LegalZoom.com Inc v. Rocket Lawyer Incorporated
Filing
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NOTICE OF MOTION AND MOTION for Partial Summary Judgment filed by Plaintiff LegalZoom.com Inc. Motion set for hearing on 8/18/2014 at 09:30 AM before Judge Gary A. Feess. (Attachments: # 1 Proposed Statement of Uncontroverted Facts & Conclusions of Law, # 2 Declaration of Travis Gigi, # 3 Declaration of Dorian Quispe, # 4 Declaration of Aaron Allan, # 5 Appendix of Exhibits, # 6 Proposed Order)(Heather, Fred)
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PATRICIA L. GLASER - State Bar No. 55668
pglaser@glaserweil.com
FRED D. HEATHER - State Bar No. 110650
fheather@glaserweil.com
AARON P. ALLAN - State Bar No. 144406
aallan@glaserweil.com
GLASER WEIL FINK HOWARD
AVCHEN & SHAPIRO LLP
10250 Constellation Boulevard, 19th Floor
Los Angeles, California 90067
Telephone: (310) 553-3000
Facsimile: (310) 556-2920
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,
Defendant.
CASE NO.: CV 12-9942-GAF (AGRx)
Hon. Gary A. Feess
Courtroom: 740
PROPOSED STATEMENT OF
UNCONTROVERTED FACTS AND
CONCLUSIONS OF LAW IN
SUPPORT OF MOTION FOR
PARTIAL SUMMARY JUDGMENT
BROUGHT BY PLAINTIFF
LEGALZOOM.COM, INC.
[L.R. 56-1]
Date:
August 18, 2014
Time:
9:30 a.m.
Courtroom: 740
[Notice of Motion and Motion;
Declarations of Aaron P. Allan, Dorian
Quispe, Travis Giggy; Appendix of
Exhibits; (Proposed) Order filed
concurrently herewith]
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Complaint Filed: November 20, 2012
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
891644
Pursuant to Rule 56 of the Federal Rules of Civil Procedure and Local Rule
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56-1 of this Court, Plaintiff LegalZoom.com, Inc. (“LegalZoom”) hereby submits the
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following proposed Statement of Uncontroverted Facts and Conclusions of Law in
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support of its motion for summary judgment:
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UNCONTROVERTED FACTS
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UNCONTROVERTED FACT
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1.
Legalspring.com is a website that
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was formerly owned, operated and
EVIDENTIARY SUPPORT
Declaration of Travis Giggy (“Giggy
Decl.”) ¶ 3.
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moderated by Travis Giggy.
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2.
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LegalZoom.
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3.
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March 1, 2013, the Legalspring.com
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website is now owned by Inenvi, Inc.
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4.
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“opinion” about various online providers
Decl.), ¶ 2, Ex. C (Exhibit 15 to Rocket
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as well as the posting of third party
Lawyer’s Answer and Amended
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customer reviews, and this content is
Counterclaims, ECF No. 17) and ¶ 3, Ex.
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selected and published exclusively by
D (customer reviews of LegalZoom from
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Legalspring.com.
Legalspring.com); Declaration of Dorian
Mr. Giggy is a former employee of
Based on a sale which took place
Legalspring.com includes an
Giggy Decl. ¶ 2.
Giggy Decl. ¶ 3.
Declaration of Aaron P. Allan (“Allan
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Quispe (“Quispe Decl.”) ¶ 4; Giggy Decl.
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¶¶ 5-6, Ex. A (various Legalspring.com
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webpages).
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5.
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the reviews on Legalspring.com, and has
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no responsibility for the reviews which
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are actually posted.
LegalZoom has not authored any of Quispe Decl. ¶ 4.
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
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UNCONTROVERTED FACT
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6.
The current relationship between
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Legalspring.com and LegalZoom is that
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of affiliate and client.
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7.
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LegalZoom’s web site as a result of
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having first visited Legalspring.com,
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LegalZoom has provided compensation to
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EVIDENTIARY SUPPORT
Legalspring.com.
To the extent that consumers visit
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8.
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for any products sold by LegalZoom as a
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result of a consumer first visiting
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Legalspring.com., that relationship
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terminated as of March 2013.
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9.
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Legalspring.com is expressed as matters
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of opinion – not facts.
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10.
