agreeing with defendant that “while Plaintiff may testify to facts relevant to the legal

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determination [at issue], she may not testify as to the legal determination itself.”).

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Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 18:
This statement, based upon Rocket Lawyer’s own Terms of Service clearly is
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relevant. Indeed, the conditions under which consumers can actually receive the

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services that Rocket Lawyer provides and advertises are probative as to whether

3

Rocket Lawyer provides anything for “free,” as it advertises. Rocket Lawyer admits

4

so—having placed in evidence the same document to serve its own purposes. Federal

5

Rule of Evidence 403 does not support the exclusion of this highly-probative

6

evidence as there is no clearly-articulated argument that demonstrates that the

7

probative value of this evidence is outweighed, let alone substantially outweighed, by

8

any purported confusion.

9

Separate Statement Paragraph 19: Objection to Exhibit I to the supporting

10

Nguyen Decl. on the grounds that it is incomplete, misleading, and an improper legal

11

conclusion. To the extent that it is offered to show that this is the only disclosure of

12

Rocket Lawyer’s free trial terms, it is incomplete, misleading, and offers an improper

13

legal conclusion. Fed. R. Evid. 106, 403; Fed. R. Civ. 6 Proc. 56(c)(4); L.R. 7-7. To

14

the extent it concludes that Rocket Lawyer’s free trial is a negative option plan, it is

15

an improper legal conclusion. Fed. R. Civ. Proc. 56(c)(4); L.R. 7-7. Furthermore, to

16

the extent it alleges a violation of the Negative Option law, it is irrelevant since

17

LegalZoom lacks a right of action under that law. See Noll v. eBay Inc., 2013 WL

18

2384250 (N.D. Cal. May 30, 2013) (“The Legislature employed specific language in

19

Section 17602 limiting recovery under Section 17600 et seq. to California consumers.

20

The court will not contravene the Legislature’s clear intention.”) (emphasis added).

21

Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 19:

22

Evidence of the terms and conditions upon which the receipt of “free” services

23

is offered to Rocket Lawyer consumers is undoubtedly relevant to this case. See, e.g,

24

Cal. Bus. & Prof. Code § 17600 et seq. To the extent that Rocket Lawyer here argues

25

for exclusion on the grounds that other information exists on the website also

26

discloses these conditions, Federal Rule of Evidence 106 does not mandate outright

27

exclusion of the subject evidence. Rule 106 would simply permit Rocket Lawyer,

28

under such a circumstance and after it has lain the factual predicate for doing so, to
12
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offer evidence rendering the purportedly incomplete “writing” or “recorded

2

statement” complete. Here, however, Rocket Lawyer has not clearly established why

3

or how the subject screenshots are incomplete. Nor has Rocket Lawyer made the

4

requisite showing indicating that “fairness” requires the introduction of additional

5

material. U.S. v. Branch, 91 F.3d 699 (1996); U.S. v. Boylan, 898 F.2d 230 (1990),

6

cert. denied, 111 S.Ct. 139 (noting that there is no “per se rule requiring the admission

7

of evidence in any case and that a preliminary decision is required concerning what

8

units contained in a document collection constitutes a “fair and reasonably” complete

9

unit of material). In any event, by now, Rocket Lawyer should have proffered

10

whatever evidence it believes is necessary to make this particular Exhibit complete.

11

If not, it certainly had the opportunity to do so.

12

Rocket Lawyer’s objection on the grounds of 403 is also unavailing. Indeed,

13

Rocket Lawyer has proffered no evidence demonstrating that there are other

14

disclosures of Rocket Lawyer’s free trial terms. The document is central to a critical

15

issue in this case and Rocket Lawyer has offered no reason as to why the probative

16

value of a document reflecting its own terms is substantially outweighed by the

17

danger of misleading this Court.

