CRS Recovery Inc et al v. Laxton et al

Filing 396


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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 5 CRS RECOVERY, INC., a Virginia corporation; and DALE MAYBERRY, Plaintiffs, 6 7 8 9 v. JOHN LAXTON, aka; and NORTHBAY REAL ESTATE, INC., Defendants. United States District Court For the Northern District of California 10 11 ________________________________/ No. C 06-7093 CW ORDER DENYING MOTION FOR JUDGMENT AS A MATTER OF LAW (Docket No. 349) AND DENYING MOTION TO MODIFY PRELIMINARY INJUNCTION OR REQUIRE AN ADDITIONAL BOND (Docket No. 387) Defendant Northbay Real Estate, Inc., through its Chapter 7 12 Bankruptcy Trustee, moves for judgment as a matter of law. 13 Defendant John Laxton joins in its motion. Plaintiffs CRS 14 Recovery, Inc. and Dale Mayberry oppose Defendants’ motion. 15 Plaintiffs also move to modify the permanent injunction imposed by 16 the Court or to require Defendants to post a bond. For the 17 reasons set forth below, the Court DENIES both motions. 18 BACKGROUND 19 On July 1995, Mayberry registered the domain name “” 20 with Network Solutions, Inc., a registrar of domain names. See 21 Docket No. 381, 155:8-9, 160:2-161:16; Docket No. 251:9-16; Pls.’ 22 Trial Ex. 1. Mayberry was the original owner of Docket No. 164:3-4. After he registered, on October 3, 1995, 23 24 Mayberry also registered the domain name “” with Network 25 Solutions. Id. at 153:20-22, 163:25-164:2; Docket No. 382, 26 268:10-269:6. After Mayberry registered, he updated the 27 administrative contact information for to reflect the email 28 1 address “,” in addition to his mailing address and 2 telephone numbers, and to show his company, Micro Access 3 Technologies, as the account holder. 4 165:19; Pls.’ Trial Ex. 3. 5 Docket No. 381, 163:14- When an individual registers a domain name, he or she, as the 6 registrant, can pay for the registration in one year increments 7 for between one and ten years at a time, and can renew the 8 registration repeatedly when the original registration expires. 9 Docket No. 382, 260:12-18. The date when the domain name comes up United States District Court For the Northern District of California 10 for renewal is referred to as the anniversary date. 11 263:22-25. 12 pays the registry to renew the domain name, even if the registrant 13 has not yet paid the registrar for the renewal. 14 263:1. 15 domain names. 16 the renewal fee to the registry by the anniversary date, the 17 domain name goes into an “auto renew grace period.” 18 16. 19 Verisign was forty-five days. 20 Id. at On the anniversary date, the registrar automatically Id. at 262:18- Verisign is the registry for the .com and .net top level Id. at 254:13-17. If the registrant has not paid Id. at 264:9- In late 2003, this grace period for Network Solutions and Id. at 264:17-20.1 If, by the end of the grace period, the registrant has still 21 not paid the renewal fee, the registrar sends a “delete command” 22 to the registry. 23 command does not actually delete the domain name. 24 266:1. Id. at 265:18-25. Despite its name, the delete Id. at 265:25- Instead, among other things, it puts the domain name into 25 26 1 27 28 At this time, Network Solutions had recently been spun out of Verisign and certain documents created by Verisign continued to be used by Network Solutions to govern its relationships with registrants. Docket No. 383, 440:2-7. 2 1 a status called a redemption grace period with the registry. 2 at 266:2-5. 3 thirty days. 4 fee during that time period, the domain name is restored to active 5 status for the registrant. 6 Id. In late 2003, this redemption grace period lasted for Id. at 266:6-8. If a registrant pays the renewal Id. at 266:9-12. If the domain name is not restored during the grace period, 7 it goes into a five-day pending delete queue, at the end of which 8 the domain name is deleted and “drops,” which means that it is 9 made available for registration by the general public. Id. at United States District Court For the Northern District of California 10 260:5-11, 267:3-11. 11 allows them to register the domain name as soon as it drops. 12 at 282:4-12. 13 redemption grace period, no one other than the registrant can 14 acquire the domain name or request restoration of the domain name, 15 and in order to be re-registered through a back order, the domain 16 name must expire, go through each grace period and then be 17 formally deleted at the end of the pending delete period. 18 267:12-19, 334:20-25. 19 Individuals can place a “back order,” which Id. However, during the auto renew grace period and the Id. at Mayberry generally received annual renewal notices and 20 invoices for the registration of the domain names by mail and 21 email. 22 11. 23 one or two months before the annual renewal date, which was in 24 October. 25 governed Network Solutions’s relationship with registrants in 2003 26 provided that it would “endeavor to provide you notice prior to 27 the renewal of your services at least fifteen (15) days in advance 28 of the renewal date,” although it further provided that “you are Docket No. 381, 162:6-17, 167:10-13, 178:12-179:3, 182:8- He usually got these for the registration of about Id. at 178:21-179:1. The service agreement that 3 1 solely responsible for ensuring the services are renewed.” 2 No. 383, 440:1-22; Defs.’ Ex. 137-2. 3 Docket Mayberry last renewed the registration for on 4 February 19, 2002 for the time period from October 4, 2001 through 5 October 4, 2003; that renewal was completed prior to the 6 establishment of the grace periods and process described above, 7 which were newly established in 2003. 8 Docket No. 382, 327:24-328:14; Pls.’ Trial Ex. 37. 9 renewed the registration for on July 23, 2002, when he paid Docket No. 381, 179:3-22l; He last United States District Court For the Northern District of California 10 in advance for three years so that the registration would expire 11 on July 24, 2005. 