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Legalspring.com, e.g., that the reviewer
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and his family members have used
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LegalZoom, and that the site moderator
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has been running the review site for many
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years, are not being challenged by Rocket
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Lawyer as being either false or
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misleading.
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11.
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Legalspring.com for which LegalZoom
Quispe Decl. ¶ 5; Giggy Decl. ¶ 8.
received compensation from LegalZoom
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Quispe Decl. ¶ 3.
While Mr. Giggy, at one time,
All of the content at
Statements of fact provided by
The only content on
Quispe Decl. ¶ 6; Giggy Decl. ¶ 8.
Allan Decl. ¶ 2, Ex. C; ¶ 3, Ex. D.
Rocket Lawyer’s Answer and Amended
Counterclaims, ECF No. 17, pp. 18-20.
Quispe Decl. ¶ 8; Giggy Decl. ¶ 9, Ex. B.
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
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UNCONTROVERTED FACT
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provided any authorship is the disclaimer
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which appears at the bottom of the first
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web page which states: “The moderator
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of this Site has affiliate relationships with
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third party sites reviewed on this Site.”
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12.
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Legalspring.com suggesting that
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EVIDENTIARY SUPPORT
Legalspring.com has no relationship with
There is no language at
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the online providers being reviewed.
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13.
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market research or consumer surveys to
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establish that consumers are being misled
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by Legalspring.com into believing that
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“all” online providers are being reviewed
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by a “neutral” reviewer.
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14.
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Legalspring.com that the reviews being
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provided are either objective or “neutral,”
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as alleged by Rocket Lawyer.
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merely provides “opinions” and
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“reviews” by the site moderator and by
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actual customers.
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16.
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LegalZoom at Legalspring.com are very
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positive, several of them are not.
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17.
Allan Decl. ¶ 2, Ex. C; ¶ 3, Ex. D.
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Rocket Lawyer has produced no
There is no representation made at
The Legalspring.com website
While many of the reviews of
Rocket Lawyer has made no
Allan Decl., ¶ 5.
Allan Decl. ¶ 2, Ex. C; ¶ 3, Ex. D.
Allan Decl. ¶ 2, Ex. C and ¶ 3, Ex. D; ;
Giggy Decl. ¶ 5 and ¶ 6, Ex. A.
Giggy Decl. ¶ 7; Allan Decl. ¶ 3, Ex. D.
Rocket Lawyer’s Answer and Amended
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
UNCONTROVERTED FACT
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allegation, and has no evidence, that any
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of these posted customer reviews are not
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genuine.
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Legalspring.com which suggests that “all”
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online providers are being reviewed; to
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the contrary, the website states “only the
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EVIDENTIARY SUPPORT
best online legal service providers are
There is no statement at
Counterclaims, ECF No. 17, pp. 18-20.
Allan Decl. ¶ 2, Ex. C; ¶ 3, Ex. D.
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reviewed.”
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19.
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advertisements which do not mention its
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competitors, but that does not make the
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advertisements either false or misleading.
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20.
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for its third affirmative defense of unclean Counterclaims, ECF No. 17, pp. 18-20.
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hands: (1) that LegalZoom bids on
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keywords to place its own advertisements
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in searches for Rocket Lawyer; (2) that
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LegalZoom uses the word “free” in a
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manner similar to how Rocket Lawyer
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uses the term in its advertisements; and
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(3) that LegalZoom uses Legalspring.com
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to falsely advertise.
Rocket Lawyer has its own
Rocket Lawyer alleges three bases
Allan Decl., ¶ 4, Ex. E.
Rocket Lawyer’s Answer and Amended
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
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CONCLUSIONS OF LAW
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Summary Judgment
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1.
Federal Rule of Civil Procedure 56 provides that a party may move for
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summary judgment on some or all of the claims or defenses presented in an action.
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Fed. R. Civ. P. 56(a)(1).
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2.
Partial summary judgment is appropriate to “narrow the issues in a case,
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advance the progress of the litigation, and provide the parties with some guidance as
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to how they proceed with the case.” United States v. Philip Morris USA, Inc., 327 F.
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Supp. 2d 13, 17 (D.D.C. 2004); see also Lies v. Farrell Lines, Inc., 641 F. 2d 765,
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768-69 (9th Cir. 1981) (quoting Moore's Federal Practice, stating: “partial summary
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judgment... was intended to avoid a useless trial of facts and issues over which there
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was really never any controversy”).