18

Exclusions under Federal Rule of Evidence 403 is also not required in light of

19

the highly probative value of the subject evidence. Finally, the evidence is relevant to

20

the issues in the instant lawsuit whether or not LegalZoom may pursue Rocket

21

Lawyer for remedies in connection with a violation of the Negative Option Law. In

22

fact, to the extent that Rocket Lawyer’s ads violate the Negative Option Law because

23

receipt of free services is conditioned upon the purchase of a paid membership, which

24

is not sufficiently disclosed in Rocket Lawyer’s ads, Rocket Lawyer violates

25

California Business and Professions Code § 17200. See, e.g., In the Matter of Prodigy

26

Servs. Corp., 125 F.T.C. 430, 434 (Mar. 16, 1998) (Prodigy liable for advertising

27

“free” Internet service but failing to disclose at the outset that customers would be

28

charged if they did not cancel during the trial period); 16 C.F.R. § 251.1 (1998).
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PLAINTIFF LEGALZOOM.COM, INC.’S RESPONSES TO ROCKET LAWYER’S MEMORANDUM OF
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2

Therefore, it is abundantly relevant to the central issue in this case.
Separate Statement Paragraph 20: Objection to Paragraph 13 (“No further

3

acknowledgement regarding the negative option is provided.”) of and Exhibit I to the

4

supporting Nguyen Decl. on the grounds that it is incomplete, misleading, and an

5

improper legal conclusion. To the extent that it is offered to show that this is the only

6

disclosure of Rocket Lawyer’s free trial terms, it is incomplete and misleading. Fed.

7

R. Evid. 106, 403. To the extent it concludes that Rocket Lawyer’s free trial is a

8

negative option plan, it is an improper legal conclusion. Fed. R. Civ. Proc. 56(c)(4);

9

L.R. 7-7. Furthermore, to the extent it alleges a violation of the Negative Option law,

10

it is irrelevant since LegalZoom lacks a right of action under that law. See Noll v.

11

eBay Inc., 2013 WL 2384250 (N.D. Cal. May 30, 2013) (“The Legislature employed

12

specific language in Section 17602 limiting recovery under Section 17600 et seq. to

13

California consumers. The court will not contravene the Legislature’s clear

14

intention.”) (emphasis added).

15

Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 20:

16

Evidence of the terms and conditions upon which the receipt of “free” services is

17

offered to Rocket Lawyer consumers is undoubtedly relevant to this case. See, e.g,

18

Cal. Bus. & Prof. Code § 17600 et seq. To the extent that Rocket Lawyer argues for

19

exclusion on the ground that other information exists on the website also discloses

20

these conditions, Federal Rule of Evidence 106 does not mandate outright exclusion

21

of the subject evidence. Rule 106 would simply permit Rocket Lawyer, under such a

22

circumstance and after it has lain the factual predicate for doing so, to offer evidence

23

rendering the purportedly incomplete “writing” or “recorded statement” complete.

24

Here, however, Rocket Lawyer has not clearly established why or how the subject

25

screenshots are incomplete. Nor has Rocket Lawyer made the requisite showing

26

indicating that “fairness” requires the introduction of additional material. U.S. v.

27

Branch, 91 F.3d 699 (1996); U.S. v. Boylan, 898 F.2d 230 cert. denied, 111 S.Ct. 139

28

(noting that there is no “per se rule requiring the admission of evidence in any case
14
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and that a preliminary decision is required concerning what units contained in a

2

document collection constitutes a “fair and reasonably” complete unit of material). In

3

any event, by now, Rocket Lawyer should have proffered whatever evidence it

4

believes is necessary to make this particular Exhibit complete. If not, it certainly had

5

the opportunity to do so.

6

Exclusions under Federal Rule of Evidence 403 is also not required in light of

7

the highly probative value of the subject evidence. Finally, the evidence is relevant to

8

the issues in the instant lawsuit whether or not LegalZoom may pursue Rocket

9

Lawyer for remedies in connection with a violation of the Negative Option Law. In

10

fact, to the extent that Rocket Lawyer’s ads violate the Negative Option Law because

11

receipt of free services is conditioned upon the purchase of a paid membership, which

12

is not sufficiently disclosed in Rocket Lawyer’s ads, Rocket Lawyer violates

13

California Business and Professions Code § 17200. See, e.g., In the Matter of Prodigy

14

Servs. Corp., 125 F.T.C. 430, 434 (Mar. 16, 1998) (Prodigy liable for advertising

15

“free” Internet service but failing to disclose at the outset that customers would be

16

charged if they did not cancel during the trial period); 16 C.F.R. § 251.1 (1998).