12 Pls.’ Trial Ex. 17. 13 Docket No. 381, 157:20-158:6, 167:10-169:10; In the fall of 2003, Mayberry did not receive renewal or 14 expiration notices or invoices related to 15 381, 182:8-21. 16 when the renewal date was coming up and did not send in a renewal 17 payment because he did not receive an invoice. 18 227: 2-4. 19 email address, although it was no longer his primary email 20 address. 21 Docket No. Mayberry relied on receiving an invoice to know Id. at 183:4-12, At that time, Mayberry still used the Id. at 166:1-6, 225:14-18. On its anniversary date on October 3, 2003, expired 22 and its forty-five day auto renew grace period began. 23 382, 278:15-279:12. 24 issued for and the thirty-day redemption grace period 25 began. 26 Docket No. On November 17, 2003, the delete command was Id. at 280:2-23. However, never completed the redemption grace period, 27 went into the pending delete queue or became available for anyone 28 in the public to register because, during the thirty day 4 1 redemption grace period, on December 15, 2003, Verisign processed 2 a restore command for it. 3 Docket No. 383, 466:18-467:7. 4 Solutions issue a restore code for 5 185:13-15. 6 only to restore to the original registrant, Micro Access 7 Technologies, and was restored to it. 8 281:12-19; Docket No. 383, 467:8-17, 479:3-23. Docket No. 382, 281:3-282:1, 335:15-22; Mayberry had not asked that Network Docket No. 381, As previously noted, the restore command could be used Docket No. 382, Once a domain name is restored, there is no authorized 10 United States District Court For the Northern District of California 9 process for anyone other than the original registrant to update 11 the administrative contact or primary user information for the 12 domain name. 13 was restored to Micro Access Technologies, on December 19, 2003, 14 someone other than Mayberry changed the name servers associated 15 with and changed the primary user for that domain name 16 from Mayberry to Li Qiang, without Mayberry’s permission to do so. 17 Docket No. 381, 172:4-174:7; Docket No. 383, 469:3-473:8, 479:3- 18 23. 19 email account. 20 not acquire the domain name through the back order process. 21 at 468:24-469:2. 22 Docket No. 382, 282:13-18. However, after Through that change, Qiang took control of the Docket No. 383, 469:3-473:8, 479:3-23. Qiang did Id. On the morning of December 23, 2003, using the 23 email address, Qiang initiated a request to transfer to 24 himself. 25 Ex. 82-63. 26 request to as the email address associated with 27, requesting authorization for the transfer. 28 382, 359:16-360:13, 361:22-362:9; Pls.’ Trial Exs. 18, 82-61, 82- Docket No. 382, 359:16-360:13, 364:10-20; Pls.’ Trial Network Solutions then sent an automated authorization 5 Docket No. 1 63. 2 minute after the email was sent. 3 363:18-364:2; Pls.’ Trial Exs. 18, 82-61, 82-63. 4 receive the email, give permission for the transfer or authorize 5 Qiang to take any of these actions. 6 169:24-1, 175:2-176:25. 7 from Network Solutions to another registrar based in China. 8 Docket No. 382, 366:2-367:7. 9 Solutions to another registrar on March 28, 2004. United States District Court For the Northern District of California 10 11 Authorization was given in response to the email less than a Docket No. 382, 360:4-19, Mayberry did not Docket No. 381, 157:2-7, Later that day, Qiang transferred was transferred from Network Docket No. 383, 451:8-18. In May 2005, Laxton purchased from Bernali Kalita. 12 Docket No. 382, 405:5-11, 417:19-20. 13 had acquired it from Qiang. 14 Northbay. Sometime before that, Kalita Laxton later assigned to 15 On July 21, 2005, Mayberry signed two relevant documents. 16 The first was titled “Agreement for Domain Name Transfer,” and the 17 second was attached to the agreement as Exhibit A and titled 18 “Assignment.” 19 Decl. ¶ 4, Docket No. 271, Ex. A, 3-5. 20 Mayberry, in exchange for “good and valuable consideration,” 21 assigned “CRS Recovery Services, LLC . . . all right, title and 22 interest in and to the domain name ‘RL.COM’ . . . and the right to 23 bring actions and to recover damages for past infringement of any 24 of the foregoing.” 25 referred to “CRS Recovery Services, LLC” as the recipient of the 26 rights to, the company is referred to as “CRS Recovery 27 Services, Inc.” above the signature line. 28 CRS Recovery agreed to pay Mayberry a fee and to attempt to Donaldson Decl., Docket No. 261, ¶ 2, Ex. A; Lau Id. In the latter document, Although the body of the agreement also 6 Id. In the agreement, 1 recover both and and turn the latter over to 2 Mayberry. 3 of if it was recovered. 4 all actions necessary for the execution and performance of the 5 agreement and assignment and “the consummation of the transactions 6 contemplated” therein, including the attempt to recover 7 and 8 9 Id. In exchange, CRS Recovery would retain ownership Id. Mayberry also agreed to take Id. At the time that these documents were executed, neither CRS Recovery Services, Inc. nor CRS Recovery Services, LLC had been United States District Court For the Northern District of California 10 formed. 11 CRS Recovery, Inc., reached the agreement with Mayberry because he 12 intended to establish CRS Recovery in some form shortly thereafter 13 and wanted to obtain the rights to on behalf of it. 14 Lau Decl. ¶ 4. Richard Lau, who is now the President of Id. Almost five months later, on December 13, 2005, Lau and 15 Steven Lieberman incorporated CRS Recovery, Inc. in Virginia. 16 Donaldson Decl. ¶ 7, Ex. F; Lau Decl. ¶ 5, Ex. B; see also Docket 17 No. 382, 243:7-11. 18 382, 299:8-10. 19 Lieberman, LLC as one of the initial directors of the entity. 20 Decl. ¶ 5, Ex. B. 21 ever formed. 