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3.
The disposition of liability issues on summary judgment furthers both the
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goals of the Federal Rules of Civil Procedure by securing “the just, speedy and
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inexpensive determination of every action.” Celotex Corp. v. Catrett, 477 U.S. 317,
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327 (1986).
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False Advertising Under the Lanham Act
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4.
“The purpose of the [Lanham] Act is to insure truthfulness in advertising
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and to eliminate misrepresentations with reference to the inherent quality or
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characteristics of another’s product.” Coca-Cola Co. v. Tropicana Products, Inc.,
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690 F.2d 312, 318 (2d Cir. 1982).
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5.
To establish a false advertising claim under the Lanham Act, a plaintiff
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must show: (1) false statement of fact by the defendant in a commercial advertisement
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about its own or another’s product; (2) the statement actually deceived or has the
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tendency to deceive a substantial segment of its audience; (3) the deception is
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material, in that it is likely to influence the purchasing decision; (4) the defendant
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caused its false statement to enter interstate commerce; and (5) the plaintiff has been
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
891644
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or is likely to be injured as a result of the false statement, either by direct diversion of
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sales from itself to defendant or by a lessening of the goodwill associated with its
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products. Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir.
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1997).
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LegalZoom Is Not Liable for False Advertising Because the
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Legalspring.com Web Page Provides Opinions and Puffery Rather Than
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Actionable Misstatements of Fact
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6.
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An advertisement that is mere “puffery” is not actionable under the
Lanham Act because it is not a “false statement of fact.” Cook, Perkiss and Liehe,
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Inc. v. Northern California Collection Service Inc., 911 F.2d 242, 244-246 (9th Cir.
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1990); Southland Sod Farms v. Stover Seed Co., 108 F.2d 1134, 1145 (9th Cir. 1997).
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“[P]roduct superiority claims that are vague or highly subjective often amount to
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nonactionable puffery.” Southland Sod, 108 F.3d at 1145. In contrast,
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“misdescriptions of specific or absolute characteristics of a product are actionable.”
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Id.
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7.
In its counterclaim, Rocket Lawyer states “Legalspring.com advertises
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for LegalZoom and states that it is the best legal services website…” But the
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Legalspring.com website contains no specific facts or allegations which could be
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interpreted by any reasonable juror as a false description of products or services that
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could operate to mislead consumers. It merely states that LegalZoom is the number
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one online legal choice. This is plainly (and expressly) a statement of opinion, not
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fact, and is therefore not actionable false advertising. See Cook, Periss and Liehe,
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911 F.2d at 246 (quoting Metro Mobile Cts, Inc. v. Newvector Communications, Inc.,
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643 F.Supp. 1289 (D.Ariz. 1986)) (“‘Puffing’ has been described by most courts as
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involving outrageous generalized statements, not making specific claims, that are so
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exaggerated as to preclude reliance by consumers.”).
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LegalZoom Is Not Liable for False Advertising Because It Does Not
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Author or Control the Content Provided by Legalspring.com
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
891644
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8.
Rocket Lawyer alleges that Legalspring.com’s actions are attributable to
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LegalZoom because Legalspring.com is LegalZoom’s alleged “agent,” as the site was
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originally developed by Travis Giggy, a former employee of LegalZoom.
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Legalspring.com also receives compensation from LegalZoom for clicks on links to
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LegalZoom’s website and receives commission from LegalZoom for any products
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sold as a result of such clicks. These allegations, even if true, provide no support for
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a false advertising claim.
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All of the statements made at Legalspring.com are made by the web page
moderator, and there is no evidence that such statements were either authored or
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controlled by LegalZoom. The fact that LegalZoom benefits from the advertisement
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and/or pays a commission to Legalspring.com for business which is generated by the
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advertisement does not create or support false advertising liability for LegalZoom.
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See Dominick v. Collectors Universe Inc., 2012 WL 6618616 (C.D. Cal. Dec. 18,
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2012) (defendant not liable for alleged false statements attributable to corporations
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owned by the defendant); see Campagnolo S.R.L. v. Full Speed Ahead, Inc., 2010 WL
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2079694, *8 (W.D. Wash. May 20, 2010) aff'd, 447 F. App'x 814 (9th Cir. 2011)
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(supplier that benefited from distributor’s advertisement of product but did not control
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the manner of advertisement was not vicariously liable for distributor’s false
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advertisement).