17

Therefore, it is abundantly relevant to the central issue in this case.

18

Separate Statement Paragraph 21: Objection to Exhibit J to the Nguyen Decl.

19

on the grounds that it is misleading, incomplete and contains irrelevant hearsay. To

20

the extent it is offered to show the exchange between Mssrs. Liu and Nye, it is

21

incomplete. Fed. R. Evid. 106. To the extent it is offered to show that LegalZoom’s

22

legal department raised these alleged issues, it is irrelevant hearsay, since the

23

initiation of the conversation is not at issue. Fed. R. Evid. 401, 402, 801, 802.

24

LegalZoom’s evidence shows no communication between mid-November 2011 and

25

November 2012, when Rocket Lawyer was served with papers for this dispute.

26

Therefore to the extent the evidence is offered to show that LegalZoom sought to

27

resolve this dispute out of court before filing this lawsuit, it is misleading. Fed. R.

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Evid. 403.
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Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 21:

2

The exhibit to which Rocket Lawyer objects, which reflects communications between

3

Rocket Lawyer and LegalZoom principals, are relevant and admissible. The

4

communications are relevant to the extent they indicate Rocket Lawyer’s state of

5

mind concerning the nature of their advertisements and may suggest Rocket Lawyer’s

6

motive in changing critical aspects of their website—thus excepting them form the

7

rule against hearsay since they are not offered to prove the truth of the matter. Fed. R.

8

Evid. 801 (c)(2). To the extent that they involve statements of an opposing party,

9

they are not hearsay at all. Federal Rule of Evidence 801 (d)(2).

10

That there are or may be additional communications does not render these

11

communications irrelevant or preclude introduction on the grounds that they are

12

incomplete or misleading under Federal Rule of Evidence 106. Federal Rule 106

13

does not mandate outright exclusion of the subject evidence. Rule 106 simply permit

14

a responding party, in certain circumstances and where certain factual predicates have

15

been established, to offer evidence rendering a “writing” or “recorded statement”

16

whose contents were allegedly incomplete, to submit the entirety of the writing or that

17

portion in order to make the writing complete. Here, however, Rocket Lawyer has

18

not clearly established why or how the subject screenshots are incomplete. Moreover,

19

Rocket Lawyer has not made the requisite showing indicating that “fairness” requires

20

the introduction of additional material. U.S. v. Branch, 91 F.3d 699 (1996); U.S. v.

21

Boylan, 898 F.2d 230 (1990), cert. denied, 111 S.Ct. 139 (noting that there is no “per

22

se rule requiring the admission of evidence in any case and that a preliminary decision

23

is required concerning what units contained in a document collection constitutes a

24

“fair and reasonably” complete unit of material). Moreover, by now, Rocket Lawyer

25

should have proffered whatever evidence it believes is necessary to make this

26

submission complete. If not, it certainly had the opportunity to do so.

27
28

Finally, the fact that these communications took place nearly a year prior to the
filing of the lawsuit also does not preclude the introduction of this evidence under
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Federal Rule of Evidence 403. First, there is nothing inherently misleading about the

2

communications. Second, their having taken place a year before the lawsuit is

3

insufficient, in light of the circumstances, to support a conclusion that the danger of

4

misleading this Court substantially outweighs the probative value of the

5

communications. Proximity in time is only one fact the Court weighs in balancing

6

whether the misleading nature of evidence outweighs the probative value of a piece of

7

evidence. Here, all other indicia point to the inclusion of the evidence, which goes to

8

a central issue in the case—evidence of Rocket Lawyer’s intent.

9

Separate Statement Paragraph 22: Objection to Exhibit J to the Nguyen Decl.

