Netquote Inc. v. Byrd

Filing 75

MOTION to Dismiss MostChoice's Amended Fraud Counterclaim by Plaintiff Netquote Inc.. (Stark, David)

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Netquote Inc. v. Byrd Doc. 75 Case 1:07-cv-00630-DME-MEH Document 75 Filed 08/23/2007 Page 1 of 7 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 07-cv-00630-DME-MEH NETQUOTE, INC., a Colorado corporation, Plaint iff, v. BRANDON BYRD, an internet user making use of the IP Addresses 64.136.27.226 and 64.136.26.227, and MOSTCHOICE.COM, INC., a Georgia corporation, Defendants. NETQUOTE' MOTION TO DISMISS MOSTCHOICE' S S AMENDED FRAUD COUNTERCLAIM Plaint iff NetQuote, Inc. (" etQuote", through undersigned counsel, moves to dismiss N ) Defendant MostChoice.com, Inc.' (" ostChoice" amended fraud counterclaim pursuant to sM ) Rules 9(b) and 12(b)(6), Fed. R. Civ. P., and in support of its motion states as follows: INTRODUCTION MostChoice previously filed a counterclaim for " lick fraud,"but when NetQuote moved c to dismiss it, MostChoice immediately filed an amended counterclaim. Even on its second attempt, MostChoice fails to state a claim for fraud with particularity. MostChoice' fraud s allegat ion is a serious one that should never have been asserted because MostChoice lacks facts to support it. It is premised on nothing more than a guess that NetQuote is one of over 1400 individuals or entities that may have committed " lick fraud"against it. The alleged click fraud c Dockets.Justia.com Case 1:07-cv-00630-DME-MEH Document 75 Filed 08/23/2007 Page 2 of 7 is claimed to have occurred " eginning sometime in 2004,"which fails to identify with any b specificit y when over the last three-and-a-half years the alleged click fraud took place. The fraud claim is ripe for dismissal now because MostChoice cannot meet the stringent pleading requirements of Fed. R. Civ. P. 9(b). The Rule 9(b) requirements for pleading fraud act as a gatekeeper to prevent unfounded fraud claims from moving forward. The policies underlying Rule 9(b) include " iving adequate g notice to the defendant, eliminating complaints that merely seek to obtain discovery of unknown fraud, and protecting defendants from reputation injury that would result from frivolous or unfounded charges of wrongdoing." Grant v. Union Bank, 629 F. Supp. 570, 575 (D. Utah 1986) (citation omitted) (emphasis added). " art of the reasoning behind Rule 9(b) is to avoid P desultory accusations of moral turpitude which would only result in enormous social and economic costs absent some factual basis for supporting such claims." Wenneman v. Brown, 49 F. Supp. 2d 1283, 1287 (D. Utah 1999) (citing Lochhead v. Alacano, 662 F. Supp. 230, 234 (D. Utah 1987)). MostChoice' fraud counterclaim is the precise type of litigation-by-fishings expedit io n that Rule 9(b) is designed to eliminate. BACKGROUND NetQuote filed its Third Amended Complaint on April 16, 2007. On June 15, 2007, Most Cho ice filed its Answer to the Amended Complaint and included with the Answer two counterclaims alleging " lick Fraud"and Defamation. See Dkt. #33. After NetQuote filed a C mot ion to dismiss the counterclaims for failure to state a claim upon which relief could be granted, and specifically failure to plead fraud with particularity, MostChoice filed Defendant Mostchoice.co m' Amended Counterclaims (" mended Counterclaims". See Dkt. # 62. s A ) 2 Case 1:07-cv-00630-DME-MEH Document 75 Filed 08/23/2007 Page 3 of 7 Despite the opportunity to refine the fraud claim to include the particularity required under Rule 9(b), MostChoice' Amended Counterclaims still fail to set forth well pleaded facts to support s the key elements of fraud or to plead fraud with the particularity. ARGUMENT A claim for fraud must be pleaded with particularity. See Fed. R. Civ. P.9(b).1 The Tenth Circuit "equires a complaint alleging fraud to set forth the time, place and contents of the r false representation, the identity of the party making the false statements and the consequences thereof." Koch v. Koch Indus., 203 F.3d 1202, 1236 (10th Cir. 2000) (internal citation omitted); see also United States ex rel. Sikkenga v. Regence BlueCross BlueShield, 472 F.3d 702, 726-727 (10th Cir. 2006) ("a]t a minimum, Rule 9(b) requires that a plaintiff set forth the who, what, [ when, where and how of the alleged fraud."(quotation omitted)). Where the four corners of a pleading fail to meet the particularity requirement, the claim is to be dismissed. See, e.g., Koch, 203 F.3d at 1236. MostChoice' claim that NetQuote engaged in click fraud 2 fails to state a claim upon s which relief can be granted. Under even the most liberal reading of Rule 9(b), MostChoice' s allegations do not satisfy the particularity requirement for pleading special matters. At a 1 Rule 9(b) provides: In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condit ion of mind of a person may be averred generally. 2 MostChoice titles its count as a claim for " lick Fraud"and cites as authority Wikipedia, an C on-line encyclopedia. In Paragraph 8 of its Amended Counterclaims, it alleges that Georgia law applies to this claim. While NetQuote does not concede the applicability of Georgia law, undersigned counsel could locate no Georgia case or statute recognizing the tort of " lick fraud,"and Wikipedia obviously is not legal authority. NetQuote interprets the c counterclaim as alleging a species of common-law fraud. 