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LegalZoom Is Not Liable For False Advertising Because The Alleged
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Deception of Consumers by Legalspring.com Does Not Impact Rocket
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Lawyer
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Rocket Lawyer lacks standing to pursue a false advertising claim unless
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it can demonstrate that its interests “fall within the zone of interests protected by the
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law invoked”, and the injuries must be “proximately caused by violations of the
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statute.” Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377,
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1388-90 (2014). To show proximate cause, Rocket Lawyer “must show economic or
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reputational injury flowing directly from the deception wrought by the defendant’s
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
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advertising; and that occurs when deception of consumers causes them to withhold
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trade from the plaintiff.” Id. at 1391.
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While Rocket Lawyer alleges deception of consumers by
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Legalspring.com that it was providing “neutral” reviews of “all” online providers, the
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uncontroverted evidence demonstrates that Legalspring.com made no such
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representations, and that no such deception was possible. In addition, even assuming
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such deception occurred, Rocket Lawyer has produced no evidence that Rocket
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Lawyer has in any way been harmed by such a deception. Rocket Lawyer has
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produced no evidence, including but not limited to market research or consumer
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surveys, that would demonstrate such confusion, or that consumers were less likely to
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pursue Rocket Lawyer’s services as a result of having viewed Legalspring.com.
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Based on the lack of such evidence, Rocket Lawyer is unable to prevail upon this
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claim. Willam H. Morris Co. v. Group W. Inc., 66 F.3d 255, 258 (9th Cir. 1995).
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LegalZoom Is Not Liable Under the California Unfair Competition Laws,
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Business and Profession Code Section 17200 and 17500
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12.
Rocket Lawyer’s counterclaim counts V and VI against LegalZoom are
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based on the same false advertising grounds concerning Legalspring.com that are
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alleged with respect to its Lanham Act claim in count IV. See Counterclaim, ECF
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No. 17 at pp. 18-20. Accordingly, these claims are entirely derivative of the Lanham
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Act counterclaim, and are “substantially congruent” to such claims. Cleary v. News
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Corp., 30 F.3d 1255, 1262-63 (9th Cir. 1994). Because the uncontroverted facts
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compel a finding that Rocket Lawyer’s Lanham Act claim based on Legalspring.com
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must fail, that same result should be obtained with respect to Rocket Lawyer’s state
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statutory and common law claims which are brought based on the same factual and
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legal theory.
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No Evidence Supports Rocket Lawyer’s Affirmative Defense for Unclean
Hands
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
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13.
To establish an unclean hands defense, Rocket Lawyer must establish the
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following two elements: (1) that LegalZoom’s conduct is inequitable; and (2) that
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LegalZoom’s conduct relates to the subject matter of LegalZoom’s claims against
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Rocket Lawyer. Emco, Inc. v. Obst, 2004 WL 1737355 at *4 (C.D. Cal. May 7,
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2004) (citing Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 847 (9th Cir.
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1987)). With respect to the second element, LegalZoom’s bad faith must relate
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directly to its use or acquisition of the right in suit. Pom Wonderful, LLC v. Welch
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Foods, Inc., 737 F. Supp. 2d 1105, 1110 (C.D. Cal. Aug. 25, 2010). Thus conduct
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that is factually similar, or involves the same type of legal claims, is not the standard
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for unclean hands. See Specialty Minerals v. Pluess-Staufer AG, 395 F. Supp. 2d 109,
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112-13 (S.D. N.Y.) (rejecting unclean hands defense because “factually similar
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misconduct alone is [not] sufficient to create the necessary link”).
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14.
Here, Rocket Lawyer alleges three types of misconduct to support an
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unclean hands defense: (1) bidding on keywords to place advertisements in searches
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for Rocket Lawyer; (2) using the term “free” in advertisements; and (3) misleading
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consumers through advertisements on Legalspring.com. Answer, ECF No. 17 at 7.
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But these allegations, while allegedly describing “factually similar” misconduct, fail
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to set forth sufficient facts which, if true, would demonstrate that LegalZoom engaged
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in misconduct which directly relates to the same rights that LegalZoom is asserting
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against Rocket Lawyer.
