Mizera v. Google

Filing 31

Mizera v. Google

Doc. 31 Att. 1

Case 5:05-cv-02885-RMW

Document 31-2

Filed 03/29/2006

Page 1 of 7

EXHIBIT A

Dockets.Justia.com

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1 KEKER & V AN NEST, LLP DAR YN J. DURIE - # 169825 2 DAVID J. SILBERT - #173128
San Francisco, CA 941 1 1 - 1 704 3 Telephone: [phone] Facsimile: [phone] 4 Email: ddurie~kvn.com

dsilbert~kvn.com
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Attorneys for Defendant GOOGLE, INC.
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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION

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11 ADVANCED INTERNT TECHNOLOGIES, Case No. C 05 02579 RMW

12 Individually and on behalf of all others Consolidated with
13

INC., a North Carolina corporation,

similarly situated, Case No. C 0502885 RMW
Plaintiffs,
DEFENDANT GO

OGLE INe'S MOTION
Hon. Ronald M. Whyte

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TO STAY PENDING SETTLEMENT
v.

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Judge:

GOOGLE, INC., a Delaware corporation, and
16 DOES 1 through 100, Inclusive, Date Compo Filed: June 24, 2005
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Defendants.

Trial Date: None set

18 STEVE MIZERA, an Individual, individually and on behalf of all others similarly situated,
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Plaintiff,
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v.
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GOOGLE, INC., a Delaware corporation; and 22 DOES 1 through 100, inclusive,
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Defendants.

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368912.01

GOOGLE'S MOTION TO STAY PENDING SETTLEMENT Case No. C 05 02579 RM Consolidated with C 05 02885 RMW

Case 5:05-cv-02885-RMW

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1

I.

INTRODUeTION

2 Under Civil L.R. 7-11, defendant Google Inc. ("Google") moves for an administrative

3 order staying this action pending judicial approval of a class settlement that the parties have

4 reached in an overlapping, and earlier filed, nationwide class action pending in state court in
5 Arkansas.
6 After more than a year of litigation, and settlement negotiations presided over by retired

7 United States District Judge Layn R. Philips, Google and the plaintiffs in the Arkansas case

8 have reached a comprehensive class settlement that, once finalized, wil resolve all ofthe class
9 claims pending before this Court. Under the nationwide settlement, Google wil establish a

10 settlement fund to resolve, on a class-wide basis, all claims arising out of alleged "click fraud" or

11 other invalid clicks on pay-per-click advertisements-the same claims that the plaintiffs are
12 asserting here. Thus, staying this case pending approval of

the settlement wil conserve judicial

13 resources, wil avoid needless and wasteful expenditure of

the parties' resources on discovery

14 and motion practice, and wil support judicial comity.

15 Further, a stay wil not prejudice the named plaintiffs in this action. Advanced Internet
16 Technologies, Inc. ("AIT"), one of the named plaintiffs, has moved to intervene as a plaintiff

in

17 the Arkansas action. And even ifthat motion is denied, the named plaintiffs wil have the right

18 to opt out ofthe class settlement to protect their individual interests, and wil have all of the
19 protections afforded by Arkansas law to ensure that the settlement adequately protects the class's
20 interests, including the right to object to the settlement.

21 For the foregoing reasons, and as explained in more detail below, Goog1e respectfully

22 requests that the Court enter the accompanying Proposed Order staying this action pending

23 approval of the class settlement reached in the Arkansas action.
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II.

BAeKGROUN

25 This is a "copycat" lawsuit based upon an earlier suit alleging that Google and other pay26 per-click advertising companies overcharged advertisers as a result of

"click fraud." The original

27 action, which is pending in Circuit Court in Miler County, Arkansas, was fied on February 5,
28 2005, and asserts claims on behalf of a nationwide class for breach of contract, unjust
i

368912.01 GOOGLE'S MOTION CTO STAY Consolidated with C 05 02885 RMW PENDING SETTLEMENT Case No. 0502579 RM

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enrichment, and civil conspiracy. A copy ofthe Second Amended Complaint in the Arkansas
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action is attached is Exhibit A to the Declaration of

David 1. Silbert ("Silbert Decl.").

Some five months after the Arkansas plaintiffs filed their class-action complaint, Click

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Defense, Inc. commenced this action, making virtally identical allegations. A copy of Click
Defense's Complaint, filed on June 24, 2005, is attached as Exhibit B to the Silbert Declaration.