22 Lieberman was also Lau’s attorney. Docket No. The articles of incorporation listed Greenberg & Lau No entity called CRS Recovery Services, LLC was Lau Decl. ¶ 5. In January 2006, Lau and Lieberman called Laxton on the phone 23 and demanded the return of 24 299:8-10; see also id. at 397:9-398:20 (Laxton’s testimony 25 regarding the phone call, including that Lieberman told him that 26 he “was in possession of . . . a stolen domain name and that they 27 wanted it back, his client wanted it back”). 28 conversation, they offered to reimburse him what he had paid to 7 Docket No. 382, 290:12-15, During that 1 acquire the domain name. 2 to send him this in writing. Id. at 290:20-291:2. Laxton told them Id. at 290:16-19, 291:3-5. 3 On February 27, 2006, Lieberman sent Laxton a demand letter 4 on Greenberg & Lieberman, LLC letterhead, “intended only for the 5 purpose of settling any disputes between my client, Brian D. 6 Mayberry, Jr., and yourself.” 7 Trial Ex. 86. 8 unequivocal that Mr. Mayberry is the rightful owner of the domain 9 name” and stated that “my client has authorized me to offer Docket No. 382, 291:6-19; Pls.’ In the letter, Lieberman stated that “it is United States District Court For the Northern District of California 10 to reimburse you for your acquisition costs in order to avoid 11 extended litigation regarding this matter.” 12 Pls.’ Trial Ex. 86. CRS Recovery, Inc. and Mayberry filed this action on November 13 15, 2006, against, among others, Laxton, Northbay and Qiang. 14 Docket No. 1. 15 amended complaint (2AC). 16 allege, “In July, 2005, Mayberry transferred all of his right, 17 title and interest in RL.Com to CRS for valuable consideration.” 18 2AC ¶ 16. 19 pursuant to a written assignment to recover possession of RL.Com 20 and MAT.Com, and to recover pecuniary damages suffered by 21 Mayberry.” 22 for conversion, intentional interference with contract, 23 declaratory relief and unfair competition. 24 On October 30, 2007, Plaintiffs filed their second Docket No. 51. In the 2AC, Plaintiffs They also allege that “CRS stands in Mayberry’s shoes Id. at ¶¶ 24, 31. In the 2AC, they asserted claims In early 2008, CRS Recovery recovered from Liang and 25 returned it to Mayberry. 26 ¶ 8. Donaldson Decl. ¶ 6, Ex. E; Lau Decl. 27 In February 2008, after had been returned to 28 Mayberry, he and Lau, personally and on behalf of CRS Recovery, 8 1 Inc., signed a document entitled “Confirmation of Contract 2 Performance and Unqualified Assignment of Rights.” 3 Decl. ¶ 5, Ex. D; Lau Decl. ¶ 9, Ex. A, 1-2. 4 they described the 2005 agreement as a contract between Mayberry 5 and Lau and stated that Lau had subsequently conveyed all rights 6 to recover to CRS Recovery, Inc. 7 D; Lau Decl. ¶ 9, Ex. A, 1. 8 Mayberry again agreed that he conveyed to CRS Recovery, Inc. 9 irrevocably and without qualification, all rights to the ownership United States District Court For the Northern District of California 10 of 11 Donaldson In this document, Donaldson Decl. ¶ 5, Ex. In the February 2008 agreement, Id. On June 13, 2008, Plaintiffs filed a motion for leave to file 12 a third amended complaint. 13 stated, “Plaintiff Mayberry should be dismissed from the action, 14 as he has recovered MAT.Net, and seeks no further relief.” 15 3. 16 100. 17 Docket No. 76. In the motion, they Plaintiffs later withdrew this motion for leave. Id. at Docket No. On September 26, 2008, the Court granted Plaintiffs’ motion 18 for summary adjudication on its claims against Laxton and Northbay 19 for conversion and declaratory relief. 20 also dismissed Plaintiffs’ claims for intentional interference 21 with contract and unfair competition, because at the hearing, 22 Plaintiffs agreed to dismiss these claims if they prevailed on the 23 motion for summary adjudication of the other claims. 24 Subsequently, the Ninth Circuit reversed in part this Court’s 25 summary adjudication order, finding that, under the facts 26 presented at that time, material disputes remained regarding the 27 circumstances under which Mayberry lost control of, 28 9 Docket No. 170. The Court Id. at 18. 1 including whether this was the result of theft, fraud or 2 abandonment. 3 On May 4, 2012, the Court denied Plaintiffs’ motion to amend 4 their complaint to withdraw their claims for conversion, 5 intentional interference with contract and any requests for 6 damages, to strike their jury demand and to reset the matter for a 7 bench trial. 8 claims and requests for damages was conditional on the Court 9 granting their request to strike the jury demand and proceed with Docket No. 322. Plaintiffs’ request to withdraw the United States District Court For the Northern District of California 10 a bench trial, which the Court denied. 11 had noted, “Regardless of the ruling on this motion, Plaintiffs do 12 not intend to pursue their claim for intentional interference with 13 contract,” and that “if the Court denies the request to amend the 14 complaint and strike the jury demand, Plaintiffs will simply 15 proceed with a jury trial as scheduled on all of their claims 16 except intentional interference with contract, and will separately 17 seek leave to withdraw that claim before trial.” 18 1-2 n.1. 19 In that motion, Plaintiffs Docket No. 316, On May 4, 2012 as well, the Court denied Northbay’s motion to 20 dismiss the complaint. 21 argued that neither Mayberry nor CRS Recovery, Inc. had standing 22 at the outset of this case to pursue the claims as to 23 Northbay stated that Mayberry lacked standing because, in 2005, 24 Mayberry assigned his interest in to CRS Recovery Services, 25 LLC and that, even if he had standing at the outset of the case to 26 bring claims related to, he asserted only claims related to 27 and had abandoned any claims related to 28 also argued that CRS Recovery, Inc. lacked standing, because Docket No. 323. 10 In its motion, Northbay Northbay 1 Mayberry’s 2005 assignment was in favor of the LLC and not the 2 corporation, the assignment took place before the corporation was 3 formed and it was invalid. 