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15.
First, bidding on keywords to place advertisements is not separately
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alleged as a violation of the false advertising or unfair competition laws by
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LegalZoom, and therefore Rocket Lawyer’s first ground for unclean hands does not
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directly relate to any claim at issue so as to meet the requirements of Pom Wonderful,
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LLC v. Welch Foods, Inc., 737 F. Supp. 2d at 1110.
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Second, Rocket Lawyer alleges that LegalZoom uses the word “free” in
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a manner “similar” to that complained of, but there is no evidence supporting such an
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allegation. LegalZoom’s alleged use of the term “Free” is markedly different from
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
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the allegations made by LegalZoom against Rocket Lawyer. To prove unclean hands,
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RocketLawyer must demonstrate that LegalZoom misleads customers into believing
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they may obtain free incorporation, free legal review or a free trial of a LegalZoom
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plan, when in fact such services require a financial commitment from the customer.
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The phrase “Free to Get Started,” alleged by Rocket Lawyer, does not in any way
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represent that a customer can complete an incorporation, obtain legal review or try out
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a comprehensive legal plan with no financial commitment.
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Third, as established above, there is nothing about the relationship
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between LegalZoom and Legalspring.com which is either inequitable or actionable as
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false advertising. In addition, LegalZoom’s alleged affiliation with Legalspring.com
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is irrelevant to RocketLawyer’s unclean hands defense because it does not relate to
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any of LegalZoom’s claims in this litigation – LegalZoom has not alleged in its
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complaint that RocketLawyer has an improper relationship with a review website.
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See Pom Wonderful, 737 F. Supp. 2d at 1110-1111 (defendant’s unclean hands claims
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regarding plaintiff’s misleading advertising of juice processing not sufficiently related
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to plaintiff’s claims regarding defendant’s misleading advertising of content of its
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juice blend).
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Fourth, RocketLawyer has failed to establish that LegalZoom’s
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inequitable conduct was egregious. “We have stated that only a showing of
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wrongfulness, willfulness, bad faith, or gross negligence, proved by clear and
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convincing evidence, will establish sufficient culpability for invocation of the
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doctrine of unclean hands.” Pfizer, Inc. v. Int'l Rectifier Corp., 685 F.2d 357, 359
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(9th Cir. 1982). The extent of actual harm caused by the conduct in question is a
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highly relevant consideration in analyzing the defense, and where such evidence is
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lacking, the defense is properly rejected. See Republic Molding Corp. v. B. W. Photo
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Utilities, 319 F.2d 347, 349-350 (9th Cir. 1963); accord Citizens Financial Group,
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Inc. v. Citizens Nat. Bank of Evans City, 383 F.3d 110, 129 (3rd Cir. 2004). But here,
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Rocket Lawyer has produced no evidence whatsoever, e.g. market research, consumer
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
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surveys or other evidence, that any consumer was injured by LegalZoom’s alleged
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bidding on keywords, its use of the term “free,” or its alleged affiliation with the
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Legalspring.com website. Absent such evidence, Rocket Lawyer’s unclean hands
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defense must fail.
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DATED: July 14, 2014
Respectfully submitted,
GLASER WEIL FINK JACOBS
HOWARD AVCHEN & SHAPIRO LLP
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By:
/s/ Fred Heather
PATRICIA L. GLASER
FRED D. HEATHER
AARON P. ALLAN
Attorneys for Plaintiff
LegalZoom.com, Inc.
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
ISO LEGALZOOM’S MOTION FOR PARTIAL SUMMARY JUDGMENT
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PROOF OF SERVICE
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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 document(s) using
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the CM/ECF system.
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PROPOSED STATEMENT OF UNCONTROVERTED FACTS AND
CONCLUSIONS OF LAW IN SUPPORT OF MOTION FOR PARTIAL
SUMMARY JUDGMENT BROUGHT BY PLAINTIFF LEGALZOOM.COM,
INC. [L.R. 56-1]
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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.
I declare that I am employed in the office of a member of the bar of this 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.
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Executed on July 14, 2014 at Los Angeles, California.
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/s/ Fred Heather
Fred Heather
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PROOF OF SERVICE
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