10

on the grounds that it is incomplete. To the extent it is offered to show the exchange

11

between Mssrs. Liu and Nye, it is incomplete. Fed. R. Evid. 106.

12

Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 22:

13

The exhibit to which Rocket Lawyer objects, which reflects communications between

14

Rocket Lawyer and LegalZoom principals, are relevant and admissible. The

15

communications are relevant to the extent they indicate Rocket Lawyer’s state of

16

mind concerning the nature of their advertisements and may suggest Rocket Lawyer’s

17

motive in changing critical aspects of their website—thus excepting them form the

18

rule against hearsay since they are not offered to prove the truth of the matter. Fed. R.

19

Evid. 801 (c)(2). To the extent that they involve statements of an opposing party,

20

they are not hearsay at all. Federal Rule of Evidence 801 (d)(2).

21

That there are or may be additional communications does not render these

22

communications irrelevant or preclude introduction on the grounds that they are

23

incomplete or misleading under Federal Rule of Evidence 106. Federal Rule 106

24

does not mandate outright exclusion of the subject evidence. Rule 106 simply permit

25

a responding party, in certain circumstances and where certain factual predicates have

26

been established, to offer evidence rendering a “writing” or “recorded statement”

27

whose contents were allegedly incomplete, to submit the entirety of the writing or that

28

portion in order to make the writing complete. Here, however, Rocket Lawyer has
17
PLAINTIFF LEGALZOOM.COM, INC.’S RESPONSES TO ROCKET LAWYER’S MEMORANDUM OF
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not clearly established why or how the subject screenshots are incomplete. Moreover,

2

Rocket Lawyer has not made the requisite showing indicating that “fairness” requires

3

the introduction of additional material. U.S. v. Branch, 91 F.3d 699 (1996); U.S. v.

4

Boylan, 898 F.2d 230 (1990), cert. denied, 111 S.Ct. 139 (noting that there is no “per

5

se rule requiring the admission of evidence in any case and that a preliminary decision

6

is required concerning what units contained in a document collection constitutes a

7

“fair and reasonably” complete unit of material). Moreover, by now, Rocket Lawyer

8

should have proffered whatever evidence it believes is necessary to make this

9

submission complete. If not, it certainly had the opportunity to do so.

10

Separate Statement Paragraph 23: Objection to Exhibit K to the Nguyen Decl.

11

on the grounds that it is irrelevant and contains irrelevant hearsay and an improper

12

legal conclusion. To the extent that it is offered to show that LegalZoom took issue

13

with Rocket Lawyer’s advertising, it is irrelevant hearsay since LegalZoom’s state of

14

mind is not at issue. Fed. R. 401, 402, 801, 802. To the extent it is offered to show

15

that state-imposed fees negate a free service, it is an improper legal conclusion. Fed.

16

R. Civ. Proc. 56(c)(4); L.R. 7-7.

17

Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 23:

18

LegalZoom offers evidence of communications between principals of Legal Zoom

19

and Rocket Lawyer not for the truth of the matter—here, the content of the FTC’s

20

guidance in connection with advertisements—but to show that Rocket Lawyer

21

received communications questioning the ads. The receipt of such communications is

22

relevant to the state of mind of Rocket Lawyer and whether Rocket Lawyer was on

23

notice regarding the legality of its practices prior to the time of the filing of the

24

Complaint. To the extent that they involve statements of an opposing party, they are

25

not hearsay at all. Federal Rule of Evidence 801 (d)(2). Contrary to Rocket Lawyer’s

26

assertions, simply because the document may support LegalZoom’s position here

27

does not render the document itself a legal conclusion; it is simply a communication.