4 In denying the motion, the Court found that CRS Recovery, 5 Inc. obtained the rights to through the 2005 agreement and 6 assignment and that, even if the 2005 transfer were invalid, 7 Mayberry had standing when the action was filed, and he 8 subsequently transferred rights to CRS Recovery, Inc. in the 2008 9 confirmation and agreement. Id. at 5-6. The Court also rejected United States District Court For the Northern District of California 10 Northbay’s argument that the operative complaint could be read 11 only to assert claims by Mayberry related to and found 12 that it was “susceptible to a broader construction.” 13 The Court noted that, although Plaintiffs have stated that they 14 would remove Mayberry as a named plaintiff, they did so with the 15 understanding that CRS Recovery, Inc. would be able to pursue the 16 claims that it gained through assignment from Mayberry. 17 Id. at 6. Id. A four day trial was held on May 7 through 10, 2012. Docket 18 Nos. 339-42. 19 dismiss voluntarily their claim for intentional interference with 20 contract, which the Court granted. 21 Defendants did not object. 22 23 On the first day of trial, Plaintiffs moved to Docket No. 381, 4:17-20. On May 9, 2012, Northbay filed a motion for judgment as a matter of law. 24 Docket No. 333. On May 10, 2012, the jury returned a verdict that Plaintiffs 25 proved that Laxton and Northbay had converted 26 345. 27 their affirmative defenses. 28 Defendants had not established that Plaintiffs abandoned Docket No. The jury also found that Defendants had not proved either of Id. In particular, the jury found 11 1 before Defendants acquired it or that Qiang had obtained by 2 fraud rather than by theft and therefore gained title to it, which 3 could be passed to Defendants as good faith purchasers. 4 After the jury returned its verdict, Plaintiffs voluntarily 5 dismissed their claim for violation of California’s Unfair 6 Competition Law (UCL), Cal. Bus. & Prof. Code section 17200, with 7 the Court’s permission. 8 did not object to the dismissal. Docket No. 384, 565:15-24. Id. Defendants On May 14, 2012, the clerk entered judgment in favor of 10 United States District Court For the Northern District of California 9 Plaintiffs against Defendants on the first and fourth claims for 11 conversion and declaratory relief, stating that Plaintiffs are the 12 lawful owners of the domain name and noting that the second 13 and third claims for intentional interference with contract and 14 unfair competition had been dismissed. 15 same date, the Court entered a permanent injunction. 16 343. 17 Docket No. 344. On the Docket No. On May 31, 2012, Northbay filed the instant renewed motion 18 for a judgment as a matter of law pursuant to Federal Rule of 19 Civil Procedure 50(b). 20 joined in the motion. 21 Docket No. 349. On June 4, 2012, Laxton Docket No. 352. On November 8, 2012, Plaintiffs filed a motion to modify the 22 permanent injunction or to require Defendants to post an 23 additional bond, and for a case management conference. 24 387. 25 26 27 28 Docket No. DISCUSSION I. Motion for judgment as a matter of law Defendants request that, under Federal Rule of Civil Procedure 50, the Court set aside the jury’s verdict in favor of 12 1 Plaintiffs on the claims for conversion and declaratory relief and 2 that the Court enter judgment in favor of Defendants on the 3 remaining claims pursuant to Federal Rule of Civil Procedure 52. 4 A. Legal standard 5 A motion for judgment as a matter of law after the verdict 6 renews the moving party’s prior Rule 50(a) motion for judgment as 7 a matter of law at the close of all the evidence. 8 P. 50(b). 9 granted only when the evidence and its inferences, construed in Fed. R. Civ. Judgment as a matter of law after the verdict may be United States District Court For the Northern District of California 10 the light most favorable to the non-moving party, permits only one 11 reasonable conclusion as to the verdict. 12 443 F.3d 1050, 1062 (9th Cir. 2006). 13 conflicting evidence, or if reasonable minds could differ over the 14 verdict, judgment as a matter of law after the verdict is 15 improper. 16 772, 775 (9th Cir. 1990); Air-Sea Forwarders, Inc. v. Air Asia 17 Co., 880 F.2d 176, 181 (9th Cir. 1989). 18 Josephs v. Pac. Bell, Where there is sufficient See, e.g., Kern v. Levolor Lorentzen, Inc., 899 F.2d Federal Rule of Civil Procedure 52 governs findings and 19 conclusions made by the Court in actions tried on the facts 20 without a jury or with an advisory jury. 21 that, after making such findings, on a party’s timely motion after 22 the entry of judgment, “the court may amend its findings--or make 23 additional findings--and may amend the judgment accordingly.” 24 Fed. R. Civ. P. 52(b). 25 fully heard on an issue during a nonjury trial and the court finds 26 against the party on that issue, the court may enter judgment 27 against the party on a claim or defense that, under the It provides in part It also provides, “If a party has been 28 13 1 controlling law, can be maintained or defeated only with a 2 favorable finding on that issue.” 3 B. Discussion 4 5 Fed. R. Civ. P. 52(c). 1. Standing of Mayberry and mootness of his claims In their motion, Defendants argue that Mayberry no longer had 6 standing to prosecute his claims at the time of trial because he 7 lacked a stake in the case at that point and his claims were moot. 8 Defendants base their arguments on the fact that Mayberry assigned 9 his rights to to CRS Recovery, recovered prior to United States District Court For the Northern District of California 10 trial and did not seek monetary damages at trial. 11 contend that, as a result, judgment should be entered in their 12 favor on all claims asserted by Mayberry. Defendants 13 Standing and mootness are distinct issues that underlie 14 whether the Court has jurisdiction under Article III to adjudicate 15 a case and are separate from the merits of the claims asserted. 