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AIT has since replaced Click Defense as the named plaintiff in this action, and has adopted Click
Defense's complaint as its own. In addition, in January 2006, the Click Defense/AIT action was

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consolidated with one fied on July 15,2005 by Steve Mizera. Mizera is represented by the same
attorneys as Click Defense and AIT, and his allegations duplicate theirs. A copy ofMizera's
Complaint is attached as Exhibit C to the Silbert Declaration.

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After a year of intensive litigation in Arkansas, including litigating at the trial and
appellate court levels in both state and federal court, Google and the plaintiffs agreed to engage

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in discussions to attempt to settle the case. See Silbert Decl..~ 5. In Februar 2006, the paries
held a two-day mediation before the Hon. Layn R. Philips, a retired United States District Judge

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and former United States Attorney, and a highly regarded mediator. Id. ~ 6. Though the
settlement process that Judge Philips oversaw, the parties ultimately signed a confidential

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settlement agreement. Id. ~ 7. While the details of that agreement are stil confidential, its
principal terms include the creation of a nationwide settlement class, the establishment of a
settlement fund with a total value of

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up to $90 milion, and the resolution of all class members'

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claims against Google relating to "click-fraud" or other invalid clicks on pay-per-click
advertisements. Id. A hearing on preliminary approval ofthe settlement is currently set for

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April 3, 2006. Id. ~ 8, Ex. D.
Unless this Court enters a stay, the parties and the Court wil expend a great deal of

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resources litigating matters that wil become moot once the class settlement is finalized. AIT
fied its class-certification motion on March 6, and Google's opposition to that motion is

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currently due on April 3, with a hearing set for May 16. Before Google fies its opposition, it
will need to depose AIT, Click Defense, Mizera, Clarence Briggs (the declarant in support of
AIT's motion), and possibly other witnesses as welL. AIT may also wish to depose additional
2 GOOGLE'S MOTION TO STAY PENDING SETTLEMENT Case No. C 05 02579 RM Consolidated with C 05 02885 RMW

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1 witnesses. Other discovery activities are also underway, including AIT's, Mizera's and Click

2 Defense's responses to document requests, which are due in several weeks. Further, unless the
3 parties resolve their disputes, they may need to move in the next few weeks for the entry of a

4 protective order, and possibly for other relief as welL. Id. ~ 9.
5

III. ARGUMENT
Principles of Judicial eomity And The Encouragement of Settlement Require A Stay of This Action
Federal courts have repeatedly stressed that a stay is appropriate when necessary to

6 A.
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support judicial comity and the encouragement of settlement. In Sandpiper Vil. Condo. Ass'n v.
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Louisiana-Pacifc Corp., 428 F.3d 831 (9th Cir. 2005), for example, the Ninth Circuit held that a
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federal district court properly stayed proceedings in another court in order to safeguard the
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settlement process in a nationwide class action. As the Ninth Circuit explained, a stay was
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appropriate to permit the settlement-approval process to proceed undisturbed:
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We concluded that a temporary stay pending settlement of the nationwide class 14 action was appropriate. . . . A competing state class action covering a portion of the federal class posed a significant danger to the delicate and transitory process 15 of approving a settlement agreement, and thereby threatened the district court's ability to resolve the litigation.
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Id. at 845. Thus, the Ninth Circuit recognized both the sensitivity and the importance of
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finalizing national class-action settlements, and held that those interests warranted even a stay of
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proceedings in another court. Id.; see also In re Wireless Tel. Fed. Cost Recovery Fees Litig.,
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396 F.3d 922, 927 (8th Cir. 2005) (noting district court's stay of

all other class actions pending

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settlement of

the case before it).

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In this case, of course, the Court need not impinge upon another court's jurisdiction in
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order to safeguard "the delicate and transitory process of approving a settlement agreement. . . ."

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Instead, it need only stay its own proceedings pending approval ofthe Arkansas settlement. This

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Court unquestionably has the power, and would exercise it properly, by staying the case under
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these circumstances. See Mediterranean Enterprises, Inc. v. Ssangyong Corp., 708 F.2d 1458,

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1465 (9th Cir. 1983) ("a trial court may, with propriety, find it is efficient for its own docket and
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the fairest course for the parties to enter a stay of an action before it, pending resolution of
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368912.01

GOOGLE'S MOTION TO STAY PENDING SETTLEMENT Case No. C 05 02579 RM Consolidated with C 05 02885 RMW

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1 independent proceedings which bear upon the case."). Thus, a stay is necessary and appropriate
2 both to facilitate settlement and to promote judicial comity by permitting the Arkansas court to

3 finalize the class settlement undisturbed.