3 Case 1:07-cv-00630-DME-MEH Document 75 Filed 08/23/2007 Page 4 of 7 minimum, the " ho,"" hen,"and " ow of the alleged fraud"are missing from MostChoice' w w h s claim. First, MostChoice' counterclaim " oes not alert [NetQuote] to a sufficiently precise time s d frame to satisfy Rule 9(b)." Koch, 203 F.3d at 1237. In Koch, the Tenth Circuit held insufficient the pleading that a fraud occurred " uring 1982 and continuing to the present time." Id. at 1236. d Because MostChoice' counterclaim contains a similarly general allegation that the alleged s conduct took place " eginning sometime in 2004,"Amended Counterclaim 17, it fails for the b reasons explained in Koch. Second, MostChoice fails to plead "he identity of the party making the false statements." t Koch, 203 F.3d at 1236 (internal citation omitted). Its Amended Counterclaim states loosely that " t least one employee of NetQuote engaged in click fraud," Amended Counterclaim 17, but it a provides no information about who the employee is and it identifies no facts that support MostChoice' allegation that the individual committing the alleged click fraud was indeed an s emplo yee of NetQuote'. MostChoice attaches to its Amended Counterclaims 1,473 computer s "P addresses"that it contends represent individual computer users who accessed MostChoice' I s website more than 20 times each, Amended Counterclaim 14, and then it speculates, "u]pon [ infor mation and belief, [that] one or more of the IP addresses . . . is or has been associated with a computer owned or operated by a NetQuote employee." Id. 16. MostChoice does not state the basis for its supposition that " ne or more"of the IP addresses on its list of multiple users of its o website can in fact be attached to NetQuote, nor does it identify any specific NetQuote employee that it contends engaged in fraud. It fails to provide this detail because, as it admitted in its Response to the previous motion to dismiss for failure to state a claim for fraud, MostChoice 4 Case 1:07-cv-00630-DME-MEH Document 75 Filed 08/23/2007 Page 5 of 7 " ay not be able to plead with particularity factual allegations regarding the individual(s) m invo lved without discovery." See MostChoice' Response to Plaintiff' Motion to Dismiss for s s Failure to State a Claim Upon Which Relief Can Be Granted at, Dkt. #51. MostChoice cannot satisfy Rule 9(b) by attaching a list of over 1400 IP addresses and then speculating with no factual basis disclosed in the Counterclaim that NetQuote owned or operated one or more of the over 1400 IP addresses. If such pleading were sufficient, Rule 9(b) could be circumvented in every case by mere speculation, with no specific factual support, that the defendant may have had some role in the harm a plaintiff alleges to have suffered. Finally, the " ow of the alleged fraud"is missing from the Amended Counterclaims. h Sikkenga, 472 F.3d at 726-727. The Amended Counterclaims do not allege what online advert iser MostChoice was using at the time of the alleged fraud, for example Google, Yahoo, or some other company, and how many pay per click advertising charges MostChoice incurred fro m any of those advertisers on any given day. See Amended Counterclaims 10-14. (describing how pay-per-click advertising works but failing to allege the details of the alleged fraud committed by any of the users of the over 1400 listed IP addresses). Nor does it plead with particularit y what the maximum pre-set spending limits on its pay-per-click accounts were; when the allegedly fraudulently induced charges were billed to MostChoice; or how many charges occurred on the days of the alleged fraud. Because MostChoice' Amended Counterclaim for fraud fails to comply with Rule 9(b), s it must be dismissed. See, e.g., Sikkenga, 472 F.3d at 726 (explaining that Rule 9(b) inquiry is limited to the " ell pleaded facts, as distinguished from conclusory allegations . . . in the text of w the complaint". ) 5 Case 1:07-cv-00630-DME-MEH Document 75 Filed 08/23/2007 Page 6 of 7 CONCLUSION For the foregoing reasons, MostChoice' counterclaim for fraud should be dismissed. s Dated: August 23, 2007 Respectfully submitted, _/s David W. Stark_____________ David W. Stark FAEGRE & BENSON LLP 3200 Wells Fargo Center 1700 Lincoln Street Denver, Colorado 80203 Tel: (303) 607-3500 / Fax: (303) 607-3600 E-mail: dstark@faegre.com Daniel D. Williams Teresa Taylor Tate FAEGRE & BENSON LLP 1900 Fifteenth Street Boulder, Colorado 80302 Tel: (303) 447-7700 / Fax: (303) 447-7800 E-mail: dwilliams@faegre.com ttate@faegre.co m Attorneys for Plaintiff NetQuote, Inc. 6 Case 1:07-cv-00630-DME-MEH Document 75 Filed 08/23/2007 Page 7 of 7 CERTIFICATE OF SERVICE I certify that on this 23rd day of August, 2007, I electronically filed the foregoing NETQUOTE' MOTION TO DISMISS MOSTCHOICE' AMENDED FRAUD S S COUNTERCLAIM with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following counsel of record: Ryan L. Isenberg, Esq. ISENBERG & HEWITT, P.C. 7000 Peachtree Dunwoody Road, Bldg 15, Suite 100 At lanta, GA 30328 ryan@isenberg-hewitt.com __/s Daniel D. Williams_____________ 7

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