16 See, e.g., Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. 17 (TOC), Inc., 528 U.S. 167, 189-190 (2000) (discussing the 18 conflation of standing and mootness); Warth v. Seldin, 422 U.S. 19 490, 500-01 (1975) (“standing in no way depends on the merits of 20 the plaintiff’s contention that particular conduct is illegal”). 21 The standing requirement is “perhaps the most important” of 22 the doctrines under Article III of the Constitution that limit 23 “the federal courts to adjudicating actual ‘cases’ and 24 ‘controversies.’” 25 “Those two words confine ‘the business of federal courts to 26 questions presented in an adversary context and in a form 27 historically viewed as capable of resolution through the judicial 28 process.’” Allen v. Wright, 468 U.S. 737, 750-751 (1984). Massachusetts v. Envtl. Prot. Agency, 549 U.S. 497, 14 1 516 (2007) (quoting Flast v. Cohen, 392 U.S. 83, 95 (1968)). 2 bottom, ‘the gist of the question of standing’ is whether 3 petitioners have ‘such a personal stake in the outcome of the 4 controversy as to assure that concrete adverseness which sharpens 5 the presentation of issues upon which the court so largely depends 6 for illumination.’” 7 (1962)). 8 except mootness, standing is determined as of the date of the 9 filing of the complaint . . . . The party invoking the “At Id. (quoting Baker v. Carr, 369 U.S. 186, 204 “As with all questions of subject matter jurisdiction United States District Court For the Northern District of California 10 jurisdiction of the court cannot rely on events that unfolded 11 after the filing of the complaint to establish its standing.” 12 Wilbur v. Locke, 423 F.3d 1101, 1107 (9th Cir. 2005), abrogated in 13 part on other grounds by Levin v. Commerce Energy, Inc., 130 S. 14 Ct. 2323 (2010) (quotation marks and citations omitted). 15 plaintiff need have standing to assert a claim for the Court to 16 have jurisdiction under Article III. 17 F.3d 789, 798 (9th Cir. 2012) (“‘Because we find [one plaintiff] 18 has standing, we do not consider the standing of the other 19 plaintiffs.’”) (quoting Watt v. Energy Action Educ. Found., 454 20 U.S. 151, 160 (1981)). 21 Only one See Kaahumanu v. Hawaii, 682 "Mootness can be characterized as the doctrine of standing 22 set in a time frame: The requisite personal interest that must 23 exist at the commencement of the litigation (standing) must 24 continue throughout its existence (mootness).” 25 v. Mink, 322 F.3d 1101, 1116 (9th Cir. 2003) (quoting Cook Inlet 26 Treaty Tribes v. Shalala, 166 F.3d 986, 989 (9th Cir. 1999)); see 27 also Friends of the Earth, 528 U.S. at 191 (explaining that this 28 description of mootness “is not comprehensive”). 15 Or. Advocacy Ctr. “Thus, ‘[a]n 1 actual controversy must be extant at all stages of review, not 2 merely at the time the complaint is filed.’” 3 Bernhardt v. County of Los Angeles, 279 F.3d 862, 871 (9th Cir. 4 2002). 5 are no longer live and therefore the parties lack a legally 6 cognizable interest for which the courts can grant a remedy.” 7 (internal quotation marks and citations omitted). 8 asserting mootness has the heavy burden of establishing that there 9 is no effective relief remaining for a court to provide.’” Id. (quoting “Generally, an action is mooted when the issues presented Id. “‘The party Id. at United States District Court For the Northern District of California 10 1116-17 (quoting Tinoqui-Chalola Council of Kitanemuk & Yowlumne 11 Tejon Indians v. United States Dep’t of Energy, 232 F.3d 1300, 12 1303 (9th Cir. 2000)). 13 In the instant motion, Defendants have not challenged the 14 standing of CRS Recovery or asserted that its claims are moot, and 15 have not disputed that Mayberry had standing at the time that the 16 case was filed. 17 justiciable case or controversy properly before this Court both at 18 the time of filing and at the time of trial. 19 Article III jurisdiction inquiry were limited to Mayberry’s 20 individual stake in the case, contrary to Defendants’ 21 characterization, Mayberry has retained an interest in its outcome 22 throughout its duration and did not concede at trial that his 23 claims were moot, as Defendants have averred without citation. 24 Among other things, Plaintiffs have sought a declaratory judgment 25 that was improperly taken from Mayberry through identity 26 theft and forged transfer documents and that the transfers based 27 on these wrongful actions should be reversed, even if he would 28 then transfer the domain name to CRS Recovery. Thus, there is no dispute that there was a 16 Further, even if the 2. Whether domain names are subject to a conversion claim 1 2 Defendants argue that the jury’s verdict on the conversion 3 claim should be reversed because domain names are not property 4 subject to a conversion claim. 5 To establish the tort of conversion, “a plaintiff must show 6 ‘ownership or right to possession of property, wrongful 7 disposition of the property right and damages.’” 8 337 F.3d 1024, 1029 (9th Cir. 2003) (quoting G.S. Rasmussen & 9 Assoc., Inc. v. Kalitta Flying Service, Inc., 958 F.2d 896, 906 Kremen v. Cohen, United States District Court For the Northern District of California 10 (9th Cir. 1992)). 11 domain names in this case are property subject to conversion 12 claims: 13 14 15 16 17 18 19 20 21 22 23 24 The Ninth Circuit previously found that the Like the majority of states to have addressed the issue, California law recognizes a property interest in domain names. As we explained in Kremen v. Cohen, domain names are intangible property subject to conversion claims. 