4 B.

A Stay Wil eonserve the eourt's and the Parties' Resources

5 In addition, a stay will prevent the Court and the parties from wasting resources on

6 litigation that will serve no purpose. Once the settlement is finalized, it will preclude the class
7 claims that the plaintiffs are asserting here. As the Ninth Circuit has observed, the "full faith and

8 credit" provisions embodied in 28 U.S.C. § 1738, "require() a federal court to give precisely the
9 preclusive effect to a state court judgment that the state prescribes for its own courts," in order to
1 0 "take into account concerns of both finality and federalism." Noel v. Hall, 341 F 3d 1 148, 1160

11 (9th Cir. 2003). Under Arkansas law, a final settlement of an action has a claim- and issue12 preclusive effect on all parties to the action. See, e.g., East Texas Motor Freight Lines, Inc. v.

13 Freeman, 289 Ark. 539, 543 (1986) ("Res judicata or claim preclusion bars the relitigation of
14 issues which were actually litigated or which could have been litigated in an earlier suit"). Thus,

15 because the settlement wil resolve all claims relating to "click fraud" on a class-wide basis, it

16 wil preclude any further class proceedings in this action.
17 Accordingly, by staying the case, this Court wil save itself and the paries from
18 expending enormous resources litigating issues (such as class certification) that wil have no
19 impact on the resolution of

this case. On the other hand, ifthe Court did not enter a stay, the

20 parties would likely have to conduct numerous depositions, compile and produce tens of
21 thousands of pages of documents, and present motions to the Court, all to no end.

22 e.
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The Named Plaintiffs Wil Not Be Prejudiced By a Stay
Finally, a stay wil not prejudice the plaintiffs. As noted, AIT has moved to intervene in

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the Arkansas action. See Silbert Dec!. ~ 8, Ex. D. Thus, AIT may be allowed to participate fully
in the Arkansas case as a named plaintiff. Moreover, apart from any intervention, Arkansas law

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provides a full panoply of rights by which an interested part may comment on or oppose a
class-action settlement. See, e.g., Arkansas R. Civ. Pro. 23; Ark. R. App. Pro. 2(a)(9). Under
Arkansas Rule of

Civil Procedure 23, which is patterned on the Federal Rule, Arkansas courts
4 GOOGLE'S MOTION TO STAY PENDING SETTLEMENT Case No. C 05 02579 RM Consolidated with C 05 02885 RMW

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1 rigorously scrutinize class-action settlements to ensure fairness. See, e.g., Ballard v. Martin, 349
2 Ark. 564, 575 (Ark. 2002) ("no court should accept a settlement that is unfair or inadequate, and
3 the burden is on the proponents of the settlement to show that the proposed settlement meets
4 standards of fairness and adequacy"). Thus, if

the named plaintiffs believe for any reason that

5 the settlement fails to protect the class's interests, they wil have a full and fair opportunity to
6 present their objections.
7 Moreover, if

the named plaintiffs are dissatisfied with the settlement, they may, of

8 course, opt out of it and pursue their individual claims against Google. Thus, the plaintiffs can

9 be assured that their individual interests, as well as the class's interests, wil be safeguarded.

10 They wil suffer no prejudice that could weigh against the promotion offederal-state comity, the
11 encouragement of settlements, and the conservation of resources that wil result from a stay. i
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iv.

eONeLUSION

13 . For the foregoing reasons, Google respectfully requests that the Court enter a stay of all
14 proceedings in this action pending finalization ofthe settlement in the Arkansas action.
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Dated: March 9, 2006

KEKER & V AN NEST, LLP

By: Is/ David Silbert
DAVID 1. SILBERT Attorneys for Defendant GOOGLE, INC.

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i As set forth in the Silbert Declaration, counsel for the named plaintiffs has refused to stipulate
to the entry ofa stay. See Silbert Decl. ~ 10.

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368912.01

GOOGLE'S MOTION TO STAY PENDING SETTLEMENT Case No. C 05 02579 RM Consolidated with C 05 02885 RMW