28

Separate Statement Paragraph 24: Objection to Exhibit K to the Nguyen Decl.
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PLAINTIFF LEGALZOOM.COM, INC.’S RESPONSES TO ROCKET LAWYER’S MEMORANDUM OF
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on the grounds that it is irrelevant, misleading, and contains irrelevant hearsay and an

2

improper legal conclusion. To the extent it is offered to show that Rocket Lawyer has

3

violated the Federal Trade Commission’s guidelines regarding the use of the word

4

free (“FTC Guide”), it is irrelevant, since compliance with the FTC Guide is not at

5

issue, hearsay, misleading, and an improper legal conclusion. Fed. R. Evid. 401, 402,

6

403, 801, 802; Fed. R. Civ. Proc. 56(c)(4); L.R. 7-7. Furthermore, to the extent it is

7

offered to show the requirements of the FTC Guide, it is not the best evidence, which

8

would be the Guide itself. Fed. R. Evid. 1001, 1002.

9

Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 24:

10

LegalZoom offers evidence of communications between principals of Legal Zoom

11

and Rocket Lawyer, which are relevant to the extent that they show that Rocket

12

Lawyer received communications questioning the ads. Moreover, the receipt of such

13

communications is relevant to the state of mind of Rocket Lawyer and whether

14

Rocket Lawyer was on notice regarding the legality of its practices prior to the time

15

of the filing of the Complaint. As such, these communications do not represent

16

hearsay. See, e.g., Drew v. Equifax Information Services, LLC, 690 F.3d 1100, 1008

17

(9th Cir. 2012). To the extent that they involve statements of an opposing party, they

18

are not hearsay at all. Federal Rule of Evidence 801 (d)(2).

19

Finally, no other purported objection compels a conclusion that the evidence

20

should be excluded. Contrary to Rocket Lawyer’s representations, the evidence is not

21

being submitted to prove the contents of the FTC Guide. Federal Rule of Evidence

22

1002, is, therefore, not an issue here. Moreover, there is nothing inherently

23

misleading about these communications or anything that has been asserted by Rocket

24

Lawyer that would lay the foundation for exclusion of the evidence on the ground that

25

its probative value is substantially outweighed by the danger of confusing this Court.

26

Separate Statement Paragraph 25: Objection to Exhibit K to the Nguyen Decl.

27

on the grounds that it is misleading, prejudicial, hearsay, and an improper legal

28

conclusion. To the extent that it is offered to show that any of Rocket Lawyer’s
19
PLAINTIFF LEGALZOOM.COM, INC.’S RESPONSES TO ROCKET LAWYER’S MEMORANDUM OF
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advertisements were misleading, the exhibit is misleading and prejudicial, hearsay,

2

and an improper legal conclusion. Fed. R. Evid. 403, 801, 802; Fed. R. Civ.

3

Proc.56(c)(4); L.R. 7-7.

4

Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 25:

5

LegalZoom offers evidence of communications between principals of Legal

6

Zoom and Rocket Lawyer, which are relevant to the extent that they show that Rocket

7

Lawyer received communications questioning the ads. Moreover, the receipt of such

8

communications is relevant to the state of mind of Rocket Lawyer and whether

9

Rocket Lawyer was on notice regarding the legality of its practices prior to the time

10

of the filing of the Complaint. As such, these communications do not represent

11

hearsay. See, e.g., Drew v. Equifax Information Services, LLC, 690 F.3d 1100, 1008

12

(9th Cir. 2012). To the extent that they involve statements of an opposing party, they

13

are not hearsay at all. Federal Rule of Evidence 801 (d)(2).

14

Finally, no other purported objection compels a conclusion that the evidence

15

should be excluded. Contrary to Rocket Lawyer’s representations, the evidence is not

16

being submitted to prove the contents of the ads themselves, and both Rocket Lawyer

17

and LegalZoom have submitted original source documents for the ads themselves.

18

Federal Rule of Evidence 1002, is, therefore, not an issue here. Moreover, there is

19

nothing inherently misleading about these communications or anything that has been

20

asserted by Rocket Lawyer that would lay the foundation for exclusion of the

21

evidence on the ground that its probative value is substantially outweighed by the

22

danger of confusing this Court.

23

Separate Statement Paragraph 26: Objection to Exhibit L to the Nguyen Decl.

24

on the grounds that it is hearsay and not the best evidence. To the extent that it is

25

offered to show that Rocket Lawyer’s advertisements of free services had not been

26

changed or removed, it is hearsay and not the best evidence of that purported fact.