337 F.3d 1024, 1030 (9th Cir. 2003). To this end, “courts generally hold that domain names are subject to the same laws as other types of intangible property.” Jonathan D. Hart, Internet Law 120 (2008); see, e.g., Office Depot Inc. v. Zuccarini, 596 F.3d 696, 701-02 (9th Cir. 2010) (domain name subject to receivership in the district of domain name registrar). We have previously explained the logic of California understanding domain names as intangible property because domain names are well-defined interests, exclusive to the owner, and are bought and sold, often for high values. Kremen, 337 F.3d 1024. Domain names are thus subject to conversion under California law, notwithstanding the common law tort law distinction between tangible and intangible property for conversion claims. Id. CRS Recovery, Inc. v. Laxton, 600 F.3d 1138, 1142 (9th Cir. 2010). 25 Defendants contend that, despite the Ninth Circuit’s 26 discussion in this case and in Kremen, this Court should hold 27 that, as a matter of law, “under California law, a domain name is 28 not property that may be converted.” 17 Renewed Mot. 6. Defendants 1 argue that, in Kremen, because no California court had squarely 2 decided the issue, the Ninth Circuit found that domain names were 3 property subject to conversion based on its prediction of how 4 California courts would resolve the question. 5 that a subsequent California Court of Appeal decision, In re 6 Forchion, 198 Cal. App. 4th 1284 (2011), showed that this 7 prediction was erroneous. 8 9 Defendants contend However, Forchion does not compel this conclusion. In that case, the California Court of Appeal considered whether an United States District Court For the Northern District of California 10 individual could statutorily change his name to the name of his 11 website, “” 12 The court found that he could not and, in so holding, discussed 13 the confusion that could ensue if the plaintiff were allowed to 14 change his name this way but later lost the use of 15 as a domain name, thereby allowing someone else to register it. 16 Id. at 1287, 1309-12. 17 domain name, the court quoted several passages from a discussion 18 in a note published in a law journal that explained the author’s 19 belief that a domain name is not property but is instead the 20 product of a contract for services between the registrant and the 21 registrar. 22 “Knotty” Saga of Sex.Com 45 Jurimetrics J. 75, 84–91 (2004)). 23 court also pointed out that other notes urged the contrary 24 approach, which the Ninth Circuit had adopted. 25 court, however, went on to state, “Regardless of whether a domain 26 name is a registrant’s property or merely the product of a 27 services contract, a registrant may lose any proprietary interest 28 in the domain name if he or she fails to pay periodic renewal fees Forchion, 198 Cal. App. 4th at 1286. During its discussion of the nature of a Id. at 1308-09 (quoting Note, Kremen v. Cohen: The 18 Id. at 1309. The The 1 or breaches the registration agreement with the registrar.” 2 at 1309. 3 express its own views on whether domain names are property. 4 Rather, it raised the issue only as background in a very different 5 context, before moving on to consider the matters relevant to the 6 case before it. 7 contrary determination as law of the case, as well as its 8 controlling holding in Kremen. 9 Id. Thus, the court did not directly address or even clearly This Court is bound to follow the Ninth Circuit’s Accordingly, the Court denies Defendants’ motion to reverse United States District Court For the Northern District of California 10 the jury’s verdict on this claim based on their contention that 11 domain names are not property subject to conversion. 12 13 3. Demand for return of by CRS Recovery Under California law, “where a person entitled to possession” 14 of property “demands it, the wrongful, unjustified withholding is 15 actionable as conversion.” 16 Defendants argue that Plaintiffs did not present evidence that a 17 demand for the return of was made on behalf of CRS 18 Recovery, and thus the jury verdict on the conversion claim should 19 be reversed. CRS Recovery, 600 F.3d at 1145. 20 Plaintiffs offered evidence that Lieberman and Lau requested 21 the return of from Laxton on multiple occasions, through a 22 phone call and a letter. 23 and Lau made these demands or that Laxton understood them as such, 24 and instead argue that these demands were made on behalf of 25 Mayberry, who was not entitled to possession at that time, and not 26 on behalf of CRS Recovery. Defendants do not dispute that Leiberman 27 Defendants’ arguments are unavailing for a number of reasons. 28 The jury found in favor of Plaintiffs collectively, including both 19 1 CRS Recovery and Mayberry. 2 that CRS Recovery agreed to try to recover both domain names, with 3 the full assistance of Mayberry, by exercising the rights of 4 Mayberry to the domain names. 5 a proper plaintiff, CRS Recovery was, and it was the principals of 6 CRS Recovery who made the demands. 7 any authority requiring that CRS Recovery demand return of the 8 domain name while identifying itself as the entity with the right 9 to possession. Plaintiffs have presented evidence Further, even if Mayberry were not Defendants have not offered That Lau and Lieberman asserted that they were United States District Court For the Northern District of California 10 acting on behalf of their client, Mayberry, is consistent with the 11 arrangement that Lau had made with Mayberry on behalf of CRS 12 Recovery to try to use his rights to recover the domain names. 13 Accordingly, Plaintiffs offered sufficient evidence to 14 support the jury’s finding that they made a demand for the return 15 of, and the Court denies Defendants’ motion to vacate the 16 verdict on the conversion claim for this reason. 17 4. Declaratory judgment claim 18 Defendants argue that the Court should reverse the judgment 19 on the declaratory relief claim because the “predicate for or 20 substance of plaintiffs’ declaratory relief claim was their 21 conversion claim” and “judgment must be rendered against 22 plaintiffs and in favor of defendants on plaintiffs’ conversion 23 claim.” 24 Defendants’ arguments regarding the conversion claim. 25 Defendants’ contention on the declaratory relief claim is merely 26 derivative of their unmeritorious arguments on the conversion 27 claim, the Court also denies their motion as to the declaratory 28 relief claim. Renewed Mot. 9. However, the Court has rejected 20 Because 1 5. UCL and wrongful interference with contract claims 2 Defendants argue that, pursuant to Rule 52, the Court should 3 make findings that Plaintiffs failed to offer evidence in support 4 of their UCL claim and enter judgment against them on the claim. 5 Defendants alternatively contend that the Court should amend the 6 judgment to reflect that Plaintiffs dismissed their UCL claim with 7 prejudice or to state that they may not bring it again in the 8 future. 9 the wrongful interference with contract claim. United States District Court For the Northern District of California 10 In a footnote, Defendants ask that the same be done for As Defendants acknowledge, the UCL claim “was a nonjury 11 claim.” 12 dismissed their UCL claim after the jury had returned a verdict on 13 the conversion and declaratory relief claims. 14 offered no authority to support that the Court may make such 15 findings or enter judgment as a matter of law on a claim after it 16 has been dismissed voluntarily with Court permission. 17 Renewed Mot. 10. As explained above, Plaintiffs Defendants have In addition, the Court declines to modify the judgment to 18 reflect that the dismissal of the claims for violation of the UCL 19 and wrongful interference with contract was with prejudice. 20 Defendants argue that the dismissal of the UCL claim should 21 be with prejudice “in light of plaintiffs’ purported dismissal of 22 their Section 17200 claims after the jury returned its verdict and 23 before the Court ruled on their claims . . . as well as in view of 24 the fact that plaintiffs dismissed the same claims in 2008.” 25 Renewed Mot. 10. 26 interference claim has been dismissed multiple times. 27 n.5. Defendants also argue that the wrongful 28 21 Id. at 11 1 In support, Defendants cite language set forth in Rule 2 41(a)(1)(B), which provides in part that “if the plaintiff 3 previously dismissed any federal- or state-court action based on 4 or including the same claim, a notice of dismissal operates as an 5 adjudication on the merits.” 6 to dismissal of an action by the plaintiff without a court order 7 through the filing of a notice of dismissal or stipulation. 8 41(a)(2) governs the dismissal of actions by court order and 9 provides that, unless the order states otherwise, a dismissal However, this subpart is applicable Rule United States District Court For the Northern District of California 10 under that paragraph is without prejudice. 11 granted Plaintiffs permission to dismiss the claims; Plaintiff did 12 not act without a court order. 13 eliminated claims but did not dismiss the action. 14 Canyon Pres. Council v. United States Forest Serv., 403 F.3d 683, 15 687-689 (9th Cir. 2005) (Rule 41(a) does not encompass dismissal 16 of individual claims; instead, this is properly considered an 17 amendment under Rule 15(a)); Ethridge v. Harbor House Restaurant, 18 861 F.2d 1389, 1392 (9th Cir. 1988); see also Hells Canyon, 504 19 F.3d at 690 (“It is axiomatic that prejudice does not attach to a 20 claim that is properly dropped from a complaint under Rule 15(a) 21 prior to final judgment.”). 22 conditionally dismissed the UCL and wrongful interference claims 23 only if the motion for summary judgment on their claims for 24 conversion and declaratory relief were granted, in order to obtain 25 a final judgment. 26 other claims, it dismissed the UCL and wrongful interference 27 claims. Here, the Court Further, here, Plaintiffs See Hells Finally, in 2008, Plaintiffs Because the Court granted the motion as to the However, the Ninth Circuit then reversed the order 28 22 1 granting summary judgment on those claims, thereby removing the 2 condition that Plaintiffs had placed on their dismissal. 3 In support of their request, Defendants cite Williams v. Ford 4 Motor Credit Co., 627 F.2d 158, 159-60 (8th Cir. 1980). 5 in that case, the court discussed a dismissal of an action under 6 Rule 41(a), which is inapplicable here. 7 jury returned a verdict for the plaintiff and the defendant filed 8 a motion for a judgment notwithstanding the verdict. 9 In response, the plaintiff argued that the motion should be denied However, Further, in Williams, the Id. at 159. United States District Court For the Northern District of California 10 and requested in the alternative that, if the court decided the 11 verdict should not stand, the action be dismissed without 12 prejudice to refiling in state court. 13 the latter action. 14 the trial court to rule on the motion for judgment 15 nothwithstanding the verdict. 16 the only apparent reason for the plaintiff’s request was 17 apprehension of the court’s ruling on the pending motion and that 18 the dismissal would prejudice the defendant by subjecting it to 19 more litigation in state court after the federal action had 20 already progressed to trial. 21 Id. Id. The trial court took The appellate court reversed and directed Id. at 161. The court found that Id. at 159-60. Here, in contrast, Plaintiffs did not seek to dismiss the 22 entirety of the action. 23 motion for judgment as a matter of law pending, they sought to 24 dismiss the wrongful interference claim, and Defendants did not 25 object. 26 they had already obtained their desired relief through the 27 favorable verdict on their other claims. 28 reason for the Court to rule on the UCL claim. Before the trial began, and without any Further, they sought to dismiss the UCL claim because 23 Thus, there was no Especially in 1 light of the fact that Plaintiffs’ voluntary dismissal of the UCL 2 claim was again occasioned by a favorable finding on their other 3 claims, it would be inequitable for the Court to hold, as 4 Defendants apparently request, that, if the jury verdict were 5 reversed during Defendants’ pending appeal, Plaintiffs would be 6 barred under any circumstance from pursuing the UCL claim. 