27

Fed. R. Evid. 801, 802, 1001, 1002.

28

Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 26:
20
PLAINTIFF LEGALZOOM.COM, INC.’S RESPONSES TO ROCKET LAWYER’S MEMORANDUM OF
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LegalZoom offers evidence of communications between principals of Legal Zoom

2

and Rocket Lawyer, which are relevant to the extent that they show that Rocket

3

Lawyer received communications questioning the ads. Moreover, the receipt of such

4

communications is relevant to the state of mind of Rocket Lawyer and whether

5

Rocket Lawyer was on notice regarding the legality of its practices prior to the time

6

of the filing of the Complaint. As such, these communications do not represent

7

hearsay. See, e.g., Drew v. Equifax Information Services, LLC, 690 F.3d 1100, 1008

8

(9th Cir. 2012). To the extent that they involve statements of an opposing party, they

9

are not hearsay at all. Federal Rule of Evidence 801 (d)(2).

10

Finally, no other purported objection compels a conclusion that the evidence

11

should be excluded. There is nothing inherently misleading about these

12

communications or anything that has been asserted by Rocket Lawyer that would lay

13

the foundation for exclusion of the evidence on the ground that its probative value is

14

substantially outweighed by the danger of confusing this Court.

15

Separate Statement Paragraph 27: Objection to Exhibit L to the Nguyen Decl.

16

on the grounds that it is hearsay, misleading and prejudicial, and an improper legal

17

conclusion. To the extent it is offered to show that Rocket Lawyer’s conduct

18

constituted false advertising or unfair competition, it is misleading and prejudicial,

19

hearsay, and an improper legal conclusion. Fed. R. Evid. 403, 801, 802; Fed. R. Civ.

20

Proc. 56(c)(4); L.R. 7-7.

21

Response to Rocket Lawyer’s Objection to Separate Statement Paragraph 27:

22

LegalZoom offers evidence of communications between principals of Legal Zoom

23

and Rocket Lawyer, which are relevant to the extent that they show that Rocket

24

Lawyer received communications questioning the ads. Moreover, the receipt of such

25

communications is relevant to the state of mind of Rocket Lawyer and whether

26

Rocket Lawyer was on notice regarding the legality of its practices prior to the time

27

of the filing of the Complaint. As such, these communications do not represent

28

hearsay. See, e.g., Drew v. Equifax Information Services, LLC, 690 F.3d 1100, 1008
21
PLAINTIFF LEGALZOOM.COM, INC.’S RESPONSES TO ROCKET LAWYER’S MEMORANDUM OF
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(9th Cir. 2012). To the extent that they involve statements of an opposing party, they

2

are not hearsay at all. Federal Rule of Evidence 801 (d)(2).

3

Finally, no other purported objection compels a conclusion that the evidence

4

should be excluded. There is nothing inherently misleading about these

5

communications or anything that has been asserted by Rocket Lawyer that would lay

6

the foundation for exclusion of the evidence on the ground that its probative value is

7

substantially outweighed by the danger of confusing this Court.

8
9
10

DATED: October 7, 2013

Respectfully submitted,
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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PLAINTIFF LEGALZOOM.COM, INC.’S RESPONSES TO ROCKET LAWYER’S MEMORANDUM OF
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CERTIFICATE OF SERVICE

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STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

3

I am employed in the County of Los Angeles, State of California; I am over the
4

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 October 7, 2013, I electronically filed the following document(s) using the
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CM/ECF system.
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PLAINTIFF LEGALZOOM.COM, INC.’S RESPONSE TO ROCKET
LAWYER’S MEMORANDUM OF EVIDENTIARY OBJECTIONS

10

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 of the bar of this court at
13

whose direction the service was made. I declare under penalty of perjury that the
14

above is true and correct.
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Executed on October 7, 2013 at Los Angeles, California.
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/s/ Fred Heather
Fred Heather

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CERTIFICATE OF SERVICE
829314