7 Accordingly, the Court denies Defendants’ request to modify 8 the final judgment to dismiss the UCL and wrongful interference 9 claims with prejudice or to state that Plaintiffs are foreclosed United States District Court For the Northern District of California 10 from pursuing them under any circumstance. 11 II. 12 Motion to modify permanent injunction or to require an additional bond Plaintiffs seek to modify the permanent injunction that is 13 currently in place so that they can alienate the domain name 14 prior to the resolution of the appeal, or to require 15 Defendants to post a $500,000 bond as security for any damages 16 caused by Plaintiffs’ inability to alienate the domain name during 17 the appeals process. 18 The permanent injunction entered by the Court stated that 19 Plaintiffs are the lawful owners of and enjoined Defendants 20 from interfering with Plaintiffs’ rights to possession, control 21 and use. Docket No. 343. The Court also stated, 22 23 24 25 26 27 28 In the event an appeal is taken from the Judgment herein, this Order shall remain in effect pending decision of the appeal, without any bond being required of Plaintiffs, except upon the prior application of Defendants, supported by a showing of good cause. However, in such event, Plaintiffs shall not be permitted to alienate until mandate of the Ninth Circuit issues and the time to petition for a writ of certiorari has passed. If a petition for a writ of certiorari is filed, Plaintiffs shall not be permitted to alienate until the petition is denied or, if the petition is granted, until the matter is decided. 24 1 2 Id. at 1-2.2 Plaintiffs argue that the condition in the permanent 3 injunction restricting alienation is akin to a stay of the 4 injunction pending appeal pursuant to Rule 62 and thus that the 5 Court must require a bond or other appropriate terms for their 6 security. 7 be altered to prevent them from incurring substantial economic 8 harm during the pendency of the appeal. 9 Plaintiffs contend that the permanent injunction should The Court notes that, in connection with Defendants’ motion United States District Court For the Northern District of California 10 to stay the injunction imposed after the motion for summary 11 adjudication, Plaintiffs themselves proposed, and stipulated to, 12 the requirement that they refrain from alienating the domain name 13 during the appeals process. 14 Stay, Docket No. 195, 9; Carreon Decl., Docket No. 195, ¶ 13; see 15 also Carreon Decl. ¶ 16 (requesting that the Court impose either 16 the condition that the domain not be alienated or require that the 17 registrar “lock” the domain name, so that its registration 18 information cannot be modified). 19 name was raised shortly before trial, Plaintiffs informed the 20 Court that they did not intend to sell the domain name and rather 21 that CRS Recovery, through Lau, intended to use it. 22 No. 385, 37:12-38:2 (stating that Lau “is not interested in 23 divesting himself of the domain name and selling it”); see also See Pls.’ Opp. to Defs.’ Mot. to Further, when sale of the domain See Docket 24 25 26 2 27 28 The condition included in the permanent injunction that contemplated the possibility of a bond in Defendants’ favor was proposed verbatim by Plaintiffs and is not at issue in the present motion. See Docket No. 171 (Pls.’ Proposed Permanent Injunction). 25 1 Carreon Decl. ¶ 15 (stating that CRS Recovery intended to use the 2 domain name while the appeal was pending). 3 Plaintiffs also have not offered any evidence to support 4 their assertions that the appeal condition in the permanent 5 injunction is causing them to suffer harm. 6 their motion that the injunction means that they cannot use the 7 domain “for a commercial website or otherwise commercialize it,” 8 “mortgage it,” “challenge a third party who wishes to use RL as 9 one of the new” generic top level domains (gTLDs) or sell it. Plaintiffs state in United States District Court For the Northern District of California 10 Mot. to Modify 5. 11 that this appeal condition prevents them from using the domain 12 name for a commercial purpose or to produce income during the 13 appeal and it is not clear how this term could interfere with 14 Plaintiffs’ ability to challenge third parties who may wish to use 15 RL in connection with a different generic top level domain. 16 However, Plaintiffs have not submitted evidence In addition, the Court declines to require Defendants to post 17 a bond at this time. 18 is currently in bankruptcy and is represented by the Trustee of 19 its estate and that Laxton is proceeding pro se due to his 20 inability to pay counsel. 21 The record contains evidence that Northbay Accordingly, the Court DENIES Plaintiffs’ motion. However, 22 if the parties are able to reach an agreement, the Court will 23 entertain a stipulation to modify the injunction to allow 24 Plaintiffs to sell the domain name and invest the proceeds pending 25 appeal. 26 27 28 CONCLUSION For the reasons set forth above, the Court DENIES Defendants’ renewed motion for a judgment as a matter of law (Docket No. 349) 26 1 and DENIES Plaintiffs’ motion to modify the permanent injunction 2 or to require the posting of a bond (Docket No. 387). 3 Because Plaintiffs’ request for a case management conference 4 appears to be to discuss the status of Defendants’ motion, which 5 the Court has resolved in this Order, the Court declines to set a 6 case management conference at this time. 7 IT IS SO ORDERED. 8 9 United States District Court For the Northern District of California 10 Dated: 1/10/2013 CLAUDIA WILKEN United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 27

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